Book review: Start Late, Finish Rich
Start Late, Finish Rich by David Bach
Give yourself a break already
We've all made financial mistakes or procrastinated on our financial goals. "I could have" or "I should have" is pretty common theme amongst those of us in our mid-40's. David starts off the book by saying, "The past will continue to be your future if you drag it along with you!" He advises to forget all of your mistakes and decide today to move on.
Important points:
- It's not about the money--it's about living the life you were meant to live.
- Money buys you freedom.
- It's never to late to start.
There are chapters dealing with getting out of consumer debt, especially credit card debt. I'm past that, so I sort of skimmed those chapters.
SAVE MORE
- Decide to pay yourself first
- Open a retirement account (i.e. 401k)
- Start funding it with 12 1/2% of your gross income.
- Make it automatic
David is all about automatic. Automatic savings, automatic paying of a tithe (see below), automatic paying your mortgage down early, etc. ACTION: I opened a 401k at work at maxed it out for 2007. Bach believes in diversifying equally among stocks, bonds and real estate. The equity in your home counts towards your 1/3 real estate portion of your portfolio.
BUY A HOME
Bach is big on buying a home vs. renting. He also believes in paying off your mortgage early by using your mortgage company's bi-weekly payment program. It will make minimal impact on your cash flow, but decrease the number of years and total interest significantly. ACTION: I am accelerating payments AUTOMATICALLY on my mortgage to get it paid off 6.5 years earlier and save over $100k.
GET A RAISE
Bach says the fastest way to increase revenue is to ask for a raise or, if your self-employed, raise your prices. "I've seen people go from being on the verge of getting fired to doubling their income in six months by getting their act together. All it takes is turning around the impression people have of you."
- The reason people are stuck in life is that they don't know what they want.
- You have to decide what you want, put in in writing, and then move toward it.
- Direction if crucial. You will never get anywhere in life without it.
THE SEVEN MAGIC QUESTIONS
- What is the most important thing I do for my boss?
- What does my boss think I'm uniquely qualified to do?
- What would my boss be afraid to tell me about my job or how I do it?
- What would my boss say I could do to add more value to my job?
- What could I do to be my boss's "dream team" employee?
- Knowing what he or she has learned about me in all the time I've worked here, would my boss hire me today?
- What would my boss say it would take for me to get a raise in the next six months?
- The bottom 20% have no clue
- The middle 60% want a clue
- The top 20% have a clue. The top of the top are called "clue creators" They go beyond simply having a clue to owning a clue.
What is the 20% you do that produces 80% of the results? Maximize that thing and minimize everything else.
ACTION: Learn how to develop an entirely new income stream without having to leave your job. DONE. This is what I'm doing with the Concierge position and the MFO.
START YOUR OWN BUSINESS
- Start a franchise. See Entrepreneur Magazine
- Sell stuff on Ebay
- Start a MLM business
INVEST IN REAL ESTATE
These chapters go beyond owning your own. Overall, real estate appreciates on average about 6% a year. But, since your leveraging your money (i.e. only putting down 20%), you get 5x that return cash-on-cash. So that 6% could be closer to 25-30%. Here's a summary of the real estate chapters:
- Strategy #1: Weekend investor. Buy your first home. Live in it for a few years. Then, rent it out. Borrow against the first house and buy a second house. Live in that for a few year. Rent it out. Buy house #3. And so on. START LOOKING NOW with the goal of buying your 2nd home within 12 months.
- Strategy #2 Buy homes with tax abatements.
- HUD Homes for sale
- FDIC Low to moderate income housing
- US Department of the Treasury
- IRS Auctions
- US Department of Veterans Affairs
- Buy Foreclosures
- www.foreclosure.com
IT'S NEVER TO LATE TO GIVE MORE
Having a purpose bigger than money is critical to long-term happiness, joy, and personal fulfillment. Having nice stuff is great, but living a life of meaning is even better. Your life was meant to be lived with a purpose higher than simply accumulating wealth--and that purpose is to give more.
Tithing--You can give by donating your time, energy, expertise and money. Those who give lead more abundant lives. If you automatically tithe, you essentially have decided to pay yourself second.
Over the years, I've seen firsthand that the "have mores" give more. I've also seen that the fastest way to feel rich is to give more--and that those who give more become rich faster.
The myth of retirement.
If you put off what you want to do with your life for decades, with the idea that you'll enjoy your life after you retire, you will ultimately miss your life. The happiest retirees are people who have lived full and meaningful lives.
THE LIVE RICH QUESTIONS:
What makes you happy? Be honest. Think about all areas of your life.
- What makes you happy at work?
- What makes you happy at home?
- What makes you happy with friends and family?
- What makes you happy when you are by yourself?
- What to you love to do?
- What would you do with your life today if you were not afraid of failure?
- What is not working in your life?
- What are you currently doing that prevents you from experiencing joy?
- What is working in your life?
- Who right now in your life is subtracting value from your life?
- Can you fix any of these relationships or should you let them go?
This is your mission in life: to find what you are meant to be doing while you are here. It is the hardest thing there is to do, and it is the most important thing to do. If you are doing today doesn't create joy in your life, then you may not have found what you are meant to be doing. If you have not found what you are meant to be doing, it can be tough to live rich.
