Below is part 9 in my series of blogs about “The Top Ten Distinctions Between Millionaires and the Middle Class” by Keith Smith.
Distinction 2 – Millionaires focus on increasing their net worth. The Middle Class focuses on increasing its paychecks.
“Most everyone has heard the saying ‘Work smarter, not harder’. Focusing on your net worth is working smart. Working for a pay check is working hard. Millionaires attain their financial freedom because they work hard in the beginning to build their net worth. Once their net worth is built to a certain level, they are free to do what they want when they want…
The typical definition of net worth is assets minus liabilities. Most people think an asset is anything they own that has value… This is not the way millionaires think about assets… Millionaires look at assets as the things they own that have value and earn passive income for them… Your liabilities are things you owe money for, like mortgages, car payments, credit card debts, and school and personal loans. Subtract the things you owe from the things you own that have value and produce passive income. This is your true net worth…
Millionaires make their money work hard for them. The middle class works hard for its money. Here are two reasons why working for a paycheck alone is risky and not very smart. One, as your paycheck gets bigger, so do your taxes. Two as your paycheck gets bigger, so does your dependency on someone else. Millionaires are in control of their financial lives. Middle-class people place control of their financial lives in the hands of someone else…
Working for a paycheck, is not wrong or bad,… Many people who are millionaires today, once worked for a paycheck. How did they become financially free? By using their paychecks to buy assets… Buying assets that produce income is not easy at first. It requires new knowledge, which is gained by many hours of personal study… Millionaires apply the knowledge they gain.”
One way to get started is with a small business. “In my opinion, everyone should have a small business. I am not saying to quit your job and start a business. I am suggesting your start a part-time business while working your current job: a part-time business doing something you enjoy… When you start your business, make sure you keep your cost of lining the same and save the money you make from your new business until you are ready to invest in an asset. It is the most common thing in the world to spend more money when you start making more money.”
When considering what type of small business to start I suggest that you look at the things that you enjoy, or are skilled in, or already do for yourself that you can do for other people and charge a fee. The biggest WARNING I can give you is to stay far far away from multi level marketing companies. Do NOT get involved with any company where their entire sales pitch to you is that all you have to do is to get other people to sign up underneath you and you will make money from them, and then you will also make money off the people they sign up, and so on and so on. This is a pyramid scheme. No matter what they call it, or how different they say it is from other MLM companies, it is all the same. The only person who actually makes money is the person at the very top. Any company that charges you an initiation fee, or requires you to purchase a certain amount of product every month to be commissionable, is one where they are not actually making their money from selling products, they are almost solely making their money from conning people into signing up and paying their fees to do so.
A couple other types of assets that produce passive income is Real Estate, and Stocks. Now, I know what you are thinking. The real estate market is in the tank, the stock market keeps tanking more and more every day. However, even now can be a great time to purchase either of these two things, you just have to be smart about it.
It's a Good Life!!!
Greg Novak MBA
Branch Manager
Eagle Nationwide Mortgage Company
Office - 386-756-8228
Cell - 386-846-6686
Fax - 386-756-8108
Web site - www.MyNationwideLender.com
Oh, by the way, if you know someone who is thinking about buying or refinancing a home, please give me a call with their name and number, I will be happy to follow up with them for you.
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