Really Pay Yourself First

While conversating about The Habit of Saving, I got to realizing many people seem to have a misunderstanding of “pay yourself first“. After doing some research, I noticed many How to Save topics have mentioned in some shape or form, the phrase of paying yourself first.

Not to discourage anyone who is starting the habit of saving, but more so in hopes of advocating the benefits of investing, I wanted to clarify this topic.

In relevance to the habit of saving, paying yourself first refers to placing a portion of your paycheck into a savings account or other forms of containment before spending the rest. By doing this, you prioritize and create a habit of saving and creating a nest egg.

However, paying yourself first is only truest when it pertains to those with the privilege of entrepreneurship, investing, or un-waged incomes. This is only possible since the paying of oneself first is only done so when it is not taxed prior.

What most people’s paychecks go through is paid in the following order.

Taxes > Bills > Spending of luxuries > Savings

With an employee paycheck, your income is taxed before it even reaches your hands. This means that you will never truly be paying yourself first since the government has already paid themselves with your money, first.

The benefit of truly paying yourself first is the ability to do just that, claim your income in its raw form before anyone else is able to claim it. What entrepreneurs or investors then do is use their pay to invest more in their company by inventory, services, or other relations. By declaring these spending as business expenses to their related trade, they are then lowering their collected income by the spent amounts. Once they have claimed what they need and paid themselves first, then they pay bills, and then taxes.

This is what a successful person’s paycheck goes through.

Savings > Spending for assets > Bills > Taxes

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Power of Failure

One of our great fears is failure. Fear of failure is so powerful that one would rather choose the path of CONCIOUS failure, than the CHANCE of failure; leading those to rather choose no path than a path, thus guaranteeing the failure they so fear.

Why do we fear failure?

It’s built into many, whether we believe it or not, that to have tried and failed is far more embarrassing than to have just not done anything at all. It is built into us from society, from the concept of win or lose, that there is nothing in between. “If you’re going to play, play to win” is the mentality we hear all so often, and while so encouraging, it leaves to deceit and generate fear in the ones with little confidence already. Questions arise; what if I don’t win, what if I can’t do it, what if I just end up wasting my time? These questions leads back to the initial encouraging quote, if you can’t win, why try?

Why try?! Try because by ANY effort, is a success as long as we learn from it. It is a success for the next attempt on. One does not truly fail till they have given up.

The mentality of win or lose if none so equivalent to black and white, being that it is near impossible to judge a success or a loss except by one’s own belief. Failure itself is not a failure unless you give up or pass view of the lessons learned or journey taken to the climax. As long as one can learn and except the mistakes they have made, they have now given them self the success of experience. With each additional experience that is gathered, the chance of success to the goal becomes clearer.

James Joyce mentions in Ulysses, A man of genius makes no mistakes. His errors are volitional and are the portals of discovery.

The one that succeeds right away, may potentially have gained nothing more than just that, unless they have learned from it as well.

A great story I like is taken from Donald Trump,

Being stubborn is a big part of being a winner. Some people have failed because they have given up too soon.

My father used to tell us this story about a guy who loved soda, so he went into the soda business, with a product he called 3UP. It failed. So he started again with a soda called 4UP. It failed, too. So he decided to name his product 5UP and worked just as hard to make it work, but sure enough, it failed again. He realized that he still loved soda, so he tried again with a product named 6UP. It failed, and he gave up completely.

Then a few years later, someone else came up with a soda product and named it 7UP, which became a huge success. When I was young, I couldn’t understand why my father kept telling us this story. He told it many times. Later, I realized he was telling us to never give up. Well, I never forgot that story, and I’ve never given up either…

This is such a great story that I have used it many of times when talking to people about efforts and the topic of success. For each of the times that the person tried to make the soda, he had not truly failed till he had given up. Which by that, given another the opportunity to learn from his mistakes and succeed.

By this example, failure is the equivalent of giving up. And therefore, the polar opposite of giving up is to not.

Fear of failure = Fear of giving up

By this expression, does it not feel illogical to fear failure, when to fear failure, one should truly fear the chance of not trying to succeed.

To not have tried because you are fearful of failing is a guaranteed path of failure.

Napoleon Hill said this best with,

One of the most common causes of failure is the habit of quitting when one is overtaken by temporary defeat.

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Always keep an Open Mind

Why would anyone ever close their minds in the first place?

I was talking with a few people the other day about H2MC and was asked, “Why would you want to create something like this? You can’t tell people they can do something you haven’t even done yourself. You’re not rich, so why talk others into thinking they can be”. My answer to them was, “Opportunities are all around us, just because I may not be in the right place to see certain ones, does not mean others aren’t either”. We created H2MC to encourage this option to those that are willing to keep an open mind, to help train them to see what others don’t.

How can you “train” yourself to see opportunities?

You train to see opportunities by asking the right questions of course. Stay away from negativity and doubt. Don’t end your thoughts with statements such as:

I can’t do that. It wasn’t meant to be. It’s impossible. I can’t afford those kinds of things. I don’t have that kind of luck.

Those are close ended statements that leads nowhere. In fact, they bring down any positivity and replace them with more negative thoughts down the line. These are what I would call the lazy mentality. It’s much easier to just say or think these thoughts than to put some efforts into your thinking.

But let me ask this, would you rather be rich than poor if all in your way was some effort?

Why is it most people wake up every morning, bright and early, moaning and dreading the day to come, only to go into work, sit their set given hours, make the employer, which they will most likely never meet, rich? But yet when it comes to placing some effort in the day to help them succeed, they get lazy and push it off?

If effort was what was truly stopping people from being successful, they wouldn’t go into work; they would sleep in, stay at home, go do whatever they wanted. But most people place so much more effort in sustaining their job, doing what they have to, just to make that income, which is just a mere fraction of what their employers actually take home. Yet the difference is the employer is living their life the way they want, all because they put that effort into them self, rather than waste it away each day.

So why is it most of us place more effort to help someone else and then complain they have no time in the day for himself?

Effort is not stopping us from success, if it were; we wouldn’t have placed effort to go to work either. What’s stopping us is how we have trained our mind. We’ve been so accustomed to being an employee, rather than an employer. What stands the two apart is the questions we ask, the way we have trained our minds.

Instead of the previous statements, next time ask yourself questions such as:

How can I get that? What can I do to achieve this? What can I do?

Notice that these are questions rather than statements. It’s because by asking questions, positive ones, allows your mind to think. The more we think of answers, the more we are training our minds to deal with road blocks in our life. When you see something you really like in a store that you can’t afford, instead of saying “I can’t afford this”, or “I guess it’s just not for me”, Ask yourself, “How can I afford this?”. With this simple question, you have removed the option to give up.

Don’t give up!

This works to the keeping an open mind. Once we can train ourselves to be problem solvers, then we allow our eyes to see opportunities. By being trained to ask questions, we will be able to see a need or opportunity around us, and instead of believing that it’s just the way things are, we learn to ask why there is that need in the first place. Our minds will be trained to reject defeat and instead, find a solution, find a way to resolve it. This opens the possibilities that others whom are not trained in the mind for it could see. It opens the ability to think of options and possibilities.

This is the ability of having an open mind. To see what others can’t.

When you can achieve having an open mind, why would you ever want to close it?

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Make money from Thin Air

It doesn’t take money to make money

This is something that has always seemed to be imbedded into my head, but I have recently realized it does not seem to be true to others. The thought that it takes money to make money makes me cringe. If this was the case, we’d all be broke and have nothing, we weren’t born with money, and for most of us, money is not thrown at us. We had to gather it somehow, and to not have something to begin with, and have it now, is a proof that it doesn’t take money to make it. No one ever says, “Man, if I was rich, I could be… Rich!”, but I’ve heard “If only I was rich…”.

If it doesn’t take money to get more, how come we aren’t all just sitting at home and accumulating mass wealth?

Many aren’t because money isn’t grown on trees. Money is grown on ambitions. It’s how bad you want something and what efforts you are willing to put forth to achieve it. If we want something bad enough, we have the free will to use our minds to find ways. Many go to school, get degrees, get a job, and make money. Some think of ideas, creative ones, and design a business plan and sell and receive cash flow. There are many ways people are making an income, but the underlining concept is that they all started from wanting and decided to do something.

How do you make money from no money?

The key is understanding the word “Derivatives“. Once you understand what a derivative is, then you will be able to create your own money. Think of a tree you are trying to get rid of in your backyard, you cut it down, chop it up; you now have firewood. That firewood is a derivative of the tree. You have scraps of wood from leftovers, you cut it up more and shred it; you now have mulch. That mulch is a derivative of the tree as well. A great example is what kids used to do; what you do with lemons? Make lemonade! Lemonade is the derivative of the lemons. Even as kids, we had the idea, we just didn’t realize it. A derivative is having value from a variable. A common stock is a derivative of that company.

The concept behind all this is to use your head. If you want something, but don’t have the money for it, use your head and think of ideas to get it. Our strongest asset is our mind, and with it, we can generate unlimited derivatives from it. And the best part is that our ideas are free, we can generate money from thin air, you just have to be ambitious enough to think of ideas.

Don’t let the amount of money you currently have, stop you from accomplishing what you want.

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Stocks are Crazy!

So, Dennis and I both enjoy watching the stock market and seeing the interesting good/bad things that happen to it daily.  The other day we were looking at random stocks and saw that one of them had a share price of over $2,000.  That’s when we looked at each other and were like, “Wow. That’s sorta-kinda high”.

Like always, I got curious and hit up Google so I could get the answer to my question of, “What is the highest recorded stock price in history?”  I kind of laughed to myself when I figured it out.  Berkshire Hathaway Inc. (NYSE:BRK.A) clocks in at just under a measly $150,000 a share!  Dear God!

Since we have both added BRK.A to our phone stock ticker apps (Droid > iPhone) so we can watch it on the fly, it’s kind of funny to see how the stock fares.  If you look at its history, it has a fairly consistent positive slope since it opened around 1990 at about $7,000 a share.  Their share price today is approximately $120,000, meaning that at a 1.00% increase there is a gain of over $1,000 on a share.  Of course, the CEO of Berkshire Hathaway Inc. is stock tycoon Mr. Warren E. Buffett.  Man, I wish $120,000 was pocket change for me too.

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