Self Made Wealth Eben Pagan

SELF MADE WEALTH – EBEN PAGAN

NOTES FROM VIDEO 1 – ORIENTATION

Why is wealth so important? Why should you pursue wealth? Why is it a high priority?

Without wealth there are a lot of things in life that aren’t available to us. Without wealth we can’t have the power of influence that we want, we can’t help the ones we love as much as we want and ultimately we can’t achieve the results we want.

If we can create wealth, we have the power to make things happen, we can take care of the people around us the way we want. It’s a lot easier to achieve goals when you don’t have to worry about money. Wealth helps us avoid the things we don’t want in life and helps us attract the things we do want.

WHAT SELF MADE WEALTH IS NOT:

It’s not a get rich quick scheme;
It’s not a pyramid scheme;
It’s not a “how to make money with no down payment” real estate scheme;
It’s not about how to save a little bit of money here and there;
It’s not about how to get a small raise at work;
It’s not about saving for retirement.

We will talk about investiments and how to accumulate wealth and money, but ultimately this program is about the art, science and psychology of creating wealth.

People that have the ability to create wealth see the world differently. They have different mindsets and maps in their minds. They have different emotions and a different relationship with money. They have a different set of habits, different action steps that they take everyday that allows them to create wealth consistently.

In this program, you’re going to learn the architecture, you’re going to go behind the scenes, you’re going to understand it so you have the ability to create wealth for your life.

I’m going to introduce you to concepts you’re never learned before in a finance or wealth program. Modern neuroscience and cognitive science have really opened our eyes and allowed us to get a view into how we’re wired. Specifically we’re learning that our brains and emotional systems are really not wired to accumulate wealth. We make various mistakes, very commonly that prevent us from ever attracting the money and wealth we want into our life. I’m going to introduce you to the emotional intelligence that we need in order to evercome our inner blocks that prevent us from taking action to create wealth.

We’re not wired to become wealthy. We were designed to live in a world that doesn’t exist anymore. Our bodies and brains are not wired to deal with a society that has money and in which is possible to accumulate wealth, being able to value into things and have long term goals;

Besides our biology, our education also was not appropriate to build wealth;

And on top of that, there’re all the cliches and myths about rich people not being good people, money doesn’t bring happiness, etc. Poor people keep a lot of negative feelings towards money and wealthy people;

And finally, our habbits don’t allow us to build wealth.

Statistics show that 95% of the population gets to 65 years old either broke or totally dependent on someone else or the government for support;

Also people that get a lot of money without building it over time, like winning the lotery, inheriting, etc, wind up worse off 5 years later, with no money.

The fact is that wealthy people don’t have a different biology and nmost of them grew up in poor families that didn’t have the right mindset or the habbits to accumulate wealth. A lot of these people were just in the right place at the right time, they were just lucky.

Napoleon Hill – Not one in a 100.000 people really understand the mechanisms of entreprenuership success and wealth building.

In spite of everything, some people that have learned to build wealth consistently and in an organized manner left clues.

Intuitive X counter intuitive – intuitive is the “obvious” thing to do, what everybody does, what “seems to be right”. Counter intuitive is what’s not obvious, it’s against common sense. Many of the important paths to success require counter intuitive actions and habbits, it’s against what you would naturally do, it’s against what seems to be right, so people not only don’t do it, but they try to prevent others around them from trying anything that’s our of norm because thet believe they’re going to fail if they do so.

PRINCIPLE #1: We’re wired for a time that doesn’t exist anymore. Our bodies and brain and wired to take advantage of resources, money, food, etc., right now. In the stone age we needed to consume whatever resource we could get a hold of as fast as we could. Why? Because it probably wasn’t going to be available tomorrow or even in 10 minutes. If there was food around, which was probably the #1 resource, we would consume it all right now.

The investion of credit brought even a more complex problem for our simple brains. Now we can consume right away something that we don’t even have, by mortgaging the future;

In fact the development of wealth and it’s accumulation if very recent in human history;

Also it’s very recent the concept of planning for the future. Our ancestors didn’t even live long enough or had any desire or reason to make plans and save anything, especially wealth;

In the beginning, wealth had an actual value, it was something real, tangible like objects, gold, food, etc;

Nowadays we’re very disconnected. We tend to work and our work is a part of a big company and we get some money back in return for our time and weér using the money to trade for other goods and services, so we don’t actually have a feel for what something really costs or what the investment is. We don’t really do all the math, like, when we want to buy a new TV we don’t think, well I’m gonna have to work 700 hrs to pay for this TV, after taking my taxes taken out, paying all my bills and if we can finance it, it’s even worse. We lose completely the sense of what the object really costs to us;

The way that money works in out society and the culture of debt has removed us from reality;

We have an unhealthy relationship with money. We have maps and models in our heads and feelings about money. A lot of people have a love hate relationship going on with money. On one site they want and desire money because they want a better life, they want the stuff that money can buy and on the other hand they hate money because they think money controls their lives and also because they are influenced by all the myths about rich people and money. They tend to look at the negative aspects of rich people and only concentrate on them and criticize them for not giving more to the ones in need and stuff like that;

Until we deal with this internal conflict we’ll never going to be able to create and acumulate wealth.

Another thing is that most of us treat and spend money the way we do with food, we do it emotionally, we do it for a rush that we get inside, for a temporary little squirt of emotions, we don’t actuallt do inteligently with the long term in mind. We became completely programed to do this;

Barry Scwartz – The Paradox of Choice – survey with high school girls, 93% answered that the most fun thing to do is shopping. Eben: If these girls think at this age that the best thing they can do to have fun is shop, how are they going to be in the future?

When we talk about credit cards the thing gets even worse. If you have a little room on your credit card they will come a time when you’re gonna feel like you have to spend it. Your emotions and immediate needs will push you to do it and you fool yourself thinking that you’re gonna get a raise, you’re gonna make more money and you wind up getting deeper and deeper into this hole.

PRINCIPLE #2: We have bad culturas and societal programming when it comes to money and wealth building. In one hand the investion of money is really a miracle, the creation of this simbolic media of exchange, symbolic value that we can trade very quickly. It allowed all kinds of commerce, exhance and trade that would have never have existed without this exchange media;

The problem with money began when we started using it so much that it became the common denominator. It’s the one thing we use to exchange value way more often than anything else. Now the problem is that we confuse money with the value of the asset. For ex. A $100 bill is not worth $100 in asset value. It costs maybe less than a penny to print and there is no intrinsic value to it anymore as gold or silver have and had in the past when it was the actual money. And because we think that the money (bills) have value, that’s the thing we go after. As long as we’re trying to get “money” we’re not going to build wealth.

All the real wealthy people, take fortune 500 for example, none of these people have their wealth in actual money, like in cash. Wealth isn’t money. You don’t’get wealthy going after money as much as you don’t get full eating the menu at a restaurant instead of the meal.

PRINCIPLE #3 – Money isn’t real so we screw up trying to get it and scre up when we use it.

Joe Sugarman: What you focus on in your life tends to get bigger, like if you focus on your health, you tend to get healthier, if you focus on your relationshio with another person, that relationship tends to grow and florish, but what happens when you focus on money? Does money grow and expand? No, it doen’t and again, it’s because money isn’t the real thing. We could truly think of it like Monopoly money, it’s not where the value or the asset is. Money grows when we focus in creating value. It’s when we focus on helping someone else get what they want in life, it’s when we focus on putting two things together in a way it has never been done before so that other people would want to invest in that idea or buy it from you. Focusing on money is not the answer, because money itself is worthless without the value we attribute to it. It’s like trying to grow a plant by talking about it and keeping a positive midset. The plant will never grow if you don’t go out there and plant it, then water it and take care of it. With money is the same thing, you have to actually go out there and create value for someone else and as a byproduct of that you get money or assets that you can convert into money.

People that know how to create value to other people can get paid all day long for it, but people that just go after money itself and have nothing to offer, no value to offer, get nothing and they don’t understand what’s wrong with them.

People that come into money without knowing how to create wealth and lose it all don’t understand how to create value. Wealthy people usually have learned to create value through a business or solving problems for other people, companies, etc. and that’s why they can get money, keep and manage it wisely. People that get money like that don’t usually buy assets or invest in things that are going to protect and grow their wealth, they just spend in a bunch of stuff that won’t come back to them later. It’s even worse with credit cards, people get money they don’t have and go spend it, not turning it into assets and wealth, but in things that are not going to come back to them.

Napoleon Hill: If you don’t accumulate money under your own power and learn the lessons that come with it, you’ll never be able to hold on to it.

PRINCIPLE #4: We had bad financial role models. What was the conversation that was going on in your house about money? Of all the conflicts that were going on in your house when you were younger, were any of them related to money? Do you remember comments made about rich people when you were younger and how they were mean, unhappy and negative? This kind of thing created a framework in your mind that keeps you poor.

PRINCIPLE #5: We have poor habits with money. We habitually do things that cause us to have less and less money and to deplete our assets and our wealth. The first habit we have is that we use cash unconsciously, we spend it on things without actually asking what is this costing me, we don’t translate it in how many hours of our time or other things that we could have had or even worse, the things that we’re robbing ourselves of in the future. We just spend it like it’s going out of style.

Warren Buffet: When asked why he doesn’t buy new houses, new cars, he says he doesn’t think of that 100K in terms of what he can buy with it, but the cost of not investing it in something that is going to pay off 20% for the next 20 years. He’s not thinking about 100k that he’s losing, he’s thinking about the millions of dollars that he’s losing in the long term. Most of us don’t think that way. And because cash isn’t the real thing and we’ve been programed to think it is, we just spend it totally disconnected from the real value.

Another bad habit is making spending decisions in the moment. This behavior is like choosing something to eat when we’re really, really hungry. You pick the full fat, full carbs thing that will give you a short term pleasure and then make you feel miserable for 2 hours.

We commonly made mental mistakes when we think about money and the way we make and spend it. For ex. In the real estate market is very common for people not to think about all the little and sometimes hidden costs involved when buying and selling a house so they ake plans and calculate values as if all these other costs didn’t exist.

There’s also 2 other costs that most people never think about: interest and inflation. Infation happens because we keep printing more and more money and it dilutes the value of our money. So if you keep everything you have in money, inflation is going to dilute it and you have less and less and less, even though it looks like you have more and more and more of it.

Why does Warren Buffet likes to buy assets with the mindset that he’s gonna own it forever? Why doesn companies like to buy other companies and trigger event that don’t incur taxes? Like when they buy other companies, grow assets and don’t trigger taxable events? Because they understand that using money costs money, that eveytime they use money there’s fees and extra costs behind the scenes.

PRINCIPLE #5: wealthy people don keep their wealth in money, they keep in 1. Assets (real Rich Dad, Poor Dad). Rich people accumulate things that grow in value over time, poor people (including middle class) purchase things that decrease in value over time and don’t throw off cash flow. Rich people invest in assets, poor people invest in liabilities.

Poor people tend to don’t invest in their own ( #2. ) education or in getting knowledge and it’s not because they don’t have money but because they don’t want to.

#3 Relationships. Wealthy people invest in relationships. People that are successful really like to help other successful people that keep their networking flowing. Wealth is always accumulated through other people, even if it’s through the people that work for you.

PRINCIPLE #6: Borrowing money is the ultimate trap. It just keeps us further and further away from wealth. Keeping credit card balance available “for an emergency” is a trap because you can anytime, fool yourself and use it as if it’s the most natural thing in the world. Keeping credit around is like keeping a bottle of booze around if you’re an alcoholic. As a business, you should never borrow money. If you do you limit your options, you made an old fashion deal with the devil, whoever lend money to you has control over you. Using credit screws up the way people think. When we want something and we have credit availble we fool ourselves to thinking that it’s ok. The first think that we do is to convince ourselves that we’re going to make more money “in the near future”. We imagine some future event when the money is gonna come to us. Then the second thing we do is to think about the finance option we have. “I don’t have to pay the full balance”. The biggest problem is that we never actually look back and see if in the past when we made similar decisions, things really happened as we thought they would. Like, we don’t realize that in the past we thought we were going to make money money and make financial decisions based on that and then we didn’t make the money we expected (we conviniently forget about that!), we don’t think about the balance of our credit cards and how many other things we’re already paying monthly just because it would be just a 10 or 20 dollar increase on the monthly payment.

If we get into to the habit of borrowing money, we never learn to take responsibility for ourselves to create wealth on our own without help.

The modern indentured servant. The term came from the old immigration times when people would make deals to be a servant for whoever paid for them to immigrate to America. These people didn’t realize that what they signed into contained several fees, interest, etc, so they debt to the person (or family) would never go down and would always increase. Most of them winded up being a slave for the rest of their lives. Now, the way I see modern society and the people that focus too much on money and not on real value that a lot of people are signing up for the modern indenture servant program. We are literally voluntearing to be slaves to out debt and slaves to money for the rest of our lives.

The path to wealth starts with taking control of our wiring. Yes, we have bad wiring, but we can control it. Next, we need to take control of our relationship with money

Fast-Start Session #1: Changing How You Think About Financial Challenges