The THINGS POOR People Do That The RICH DON'T!

Steve Myrick, my first mentor, asked me one time what difference between a rich man was and a poor man was. And I thought, like probably most people do, that money's the difference. He very quickly corrected me and said, money has nothing to do with the difference. It's all about the way you think.

Hey, what's going on? This is Connor Kraft, and I'm joined, as always, by Stephen Scoggins. And today we're going to be answering your questions about the differences between people who struggle with financial matters and people who do not. Really, that's the main thing. So just off the top of your head, like to kick us off, what are some of the things that you think make that difference?

I can tell you. So the easiest way for me to explain this is I've shared this story before on other videos. But.

Steve, my first mentor, asked me one time what difference between a rich man was and a poor man was. And I thought, like probably most people do, that money's the difference. He very quickly corrected me and said, money has nothing to do with the difference. It's all about the way you think. People who struggle with financial security also struggle with one concept, which is I'll get it now and I'll pay for it later. Most marketing messages that hit people in the economy are aimed at that specific people group because it makes up about 70% of the population. As a result, this I'll get it now, I'll pay for it later thing keeps them further and further behind because they're not able to take advantage of compound interest. Instead, they're held prisoner to compound interest. People who are financially wealthy let compound interest work for them. In a sense of every dollar that I put here or put there is going to come back to me with little friends.

Yeah. And it makes a lot of sense to me when you put it in terms of mindset and one person having a belief that money is scarce and the other person having a belief that money is abundant. It makes sense that the person who thinks that money is abundant is more likely to invest it and put it in a place where he believes it's going to, as opposed to someone who thinks there's only so much of it, they're just going to go spend it all because it's a limited supply.

Look, the easiest way for me to help people understand this is to kind of explain my upbringing and childhood. My parents, father specifically. I spent a bit more time with him after my grandmother passed away, worked as hard as he possibly could, work dusk till dawn every day, put in the sweat put in the quote, unquote, sweat equity and stuff like that. There is absolutely. In fact, Steve Meyrick actually told me that my father and my grandfather should have been millionaires. That they. That enough money had come through their fingertips through that hard work and through that effort, that they could have deployed it in such a way that it would have returned with compound interest or with little friends, as like Kevin O' Leary likes to say, right?

Oh, yeah, that's right, Mr.

Wonderful. Yeah, yeah, he likes to say that. So in truth, if you think about it, most people will have over a million dollars come through their FingerTips, closer to $2 million in their lifetime, okay? The primary difference between them and someone else is the people who are financially steward or financially successful are using principles like delayed gratification. They're using principles like compound interest. They're using principles like stat of debt or leveraging themselves to a point where. Not leveraging themselves where it puts them at risk. Most people are like, well, you know what? I'm going to get this TV over here. And then their tire goes flat on their car.

But they got all the money tied.

Up in the tv, and the money's tied up in the tv. Now they don't have the money for the car or for the car. Then they have to get another credit card or charge another thing on their credit. You see what I'm saying? Like, it's a constant cycle of lack of wisdom, lack of understanding. You've heard me say before that people are where they are today because that's all they allow themselves to be. But on top of that, people are where they are today because they simply don't know any better. What Steve was trying to get me to do in that moment was he was trying to get me to understand how important it was to learn to think differently. People often get financial advice from people who really have poor financial lives. Where's the logic in that?

I take my financial advice from people who are far more successful financially than I am. Steve taught me that because I lived a life early on where I was living more like my father early on. And again, my dad's very different now. This is when I was a kid, okay? But I live like my father, which means I was constantly borrowing money from other people and hardly ever repaying that money. Like, I just didn't. I didn't think it was important, right? The person may have just as well gifted me the money, okay? Steve refused to do that with me. He refused to let me go into that cycle because one of the people my dad used to borrow money from the most often was actually Steve.

Steve would tell me, no, you would.

Go try to borrow money from Steve, too. And he would be like, nah, yeah.

You'Re not doing this. This is not the life I'm going to have you live. Right?

He was that against debt, huh? He was that against debt.

He was that against debt being being in debt to someone else. There's an old scripture in the. I'll say old scripture. A relevant scripture in the Bible, obviously. As a person of faith, I've read quite a bit of it and studied quite a bit of it that says the borrower is always slave to the lender. In fact, Dave Ramsey says it all the time. Okay? It's in Proverbs.

If you borrow money. If I borrow money from you, then I'm indebted to you. That's going to create a roadblock in our relationship. Okay? If I'm indebted to a bank, the bank has the right to come take my stuff. If I don't pay my taxes, which I've seen people do, the government has the quote, unquote legal right to come take your stuff to satisfy that debt. Debt increases risk at an exponential level. I'm a big believer in do the hard work now, get the benefit later, not get the benefit now and do the hard work later. Doing the hard work now might be I've got to work three jobs for the next two or three years to get myself out of debt or to create a nest egg where I actually save enough money. Grind it out. Yes. I'm going to have to get up earlier, go to bed later. Right. But it's a temporary level of sacrifice to get the income coming in. Then I can be wise with it. What I see a lot of folks do is they'll get. They'll have multiple jobs, they'll get the income in, and then they'll let it bleed out through their fingertips. Okay? Ask yourself why someone who makes $40,000 a year, okay. In total.

Can be consistently financially broke. Where a single mother can have two kids and live off of $40,000 a year and get by.

They're making better decisions.

They're making better decisions financially. One is putting self. Is putting self interest. Last one is putting other people first. Right. Both of those people are capable of doing better financially if they had the right education and training. Right.

It's a real thing to actually have an emergency fund. It's a real thing to actually pay off your debt. It's a real thing to actually have enough liquidity AKA cash, in order to invest wisely in things that grow over time. But everybody wants the quick fix. Yeah, everybody wants to quick. I wanted the quick fix. When I was young, I did a bunch of different businesses, some of them multi level, some of them not. I've done a bunch of different things thinking I was going to be able to create wealth overnight. None of those vehicles, none of those financial vehicles were able to create income without work. It's no such thing. To have a level of life that comes without work, you have to have work.

Well, I want to dive into your story a little bit more because you're somebody who has come from.

An economic background where you didn't have much poverty and then you've turned it around and then now you're on the complete other end of the tax spectrum, right?

So as you've traversed those tax brackets, has what you've learned made you realize that economic starting point is not something that holds people back? Or do you think that it is?

No. I mean, look, having a more difficult economic upbringing or economic solution, it comes down to what you've been taught along the way and that kind of thing. It's not that. It's not. It doesn't create difficulty because it can be create some additional difficulty. But it's not insurmountable, okay? It's just not. If it was insurmountable, I wouldn't be sitting where I am today. And again, I'm not a billionaire, so it's not like I have more income coming in than I know what to do with Necessarily. What it has taught me is a healthy respect for the resource. You know, I've said before that, you know, money itself is a tool. Either you build with it or destroy with it. It's kind of like a brick. I can build a foundation or I can break a window. Doesn't matter either way. That money being a tool, that resource, if you will, is designed to help build you up over time or tear you down. If I'm constantly spending it before I have it, if I'm constantly living above my means, if I'm constantly taking on additional debt, if I'm constantly calling out of work or whatever on a regular basis, if I'm not looking, if I'm not taking the time to budget and figure out where my money is even going in the first place, then essentially you have what's called slippage in the business world. Slippage is when basically you have margin eroding from your business that you can't see coming. And if you're not taking the time to look at your financial picture in such a way that allows you to have measurable milestones along the way and actually understand where you are on a consistent basis, then you are not going to know what money you do have or what money you don't have, which means you won't know which money you could invest versus which money you can invest. And there's lots of different things that you can invest in. You can invest in a business, you can invest in stocks, you can invest in money mutual funds, you can invest all over the place. Right? But someone who's trying to build a financial future has to be very selective with where they invest their resources. Now, I invest really conservatively. I'm not a super when it comes to resources. Like, I have some in real estate, I've got some in business equities, meaning I own equities in companies. I've got some in different places.

Primarily. That's. And so I can have a wide net to hopefully create income coming from a variety of sources. So I don't require a large amount of income coming in from one source. Okay. That takes time to get to. My first step was I needed to increase the amount of liquidity that I have.

Which you do just by grinding, which.

Is you do by grinding, especially when you come from the background that I've got. Okay. Now, I also made a conscious decision that I was going to do so with whatever it took to make it at a legal level. Some people will fast forward because. And they get into things they shouldn't get into. And the next thing you know, all of that grinding is in the wrong direction and they end up incarcerated. Okay? So someone with an impoverished background has got to be very selective in how they go about creating essentially liquidity or cash, then that cash has to be deployed. Well, typically people who, coming from a struggling financial background typically have some level of debt of some kind, a credit card, a light bill, a medical bill, or whatever.

They're starting out already.

They're starting out from a perspective of I have resources or I'm lacking resources that need to be deployed. Step one is to work your butt off, find a good resource to actually get that. And again, I work two or three jobs myself, appropriately for about 18 hours a day for about two years to create enough cash for me to actually have some resources to then begin to deploy. Okay. I then lost all of that. I had to start over with the first company that I owned. If you take all of that rolled in a thing, all I'm trying To say is you have to create liquidity. You have to create excess. You can't have excess without income. Right. So you have to get income to then create excess, which means you may have to pay off debt or something in the middle. Okay. To create that excess. And then you have to get wisdom and understanding and somebody to mentor you and how to deploy that excess to benefit you long term.

Well, that's an important point because I've heard a lot of people in the financial space, some people are very split. Like a Grant Cardone is going to be very different in theology to a Dave Ramsey. Very wildly different sometimes.

Let me hit on Cardone for just a second. So one of the things that I was able to discover when I was talking to him not that long ago when I'm stuck to Unstoppable Podcast, which you guys can also find here on YouTube, was that his very first chance at creating income was a $350,000 apartment project that he was. That he bought. Now, he said he sunk every single dollar into that product that he had. He had no money. Almost like where he was with the undercover billionaire. And he was scared to death until it clicked. Okay, now, so that. That is a way. That's high risk, high reward. That is one way to do it. Okay. Another way to do it is going to be the Ramsey approach, which is the tortoise always wins. Right. It's a slow approach. It's get your emergency fund put together. Right. Get your debt paid off, take your excess and begin to invest. Get your mortgage paid off. There's different steps. It's much more of a stair step. I find that most people benefit most by a stair step approach rather than a high risk, high reward approach. But the high risk, high reward approach, it can go south really quickly or it can blow up really quickly.

Right. I remember what I was going to say now. So I think I've heard Grant say before that you can't save your way to wealth.

That's true.

Basically.

That's true.

So I wanted to elaborate on that some, because I think that there's some things you said about, you know, if you're starting out and your income level is low, there's not a lot there to begin with. It's not like you're going to end up a multimillionaire from just saving. So I think that's an important point that you made to get your income up first. Figure out how you can solve that problem.

So again, there's no secret that I'm a. I have a faith Perspective and background. My faith now has made me who I am today. It's the reason I have. I'm able to steward what I steward. Now. There's a concept in Proverbs that says, actually, it's in several places. It's just said differently in several places that if you're faithful, if you're faithful with the little, you'll be made master over much. If you're faithful with the little, be made master over much. That principle has been applied to my life specifically. Okay, I made a conscious decision to save some, spend some, invest some. You see what I'm saying? And of course, I give some. Right? I made a conscious decision to do that regardless of my income level. Right. If I make $100, I can still afford to give $10 away, even though I don't really want to. Okay. I did that to create muscle memory in me. So. So when someone hands me a million dollars, it's okay for me to stroke a check for $100,000. Okay?

Ratios win the day. You have to figure out what ratios help you win the day. When you're first starting out, you don't have a lot of income. You're going to put a lot of percentages into getting out of debt and just living like your house and all that. Exactly. My ultimate goal is to be what's called a reverse tither in the faith community. A reverse tither gives away 90% and lives off 10%. Okay, I am not there yet, but I did start the other way, where I had to live off a 90% and then deploy the other 10%. And as you practice that principle of watching the little to be master over much, you will see that ratio change. I went from 10 to 90 to 20, to 80, to 30, to 70, to 60 to 40 and almost 50 to 50. I've shared with you offline and privately before that. I live off half my income. The other half of my income is deployed. I've got it working in theory for me, whether it's in real estate, whether it's in business, whether it's in investments. And I have a hodgepodge of a little bit of everything, what some people refer to as a portfolio. A portfolio is nothing more than the silos in which you've basically put money to work for you. That's all that is. Right? People have to get to the place where they can afford to have a portfolio. So start by ratios. Maybe for this next year, this next 12 months, you're just going to say, hey, look, I'm going to live off of 90, I'm going to give my 10, take that 10 and carve it up into savings and investments or whatever and then I'm going to go to the 80, 20. So next year I'm focused on my stretch goal is 80, 20. My next year my stretch goal is 70, 30.

So it sounds like the first step is really like no matter where your income level is at right now, you're decide what your ratios are, what they should be, figure that out and then live by them.

Yeah, cool. And sacrifice by them.

Yes.

Because if you're just getting started, in order to get these ratios to actually start getting you some momentum, you are probably going to have to stop doing some things that maybe you really enjoy. Case in point, the average pack of cigarettes is almost equal to the average cost of a single meal.

Now, no way.

One pack of cigarettes, you can go get Dave's Dollar menu or Taco Bell and actually get a single meal for not for eating. Okay. You may have to quit smoking. You may have to quit drinking, you may have to quit partying. You have to make choices. You may have to get one or two or even three levels of income. You are going to have to make a sacrifice to be master of the little, to be master over much.

And in order to build up that liquidity.

Exactly. And as you do that, you also discover that the very same things that you thought were super important, entertainment value wise or whatever, you've invested your, or you've quote, unquote, not invested, even spent your money on, are nowhere near as important. Like, I'm not tied. I'm no longer, I'm not tied to my personal belongings at all. I know that business can change. I know I might be sitting in this chair right now and I'm being crazy financially successful or having that availability or having some financial freedom. And I know that a year from now, two years from now, three years from now, maybe the economy is different, maybe things have taken. I hope that that's not the case. But the one principle that I've learned, but through all of this, through all the various downturns, call it Covid, call it in 2008, call it whatever it is, is this one principle, when there's earning potential, what's referred to as the bull market, when the bulls are running, okay, and you got a lot of earning and things are going really awesome, the bear always follows the bull. The bear always follows the bull. Which means when that resource is coming to you, you have to think in that moment of whether or not you're Going to spend it or deploy it. And how you spend it or deploy it affects how you actually are, how you are in a financial future in the next five years. You know, we were able to survive and even thrive through Covid to a degree with all the companies that I have. Okay? We did that because we had been saving, we had been investing, we had been putting compound interest to work for us in different areas in such a way that allowed us to have liquidity which allowed us to stave off and keep ourselves out of risk.

Alright, final question really, really quickly, because we're already out of time. Why do the rich get richer and the poor get poorer?

Same technique. It's the way they think, right? So I'll give you one example of what I mean, and this comes down to the way you think. The primary example I'll give you is when the bull market that I just mentioned is happening, most Americans or people all over the world are spending, they're shopping, they're buying houses, cars, TV stuff. Most of that stuff is getting done on credit. Okay? It's that whole buy, get it now, pay for it later kind of mentality.

Most times those people aren't thinking about downturns and thinking like they're judging. They're making their financial decisions based on their financial well being in that moment, which is always dangerous. The wealthy typically the quote unquote rich and getting richer, as some people like to say, is a little bit different. They know that during the really good times they have money deployed that's going to grow them cash wise. But they do most of their quote unquote shopping. When economies are down, that's when they're buying businesses, that's when they're buying real estate, that's when they're buying excess capital. Capital market, that's when they're investing in capital market. I will tell you personally that when Covid happened and the hotel industry got hit and.

The entertainment industry got hit, and even some of the big tech brands got hit, that's when I bought some of the stock.

I did too. I bought some American Airlines and I made like 20% in a week. Yeah, it was nuts.

But see, that's a different mindset than someone who's had a scarcity mentality and a lack of resource. Right? A totally different mindset. I'm going to get it now because I can, I can afford it. I can get the new car, I can afford a $400 a month payment. How do you know you're going to have your job a year from now? Or you're not going to be searching. You see what I'm saying? That's where people get messed up.

They're not thinking ahead about why not.

Spend three to five years getting super solid on having liquidity, having cash in the bank, and then choosing at different times, specific times to deploy it and buy crap on sale. Like, I'm looking at a new potential building right now that would replace the live event center that we're in. In theory, maybe I'll get it, maybe I won't. Maybe I can afford it, maybe I can't. I won't know until I do my due diligence. But I'm doing so because Covid just happened. And there's still some. There are still some properties that are on sale, which means not only do I get the equity in the property if I buy it low, I also get the appreciation factor over that property over the next five years.

That's the difference between people staying with a lack and people who already have gained continue to gain more. That's why there's such a disparity. It's not because one person's evil and one person's not right. It's not that at all. It's how they think about money. That's the difference factor. All you've got to do is learn how these people think and use the ones that do so with character and duplicate what they're doing, and you will have no end of resource. I hope you found that video helpful. And if you did, do me a favor. I know you'll love this video. Check it out. So the number one question I think people need to ask themselves is what could be. What could be my end result if I dare to try?