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.

| Book Review | Response #1 | Response #2 |

 This is the continuation of a series of responses to a review of Killing Sacred Cows by Helen Huntley, personal finance editor for the St. Petersburg Times. While she does her best to give a synopsis of the book without reading it entirely, at one point she says, “…the main purpose of the book seems to be to convince you to cash you’re your 401(k) -- [Garrett] doesn’t mind that you have to pay income tax and possibly a 10% penalty…”

I’ve already discussed what the main purpose of the book is, and now I want to talk about the 401(k) issue.

If any readers are taking from the book that Garrett is specifically recommending to them that they should liquidate their 401(k), we stress that this is not the case at all. While we do deal extensively with the dangers of qualified plans, we never once make the blanket recommendation that every individual should cash out of them.

In fact, to be true to the thesis of the book, there may be some for whom the advice we give is not a good fit at all based on the context of their individual circumstances. One aspect of the conventional financial planning industry that we take issue with is the practice of recommending products and strategies out of context.

There’s a significant difference between content and context. In this case, how we discuss the 401(k) is content; the context in which that content is discussed says that your financial decisions are unique to you and your situation. For some people, a 401(k) may be great; for others it may be useless. If people can overcome the fifteen dangers of a 401(k) that we outline on page 253 of the book, a 401(k) would be a perfectly suitable investment for them. For some, whole life insurance is a productive, valuable product; for others it would be a big mistake. For some, stock market investing is great; for others it is risky and destructive.

There Are No Risky Investments

One of the most important points of the book is that there are no inherently risky investments; just risky investors. It is individuals that determine the success or failure of any investment.

As Garrett says on page 150,

"What is risky to one person could be the safest investment in the world for another. Any time someone asks me questions such as, 'Is real estate risky?' or 'Isn't it risky to quit your job to start a business?' my answer is always, 'It depends.' These things certainly can be risky -- to some people -- but they can also be very wise and safe for others.

"I have friends who have done very well in real estate, and others who have lost big with real estate. The difference is that those who do well have more knowledge, they write better contracts, they know how to manage their properties, and they mitigate their risk by doing thorough due diligence on the people who use their properties. In addition, those who I've seen thrive with real estate happen to love working with real estate; it's in their Soul Purpose. The others have very little knowledge of real estate (most of the time they get into it only because they think it will make them a lot of money), they write poor contracts that open them up to great risk, they manage their properties poorly, and often these properties are damaged by renters the owners never checked out properly. The risk or lack thereof isn't in the real estate; it's in the people who invest in it."

So what should you do with your 401(k)? Quite simply, without knowing the context of your life, we don’t know. Garrett would never make such a direct recommendation without knowing the context of your life and he’s not trying to directly convince you to cash yours out in the book.

What You Should Invest In

Another criticism that Helen Huntley makes in her review is to say, “The only investments he endorses in the book, at least in the parts I read, are real estate and permanent life insurance.” Once again, the problem with this is that she speaks of content out of context.

Just as liquidating a 401(k) is never recommended for any particular individual, likewise real estate and permanent life insurance are never specifically endorsed. They are discussed at length, but only to provide examples and explain certain concepts. They would only be endorsed within the proper context.

The one investment that is directly recommended for every reader is an investment in oneself. As you’ll find on page 155,

“There’s one critical litmus test to perform on yourself whenever you are wondering what to invest in. The answer is always – without exception – to invest in yourself. If your human life value were developed enough and if developing it was your first priority, you would never need to ask what to invest in, because your path would be clear. The best investment you can ever make is to increase your human life value, or your ability to utilize your knowledge and abilities to create value in the world. Turn inward for personal improvement and value will flow outward to those around you.

“What this means is that you are your best investment. Not your 401(k), not your Roth IRA, not your mutual fund, not your house or your rental properties – YOU. If you want to mitigate your risk and enjoy high returns, then start doing everything you can to invest in yourself. Read books, go to school to gain new knowledge and learn new skills, attend educational seminars frequently, associate with people that you can learn from, take action and learn from your mistakes."

 | Book Review | Response #1 | Response #2 |

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| Book Review | Response #1 |

In a recent review in the St. Petersburg Times, personal finance editor Helen Huntley writes, "[Killing Sacred Cows] makes some good points. I agree that you need to take responsibility for your own financial success and you should invest in yourself and your money-making potential. However, the main purpose of the book seems to be to convince you to cash out your 401(k) -- he doesn't mind that you have to pay income tax and possibly a 10% penalty -- and pay Gunderson to show you how to manage your money. If you 'apply' for his program and you have enough money, you just might be accepted!"

We appreciate this perspective because it brings out three valuable things to discuss and clarify: 1) The primary focus and main purpose of the book, 2) Garrett's position on what you should do with your 401(k), and 3) The purpose of Garrett's "program" in question (the Financial FastTrack process that qualified participants of the 401(k) Hoax Challenge experience) and the reason behind the application process.

This post will deal only with the first point, and the second two will be discussed in subsequent posts. And none of these posts are meant to single out Helen Huntley; we simply raise these points because they are common points, indicative of typical perceptions about the book and its message.

 

The Main Purpose of Killing Sacred Cows

While Mrs. Huntley graciously agrees with the book's focus on personal responsibility and investing in oneself, her perception of its main purpose is reversed; what she mentions as "good" points (personal responsibility/investing in oneself) are the main points, and what she states as the "main" point (detailing the risks with 401(k)s) was a good point taken out of context. It's an understandable mistake, especially when one hasn't read the entire book, as Helen admits in her review.

As stated in the Introduction (pg. xvi),

"The purpose of this book is to train your mind and help you to cultivate the ability to be able to see through the myths that limit wealth creation. If this is accomplished, you may well experience a productivity breakthrough on an unprecedented scale...

"My purpose isn't so much to identify and answer every myth for every reader as it is to just get readers thinking about the rhetoric, propaganda, and traditional 'logic' that we're fed through the financial media."

Wanting to give her the benefit of the doubt, Mrs. Huntley's remarks made me wonder if perhaps we don't emphasize enough personal responsibility, stewardship, investing in oneself, and Soul Purpose, and if we over-emphasize the problems with 401(k)s.

Not wanting to go on gut feelings and knee-jerk reactions -- as those who are entrenched in financial myths often do -- I took a scientific approach, did a lengthy and in-depth search of the book, and extracted the following data on the major concepts that we focus on. The appearances of the words that I highlight below were only counted if they were in the proper context. (In other words, I could have counted much more, but I wanted to be as objective and fair as possible.)

In the context that I speak of, the word "responsibility" appears 77 times in the book, with 22 uses of the variation "responsible." "Stewardship" is used 30 times; "steward" 20 times. We speak of "Soul Purpose" on 124 occasions throughout the book. And most importantly, 61 times we use variations of the word "invest" in the context of teaching that the best investment one can make is an investment in themselves through education. The total uses of each of these words and phrases in their proper context -- which together represent our primary focus -- comes to 334.

Constrast that to just 78 mentions of "401(k)s."

(I eliminated all occurences of these words and phrases that were not relevant to the actual content of the book, such as references in the table of contents or the index.)

Clearly, something went wrong with this reviewer's analysis, yet it provides an excellent opportunity to illustrate the power that financial myths can have over us -- when subject to the myths we see only what we want to see. We see the things that coincide with our current beliefs, and casually reject anything that challenges our beliefs. Since 401(k)s are so popular, anything that challenges them will stick out much more than the things with which we agree, or think we already know.

As we learn in the Introduction of Killing Sacred Cows (page x),

"It's human nature to relate things that we are unfamiliar with back to the things that we are already familiar with, or with the things that we think we know. But what if the things we think we know are false, or at least misguided? How can we make sense of new things when our frame of reference is distorted or not founded in truth? One of the most critical steps we can take toward financial freedom is to accept the possibility that what we though to be true may be completely false, and that there are infinite truths we have yet to learn."

The main purpose of Killing Sacred Cows is not to convince any individual reader to cash out their 401(k). In fact, such a direct exhortation is not even a purpose of the book. We completely agree with Helen Huntley that to make such a blanket recommendation -- without knowing the context of the lives of individual readers -- would be highly irresponsible and inappropriate.

If any of our readers have taken this to be the core message of the book, we stress that it was not our intention. Targeting the 401(k) was a way to highlight the importance of self-reliance, responsibility, and stewardship -- not to make a specific financial recommendation to readers.

While we do, quite strongly and in no uncertain terms, detail the inherent dangers of 401(k)s, qualified plans, and the accumulation theory of wealth creation, we never once recommend to any reader that they should liquidate their qualified plan. (This will be discussed in the next blog post.)

The main purpose and primary focus of Killing Sacred Cows is to teach that individuals must take personal responsibility for their prosperity, be wise stewards over their assets and resources, invest in themselves, and live their Soul Purpose. It is to teach people that they are their most important investment -- not products, techniques, or strategies. It is to teach that what happens within a person determines what happens in their external world. It is to detail universal, timeless principles of wealth creation. It is to teach that these things are far more important than -- and determine the success of -- financial products, techniques, and strategies.

This is contrary to much of the traditional financial services industry which teaches people that the right financial products are what matter. Such advisors often recommend products without knowing the full context of their client's lives. We're taught that just throwing money into mutual funds and qualified plans and letting them sit for 30 years -- without knowing what they're doing, where the money is going, who is managing it, how to control it, and how it's creating value in the marketplace -- is all that's needed to make people's retirement dreams come true.

Garrett's point is that people need to take a step back from that flawed approach, invest in themselves, consider every angle, know what they're doing before they invest, and invest based on a macroeconomic plan that takes every aspect of their financial situation into consideration. People must stop believing that financial products -- such as 401(k)s -- have intrinsic value and that people hold the only intrinsic value.

| Book Review | Response #1 |

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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.

I recently had an opportunity to apply the lessons that Garrett and I teach in Killing Sacred Cows.

I've been studying affiliate marketing lately to see if it is a viable opportunity with a solid value proposition. Online affiliate marketing means to market the products and services of others in order to earn a commission from the product creator.

On the surface it sounds like a great model--you don't even have to create your own products, all you have to do is market, and you can supposedly earn great money. However, the deeper I dug the more I realized that there are significant problems with the industry and individual practices. Mind you, there are undoubtedly ways to go about it that are ethical, legal, and aligned with Soul Purpose, yet from my intense research it appears that there are very few such cases.

So what were the problems I uncovered, and how can it apply to your own life?

1. Backwards Motivation. For most people, the primary motivation for getting into the business is to make money, not to create value. They go into it asking the question, "How can I make more money?" rather than "How can I better serve others?" or "What does the marketplace need that I can provide?"

If your primary motivation is to make money, you'll be chasing money for the rest of your life. Even if you end up making a lot, you'll live in scarcity because your primary concern is money, not value creation. You'll be plagued with the worry of losing it. You'll be less inclined to be generous. You'll attach more value to material things than to people.

2. Problematic Value Proposition. As Garrett and I write in Killing Sacred Cows, "A value proposition is simply the identification of how value is created for others through specific actions, investments, business proposals, etc. A good value proposition comes in the form of a very clear and concise statement that explains how value is being created and how it will be sustained...One excellent way to analyze opportunities and mitigate risk is to ask and answer the following five questions:
1. Is this in alignment with my passion and values?
2. Will it increase and/or utilize my human life value?
3. How will it benefit others?
4. How will it benefit me?
5. Is it based on sound economic principles?"

One could say that the value proposition of affiliate marketing is that it creates value for product sellers by increasing their reach and duplicating their efforts, while creating wealth for those willing to share their product. The problem comes when we take it a step further to ask if it's creating value for the ones paying for the entire process-the end buyers.

From what I can see, most affiliate marketers--including the creator of the methodology I studied, one of the most popular on the web--simply go to Clickbank , a broker of online products, choose a product that looks like it will sell, then promote it without knowing if it's actually benefitting end users. They're not even using the product themselves. The main things they study about the product are its commission rate and popularity, not its value to society and end users.

To be clear, I'm not saying that there are not great products out there that are in reality creating value for buyers. The problem is that affiliate marketers, those promoting the products, don't know for themselves if the products are valuable or not. They're not in it to create value or to identify a solid value proposition; they're in it to make money regardless of any such considerations.

3. Unethical Practices. There's one insidious practice that got my blood boiling. It's a common practice for affiliate marketers to identify three products in a particular niche, then create a "review" site, such as this one , showing the pros and cons of each. Again, it sounds like a potentially great service--end users can ostensibly benefit from the research performed by the marketers and choose the product that best fits their needs.

So what's the problem? Based on my research, it seems that most "reviewers" are rarely reviewing anything--they're making it all up and choosing three products that will pay them a good commission. If you're an affiliate marketer who performs solid research and actually purchases and uses the products you're reviewing, please don't take this personally. I believe that there are such out there. But after reading all of the materials from the most popular affiliate marketing promoter on the web, and reading his direct instructions of how to simply copy other reviewer's websites, I'm fairly certain that I'm on track with this.

Also, every user of Clickbank, the product broker I mentioned above, agrees to certain terms and conditions when they create an account. Agreeing to an online form is just like signing your name--your integrity is on the line. In the case of the company I researched, the creator of it admits outright that he is a liar and that his word doesn't count for much.

After describing a technique he promotes, he writes, "Technically, this is against Clickbank’s terms and conditions, but I know of plenty of affiliates who do it (many of whom make $300 and upwards per day – see if you can draw a causal link). I have only heard of a few people being told to stop offering bonuses by Clickbank, and I have never heard of a single case of an affiliate being banned for doing so. I do it myself, so that should tell you where I stand on the issue." Two pages later, after describing yet another deceitful technique, he says again, "Now once more, this is against Clickbank’s policies (and I have anecdotal evidence to suggest they dislike this more than the bonus offer), but I do again know of some $500/day affiliates who do it. I have tried it myself on two occasions with moderate success..."

In other words, as long as everyone else is doing it and as long as you don't get caught, it's all right. Anyone else see a problem with this?

Such practices are not built on solid economic principles and so they will always fail. There will undoubtedly be a few who make good money doing it, but most people will find nothing but heartache pursuing these types of businesses. And even those who do make money aren't truly prospering anyway. No amount of money is worth your self-respect and the talents that will be uncovered when you set out to serve others, talents that remain largely undiscovered if your primary concern is how to make more money.

Unless you're really creating value for others, serving them, providing them with what they really need in a principled fashion, you will never find prosperity. I'm not saying to stay away from affiliate marketing--I'm saying that if you're going to do it, then do it right. Actually research and use the products you're going to promote. Promote products that align with your passions and values, that aid you in living your Soul Purpose, and that contribute to a sustainable economy and society. Never, ever lie--even if no one else will ever find out.

Conclusion

Follow these four simple steps any time you are presented with a business opportunity to discover if it is the right thing to do:

1. Start by asking, "How can I serve?" and "What does the market need that I can provide?" as opposed to "How can I make more money?"

2. Identify the value proposition, and trace it back through every level down to the end user. Look beyond the hype and sift through your feelings of scarcity. How is the business/investment creating value for others, for the economy, and for society at large? Is it truly helping others, or just selling them? Do you personally know how it's helping others, or are you just believing the hype presented by the seller?

3. Never engage in unethical or illegal practices, no matter how many others are doing it. Keep your word. Live the spirit and the letter of all of your agreements. Be a person that others can trust and you will always prosper. You reap what you sow--reap lies and you will sow mistrust and eventual failure. Reap truth and honesty and you will sow trust, loyalty, and prosperity.

4. Never spend time, effort, and money on anything--no matter how much money you can make--that does not align with your passion, values, and Soul Purpose. Find what you love to do and do it in the service of others.

 

“I know of no more encouraging fact than the unquestionable ability of man to elevate his life by conscious endeavor.” -Henry David Thoreau

In our last post we defined consumers and producers and made clear that the one choice to become a producer is the single most important factor in determining your prosperity.

Booker T. Washington was an extraordinary producer from whom we can learn many valuable lessons. He was born a slave in Virginia, was freed after the Civil War, then set out to become educated. He arrived at the Hampton Institute determined to gain admittance. This story is a perfect illustration of how a producer approaches life and its challenges.

In his autobiography he wrote, “I presented myself before the head teacher…After some hours had passed, the [she] said to me: ‘The adjoining recitation-room needs sweeping. Take the broom and sweep it.’ It occurred to me at once that here was my chance…I swept the recitation-room three times. Then I got a dusting-cloth and I dusted it four times. All the woodwork around the walls, every bench, table, and desk, I went over four times with my dusting-cloth.

"Besides, every piece of furniture had been moved and every closet and corner in the room had been thoroughly cleaned. I had the feeling that in a large measure my future depended upon the impression I made upon the teacher in the cleaning of that room.

"When I was through, I reported to the head teacher…She went into the room and inspected…When she was unable to find one bit of dirt on the floor, or a particle of dust on any of the furniture, she quietly remarked, ‘I guess you will do to enter this institution.’

"I was one of the happiest souls on earth. The sweeping of that room was my college examination, and never did any youth pass an examination for entrance into Harvard or Yale that gave him more genuine satisfaction. I have passed several examinations since then, but I have always felt that this was the best one I ever passed.”

What challenges do you face in your life? Are you approaching them as a consumer, or as a producer? As a victim, or as a hero?

“The difference between a warrior and an ordinary man is that a warrior sees everything as a challenge, while an ordinary man sees everything as either a blessing or a curse.” � -Carlos Castaneda

Being a producer means finding ways to become empowered when you feel that your options are limited. It means finding a way to succeed when everyone around you sees nothing but defeat and discouragement. It means possessing and enduring and vibrant belief that everything will always work out as long as you are committed to creating as much value for others as possible.

Follow the example of Booker T. Washington in every aspect of your life. No matter what you're currently facing, approach it with a mindset of determination and a desire to serve others. An abundance of opportunity and wealth exists for those willing to persevere in spite of obstacles and criticism.

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

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.