35 Years of Brutally Honest Financial Advice In 70 Mins

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. What is it that most people get wrong when it comes to building wealth, finding financial freedom, and eliminating financial stress from their life? Well, in this episode of the Affluent Entrepreneur Show, I'm going to share something really, really cool with you. It's actually 35 years of financial advising done in 70 minutes. This was a keynote that I did at this cool theater. That was the theater that Walt Disney screened all of his cartoons and all of his movies at when he was alive. 1100 people there, and I'm walking them through all the things that they need to understand to build the path to financial freedom, to find and build their money machine. I hope you enjoy it.

So let's talk about where we're gonna go, our path. Today, I want to talk about the four stages of building a money machine. I want to talk about the two journeys that you need to travel.

I want to give you a formula. Now, it's going to be a rough formula, but I want you to give you a formula where you might be able to calculate a little bit as to what is your target number. We have to know where we're going, at least a trajectory. And then what are the five incomes that will get you your time back. All right, you game? Yeah. All right, so let's do this thing. So here's the thing. The first step, the first stage is to understand the journey.

We don't understand the journey when it comes to money. Now you're gonna find out that money is not separate from life. I actually think that the only reason we have money is for life. It's not the other way around. When we chase the money. Money is. Money is a result. It's not a purpose.

Yeah.

And so the challenge with understanding this is I think that if we look at Benjamin Franklin here, he says. He says the wealthy wealth is not his that has it, but his that enjoys it.

And I've had an opportunity to work with, with people starting out, people that have $100 million billion dollars, thousands of dollars. I've worked with people that have wealthy, wealthy bank accounts. You would look at them and you go, wow.

But they live bankrupt lives.

But one of the challenges with money and. And. And getting us to get money right isn't in the wallet. It's in the head. It starts with the stories we tell ourselves. And the problem is that how many grew up in a household where they said, hey, it's impolite to talk about money? Yeah, I did, too. Here's the thing. American Psychological association said 72% of people say that they're stressed about money. 22% say they're extremely stressed about money. Y', all, if three quarters of the population is stressed about money or one quarter is extremely stressed, and then they tell you not to talk about it, how the hell are we going to fix it? So I gotta tell you, the reason I wrote the book is we're gonna talk about it. We're gonna fix it. I truly believe financial freedom is your birthright. So let's just go claim it.

I got a kid who joined one of my programs. Sixteen and a half years old. Henry, sixteen and a half years old. Talked to his mom before he joined. Does it make sense? He's only 16 and a half. He said, Give him a chance, and in a year, two years, I don't care if it's not working, you let me know, I'll refund it. 17 years old, he's on one of the calls. He says to me, he says, he says, I got a job. What do I do? I said, really? I said, open a Roth ira. Okay?

Three weeks ago, we're on a call. He says, I funded my Roth ira, but I don't know what to invest in. What do I do? I said, okay. I said, you're 17. He says, well, I'm 18 now. Oh. I said, well, how much do you fund it with? I mean, he's 18. What could he do? Five hundred dollars, a thousand months? What'd he do? You know? He says, well, I fully funded 2023, and I already funded 2024. Hold on a second. Yeah, what? Fully funded, $6,500 in 2023. 2024, fully funded, $7,000. I said, you're 18 years old. You put $13,500 away? He says, yeah. He says, it helps that I'm living at home.

Okay? I said, let me do the math for you, man. I said, every dollar you put at 18 years old just invested in an S&P 500 fund will turn into $107 by the time you're ready to retire 107 times. I said, you don't have to do anything and you'll be worth a million three. I said, you're already a millionaire. We just gotta avoid stupid.

And if we keep putting money away, then what?

Yeah.

But that's the thing. But I said, I look at it and I go, this is why we do things. And yet he doesn't have the stories that, that, that hold us back. One of the first stories in my book is, is the first time I saw my dad cry. Now my dad came here from a, from, from a country at 17 years old.

With nothing.

So to me he was this tower of power. And I'm five years old and I see him in tears, talking to my mom, arguing about something, but.

I don't get it. I know it has to do with money, but I don't understand it. And all of a sudden I hear him say, I just feel like I'm letting down the people I love the most.

And this five year old kid took that in.

And said, wow, if I don't make money.

I want to disappoint the people I love.

And this is how we get our stories, this is how we get our limitations. This is how all of a sudden you sit back and say, why is it that I think that money's dirty or I have a limit, or I can't ever be that way because I'm from a different side of the tracks, I'm from a different country or from a different place. I didn't come up with money. I'm a son of an immigrant.

The problem is this. I carried that with me. I carried it with me to a point where I was an, as an adult, I, I'm sitting back, I'm an entrepreneur. I, I end up at, oh in 1996. I know I'm dating myself here. A single full time dad. I'm taking care of my son Jeremy.

And I'm trying to build a business. So I'm on the treadmill, I'm working, I'm running, I'm doing, I'm, I'm doing all the things and the cash is coming in and everything's going well. And then Jeremy comes running in, he says, daddy, dadd drew a picture of you at school today.

So I kneel down.

I grabbed the picture and there I am, blue felt tip pen, a lot more hair.

Standing in front of two computer screens and a phone in each ear and one on the desk screen.

My son put a mirror to my soul and, and Here I was.

Walking the path from something I took from my dad at 5 years old, saying, I have to make money, otherwise I'm disappointing the people I love.

But now I'm making money, and I'm still disappointing the people I love.

And that. That's what gave birth to this whole idea of how do we do this? How do we do life? How do we make it work? How do we. How do we do it? Where it isn't an either or, but it is an and that's where I want us to look at it from. Okay? Now, there are going to be some things that get in our head that keep us, hold us back, and I want to break some of these myths. I want us to talk, to really start to talk about it, and that is this. The first myth is this money stuff is complicated, y'. All. I'm going to show you the four things that you need to control to build wealth. Four things, and that's it. Okay? It can be complicated. And trust me, as you get more successful, complications will find you. There's no reason to complicate it up front. Let's just walk through it. Now. Everything that I'm gonna talk about here, this is a prescription. It's a recipe. It's not a suggestion. And it's a recipe because it's something that I walked. Everything that I'm teaching. Yes. I'm a CPA by education, okay?

But everything that I do is because of what I did. The miles I ran, the mistakes I made, you'll see some of them, okay? And so the real issue here is this, you guys. I've been lucky enough to do enough things right to be successful. But more importantly.

You'Re lucky enough that I've done enough things wrong to be educational.

So, first myth. It's not. Is. Is that as complicated. It's not. And I'll walk you through that. Second myth is this. Is that I have time, y'. All. You don't have time. Can you imagine if we were all, Henry's in here and just put $13,000 away? We'd be sitting pretty right now.

Talk about time and how that goes. I'll do some math for you here. And then there's those people that call me up and just say, I don't want to deal with that. I don't want to deal. I'm not a numbers person. Just tell me. Invest in.

But here's the problem with that. If I tell you the mechanics of something, you just memorize them, you do them. And then when the economy Changes. Things change. Life changes. You're not prepared to do anything. The idea behind everything I do, including the book, is to make sure that you're educated, equipped and empowered to take control of your financial destiny. You game?

Because that's the challenge, is that I have nothing to sell you. Okay, maybe the book, but. But I'm not selling investments. I'm not selling insurance. I just want to sell you on your dreams. I don't care what age or stage you're at. I want you to go. And if you get there 70% of the way, you know what? It's 70% closer than you ever did.

Yeah.

And. And I can't tell you what to invest in without knowing your situation. So everyone's different. And here's this. Here's how we do things. We always start with life first.

The reason we build wealth isn't for the bank account. It's for the Life account.

So we have to start with the vision of our life. The vision of our life.

Is what allows us to create the plan to make that vision a reality. Too often we don't start there. What do you want for your life? I mean, not just money, but health, relationships, spirituality, all of it. What do you want it to be?

Then we create a plan. And from that plan, we can define the strategy. And when we have the strategy, I go through all of this, then. Then we turn around and do the tactics.

The investments are the tactics.

And I can look at it and go, huh? If I tell someone to invest in something, that's a tactic. But if the tactic doesn't fulfill the strategy and the plan, it doesn't get into the proper life that they want. So that's why we don't start there. We start with the vision of life. But here's how this. Stories start to get in the way of things, okay? It's something I call the money story dynamic. Most of our money stories are caught, not taught.

You watch your parents, you watch the media, you watch TikTok. Yo, there was someone on TikTok. This is what he said. He says he's doing an interview, and he says it is stupid to buy a Toyota Camry now. Okay, no judgment against Camrys, okay? But he says you're better off spending $200,000 on an. On a R8.

He says it'll go up in value. Really?

He says it's a transfer of wealth. And I go, you're right, to the dealership. What are you doing?

But people are listening to this.

So we listen to it, we hear it, and what we do is that once we observe it.

We make an interpretation, just like I did at 5 years old.

That interpretation creates our identity.

And that identity then defines behaviors.

Your wealth, your ability to create wealth. Here's the thing. No one in here has money issues.

No one in here has money problems.

What you might have, which you all have money symptoms. They're symptoms of the decisions, the choices, and the behaviors of the past. You all can't see this. Well, let's fix that for y'. All.

I mean, my drawings, I want you to see them all right.

Now. That behavior. So your behaviors are what's setting you up for everything. It creates what I call a money set point.

That's where the challenge is. That's where the problem is. I had a money set point that set me up to think these things, do these things, and stop doing these things. How do you fix this? Because the money set point isn't based on facts. It's based on. Based on interpretation.

Let me give you a quick way to do this.

Imagine for a moment you go back to one of your most. Your earliest money memories, and you're watching it. You're listening to it, and you're sitting back and you're saying, oh, my gosh. Now, what I want you to do is I want you to put earplugs in.

You can't hear it anymore, and you put a camera up and you're looking through the lens, and you're watching through the lens.

But you can't hear the words. The facts of what happened are what the lens sees and not what your brain hears. And when you separate what you hear.

From that, you reduce the possibility of interpretation.

If I just looked at my parents, they were having a conversation. I guess I shouldn't go over by the speakers.

They were having a conversation about money. I didn't know what it was about, but would I have had the same interpretation, carried it with me for 30 years? Probably not.

So I want you. One of the things I'm going to ask you to do is to go back to your earliest money memories and start asking yourself, what was the interpretation? What did I see? What did I hear? What did I feel? What did I make it mean? And what can I make it mean from a positive standpoint?

Because until we clear that out, all the tactics, all the strategies won't work because you have a money set point that keeps you somewhere. Now, once we do that, there's two journeys you have to be on. How many are entrepreneurs in here? It's hard for me to See? All right, good. Proud and high. There you go. Good deal. All right. We are raised with industrial age thinking still. And that industrial age thinking is this. Go get a job, go build a business. In other words, go earn money. Just make money. Make money. Make money. That will solve all your problems. No.

See, they tell you that you're going to make money. Now, there was a time in our lives where they said, work for this company for 30, 40 years.

And we'll give you something called a pension, lifetime income. They took care of us. We started living longer. And the company said, wait a second, it's too expensive. Y' all living too long.

So what do they do? They gave us 401ks, they give us IRAs. They give us all these other accounts in different countries or different things. But what they did is they dumped it in your lap.

With no explanation, no training, no nothing, and made it your responsibility to create lifetime income.

And the problem is, we think we can solve that problem by earning more. Here's what it is. The two financial journeys you're on. One is the earnings journey. We all have to make money. We all have to do that. But the earnings journey was never meant to give you financial freedom. It was never meant.

To give you the control of the freedom of your life. It was simply meant to give you cash flow to optimize earnings, to optimize value, to create a solution, to have an impact. That's it. No more. Nothing in there says freedom. How many of you have a business right now.

Would you call it? I mean, I remember when I first started, I was on a treadmill. I don't think I was running the business, it was running me. How many were late? Yeah, yeah, yeah. Two hands up over here. Uh huh.

So here's the challenge. No one told us that we needed a second machine, a second journey. The second journey is the money machine. The second journey is the money journey. See, in the hands of a six year old boy, I figured out that I had to get off the treadmill if I was going to be a dad or I had to find a way to do that. And the only way I could do that is if I separated my ability to earn from the efforts to earn it.

Okay? Hence the subtitle of the book, getting your money to work harder for you than you did for it. So you create this money machine. This is where you find it. This is where you start to take the cash flow from earnings and start to build the machine. We'll talk about what goes into it and how you do it. Because the money machine is where you optimize assets and you optimize time. In other words, you get your time back. And I actually think your wealth should be measured in time and not dollars.

Amen. Yeah.

Yeah.

So here's. Here's how this plays out. I think that as. As George Bernard saw Shaw says, bottom line is you look for the circumstances you want, and if you can't find them, you go make them. Now, I. I'm paraphrasing that, but you can see it up there. And I think it's great. We're going to create your circumstances, but circumstances will change. Circumstances will. This. This is the first time that I'm ever going to do this publicly, but I'm going to show you my financial journey, at least a portion of it, y'. All. So here's. And I'm going to tell you why I'm doing this because it's important to see this. At 29 years old, I was worth $100,000. That was a long time ago.

1990 is when my son was born. It took me five years to double that to $200,000.

But what you're going to notice as we go through this is that 1999, four years later, I over doubled it again.

Okay? One year later.

It went to 750. I'm doing good. At 40, I crossed the million dollar mark. Feeling good.

2005, I'm over $3 million.

Except for that hiccup, see, right there.

So at 44 years old, I'm worth $3.1 million. I get into an investment.

That turned out to be a Ponzi scheme.

Wiped out one third of everything I own. Between me and two friends, we lost four and a half. Over four and a half million dollars. You want to talk about the stories I told myself?

So I went down.

I dropped to a million eight. Still not bad. But look, when you. You drop. Drop one third of everything you own, you're sitting back and saying, what do you do? Here's the challenge. And I tell you this for. For this reason, I don't care where you're at today with your money, your finances, you, your age or stage of life. I don't care about the bad decisions you made. I've made them, too. And for some reason, for some reason, y' all had to make them to get here. And there's a lesson in it, and there's a reason for it. What I figured out with this Ponzi scheme was until I was willing to accept my role.

Role, not blame.

In it.

I was not prepared to heal from it.

So whatever it is, it's about your role in it and not the blame for it.

And so once I got that straight, then I was open to saying, well, what are the lessons I learned? How did I learn? What did I grow from? So I grew from this by having the ability to sit back and say, what are the rules that I ignored? And how do I make sure that no one, including you, ever, ever have something like this happen again? So I put rules in criteria in investing rules in. It's the stuff I write and teach now about. Because I'm sitting back going, hey, y', all, if I spent over a million dollars for an education, you might as well get the benefit of it. Yeah, yeah.

18 months. 18 months from that, from that, I was back at it.

And now, 15 years later, we've just kept on going. Now, it doesn't mean that I haven't made bad decisions, but here's what I want you to take from this one. Mistakes happen.

Forget the blame. Take the roles. Get the awareness. Take the lessons. Let's move on. And we start from wherever you're at. 2. If you look at what's happening here, look at the time compression.

Y' all can't win the wealth game if you're not on the field. If you want to stand on the sidelines, you want to sit in the stands, it's not going to work. You got to get on the field, get on the field, play the game, and it starts to happen. This is what I mean. When your money's working harder for you than you did for it. Because now, all of a sudden, I'm doubling on an ongoing basis. So that is understanding the journey. Understanding it. Now we got to define the journey.

Defining the journey is about.

You knowing where you want to go. So I'm going to give you a couple of realities. I gave you some myths. I'm going to give you a couple of realities here. And the first is this. You can build a money machine. Yeah. How many want to build a money machine? Let me hear you say that's money. All right, here we go. It's your money. Heck, yeah. Wealth creation. The fir. The second reality is wealth creation is a today thing. There's something that I call the wealth creation curve. The challenge is this, is that there's a place on this wealth creation curve that we all have to live for a period of time, and that's the wealth flatline. That's where you first start out. You're going to listen to someone like Mel Abraham tell you to get in the game. Get in the game. Get in the game. Put money away. Put money away. You're going to say, yeah, put money away. I do it year after year after year, and after six years, you're looking at it, and he goes, yeah, I'm $67 higher. This guy's an idiot. He doesn't know what he's talking about. Here's what it is. At the beginning of the game, you have a spring. You're compressing it, you're compressing it, you're compressing it. And when you hit the tipping point, that spring unloads. And when it unloads, you hit the acceleration zone. That's where you need to get. Now, the challenge is this. There's four things that will drive your wealth right now. And these are the four things I want you to understand and I want you to carry with you. And the first is this. We think that the first one is the only thing we need to manage. And I said it already. And that is this. Income.

Income.

Y'. All. The bigger your shovel, the easier it is. I get it. But a big shovel doesn't give you freedom. A big shovel doesn't give you wealth. A big shovel isn't going to give you the money machine. If you think that's the case, let's talk about Michael Tyson. Although he's fighting again. Let's see what happens.

I would not get in the ring with that boy. He is. If you watch him training right now, he's. He's an animal. Yeah, Michael Tyson, Burt Reynolds, Nicholas Cage. I can name all of them that have made hundreds and hundreds of millions of dollars and they ended up broke. Some of them still are.

So if it's not the income that is the critical factor, what is?

This is the savings rate. This is the most important thing to driving your wealth. How much of the income are you putting to work for you? How much of the income are you putting to work for you?

Wealth has to be a priority.

Money comes in. It's got to go to the future first.

The third aspect that you need to control is your investment returns. What are we putting it in?

And we can talk another time about the kinds of investments I'd put you in. Here's what I believe you need to do, is you need to start with safety first, growth second.

If you're trying to hit a home run every single time, guess what? You're going to strike out more often than not. So I want safety first, growth second. So we're going to get A foundation. We're going to get critical mass, and you're going to grow from there.

And everyone's different. If you're 22, you're going to do something different than 62.

Yeah.

Oh, to be 22 again and have the knowledge we have today, huh? Yeah. Wow. No, that might be scary, too. So. And then the last one. Last one is this time. Y' all have time. Hey, here's what we can control with time.

Now.

That's it. Whatever happened in the past here, people go, mel, is it a good time to invest? I go, did you invest yesterday? They go, no. I said, then it's a good time.

Did you invest a month ago? No. Then it's a good time. Now, I'm not telling you what to invest in, but the bottom line is you can't win the game if you ain't playing the game. And the only decision you have to make about time is, are you committed to it? It's the only thing. Because here's the deal. Can't do anything about the past. You can wish that you were Henry and started at 18, but you're not. We can't. If you can figure out how to go back, let me know.

I wouldn't take Sherry Deal to the prom again, though.

Sorry. I just. My wife is like. Things just come out of your mouth. I go, see, at my age, it's like if I don't let it out, it's just. Yeah, you just gotta. So I said. And then you deal with the aftermath. Usually it's her face, and I go, oh, that one's over the line. House chores, here I go.

If you're worried about the future, then you're gonna be frozen in anxiety. So let's just live today.

And make the decision. How many are willing to make the decision to get in the game today? Yeah, I don't care how much you get in the game with. I just care that you're in the game because, remember, it's a behavior. Because here's the other thing. The reality is that little money makes bigger money. Little money makes bigger money. Here's how I want you to live your life. It's called the wealth priority pathway. I want you to live your life this way because too often people live their life this way. I'm going to earn money, I'm going to spend money. I'm going to have my lifestyle, and I'm going to see what's left, and I'm going to invest it.

And it's hard. Today. You've got the Internet.

Bought $300 worth of shirts from Instagram. I didn't know if they fit. I got a 900 coffee maker that my wife's going, what? I go. She says, where'd you get it? I go, instagram.

But I can order her a coffee from my phone from here.

It's kind of cool. Honey, I made you a coffee. Do I get points?

But here's the thing. Spend money, invest money. What are you doing? You're building. So spending money is today present. Invest money is your future. You're building your future on your scraps.

I want a better future than that. Here's what we need to do. And this is what the wealthy people do. They say, I'll make the money, and I'm gonna flip it. I'm gonna make investing the priority, and then I'll create my present on what's left. Now, you might look at me. Yeah. Now you might look at me and say, wait a second. If I did that, I couldn't afford my life.

That's all right. Then we go back to the beginning and say, how do we get a bigger shovel?

Make more money? Yeah. Instead of saying, then I can't, how about saying, how can I?

What do I need to do? What do I need to be to make that happen? And then this one's a big one. Okay. Especially now, because there's a lot of uncertainty in the world, especially with what's going on in the economy. And then we have this thing, the carnival that's coming up in November. I mean, it's. The election.

Is. You cannot save your way to wealth. I'm gonna Let me introduce you to four people really quickly. Here's. Here's the thing. You cannot save yourself to wealth. So there's. There's. There's. Tim, there's Justin. Sorry, Justin, Sally and Angela. Justin's the photographer around here. That's why I said, sorry.

Has nothing to do with him. All right, so Tom and Justin are going to invest 5. They're all going to invest $5,000 a year, just different times frames. Okay? So Tom is investing $5,000 from age 25 to 35. So 10 years, 11 years. So he invests 55,000, and Justin's going to invest the exact same amount, but he's going to wait a decade. He's going to start at age 35. You got Sally, that's going to gonna go from 35 to 65. She's gonna invest 30 years.

And then you got teacher's pet Angela. She's gonna do it the whole Time.

So what do they invest? 55,000. 55,000. 150,000. 200,000. That's it. Let's look at what they end up with at age 65. Okay. Age 65, Tom ends up with $900,000.

Yeah, Tom. Go, Tom. Then watch this. Justin. Sorry. Justin.

He invested the same amount. He just waited a decade. What do you think he's got?

400,000. Not even 50%. He did the same thing, y'. All. When you invest at 20 years old, the multiple on that is 88 times. If you wait five years, it drops in half to 44 times.

Sally. She invested longer than Justin, but started the same time as Justin. Guess what? She still didn't reach.

Ben. Teacher's pet. Look at her. One and a half million bucks. Now, here's this. Let me introduce you one other person. This is Saul. Saul's one of those guys that's scared of his shadow.

He doesn't want to take any risks. So what does he do? He invests at 2%. He invests the same $200,000 as Angela did at $200,000. At 2%, he ends up with a mere.

300,000. You cannot save your wealth. Way to wealth. You have to get in the game. You have to get in the game. All right, you ready to do some math? All right, let's. Are you ready to figure out your kind of a target number? Because we want to define it. All right, this is. Okay. This is the ballpark. We're doing math, people. You should be excited. Yeah.

You don't know how much that warms an accountant's heart.

All right, so this. This is a formula that you can use. You want to be more precise, and you will get more precise. But right now, anyone know what their financial freedom number is? That is a calculated number or. And not just a desired number. Beautiful. I see a few. Y' all should know it. Not. Not because you're. Yeah. Not because it's. It's. It's so you have a trajectory. It's so you know where you're going.

So I'm going walk you through this.

And we're going to use something called the 4% rule. And it's a rule of thumb. It's very, very rough. But it gets you started. It gets you starting to think. It gets you starting to look at things. You have to make a ton of assumptions based on it, but as you get closer, you can keep refining it.

So what you're going to start out with is. What do I think? My monthly expenses when I Retire, are now someone like me. What we did is, is as we built it out, is we started to look at things that we wanted to do. My wife and I, we love to travel. We love to travel, and we don't travel on Spirit Airlines. Anyone? Anyone? Travel on Spirit Airlines? So thank God you're here.

Okay.

So let's assume that my. My monthly expenses are $10,000 a month. Okay? You're going to calculate it. You'll just write the formula down. You can work on it, because that's one of your homework assignments. Multiply it by 12 so you know how much you need for 12 months. Now, you're going to estimate it down the road because you can look at today, and then this number will be what you need to support your lifestyle today. But if your lifestyle today isn't what you want, then we got to ratchet it up. Everyone follow that. So now I'm going to have you multiply it by 25. What's the magic of 25? It's the inverse of 4%.

And I'll show you why this proves out for a moment. Okay? So all you can do is 120. If it's 120,000 times 25, my ballpark number is 3 million. That tells me that I need $3 million. And if I have $3 million, here's where the 4% comes in, and I take 4% off of it. I'll do the math for you. That's 120,000 a year. So I'm able to support that. Now, do I want to cut it that close? No. Plus, there's all kinds of assumptions like taxes and all that stuff. But I just want you to start to understand the mathematics about your future. Does that make sense? Y' all with me? Because sometimes you do math and it's like, oh, but I want to do one more thing here. You might have already saved some money. You might already have part of a nest egg. So if you have a nest egg, let's say of $300,000, then you reduce it by that. In this case, it would be 2.7.

All this does is tell you what horizon to look at. But right now, based on what the hands were in the room, there's only two or three people that know what horizon they're looking at. But I want you to have that in mind. Not for the number, but for the lifestyle. Yeah.

Because we started with lifestyle, and that's how we start to calculate this. I go in more and more detail of this in in the book where we start to really break it down one number at a time. But to start for someone, for an audience at the beginning, just do this. And at least you're looking at it. Now, here's the other thing. There's this tendency to look at and go, I need, like, $7 million and I got Zippo.

I'm never going to get there.

Here's why we think we'll never get there. We think that our wealth grows linearly. Remember the wealth creation curve. It doesn't grow linearly. It grows exponentially. And you will get there if we just get in the game.

All right, so this gives you the ability to at least define the target at the start. Now we sit back and say, okay, now I have to create the journey. So what did I do? We understood the journey.

We defined the journey. We're going to create the journey.

Here's what I want. Want to hit on is now I want to talk through the five levels of income. And three of them are the ones that will give you your time back. Your most important purchase you will ever make. The most important purchase you will ever make in your lifetime is your freedom.

Yeah. Yeah, you can plot that. Hell, yeah.

It ain't. It ain't the coffee maker, Mel. And you got to look at it as every dollar you put away is a freedom dollar. It buys you time back. But here's the challenge. We go through the earnings journey, and here's how we start. And this is the five incomes. At the very beginning, we start with what we call active income. Now, I do not believe how many have heard of the term passive income? Yeah, it's a myth. There's no such thing as passive income. And, you know, I get what they're trying to get at. But here's the challenge. You all have a. You all have a relationship with your income. You have a relationship with your money. You have a relationship with your wealth.

How many are married in here, are in intimate relationships? Let me just ask you something. If you were passive about that relationship.

How long do you think it would last? Yeah. See, my wife and I, we're hitting 13 years the day after the book comes out. Yes. Yeah. But if I was passive about it, we would have never gotten past the year. Well, we almost didn't get past that first year. I was a bullheaded, stubborn kid, but she. Well, I wasn't a kid because I was 50.

My family didn't think that I was getting married, so they looked at me and said, she's got the guest list. You have a witness list. Because we don't believe it.

Active income is a one on one relationship between your earnings and your income. It's where we all start jobs, solopreneur, that kind of thing. Problem is, a lot of times we stay there. That's what I was doing when Jeremy drew the picture of me. There's nothing wrong with it, but we got to understand that it doesn't give us the freedom. Because what I want you to do is not look at passive income, but leveraged income. Leverage, meaning that it takes less of your effort to generate it.

And I want more leveraged income than anything else. The second level, once we figure this thing out and say, God, I gotta get off this treadmill, I want to take more than two weeks off, I can't take a day off. They're calling me all that stuff, stuff. So what do you do? You create a business. You say, I'm going to hire some people or I'm going to create a team, or I'm going to get people to, to mow the lawn and do the things. And I, I get my time back. See, we start to spend our time to make money. And then over time we start to sit back and say, wait a second, I'm going to use my money to buy my time back. But the best thing is to use your money to get more money.

Now, most of us live in these two zones. I make the majority of my income in these two zones when I'm, when I'm working.

Okay, the next three is where your money machine's built.

The next level up is residual income. Create it once, get paid over and over again.

Residual income.

Downlines in network marketing or direct sales, licensing deals, royalty deals. Create it once, get paid over and over again. Yeah, absolutely. Actually, that's asset based. So we'll talk about asset based really, really quickly. So asset based is buying, buying equipment or real estate.

Less time.

But still time involved. I don't have a lot of real estate. Truth told, I have some real estate, but I don't want to get the call at 11 o' clock at night saying the toilet's clogged. So as a matter of lifestyle, we own real estate through syndications and other things, but we have that. The key is that it takes you out of the game. Then you have the residual income. Okay, Then you have the residual income.

And then the last level is this portfolio income. Stocks, bonds, ETFs, annuities, those kinds of things. Yeah. The most leverage is going to be this. Now, is it passive? No. Do I check it? Yes. Do I have meetings about it. Yes. Do I analyze it? Yes. You're going to need to do the same. If you're not checking the pulse on the patient, the patient's gonna die. The first complacency is the first step to crisis. If you don't think so, what happened to Blockbuster Video?

Complacency is the first step of crisis, especially when it comes to your money. So here's the reason that this is important. Now, here's how I want you to do this. You must hear me out on this. You must get one income stream first.

Running well before you try to multiply it. Because now all of a sudden, you're diluting your efforts, you're diluting your resources, you're diluting your focus, and it won't work.

I tried it.

So what you're going to do is you're going to get your active or your business working well and you're going to use that to fund the top three. When you do that properly, here's what happens some of you know, in 2018, 2019, life was good until someone. I ended up in the hospital with a surgeon staring at me and he says, ooh, looks like you have a 5 centimeter tumor in your bladder. Looks like you have cancer.

My life changed.

I looked at my son on one side, my wife on the other. I said, shut everything down. Shut everything down. So the business and the active income, we shut down to close to zero. Because I said, I got to fight. I got, I got to, I got to beat this thing. And I called my wealth team up and I said, turn on the machine. Because I had enough in the machine to generate cash flow to pay for our living. And all I said is that instead of continuing to build the machine, just send it to us, let us live. So now all of a sudden, 100% of my of our living is from the top three.

Three surgeries, four tumors, 57 treatments. What's the date today? The second four days from today. I will be clear.

Thing is that I wasn't scared of the cancer, but I was pained by the thought.

That I wasn't going to be able to live my life because I loved life too much. I loved my wife too much, and the kids, the grandkids, all of it. Why do we do this for life?

Now that I came back, told the wealth team, shut the machine off, keep it investing, let it grow some more.

And we turned back on the act in business book. Speaking back in the game.

When you do this right, you have a life that you get to live instead of have to live, you have a life that is a life built on choice, not demands. That's what I want for you. And so this is where you get to this last stage. And that is to live the journey. To live the journey, to understand that we gotta live into it. Now, I talk a lot about legacy.

Call it the legacy factor.

But most people mistake legacy. They say, I gotta build this. I want to build this wealth. I want to build it, and I want to be able to leave a legacy. I want to leave a legacy for my kids. And this. Now, I don't want to leave a legacy for my kids.

I want to leave a legacy in my kids.

And the way that's done is not what I leave, but how I live.

And this is why I think we need to look at it this way, is that we get a chance and we say, how do I do this? Because here's the other side of it. When you look at your. Your life, our earnings, that earnings machine, there's just the seeds. For us, the challenge is we were trained early on to eat the seeds.

To build the money machine. We need to take a piece of those seeds and we need to plant a crop. We plant the crop, and now you can eat a portion of the crop. The crop regrows and will continue to grow and continue to grow to take care of the people you love, the missions you want, the things that matter to you.

My son introduced me to the concept.

Of the money machine with his drawing.

Cancer, showed me the importance of it.

And when you take that on and you start to look at it and you sit back and say, I do this right, I become something in my family tree. I get a chance to do this right. I become that financial inflection point for all the generations that go beyond me. Amen. That's the biggest gift for me. Now, I'm going to tell you something here, and I put it in the book, too.

You never, ever, ever transfer assets without transferring skill sets.

My son Jeremy, if he didn't earn the right to get the machine, it would go to charity.

Adam, send him this clip, please. No, he's doing just fine. He's 34. She's 33. Homes. Multimillion dollar net worth. The brainwashing started at 10 years old.

But here's the thing. You have a responsibility.

And that responsibility is something that was gifted to you at birth.

We were all brought here with a unique gift.

Some of us have to nurture that gift.

Some of us already have it. It's naturally it's innate. I mean, you look at. I mean, she. She was hard, but, I mean, Ashley in that voice is, like. Just, like, golden.

But I believe that our job here is to nurture our gift, to. To bring it to full expression, to live specifically to what you were called to do. There is something about this journey that I'm on right now since the cancer and to do all of this.

That tells me that I'm on the right path. I had a conversation with a friend because the cancer came back one time, and I was struggling with it, and he just. And we're talking, and I'm walking on the beach, and he says, you're having a hard time with this. And I said, yeah. I said, I can't figure out why I got it. I'm not a drinker. I'm not a smoker. I said, I don't deserve this.

I want to be here for my kids. I don't know how to do this. And he says, you keep looking in the past. And I said, yeah. He says, let me ask you something. I said, what? He said, what if the reason you got the cancer.

Isn'T because of something you did, but something you're meant to do?

What's the message there? And I said, the message is the book. The message is the journey. The message is this. Because the pandemic hit right after the cancer, and I watched people struggle with finances. There's no reason for this. We shouldn't have to. If we just talked about it, we just gave the tools, we made it simple, and we just said, here's the frameworks, here's the processes, here's the things. To take control of your financial destiny, to create something that becomes an inflection point in your family tree that allows you to say, I lived it fully, that I got to the point where I'm standing there. I don't know how many years you've got left, and may it be many, but my toes are on that grave, ready to step in. I am sweaty, I am dirty, I am tired. And I look back at everyone I loved and said, it's a hell of a ride, and I'm good to go. That's what I want for all of you. Yeah.

So with that, let me give you some steps to do. Okay? I have so much more I could share with you. I could do this for days. But let me give. Give you some steps to really bring this home. One, I want you to figure out the money story. So I want you to get a journal. I want you to get a Page. I want you to get some quiet space, get, get some, some quiet music, probably not ACDC or something like that. And I want you to journal about your money stories. What was the interpretation that you gave it? What was the meaning? What were the facts? What is the more empowering meaning? What were the lessons? Take that away, strip away that money identity and start to look at the behaviors differently.

Number two.

Get specifically clear about what you want your life to be like, not the money life. What kind of relationship do you want, what kind of health do you want? What kind of relationship do you want with your kids, your grandkids.

How do you want to live that?

And then use that as the vehicle to start to look at that ballpark number calculation and calculate it more specifically to you.

That becomes your trajectory, that becomes your North Star. Because now you can ask yourself the question, when you see it on Instagram and say, coffee maker, does that move me closer to my vision?

And you could rationalize it and say, caffeine, I'll get there faster.

You say, yeah, my wife says I can spin anything. I said.

Typical accountant, huh? No.

Number four, I want you to choose the first income stream you're going to get rolling, and you already have one rolling. Then I want you to choose the second.

We're not, we're going to do them one at a time. And the second one, what I'd like you to do is sit back and say, does it. If I can do it in the top three, asset, residual or portfolio, that's even better. And we can talk about how do you invest and all that stuff later. But I just want you to start thinking about these concepts and introducing them to you so we can then have deeper conversations.

And then number four.

Five. See, I can count. I'm account.

Is this. I need you on the field. No more in the stands, no more on the sidelines, on the field. So whatever business you're in, whatever work you do, I want you to take that first sale of the week, that first sale of the month, that first sale of something, and I want you to put, put it in a high yield savings account. I need you exercising the muscle. Just exercise it. Don't think about it. Here's the problem. The only way you're going to build the wealth and have that financial freedom is if you do the thing. Thinking about doing the thing isn't doing the thing. Planning to do the thing isn't doing the thing. Talking to someone about doing the thing isn't doing the thing. The only thing that's doing the Thing is doing the thing. Yeah. So let's do the thing. Even it's $5. Even it's $10. Whatever it is, it will grow in time. Because now that muscle memory starts to get there. Got to get you in the game.

And in the end, there's this. You've been given three gifts in our lifetime. The first gift.

Is the gift of time.

It's the most precious gift. Question is, how are you going to spend it? How are you going to invest it? What are you going to do with it? To live that rich life that you deserve, One that's experienced, one that becomes an inflection point to change people's lives.

The second gift is the gift of talents. Remember I said you were put here with some gifts. You wanna nurture that? Because here's what happens. Those gifts aren't for you to take with you. Those gifts are for you to nurture, to grow, and to give back to the world. Before you leave this world, you're just borrowing the gift and then you give it to someone else to take it the next.

Little while. And the third gift is a gift of treasures. They're the people that you get to share life with. They're the people that you love. They're the people that bring richness to you. Because I promise you this.

The things that make you rich will never be found in the bank account. They will be found in your life, in your heart, in your soul, the way you live it. And with that, the last thing that I ask of you is that no matter what happens, no matter what age or stage, no matter what comes your way, to never, ever, ever stop dreaming. Thank you. Thank you for listening to the affluent entrepreneurship with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

And that's it for this episode of building your money machine where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcasts, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get the this information and this message out to people. Because I truly believe that financial freedom is your birthright. And I want to help each and every one of you claim it. Thanks so much.