Moneywise24 Personal Finance

I stumbled today on an interesting video from The Morning Show on YouTube. It is posted by Cameron Johnson, and it focuses on teenagers, who became wealthy to very wealthy by having great ideas and being passionate about it. I don’t really want to spend too many words on it at this point, here it is:

I find this video extremely inspiring, and actually there are four key points which have gotten my attention:

Passion

Whatever you’re doing, you need to have a passion while doing it. Without passion, you may do things correctly, but you will not be able to deliver the highest possible service and quality. I find passion is the first quality it takes to become truly successful. Additionally, having passion in what you do makes it fun, and you create the willpower to continue going.

Put yourself out there

It’s okay to read through some theory sometimes, for example on how to write a business plan, or how to do you accounting. But the most important thing is to put yourself out there and just give it a shot. Spending too much time on theory might actually be very demotivating, since all the theory is so overwhelming. In the end, you’ll learn what you need to know throughout the process. Additionally, if you have a business idea that might be great and could work, just do it in stead of finding reasons why it should not work.

Start small

“I would immediately start a business, if I had the capital to do so”… I hear many of my friends saying this (including me from time to time… but I am improving). Starting up a business does not have to be expensive. Think about starting up an internet business, or an eBay business, or writing an eBook. Also, being a consultant of any kind does not need to be all that expensive. Many businesses can be started small, and built from there.

Have a mentor

Many millionaires come from families, who are businessmen themselves. As such, they already have a mentor. If you don’t know anyone who has his/her own business, it does not necessarily mean you cannot have a mentor. There are so many great books out there, written by well-known personalities such as Donald Trump or Richard Branson. Or how about Carlos Slim Helú. You might not know these people for real, but you can still read their biographies and learn from their lives.

I find this video very inspiring, and very refreshing that as an adult, I can still learn one or two things from people who are half my age. And I surely hope, that these people will keep inspiring the world with their stories in future also.

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I have to be completely honest with you: I have always wanted to become a millionaire… I think since I was 16 or so. So then, why am I not already. I mean, I have had 16 years of my life to achieve that goal…

I believe life is so exciting, fast paced, and emotional, that we quickly tend to lose sight of our goals. At least I do every now and then. For this reason, I was extremely surprised, or perhaps call it relieved, to find a “Million Dollar Club” on the web. The Million Dollar Club is a non-exclusive, no-nonsense club for those who want to become a millionaire. The introduction is simple, followed by a number of statements, that the author pledges to.

Hell, why did I not think of that? I want to join, enhancing my life and my blog… and being remembered of what I pledge each time I review my blog by the badge on the side bar.

On my way to becoming a millionaire, I pledge the following:

1. I will not lend money only for the purpose of real estate and education: I consider these investments in my life, aiming at generating money.
2. I will not make more transactions on my credit card than I can pay off with my one month’s salary.
3. I will not spend at least 20% of my net salary each month (after deduction of taxes, social security payments, and retirement contributions).
4. I will start investing in stocks, and perhaps options with smaller amounts. I will ensure my money will start working for me on the long-term.
5. I will continuously look for opportunities for increasing my regular income base, either via employment or through entrepreneurial activities.
6. I shall keep working on increasing my knowledge and education continuously.
7. I shall always think about the value of my purchase, and how it enhances my life.

Now, I realize that I am still at the very beginning of my journey, unfortunately I have to admit that I have literally failed to save or invest virtually anything during the past 15 years. But thank God I have recognized this and am willing to make a change!

As a result, I will be thinking of posting regular financial updates at Moneywise24.com about how I am progressing… I will keep you updated.

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Every now and then I have been thinking what I would do if I would win a few million in a lottery, or in the casino. I am sure most people have, perhaps you have. I have been discussing all possible scenarios with my friends, and often we ended up talking about expensive sports cars, yachts, luxurious estates and world travel. Honestly, if this is really how I would spend my millions, I would probably be instantly in debt.

I watched a documentary the other week, in which they were looking at what people had done with the millions they had won in a lottery, and as it became obvious, most people had spent their money very stupidly. A psychologist was asked about this phenomenon, and he claimed that it is only logical; these lottery winners were not at all used to thinking in dimensions of millions. They were literally thrown out of their own reality, which caused them to make irrational decisions.  This particular documentary set me to think: how would I handle that much money.

Keep my job

Okay, I have to admit, it really depends how much I won. But at least at first, I would definitely keep my job. Especially if I can not live off interest and maintain a good standard, what is the point in quitting my job? Besides that, I love my work. I might quit at a later time, but first I want to see how things are developing.

Cash Savings

Before I would do anything with the money, I would put some part of it on a savings account. Call it an emergency account if you want to, the money is intended for emergency situations, and in case I would lose everything. This money should allow me to start all over again just in case things go wrong. I would probably put aside about two years of my current salary.

Real Estate

Currently, I am renting an apartment, this might be one of the first things I want to get rid of. I would probably buy something bigger and more central than what I have now, but I do not see the point in buying a luxurious estate, which would vaporize most part of my money. A nice 2- or 3-bedroom condo in the city center will do, nicely furnished, a place where I feel good and comfortable. Besides, I am conscious of the fact that the bigger and more luxurious the estate, the more tax and other yearly expenses I will have. Real estate offers me the benefit of lowering my monthly expenses (my monthly rent) while making a long-term investment. Alternatively, I might purchase more than only one object, which I would rent out if I am not using them. This way, the incoming rent will compensate for my expenses I have on the real estate, and I am investing money with a long-term focus.

Long-term investments

At least half of my winnings, if not more, I will invest long-term on the stock markets. Firstly, I want my money to grow over time and it to gain value. Secondly, I want to obtain dividend payouts. If these dividends are high enough, they could even substitute for my current job, either partially or completely. But until I have reached a certain threshold, I would keep my job.

Business

If I feel entrepreneurial, I would perhaps start a business. However, I will do this with great caution. I do not have great experience with running businesses, so I will start small, even though I have the necessary funds to start big. By gaining experience, I can build my business from there, and engage into bigger businesses over time. The documentary I was writing about earlier showed a man, who invested most of his money in a bigger type of manufacturing business, which went bankrupt due to his inability to run that business. By the way, the guy ended up broke, and his wife left him. So did many of his friends.

Education

I am a fan of life-long learning, whether it is a new language, an MBA, or something else which I find interesting. I consider education an important part of my personal development.

Something needs to be spent, right?

Good, I have to admit; of course I will spend some of that money. I might buy some fashion, perhaps travel the world, buy a more fancy car, or take my flying license. I will definitely give myself some treats, but I will do this in a dimension I understand. I would hardly start to buy business suits worth 5,000 Dollars, as this is a dimension of spending I am not familiar with, and which I do not need either. The same goes for my world travel: I might fly business class on long distance flights, but I don’t see the use of paying 8,000 Dollars or so for flying first.

I am in charge of my money

I recognize the fact, that once I win the lottery I will probably be approached by many so-called consultants, who would recommend me to invest my money here or there. But I will, at all cost, remain fully in charge of my own money. I might consult someone I really trust, who may give me advice of specific trends and market developments, while at the same time I make my own decisions.

Honestly, I have never been in a situation of winning millions. However, I believe that becoming suddenly rich can be quite problematic for many people. And even if I am gaining wealth slowly over time, I will cherish the above points, in search for long-term growth, development, and a stress-free life.

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“In a world of more than six billion people, there are only 587 billionaires” are the first words the book starts with. But what does it take to belong to that so much desired exclusive club?

In his book Think Like a Billionaire – Everything You Need to Know About Success, Real Estate, and Life, Donals Trump litterally takes the reader inside the mind of one of world’s most famous billionaires: himself. With his colloquial writing style, Donals quickly fascinates the reader and introduces him/her into the world of real estate, attorneys, marriage, saving, passion for business, the big deal, but above all a passion for life.

In Think Like a Billionaire you will not find detailed theories on portfolio management or finance. The book approaches what you need to know and how you need to be in a well balanced way. The book will most probably leave the reader with a high energy level and a different way of looking at things.

Highly recommendable.

ISBN 0-345-48140-2

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We hear stories about self-made millionaire and people who made it from being a cook to owning a private jet. We often tend to treat such people as ‘being lucky’, or we feel the need to state that they probably had the help of a wealthy uncle or family. Seldom, however, we really try to understand what goes on in the mind of someone who truly ‘made it’, and more importantly, trying to learn from it.

 Responsibility

 If you take the time to read and compare different biographies from the rich and the famous, such as Bill Gates or Donald Trump, you will soon find that they have one big thing in common: they take responsibility for their lives. They strongly believe, and live by, the fact that every person is in the position to shape his/her future. The saying “your life as it is today is the result of your past actions” could not apply more.

 The first step in adopting the mindset of a millionaire is to be responsible for your own life. Life does not just happen to you; you are in control of it, as far as it is possible. Understanding what you do today shape your future is where you want to begin. Sometimes, you may experience faith, how unpleasant it may be. However, a true winner will simply accept this as a part of life, and move on, self-confidently, and write the next chapter in his life.

 Value your time

 Be honest to yourself for second: could you imagine Donald Trump sit in front of the television, watching a soap opera? Of course not, millionaires value their time, since they understand this will bring them further in life. In fact, television, computer games, or any activity which does not intend to enrich your life in some way or the other, is a waste of time.

 In stead, go out and become active. Engage in social activities, do sports, keep your living place tidy and clean, study, travel, and do whatever is necessary to keep moving forward in life. Spend your time as efficiently as you can, and grasp the opportunities that cross your path. Becoming active on the one side will also stimulate you to become pro-active, a key characteristic of wealthy people. Being pro-active means identifying opportunities, and doing something constructive with it. The best time to do things is not later, or tomorrow. It is now.

 Insist on quality

 No matter whether you are buying an item, making an investment, or delivering work yourself: insist on the highest possible quality, always. It is completely useless to buy a low-quality item which needs replacement after a short time, in the end you will spend more money on buying countless of low-quality items than you would have on one high-quality item. The same applies if you are delivering work as an employer or entrepreneur: your own image and that of your product will depend much on the quality you deliver. Delivering a high quality of work, for example, will make you stand out above the masses, and your managers will identify you with the quality you deliver. This makes your position for salary raises or promotions stronger.

 Do not fear

 Fear is the enemy of any successful person. Fear is nothing more than a physical reaction of the body, which indicates that you are about to enter into a situation, which might be life-threatening. However, being successful also means taking risks. Building a business means investing money, with the potential of losing it. The same applies for investments, or even switching jobs. However, with the right mindset, you can limit any potential negative outcome. If you insist on efficiency and quality in your life, you are likely to deliver an excellent job, which will only astonish your future manager.

 The four characteristics described above are only the tip of the iceberg. By the way, this does not only apply to building wealth, but also applies to being successful in general and leading a happy and fulfilling life. Once you understand, and live by, the main principles of what make people successful and happy, nothing can stand in your way.

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