How to Create Wealth
Stop buying stuff!
You’re destroying the planet, you’re keeping yourself poor and miserable, and screwing up your life. Don’t believe me? Watch this. Think about the true costs of the useless crap you buy every day that fills up your closet and eventually ends up in the landfill. Learn about, study, and ponder externalities. How many are you (at least partially) responsible for?
Ask yourself this, and answer honestly: Would you really be all that bad off if you gave up everything you own except basic kitchen fixtures, a bed, and a modest roof over your head? (Ok, you can have some more basic furniture and a simple wardrobe, but you must buy it all used at thrift shops. And you can have basic utilities, so long as you don’t overuse them.) Would that ruin your life? Would it really have any appreciable effect on your well being at all? Most people derive 90% of their happiness from their family and friends. And to fill in that last 10%, you can get unlimited entertainment, enough for a lifetime, free at any local library, along with a free Internet connection.
Now consider how much money you’ve blown over the years on items that aren’t on that list. Imagine if you had saved it all, and invested it at a modest 8% return. Seriously, run the numbers and see. For most middle class Americans, the result would be more than enough to create a lifetime of financial independence.
It’s not too late. You can just stop. You really can!
In fact, I ought to launch another site called “Million Dollar Closet.” The rules would be the same, except your starting stake can come from selling crap you already own on eBay or Craig’s list. The hook - no buying ANYTHING new until you have a million in the bank. You can buy food (but not at restaurants), pay your bills, and pay to repair stuff you already have, but that’s it. I’m confident most people could get rich in much less time than they imagine this way. So why not do it?
Time is Money?
We’ve all heard the phrase. However, the notion is a dangerous one. The truth is that time is infinitely more valuable than money. Surely everyone reading this will agree. Every precious moment that slips away and will never return again is a tragedy if wasted.
So I will put a hard question to you: if time is more valuable than money, why are you trading your time for money? Whether your hourly wage is $7 or $700, is it really worth giving over so much of your life? I don’t care who you are, the answer is no. Not for its own sake. Not by a long stretch.
If you are one of the few people fortunate enough to have a job you love, then you need not concern yourself. If you are supporting yourself doing something that brings you joy and satisfaction, then count your blessings (for they are many), save for retirement, and don’t worry after that. Most people hate their jobs, however. To spend the majority of your waking hours away from your family and the things you love, trapped in a job you hate, is a terrible waste. As one friend put it, “it’s no way to live a life.”
Here’s the real test for any job: If you had a billion dollars, would you do your job for free? If the answer is no, then in my mind it just isn’t worth it, not matter how much you are being paid. At the end of the day, it’s only money, and your time is priceless.
Most of us are trained from an early age to believe that time equals money, that we must work an hour to earn an hour’s pay. It’s deeply ingrained in our society and culture, and it is utterly false. If you ever want to be wealthy, you must free yourself from this lie.
The truth is that there are many ways to grow wealth. Trading hours for money is only one, and it is by far the worst option out there. Yet is it the only option that we’re taught about in school, and many people never use any other method their entire lives. That’s why you are not allowed to use a single penny of pay from hourly work in this game.
Find another way. The world is full of ways to make money. All that is required is for you to find something someone needs or wants, and give it to them. But don’t give them the precious hours of your life. They should be yours, and yours alone.
How to Make Money From Nothing
At the risk of violating Rule 6, check out this post from money smart life. It discusses using leverage to profit on eBay. The strategy need not be limited to eBay alone, though. Using this method, you can profit while putting zero (literally) of your own money at risk. Like my first sale, the trouble with this strategy is time. It works, but it’s hard to scale up to make serious money with it. However, it’s a great way to build up a stake for more lucrative opportunities. Food for thought.
The Secret to Building Real Wealth
My brother is what some might call a ne’er do well. He’s never had much luck holding down a job. He’s extremely intelligent, creative, and charismatic, which of course means he’s utterly unsuited for the typical stifling corporate workplace. To make matters worse, he’s a high-school dropout.
Building Real Wealth
After a series of unsuccessful jobs, he was discouraged, and had a chat with our mother, who told him what I’ve been telling him for years: he needed to start a business and be his own boss. It’s the only true path to building real wealth - there really are no exceptions when you look closely enough. If you get rich in stocks, it’s because you own the businesses you invest in. Dot-Com millionaires don’t get rich off of their salaries, but off of their stock options, which again represent ownership of a business. Even CEO salaries are peanuts compared to what they make off of stock ownership. The list goes on and on.
My brother understood the idea intuitively. The trouble was he had no earthly idea how to go about starting a business of his own.
Build Your Own Wealth by Helping Others
Faced with this quandary, my brother asked my mother what to do. Her response was the most important six words any aspiring entrepreneur can hear. This simple statement holds the secret to unlimited wealth: Find a need and fill it. Repeat this statement to yourself. Think on it. Meditate on it. It’s the secret behind every successful business ever made. If you can manage to follow this extremely simple idea, then your success will be all but assured.
Of course the idea may be simple, but that doesn’t mean it’s easy. How do you find an unfilled need? Well let’s look at what my brother did: He started visiting successful businesses in the small Southern where he lives. He simply walked up to the front desks asked to speak with the owners of the businesses. More often than not, he was let right in. He then chatted with the owners about their businesses and asked if there was a service which would help them out, which they wished were available locally. (As I mentioned, he’s quite charismatic.)
Build Real Wealth With A Few Mops and Some Elbow Grease
As it turned out, this small Southern town was in a bit of an expansive boom, and lots of medium to large office buildings were cropping up downtown, yet many of the standard services for office buildings you see in bigger cities just weren’t available in town. One was after-hours industrial cleaning.
So my brother bought some gear, and started an industrial cleaning business. The very same business owners he chatted with originally became his first customers, and his business quickly expanded by word of mouth. He now has several employees and more business than he can handle. More importantly, there’s no jerk in a stuffed suit telling him what to do. He’s well on his way to achieving financial success, and he’s done it all his own way.
You can Build Your Own Wealth, Too
Trust me, if my brother the high school dropout can make such great strides toward building financial wealth , anyone can. Just follow mom’s advice.
Inspiration and Resources for Building Financial Wealth
Whether you’re playing the game and looking for some inspiration or some help, or are brewing your own wacky idea, here is a list of resources and success stories to help you along the way.
Wacky Ideas
Every one of these ideas seemed crazy at first. Laughable, even. Who’s laughing, now?
- One Red Paperclip — A guy who traded a red paperclip for a house.
- The Million-Dollar Homepage — A kid who made a million dollars by selling space on his home page one pixel at a time.
- Plenty of Fish — A free dating site run by two people, the founder and his girlfriend, out of the founder’s apartment. They’re making over $1 million a year in Google Adsense revenue.
- How to Double Your Way to a Million — Stuart Goldsmith’s classic that inspired this site. Mr. Goldsmith has made millions over the years using the exact ideas he writes about.
Free Resources
With so many free tools available now, it’s easier than ever to make something out of nothing.
- The Gimp — A powerful free graphics editing tool. Why pay hundreds for Photoshop when the Gimp has almost all of the same functionality, and is free? All of the graphics you see on this site were created with it.
- Emacs — The best text editor in the world. This entire site was written in it. (No vi fanaticism, please.)
- Wordpress — A powerful, flexible, and easy-to-use blog publishing platform. This site is published using it.
- ReCaptcha — Having to enter distorted words to verify that you’re human is mildly annoying, but a necessary evil to stop the scourge of comment spam. ReCaptcha is a free service that actually makes use of the effort you make to decipher the words, because it uses real scans from old books that are being digitized. Thus, I ch0se ReCaptcha to provide the human verification for this site. Stop spam, and help preserve old books at the same time. What could be better?
Learn About Money
- The Motley Fool — A comprehensive financial education may be found on this site, all written with great humor and irreverence.
- Warren Buffett’s Annual Letters to Berkshire Hathaway Shareholders — Read every one of these letters from beginning to end, and you will learn more about business, the economy, the markets, and finance than in any MBA program in the world.