Sunday, September 25, 2011

The Wealth was Always in the Farm

The following has been quoted (as best as I could) from a financial speaker named Brett Burks. His way of thinking and speaking is unlike anything I have ever read or heard before. Brett provides a unique perspective on how America, over the last century, has been transformed from a society of “Owners” to more of a society of “Renters”. I hope this inspires you to take the necessary steps back to the path of “Ownership”. Enjoy!

In 1900, 95% of [the] people owned what they did. They owned their own blacksmith, they owned their own farm; they owned their own convenience store. Whatever they did, they did it for themselves; it was theirs. The [other] 5% worked for those 95%. But in 2000, it pretty much flip-flopped. In 2000, 5% - 10% of the people owned everything. The rest of us went to work for them. Somewhere in those 100 years it flip-flopped. They, whoever “They” are robbed the wealth of our families. And the reason why was because we weren’t educated to what wealth really was. See, the wealth was in the farm, not in the income.

Let me give you an idea. If it was 1900 and I own a farm and that farm gives me $10,000 a year. Let’s say I grow corn and the market value of that corn is $10,000, so every year I make $10,000. Middle Class [people] think that the wealth was in that $10,000 – And say, “Oh he makes $10,000, he’s a $10,000 guy” and judge and assess me as a $10,000 person. But the wealth wasn’t in the $10,000, it was in the farm. Why? Because the minute I pass that farm on to my son, the second I do, I’m 65, he’s 18, the second I pass the farm on to my son, he is instantly, just as wealthy as me – just like that! So, now my son runs the farm and he makes, because of inflation, $11,000.

Now, could you imagine? My uncle had been in the same company for 40 years. Now think about it, could you imagine my uncle – he comes up to his boss; he says “Boss, I built this company with my sweat, blood and tears. I’ve been here from the beginning; I built this thing; I’ve been here every step of the way, now I am the director of administration. I oversee 100 people. You’re paying me $100,000 a year and I’ve been here 40 years. My son is graduating high school in May. He’s 17 years old, but he’s going to turn 18 in May as well. So, what we are going to do is; we are going to go ahead and have him, and he’s going to be your director of administration. He’s going to oversee the 100 people. And you are going to pay him $100,000 a year. Wait a minute, I was up for a raise, I forgot. You’re going to pay him $103,000.”

Now what do you think the boss is going to say?

Think about this for a second. Who cares how much money my uncle made? He could have made $100,000 a year he could have made $500, it doesn’t matter! When he’s gone his son still starts at zero! See, that’s why we aren’t getting wealthy. That’s why there are no broke Kennedy’s, there’s no broke Bush’s, there’s no broke Rockefellers. Why? Because instead of focusing on the income they focused on the asset. And if you pass on an asset to your son that’s $5,000,000, he’s not starting at zero; he’s starting at $5,000,000. He takes the $5,000,000 and makes it $20,000,000. His son makes it from $20,000,000 to $50,000,000. $50,000,000 to $100,000,000. But what we do is, we start from scratch, we get our education, we get to $100,000 a year, and then BOOM, we are done. And our son starts at the exact same spot – ZERO! He owns nothing; he has nothing; he’s worth nothing.

So, it doesn’t matter how much he made – it’s not getting passed on. You can’t accumulate wealth like that.

See, what happened was my son was one of the farmers making $11,000 a year, some corporation came along convinced my son to sell them the farm. How’d they do it? They preyed on our lack of knowledge. They told my son, “Hey, we’ll pay you $12,000 a year for the rest of your life.”
So, my son said, “Let me get a day to think about it.”

He talked to his wife and family and they say, “Well you can make $11,000 as a farmer or $12,000 doing nothing.”

“I’ll take $12,000 for doing nothing.” So, they sell the farm to the corporation. The corporation makes good and pays him $12,000. He thinks he’s done it. Because the wealth is in the income – right? And I just made $1000 more for my family.

But for everything you get you have to give. And because he did that, he forever – forever - enslaved my grandson. Because now my grandson has no farm. He will probably still farm because his daddy farmed and his daddy’s daddy farmed, etc. but now he’s going to do it for someone else.

So, now that company that bought the farm from my son is now going to employ my grandson. And my grandson is going to do the exact same job that his daddy did, but instead of doing it for himself, he’s doing it for the corporation. The corporation is now making $12,000, because of inflation, off the farm. So, now my grandson is doing the same work I did and my son did, but instead of getting $10,000 doing that work, he’s getting $6000. The company is making $12,000 and giving him $6000 and then keeping $6000. So, now forever, my grandson has no worth – he just rents his income.

You see, that’s what has happened from 1900 to 2000.

I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any comments, please post them below, otherwise, feel free to contact me.

Sunday, September 18, 2011

Images of Achievement
Written by Denis Waitley

Are you aware of how the FBI trains its agents to spot counterfeit bills? The FBI schools agents by training them to see all of the characteristics of bills printed by the U.S. Treasury—they deal only with genuine money. An FBI agent learns to recognize authentic ones, fives, tens, twenties, fifties and hundred-dollar notes until his or her appraisal of them becomes second nature. An agent studies a bill, both sides of it, until he or she learns every feature that makes it genuine legal tender.

That way, when FBI agents see counterfeit bills, they immediately recognize them as such. Their minds aren’t cluttered with what “might be wrong” or “what usually is left off” or “mistakes that are commonly made.” They know what they’re looking for. They are specialists in the real thing. False bills seem glaringly obvious to them.

If you allow yourself to think about the penalties of failure or all the things that could go wrong, you’re far more likely to infuse your performance with those penalties and mistakes. Continually tell yourself what to do. Don’t concentrate on what not to do.

The mind has a fascinating capability. What you think about most is generally what you do most readily. A mistake most people make is to set goals in negative terms. A tennis player may set a goal of not double-faulting a certain number of times during a match. An employee may set a goal of not being late so often. Goals to lose weight, not talk so loud and fast, and not get upset so often are goals framed in negative terms. We need to stay away from negative goal setting.

Understand this about the mind: A fear is a goal in reverse. The mind can’t focus on the reverse of an idea. The term double fault reminds the tennis player of the condition he or she wants to avoid. Being late reminds the employee of the problem, not the solution. When we think we need to lose weight, our minds store the self-image of being overweight. We need the image of the desired weight we want to attain, not the pounds of fat we want to discard. It is extremely difficult, if not impossible, to concentrate on not being upset.

It’s the same thing as saying, “Don’t make mistakes.” Or worse yet, to a tightrope walker, with no net, “Windy day, don’t fall!” The mind always moves you toward your current dominant thought.

We should say, “First serve in,” for the tennis player.

“I’m a punctual, on-time person.”
“I’m reaching my desired weight.”
“I speak slowly, clearly and confidently.”
“I remain calm and relaxed under pressure.”
These are all positive goal statements, which are called images of achievement, which pull us in the direction of the desired behavior rather than away from the undesired habit.

This week, stop looking at your life through the rearview mirror; instead, focus on where you want to go!

Reproduced with permission from the Denis Waitley Newsletter.
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© 2011 Denis Waitley International. All rights reserved worldwide.

Monday, September 12, 2011

The Difference Between “Middle Class” and “Wealthy” Thinking

The idea for this blog post came out of an intriguing and thought provoking financial presentation that I had the privilege to listen to from a brilliant speaker named Brett Burks. Brett Burks is a multi-millionaire, who has roots growing up in the Middle Class. Brett’s experience with having been both “Middle Class” and “Wealthy” has given him an interesting introspective on the two. See how much of his comparison and contrast opinions on the two classes you agree with … or disagree with.

Brett starts off by saying that the Middle Class has had it hammered in their heads to tell their kids to get a good job with benefits; get an education; put your nose to the grindstone; kiss up to the boss; respect authority and all of this hard work will be rewarded one day. Well, then he goes on to mention that Bill Gates dropped out of Harvard. Steve Jobs, Michael Dell and Larry Ellison also dropped out of college. Furthermore, Brett’s three favorite business men Henry Ford, Ray Kroc and Andrew Carnegie never even finished high school.

Now at this point, Brett makes it clear that he is not promoting the idea that people should not go to school. He was just making the point that education doesn’t necessarily equal wealth. Education just equals knowledge. It just so happens that a lot of people continue their education with the main goal of getting more money or getting a higher paying job.

Brett goes on to say that Middle Class people want safe investments, like CDs at the bank. They think that risk is a bad thing. Wealthy people invest in equities and believe that managed risk is a good thing. They know that the higher the risk, the higher the return. And as long as you can manage that risk, you are going to make a lot more money. Middle Class people, under the wrong assumption that risk is a bad thing, miss out on money working hard for them.

One of the biggest differences between “Middle Class” and “Wealthy” thinking is how we talk about wealth. Middle Class talks about income. Middle Class want their income up while wealthy people want their income down. Wealth is not in the income. Wealth is in the ownership. Wealth is in your net worth. Every year ForbesInvesting Magazines) lists the 400 richest people in America – never is one income listed because income has nothing to do with wealth. But because the Middle Class is under that assumption they make the wrong decisions.

For instance, if you are making $400,000 and spending $470,000 you are still broke. If you are making $170,000 and only spending $70,000 and saving $100,000 a year, then you can get very wealthy very fast.
Let’s say you are 23 years old and your whole life is ahead of you and you go work at a job. How much money are you going to make the first year? Let’s say $40,000. Let’s say, you start your own business. How much do you make the first year in business? You’d be lucky to make nothing! Average businesses do not turn a profit on their first year.

If those are your two choices and you are in the Middle Class, which one do you choose? The job, of course, for the guaranteed $40,000!

If you make a decision like a wealthy person, you might think what is the value of a job? It’s really just worth whatever someone with pay for it.
How much can you sell a job for? How much can you trade it for? Nothing, right? So the value of a job is zero.

What is the worth of a business – even if it is not making any money? It’s probably still worth something. Maybe you have work vehicles. Names and numbers of contacts could be sold. And what about office supplies, computers, inventory, etc.? So, even if a business is not turning a profit, it still has worth.

Now, let’s say the worth of the business is $40,000. Same question, would you rather have the $40,000 job or the $40,000 business? In other words would you choose the job where you make $40,000 the first year and it is worth nothing or a business where you make nothing the first year, but it is worth $40,000?

What do you think 9 out of 10 people still choose? The job, right?

In Brett’s opinion, he says, “Here’s the problem, they chose wrong. They chose like the Middle Class.”

What about you? What do you think? Do you find yourself making financial decisions using “Middle Class” or “Wealthy” thinking?

I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any comments, please post them below, otherwise, feel free to contact me.

Monday, September 5, 2011

The Truth About Life Insurance
Written by Dave Ramsey

Myth: Cash value life insurance, like whole life, will help me retire wealthy.
Truth: Cash value life insurance is one of the worst financial products available.

Sadly, over 70% of the life insurance policies sold today are cash value policies. A cash value policy is an insurance product that packages insurance and savings together. Do not invest money in life insurance; the returns are horrible. Your insurance person will show you wonderful projections, but none of these policies perform as projected.

Example of Cash Value

If a 30-year-old man has $100 per month to spend on life insurance and shops the top five cash value companies, he will find he can purchase an average of $125,000 in insurance for his family. The pitch is to get a policy that will build up savings for retirement, which is what a cash value policy does. However, if this same guy purchases 20-year-level term insurance with coverage of $125,000, the cost will be only $7 per month, not $100.

WOW! If he goes with the cash value option, the other $93 per month should be in savings, right? Well, not really; you see, there are expenses.

Expenses? How much?

All of the $93 per month disappears in commissions and expenses for the first three years. After that, the return will average 2.6% per year for whole life, 4.2% for universal life, and 7.4% for the new-and-improved variable life policy that includes mutual funds, according to Consumer Federation of America, Kiplinger's Personal Finance and Fortune magazines. The same mutual funds outside of the policy average 12%.

The Hidden Catch

Worse yet, with whole life and universal life, the savings you finally build up after being ripped off for years don't go to your family upon your death. The only benefit paid to your family is the face value of the policy, the $125,000 in our example.

The truth is that you would be better off to get the $7 term policy and put the extra $93 in a cookie jar! At least after three years you would have $3,000, and when you died your family would get your savings.

A Better Plan

If you follow my Total Money Makeover plan, you will begin investing well. Then, when you are 57 years old and the kids are grown and gone, the house is paid for, and you have $700,000 in mutual funds, you'll become self-insured. That means when your 20-year term is up, you shouldn't need life insurance at all—because with no kids to feed, no house payment and $700,000, your spouse will just have to suffer through if you die without insurance.

Don't do cash value insurance! Buy term and invest the difference.

Dave Ramsey. (2010, October 25). The Truth About Life Insurance [Blog post]. Retrieved from