Episode 7: Three Money Myths – Transcript

Hi, Folks. Welcome to Episode Seven of the Wealth On Any Income Podcast, I'm your host Rennie Gabriel. This is where we talk about money tips, techniques, attitudes, information and provide inspiration.

This episode is about a few of the money myths,or beliefs, about money that keep people or keep you broke. It's about nine minutes long. In Podcast Episode Five, I spoke about one of the most important myths that dealt with focusing on paying off credit cards or other debt before beginning to start a savings or investment program. In this episode, I'll use an analogy. Some of this podcast will be a reminder, and for details on how the numbers work, listen to Podcast Episode Five.

In summary, it can cost you over $200,000 in lost investment earnings over a 30-year timeframe, if you just delay two years to pay off a $6,000 debt, and that's just investing $300 a month. For the analogy, I want you to think about this from the perspective that does not deal with numbers.

 Let's say you want to get into better physical shape, build some muscles, and you only have two choices. You can diet to lose weight, or you can lift weights to build muscles. Which would you choose? It's obvious. If you want to build muscles, you have to lift weights. Dieting will not help you build muscles, it might only help you lose weight. I would compare paying off credit card debt or any debt to dieting. And I would compare starting a savings or investment program to lifting weights. You need to build the muscle of creating the income-producing assets if you want to achieve Complete Financial Choice®. You have to build the muscle of treating yourself like you deserve to own some of the money you earn, you have to treat yourself like you matter. You must pay yourself first, some amount of money, whether it's 1%, 5%, 10% or more. Now, I don't want you to retire, I want you to have Complete Financial Choice®. When a cow can no longer produce milk the rancher puts it out to pasture to die, it's no longer useful. Is that how you want to be treated? Do you want to be sent out to pasture to die at some point? Of course not. When you have Complete Financial Choice®, you can work if you choose to - or not. You can travel if you choose to - or not. You can do charity work if you choose to - or not. You can choose whatever you want to do, because you have the assets generating your income instead of you generating your income.

So here are the three big money myths that can keep you broke. One - don't focus on paying off credit cards before you begin to invest. Two -  the more money you earn, the more wealth you create. That's the second myth. And the third is - it takes money to make money, you might think you have to pay off credit cards before you start investing, do not focus on paying off debt, and use that as an excuse to avoid paying yourself first and saving or investing to build your net worth and achieve Complete Financial Choice®. This is what I call the #1 biggest money myth.

I've worked with thousands of people over my 46-year career, and I've seen it over and over again. Someone works hard to pay off their debts, and then something happens and the debt comes back. And then they start working again to get rid of it. Other times someone pays off their debt with an inheritance, or from a lawsuit settlement, or employer buyout, or consolidation loan, or filing for bankruptcy, or a gift from a family member. It doesn't matter. This is a painful roller coaster of debt - and no debt - and then debt again. Every quick and easy method I've ever seen that someone uses to pay off their debts - they returned in less than 18 months. They were back in the same situation for two reasons. One, they never learned how to handle money powerfully in the first place so that the debt wouldn't return. And two, they didn't start a program to create an income from investment - instead of from work.

Let me have you do this. Imagine you have no debts. You have no credit card debts, you have no auto loans, you have no student loans, you have no mortgage yet, you have no debts. Now, let me ask you this. Do you have Complete Financial Choice® or financial freedom? Even though I don't like the word - can you retire? Think about this clearly for a moment. All I said was you have no debt. I didn't say you had assets that generate an income. Even if you had no mortgage on your home you'd still have to pay property taxes, insurance, repairs, and utilities. You'd probably want to eat, right? Whether you went to a restaurant or a grocery store, and the money for that has to come from somewhere. So even if you want an income to pay for your living expenses, either you have to keep on working, even though you have no debts, or you need an income from your assets instead. And as I described in Episode Five, because I focused on building my net worth, instead of paying off my credit cards, now I have the income from my investments to pay my credit card bills, instead of my working for the income to pay those bills.

The second big myth I want to shatter is that you might believe the more money you earn, the more wealth you'll create. First, just because you have a large income does not mean you're spending it wisely, or investing any of it. Too often I've seen people who earn hundreds of thousands of dollars a year and have nothing to show for it. Second, when I started over at age 50, I was only earning $5,000 per month from doing business coaching with financial planning and accounting firms. From that I was paying myself first - 10% - and investing that $500 a month. I was putting it into the stock of 8 companies that run the Dow Jones list of 30. When the dot com bubble burst around 2001, and people lost 30 to 40% of their portfolios, I was up by 1%. It was three years of savings to accumulate $18,000 that I used to build a multi-million-dollar net worth, that now creates a multiple six figure passive income.

You've heard it before, and it'll always be true. It's not how much money you make, it's what you do with it that makes all the difference. If you want to know how to be powerful, and how you handle your money, you can check out our programs at WealthOnAnyIncome.com.

The third biggest myth is that it takes money to make money. The reason this is not true is that if you're willing to work on an investment, someone else can provide the money. Granted, when I started over from broke, I'd saved a whopping $18,000 in three years - but it's not necessary to have any money at all. The downpayment needed on this first real estate purchase was $72,000. So my wife contributed 18,000, the realtor put up 36,000 to own half the property. Also, since it was only three years since I went broke, I had credit card debts and a low credit score. I also needed to use their good credit to be added to the loan. So I used other people's money - which is OPM, and other people's credit, which is OPC - to start my real estate portfolio. This is how I created the quote, "wealth creation is a team sport, not a solo sport".

That first triplex was sold about six years later, for a half a million dollar profit, and we were able to do a tax deferred exchange into a 15 unit property and avoid the capital gains taxes.

I think that's enough for this episode. Again, the three big money myths. One - you don't have to pay off your debts before you start investing, because being debt-free does not create financial freedom nor Complete Financial Choice®. Two -  You do not need to earn a lot of money to create wealth. What you do need to do is handle what you earn efficiently and powerfully and pay yourself first. And three -  it doesn't take money to make money. You can use other people's money and other people's credit to create wealth.

I just wrote a new book called Attitudes Of The Wealthy. In it, you'll find 32 attitudes that wealthy people operate by that ordinary people don't. These counter the myths that keep you broke. And because you're listening to this podcast, you can get a free PDF version of the book, instead of paying $19.95. Just go to WealthOnAnyIncome.com/gift

And here's an opportunity to grow. Transform your financial life by requesting a free copy of my latest book, Attitudes Of The Wealthy. Again, just go to WealthOnAnyIncome.com/gift  and you'll also see the link to the show notes. And that's it for this week. Please join me next week when I cover three more myths that keep you broke. Bye bye.

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