EXCLUSIVE: Building Your Money Machine For Financial Freedom - PART 3

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.

Hey there, and welcome to this episode of the Affluent Entrepreneur Show. This one, it's a different one. It's a unique one. It's something that I haven't done before. So if you hadn't noticed, I have been in a special training series. I do this once a year. It's called the Affluent Entrepreneur Experience. This is my live three part series that I do where I'm helping people just like you get the priorities, the principles and the processes it takes to build a money machine. And we know that the money machine is the key to your freedom. It's a key to life of choice. It is a key to getting your time back.

Okay?

And so in this episode, what I've done is I've taken the training and I've condensed the training down into the highlights, the juicy stuff that you need to know to start to move yourself forward on the road to financial freedom. So take it all in, take some notes, let me know if there's anything I can do to bring it further for you. Enjoy this episode of the Athlone Entrepreneurship.

Let's start in. And here's what I want you to do as we start down this road is I'd love for you to grab the action guide, okay. And turn to page 14. We're going to fill out the exterior of this as we go through this. Okay? And do that now. I'm going to take you through each of the nine and we're going to evaluate where you are. Not for blame, not to beat you up, not so you walk away going, I feel bad. But so you are empowered, so you understand, so you are aware. This becomes your checklist of what you need to have in place. And as you go through it, you'll look at it and go, huh? If, if it's there, great. If it's not there, I know what I got to work on. And you're not going to work on all nine at the same time anyways. So we, we started, we started this Whole thing, yes. You're going to grow from where you are. Exactly, Tracy.

You're going to grow from where you are. So let me jump back to the slides and let's, let's, so let's walk through this because here's what we did. We understood and we talked about the generate and generate total, the accumulate and insulate pair. Here's what we know. Generate is how we scale our income. It generate is how we, how we create the, the cash flow stream that allows us to, to build the wealth. Okay? Accumulate is what allows us to build the machine and this is what allows us to protect it. We know that if we don't have the system to generate, we have no money, which it's a non starter for us. If we don't have the accumulate pillar down, we have no freedom. We're on the treadmill, we're running, we're earning, we're trying and we keep going, but we're not building anything that allows us to have that get to life, to step away, to have the critical outcomes. And if we don't protect it, we have no safety, nor does our family. So the very first critical outcome, the very first critical outcome in the generate pillar is that you have to have what we call an unshakable foundation. Okay? Unshakable foundation and so pillar. So the first accelerator is that we have to have an unshakable foundation. In other words, do you know, do you know where you are, where you're going, what you're doing? Are you.

Are you familiar with it? Okay, because if you don't understand it, if you don't have that foundation of the elements of debt and the elements of some of these things, then it becomes a problem. If you're not sure where you want to go and what you want to achieve, then you're not sure what to do to get there. Here's the challenge. Let me give you a story and then I'm going to get, then we're going to talk about a question and, and what it takes, okay? I had two boys come to me after their mother died. Their mother passed away. They came to me and they said.

Can you help us?

I said, what's going on? And they said, we are not good.

At this money thing, okay? I said, can we just give it to you and let you do it? I said, I don't do that.

It does you no good for me to do it all for you. Because when I'm gone or I step away or we separate our relationship, technical term, you're Screwed. I mean, you can't do it, so. But I said, I will stand by your side. I will guide you, I will educate you, I will empower you, and I'll equip you so you have the ability to make decisions, and I'll be there to guide those decisions. And I said, but why do you think you're no good with money? So. Well, mom died, we're worth $5 million, but dad died five years earlier. Yeah. And he said, when dad died, we were worth. Hold onto your seats. $180 million. I said, hold on a second. Yeah, exactly, Stace, you're telling me that in five years you wiped out $175 million? They said, yeah, folks, let me do some math for you. $180 million at a 5% return is $750,000 a month without touching the 180.

And I'm looking at it, and I go, what happened? And as I started to investigate, bad advice didn't pass skill sets. Someone stole from them. People gave, put them in investments they should have never been in. Why?

Because.

Dad was worried about passing assets versus skill sets. And I said, that won't happen again. We're going to skill you up and we're going to build you up. And so they're doing really well today. Okay. Now, they could have been doing hugely well had they done it right, but. And they weren't, in all fairness, they weren't necessarily in control. Mom was in control and she wasn't part of it. That's why I have Stephanie as part. This is why I say that your money journey isn't your. So a solo pursuit. The fact is, is that if you look at it, 78% of millionaires are first generation millionaires. They didn't win it. They didn't inherit it. They. They created it. They created it. Money magazine then did a study, and then you know what? 70% lose it all by the second generation. Why? Because they didn't pass skill sets.

I'd rather take the assets. If. If Jer. Truth be told, if Jeremy wasn't acclimated to learning some of this.

Where I could. I believe that he could take care of himself and take care of it and, And. And keep the legacy going for. For the generations in values. He would. He would not inherit a thing. He'd inherit a little bit, but all of it would go to charity when I knew it would do some good, but I wasn't going to enable them. And I think that's the thing that we need to look at. So I ask you this question on this accelerator, and I want you to rate yourself 1 to 10. Just, just write it down next to the accelerator. The second accelerator is this, is that once we have the unshakable foundation, we now need to look at this and say, what do I need to do with respect to income elevation? Okay? Income elevation. This is, this is how do I scale.

My cash, my income? This is the earnings machine. Okay. This is the five incomes. It's about really starting to figure out and start to build that. Okay. This is about looking at and saying, how do I diversify the. The money that I make? So I'm not making money just from one place. I learned this really an interesting way, because what I was doing when I was building my consulting practice is I was trying to get a consulting project. And it was a sizable project. They'd typically be 15 to $150,000, depending on what it was. But in order to get it, in order to get it, I would go speak, I would write articles, I wrote books, I would workshop. I would do all of these things. I was doing all of that stuff for free so I could get the one thing. Until I realized, well, what happens if I got paid on the journey to the project? So now I get. So then all of a sudden I got paid to speak, I got paid to write, I got paid to do all the things that were getting me the project in the first place. It certainly made it easier to hit the million dollars or hit the 500,000 or do that. And just so you all know, I'm totally upfront. I don't run a billion dollar, 100 million dollar company. I build wealth on less than seven figures of income a year. It's not about do that, doing that. Okay. And so really starting to figure out how to scale it, how to find opportunities for additional elements of income. Then we go to the last accelerator, and this is the generate pillar. And this is what we call essential evaluation. Essential evaluation. Ad I was all over the place too.

Essential evaluation, in other words, what are you looking at? What are you looking at on a regular basis? Are you looking at numbers? Do you even know if I. If I'm just gonna. I'm gonna pick on someone? Not pick on someone. I'm gonna just pick someone. I'm sorry, that sounded horrible. So I'm gonna pick. Is it Isla or Isla?

Isla.

It's okay. Yeah, give me a thumbs up if it's Isla. Did I pronounce it right? No. What is it? Isla. All right. Isla. Ah, okay. So if I were to just fly into her world, if I was just gonna come down and I sit in the cross from her, I go, hey, tell me where you're at. You know, do you know what you owe? Do you know where your money's coming in from? Do you know where it's going? And she looks at me, goes, I don't know. Well, then we got an issue. We need to know these things. We need to measure, because if we don't measure, we can't manage. If we don't, and if we don't manage, we can't get to the goal. So essential evaluation is looking at data now, not deep data. And I'm going to give you a few things I want you to keep track of. Just if you just starting out, if you're just starting out, this is what I want you to do. I love this. Brianna, is that you're, you're, you're reconciling it every single month. Beautiful. So when you're just starting out, here's three things I want you to track. Okay? Is the first is income.

By source.

Where is all your income coming from? So that's one.

The second is expenses by category. Where is it going?

Where is it going? And the third.

Is your net worth.

This is. Whoops. Net worth. This is basically your assets minus your liabilities. But it's not just any assets. It needs to be.

The assets that can create cash flow. Investible assets. If all you did was start with those three numbers and track them on a monthly basis, it would do you a tremendous amount of good. Now we look at more numbers than that typically. And everything, and a lot of it is, is driven by. I love scorecards, dashboards, and one sheets. So I have a one sheet scorecard called the Affluent Entrepreneur Scorecard where I track everything. I'll show it to you in a second. Which then leads us to the accumulate pillar. And the accumulate pillar, the very first.

Accelerator is wealth education.

Just getting educated. All right? That's all it is. And you all are doing it. You're here, you're here and doing it. And, and the key here is this, is that. Do you know, you know, do you, do you know? Are you educated in a place where you know what's going on? The right accounts, the right education, the right advisors, the right people?

I, I totally. My. One of the first rules that we talk about is that you do not invest in anything you do not understand. If you don't understand it, you're out.

And if you want to understand it, you spend the Time to understand it. If the advisor or the person that's going to put you in it isn't willing to take the time to educate you, I don't care if it's an hour or a hundred hours, then you're out. It is, it is a hard and fast rule with, for, for us, you know, if we don't understand it, we just don't do it.

So that's how we kind of look at things. Because now, because in this segment, this is where we're starting to build the money machine. So it's really important that we build it correctly. So the, so that then leads us to this whole idea of the second accelerator in the accumulate pillar. And this is huge. And that's asset allocation. Asset allocation. Look, when it comes to investing, we are going to invest in different types of assets and we need, and everyone is different. If I look at this, if I look at this, Christiane, Beau, Oilers, Romaine, Donna, I see all on the screen here and over here, you know, Deborah and Noah, we're all different. We all have different risk profiles. We all have different desires, we have different lengths of time. So we need to look at what assets are good for you.

Not what assets are good for me and say, I'm just going to do what Mel does. Because look, I just turned 62. I'm in a different game than some of you. I don't have young kids, I got young grandkids and I got a young puppy and a wife. So I'm in a different game than you. I have a different level of assets and wealth. So it changes it. And what we need to do here in this segment is really start to understand what, what your risk profile is, your risk capacity is and your risk need is. Okay, because that's going to inform us into where do we allocate the assets, how diversified do we get and what do we, what kind of location. So it's asset, it's allocation, diversification, location that starts to drive everything. In other words, is it in a tax account, is it in a tax, a tax free account, Is it in an etf, is it in a bond allocation is kind of in what kind of group. Then we start to break it down. Think about, it's like I want a truck, I want, I want this style truck and I want this brand of a truck. Okay.

It's starting to step it down. And that's the thing that, that we're really starting to, to build from. Thank you, Joey man.

So here's, here's why this is important.

I read a study recently, Risk profile is based on risk tolerance, risk capacity and risk need. I went deep into this in one of my podcasts too, so. So you can see where I walk through it. But here's the interesting thing that we need to. The ETF is an exchange traded fund. It's basically a basket of stocks. Okay. Is that this study said that there's one to two generations who have never lived through an inflationary time. Well, they're getting theirs now. They're starting to understand what inflation is and rising costs. Here's where I think it's important to understand.

That also means that there's a whole bunch of advisors out there.

Who have never lived and advised during an inflationary time.

And that's something you need to be aware of. Okay? That's something you need to be aware of. Okay? But the key here is once you know the assets, once you know your risk, you set things based on rules, based on priorities, and based on principles. And you don't sway, you don't allow yourself to get swayed. Otherwise, that's when you get in trouble.

It's how I got into the Ponzi scheme.

I literally ignored my rules. I ignored the voice, I ignored all of it. I got sucked in by the emotions. Exactly, Sharita. It's like have a plan and work the plan. The plan. Here's the thing. You create the plan from the vision. So the vision creates the plan. The plan informs the strategy, the strategy informs the tactics, the tactics inform the actions. Okay? Vision, plan, strategy, taxi, tactics, action. That's what happens. But the tendency is that, hey, I got $10,000. Where do I invest it? I don't know, what's the plan say? And so we need to build from that out and work from rules. Let me tell you what happens last accelerator in the accumulate pillar. And that is hands off automation. Hands off automation. Okay, here's what we know. How many of you out there.

Have never, ever bought anything? I'm looking at you all ever bought anything off of Amazon? Yeah, I didn't think. Have you not? Oh, my God. Who is this? Christiane, you've never bought anything on Amazon. You are a unicorn.

So good. Oh, my God.

Oh, you misunderstood. Okay.

So because here's why, here's what I'm getting at. Why do we want to automate this?

Yeah, we get smiley face. I'm telling you, the boxes we get like, Stephanie, I don't even know what I ordered. It's so bad. Now even Budo knows that the treats are in the boxes. So like, as soon as he sees the box he's sniffing, he goes, which one's mine? You know, and so it's crazy. But here's the deal. Okay, here's the deal. The reason we want hands off automation in our vesting is because.

Is it is hard to invest. Sometimes it's not at the forefront of our mind, but watch what happens. Why did I ask about Amazon? Because marketers figured this thing out. Marketers understand if they make. If they take the friction out of your buying decisions, you will buy more. Yo, all you got to do is tap buy done. Then the problem is, is that we don't do that. Amazon's got its own line item in my personal budget. Oh, gosh. So if we are not careful, we just buy away. Because it's actually so easy. Well, what we need to do is change it so we put friction in the buying decisions and take the friction out of the investing decisions. Basically, the money that's going into my investments, my 401k, my SEPs, my. My other tax advantage accounts, anything should be automatic without thought.

Without thought, exactly, Adam. It's one of the biggest barriers to investing. But if we turn around, like every day, every. Not every day, but every time money comes in, there's a piece of it that just goes away.

And I never look at it. I don't even know it goes.

I don't even know it goes. Those of you that are in the United States that work as job, what happens? You remember the first time you got a paycheck, you. You were thinking you were getting paid, you know, $10 an hour. And then. And you, you, you, you get the paycheck and the net check is like fraction of that. And they go, you go, what happened? Oh, taxes happened. You know what the government's doing? They take their money first because they know if they left it to you to pay, y' all would spend it and it wouldn't be money left for them. So they take it first. Well, what you need to do is be like the government. Take your investing first, make it automatic so you don't have to think about it, and put as much friction in the buying decisions as possible. So you have to think about it. That's. That's going to drive everything, and then revisit it and the numbers on a regular basis.

Automating it will make it easy. And all of a sudden a decade goes. 5 days go. 5. 5 years go by and you go, oh, my God, there's a lot of money there. Yeah. And it happened without your Effort. We have to create the machine on an. In an automated way. That leads me to the next accelerator. Now, this next accelerator moves us now into the next pillar. So we've been through, we've been through the accumulate pillar and the generate pillar. Now let's look at the insulated insulate pillar. Okay, now let's look at the insulate pillar.

The first accelerator in the insulate pillar is this. This is about protecting yourself from risks and loss and, and, you know, whether it's loss from thief, thieving, thievery, you know, loss from taxes, loss from lawsuits, all that stuff. The first, the first element of the insulate pillar is what we call risk classification. Risk classification. In other words, you got to know where the risks come from. Okay. Because here's what you're going to do with the risks. We're either going to insure it, we're going to eliminate it, or we're going to mitigate it. Okay, we're going to first try to eliminate it. Second, we're going to try to mitigate it. And third, we'll try to insure it if we can't. Okay, now you all might be going, I got no risks. I'm just a coach. Really mask something. What happens if you say something to a client that triggers them and they go off and do something stupid? We all have risks. How many of you all have kids out there? Let me see. Yeah, yeah, All y' all got risks. You got kids, you got risks, all right? And, and the risk could be, look, especially if they get to driving age, there's risks that you got to shield yourself from. There's also the risk of the kids coming back home and you got to support them at 30 some years old. That's a risk. Yeah. So it's about understanding what risks are there. And I have something called the 12, the Dirty Dozen, dream killers. It's a list of risks that we go through to look at. Hey, do any of these exist?

Some of the risks will include things like.

Health risks. The fact that, and that's why we do diversification. Those are risks that we need to watch out for, or they're still at home at 25. I know, I know. The next one is debt elimination. I am not one of those that believes all debt is the devil. So let me be clear. I do, at some point in your life, especially as you get up in years, want you to be completely debt free. I don't want that burden on you. There's two characteristics about debt. So now there's, there's two Types of debt, destructive debt and productive debt. The way I look at it, productive debt is debt you take on.

That will increase your cash flows or increase your net worth. In other words, expand your money machine. Okay, so it would be things like financing a piece of real estate, but you got to finance it properly. Financing a piece of equipment in the business, that's going to boost productivity. That kind of debt can be productive debt because on the back side of it, you have additional cash flow, you have additional assets, and it's expanding the size of your money machine if you do it right. Destructive debt, on the other hand, is financing your lifestyle. It's buying stuff, it's keeping up with the Joneses. It's big screen TVs, luxury vehicles that you can't afford. We don't rob our future to live a life today. The idea here is it is vastly more important that you are wealthy than you look wealthy. It's vastly more important that you are wealthy than you look wealthy. Okay? Now I hear people all the time say, well, I don't carry balances on my credit cards. I get it. Studies show that even if you don't carry balances, you pay it off every month because of the lack of friction in the buying habit. You overspend by 30%. Now, not saying not to use it, I'm just saying to be aware of it.

But in the end, we need to avoid destructive debt. We are now in a rising interest rate environment and a high interest rate environment. So carrying balances on destructive debt is only going to get more punitive, it's only going to hurt more. All of a sudden, credit card, credit card balances are going to be, going to be, have interest rates at 28, 30%.

We need to be aware of it. We need to get ourselves out from under the debt to make that happen. Now there are people that will say, do the debt snowball, debt avalanche. That's why I put that additional training on the all access page about debt. I'll walk you through exactly how I want you to do. It's not what most people will tell you to do because I want you to exercise the debt payoff muscle and the wealth creation muscle at the same time. But I walk you through the whole thing so you know exactly what to do. But debt will drown you and will take down your money machine if you're not careful with it. Okay, so we don't, we want to be really careful about that debt, but we get points. I know, Mickey, I know.

But when you start to do the. It's fine to get the points, then pay the balance off. Don't carry the balance because the interest cost. Okay, listen, here's the thing. If you bought something for $7,000 and paid the minimum payments at the average interest rate for the current interest rate on credit cards, it would take you 20 years to pay it off, and you would. You would end up paying like $16,000 on it. So all of a sudden you bought something that's a consumable, that probably is out of style, out of use, not even in your house anymore, that cost you 7 that you actually paid 16. Yet if I took the $7,000 and invested it and let it grow, I would have made something like $50,000 over that time.

It's a behavior so beware of. Of. Of debt. So that, that, that leads me to. Then to understand this is then to look at the last element in the insulate pillar. And the last element of the insulate pillar is armored protection. This is the last piece of what we really need to do. This is about using entities. It's about using trusts, it's about using copyrights, it's about using tax strategies. We have to protect what we earn and our ability to earn it. Here that again, we have to protect what we earn and our ability to earn it. Here's what we need to understand is that when you understand the risks, when you understand the exposure, you can then use tactics to make sure that it doesn't come back to you. At a client that he. What he does is he rents what they call jibs. These are the big arms that they put the cameras on that get these nice, beautiful, sweeping shots when they film. Okay.

When they film. So what happened is that he was. He was renting to this show. I don't even know if it's still on anymore. Deal or no Deal. And the jib operator was sweeping the arm across the audience above the audience's heads. And one person not only decides to stand, but. Which would have been fine, but he jumped, Smacked him in the side of the head.

Okay. Lawsuit waiting to happen. Now, he didn't sue. Nothing happened. But the key is that we actually had the Jibs in a different company, separate and apart from his real estate, separate apart from his investments, separate apart from. From all of that. So. So we, we are in a situation where if something happened, they take that and the rest of it rest of works. It's. It's what I call something that. That I work through and I've taught is this idea of a starfish strategy. You know, Starfishes versus a domino. A lot of people will own things in a domino, and if one thing goes, everything goes. But a starfish, if they lose, I don't know if it's an arm, a leg appendage, I don't know what you call it, but if they.

Or it gets bad, they just let it go, and then it grows back. That's the way we need to run our. Off our. Our assets, our money machine. So we protect it from something that could go wrong, because that's the only way to protect the things that we are doing. All right, So I want to do one thing. I want to do one little thing with you on this to bring this home. You probably should have a lawyer to do this in every state and every country will have different laws, okay? And then I want to give you the one thing that I think will stand in your way if we don't get it right. All right? So we've just got a bit more that I want to. I want to take you through, but this next piece is going to bring this. Bring this really full circle for you. Okay? What I want you to do is make sure that you have in front of you the, The. The framework with all the numbers on it. The framework with all the numbers on it. Because what I want to do is, is do something with you that, that you start to understand the dynamics of everything. Okay? So here's. It's something that I call traffic lighting. You've got numbers from 1 to 10. Some have zero. That's fine. Okay, so you might have a number. Let's just call it 0 to 5. Okay? Then you have 6.

To 8 and 9.

To 10. Okay? And when we look at this, 0 to 5.

Is red, 6 to 8 is yellow, and 9 to 10 is green. I want you to. To look at all your numbers, and I want you to write the color next to it. If you have colored pens or pencils, that's great. So let's assume, just so you see what I'm talking about, let's assume that you got the unshakable foundation. You got it dialed in. You know what that is? That's great. You've got it, got it figured out, but you're not really looking. You're working the job. You're not really looking at. At how to elevate your income, and you're not spending any time looking at. At any numbers, but you're looking at this and saying, hey, I'm getting educated. And I like, I'm intrigued by it. I'm Trying to learn. And I feel like I'm starting to get involved in, in investing. I probably could do a better job of, of automating and everything. But then you go, well, I don't. I have no clue what my risks are. And I have debt. You know, I'm dealing with student loans, this and that, but I'm trying to get out of it. And I haven't really looked at how to protect myself clearly. Okay, this is when you start to look at this, you start to see the areas that we need to focus on. That's all this is. And here's how I see my job. The work that I do with, with clients and, and in the world is really about looking at all of this for a client and having you look at it and say, and helping people. Helping people take all what they have and turn it all to green. Because when we have this to green and we won't happen overnight, now all of a sudden we have a system that's working. Now we have something that, that, that's driving everything, because we're sitting up here at, at nines and tens on everything now. May take a while, but one step at a time. We build the system. We build the system in a way that really starts to drive everything. All right, I hope you found this.

Special, unique episode of the affluent entrepreneur show really enlightening and helpful to start to understand what it takes to build your money machine, what it takes to create the path to financial freedom. Listen, if you want to get access to the full training, all of the training and all of the goodness that's coming that comes with the training, the workbook, and all that stuff, just go.

To affluencelive.com, grab the spot. You can get access to either the.

Replays or the lives, and I'll see you on the journey to financial freedom. Cheers.

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 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.