Do What the Rich Do: Step 2 - Set Your New Goals

·         Wealth is measure in time, not money. You should have your money working for you so you don’t have to spend time working for money.

·         It doesn’t matter how much money you make, but how your money flow.

·         “The poor and the middle class work for money. The rich have money work for them.”

·         “You need to have your money work for you, instead of you working for money.”

·         ANALYSIS OF YOUR FINANCIAL STATEMENT

·         How Much do You Keep?

o   Goal: Increase the percentage of income you keep. Start with 1% and increase it from there, if you have to.

·         Does Your Money Work for You?

o   Goal: Increase your percentage of passive or portfolio income. If you have no passive or portfolio income, start by buying assets that generate passive and/or portfolio income.

·         What is Your Income After Tax?

o   Goal: Decrease the amount of tax you pay. Consult your tax advisor to see if you are taking full advantage of the tax deductions allowed to you. If you have started a business, make sure you are deducting all legitimate business deductions.

·         How Much of Your Net Income Goes to Housing?

o   Goal: Keep housing costs under 33% of net income.

·         How Much do You Spend on Doodads?

o   Goal: Keep your doodads under 33% of total assets. The lower the percentage, the faster your assets will grow.

·         What is Your Return on Assets?

o   Goal: Increase your Cash-on-asset return.

·         How Wealth are You?

o   Note: Once your monthly passive income exceeds your monthly expenses. You’re infinitely wealthy because your assets are working for you.

o   Goal: To purchase assets that generate passive and/or portfolio income in excess of your monthly expenses.

·         “It’s not the numbers, but what the numbers are telling you. It’s not the words, but the story the words are telling you.”

·         Poor

·         Cash flow pattern is using earned income to pay expenses.

·         No assets and no liabilities.

·         Own a lot of things and owe nothing on them.

·         No debt, no passive income or assets.

·         Middle Class

·         Cash flow pattern is using earn income (primarily) to paying expenses and building more liabilities, creating more expenses.

·         Toughest pattern to change.

·         Rich

·         Cash flow pattern is to build assets that create passive income, which in turn pays expenses.

·         The term rich here refers to the cash flow pattern only.

·         It is not the amount you have, but what you do with it that counts.

·         If you stop rewarding yourself with doodads, you’ll stop massing liabilities (bad debt).

·         When you stop amassing liabilities (bad debt), you’ll start building assets.