The Butler Project

We all remember the tech bubble, both the insane gains in the market before it burst and the massive losses when it all fell apart. I had the opportunity to interview a millionaire who participated directly in the whole thing, and he has some incredible stories.

“Nate” has spent 25 years or so in technology sales, and he’s been able to make a relative fortune doing it. Not everybody came out of the tech crash as unscathed as Nate. He made it through because of his conservative nature and the guidance of a friend and mentor who happens to be a multi-billionaire.

Some of the first experiences Nate told me about had to do with how his colleagues handled (or didn’t handle) the massive wealth created during the boom:

Nate: I saw the other side people burning through money like [crazy]. There was so much wealth created in the employee base in the [tech] bubble, and it was unbelievable to watch people self-destruct. I had a boss that netted about $40 Million, then bought a big house in Palisades, and then basically blew the $40 Million on coke parties. You would think nobody could go through that much money. After taxes, maybe it was $20 Million he wasted.

Basically he lost his family and then ended up in a shootout with police and then in prison. And it was all based on the fact that everybody in LA knew they could go to his house and get free coke. It was unbelievable. I saw people that were working for me that had a net worth of $50 to $60 Million that are now bankrupt.

Mark: Now why do you think that happens Nate? If we didn’t get anything else out of this interview I think that’s really an interesting thing. People have these massive windfalls - why do they end up in the shootout with the police? Why do they end up bankrupt?

Nate: Oh I think there are people in life that have destructive personalities, and I think there are people that are so greedy that if they have $50 Million they’re not happy until they get $60 Million. And they’re going to push that envelope and try and do everything they can to try and get a little more. You know instead of just recognizing “hey I won the lottery here, I’m going to sell some shares, I’m going to take some off the table and pay my taxes and put the rest away for a rainy day.” They just don’t have anything in their personality to do that.

Mark: And having a lot of money didn’t change them [for the better].

Nate: Nope. They’re gamblers by nature. I have two guys in particular that I can think of that worked for me during that time. And I was screaming at them. I’d say ‘Guys you’re crazy.’ Both of them – one lost his wife and the other’s wife stayed with him. But both of them went bankrupt after having all that money. Unbelievable.

Mark: Well – you’re not bankrupt, I don’t think. Having gone through a crazy time like the roaring ’90s, what were some of the guiding principles that kept you grounded so that whatever your net worth is or was – you’ve stayed solvent, where these other people decided not to be.

Nate: Well for me it was just more basic principles of money doesn’t make you happy. You just have to be conservative and cautious. I certainly didn’t make every decision 100% accurately, but I think my conservative nature saved me. While the whole bubble was going up and going down I continued to sell shares. And I think ultimately that’s what it is. You know that’s what most senior level executives do, they just get on stock programs where they sell a certain amount of shares every month. And I wasn’t a CEO or CFO but I just figured, ‘hey if it’s good enough for them it’s probably good enough for me. So I’m not going to worry about trying to cheat the tax man, I’m just going to sell shares, pay the tax man, and go on with my life and invest in other areas.

Mark: So you secured your gains.

Nate: Yeah and then the other thing is, [my billionaire friend] was actually very helpful to me during that time because when things really started to unravel he told me to just let everything go (sell all my shares). Which I did. You know I figured he’s a multi-billionaire. Why should I think I’m so smart? I’m fortunate enough to have a friend who’s made billions of dollars I think I ought to listen to him.

Nate did listen to him, and as a result he’s far from bankrupt. I had a hard time tracking him down for a while before we talked because he had been on a two-week heli-skiing trip.

Most people will never have the opportunity to waste a $50 Million net worth, but the principles Nate shared with me apply to everyone.

First of all, money is likely to only make you more of what you already are. If you’re a gambler, you’ll become even more reckless with a bunch of money in your pocket.

If you’re conservative, you’re likely to stay that way when you have more money.

The point is, develop good attributes and values, and then stick to them as you have financial success.

What’s on your to-do list today? I don’t care if it’s actually written down or just in your head, what things do you plan to accomplish today?

Right now, you’re reading this blog. Was that on your list? Is it helping you with your big picture? Is it moving you forward to the person and the place you really want to be?

If you’re related to Mark or me, and you’re reading today out of obligation; quit it. If you’re a friend, simply interested in what we’re up to; quit it. If you subscribed at one time, haven’t found any value, and now are just too lazy to unsubscribe; unsubscribe. It will probably cost you two or three mouse clicks. It’s worth it.

If the information you’re spending your time reading at The Butler Project is not inspiring you to make changes in your life, to move forward and really live the life you want to have, then stop spending precious parts of your life here, and find something else!

If there is one thing I’ve learned from listening to, transcribing, and blogging about Mark’s interview with our multimillionaire business owner, Jim, it’s that you’ve got to be efficient! You’ve got to know where you want to go and find the shortest path to getting there. For Jim, that meant flying in to visit the offices he managed on the early Monday morning red-eye so he could have more family time on Sunday. It meant sleeping on the couch or (gasp!) the floor of pest control offices so that he wasn’t wasting time or money on hotel rooms. It meant always looking for ways to be more productive, more efficient with his time.

So, if you haven’t learned one thing yet from this blog, if you haven’t taken some positive action in your life because of it; it’s time to find something else. Something that will help you move forward passionately, and, (for lack of a better phrase) Be ALL You Can Be. And, as long as I’m quoting slogans: Just Do It!

And I’m not just talking about money here; money is just one part of the overall equation. We interview financially successful people because when you have more money, you have more options. Because the path to creating wealth is paved with the principles of self development. Because we personally continue to learn and improve with each interview.

Since you haven’t quit reading yet, I’ll leave you with a little excerpt from Mark and Jim’s conversation:

Mark: you have used a word a lot as we’ve talked, which is “indolent.” And I think that’s a powerful word. It’s a strong word, so define it for me. What do you mean when you say indolent? What does that person look like?

Jim: You know, that’s a great question… I don’t know what the dictionary would say, but in my mind, when I say indolent… it’s the antithesis of productivity. It means you don’t get things done, it encompasses procrastination, excuses, sitting around, perhaps avoiding responsibility, and again, to me it’s just the antithesis of productivity and efficiency.

Mark: Wow. Makes me not want to be indolent.

Don’t be indolent today! Find one thing you can do today, one small thing, if that’s all you have time for, and move yourself forward. Start becoming your best self today.

Here’s another excerpt from an interview Mark did with Jim, who is a pest control company owner worth “many millions of dollars.” When I first listened to this interview, I thought Jim’s ideas were way too far out there in left field to apply to real life, but I finished this post with a new respect for the man and myself.

Jim’s actually brilliantly efficient because he sees the big picture and shoots straight to get his desired results. I’m not sure I could ever spend the night on the couch in a pest control office, but I’m definitely looking for ways to apply Jim’s methods in my life because I would really, really like to have similar results. Enjoy this story:

Jim: In my capacity as a regional manager [for a national pest control company], the job description was very vague; [it] was “Get your regions to perform well, and here’s where we expect sales to be, and here’s where we expect costs to be.”

And I looked at the sales training model that . . . the company had been following the last couple years, which had not been yielding very good results. So I spent the off season going and speaking with all of our competitors and just the top tier of people who had been successful. And I developed a totally different sales training paradigm, and that’s the paradigm that my company rejected (see Why I Quit My Job).

When I would get together with my associates who were the other regional managers, they seemed to be very excited that they now had this corporate account where: “Look at the nice rental car I can rent,” and, “I get to go stay in a nice hotel.” And it made them feel like executives, and so they were able to again rationalize how they could spend their time.

Their Sales Training Model

When they (the other regional managers) would go work with an office [it generally looked like this]: on Monday they’d fly in at 1 o’clock in the afternoon and maybe they’d go to a baseball game or out to a nice dinner. They’d meet up with their team at night. The next morning they would maybe do a sales training, and then go into an office with a manager.

[The] next day they’d take their manager out to dinner or breakfast and maybe they’d spend a couple of hours doing direct training with salesmen … Then they’d fly home, [after spending all their nights] in a hotel.

My Sales Training Model

Here’s how I planned the same trip: I would fly out Sunday night. I would get to where I was going at 1 o’clock in the morning Sunday night, so I could spend Sunday with my family. I would get up then at– if I was on the [west] coast, I’d get up at 4 o’clock in the morning so I could contact my offices on the [east] coast and do phone interviews and congratulations based on sales training.

At 6 in the morning [local] time I would go in [to the main office] with [the] manager … and see what needed to be done [there]. At 9 [or 10] o’clock, I would show up with the salesmen … and conduct the sales training meeting and then be with them in the field all day long until literally 10 o’clock, 11 o’clock at night.

Then I’d sit down and do performance reviews, evaluations, [and] put together specific training action plans for each individual rep that I worked with, and I would stay in the office the three days until I finished those plans. I didn’t get a hotel; I got the cheapest rental car that you could possibly buy, and I slept on the floor or the couch in every instance for two years.

Comparing Results

So when we got together … to evaluate our efficiency as regional managers, here’s what it looked like: I was on the road three times more … I specifically spent [3 or 4 or 5 times more] time direct training reps than the next manager in my position. And my costs, even though I was on the road that much more, my costs were less than a third of what anyone else’s were. And that wasn’t MY company! That was me just being a responsible steward for the person I worked for.

And then people would have the gall to come to me … and say, “you made … the owner of the company probably in the neighborhood of 2, 3 million dollars, and you only got paid this, doesn’t that make you mad?” And I’d say, (laughing) “You gotta be kidding me! First of all, I made a lot of money. I mean, it certainly wasn’t what [the owner] was making, but I was under the assumption that this was [his] company, it was his contract and he paid me to do this, and that if I made him a lot of money, well, doesn’t that make him want to have me around and perhaps pay me more in the future?” I mean, isn’t that my job as his employee?

The whole mentality of the fact that you did well and so therefore the employer should be penalized or that he cheated you . . . [he] honored his agreement with me, he paid me what he was supposed to pay me! Of course, I didn’t feel cheated!

I Couldn’t Avoid Becoming a Millionaire

Not only that, it provided me an opportunity to work and grow… I think the other managers, the other leaders, were specifically trying to rationalize and take advantage of finding opportunities to be indolent instead of finding opportunities to improve, be productive and be efficient. I’m saying you do that over a period of time.

If one person’s consistent habit is finding a better way to do it, being more efficient with their time and other people are trying to figure out the newest kind of rental car to drive or the nicest hotel to stay in or how to be able to take in an Astros game while they’re in Houston. In one day, that doesn’t change things very much; over the course of two or three years, you have one person who’s stagnant and not improving, and some significant skills can be developed by someone else to where in my case, I couldn’t avoid becoming a millionaire. Honestly, that is the true reality of it.

Another excerpt from Mark’s interview with Jim, multi-millionaire pest control company owner:

Jim: So the first [pest control] company I was with before I was an entrepreneur, I rose up in that company because of my results which were specifically sales related and management related and human resource related . . . I didn’t even want to stay in the industry but I was successful, so they’d offer me a lot of money to come back, and so I did.

The turning point year for me was: I was a regional manager with this company and there [were] three other regional managers. We all had the same amount of employees; we all supervised three different offices. I had no experienced employees in my region, none, and everyone else did have experienced employees . . . I was specifically assigned to three offices who had failed the year before, the other people did not have such offices.

I came up with a new paradigm of “Hey, I think this is where we’re failing as a company. I think this should be done this way.” I did my own research to figure out how I thought things should be done. I don’t want to go off on a tangent and be specific as to what that was, but it was a lot of things.

When I told the owners of the company what my plan was [to improve my region], they said, we think that that’s really outlandish, and we’ll put you on a short string, but we don’t want anyone else doing that, so keep it to yourself.

Well, within a month of the summer I had . . . outproduced any other region by over 85%! And I had zero employees quit, everyone else had a minimum of 30% of their employees in their region quit. And by the middle of the summer, I was put in charge of the whole company!

But it’s because I was thinking outside the box . I would say that the behavior when you continually think outside the box and exceed what other people are going to do, that you just start going to fast and you end up being thrust into doing your own thing because you get ahead of the curve a little bit and you think, “I’m just going to go start my own thing because it’s inevitable.”

Mark: And if I’m not mistaken . . . I personally know the owner of the company you’re talking about, and are they not now pursuing your same business model?

Jim: Yeah, yeah, they are.

Mark: (laughing) So . . .

Jim: I presented to them 12 years ago, and said, “Either do this or I’m going to leave, resign next week.” And they rejected the model and I resigned the next week.

Then they came back and said, “Okay, we’ll give you all this equity and all this money to stay and we’ll do your business model.”

And I said, “I’ve already made an agreement with someone else; if you’d have said that a week ago, we would have done it, but I’ve already made an agreement.”

And they said, “Well, did you sign a contract?”

And I said, “Well, I did something more powerful than that, I gave my word, and had a meeting of the minds . . . So we’re going to stick with the commitments that we’ve made. And I gave YOU a commitment last week that if you didn’t do it, I was going to resign next week, and that week’s past, and I resigned.”

Jim was one of Mark’s longest interviews; he gave so much good stuff. Yesterday and today’s post give you just a little idea of the importance Jim places on commitment and discipline.

Think about your own level of commitment:

• Do you consider giving your word to be more powerful than signing a contract?
• Have you been assigned tasks where it seemed the odds were stacked against you?
• What was your reaction?
• What was your outcome?

Later this week I’ll tell you about how Jim took those three failing pest control offices and turned them into the best selling region in the United States; the guy is crazy!

Today’s post is an excerpt from an interview Mark did with Jim, successful owner of a pest control company. Jim is fanatical about commitment and discipline. This week you’ll read stories about how far he was willing to go to make his ventures succeed.

Mark: Was it a specific intention to become financially very successful, or did it just kind of happen?

Jim: That’s a good question. I personally did not foresee myself being an entrepreneur. So, I had a lot of my work associates when I began college who knew they were studying business, and they knew they wanted to be entrepreneurs. I, like probably most young people certainly thought, “Hey, one day I’m going to be financially independent.”I grew up very poor, and I always felt like I was running on the heels of bankruptcy and having the carpet pulled out . . . from the family I grew up in.

Mark: Really?

Jim: So I felt like I needed to establish a sense of security. I felt very motivated to establish some financial security, but I tended to think that would come from either getting a law degree or getting an MBA and being an executive and doing it through someone else’s business.

And I have many friends who’ve done that, and I think that would have been a great way to go because the principles are the same.

I moved to Texas to start my first pest control company, and we quickly met a group of seven or eight friends; there were three attorneys, there was me (the entrepreneur), and there were a couple of other CPAs.

One of the attorneys said to me, “Look, I didn’t go to as good of a law school as these other guys, but since I’ve gotten my first job as an attorney, I’ve really applied myself. I became the best attorney at the firm where I was, which was a mediocre firm, and I have advanced to now a really good firm, a firm that you almost, to get hired out of law school, you have to be from a first tier type of a law school.”

And he said, “Look at our friends in this group - see these other attorneys that complain that they don’t want to work more than 40 hours a week with their young families? See the accountants . . . all of them complaining, ‘I’m not going to work more than 40 hours a week, because I want to be there for my kids. I want to be there for my family; I want to be there to fulfill civic or church responsibilities.’”

He said, “Pay attention and you’ll see that really that’s the great lie that they’ve used to convince themselves to be indolent. For me, I work over 60 hours a week. In three years I’ll be a partner at the firm where I am, and In 5 years I’ll be making $800,000 a year at the firm where I am, and I will be there for my children and for my church and for my other responsibilities more than my friends.”

Well, what’s happened since then is all the other attorneys still make between, (they’ve now been out of law school 10 years), they make between 100 and 200 thousand dollars a year; the CPAs, the same. . . decent career jobs. I haven’t seen any of them coaching any of their children’s softball teams, basketball teams, or T-ball. I haven’t seen them get actively involved in their church, they’re just there. They’re going through the motions like zombies.

They’re living okay lives . . . they’re involved in all the fantasy sports leagues, they will play the x-box until 1 or 2 in the morning, regularly, and that’s all well and good. My friend, last year he made over a million dollars, he is a partner at the firm where he said he would become a partner. He has two children . . . he’s been the softball, soccer, and basketball coach for both of his kids’ teams every year. And he’s been very, very involved civicly, meaning he’s just become competent, he’s just become efficient. Instead of starting off with an excuse of “Why I’m going to be indolent,” he’s saying, “I reject that. It’s okay to say I’m going to work very, very hard; I’m going to have a fantastic career and It’s not going to be a substitute for the other roles that I want to do; it’s not going to be a substitute for my civic or church or work responsibilities. I’m going to make up the ground by being efficient, by being hard working, by being industrious, by developing better habits . ”

So, I think your original question that you asked me was did I see myself becoming financially independent. I saw myself more heading toward where my friend was as a corporate attorney or an MBA. I think that that would have been a good career path, I’m not here to tout that you should be an entrepreneur, I’m here to say that . . . the skill set is your behavior and your discipline, regardless of whether you’re an entrepreneur. I would say it’s easier for me to be successful as an entrepreneur than it is climbing the corporate ladder, but it’s the same skill set that gets you to where you want to be. It’s having the same vision and discipline of working hard, not just for a week, but always.

I had an interesting experience the other day with one of the millionaires I’d been pursuing for an interview. I’d left him two messages on his cell phone, and I was starting to wonder if I had the guts to really keep harassing this man until he spent some time with me.

Then on a Saturday at about 5 pm my cell phone rang with a number I didn’t recognize.

Me: “Hello?”

Caller: “Hello Mark, this is Nathan, I was just returning your call.”

Me: (Stammering) “Uh, hello Nathan, thanks for the call back.”

Nathan: “No problem, I got your message and I thought it was interesting. Tell me more about what you’re doing.”

I explained my goal of interviewing as many financially successful people as possible, to which he replied:

“Well I have about ten minutes I can spend with you, go ahead and fire away.”

Now, normally I record the calls and then transcribe them basically word for word, so I asked him if I could drive to my office (which was just a minute or two away) where I was set up to record. His response was great:

“Well, like I said, I’ve got about ten minutes, so we should probably just go ahead.”

It doesn’t come across in a blog post, but his tone of voice said “You’ve got ten minutes, sport. Get on with it.” He wasn’t rude at all, just letting me know that he had other things to do on a Saturday night besides accommodate me.

I bring that part of the story up for two reasons: First, I’m glad I persisted in trying to get in touch with him, because the conversation we had was interesting.

Second, when you’re talking to somebody who is financially out of your league - whether it’s a sales prospect, a potential mentor, or your boss - you need to be both bold and flexible. I’m glad I asked him if I could record the call even though he said no. The request didn’t hurt, and I would have liked to have the recording. The flexibility came in when he said no, and I just had to take what I could get.

I think that’s true in any situation where you’re trying to get something you want. Very often things don’t pan out exactly as you’d like. Take what you can get, keep your bigger goal in mind, and keep working.

So we spent the next fifteen or twenty minutes together (another lesson: people often forget their ‘10 minutes’ when you get them telling stories about themselves) and he shared some great insights with me. The background information on Nathan is that he’s a 47 year-old commercial real estate developer who has made the majority of his money creating luxury resorts on the Hawaiian island of Kauai. Here are a couple of his thoughts:

The most important attributes a person can have are a sense of humor, boldness, and integrity.

“When I was young I wasn’t afraid to call people older and more established than me. I knew I had to if I wanted to succeed in those circles.”

That statement made me think of my own time in sales and also of the interactions I’ve had with network marketers. People tend to do what I call “selling down” or in network marketing - “recruiting down” which means you only try to pursue and persuade people you feel are less successful than you.

This habit comes from the idea that “Who am I to ask that person for…” The reality is that success requires you to sell and associate “up” which means you need to seek relationships with people that are more established and more successful than you. If you are the most successful person in your peer group, you need to challenge yourself to expand, or replace, that peer group.

And as far as honesty and integrity go, he said this:

“No matter how smart or talented the person, if they lied to me I let them go. It’s just not worth it. On the other hand, if you’re always completely honest with people, they’ll sense it. You’ll start to get noticed. Inevitably you’ll move up the chain. Success will be inevitable.”

Nathan said this was the best financial advice he could offer:

“Take lots of risks and chance when you’re young. You have to take them if you want to get ahead, so you’re wise to get them out of the way early. When you get to be my age (47) you’ll have a lot further to fall if a deal goes wrong. I don’t risk money anymore. I’m ready to retire and move on to more important things than money.”

Some of you may say “I’m already way past ‘young’. What do I do with this advice?”

My opinion is you can change this quote to be “Take lots of risks at the beginning of your path to financial freedom. You have to take them if you want to get ahead whether you’re 25 or 55, so you might as well get them out of the way as soon as possible. Once you’re secure financially, don’t take risks that jeopardize what you’ve built.”

My favorite quote from my conversation with Nathan:

“At some point you have to decide how much is enough. You can go on making more money forever if you want to. At some point you have to stop and think about more important things you could be dedicating your life to.”

For Nathan that meant leaving his normal life to dedicate three years to a religious mission that will start this summer.

Hopefully a lot more of us will have the opportunity to decide enough is enough and move on to more important things.

Since I quit my job two weeks ago my wife and I have moved back to our home in Utah. It was rented while we worked out of state. With the home comes the yard work, and yard work requires a lawn mower.

On Monday we headed to our local Lowe’s store to buy the lawn mower and on the way I said to my wife: “Sweetie, I’m leaning toward buying a push mower. One of those deals with no motor.” She gave me a funny look that said “Who are you and what have you done with my husband…you know - the guy who really doesn’t believe in mowing his own lawn, let alone with a motor-free mower?”

Long story short, we bought the push mower. While we were in Lowe’s my wife called my sister (because she already has a push mower) for her opinion. After a minute my wife pushes the phone at me and says “She wants to talk to you.”

Mark: Hey.

Emily: Who is this? What did you do with my brother? You’re going to buy a push mower? Yeah, we love ours, but it’s the last thing in the world I’d ever expect you to do.

You might be wondering why my wife and sister reacted so skeptically to my mower plans. It’s not that I’m opposed to manual labor. I worked construction all through college and I actually enjoy it. Their skepticism is due to the fact that I’m the world’s biggest proponent of leveraging your time.

For example, when I was still working there were quite a few Saturdays when my wife would ask me to wash the cars, and I’d tell her it was too expensive for me to do it myself. After all, I could go to work, make one sale, and the commission would be ten times the cost of driving both cars through the car wash. So I’d go to work, make the sale, and drive the cars through the car wash.

So why the change of heart? A mower with no motor is the complete opposite of leveraging your time. It will probably take twice as long to mow with the push mower, and I’ll probably have to do it twice as often.

Here’s why I bought the push mower:

I spent the last four years in a cubicle with a headset on. I liked the work, but it was devoid of physical exertion. So I got fat (I’ve gained about 30 pounds over the last four years), but I also got stressed. Did you know that a sedentary lifestyle is both a symptom and a cause of depression?

On other hand, regular physical activity is actually one of the best treatments for depression and anxiety.

So the point is, when I was commuting and punching a time clock, I felt too stressed and too short of time to do something like mow my own lawn or wash my own car. Result: fat and depressed.

Now that I’m job free and can take breaks in the middle of my workday at home to go work in my yard for an hour or two. It feels great.

I’m already happier; I have to hope I’ll get skinnier too.

What are the stress-reducing, happiness-producing things you would do if you had more control over your time?

If you’re trying to reduce and pay off your debt, high credit card finance charges are a real thorn in your side. You’re probably tempted to transfer your balances, but wonder about short introductory rates, balance transfer fees and how balance transfers affect your credit score. Before you do anything, make a simple phone call to each of the companies with whom you are carrying a balance. Try Jean Chatzky’s script to get your interest rate lowered:

“I have [name of card] with you and my interest rate is [X] percent. I received another offer in the mail from [other bank's name] for [X] percent, but before I take it, I want to see if you can lower my interest rate instead.”

If the representative says they’re not authorized to do that, you say:

“Look, you and I both know that if I transfer my balance today, next week your bank is going to send me an offer to come back at an even lower rate. Why don’t you just save the bank the cost of that effort by giving me several points today?”

If the rep says it’s not possible because your credit card is at a fixed interest rate, you say:

“Actually, that doesn’t have anything to do with whether or not you have the ability to lower my interest rate. A fixed interest rate only means that my rate doesn’t vary with fluctuations in the prime rate. In fact, the bank can raise it on my account at any time by just giving me 15 days written notice. And the bank can, if it chooses, lower the rate today.”

If the rep still says they’re not authorized to do that, you say:

“I’d like to speak to your supervisor.”

Then speak to a supervisor and follow the above script again.

Now, keep in mind paying on time every month goes a long way with the credit card companies. If you have a history of making late payments, they get a bit snippy and reluctant to help you out in any way. But, whatever your situation, it never hurts to ask to have your credit card rate reduced.

P.S. If you do get your rate(s) reduced, find the smartest place to put that extra money. My first choice would be to apply it to my most expensive debt. If you feel the need to get a little money in a savings account, by all means, do that. Don’t think of it as “free money,” use it wisely to better your financial situation.

I need to vent. I was doing a little reading today and I came across a real gem of an article titled Living Below Your Means: Control Vs. Competence. I know, the title should have tipped me off, but it didn’t.

It started off easy enough, predictably talking about the benefits of living below your means, many of the same points I used in my post yesterday.

Then, the author introduces us to “Paul Minsky, a California psychologist who specializes in money issues.” Apparently Paul “says not being in debt may make you look incompetent.”

Well, that’s just what we needed. A psychologist to tell us that if we’re not in debt, we look incompetent.

Hurry and go buy a house you can’t afford or you’ll look incompetent. Hurry!

I know. It sounds crazy, so here’s the exact quote: “The issue isn’t so much that not being in debt represents safety, security and freedom, but rather that your expenditures represent your competence.”

Minsky has more wisdom to share: “Our society promotes more spending, more credit card debt. What do you do when you don’t feel so good? Most people say they spend — that offsets the stress of being in debt. If you undertake a program of debt reduction it’s counter cultural. More is better than less, shop ’til you drop.”

Let me get this right, If I “undertake a program of debt reduction, it’s counter cultural.”

So, really I have to go into debt.

I can’t help going into debt.

We all just go into debt. That’s what we do.

Especially when we “don’t feel so good.”

What the heck is the author trying to tell us here? That, yeah, it would be great if we could all be in control of our spending and live below our means, but since our culture is set up so that having things represents competence, it just can’t be done? Does she really think, as her title suggests that you can either be in control of your money or you can look competent?

Horse Pucky! Bull Honky. Are you buying this?

I know, I know, we judge others by their stuff; I already posted about that. But, come on. Is this really going to be an excuse now? “I can’t get out of debt. People will think I’m incompetent if I don’t buy this.” What a load of crap!

Excuses

OK, so maybe I’m preaching to the choir. If you’re reading this blog, you probably have better grasp of the big picture. You’re not worried about what people are thinking. You’re laying the foundation to build the life you want to live, not the life society is trying to dictate. But this might be a good time to reflect on what excuses you’re using.

Cue the sad music: Do you not have enough time? Are the people in your life bringing you down? Is there just no way to overcome your troubled childhood? Maybe you had a teacher who was mean to you in high school. Maybe your dog died.

Don’t think I’m making fun, these are all valid excuses. But they’re just that–excuses. They are doing you no good. Let go of the excuses, get off your butt, and start doing something!

Look at the Millionaires

What did Mike (advertising exec) do after 4 clients went bankrupt in the same month and left him short 2 million dollars? Sounds like a pretty good excuse to fail at just about anything. Did Mike give up? No, he worked for 4 years paying off other peoples’ mistakes.

How about Dan, who shattered the summer sales record for his company when he was in college. Did he let the other guys pull him down when they wanted to go to the movies, take a nap, or hit the pool on a hot afternoon? No, he made a commitment to succeed and nearly doubled his own record from the summer before. Did I mention he also pulled in $180,000? Not bad for a summer gig.

Do you think M.R. worried people would think he was incompetent when both he and his wife had two jobs in order to pay off their mortgage and business debts? Do you think he looks incompetent now, completely debt free with a successful furniture business and real estate developments?

If your life is not where you want it to be and you can’t see a way to get it there, you’re making excuses. It’s time to sit down, clear your the mental clutter, and figure out “’What is it that I want to become?‘ Because when [you] do that, everything else really falls into place.”

photo credit: efleming

You hear it all the time. It’s a phrase your parents or grandparents used. There’s nothing flashy about it, in fact it sounds boring and confining, exactly the opposite of how you want your life to go.

Yet the concept behind the phrase is fundamental to true wealth creation, and I’d wager every one of our millionaire interviewees follows this motto: Live Below Your Means.

Basic. Fundamental. Essential to creating abundance in your life.

What’s the big deal with living below your means?

To me, it all comes down to one word: control. Either you control the money or the money controls you. Live below your means and you decide when, where, and how much to pay for whatever you want. Live beyond your means and you are controlled. Controlled by payments and deadlines and whatever else is written in the fine print of your credit agreements.

Living beyond your means means you’re using credit. No, you’re not just using credit, you’re buying credit. You spend money on interest. You spend money on late fees. You might even spend money just for the privilege of carrying that plastic around in your wallet.

Living beyond your means means you’re stressed. I don’t care what kind of denial you’re in; I’ve done it, and it’s stressful. Counting down the days until your next payment is due. Counting down the days until your next paycheck will come. Juggling payments. Figuring out which late fee/finance charge will be more so you can decide which payment to put off a few days. Pulling money out of savings. Calculating how much longer that savings account will last at your current rate of draining it.

Of course, if you’re spending more than you earn and not juggling payments or calculating how much longer you can keep these balls in the air, you’re just racking up the charges and piling the debt on for a long future of payments or bankruptcy. Pretending the stress is not there does not make it go away.

Oh crap, the washer broke!

Or the car needs new tires, or you have to have a root canal. Now what? How can you pay for that and make next month’s credit card payment?

That’s why we live below our means because when the washer breaks or Johnny fails the eye test at school and needs glasses, or there’s a great shoe sale, or your friend offers you a free week at a condo in Hawaii, you have the money to take care of the things you need and take advantage of opportunities for things you want.

Living below your means means you have a cushion. You have retirement savings, you have an emergency fund, and you have money to play with– to stock up on essentials at a great sale, to take a spontaneous weekend getaway, or splurge on the newest electronic gadget. Or not. You have the choice. With extra money, you can choose where and when to spend it or save it. With credit payments, you are tied to someone else’s schedule and that someone else is always looking for a way to up your interest rate or stick you with another fee.

You have a choice: you can ride through life on that cushion of a little extra money that comes from living below your means. Or, you can buy yourself some credit and live life watching out for the fine print.

Are you living below your means? If you don’t know, take some time and list all your monthly income. Now take some more time and list all your expenses. (See our post on budgeting for more help with this step) This will take a while, in fact, if you’re not already keeping track, it might take you a few months to really get a handle on where your money is going. That’s okay. Invest the time. Making a conscious decision to live below your means is the beginning of taking control of your finances and could very well start you on the path to financial independence and success. It’s worth it!

Need encouragement?

Here are a few millionaire quotes linked to their original articles:

“If you can’t pay for it, don’t buy it.” from MR, furniture store owner.

“Occasionally I’ll pull a loan, and I try to pay it off, but I’ve kind of bought as I could; if I couldn’t, I didn’t“. From interview with “G”, a Real Estate Broker, Investor, and Entrepreneur.

“Eliminate debt first.” from interview with Mike, owner of advertising company.