Got my hands on yet another finance planning book written by Loral Langemeier. The premise and the niche that the book identified for itself is that while rest of the authors surmise on how the Millionaires are created, Loral actually has taken up challenges to attempt to create Millionaires out of absolutely normal people – a la Robert Allen. She starts off with the Building Blocks of “Wealth Cycle” which are:
1. Gap Analysis: basically the difference between Current State and Future Desired State.
2. Financial Baseline: This is the Current State position – taking a stock of where you are currently!
3. Freedom Day: The objective or the Future Desired State – where you want to be say, 120 days from now.
4. Debt Management: She has a Five Step Debt Elimination Plan about which you should read in the book itself.
5. Entities: This is one of those things that most of the “Get Rich” brigade trots – i.e.; create a complex maze of LLCs, trusts and S-Corps etc.
6. Cash Machine: Find a way to earn from your existing skills. This is something that required a lot of concentration – because in my view this is the crux of the transition from debt ridden life to becoming a millionaire.
7. Wealth Account: This is base of the “pay-yourself” principle.
8. Forecasting: You need to create a “map” in order to follow it. This is essentially the “budget” which she calls with a different name.
9. Assets: Asset Allocation is the basis of wealth creation. This is very similar to the “Cash Quadrant” of Kiyosaki in “Rich dad Poor Dad”
10. Leadership: If you need to chart a new way for yourself – you need to take lead on it. This is a principle more to get one take charge of his or her’s state.
11. Teamwork: Even though one needs to lead – you cannot achieve anything if you do not have others with whom you can join hands and create synergies. So she – again like Robert Allen and Kiyosaki – calls for creating a team of professionals!
12. Conditioning: You need to create a mind that can create money at any stage.
The author goes through case studies of her erstwhile clients with whom she has worked – all of them representing different “configuration” of life situations. She asks each one the 8 questions:
- What is your Monthly Income
- What are your Monthly Expenditures
- What Assets do you have?
- What are your Liabilities?
- What Else? (any other info)
- What do you want?
- What skills do you use to make money?
- Are you willing to Create and Execute the Wealth Creation Cycle?
Through the different case studies – I found that the tactical components of the “makeover” were very similar – and everyone involved two major things for additional income – Real Estates (mostly income producing) and converting your skills into some money making business/vocation.
While the latter piece is still a worthwhile endeavor, I am not such a great fan of the former. First, its very difficult to find a good income producing properties and second, given the bubble in the real estate market – this may not be the number one investment solution. Not every one is an expert in this area! I have invested in a rental property and I can easily tell you that its a pain.. in fact a BIG PAIN! Making money aint easy.
So, in my view, this book was a rehash of Allen and Kiyosaki preachings in a new bottle. However, it does have some very useful nuggets – specially on how to follow a discipline.. as well as how to scout for the right business/vocation venture based on your skills. Given below is a glimpse. In any case, I would say that the book is worth at least one serious read!
Your first business should have the following features:
1. Should have low barrier to entry. That is, you should be able to have it up and running and possibly generating real money within 24 hours.
2. Shouldn’t take more than you can allot, though perhaps you can get up an hour earlier eevry day.
3. Shouldn’t take more of your capacity than you can allot, though it will be a stretch.
4. Should diversify your income
5. Should give you a nice return on your investment.
It is important to focus your business and this quote from the book said it well!
“…targets a group, such as the AARP and its database of clients, rather than every person over 55, is going to be more profitable and efficient venture.”
The Business DIrective should include:
- Your vision for this business
- The Business strategies and tactics employed
- A revenue model
- Revenue projections
- Marketing Plan
- Sales Strategies
- Your Leadership Approach.
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