Killing Sacred Cows Blog

The following are tips that one can do to increase cash flow and identify resources more productively to be applied towards your economic well-being and/or Soul Purpose.  Remember, that one's perspective is more important than just going through the motions. The key is discipline to be productive with the money freed up rather than spending it on consumptive or destructive items. Each of these points can be utilized to recapture lost dollars, but can also be abused in a way that could lead to financial misery.

 1. Track income and expenses and eliminate expenses that are destructive to your human life value and Soul Purpose.  This could include overdraft charges, excessively eating out, monthly charges for memberships that aren't being utilized, etc.

 2. Look to getting some food items by finding deals from local "grocery gurus."  Warning - do not just buy things because they are on sale. However, if you are going to purchase certain items anyway, then see if you can capitalize on special sales. For those in Utah, the web link for weekly specials is http://www.pinchingyourpennies.com/forums/forumdisplay.php?f=62 (Yes, I do think the name of the website is very ironic considering the conversation).

 3. Increase tax exemptions.  If you receive a tax return each year, increase exemptions to receive it on a monthly basis rather than yearly. Consult with your tax accountant to know what number is optimal.

 4. Temporarily pay minimum payments on credit cards and other loans.  If you are making extra principal payments or anything beyond the minimum payments, identify that as a resource. If you do not know what else could be more productive than paying down high interest credit cards, then please put it towards your credit card payments.  If you are paying extra on your loans, be willing to question if that is the highest utility of your dollars.

 5. Consider stopping contributions to 401(k)'s and IRA's.  This may be an obvious choice considering the volatility of the markets. Most would have been better in money market accounts over the last few years, if not the last 10 years.

 6. Sell off any unutilized assets.  This may be time to clean your clutter and get rid of things that are only taking space but providing no utility in your life. Look to sell these off or donate to increase tax exemptions.

 7. Get rid of duplicate insurances.  If you have life insurance tied to certain loans, it will likely be more cost efficient to get an individual term policy. Most life insurance offered through banks or credit unions are expensive for the coverage and benefit the banks more than the client.

 8. Consolidate, refinance, or negotiate lower interest rates on loans.  Many of us can call our credit card companies and ask if they will lower the current interest rates on credit cards or other loans. Try it!  You may be surprised.

For more details and future podcasts on the subject, go to the Fire Your Financial Adviser website.

How To Influence the External Economy With Internal Decisions

Every expert in America agrees that our economy is under serious strain. We even hear speculation that the U.S. is headed for another Great Depression. The government bailout of Fannie Mae and Freddie Mac will cost taxpayers $5.3 trillion. The proposed $700 billion bailout of other notable financial firms is a Band-aid approach to a gaping-wound quandary.

So what is the long-term solution? Does the current crisis represent the end of America as we know it? What can you do to contribute to a more secure and prosperous economy? Is it possible for you to prosper in economic downturns?

The first step to identifying solutions is to accurately diagnose the problem. While the reasons are diverse, our current predicament is the product of three primary factors, on three different levels: 1) the government manipulates the economy with the money supply, creating artificial demand and warping natural market forces, 2) corporations have been guided by shortsighted greed, and 3) average Americans consume more than they produce.

Since corporate behavior and government policy represent individual action, the only long-term solution to America’s economic woes is for individuals to be the change they wish to see in the world; to focus more on their internal economy than on the external economy.

Internal v. External Economy

The external economy represents everything outside of you: GDP, the Federal Reserve, international trade, supply and demand, manufacturing, etc. Your internal economy is the sum total of the value you offer to others minus the factors that limit your production. It is your human life value—your knowledge, skills, abilities, relationships, confidence, etc. It is what happens within you that determines your material and spiritual prosperity, or lack thereof.

Our pressing crisis hasn’t happened in a vacuum; it’s the result of a steady shift in culture, based on personal, internal decisions. We can blame the government and corporations all we want, but government agents and corporate executives are common Americans like you and I, doing common things. There’s little you and I can do to influence government policy during this crisis, but there’s an infinite number of things we can do to ensure security and prosperity regardless of what happens in the external economy.

Do you want to learn and grow, or complain and wallow in the misery? If you choose the former, then it’s time to grow your internal economy. But how, exactly, is this done? Your personal economy will be strengthened and vitalized by living the following five principles:

1. Entitlement is the enemy of prosperity.

Stop waiting for someone else to solve your problems and give you economic security. Contrary to New Deal lies and cradle-to-the-grave propaganda, the only things you’re entitled to are life, liberty, private property, and the pursuit of happiness. The government owes you nothing but the protection of your unalienable rights. Corporations can give and take benefits as they please.

Your suffering during hard economic times will be directly proportionate to the degree to which you feel entitled to “security” and benefits from any person or institution. You’re entitled to the fruits of your own labor and ingenuity—nothing more or less. Don’t abdicate your responsibility to prosper to funds that you don’t understand, investments that you can’t control and that are not collateralized, and managers that you don’t know. Take full responsibility for your money and your life.

2. Produce more than you consume.

The average American—while complaining about the federal budget deficit—spends more than $1.20 for every dollar that he earns. Contrary to the crippling myth that “consumer spending drives the economy,” production drives the economy. Production—creating value for others in a way that they compensate you for it—is what gives any individual or entity the ability to consume.

You can’t control government spending. But you can control your own. Spend less than you earn. Never, ever borrow to consume. Pay off consumer debt as fast as you are able. Cut up your credit cards if that’s what it takes. Increase your production through education, better marketing, a career change, etc. Save and invest ten percent of your income. Do whatever it takes to ensure that your home economy produces more than it consumes; this is the best way to fight inflation.

3. Value creation comes before desire fulfillment.

Who has more money—you, or other people? Obviously, other people. How can you get others to give you money? By providing something to them that they value more than their money. Greed and selfishness are at the basis of so many of our current problems. The wise understand that they can only get what they want by first focusing on what other people want; they are still self-interested, but they are not selfish.

What do you have to offer that other people want? What suffering exists in the world that you have the ability to alleviate? What do other people need and how can you provide it efficiently? Dollars follow value—creating value for others is the only legitimate way to meet your own needs.

4. Integrity is worth its weight in gold.

Corporate executives are being caught in lies like flies to honey. But what about you? Are you going to unfairly take advantage of others in the name of “Everyone else is doing it?” Or will you take the road less traveled and be a person of your word, a person who others can trust in and rely upon? Does your private life reflect your core values?

When times are hard, people look for stability. Integrity provides stability of character, drawing others toward you. Integrity alone is a magnetic marketing tool and will boost your ability to influence and serve others, and therefore profit in spite of crises.

5. Find and live your Soul Purpose.

Soul Purpose is your unique set of talents, abilities, values, and passions applied productively and effectively, making tremendous impact upon the world and bringing the highest levels of joy and fulfillment to you and everyone you touch.

You were born for something wonderful. Are you doing it? Do you love to get up every morning? Are you energized by your career? Does it continually stretch you to achieve your fullest potential? Are is it time for you to choose something different?

Prosperity is much more than dollars, investment accounts, and toys; it’s the internal joy that you experience by applying your best work to pressing problems. Soul Purpose is the best long-term investment.Find what you were born to do and do it—your prosperity will increase exponentially.   


The problems we face are big—which means that there’s now more opportunity than ever to create value by alleviating suffering. Big problems require bigger solutions, and bigger solutions pay bigger dividends. The positive side of the financial meltdown is increased awareness; there is now enough pain for us to course-correct and overcome the economic myths of the last century.

The solution isn’t to elect new leaders any more than changing drivers on a broken car makes the car run better. The solution is for common Americans to reform the economy from the inside out by eliminating the entitlement mentality, producing more than we consume, creating value for others, developing impeccable integrity, and living Soul Purpose. If you don’t know what to invest in—especially during hard economic times—your best bet is to invest in yourself through education. After all, the external economy is nothing but a reflection of the aggregate of internal economies.

With my "Fire Your Financial Adviser" seminar and our Producer Power Hour podcast this week, I wanted to address a topic that I feel is grossly misunderstood.  When I was a traditional financial adviser, I would rattle off some assumed 2000 Bureau of Labor Statistics that came out with a longitudinal report that studied where 25 yr olds in 1960 were in 2000.  It showed 29% of 65 year olds deceased, 66% totally dependent on others or still working, 4% financially independent, and 1% wealthy.  By the way, I have never seen any government source confirm these numbers, but I have seen many financial institutions and network marketing companies quote it.  In fact, in my presentation, I would have a tagline that said "People don't plan to fail, they only fail to plan."  This was what I used to convince others to take action and do business with me.  However, even if those numbers were accurate, hadn't more than 5% of Americans implemented some sort of retirement products during their life, like 401(k) and IRA's, some with financial advisers?  Weren't many of these "Prime lifers" born in 1935 strict savers because of the influence of the Great Depression?

 

The Tragic Truth

The reality is much worse.  According to the National Centre for Health Statistics, a 25-year old only has a 16% chance of death before age 65, not 29%.  Of the surviving, the 2000 Bureau of Labor Statistics says that 24.4% of 65-69 year olds were still working and 66% of them depend on Social Security to provide at least 50% of  their income (22% are totally dependent).  The median household income for those 65 and older was only $33,802 in 2002.  In addition, the 2000 U.S. Census said that this aging population had a net worth of $108,885.  However, $85,516 was home equity leaving a measly $23,369 for retirement.  If you read my blog on hidden 401(k) fees (August 8^th), you would also notice that the average balance in a 401(k) for 65 year olds is only about $60,000.  Could you live like that for one year?  Two years?  Ten years?  How about 25 more years? 

 

The Cause

There are many factors contributing to this, but let's address some of the most overlooked. First, most financial planners will quote some "average" return in the markets that someone can likely count on for the long haul.  However, the "actual" return often is different.  See diagram below.

 

This is a pretty drastic example, but it proves the point that the number an adviser or planner puts in the calculator will never match up to reality.  From 1965 to 2004, the S&P 500's (stock market) performance was an 11.74% "average" rate of return but the "actual" return was 10.4% per year.  You may think that 1.34% makes little difference; however, after 40 years, your money is less by about 38%!  This doesn't even include fees that they never factor into your rate of return.  If your fees totaled about 1.25% per year, you would see that number cut by another 36%!  This would mean that you would actually only have about 39% compared to what a financial calculator would tell you based on the average rate of return!  Therefore, in this S&P 500 example, if you were expecting $1 million when you retire, even if it performs how it is supposed to, you would only have about $390,000.  Would you be disappointed?  How would that affect the income you were hoping for?  What if you had to pay taxes on that disappointing figure as well?  How much would $390,000 really be worth in 40 years given the actual inflation rates, including health care, as well as keeping up with certain technological changes and so forth?  To see what other factors do to your money, I would suggest listening to our August 27^th podcast on http://www.producerpowerhour.com/ or registering to attend Part 2 of my seminar/webinar at http://www.fireyourfinancialadviser.com/.  I will further illustrate how a positive ACTUAL rate of return of 12% could become a negative return in reality.

 

The Solution

It's simple.  Get further educated on leveraging the assets you have.  One cannot expect to get different results by believing the same things about investing as everyone else.  Misunderstood concepts, like some that were previously mentioned, are contributing to the dilemmas and drain on Social Security.  To hear more on this subject, check out http://www.fireyourfinancialadviser.com/ or http://www.freedomfasttrack.com/.   

By Chris Miles  

This is an essay I recently wrote about independence which I feel pertains to our discussion of overcoming myths and becoming financially free.

Could independence be no more than freedom from oppression and domination? Conversely, is independence merely unobstructed freedom to do anything we desire with no fear of intentional or unintentional consequences? Absolutely not! The more freedom we expect, the more responsibility we inescapably accept.

Today, we see a pandemic paradigm governing humans to blame anyone when things go awry. Thomas Jefferson proclaimed, "Timid men prefer the calm of despotism to the tempestuous sea of liberty." Why do we shrilly scream for independence and utter whining whispers at the first sight of responsibility?

To many, independence means to be "in dependence." They fancy others slavishly sowing so they can slothfully reap. They "fight" for freedom, but ultimately, beg for bondage. They want what has never existed - freedom from consequence. Indisputable independence is the freedom to pioneer one's path and be accountable for the destination.

My challenge is to consider what areas of our life and finances are we not taking on responsibility. Are we blaming market events, investors, financial institutions, oil companies, politicians, etc for our problems rather than creating solutions? Why can we see so clearly others' errors which are somtimes trivial and are so blind to our own destructive faults? What possibilities would arise if we focused the energy we waste complaining and repeatedly pointing out others' mistakes towards production and creating greater happiness and financial freedom through discovering soul purpose? What blessings are we failing to see because we focus more time and energy on the lack thereof? I challenge each of us to objectively ponder these questions, journal our responses, and identify ways to further focus on our financial independence.

By Chris Miles

One of my clients recently asked me a question regarding whether or not someone needed passive income to truly be financially free. I believe that many of those striving for financial excellence have asked this same question and debated it.

In response to this question, I would ask "What is passive income to you?" How you define passive income will determine whether or not it can really exist and sustain itself.

Passive = No Direct Value Creation

Many believe passive income to be earning income on investments without having to do anything to earn it. Or, in other words, provide little or no value to receive a lot of value. However, if one owns a rental property and gets paid rent, is that really "passive?" Did you really do nothing for it? If you do nothing, will the income last?

Consider having a business as another example. If you provide tremendous value in a business for months, or even years, so that you create conditions to make money while you sleep, was that a passive event, or were you active in creating it? Do you still have to maintain it?

Do you think Garrett Gunderson put minimal time or value into Killing Sacred Cows to help it sell? If he decided to put little effort and time into it by cutting corners and using no research, what kind of "passive" income do you think he would receive from book sales?

On the other hand, if passive income means working smarter and leveraging your abilities, passions, and talents (Soul Purpose), and others' as well, could that kind of income continue for a longer period of time?

The Law of the Harvest

We violate the Law of the Harvest (sowing and reaping) when we believe that we somehow can reap where we have not sown. If one ever feels that they are getting paid to provide little to no value, that income will not likely last. As a result, it becomes a state of bondage due to uncertainty of the returns rather than financial freedom.

When I have had income streams in the past where I was not certain why I was receiving so much income for providing little or no value, the passive income never lasted longer than a few years. The only income streams I have been able to count on are the ones where I have significant control and contribution.

Some may consider maintaining control and applying one's human life value bondage, but is it really? Who is paid more -- one who provides value for others in a way that few can or one that gets paid doing virtually nothing and has a difficult time understanding why they get paid so handsomely?

With regards to passive income creating freedom, did our Founding Fathers say, "Once we are ‘out of the rat race' then we will begin to fight for freedom?" They declared their independence when they were still subject to King George's rule.

What is Financial Freedom?

Is freedom a state of having or a state of being? Could one ever have enough money to buy freedom? Can freedom be purchased with money? Is it possible that many that have passive income could be slaves to doing investments or businesses that they do not enjoy? If you do real estate investing only to make money, how is that different than a job? Would you call doing an investment or business only for money "freedom?" If that were the case, couldn't one work a typical full-time job and still be free?

I do not believe that living financially free can be purchased. The only ones I have met that believe this theory are the ones that have never had money. I have had times where I have felt more enslaved with more money than living paycheck to paycheck.

Granted, our minds can be put at ease if we are wise stewards with our resources. We may choose to create conditions that cause more stress and worry, such as living on more than we have means. However, the only way to have financial freedom is to live a life of based on purpose, not a life based on our pocket books.

Freedom is a state of being, not a state of your account balance.

I challenge each of us to put money in the proper perspective as a tool to be used to serve others through our soul purpose rather than money being a master that will command us when we will be free.

Click Here to See the Building Walkthrough Garrett Mentions in the Video

Questions: (Score 1 - 10) (Watch the video as I walk you through the exercise)

1. How often do you worry about money?
2. Do you feel like your finances are perfectly organized?
3. Are you being paid for living your soul purpose?
4. Do you have enough money coming in from your portfolio income to cover your expenses?
5. What percentage of your income comes from you working in your Soul Purpose?
6. If you were to lose the ability to generate income today, would you have enough funds available to keep your same lifestyle?
7. What percentage of your income is supporting or investing in your Soul Purpose?

Getting Rich Your Own Way, written by Srully Blotnick, details a study that began in 1960 of 1,500 people representing a cross-section of middle-class America.

Throughout the twenty-year study, they lost almost a third of participants due to deaths, moves, or other factors. Of the 1,057 that remained, 83 had become millionaires.

When Mr. Blotnick’s team interviewed participants at the beginning of the study, the most widely shared impression they found was that “great wealth can come to you only as a result of doing things you don’t want to do.” They also noted that from the start, most participants assumed that chance would play a decisive role in determining who became wealthy.

They found that the 83 successful people shared five characteristics: They were persistent, they were patient, they were willing to handle both the “nobler and the pettier” aspects of their job, they had an increasingly noncompetitive attitude towards the people with whom they worked, and their investment activities—aside from their main career—consumed a minimum of their time and attention.

Writes Blotnick, “We originally expected the people in our sample to become wealthy by taking the money they earned at work and investing it wisely, in such things as stocks, bonds, and real estate…we thought there’d be no way for [them] to become rich unless they used their surplus income to generate more income…It didn’t work out that way…More often than not they made little or no money investing.”

In short, what the study unveiled was that the main source of wealth for the successful participants was that they found something they loved to do and they did it well. “In case after case,” says Blotnick, “they did increasingly well occupationally, while their pursuit of investment profits proved to be largely a waste of time. in the long run, it was their work which made them rich.” Blotnick concludes that investing in yourself, what you do, and with whom you do it are the most important determining factors of wealth.

Are you living your Soul Purpose ? If not, it's highly unlikely that you will achieve financial freedom.

In your journey to financial freedom, do you identify wealthy people and try to do what they did, or do you try to think like they thought?

The actions of people are value neutral; what gives all actions value are the thoughts and intents behind them. Two people could perform the exact same action but have different reasons for doing so, and the results would also be completely different.

Financial freedom isn't about doing; it's about thinking. Spending your time doing without understanding how to think is like a rat running on a wheel in a cage. Don't look for the right things to do, identify the right way to think .

Do you know what to invest in, or do you often ask successful people or consult financial publications to find what the best investments are?

Every time you wonder what you should invest in, the answer is always--without exception--to invest in yourself, or your human life value.

Your human life value is your own particular combination of knowledge, skills, and abilities—everything that you are when you take away all of your material resources. It is your character and integrity, your ability to think creatively and uniquely, your relationships, your faith—or the lack of each of these things. It is your knowledge and ability to shape materials and information in new ways that are valued and utilized by others and yourself.

The fact that you are asking what you should invest in tells you that your human life value is not sufficient to invest in anything without risk and with a basis in principle. If your human life value is developed enough, you would never have a need to ask the question.

The best investment you can ever make is to increase your human life value. Turn inward for personal improvement and your value will flow outward to those around you.

Would you still be doing what you're doing today, or would it be different? What would it be? Why? What's preventing you from doing it today, right now?

Now is your time to be your ideal self and live your ideal life . If money is the main thing keeping you from being who you dream of being, then now is the time to break through that tyranny of the mind.

There are problems waiting to be solved that only you can solve. There is value to be created that can only materialize in your unique way. As Gandhi said, "The difference between what we do and what we are capable of doing would suffice to solve most of the world's problems."

What would it take to get you to do what you would do if money were no concern today?