The Myths that Keep You Broke – 7 & 8

This is the fourth in a series of articles revealing the Myths that Keep Your Broke. In these articles, I will uncover the many myths that too many people believe. These myths can prevent you from creating wealth and financial freedom. Let’s start destroying them.

Myth #7: I Know This Already

Like many teenagers, I thought I knew it all. As the famous UCLA basketball coach John Wooden used to say, “It’s what you learn after you know it all that counts.”
Somewhere in my forties I learned that the wealthy ask questions when they hear familiar information instead of making statements.

An example might be that if I told you to pay yourself first 10% every time you get paid, you might say something like, “I know that” or “I’ve heard that before” or “That’s not new to me” or maybe even, “I’ve done that before.”

Statements do not lead to solutions or a change in behavior. Questions can lead to the answers that can lead to solutions or a change in behavior. And most of the questions start with the words we learned in elementary school when writing an interesting story.

The questions that you can ask yourself start with the words:

who
what
when
where
or how.

You might think to also ask a why question, but I have found that provides the weakest and most useless answer that would lead to a change in behavior.

Let me explain why a why question is useless. If you wanted to create wealth and you asked a question like, “Why can’t I create wealth” you could make up any answer you want and it would not necessarily lead to any action. As an example, maybe you could answer why you are not wealthy by saying, “Because I am dumb, lazy, don’t care, or don’t deserve to be wealthy.”

Now do you think any answer like that would support you in creating wealth? Of course not.

The wealthy mindset could answer some other questions like this:

1. Who can support me in creating wealth?

2. What do I need to learn to become wealthy?

3. When will I start paying myself first?

4. Where can I learn more about what it takes to become wealthy?

5. How do I find out where to earn more than the bank pays?

With answers to the above questions you can get into action to change your situation, regardless of where you are starting.

When I was broke at age 50 after two divorces and a business failure I asked myself, “What do I need to do so that I will have some money to retire in 15 years?” While it was not a perfect question, it did put me into action. I started by saving 10% of the $5000 per month I was earning.

Another question was, “Where can I earn more money than a savings account in the bank?” Then I found a book that spoke about how I can safely earn 11% from carefully selected stocks. One of the suggestions was to only buy the stock of companies that paid increasing dividends consistently over the previous 10 years.

The point is, one question led to another question; that led to another question; and each answer took me closer and closer to wealth. Ultimately I created a multi-million dollar net worth with my wife after about 5-6 years.

So, if you think you know this already, then where you are now is where you will end up. Only asking questions, instead of making statements, will take you to the next level.

What questions do you need to ask yourself?

Myth #8: Detail

You may think the details of an investment are the most important. Yes, the details are important, but they are NOT the most important. The most important aspect of an investment is how it fits into the big picture of your life.

If you want nothing to do with tenants, trash, or toilets, do not buy and manage an apartment building, or any type of rental housing. You can invest in this area if you want by hiring a management company, but the big picture is you should not be personally involved.

If the ups and downs of the stock market would keep you awake at night, do not invest in stocks. It does not matter what the details are: Price earnings ratio; dividend payouts; or what the buy or sell points are on a technical graph – if the gyrations will prevent you from getting sleep.

If you think there is security in having a job with a steady paycheck, then do not become an entrepreneur. It does not matter how fast the industry is growing if you are not cut out to be an entrepreneur. The big picture is Keep Your Job.

There are opportunities for wealth in each category I mentioned. If you looked at the details first, instead of the big picture, you could lose sleep and be miserable.

Think of it this way: If you were to cross the street and focus first on all the details; the height of the curb; any cracks in the asphalt where you might twist your ankle; possible dog mess to avoid… if you keep your eyes focused on the details it could kill you! If you failed to look at the big picture first, and see if any cars were coming from either direction, those details would not save you.

Let’s say in the big picture of your life you wanted to invest in a rental house and you found one. But you noticed the carpet was bad, the paint was peeling and the plumbing was leaking, it could turn you off. But if the big picture was the house was priced under the market for the area, and the area was great, then that would be the more important consideration for your investment.

Big picture first; details second.

To Your Prosperity,

Rennie