One of the segments I want to do with this blog I’m called “Required Reading,” which essentially is a combination book review and recommendation. I’ll write a post on a particularly educational or useful book and break down the top 5 takeaways.
If you read my “Top 10 Books For Financial Freedom” post, you’ll know that MJ Demarco’s The Millionaire Fastlane sat at my #1 spot. For me, this book changed everything in my journey to financial independence. Moreover, because I read it after reading so many other common authors on personal finance, DeMarco’s book came as a shock.
The first time I read it, I had to actually put it down after a few chapters because it scared the crap out of me. DeMarco’s arguments were sound, rational, and completely countered the more conventional ‘gurus’ and authors out there. I was midway through my personal financial transformation when I picked up The Millionaire Fastlane and it made me rethink my process. So without further ado, let’s get into it:
#1. “The Promise of Wealth…The Price? Your Life”
“By working faithfully 8 hours a day, you may eventually get to be the boss and work 12 hours a day.” ~ Robert Frost
The conventional financial ‘wisdom’ of financial gurus such as Dave Ramsey, Suze Orman, or Tony Robbins is build around the idea of using time to compound investments. By continually contributing to a 401k or IRA and allowing it to compound (e.g., increase in value and reinvest dividends) over time, it becomes your method of financial freedom. As Ramsey calls it, a “Cash Mutual Fund Millionaire.” The key to this, of course, is time. Work a job for forty years, investing all the while. Take the employer 401k or IRA match. Let it grow, and when you retire at 65, you’ll have millionaires to “retire with dignity.”
DeMarco refers to this strategy as the ‘Slow Lane.’ He counterpunches: “It’s a lie so deceiving that when uncovered, decades of life have passed…The driving force behind behind wealth under Get Rich Slow is time — time employed at the job and time invested in the markets. Your glorious tomorrow might arrive after 40 years, when you’re living your last presidential administration and on your second hip replacement.”
DeMarco goes on to point out the best way to enjoy wealth is when it’s lived young, when you have “health, vibrancy, energy, and yes, maybe even some hair.” The idea of waiting to enjoy life when you’re older, breaking down, and possibly even bedridden does not come across as appealing. You give up the good, healthy years to be free during the older, medically-dependent years.
Even worse, what’s the guarantee you’ll even make it? The average life expectancy (as of 2018) in the U.S. is 76. That means working for 40 years to enjoy 11 (if you retire at 65). The math isn’t worth it. DeMarco brings up the fact that, even if you do live long enough to retire, there’s no guarantee you’ll be a millionaire. The gurus’ plans don’t work without a job, or if the market goes south, or if a housing crisis wipes out 40% of your illiquid net worth in a year (as the 2008 crisis exposed to many).
#2. Your Definition of Wealth Has Been Corrupted
“Money doesn’t buy happiness when it’s misused,” DeMarco writes. “Instead of money buying freedom, it buys bondage.” The idea is that people want to feel wealth, so they buy things they cannot afford to look wealthy. By craving respect and admiration, you expect wealth to bring you into happiness. “Society says wealth is “stuff,” and because of this faulty definition, the bridge between wealth and happiness collapses.”
Indeed, wealth has become something of a dirty word in society in the era of “We Are the 99%.” Wealth is equated with sports cars, big houses, and showing off lavish vacations on Instagram. These objects of wealth are sources of envy and disdain, leading many people to sneer at the mention of wealth or money. However, DeMarco says, “used properly, money buys freedom.” Freedom buys choice. Those that chose to use money to flaunt fake wealth end up deeply in debt trying to maintain it, and are forced to work to pay that debt and keep the cycle going.
DeMarco illustrates wealth as freedom further:
- Money buys the freedom to watch your kids grow up
- Money buys the freedom to pursue your craziest dreams
- Money buys the freedom to make a difference in the world
- Money buys the freedom to build and strengthen relationships
- Money buys the freedom to do what you love, with financial validation removed from the equation
These are nothing to be ashamed of.
#3. “Wealth is a Process, Not an Event”
Earning wealth is not a sexy process. Sexy is winning the lottery, opening your front door to find Ed McMahon with a giant check, or hitting it big at the casino. However, these events are highly, highly unlikely and cannot be planned or earned, no matter how much effort or time is put into it. As DeMarco puts it, “Millionaires are forged by process…self made millionaires create their wealth by a carefully orchestrated process.”
The ‘process’ never makes the headlines. DeMarco uses the examples of an athlete scoring a $50 million contract or an Internet wiz selling his company for $30 million. The ‘event’ (the contract or deal) is “showcased for all to admire.” People read about it and say “gee, if only I could be so lucky.” What’s not lauded is the amount of work it took to get there. Years of shooting free throws alone in a gym or endless nights coding alone in the dark are unsexy. The process is hidden from the headlines, buried deep in paragraphs or tucked into the end of the story.
Wealth takes time. Don’t plan to inherit a family fortune, to win the lottery, or file frivolous lawsuits trying to win big. Do it one step at a time. Put the hours in. Be okay with things taking time; learn to respect and enjoy the process. As a reminder, 70% of lottery winners go broke because they didn’t have a process. They won money through an event and quickly spent it away because they didn’t earn it.
#4. Never Start a Business ‘Doing What You Love’
This one was a bit of shocker. Not because I started a business out of doing what I loved, but because it’s such a common saying. Do you love animals? Open a pet grooming shop. Do you love doing yoga? Open a yoga studio. If you’re going to put time and money into a business, why not do what you love? It only makes logical sense right?
DeMarco points out the fatal flaw: opening a business doing what you love does not guarantee business. Most business started out of a love of something end up shuttering their doors due to lack of customers. They weren’t started to satisfy a ‘need’ or no ‘need’ was identified to build a business around the solution. Without a guarantee of customers who have a need for your solution, it’s not going to work.
“Stop thinking about business in terms of your selfish desires, whether it’s money, dreams or “do what you love.” Instead, chase needs, problems, pain points, service deficiencies, and emotions.”
I can testify to this. I started my business in 2014 after identifying a need working at Apple. Business owners and customers all wanted on-site support or installation, which Apple refused to provide (for a myriad of reasons). It eventually got to the point where customers were offering bribes to get me to come to their house or office to resolve issues or help them. I eventually quit my job to build a business around these needs. Five years later, the company is doing more business than ever before.
So what does DeMarco suggest to finally do what you love? If you go back to #2 on this list, the answer is have wealth first. If you build a business around a need, you’ll have customers. Customer will bring wealth. Wealth will allow you to do whatever you want, including pursuing what you love to do.
#5. Instead of Digging For Gold, Sell Shovels
I love the wisdom of “What’s the best way to get rich in a gold rush? Sell shovels.” Being a producer is the fastest way to become wealthy. What is a producer? Someone who has something to offer. As Robert Kiyosaki says, “Have something to sell. The poor have nothing to sell.”
DeMarco: “Instead of digging for gold, sell shovels. Instead of taking a class, offer a class. Instead of borrowing money, lend it. Instead of taking a job, hire for jobs. Instead of taking a mortgage, hold a mortgage. Break free from consumption, switch sides, and reorient to the world as producer.”
The point is, make yourself valuable. If you have a valuable or useful skill, people will seek you out. If you have something to offer, customers will be found. A lot of the mentality I find — especially among coworkers and family — is based around “what can I buy” or “how much can I have.” It’s a consumer culture. We are bombarded with advertisements and incentives to consume. It’s up to you to change your way of thinking, “switch sides” as DeMarco calls it, and become the one offering to consumers. “If millions seek you,” he adds, “you will be paid millions.”
I highly recommend The Millionaire Fastlane to anyone interested in breaking free of The Slow Lane or even The Sidewalk. It will change your way of thinking and hopefully set you in a direction to prosperity and financial freedom. I could easily have expanded my top 5 takeaways to top 10 or even 15, but this post would have gone on forever. DeMarco followed up The Millionaire Fastlane with a sequel, called UNSCRIPTED, which I will cover in another blog post! Pick up a copy of The Millionaire Fastlane (you can do so by clicking the book above) and take off down the Fastlane.