I just finished a book called The Millionaire Maker: Act, Think, and Make Money the Way the Wealthy Do by Loral Langemeier.
The reason I picked this book for the week was because Loral is one of the contributors to The Secret. Since I enjoyed that book so much, I thought I would read more from the people it featured.
Just The Facts
After reading through this book I would suggest that you take the time to read it if you are interested in being an entrepreneur. This is who the book is directed towards. It’s a quick and easy read so it shouldn’t take you too long. I found that although I’ve read a lot of her information in other books, she does have a good way of structuring your life to become wealthy.
Loral has some great advice for people that truly want to move on to the next step (the first step is being poor!) in their lives. In the first few pages of the book, Loral pronounces that too many people think that they either don’t deserve or can’t have a lot of money. As she says:
- You posses every tool you need to make a lot of money.
- Wealth is about access, and now you can finally access the information and opportunities too long kept in too small a circle.
- There is no such thing as a self-made millionaire; it takes a team to make those millions
- Taking control of your money takes stress and risk out of your life
I like where she’s going with this. I’ve been there just like everyone else. I’ve got a job that pays a solid income and it’s such a risk to leave something like that. What if I fail?
This book is basically a series of case studies that shows how normal people are taken from their everyday lives (kids, debt, jobs, etc. etc.) and can be taught how to turn their passions into long term wealth.
The Wealth Cycle
Loral has come up with two different cycles that people spend their lives.
The first is the Lifestyle cycle:
Expenses ==> Liabiliites ==> Expenses ===> Liabilities etc.
The second if the Wealth Cycle:
Income ==> Assets ==> Income ==> Assets
Breaking these two down, while the Wealth Cycle is the path to eternal happiness through abundant wealth, the lifestyle path is your fast track to nowhere. This way involves credit card debt (spending before you make it) and adding debt and perishables instead of assets. I know what you’re saying, “didn’t Rich Dad have the same model ten years ago?” My response is, “Yes”; however, in her book she assumes that you are intelligent enough to understand it the first time. She doesn’t need to show it one every page.
My favorite quote in this chapter is:
I believe it is possible to achieve wealth and have a latte with breakfast.
Touche David Bach!
Wealth Building Blocks
The basis for the rest of the book is in Loral’s 12 Wealth Building Blocks:
The ‘Must Complete’ Blocks
1. Gap Analysis – A financial model that defines where you are and helps you work towards where you want to be.
2. Financial Baseline – an overview of your financial situation using personal financial statements, revenue, expenses and your balance sheet.
3. Freedom Day – the realization of each goal and moving into millionaire status.
The ‘Used As Necessary’ Blocks
4. Debt Management – 5 step debt elimination plan
5. Entities – the organization of trusts, partnerships, and corporations to effectively manage wealth and to take advantage of potential tax strategies.
6. Cash Machine – the fuel that accelerates the Wealth Cycle (where the money comes from).
7. Wealth Account – the pay-yourself-first account (David Bach‘s back in) that is used to purchase income producing assets.
8. Forecasting – a projection of your revenues, expenditures, assets, liabilities.
9. Assets – Direct and diversified asset allocation to create passive income.
10. Leadership – you are the linchpin of your wealth building empire.
11. Teamwork – as mentioned before, ther are no self-made millionaires. You need to create a professional team to help you succeed (lawyers, realtors, brokers, accountants etc.)
12. Conditioning – your financial way of thinking and your financial confidence.
The first three blocks (must do) basically take you through the process of finding out what you want, what you have and when it’s going to happen (ie. Goal Setting). What’s nice about this is that it takes you through the process and makes you focus on what you need to do to reach your eventual goals.
Now that all of these blocks are in place, you start with the first three to determine what needs to be done, then click in the remaining items as necessary. Each of the chapters in the book coincide with one of the items on the list. If you’re interested in figuring out where you fall in, I’d suggest picking it up.
As an example, one couple had a lot of debt and needed to get rid of some payments. After talking with the family, the sequence looked like this:
Cash Machine ==> Entities ==> Forecasting ==> Debt Managent ==> Wealth Account ==> Assets
Each student has a different order to their fiancial freedom. Have a read to figure out where you fit.
Who will this book help?
This book was written specifically for people who are ready to leave the rat race and move into an entrepreneurial life. In many instances, this is one of the key factors that will help improve the lives of her students. Since I am in this stage of my life, I found there to be a lot of great value from the book.
One word of caution when reading this book: Make sure the advice fits in with your goals.
Loral makes a lot of assumptions about returns, real estate investments and other ways to make money. She talks about running out to grab a few positive cash flow properties with 10% down then investing in a business that will net out over 40% per year. Once you reach her level of contacts, it may be possible to find these around every corner. Until then, keep searching and let me know what comes up!
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