7 Things I Obsessed Over That Made Me Richer (Retired at 45)

7 things that I've obsessed over that has made me richer. I remember the day that my son Jeremy— I was a single full-time dad— drew a picture of me. And here I look at this picture and it's me in front of 2 computer screens, a phone in each ear. Jeremy wasn't in it. The dog wasn't in it. No one was in it but me. And when I asked him why, he looked at me, he says, Daddy, you're always working. And that moment was a mirror into my soul of me screwing up as a single dad. The moment changed everything. It was building financial security, but that's what I was telling myself. But I was trading the very thing that security was to protect. And that was my time, my presence, my life, the things that were dear to me. Today, today, I'm gonna share with you the 7 obsessions that broke that bind. The 7 obsessions that got me to a place where by 47, I was working by choice, not by demand. That gave me the time to be present in my son's life at a level that I never imagined. This is Building Your Money Machine, where we help you master your money, eliminate financial stress so you can live a life by choice. Because earning more doesn't make you free, a money machine does. And I'm your host, Mel Abraham. And after 30+ years as a CPA, an entrepreneur, and a money mentor, and someone who's walked this financial freedom journey from nothing to something, broken and had to rebuild it again. I've seen what works, and it's not about bigger numbers. It's about bigger and better choices. So let's do this. So let me ask you something. What if the thing standing between you and the financial freedom that you want, real financial freedom, isn't how much you earn? It's how you think about the money. See, because here's what I've learned after 30+ years as a CPA, as a money mentor, as an entrepreneur. And walking the financial freedom journey myself from scratch, and after making some expensive mistakes along the way, and I mean like expensive, we'll get to that. The kind of expensive that makes you want to go back and have a very serious conversation with your younger self, preferably before he signs anything. The truth is this, most people have an income problem masquerading as a wealth problem. And they make more, they spend more, their lifestyle grows with every single raise. And at age 50 or 55, they look up and they realize the number in the bank account is bigger, but they're no more free than they were at 30. See, I know that story because for a stretch of my life, I was that story. See, I started my journey at 29 years old. By my late 30s, I had crossed my first million. And then in 2005, I made a financial mistake that cost me and two close friends of mine more than $4.5 million combined. I lost well into the seven figures personally. I lost one-third of everything I own. I had to start over. And when I thought I would be financially free in my early 40s didn't come until about 47. See, here's the thing. It came because of 7 obsessions, not strategies, not tips, obsessions, things that I thought about constantly, protected fiercely, and refused to let go of even when people pushed back on me. And today I'm gonna break down all 7 for you. For you. So let's get into it. And obsession number 1 is this: direct every dollar before it ever arrives in your life. People have heard me, if you've watched me for any length of time, say every dollar needs to have a job description. Now, here's the most dangerous moment in your financial life, is the moment you get paid. That's the most dangerous moment, because if you have not allocated, if you've not planned for what that money, that paycheck, or that that check is gonna do, then emotions come in, into play. Think about it. The direct deposit hits, the money floods your account, your brain lights up with dopamine, and you've got options. You can treat yourself. You've earned it. Maybe you'll transfer some to savings later. Okay? Maybe you'll knock out some of that credit card next week. And the window right there, that's where most financial lives quietly, literally fall apart. Not because of some big dramatic mistake. See, nobody sits down one morning and says, "I decided to derail my entire financial future today." They just did it through drift. A little here, a little there, and suddenly the money's gone and they're not quite sure where it went. It's like financial magic, the disappearing act nobody asked for. Because what I learned and what I obsessed over very, very early on is that you have to assign every dollar a role before, and that is the key, before it ever lands in your hand. Some people call this budgeting. I call it planning because a budget sounds like punishment. It sounds like a diet. You can't have those desserts. A plan sounds like a purpose. See, a budget tells you what you can't do, but a plan tells you and tells your money where it's going and what it's going to do for you. And when every dollar already has a job before it lands in your hand, you're not tempted because there's nothing left to be tempted with. Think of it like this. Imagine every dollar you earn is a new employee showing up at your doorstep on payday. And if you don't put that employee to work immediately, they're gonna go wandering and they're gonna go and spend themselves on your behalf. But if you walk in and say, you, you're the mortgage, you, you're the groceries, and you, you're the investments, you, you're the travel fund. Now, every single dollar has a mission. This became the foundation of how I think about money flows and priority. The obsession underneath it is totally simple. Money without a direction is money without a purpose. And money without a purpose doesn't build wealth, it builds lifestyle. And here's the bonus though: when you direct your dollars intentionally, spending stops feeling like guilt. Because when you plan for travel, you enjoy the trip. It was already in the plan. You're not in the back of your mind wondering, ooh, if I should have just saved instead. How am I going to pay for this trip? It's already paid for. Freedom isn't just a number. It's also the feeling that you're doing the right thing with your money. That leads me to obsession number 2. Refuse lifestyle creep. Let me tell you about my truck. See, for years I drove a $30,000 truck. Nothing fancy, reliable. It got me where I needed to go. I lived in a neighborhood though where my neighbors were pulling out of their driveways every morning in their Mercedes, in their BMWs, in their high-end SUVs. Meanwhile, I'm backing out in my truck like the guy who clearly did not get the neighborhood memo. And I'm half expecting an HOA letter, okay, that says, hey, you gotta upgrade. But not once did I feel bad about that truck. Why? Because I wasn't comparing my vehicle to theirs. I was comparing what that car payment would cost me in wealth and what I wasn't building. See, that's what lifestyle creep really is. The silent, socially approved destruction of your financial future. Every raise, every bonus, every new win, society has a suggestion. Upgrade the car, get the bigger house. The problem is when you inflate your lifestyle every time your income goes up, your wealth never grows. Your expenses literally just eat the difference. "I can afford it" is one of the most dangerous sentences in personal finance because affording something and it being the right use of the money are two completely different things. See, I kept the truck and the money I wasn't spending on premium car payments went into investments. The truck was just metal. The investments though were freedom. Let your values, not your neighbors, decide your lifestyle. Now, I drive a nice car right now, and, but I bought it cash because I built a machine that could fund it. And that allows me to, to do the things that I get to do today because I didn't allow my lifestyle to creep me prematurely. Okay. Now I'm not saying not to, to enjoy your lifestyle when you have a windfall, when you have some sort of growth, Take a slice of it and celebrate and enjoy it, but not all of it. Because if the income grows and the expenses grow at the same rate, there is no wealth growth in that, in that timeframe. All right. Obsession number 3, get clear on your values. Okay. What actually brings you joy? This one's a big one. And a lot of people, especially in today's world, we don't think about what we really enjoy, what our values are. We look at the social feeds, we look at media, social media, we look at our comparison and we allow them to start to define what we are gonna buy, where we're gonna spend some things. See, when we decide what things bring us joy, what we value, what brings us visceral joy, not the social feeds, not what your colleagues are buying, not what the marketing machine has decided you're supposed to want, but what generally brings you real sustainable lasting joy, that's a different game. Because if you don't know the answer to that, your money will literally flow towards whatever's loudest. Loudest. And right now, what's loudest is designed to take your money. There's entire industries that exist to convince you that you're one purchase away from being complete. Spoiler alert, you're not. But they've got quarterly earnings to hit. So guess what? For me and my wife, travel is one of our highest values. We spend on it generously and without guilt. Cars, not so much. We don't lie awake wishing we had a different car. So we hold back there without apology. We took the time to say, what do we value? What brings us joy? And we align our spending with our values. Because when your spending aligns with your values, every dollar feels worth it. Okay, before your next significant purchase, do me a favor. One question: does this buy me more of what I actually want in life? Yes, spend it, enjoy it. No, you just saved yourself a whole lot of money and probably some buyer's remorse. That's the game I want you to play. All right, now real quick, before we get to the next 4, do you know what your freedom number is? One of the things that I think really is important is that you need to know what the trajectory is, because if you're going to decide where your money's going and how to do it, You need to know what that is. And I have a freedom number calculator. It's totally free. You go to MelAbraham.com/number, put some numbers in to define what that number is you're going towards to give you freedom, at least a ballpark for now. You'll refine it as we get closer. All right. Obsession number 4: Keep it simple. Oh, I made this mistake early on in my career. I thought complexity meant sophistication and it's not. Simplicity is sophistication. Because it may sound counterintuitive coming from a CPA, but complexity doesn't equal sophistication. It equals risk. I know, a numbers guy telling you to keep it simple. My accounting profession would be disappointed in me. But 30 years of watching people win and lose with money, including myself, that perspective changes fast. We live in a world that literally has been convinced that the more complicated something is, the more the more valuable or the smarter it must be. Here's what I've actually seen. The people who build lasting wealth are almost always doing something remarkably boring. Simple assets, things they understand. The complicated stuff, that's usually where the losses hide. Okay? In 2005, I got involved in what I believed was a sophisticated investment opportunity, something with astronomical returns. It was amazing. The people behind it appeared credible. They had, they had degrees. And hedge fund experience, I didn't fully understand it. I told myself the return was justified by the complexity. Well, guess what? Turned out to be a Ponzi scheme, and it cost me, cost me dearly. Personally, I went into 7 figures, well into the 7 figures. Between 2 of us, we lost $4.5 million. That loss became the forcing function for the rules I now hold close and sacred. The most important. If I cannot fully explain how an investment makes money on the back of a napkin or what could go wrong, I don't make it. Period. End of story. There is no discussion. I never, ever invest in something I do not understand, and I want to keep it simple as possible. I get it. FOMO is real, even for CPAs, maybe especially for CPAs, because we can run the numbers on what we think we're missing. And dang it, the numbers can lie. Simplicity in everything matters. Your spending plan, your savings plan, your investment approach. Less friction, more consistency, more compounding. That's the game. Simplicity isn't for people who don't understand finance, it's for people who do. All right, obsession number 5: protect your liquidity at all costs. This was a lesson that was Hard learned for a lot of people in 2008. But this is where I get a lot of pushback every single time because I talk about building a peace of mind fund in the wealth priority ladder. People will tell you, get an emergency fund, 3 to 6 months. I think that's cute, but I don't think it's enough. My target is 9 to 18 months in liquid reserves in a high-yield savings account. I get it. I see that face right now. Mel Abraham, are you serious right now? I get it. Then stick with me, though. The argument against this is reasonable. I get it. Cash isn't growing. You're gonna lose to inflation. You could have it in the market. Here's my response though. This isn't just an emergency fund. It's a peace of mind fund. It's an opportunity fund. Peace of mind first. When I have 9 to 18 months liquid, I don't panic when the market drops 20%. This is about protection of the wealth creation and the money machine, not the growth of it. I don't make fear-based decisions because I have liquidity in a downturn, it doesn't concern me. I don't have to liquidate assets at the worst possible time. In 2008, they couldn't get out of the real estate because the, the values dropped and they were upside down and they didn't have liquidity to carry it. When emotions go up, financial intellect goes down. Liquidity keeps the emotions in check. That's the challenge. Good companies beaten down by fear, not fundamentals, create opportunities, and if you don't have liquidity to take advantage of the opportunities when there is a downturn, then you miss out. From 2008 to 2012, my net worth literally quadrupled, not because I was genius, but because I had liquidity that others didn't. See, cash done right isn't dead weight. It's the weapon you pull out when everyone else is unarmed. Can't hit 9 to 18 months yet? I get it. Start where you're at. Build towards it. Get 1 month, 2 months, 3 months, 6 months, and then keep building. Okay? That's the game. Because if you look at the data, federal— the Federal Reserve research shows that roughly 40% of Americans can't cover a $400 emergency. So, let's not worry about the 9 to 18 months. Let's at least cover the emergencies first and start building from there. Obsession #6. Protect yourself from risk and volatility. See, after the 2005 loss, I sat down and asked myself a hard question. Not just what happened, but what was the crack in my foundation that let it happen? That's the struggle that was really in my face. The answer is I had let my emotions and my excitement override my judgment. I allowed them to stir the emotions. And when my emotions got involved, the aspiration, the desire to have these dreams, then my rules, my thinking, my logic went out, out the door. So when I understood that, I built rules. I rebuilt the rules, not guidelines, rules. Rule 1: Never invest in something I don't understand. I talked about that already. If I can't explain how it generates returns and what the realistic downside is, I'm out. And if I can't do it simply on a napkin, I'm out. Doesn't matter who it comes from, who vouches for it, who's in it. Think about what happened with Bernie Madoff. Everyone was in it because it was Bernie Madoff, and he made off with their money. Okay, rule 2: full due diligence or no deal. If, if access to the information is limited, that's not a hurdle to push through. That's a sign to walk away. I— these are some of the rules that came out. Not all of them. I've got a few rules I'm going to give you, but not all of them. But if my emotions— rule number 3— if my emotions are involved, I wait. Now, they may do things like in this Ponzi scheme, they did things about urgency and, well, we're closing the investment in 24 hours. Well, that's fine then. It's not for me. I let my emotions dissipate. The excitement, the FOMO, the manufactured urgency. It needs to go away. Those are signals to slow down, not to speed up. Trust me. I felt the FOMO. I've had the people call me and say, you've got to get in on this one. Now I use that feeling as a stop sign instead of a green light. I took a 7-figure loss to install that reflex. It would've paid for 2 or 3 PhDs at, at big schools to pay for that reflex. But here we are. But now it won't happen again. Rule number 4, No crowd following, no market timing. If everyone is rushing in, I get cautious. If everyone is fleeing, I get curious. You don't get wealthy by chasing the big return. You get wealthy by avoiding the big losses. Obsession 7: Track your investable net worth. This was huge for me because I was trying to earn, earn, earn, make money, make money, make money, which is what we're indoctrinated into. Income is great. I'm not anti-income. I'm a CPA. I love income. Income pays for the travel we talked about in Obsession 3, but income is not wealth. Income's what you earn. Net worth is what you have working for you. And the only and only one of those will set you free. Because you can earn $500,000 a year and have a negative net worth. I've seen it. It happens all the time. Even households that earn $150,000 or more, more than 1 in 5 are still living paycheck to paycheck. That's a problem because what you really have is high income, but no net worth, no wealth. High income's just a shinier leash. See, if your money stops the moment you do, you're not free. You're rented at a higher rate. That's it. See, what I obsessed over when I shifted, was investable net worth. It's not about— we hear this, this thing about, oh, it's not how much you make, it's how much you keep that matters. It's not even how much you keep that matters. It's how much you get to work for you that matters. The money machine, that's investable net worth. And I obsessed over how do I take the earnings, a good portion of my earnings, the— from the earnings machine and build the money machine and put it to work for me so it generates income without my efforts. I tracked it monthly at first. Small numbers. Okay. Little moves. Okay. But it was moving in the right direction. And over time, I then started tracking it quarterly and then annually. But that North Star kept me oriented through everything. See, the income is the fuel, it's the engine. But the investible net worth, that's the compass. That's the machine. See, and until you get a chance to separate your earnings from the efforts to earn them, you're never truly free. You might have a nicer treadmill, but that's not the goal. The goal is freedom. The goal is the life that you want. See, money is not really the goal. That's the whole game. Now, the real reason that this really matters is I want to tell you why I actually did all this. It wasn't because I love spreadsheets. Okay? I mean, I'm a CPA, so that's not entirely True, I do like spreadsheets, but mostly it wasn't that. It was because my son drew a picture of me. Here I was standing in front of two computer screens, a phone in each ear. Jeremy wasn't even in the picture. And I was a single full-time dad. That was our family image. That woke me up. And when I asked him, "Hey buddy, where are you?" He says, "Where do you think I am?" See, that broke something inside of me and I realized that the trade-off was too much. I was trading the very thing that security was supposed to protect— my time, my presence, my life. That's when the obsession stopped being about the money and started being about something much bigger. And that is working by choice, not retirement in the traditional sense, but reaching a place where I could then decide to work by choice, not by demand. Not because the expenses required me. I didn't want my expenses to own my time anymore. And where, where I had a chance to finally say yes to what matters and no to what doesn't. That's the key. And finally, at age 47, I crossed that line because of these 7 obsessions. See, these aren't 7 tips. They're 7 decisions about what you want to be with your money. And how they show up. It doesn't matter where you're starting from. What matters is that you decide right now that you're gonna build a machine, not just income, but a machine, because earning more doesn't make you free. A money machine does. This is truly about you owning your life. And those obsessions were about me taking control back of my life and having it in that way. And for the last 2 decades or so, That's the way I've lived, by choice. And I'm telling you, that's the ultimate freedom, to live a life by choice and to know that the people, the missions, the things that you care about are taken care of. And that's what I want for you. So I hope that you'll take these obsessions, put them into your, into your world, make them your own. Let me know which one. All right. I hope that this helps. I hope that you see the value in this. I'd love to hear from you. Send me a DM, drop a comment. Let me know which one of these obsessions hit you, which one you're gonna start with first. Let's get all of 'em in your life because I know what they've done for mine, what they've done for my students, and what they've done for my clients. And I know what they can do for you. All right, until I get a chance to see you in the next one, as I always say, always, always strive to live a life that uplifts you. See you in the next one. Thank you for listening to the Affluent Entrepreneur. Affluent Entrepreneur Show 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 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 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.