Killing Sacred Cows Blog

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.

To hear more, listen to my podcast about this.

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.

| 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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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.

Would you rather have Tiger Woods’ golf clubs, or his swing? Do you rely upon principles, or strategies?

A golf club, however expensive and perfectly crafted, is worthless in the hands of a person who doesn't know how to use it. Likewise, those who rely upon strategy alone—without a basis in principle—will eventually fail when the conditions upon which the strategy is based change.

For example, investing in real estate is a strategy. A principle that governs real estate investing is that people have intrinsic value, while material things have none. So many real estate "investors" think that their houses are the assets, and that their tenants are liabilities. An understanding of that basic principle can help them to realign how they approach their real estate investing--they will seek to improve properties to create value for people, not because they value the properties over people. And by doing so, their cash flow will likely increase. (After all, people write checks--not properties.)

Consumers only look for tools and strategies in their search for financial freedom, without understanding or caring about underlying principles. Producers find and understand principles and align their thoughts, speech, and actions with them, and all else flows naturally.

If you want to become a better golfer, good clubs may play a part in your improvement, but improving your own skills through consistent practice should be your initial focus. Strategies follow principles in the same manner. Focus on learning and living the principles of prosperity before being overly-concerned with financial strategies.