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6 Key Traits of the Financially Independent

#4: Positive Thinker
You can sit in front of a mirror every morning reciting positive affirmations if you wish. You might even convince the guy on the other side of the mirror. It won’t make any difference to your success or failure on the road toward financial independence though. You have to develop an internal belief system that empowers you to achieve your goals and gives you the self-confidence to take the appropriate action.

If your inner-self doesn’t believe you are going to make it then you won’t. I used to keep a little plaque on my desk with a quote from Walter D. Wintle that read:

If you think you are beaten you are,
If you think you dare not, you don’t.
If you’d like to win but think you can’t,
It’s almost certain you won’t.
Life’s battles don’t always go
To the stronger or faster man,
But sooner or later the man who wins
Is the man who thinks he can

You can be every bit as successful as almost anybody you choose. The difference between those who succeed and those who fail begins with self-confidence. The world has many folk heroes who started with nothing and built a fortune for themselves using nothing but a solid and unshakeable determination to succeed.

Many experts believe that we are programmed to fail from early childhood. The thought patterns and belief systems that determine our destiny are deeply ingrained in our psyche from childhood. We are programmed to conform, to obey rules. These are behaviours that will severely impair our ability to successfully become financially independent later. In order to win we have to break out of that very limited mentality and make our mark in the world. That often means breaking the rules.

Fortunately, there are techniques to override early childhood behaviour training. It is worthwhile investigating them and, perhaps, taking some motivational courses. Our minds are like sponges that soak up ideas and external stimuli. If we expose our minds to new ideas we can overwrite self-limiting old ideas.

As Oliver Wendell Holmes once said:

Man’s mind, stretched by a new idea, never goes back to its original dimensions

But, of course, positive thinking alone will not guarantee a positive outcome for a business or investment venture. On the other hand, negative thinking will almost certainly guarantee a bad outcome for the same venture. “If you think you are beaten you are..”

Always go through life looking for new ideas. Never stop learning. Weigh the possibilities of using each new idea to serve your own purpose. Try to anticipate the highest and most profitable way of using the new idea; develop a plan to do it. Don’t sleep on it. Tomorrow will bring its own new ideas. Act now. Think positive, act positive.

One of the most interesting ideas I ever learned was that if we deeply believe something to be true, our minds will only be receptive to evidence that supports that belief. If we focus our minds on the worst outcome of a venture, our minds will be closed to ideas that could change the outcome for the better. On the other hand, if we focus only on the best outcome of a venture we greatly enhance the probability of finding opportunities that will lead to the desired result. It is magic. Try it.

Administrator General Topics 6 Key Traits of the Financially Independent, Positive Thinker

6 Key Traits of the Financially Independent

#3: Action Super Hero
After many years of mixing with people who have been, apparently, seeking financial independence I have observed that many of them will study an opportunity six ways from Sunday but never take any action. Their reluctance stems from uncertainty. “What if?” they think to themselves. “Have I covered all the bases?”. “I think I’ll sleep on it”. “I’d like to get another opinion, maybe there’s something I’ve missed”.

Then an ad appears in the newspaper. An investment expert is holding a seminar in town next week. “I’ll wait until I’ve been to the seminar, then I’ll be better informed”. The free seminar is a pitch for a paid course. The procrastinator signs-up for the course, lays down his nickel and decides to do nothing until the course is over. “Better to learn from an expert, then I’ll be able to make better decisions”.

The course is one night a week for six weeks. At the end of the course the instructor reveals a sure-fire investment opportunity and invites his students to participate. Some eagerly accept; others hold back. “I want to digest what I’ve learned, then I’ll make a decision”. Browsing around on the whirled wild web one day, the procrastinator discovers an offer of a free ebook and a 30-day free course, by email, on financial independence. He signs up.

A British duo called Flanders and Swan once recorded a song called “Busy Doing Nothing”. The song’s lyrics are: “Busy doing nothing, working the whole day through; trying to find lots of things not to do. Busy going nowhere, isn’t it just a crime? I’d like to be unhappy but I never do have the time.” Those lyrics paint a very good picture of our procrastinator who is very busy studying opportunities, but never straps on his super-hero cape to leap fearlessly off a tall building and fly into action.

Many years ago, I made the decision to become a real estate investor. I took the courses and read all the books. Then one day opportunity knocked. My realtor found a townhome with a motivated seller who was open to offers. I studied the opportunity six ways from Sunday. For a couple of weeks I agonized over whether I should jump on the opportunity or let it go. I guess I made the right choice. I called the realtor. I made an offer. The offer was accepted. I was transformed from a procrastinator into a real estate investor.

I never procrastinated again. I know some of my fellow students on the real estate course graduated with a head full of knowledge and a belly full of butterflies. The were too afraid to take the next step. Those who procrastinate never become financially independent. If you have decided to follow this blog for a while before taking the plunge, you have already made the wrong decision. Oh, certainly follow this blog (please) but don’t let me hold you back. Go get your super-hero cape, now.

Administrator General Topics 6 Key Traits of the Financially Independent, Action

6 Key Traits of the Financially Independent

#2: Risk Taker
When I started my real estate investment career I had a full-time job. It helped. It gave me good credit to help me qualify for loans. It also gave me a peanut gallery full of mocking co-workers who made fun of my ambitions. It also gave me a boss who doubted that I was fully committed to my job. He was right and eventually I quit the job to pursue my investment career full-time.

One of my co-workers resisted my enticements to participate in real estate investments. A great boom in the local real estate market was in progress and I achieved early success. Then, one day, he announced that he had decided to leap into real estate investment too. But he didn’t want to do it in partnership with anybody else. He was an eagle, he wanted to fly alone looking for opportunity and seizing it wherever he could. He took the risk alone and became even more successful than I did.

My own investments multiplied and fed off each other. I bought and sold, bought and sold, day after day. Sometimes I never even saw properties that made me thousands of dollars for a couple of phone calls. I grew bold and ambitious. Knowing the principles of leverage and using the power of OPM (Other People’s Money) I knew that I could use the risk/reward ratio to reap even bigger profits.

Risk can be a drug. There is an enormous thrill about taking a big risk, knowing the potential reward is equally big. Gamblers feel the same high in the casino. I had “gambler’s high”. The big deals started appearing on my radar screen. Big deals carry big risks. I recall pitching one big deal to an angel investor who wanted me to risk all my assets – including my home and retirement savings – as collateral. I was ready for it but the deal fell through.

I flew out to western Canada and with nothing but testosterone backing me I wrote an offer on a 200 suite apartment building worth six million dollars. My offer was unsuccessful, fortunately. The local real estate market collapsed a week after another of my offers was accepted on a $1.3 million dollar property across town. That was when I had to learn to be a “magic carpet jockey” to find a way to make it safely down to the ground after proverbially leaping out of an airplane without a parachute.

The moral of this post is that you have to be a risk-taker to succeed. But always remember that taking risks has a downside too, so be ready with the magic carpet. And that’s a key trait of the financially independent that we’ll deal with in another post.

Administrator General Topics, Uncategorized 6 Key Traits of the Financially Independent, Risk Taker

6 Key Traits of the Financially Independent

#1: Independent Thinker
I have always been amazed at the willingness of most people to let others do their thinking for them. Thinking is an extremely easy activity; it requires almost no exertion at all. So why is it that the overwhelming majority of people only ever entertain thoughts that have been placed in their heads by other people? Why do so many people abdicate the responsibility for original thought to others?

Failing to think for themselves exposes people to having their mind controlled by somebody else. Advertisers, government and the media can manipulate the opinions of the masses to achieve whatever purpose is on their agenda. Evidence of this is readily apparent during election campaigns. Pollsters publish trends of the voting intentions of representative samples of the population.

Polls are often sponsored by vested interests and the results can be influenced by how the poll questions are constructed. Once the results of a poll are published, voters’ intentions can and often do follow the trend of the perceived majority.

Another example is the “climate change crisis”. The media has informed us that the world’s climate is changing – and humankind is responsible. Furthermore, we are told that anybody who questions the existence, or cause, of this crisis is a “denier”, a potentially dangerous subversive. So the majority of people accept what they are told for two reasons. First, “everybody else” believes it, so it must be true. Second, unbelievers will be ostracized.

So is it true? The answer to that question is irrelevant to this post. The point is that most people accept both the existence and cause of the “crisis” without thinking it through for themselves. They have blind faith in what they are told by the media. They have allowed their thoughts on the matter to be implanted by others.

Now, let us extend that idea to the pursuit of financial independence. The majority of people in the industrialized western world are “poor” and a very tiny minority are wealthy. If we ignore those whose wealth was inherited, or obtained fortuitously, the remainder of the “rich” obtained their wealth by conscious effort. Do rich people think the same thoughts as poor people? Obviously not. Let me introduce the idea of “contrarian thinking”.

The majority of the world’s population is, relatively speaking, poor. So when it comes to financial decisions, the majority are wrong more often than they are right. If you choose to follow the financial practices of the majority, you will be poor. The rich man does not care what the majority thinks. He thinks for himself and will act upon his own decisions.

A contrarian thinker may observe what the majority is doing, but his first inclination is to consider doing the exact opposite.

So, a prerequisite for aspiring to financial independence is to first acquire the trait of independent thinking. Ignore what the great unwashed masses believe. The vast majority of them didn’t think things through for themselves; they believe what somebody else wants them to believe.

Incidentally, always remember that most people don’t think for themselves and try to work that to your own advantage. If “everybody” believes the sky is going to fall on their heads tomorrow, sell them a shelter!

Administrator General Topics 6 Key Traits of the Financially Independent, Independent Thinker

We have discussed nine leading motivating factors for people seeking financial independence, but there are probably hundreds of real life situations that simply don’t fit into any of the categories we have discussed. What is yours?

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This is My Shocking Story

This blog is not intended to teach or preach. I am sharing many of my own personal experiences and the things that I have learned along life’s highway. I hope that at least some of these experiences will be of interest you. Some of it is – and will be – intentionally shocking and provocative. Provocative? Yes; it is written specifically to provoke thought. Surprisingly, most people let other people do their thinking for them. That realization has always been a profound disappointment to me. If I can jolt just a few people into re-examining things that they previously strongly believed in – but didn’t know why – then my shock tactics will have succeeded.

Go Ahead – Tell Me How Wrong I Am!

I don’t want you to agree with me. I want you to think about what you read here and form your own opinion. Argue with me. Tell me I am dead wrong. Just, please, remain civil and polite. But, most of all, contribute. There are too many “lurkers” in the world. If you don’t have the confidence to voice your opinion in a comment on any of the posts on this blog, then you may be destined to remain a lurker. A lurker looking in through the window at the warm and comfortable world of financial independence inside – but with little hope of ever joining it.

Please join in and add value to the content of this blog by way of comments. This is my story, but I want to hear your story. Let me share a quotation that I have found helpful and highly relevant to this post:

I not only use all the brains that I have, but all that I can borrow.

– Woodrow Wilson

Administrator General Topics 10 Key Motivators for Financial Independence, Your Motivation

Sadly, a lot of marriages end in divorce. Happily, some divorces end in marriage to a new reality. A reality in which years of interdependence transforms into individual financial independence. When couples embark on the highway of married life, it is with the expectation that the journey will last a lifetime. Often, the journey leaves paved roads and ends up on a rocky backroad.

Merged Finances

Somewhere along the road, the couple will have merged their financial affairs. Joint bank accounts. Life insurance policies naming each other as beneficiaries. Retirement savings accounts, health insurance, mortgages, car loans, stock portfolios, children’s college funds.

As the bumps in the road become more pronounced, the couple may begin to realize the imbalance in their joint financial affairs. One spouse may be launched into self-employment while the other remains inside the comfort zone of a secure job with benefits; benefits like employer-paid health insurance. As long as the marriage remains on track the imbalance is immaterial and unquestioned. But, as the road grows bumpier, the individual contributions become a bone of contention and a red flag for each partner as separation plans develop.

Things that were taken for granted for years suddenly become major issues and causes for concern, contention and negotiation. Can an amicable separation be agreed? How will each partner fare in the post-separation timeframe? Will an imbalance in contributions lead to friction, hardship, anguish and financial distress?

The threat of separation and divorce may be one of the most powerful motivational factors leading to a hard and firm plan for financial independence. In this case, the independence is not from wage slavery, but from a romantic partnership that has lost its way. It is one of the most difficult situations to resolve because many years of interdependence must be unravelled in a short timeframe while under the duress of emotional strain.

Beware the Other Side of the Coin

There is another side of the coin that is highly germane in this situation. If one spouse embarks on that journey of financial independence, a financial imbalance may be created. The other partner in the relationship may develop a resentment about contributing more than their fair share. Beware.

Administrator General Topics 10 Key Motivators for Financial Independence, Separation & Divorce

Do You Really Want to Retire?

Ask the average man in the street if he is looking forward to retirement and you will get a mixed reaction. Joe Average will be looking forward to not having to get up and go to work. At the same time, he will probably have some apprehension about how he is going to pay for his retirement. For Joe Average, retirement will come at age 65. If he makes it to that age without being laid off from his job, he will be laid off permanently.

Ask a lot of self-employed people if they are looking forward to retirement and they will tell you they are going to “die with their boots on”. They are never going to retire. Is that because they don’t believe they will be able to afford to retire? Usually not. If “nothing is really work unless you would rather be doing something else” (James. M Barrie) then the real reason many self-employed people will “die with their boots on” is because they actually enjoy what they are doing.

Yes! I Really Want to Retire – As Soon As I Can Afford To.

I would have to ask you “why?”. Personally I can’t imagine sitting around, nothing to do, waiting for St Peter’s call. Empty days, wasted days. No, not for me. But let’s assume that your motivation is an escape from wage slavery. You just need enough money to pay for it. You have two options depending on when you make the decision to act.

Option #1. The realization that you wish to cast off the shackles of employment arrives at an early age.

Frankly, this is both rare and unlikely. But, if it does happen, you have a world of opportunity. You could simply manage your retirement savings in such a way as to be able cut the ties before the mandatory retirement age. Your retirement date moves forwards or backwards depending on your dedication and level of success.

Option #2. The urge to retire comes later in life.

I have to ask. “Is this really a desire to escape impending loss of employment, or a dead end job?” If it is then I recommend reading the appropriate posts on this blog covering those topics. If the revelation comes too late in life to save enough to pay for an early retirement you are going to have to pull a lot of rabbits out of hats to make it. But don’t panic. In later posts we are going to share a lot of “pulling rabbits out of a hat” tricks.

Pulling Rabbits Out of Hats

Funny thing is, when you are standing there, with the rabbit’s ears clasped in your hand, suddenly you will be filled with an overwhelming urge to spend the rest of your life pulling rabbits out of hats. A big, bright light will illuminate somewhere above your head, just out of sight, but it will light up your path. You will look down and see your feet and quietly realize that you want to die with your boots on.

Footnote: I once worked for a US high-tech company based in Connecticut. The founder and president was a man named “Chuck”. Chuck was in his 70s when I worked for him. He ate, breathed, slept and wept for the company he gave birth to. He also had a habit of falling asleep during meetings. One day, during one such meeting, he couldn’t be roused. Chuck died with his boots on. He is one of the happiest men in God’s heaven.

Administrator General Topics 10 Key Motivators for Financial Independence, Early Retirement

Credit – a powerful tool but a curse for the fool

During the last few years it has been easier than ever to access credit. Credit is one of the most powerful tools available for building wealth, but it can also be one of the most destructive tools for building debt. Some kinds of debt are actually good. In later posts we will discuss using debt to leverage enormous amounts of investment capital. Unfortunately debt can also be highly unproductive when it is caused by out-of-control consumer spending.

Cut Up Your Store Credit Cards

One of the worst culprits for building unproductive debt is credit cards. Bank credit cards usually carry a high interest rate; often several times the minimum lending rate posted by the central banks. Go ahead, blame the banks for being greedy if you like, but remember they are taking a big risk and big risks come with big rewards. Retail store credit cards are even worse. They typically charge over 28% annual interest. Carrying a balance on a retail store credit card is one of the surest ways to incur unmanageable debt. The golden rule with credit cards is to use them for convenience only. If you need extended credit use a lower cost loan to pay off your credit card balance every month.

A Slave to Interest

I have known people operate their personal finances in such a way that they have several maxed out credit cards. After paying down the balance a little, another consumer toy attracts their attention and, once again, they are maxed out. They are paying a huge amount of interest and often pay only the minimum balance on the bill each month. I’ll admit, I got into a similar situation myself once. But, instead of consumer debt, I maxed out several credit cards to support a business investment that went wrong. The end result is the same – you become an interest slave.

Independence From Debt

The process of building financial independence does NOT mean the elimination of all debt. I paid for an investment course once and one of the key things I remember is the instructor’s definition of a millionaire: a man who OWES a million dollars. Think about it for a moment. If you were to walk into your bank and ask for a million dollar loan, the bank would demand collateral of at least a million dollars. In other words, you would have to own assets of at least a million dollars in order to borrow that amount. And, if you have assets of a million dollars, then you are a millionaire.

Escape From Debt

We will discuss some innovative and clever ideas for escaping debt in a later post. The kind of debt you want to escape from is debt that you cannot service. If the repayments on your debt are unmanageable, then whether the debt is based on consumer spending, business or investment, you will be highly motivated to escape from its iron grip. However, if you owe millions of dollars and you can make the repayments then you are not only financially independent, but also very wealthy.

Administrator General Topics 10 Key Motivators for Financial Independence, Escape From Debt

Working for an employer is a sink down which a very large part of your time will disappear. Perhaps you enjoy your job. Maybe showing up at work every morning is a positive joy. Then why are you reading this blog? Enjoy it or not, in all likelihood you are a “wage slave”. Wage slaves have to report to work at a time prescribed by their employer and remain at their workplace until another time prescribed by their employer. For many people, freedom comes at weekends and for one brief 2-week vacation once per year.

Life in the Employment Penitentiary

This discipline extends throughout the average person’s working life. It often starts at age 16 and, for those who are “fortunate” enough to avoid downsizing, redundancy and other unnatural disasters, goes on until age 65. That is a period of 49 years of incarceration in the working world. The average person may expect to survive for maybe 10 years following retirement. If the average person has managed to scrape enough money together during their working life, that all-too-brief interval between retirement and membership in the choir immortal may bring some sampling of the pleasures of freedom.

Flexible Slavery

Some people enjoy the luxury of relaxed servitude. Schemes such as “flexible working hours” can permit wage slaves some elasticity in their terms of incarceration. But the inevitability of reporting to the workplace can only be adjusted within very tight guidelines. Wouldn’t it be nice to be the master of your own time? Financial independence means that you are no longer a wage slave. No more reporting to work at a time determined by somebody else, in exchange for money that is already committed to paying the mortgage and utility bills, taxes, car loans and other fixed expenses.

Punch Your Own Clock

For many years I deceived myself into believing that I was pursuing a career. I was doing something useful in the world. But the seasons they went round and round and grey hairs started appearing on my head. As I neared the involuntary end of my career I met a group of gentlemen who were doing something useful in the world that was peripheral to the mainstream of industrial activity. I made contacts with other people who were similarly inclined and I began to get involved in fulfilling activities that were disconnected from my role as a wage slave. In effect, I was enjoying the satisfaction of doing something useful in the world without coupling my activities to the need to earn a living. I was elated to a far greater degree than I ever experienced while working for a salary. I was using time – my time – in a manner chosen by me.

Nothing is Really Work …
Of course, substituting wage slavery with self-employment often imposes an even greater commitment of time. The difference is that the timekeeper is you. And, as the Scottish writer James M. Barrie once said: “Nothing is really work unless you would rather be doing something else.”

Administrator General Topics 10 Key Motivators for Financial Independence, More Free Time

What is your vision? Do you have a very clear idea of how you are going to build your financial independence? What is the source of your vision? Is it an overwhelming personal desire to pursue a particular course of action, no matter what? Chances are you will fail. Many businesses are started on the basis of turning a hobby or personal interest into a business. There is a fundamental business maxim against which you should weigh your vision: “find a need and fill it”. You see, other people – people who may, or may not, become your customers – may not share your passion. You may have a lifelong interest in collecting tin soldiers but, unless there are enough people who share your interest sufficiently to pay you enough money to earn your living, you don’t have a viable business idea.

Find a New Need and Fill It

But, “find a need and fill it” is only a very basic benchmark. For example, everybody has to eat every day. A lot of people like to eat hamburgers. So if you open a hamburger restaurant you will make money right? Maybe. Maybe not. Selling hamburgers is a highly competitive business. Can you outsell your competition? Can you, at least, carve enough market share to survive? It might be better to refine our maxim: “find a need that no-one else has found, and fill it.” You will at least make money until your competition catches up with you.

Baddies Wear Black Hats
If you channel your passion and redirect your vision to fill an exclusive need, your vision of succeeding in your own business may still bear fruit. Start a business that your potential customers have a need for and go home to relax with your tin soldiers in your spare time (if the business allows you any).

Tough words? Get used to it. Business is a minefield. There is no fair play. The law of the jungle applies. There are people waiting to ambush you at every turn. This is no place for dreamers. So you have a vision? Be prepared for people who ought to be your friends to walk all over your vision.

But always keep in mind there is an equally large number of people willing to help you. Wouldn’t it be nice if everybody wore a hat? Black hats for the bad guys and white hats for the good guys. Nah!

Administrator General Topics 10 Key Motivators for Financial Independence, Vision