How the Rich Think by Steve Siebold Part 2

hard work vs leverage

I was DEFINITELY taught about hard work growing up and even just a few weeks ago when my dad came to visit and we were talking about whether or not to have more kids he made the comment that the more kids you have the more you can teach them to share and work hard, which of course is debatable in and of itself, but that is for another time.

Aside from seeing my parents buying a home using leverage via a mortgage I'm not sure I was witness to leverage on a big scale. I did work for a guy in high school that hired a bunch of people to go and do estimates for his company to do sealcoating thus leveraging more manpower to scale up his business beyond himself.

I'm a newbie when it comes to using leverage to do things like trading stocks on margin or big investment money in flipping a house and using other people's money to do so.

money is the root of all evil vs poverty is the root of all evil

a.            Critical Thinking Question: Are you ashamed of your desire to be rich?  I am when I read MMM knocking people wanting to drive heavy barka loungers.

b.            Action Step: Decide to be proud of your ambition, and ignore people who tell you wanting to be rich is wrong.  I guess I got to ignore him.  

I left the questions in and my answers unedited.

I love how this book turns on its head middle class thinking. People could and probably do get supremely offended when they hear that the rich think poverty is evil and thus people who are in it must be evil. I think he is 100% right in his assessment however. Just think about crime. Does someone who has all the accutrements of life need to go and rob a neighbor, bank, or convenience store or steal a car to get the things they need to survive in life? Of course not.  

If someone has everything they need are they free to devote themselves to their highest and best self it isn't very likely they will opt to do evil even though it does happen on occassion, which reminds me of a point made consistently throughout the book.

Being rich does one thing to someone. It amplifies who they really are. If they are sad or angry or generous and giving they will still be that, but on amplified level. Hence why some rich people still aren't happy even with "ginormous piles of moneeeey".

How the Rich Think by Steve Siebold Part 1

I loved this book!

I love how he systematically dissects middle class thinking versus world class thinking.  We all know who the middle class are.  The world class are the wealthy in the world.  The 1%.  The people who own most of the world's wealth.

I may break up my review of this book into several posts because I have a lot of notes and thoughts on this book.  Each chapter of this book is about a page to  a page and a half long is all.  I also liked that it had some questions for the reader at the end of chapter and a lot of great quotes and other books to read that will help someone further their education in thinking rich, improving their investing knowledge, and some self help and gender specific books, which I plan on reading a lot of because I want to be well versed in it all.

My review, which is for myself to look back on, will be commentary on a lot of the chapters of how I and the middle class think versus what the world class rich think.

Each chapter starts with what the middle class or the masses do and separates it with a versus and then what the world class think.

Saving vs earning

I actually thought I was gonna skip the first chapter, but after thinking about it for a quick second it is true that for me growing up in the home and in school I was encouraged way more to save money vs earning money.  My parents paid off their mortgage when I was just a kid in middle school and were always conservative in their finances.  They also made great money.  

Now saving money isn't a bad thing and is THE key to investment and improving our world because without it there aren't funds to do things.  I think my thoughts were just that it is interesting to note that while I had this fundamental lesson taught to me in the home, at school, and at church, I know that earning money and investing and all the various avenues of doing that weren't touched on nearly as much.

linear vs non-linear (exponential)

The middle class thinking of making money from their jobs and investments in a linear fashion. That entails saying if I put in X number of years or hours at my job then I will make X amount of money and so the longer I work the more I will make, but strictly in a linear fashion.

The rich though earn money in a non-linear fashion, often earning more in one day then a middle class person would earn in an entire year.

The Automatic Millionaire

I just finished reading the book the automatic millionaire by David Bach.  He espouses many of the financial principals already out there like saving up one month's emergency fund, then paying half of what you save towards debt (the past self) and the other half to your self (the future self).

He had interesting tactics for credit card debt as far as consolidating your debt, talking directly to a supervisor when you call.

He advocates for buying a home versus renting.  Statistically the average renter in America has a net worth of less than $4,000.  Homeowners, on the other hand, have an average net worth of $140,000.  Pretty stark contrast.

There are a surprising amount of automatic programs out there for saving outside of the traditional  401k plan.

I also learned that an IRA is just like a checking account that is a holding account for your money and you have to decide where to put it.  Not that you still don't get to decide with a 401k plan, but it was something I don't think I quite understood.

Overall I think if someone is in credit card debt and struggling financially that this book would be helpful, but if someone wants to be more proactive in their investing/financial approach there are likely better ways of doing it.