Processes Over Affirmations

I’m starting to favor processes over affirmations.

Here’s why – when I write an affirmation like “I am an amazing athlete” and yet I’m overweight, smoke a bunch of cigarettes and drink every night, it just seems like bullshit. It’s actually not congruent with my behavior, and I explicitly think it’s untrue (I think “I wish!”).

On the other hand, when I set up a process to run every day (or every other day), I find that I naturally don’t want to smoke, engage in excessive drinking, excessive eating, etc. I also am on my way to getting fit.

I’ve figured out that if I leave things to will power, they don’t happen.

If, on the other hand, I schedule them, then I just find myself doing them. Why? Because they are scheduled.

For instance – if I had a job (I don’t right now, but if I did) – I’d schedule going to work every day so that I show up at 9 or 10AM.  And every day I’d show up to work around that time. 

If I set a goal to run a 5k and I’ve got a plan and I set a reminder on the days I want to run – guess what – I’m going to run the 5k!

Does this mean I’m perfect and run every day I plan to?  Of course not.

Does this mean I show up at 9AM every day to work, right on time?  Of course not.

Sometimes I’m late; sometimes I don’t run.  But I do my best and find that for the most part, I achieve my goals.

The win is in the grind – every day doing something, not in wishing to do something.

So I’m starting to think of my affirmations as really more of a list of goals.

Today I’m transforming them from “I am [fill in the blank – something I am not]”,  to “I am becoming [something I am not], with [fill in the blank routine]”

Book Notes: “The Millionaire Fastlane” by MJ Demarco

For the one minute summary:

There are three “lanes” (these are the equivalent to financial “velocities”):

  1. the side walk
  2. the slow lane
  3. the fast lane

The side walk:

  • those who live paycheck to paycheck.
  • They often are in debt
  • they blame everyone else,
  • expect others to help them.
  • the world owes them something.

Slow lane:

  • get rich slow
  • the 9-5,
  • responsible evolution to the sidewalk
  • they save 10% a year
  • skimp + save
  • trade time for money
  • takes decades to succeed
  • saturday & sunday are the paycheck for monday – friday
  • but who would swap 5 (monday -> friday) for 2 (sat & sunday)
  • mediocrity
  • common talking heads: suze orman, dave ramsey, etc.
  • uncontrollable limited leverage.  you have no control, you have no leverage
  • you are trading time for money
  • take 10-60 years to get to 1mil
  • saving 10% = means it will take 10 years to get to your current salary
  • “pay your self first” is really a fast lane doctrine, not a slow lane doctrinebecause you can’t actually pay yourself first as an employee (taxes, etc).

you want to be rich now (or soon ~ 5 years), not when you are 55-65.

so you need to compound quickly, and do it now

businesses generally sell for 6x earnings.  that’s why you need to start a business – to get 600% returns.

an employee can never ask for a 100%-1000% increase in salary

to attract large sums of $$$’s:

  • control
  • leverage

slow lane has neither.  time has no leverage (in theory, 24 hours of time for your income – that’s the upper limit)

compound interest takes *time*.  so if the objective is to get rich quick, it won’t work, because:

  • it will take too long
  • you’ll need control over favorable yield (how are you going to control the economy?)
  • it often doesn’t include inflation (a gallon of milk in 30 years will be $20)

compound interest only works when you have large amounts of capital.   the rich people live off the interest of fixed income (bonds, etc).

The gurus/talking heads (suze orman, dave ramsey, even Robert Kiyosaki) got rich by selling millions of books, etc, not by doing what they actually preach (investing: in real estate, the stock market).  (The author notes that even this book could make the author wealthy, but he’s already become wealthy in his business, which is why he’s out-ing these other authors).

Slow lane is the risky thing to do, as:

  • it’s one big bet on that takes lots of time to play out
  • you have to remain healthy the full time
  • you have to avoid layoffs, bad job markets, etc. for 40+ years
  • most are banking on their home equity
  • terrible lifestyle – must become a miser, otherwise slow lane gets even slower
  • stock market danger.  decrease in capital ultimately kills compounding

Ultimately, there are only a few ways to try to fix things in the slow lane:

  • better returns
  • working more
  • going back to school

But leverage is absent, and ultimately better returns assume more risk.

The exit from the slow lane is “fame” – celebrities, sports stars, etc. They now have leverage.  Millions demand them, so they get paid millions. Other secret exit: climbing the corporate ladder to CEO via stock options.  But this takes a long time.

“Millionaire” is not as much money as it used to be.  You really need 10mil+ to act/live like the way millionaires are portrayed by the media.


Alternative: fast lane

Get rich quick does exist!  But it’s not “get rich easy” which is what most nigerian princes, late night infomercials, etc. offer.

consumer vs. producer.  the majority of people are consumers, the minority are producers:

  • selling things
  • selling info products
  • selling mortgages/debt
  • etc.

consumers seek producers.  irony: once you can produce richly, you can consume as much as you want

net profit = units sold x unit profit

need to either provide massive value to a few people (unit profit)

small value to lots of people (units sold)

or both (which makes you massively wealthy (zuckerberg, bill gates, etc).

Most millionaires (80%+) received most of their money in one lump sump, either being a business owner or an early employee of a company with explosive growth.

industry multipliers (P/E).  Usually multipliers are 2-6x.  So 100k net profit per year business would be worth 400k.  Every $1 of net profit leads to 400% increase

Money tree – passive income:

Rental systems – Real estate

Computer systems

Content systems

Distribution systems

Human resource

Ultimate money tree: money itself

With 10mil, at 5%, you get 40k per month.  With safe instruments!

Focus on income, not expenses (which most slow layers focus on it).  Now compound interest is actually the way to go.  Exploit compound interest at the shore (title wave analogy) – where it makes an impact.  Most people are riding it way out at sea.  Compound interest – 100% a year from a penny still takes 15+ years to to get anything substantial

Law of attraction is just a repackaging of other stuff.  The real fast landers are the ones selling it.  “Law of affection”.  Affect a million, make a millions.

Pay yourself first: must be a corporation for tax reasons.  Never be a sole proprietor, be protected.  Best structures: c, s, LLC.  Limited liability plus tax liability.

Poor vs. Rich – Deal with the causes, not the symptoms.  You are the results of your choices.  Poorness is really just a series of choices.  Every day you make decisions that ripple through the years.  A small change today can make a large change in your future (a one degree change today doesn’t make much of a difference tomorrow, but will in 20+ years).  Choices -> process -> results

Choices are really choices of perception and choices of actions.  You chose your language.  You must believe that you can retire soon, etc.   good choices of perception influence good choices of action.  For Extra-ordinary results, you need extraordinary thoughts.

WCCA – Worst case consequence analysis.  What is the worst case consequence of this choice?  What is the probability of this happening?  Are these acceptable risks

WADM – Weighted average decision matrix.  Quantify big decisions. Help my

Natural gravity of society is to be average.  Stay away from negative people.  Get “headwind” behind you.  Extra-ordinary results mean that you need extra-ordinary thoughts – thoughts that aren’t “normal”.  Headwinds = negative friends, environments that don’t support your dreams.  Where do you find the people who are supportive?  Join entrepreneur clubs, get a mentor, find other like people with the same mentors.  Books/autobiographies of successful people.  entrepreneur forums.  Significant others can be the biggest headwinds if they are in opposition to the fast lane.

When someone asks you for your time, they are really asking for a piece of your life.  Time is the great equalizer and much more important than money (money is infinitely abundant).  fast lane  = wealth + time rich.  stay away from “parasitic debt” (needing to buy the latest gadget which will be obsolete in 6 months).  sidewalkers = time is abundant, money isn’t. vice versa for the fast lane.

Education should go on for the rest of your life.  It should help to facilitate the business system.  Its’ the “oil change”.  The oil change shouldn’t leave the car out of commission for months or years (shouldn’t be too much $$$, too many years).  learn from engagement, the world is your real university.  Infinite knowledge is everywhere (book stores, libraries, internet, etc).  “I don’t have time” – kill two birds with one stone.  Driving, Exercise, Waiting (DMV), Toilet time, dead job time (waiting), watching tv.  Read a book at least once a month, hopefully once a week.  Any education source above $25 should arouse suspicion.  Most people want events, not process.  They want things to be easy which is why they pay $50k for a seminar, which is usually just a marketing machine that knows how to extract out every dollar from you.  Bad seminars = price.  Either “free” (8 minutes of real info with 2hrs of pitches) or really expensive.

The Red line is where growth really happens. Not interest, but commitment to get the business going.  How bad do you want it?  Rat race must be more painful than being an entrepreneur.  Most people just give up at the first challenge.   You are paying the toll, which keeps most people out   Prefer to hit one home run (one big success) rather than nothing. Can’t avoid failure, you have to take risks.  Fear of failure is WCCA.  Take intelligent risks, not moronic risks. Intelligent risks = high upside, low downside.  Must take action now, not “some day”.  There will never be a perfect time.

Not all businesses are fast lane.  For instance, if you start a barber shop, you won’t use the law of affection.

“NECST” (NEXT) commandments:






Need = businesses – 90% fail. Must solve a problem, no one cares about your problems. Address the selfishness of others.  Chase needs, pain problems, emotions, etc. Not money. Don’t focus needs of yourself, focus it on what people want. Scalpers, etc. still think selfishly. Your bank account shows how much you are helping people. “Do what you love” – is someone going to pay you for it? Is it solving a need?  Are you exceptional at it?  If not, don’t do it. Also, since many people are doing what they love, the margins go down.  kudos if you can do what you love – even in the slow lane.  but the author loves to play basketball, play piano, etc. but won’t get paid to do it.  Also, when you do something for money, it’s easy to lose the love for something. Use passion, not love.  Why are you doing this?  Who are you trying to prove wrong? Usually passionate why gets you out of bed in the morning and keeps you working long hours.

Entry = If entry is too easy, you’re going to have tough odds.  MLM, etc. any businesses that are easy to start within 1 day.  Exceptionality is the one thing that breaks the rules of entry.  Can you be the exception (1 of 1000) in an MLM business?   Forex = can you really beat everyone?  The people who are really cleaning up are the people who founded the MLM or forex brokers. Real businesses are processes, not events.  When everyone is doing it, you should get out.  everyone = random people in your life are talking about. dumb money shows up at the end of the boom. you can’t be like everyone else.

Control = you must control the system. if you aren’t driving, you are subject to sudden shifts. you are making someone else rich. you must take on the risk. create MLMs, not join.  sell franchise, not buy them. sell affiliate programs, don’t join them. create hedge fund, don’t invest in them. sell stock, not buy stock. offer drop shipping, don’t use drop shopping.  offer employment, don’t get employed. accept rents & royalties, sell licenses, sell ipo shares, don’t buy them. You can’t be a driver in every instance. Drivers make the big money.  200k every month, not 20k every month. legendary money = 1mil every month which can be made with NECST.  affiliates, for instance, can make good money (20k per month), but rules could be subject to change at any point.  with affiliates, in an MLM, etc. you are a “hitch hiker”.  If someone can flip a switch and kill your business, you are playing roulette.  Are you investing in your brand, or someone else?  Stop building pyramids for others, instead create them for youself.

Scale = leverage. You only have to be right once – so play on a field where you can hit home runs, not singles. example: local salon. need to do something to transform it to larger scale (franchise, etc).  also, law of affection.  Can also deal with magnitude.  Lamborghini instead of Hondas.  can the net income of this business scale infinitely? what is the best case units sold potential? otherwise, you are just your own boss with a job.  need either direct or indirect scale.

Time = Business must detach from your time, otherwise it’s just a job. You can create a businesses but you must be able to extract yourself from it (must at the end of time be passive). Sometimes you can add a system to make it passive (franchising, for instance).

Most potent fastlanes (they fulfill all 5):

  • internet
    • subscription service
    • content based revenue models. hard, because barriers have come down
    • lead gen
    • social networks
    • brokerage systems
    • advertisers
    • ecommerce
  • innovation/inventing. creation/manufacture, distribution.  anything that fulfills a need/desire.  core activity: make something better, or just repackage, do better marketing. example: high end vodka. same stuff, but just repackaged.  same with snuggle – it’s just a blanket. distribution is where the war is won.  authoring is also a fastlane.  writing a book is not a business, but selling one is. have to get it in front of lots of people.
  • intentional iteration. it’s really a small business (because it doesn’t naturally have scale) but done multiple times. small store -> franchise.  investor buying one single house -> 50 houses.  fasteners response to limited scale.

Opportunities are everywhere – you just need to look. doesn’t need to be a grand idea, but just an unmet need. they are everywhere. who cares if someone else is doing it? can you do it better? can you be a better marketer? Competition is everywhere, just do it and do it better. “I hate” “This frustrates me” “Why is this like this?” “Do you have to?” “I wish there was…”, “This sucks”.  These are all open roads. Failures are inevitable. Don’t quit your dream, but you can quit your road.

You need targets.

  1. define the lifestyle you want. how many cars? houses? etc.
  2. what is the cost of this lifestyle?monthly allowance -> gross living cost.  gross living cost * 0.6 => net living costs
  3. set targets. money system target: monthly net living costs * 12 * 0.05.  12 = months, 5 = 5% yield on money system.
  4. make it real. break things down into their smallest parts. need to walk before you can run. learn to make $50 a month before $50k per month.  drop change into your bucket daily (literally). have you applied pressure to that goal?

Keep expenses under your income. Live below your means in order to expand your means.

Late night info products do work – but – they make money selling you the system.  most people don’t actually try to use the system, which means that almost no one gets a refund.  Don’t play your businesses by competing on price. It’s a game of checkers, instead, play a game of chess:

  1. king = execution
  2. queen = marketing
  3. bishop = customer service
  4. knight – product
  5. rook = people
  6. pawn = ideas

idea isn’t worth much, but can be a multiplier. idea = event, execution = process.  ideas are worthless, but often treated like gold.

Customer Service – business plans are useless.  they are really just ideas jacked up. marketplace will tell you what you really should be building. Keeps “black book” with complaints.  Free feedback and insight into mind of customers.

[ more about customer service that was skipped ]

Marketing + branding: the queen, probably the most powerful piece in business.

build brands, not businesses. marketing & branding. marketing can get people to buy even if nothing else is functioning. people are loyal to brands but not businesses.  brand = usp = unique selling proposition. anchor to brand. what makes company different from the rest?  what will compel a customer to use you over someone else? (his example: risk free advertising). targets benefits. dominos = deliver to your door in 30 minutes or less, or it’s free. m&ms = melts in your mouth, not in your hands.

  1. uncover the benefit. if you are already in business, what’s the advantage of your product
  2. be unique.  not “Grow your business” but “shatter sales records”.
  3. be specific and give evidence.
  4. clear and concise
  5. make it real. you must deliver on what you say. if you don’t, you’ll be a fraud and easily exposed

Most people are marketers, but marketers of illusions. No one is poor on social media.  Author is in top 1% of wealthy in america, but you wouldn’t obviously know it.  He needs to compete with the noise.  How does one do that?

  1. Polarize. Not the best strategy for a mass market brand since it will get 50% of people who hate you.  But those who love you, really love you
  2. Risque – sex sells. Godaddy Super Bowl add example.
  3. Arouse emotion. ASPCA animal ads. Lamborgini which makes you feel rich, etc.
  4. Interactivity. If you can feel it, taste it, or touch it, you are more likely to buy it. FB = most popular, questionnaires, surveys.  People love to talk about themselves.  Get people to talk about themselves.
  5. Be unconventional.  Lamborgini sold for one dollar. Energizer bunny.  Geico ads – surprise punchline “I’ve got great news – I just saved 10% on car insurance”. If you get someones attention, half the battle is lost.  If you can get them to answer “what’s in it for me?”.

Ironic: to be in the fast lane (get stuff), you have to be selfless.  Must emphasize benefits (what’s in it for the customer), not features (what you’ve built).  One buyes a hole, not a drill. Translate features to benefits.  Who is the buyer? put yourself in their shoes.

Price conveys more than cost.  It implies value. For instance, designer handbags.  Example: dresser given away for free on sidewalk, but in good condition, just needed a quick staining. then the guy stained it, still no one took it.  finally, he put $50 price tag on it, and it got stollen. Another example: an artist selling her stuff at $90, was able to bump it up to $399 and made the same # of sales.  Another example: same ad for a job listing, but one paid a lot less than the other.  the listing with a smaller salary had 3x the number of applicants.  Are you undervaluing yourself/your products?  Right pricing strategy is crucial to branding.  What makes you different from someone else?  Own the consumer’s mind and you own the consumer.

Chose monogamy over polygamy. Must be focused & disciplined – on only ONE business. Don’t scatter focus over different projects.  It’s a symptom of money chasing instead of helping others.  You figure “if I just do a bunch of things, one has to stick, right?”.  10 businesses earning 10k each is not better than 1 that does 100k.  this just builds weak assets, doesn’t scale to multimillion valuation.  Eat, live, sleep, and shit your business.  Fastlane success comes from monogamy.  After you become wealthy, then you can become a “polygamist”.

Wealth supercharger – time to take your first step:

  1. F = formula. wealth is a process
  2. A = admit. admit that preordained path to wealth, doesn’t work
  3. S = stop & swap. stop following the wrong roadmaps. stop thinking that 401ks and mutual funds will make you rich. swap from consumer to producer
  4. T = time. stop trading time for $’s. invest time into a business system.
  5. L = leverage.
  6. A = assets + income. exploding income. live below your means, but seek to expand your means, not cut your costs
  7. N = number. what’s your dream/freedom number?
  8. E = (e)?affection. law of affection.
  9. S = steering wheel – you must have control.  Deploy WADM, WCCA
  10. U = uncouple. pay yourself first (through your business) in a C, S, or LLC
  11. P = passion + purpose. habitual action.
  12. E = educate. never stop learning
  13. R = get on a fast lane road.  train your mind to find needs / problems. you don’t need to find the next big breakthrough, just solve a problem better. the road chooses you
  14. C = control
  15. H = have what others need, and money will flow into your life
  16. A = automate your business and detach your time from your business
  17. R = replicate. replica your system. you must impact millions.
  18. G = grow your business – it’s a game of chess. build a brand, not a business.
  19. E = exit. have an exit strategy.
  20. R = retire or repeat. either way, celebrate along the way.

Ryan Holiday and Noah Kagan

Definitely worth checking out.  Ryan Holiday is specifically talking about books, but I think greater lessons can be learned for any creators & entrepreneurs.  Here are some of the more interesting things covered:

  • What to create vs. what you love to do.
  • Marketing
  • Doing things that don’t scale
  • Stoicism & giving up control

Book Notes: Seth Godin “The Dip”

Figured I’d write some notes on this book.  This is my “cliff notes” version for anyone who is too lazy to read the book (or just wants a refresher).

This book hits home to me as I’m currently trying several entrepreneurial journeys (I’ve started two LLCs in the last month) and the idea of when a project should really be invested in or quit is often non-obvious.

Anyway, here are my notes:

A large portion of the pie goes to the #1.  It pays to focus all of your effort in one thing (to be #1).  Superstars generates 10-100x.

3 curves:

  1. the dip
  2. the cul-de-sac
  3. the cliff

“The Dip” is the hard part before becoming successful.  It’s what separates those who merely want something from those who actually do it.  It’s the long-slog to mastery.

Example: snowboarders – the first several days are hell.  Another example: organic chemistry which sits in between pre-med and being a doctor

The dip actually creates scarcity, otherwise everyone would want to do it.

Trite phrases around not quitting are not true.  (“Quitters never win, winners never quit”).

Some things are worth quitting.  Others you should persist in.

Other things that are worth quitting:

  1. cul-de-sac – dead end job/etc.  not going anywhere
  2. the cliff – smoking.  marketers dream.  keeps getting harder to quit (more painful) and more pleasurable until the end, in which it is very painful (cancer, emphysema, etc).

Successful people lean into the dip instead of just going through it.  People are in a few camps:

  1. brave: best in the world
  2. informed/mature: save resources for something you are really passionate about
  3. stupid: start something, but quit in the middle of the dip

It’s ok to do #1 or #2, but not #3.

Jack Welch GE – killing dead ends.  Stopped a bunch of parts of GE that were profitable but weren’t #1 or #2 in their markets.  They were distractions to the business.

Good news: if it were easy, everyone would do it

Embrace the dip.  Lots of organizations + people actually diversify to ignore the dip.  Ex: record labels.

Real success goes to those who obsess.  It’s easier to be mediocre than to quit.

Workouts: You gain muscle when you are exhausted.  Quitting when you hit the dip is a bad idea.

Serial quitter: start lots of things, but have very little to show for it.

If you can’t make it through the dip, don’t start.

You need a dip that you can conquer. You should quit all the cal-de-sac’s that your are currently in.  You need to be the best, not at 98%, to succeed in this world of one click access.

Reasons you might fail:

  1. run out of time
  2. run out of $
  3. get scared
  4. not serious
  5. lose interest
  6. you focus on short term instead of long term when short term becomes too hard
  7. you pick the wrong thing because you don’t have the talent

you can plan for these – you can know before you start

dips are related to pyramids/schemes.  examples:

  1. health clubs.  if everyone who joined came, there wouldn’t be enough space
  2. netflix: if everyone watched every movie as quickly as possible, they wouldn’t be in business
  3. airlines: overselling flights
  4. etc.

quitting => scarcity => value

8 systems dependent on dips:

  1. manufacturing dip.  easy to start in garage, difficult & expensive for real manufacturing. guts to take work to next level
  2. sales dip. start selling an idea to stores, etc. dip = need to upgrade to a professional sales force
  3. education dip. re-invent yourself.  1 year of education (say for a doctor) reaps years of benefits
  4. risk dip – bootstrappers realize they can’t pay for everything.  investing to get through the dip = smart move
  5. relationship dip. difficult but not urgent
  6. conceptual dip.  dip = bigger set of assumptions than those you were previously operating in
  7. ego dip = giving up control, leaning into the organization
  8. distribution dip.  web, local retailers = easy, walmart = hard.  scarcity.  everyone is in the web, walmart is hard

Nothing wrong with optimism, but foresee the dip and don’t quit.

Goal of a company is to create such a dip that no other company could do it.  ex: word, quicken, etc.

Things you should quit:

  1. cul-de-sacs
  2. stuff you don’t care about
  3. stuff you aren’t good at

why?  it gives you the ability to focus on the dips that are important

better to quit before you start and give up in the dip.  average is for losers.  average feels safe, but it’s really just quitting.

he noticed that there are 3 common check out strategies at the supermarket:

  1. pick shortest line and get in it, stick with it no matter what
  2. pick shortest line and get in it, but switch at most once if the first line gets held up
  3. keep switching lines for shortest line

#3 – quick fix, but you keep on “restarting”.  “wantrepreneur” who never gets anywhere.

typical sales person = gives up at 5th time, but 7 times is the number of times most people need to be in contact to make the sale.

We’re seduced by the easy, quick fix.  The problem is a short attention span.

Most people, though, only buy when things are already accepted in the market – the things that have already matured + passed the dip.  Ex: Microsoft windows (1 & 2 were failures), first 4 versions of word were failures.

You MUST quit a product, feature, or design that doesn’t work.  But don’t quit a market, strategy, or niche.

The opposite of quitting is doubling down.  You set yourself up as someone with nothing to lose.  This allows you to try new & innovative things.

Most people quit when it gets hard.  Persistent people learn to picture the final result.

At the same time, if it’s ultimately going no where, you should quit sooner.  Every day you don’t quit you’re just avoiding the pain of quitting.  You could be doing something else which has longer term gain.  Better to take the pain now instead of having a lot of pain later.

If you aren’t going to get to #1, you should quit now.  If the dip isn’t worth it, don’t do it.

If you job is a cul-de-sac, you have to quit.

Coping = waste time.  it doesn’t lead to exceptional work.

Never quit is a terrible piece of advice.   You just shouldn’t quit something when the stress/hardship seems hard.

Quitting is worth your focus and consideration to becoming the best in the world.  Next step – ask yourself 3 questions:

  1. Am I panicking?  Decide in advance when you want to quit.  (Ex: before you run the marathon, you should decide when you want to quit).  Never make a critical decision in the moment.
  2. Who am I trying to influence?  You’re frustrated because of your boss who won’t let up, or you’re a salesman and can’t sell that prospect. But a market is different than a person.  One person will make up his mind, and you’ll have to change it, which is difficult.  But markets are different.  Some people have rejected you, but most people have never heard of you. (Story about google: they were getting better every day, knew everyone would see it eventually.  so if you saw it tomorrow it would be better than seeing it today).  With individuals: it’s like scaling a wall, and each contact makes it harder.  But with a market, it becomes easier because people talk to each other about your product.
  3. What measurable progress am I making?  Often you feel like quitting because it doesn’t seem like you are making any progress.

Tactics vs. Big goals are different.  Quitting a job is different than quitting from earning income.  Quitting a marketing campaign that isn’t paying or a feature that people don’t want in your products is different than going after a totally different business / customer segment. It’s cheaper and easier to continue focusing in one area.

Assignment: write down under what circumstances you are willing to quit, and then stick with it.

Don’t spread too thin. To get through that dip, you’ll need to quit everything else.

There’s no way to over-invest in becoming the best in the world.

Reading One Book Per Week

It seems as though the wealthiest read at least one book per week. Why?

  1. They have an insatiable curiosity and look to books to solve their problems
  2. They have structured their time so that they can have leisure to read.  Warren Buffet, for instance, spends most of his day reading.

With this in mind, I’m planning to read 50+ books this year – roughly one per week.

How I’m reducing my budget by $1k this month.

Are you spending wayyyy to much money and not sure where it is going?

That’s the situation I found myself in this last month.

I have a monthly plan to review my credit card statements, but after the end of last month I had the question: “Where did it all go?”

What Doesn’t Work (for me)

I’ve looked at things like to track expenses, but so far I haven’t found anything I like. does a horrible job of classifying expenses (side note: I have high hopes for UGHMoney).  How should I know what to cut and what to keep?

How I’ve Cut Expenses in the Past

My method in the past was pretty simple:

  1. Review my bank and credit card statements
  2. Identify recurring expenses
  3. Cut these recurring ones out

I decided up front to save money, but not be a cheap skate. I only wanted to cut out those things that added marginal value for me.  Some things (like spotify) I plan to keep as a) they don’t cost much and b) they provide plenty of enjoyment.  For others, I decided to substitute cheaper alternatives.  Ting, for example, was a much cheaper carrier than verizon.

A bunch of these took several months to phase out.  I decided to keep a spreadsheet of these expenses:

Some of these things were providing zero value to me.  Others (like smoking) were actually hurting me.  And others I enjoyed, but just weren’t worth the money.

Overall, I’m saving $600 per month – over $7k per year!  And that’s just from recurring expenses that I don’t care that much about.

How I Continue to Cut Expenses Each Month

After reviewing my credit card statements a few times, I realized the easiest way is (gasp) paper!

I’ve switched back to paper billing for my credit card statements.  I get the statements once a month and circle any charges that I’m unsure about (or anything I want to cut out).  It only takes a few minutes and keeps me conscious of what I’m spending.

My New Method of Cutting Expenses

But as mentioned before, I had cut out all of those pesky recurring items without having a good sense of where is my money was going.  My biggest issue was that I had a ton of little expenses.

Yes – I could classify them.  It turned out a large percentage were going to food (eating out / drinking out) and personal development books and courses.

I wanted a way to set some limits on each of these categories and “bucket” them (or confine/categorize them) to a certain dollar amount each month or each week.

After some googling, I discovered “Envelope Budgeting.”

Envelope Budgeting is basically this: when you receive your paycheck, you create a series of envelopes.  You put a fixed amount of money into each envelope at the start of every month.  (For instance: $1000 into the rent envelope, $500 into the food envelope, etc).  Any time you spend money, you just take it out of the corresponding envelope.

Using Cash?  No way!

This technique of bucketing your money and only spending what you’ve allocated through cash envelopes is of course really old school.

I don’t carry around cash ever. I pay for everything with credit cards. (I don’t have debt on credit cards.  I actually use them as cash back debit cards).

Luckily, there’s an answer for millennials: an app!

I’m currently using “GoodBudget” on the iPhone.

How it works: basically, you create a series of “envelopes” (buckets or categories) and allocate money to each of them.  Every time you make a purchase, you manually set the category, who you paid, and the amount.

Turns out that manually entering this stuff makes you very conscious of what you are spending.

Here’s a screenshot from my actual budget:

When that green bar goes down to empty, I’m out of money in the envelope.

And that little black horizontal bar shows where I should be to be on pace.

If I go over, I can visually see that.  And I can tell how long I should cut out spending in that category:

I already know this is going to help tremendously.

What’s your best budgeting tip?  What are you doing to reduce expenses?

Income/Financial Freedom Report – April 2017

Big changes this month:

I’ve moved $10k more into my trading account.  Since my trades have been going swimmingly, I’ve decided to double down on credit spreads.  I’m trading a very, very simple strategy which I’ll have to tell you about in a later blog post.  What’s amazing is the capital invested in this is: a) less than my 4 unit, b) so far has produced higher returns and c) is liquid.

The other big thing to notice: my expenses went way up.  The main cause: I had to pay estimated taxes: over $2k!  I didn’t get all of my documents to my accountant to time, so he filed an extension on my behalf.  I corresponded with him and it turns out he didn’t add depreciation, etc, when he calculated my estimated taxes…so, we’ll see if I get some of that money refunded.

With that said, I’m looking (today!) into making some radical cuts in my day to day budget.  I’m trying to create a business and bootstrapping it, so every dollar saved is another day of runway for getting my business off the ground.

(N.B: So – it turns out I haven’t been adding property management in the last couple months to my 4 unit rental property.  This means in the last few months I’ve only been at 33% and 29%, respectively).