Wealth Explodes after $100K But Only If You Avoid These Traps!

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. You know what's funny? The moment Most people hit $100,000, whether in revenue, savings or investments, they start to feel like they can breathe. They finally have some space, a little cushion, a taste of freedom. But that's not even the dangerous part. See, the dangerous part is what happens after you hit that first. A hundred thousand. See, that's when the financial traps show up. Not the obvious ones, but the subtle ones that look like progress but actually stall your momentum. You see, most people think, if I just earn more, I'll be free. But the truth is, freedom doesn't start with more income. It starts when your money works harder than you do. And today, I'm going to show you the seven traps. The seven traps that stall your wealth after $100,000. How to avoid them, how to build real, reliable wealth, and a money machine that keeps working even when you're not. Okay, whether you are at 100,000 or not, this one's for you. And this is building your money machine, where we help you master your money, eliminate financial stress, and live a life of choice. All right? This is a bit of financial education with a side of sarcasm and a whole lot of heart. Let's do this.

All right, Let me first say that if you made that hundred thousand dollars, congratulations, you're there. Okay? If you haven't, you're on your journey. Let's get you on the journey. This is important no matter what, because it will serve you the whole way. Because it doesn't matter whether it's revenue, savings, investments, net worth. Here's the thing. The threshold of $100,000 is the space in place where discipline meets momentum. But here's the catch. Most folks treat that as the finish line. It's just the launch pad. It's that stopping point before you take off and you build real wealth. Because this is the tipping point for your wealth building journey. It's where you hit the afterburners to make it happen. But it's also the place where People go wrong where all of a sudden one little spark can sabotage the whole lift off. And so in Today's episode, these 7 Deadly Traps can strip that acceleration. And I want to break it down with you to make it happen. So here's the first thing to understand. That hundred thousand dollar threshold does not guarantee comfort. Now it guarantees opportunity. But we need to keep that vigilance and that diligence to keep growing and going because your freedom is on the other side of that. Because $100,000, a 15% mistake. That's $15,000. Okay, that is a lot. Comparatively speaking, $15,000 on a million dollars isn't as much. But that's the thing that we need to understand. So let's talk about the traps that could bring some of these mistakes in place. Because there's this feeling of elation that I finally hit the 100,000 and we start to do things that we weren't doing before. And trap number one is lifestyle inflation over system and reinforcement. Here's what I mean by this is when you look at it, lifestyle inflation is like you got more money, you've got more net worth, you're sitting back saying, oh, I can afford more. Which is true, you can, but should you afford more? Now I'm not saying deprivation is the game because let's be honest, when the cash starts flowing, so do upgrade urges, you know, it's your reward. You should reward yourself. Now, in our process, one of the things that we do is I make sure that we build in those rewards before we get to that threshold. So if you're on the road to that $100,000, I want you just to decide well beforehand how you're going to celebrate. Okay, so you're going to hit that hundred thousand dollar mark. How are you going to celebrate hitting that threshold? And hint, you're not spending the 100,000 to celebrate because that does you no good. So that the reward could be something small but really important to you, really meaningful to you. It's not going out and buying $100,000 Tesla or some bigger home or all the designer stuff that starts to spend yourself down below the 100,000 to that point, because that type of stuff will cause a nosedive. So what I want you to start to look at is how do I take a percentage of, of what I've created to use for celebration. We call this Joy points in our, in our Money Money machine master plans. And when we're building it is that there are things that actually viscerally, sustainably joyful for you. And they're individual to you. What is meaningful? Maybe it's a. A small vacation, maybe it's some piece of technology, maybe it is some piece of clothing that, that you wanted. So make sure that you're sitting back and saying, once I hit this, this is how I'm going to celebrate. And here is the limits, here's the boundaries. Okay? So then it's not just always work, work, work to build, build, build and sacrifice and sacrifice. And it's not a sacrifice. It's a strategy to reinvest into your growth at the same time that you're investing into your joy so you can keep moving towards the dreams for tomorrow. And that's truly the first thing, because I see people all the time that fall off the plan, fall off the process, just because they want to celebrate. And then they set themselves back two steps, and we don't want to do that. All right? So it's being deliberate, it's being intentional, it's being disciplined at this point to not allow lifestyle to expand beyond where it should, but to make sure that you're celebrating on the process. So that's trap number one. Trap number two is treating gains like Vegas money. Okay, here's the thing, okay? And I've watched this happen, not just with clients and people out there, but also with me. You just found some extra money. It's like free money. You know, all of a sudden you actually hit a stock pick that went crazy and you have this free money. And. And so you all of a sudden it's burning a hole in your pocket and you feel like you're playing with house money. But think about this. The whole purpose of trying to build a money machine and invest is for you to actually have that money grow, so have gains. And there's only two ways that you're going to continue to build wealth. There's going to be an increase in value in your investments and. Or there's going to be an increasing cash flow in your investments. And in some cases you get both. Okay? So they're not found money. It's not Vegas money. It's what's supposed to happen when you invest correctly, which gets you to a point where you sit back and go, it's not free money. You're not rolling the dice in Vegas. And all of a sudden you got this money in your hand and now you can go spend it willy nilly like it's no big deal. So, so we need to look at it. These are our employees that we are going to employ to continue to grow. Remember, your wealth grows at a compounding rate. And the only way that it grows as a compounding rate is when you put money in. So you put $100 in to, to an investment and it grows to 120. If you take the $20 in, out and go spend it every time because you think it's the Vegas money. You now put yourself back to the starting point of $100 and you keep starting over again. It's, it's, it's, it's like Groundhogs Day, but with your money and the, and the challenge is that what you're really trying to do is hey, I got 100 to 120, I got a 20% return. You know, celebrate it, but don't take the 20 out. Maybe you take a percentage out like we said in the last one. Maybe it's $4, $5 and it's a small number because we're only using $100. But the purpose of investing is now I go from 100 to 120 and now I have $120 working for me instead of 100. And that works harder. That's the compound effect. That's the challenge. Now the other side of this is, this is a place where I think people start to look at things like I think I'm going to trade my account, I think I'm going to try day trading or I'm going to try swing trading. And, and, and because I've heard the stories about people making 50,000 or $100,000 in a single trade, that's a gambler's mentality. Now I'm going to be totally upfront. I do trading, I do option trading, but I don't do it with my long term money. I don't do it with my wealth. I do it with a piece of it in my play account. And you know, and I do some very safe trading. So there's very little chance of me losing a ton of money. And I do it with so such a small portion. It's going to put me in a bad mood if I lose it all. But I'm never going to lose it all because of the way I'm doing it. Here's a sobering statistic though. 97% hear that 97% of day traders lose money. Okay. And that's a multi year study that, that, that showed that. So this isn't a, this isn't a thing that you think it's so easy to take a swing and we're going to hit, hit the, the, the ball out of the park. The odds are worse at day trading than a Vegas slot machine. So this isn't about you finding Vegas money. This isn't about you gambling. But if you want to experiment, go ahead, but do it the way I do. You cap it, you plan for it, you manage the emotions and you don't let casual trades risk all your wealth. Okay, so that means you're going to carve a small sliver out. Once you have that unshakable foundation. Bottom line is this. You have to follow the wealth priority ladder if you want to build sustainable, lasting wealth. And so if you are sitting in debt, you have no liquidity. You have. I'm going to be upfront with you. You have no business going and taking risky bets because you're just one little tip over to financial disaster. So if you're going to do anything like this, you're going to have your safety in fate in place, your liquidity in place. You have your debt under control and you have an unshakable foundation. Now you'll take a sliver, and I mean a sliver that you might go and use to try and do this with. Because it's just a sliver. That means your losses are capped. You have a plan, you know your exits and you manage your emotion. This is a dangerous place to be. And what's even more dangerous is if you win on the first time because now all of a sudden you think you're infallible. Well, the market has a way of showing you your, your, the error of your ways. It has with me. All right, so I don't allow it anymore. I know what my cap is, I know what my exit is. And, and I know what my maximum loss is. That leads me to trap number three. Trap number three is neglecting taxes. It's an interesting thing because understand this is that you have a partner in every financial decision that you make. And it's not your spouse, of course, your spouse is too, but it's the government. When you make money, the government's going to tax you. Now there are ways to reduce the taxes. But think about this, is that I know you don't want. Taxes are hard. I don't want to understand the tax law. It's crazy. But if you don't understand the tax law, they can take 30 to 50% in the form of taxes. If you live in an expensive state like I do, I can get taxed as high as 50, 55%. So it becomes important, just as important as picking, your investing, your planning and all the work you're doing. It becomes just as important to manage your tax strategy to sure that you have the right, the right tax strategy in place. Because you've crossed $100,000, you're on the radar now, the IRS isn't your enemy. But ignorance can be expensive. You can't get away from it. I mean, look at, there are some really high profile people that, Wesley Snipes, for instance, okay, Ignorance can be expensive. So without a structure from a tax standpoint, you risk what we call bracket creep, double taxation, surprise bills. You know, the thing is that many entrepreneurs, they don't think about the tax side of it and they forget about it. And they don't realize what the taxes are going to be at the end of the year. They get blindsided because all of a sudden they go, wait a second, I didn't think I was going to owe this much tax. It becomes important to look at it. You might be better suited as an llc. You might be better suited as an S corporation. You have certain, certain exclusions, you have certain ways to reduce it. Maybe you, you start using tax advantaged accounts. This is something where once you start to cross into the zone, having a viable tax strategy becomes really important. Especially if 30 to 50 cents on every dollar could be taxed. We want to keep as much of that in our pocket. So what's your fix? Look at your structure, look at the way you're running your business, look at the way you're running your life. Does it make sense to have an entity in place? You're going to want to have an advisor to help you do this. Okay? Use tax advantaged accounts potentially to save on taxes. 401 Solo 401s, SEP IRAs, defined benefit or cash balance plans. Okay? Be smart around taxes. It's not something you just do in April in the US it's something you should look at in June to see where you are for the year and what you can do for the next six months. Something you look at again in October as you plan for the year end. Because tax strategy can't be done in hindsight, it has to be done in foresight. You gotta do it ahead of time. So that's why I look at it as 6 months and 10 months. Get everything in place to minimize the taxes. Keep as much in my pocket as possible. We often will ignore taxes until they bite. Well, at this point, we don't want them biting. All right, leads me to trap number four, and that is focusing on portfolio without cash flow. You can have a bunch of assets but that's like a runner running with a weighted vest and ankle weights on at the same time and dumbbells in their hands, okay? You can't run for a long period of time that way. And when we talk about building the money machine, what we talk about in that money machine is, is building a group of assets that will generate cash flow so it pays for your life without having to sell the assets. Okay? And so you can create cash flow on an ongoing basis. Net worth is important, but cash flow is powerful. So what we need is access to cash flow. And at the beginning, we may be building assets and high growth assets to build the machine. But at some point, your asset allocation, your product, your investment diversification needs to shift in a way that you're going to be able to generate cash flow, because it is the cash flow that's going to give you the freedom. It's also the cash flow that's going to carry you through life's curveballs. Okay? So we can invest, but we need to be careful. I hear a lot of people talking about alternative investments, which are great, okay? They're counter to the market and they're not correlated to the market. They're great until you need the money. The problem with many of the alternative investments is they're not liquid. I can't get at the cash, I can't sell them as easily. So we have to be really careful about managing cash flow, cash in, cash out, accessibility, especially when you start to get closer to when you need the money. But even before that, you need to have access to liquidity or cash flow to carry you to if life throws you a curveball. Okay? I've literally met millionaires that couldn't cover a $5,000 emergency without selling something, which is okay unless the market's down. Okay? So you want to start looking at things and making sure that you have the right portfolio mix that will generate growth and income generation, okay? That could be from dividends, it could be rents, it could be royalties, it could be interesting, okay? And so it gives you some breathing room because you know, you have the cash flow in place that makes them. And if you don't need the cash flow, that cash flow will be reinvested to continually grow the machine. That's what we've done, okay? So cash flow is really important to, to come into play. And trap number four is when we solely focus on asset accumulation and those assets aren't able to be liquefied, liquidated, or isn't generating cash flow, it starts to create a problem for Us. Okay? Trap number five. All your eggs in one basket. Okay? This is all about asset allocation. This is all about product diversification and investment diversification and, and everything. Here's the thing. When you, you heard the saying of, like when, when you're a hammer, every problem looks like a nail. That's the challenge. If I have one asset or one asset class, inevitably you're overexposed. Part of building a money machine, part of your net worth, part of your financial freedom journey is to manage two sides of the same coin, returns, in other words, the growth and the cash flow from the investments and the risk. And that risk is the risk of loss, the risk of elimination, all of the exposures there. And so what we need to start to look at is when we end up taking on just a single asset class, or a single asset, like a single stock, you take on a tremendous amount of risk. Now maybe you, you can hit it out of the park and you get a big return, but that, that was way too risky. So what we're trying to do is get the maximum amount of return with the lowest amount of risk possible. And this is where asset investment diversification comes in. Asset allocation comes in. All of that comes into place. If all you're doing is investing in one or two, like the Mag 7 or, or technology companies, those are volatile and they can drop. And you go, you go with it because you're invested in one single asset class. This is why we recommend at the very beginning especially to do a diversified portfolio of ETFs and index funds, because you're investing in 500 across 500 companies or thousands of companies. And so you have inevitably, diversification built in. And so there isn't a concentration of risk. In fact, when you go and look at these funds, you can look at what they hold, you can see what their biggest holdings are, and you can see the kinds of companies, the kinds of sectors that they're in. And so it's really important to look at that because I had one client that came to me that had everything in a single real estate project, everything. And this was, this was like their swan song. This was, this was it. They were going to hit it out and then retire. The problem is they got hit with rising interest rates, they got hit with lower occupancy rates, they couldn't refinance, they didn't have the cash flow and they had to sell at a loss. And the project wasn't completed when they had to sell, which made it even, even more problematic. So, so the, that kind of stuff we have to avoid because it can absolutely destroy us. So what's the fix? Diversify across income types, business market, real estate, liquid assets. Think of wealth like a band. And each instrument plays differently. And together they create harmony. They create something. And so this is where I want you to start to, to look at this. Okay? Then, then trap number six. This is where I call static savings. Okay? And I've watched this happen when we tell people to, we want them to put away 20 to 25% of their income on a regular basis. And so what happens is that at the very beginning, they, they get to a 20% of their income. Let's say they're making $100,000 a year and they're putting $20,000 a year away from. And then they go about their time, Their, their income goes up to 100 to 200,000 and they're still putting away $20,000 a year. So what they haven't done is they haven't kept pace with their income. And, and so it, it destroys their wealth. Because what's happening, Watch what happens. I'm making a hundred thousand. I'm putting $20,000 away from. Okay, now I'm making 200,000. I'm still putting $20,000 away. So instead of 20%, I'm now putting 10% away. But guess what? My lifestyle has gone up. Which means that that $20,000 I'm now putting away on $200,000 in income isn't going to build a big enough machine to support the lifestyle that I'm living at $200,000 of income. We have to keep our savings rate as a comparative percentage consistent with our income going up. Otherwise we start to fall behind, okay? So we have to be really careful with that. And that leads me to trap number seven. Okay? And, and that is going solo. No team, no feedback, no coaching, no. No brainstorming. Here's, here's the thing. Your trip, your journey to financial freedom is not meant to be isolated or siloed. It. My. There's no such thing as a self made millionaire, okay? In, in, in my, in my world, because I am built by the people around me. The people that coach me, the people that mentor me, the people that kicked me when I was down, the people that helped me when I was up, the, my customers, the you that, that's listening.

There are far greater powers than me. And for me to sit back and go, I did it all myself. Now, yes, I did all the work for sure, but I wouldn't have never done the work if I didn't get the guidance, the support, and all that stuff. So going solo isn't kind of a hero's journey. This is something that. What we need to do. This is a time where you sit back and say, I need some help. Maybe it's getting a financial coach, maybe it's getting a mentor, maybe it's getting an advisor. I do this with families. I do it with my students, okay? But hustling solo a lot of times is hustling blind because you don't know what you don't know. When you get to that point, what you're looking for are people who have been through the world. I've walked this journey not just for me, but for all my clients, too. So I get a different lens, I get a different optic into it, and I can see where someone's going. Say, be careful of that. Let's move you over here. Let's do this, okay? Because your next level, you've never been there, okay? And it won't happen in isolation. So whether the fix here is maybe you need a coach, maybe you need a program or something, maybe you need a wealth team like I have, okay? Maybe you need a mastermind. But. But what you do need is to make sure that you've surrounded yourself with good people that have your best interest and your vision in mind. Not people that are just trying to sell you into investments and insurance policies, all that, but they actually are looking at, say, how do I make your dreams a reality? Okay? That's the game that you need to play. These are the seven traps that I think once you cross that $100,000 threshold, if you're not careful, we can lose our footing and we fall backwards. We need to be careful of that. Okay? So here's the reset. How do you do it? I want you to track what matters. Margin, cash flow, okay? Not vanity stuff, okay? Not the nice cars and the big homes. Give yourself that space, okay? Number two, I want you to automate your engine. Rinse and repeat what works. Make sure that your investing is automatic, okay? Make sure that you are consistently putting money away. Put your bills on autopay, okay? Number three, I want you to diversify smartly, okay? I want you to diversify your assets and your investing. So you're investing for growth. You're getting some income. You have safety and liquidity, and you built that unshakable foundation, okay? And number four, I want you to connect strategically. What advisors do you need? What coaches do you need? Who can be your accountability partners, who can be your allies? This is not about some sort of hustle plan. This is about a strategic financial plan, a dynamic plan that allows you to take people on a journey and they guide you because they've been there through it. Okay, because here's what I know. If you, if you've hit that hundred thousand dollars, it's not by accident. If you want to hit that hundred thousand dollars, it won't be by accident, and it certainly won't be by playing small. You've earned it with grit. Now, that same wisdom that built you your base can propel you or derail you. Okay? But you're armed now. You, you know what you need to do, and you have some of the processes and things in place to make it happen. So let's keep on this journey and let's get you to the next hundred thousand, to that million and beyond. It's about building the money machine to give you the life that you dream of, the life that you deserve. I believe that financial freedom is your birthright. Let's go out and make it happen. I hope that this helps. I hope you avoid the seven traps. Do me a favor, let me know which one surprised you the most by popping it in the comments. I'd love to hear from you. All right. And until I get a chance to see you in another one of the these episodes or on your road and path to financial freedom. As I always say, always, always strive to live a life that I wish you see in the next one. 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 forward/ and I'll see you there.

And that's it for this episode of Building youg 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 Podcast, 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.