We briefly discussed debt when I shared The Only Reason For Money (KLE33):

This IS Bad Debt and should be avoided at all costs!

But, that’s only a small part of the ‘debt story’ so, let’s take a deeper dive into this important subject right now:

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Remember: The Object of The $7 Million 7 Year Wealth System is to end up with MORE money – a specific amount of money by a specific date – the object isn’t to SAVE money, PAY off debt, BUY a house, and/or START a business … they are all just possible steps along the way.

The ‘No Budget Budget’

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Stay tuned …

Are you an optimist or a pessimist (I’m already on record on this subject)? It might depend upon how well your assets outweigh your liabilities …

… this diagram shows quite nicely how the cash flows – out! – for each liability …. does that mean that a liability = bad? Not necessarily, it depends on how you use it to (eventually) drive (a lot more) cash back in!

It was enlightening to see the similarities – and differences – between the strategies for each of the 7 Millionaires … In Training! for each of their key ‘assets’: houses; cars; 401k’s.

Now, rather than ‘pulling teeth’ and looking at each of the separate areas of liability for each of the 7MITs – besides their bosses, coworkers, spouses and dependents – I asked each to just summarize what they owe, who they owe it to, what (if anything) they intend to do about it, and how (and by when). Perhaps, you should do the same?

I know we’ve already covered some of this (under cars and houses), but here we are really looking at the whole subject of liability/debt in one place.

I’m looking forward to see what they – and, you – come up with

If your house is your biggest purchase, then your next biggest purchase is likely to be your car …

… but, you aren’t most people!

I assure you – that through the course of this experiment, if you choose to participate actively along with our 7MITs – you will make MUCH bigger purchases by way of businesses/investments/RE/etc.

So, to put this all in perspective, think about your car:

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BTW: 7million7year’s own car – the Maserati in the pictures – has been sold (or, so the dealer has assured me) … I think I will break-even on my purchase price due to a number of conflicting factors:

- I paid cash

- I bought the car 6 months old (and, only 1,700 miles on the clock) for a $35k discount off new

- I am selling the car in a recession with a 8% dealer’s ‘consignment commission’

- I am transacting in FOREX currency

Now, I’ll just have to be content with the new 7m7y Mobile …

Is your home your castle or your dungeon?

What a fantastic finish to 2008!

I hope that all of our readers – following the ‘live out loud’ examples of our 7 Millionaires … In Training! – now have a great idea of how much money they need, by when, and roughly what ‘tools’ will be required to get you all there?!

If you have, then you are already ahead of 99% of the population, and you have barely begun your journey! If you haven’t … well. what are you waiting for? It’s all laid our for you in the archives of this blog.

Now, our journey takes a giant step into …

… the present.

Now, I would like you to simply take a look at a number of things IN RELATION TO YOUR CURRENT PRIMARY RESIDENCE, which is likely to be your biggest expense/asset/liability:

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Remember, this is not a test: we are here to learn from each other, rethink things we may have taken for granted and ask / answer questions …

… this ‘grand experiment’ will all evolve slowly over time (that’s why I have allowed 7 years), although you may (and, I hope!) have occasional ‘aha’ moments: it’s the combination of the gradual and the unexpected that will (eventually) take you to where you need to go …

… all the best for 2009.

Knowing What IS

 ”It depends on your definition of the word, “is.”

As a student of the English language, I had to agree with that statement.  As a student of change management, I heard it again.  We cannot change what “IS” until we know what that is. 

None of us is starting this 7 year journey at the starting gate called “zero” – our baselines are all going to be where we are at this moment in time.

A few months ago, Adrian introduced (most of) us to Networth IQ which helped us determine our net worth at that time.  It’s a kind of baseline of “what is” as well, but simply the financial aspect. 

Another important aspect is where we are emotionally and intellectually – where our heads are.

Here’s where I am:

1.  It’s time to update my Networth IQ. 

• I should have updated it last month, but deadlines at work and trying to divest my house of unnecessary things contributed to a major shortage of time, and while I saw the data on my computer, I never consolidated it completely nor put it on NetIQ. 

2.  I’m continuing to work Adrian’s Making Money 101 - debt reduction. 

• Have a litte mess with Chase Credit Cards going-on and they have about reached my last straw.  (Verizon did that last month after almost a year (similar to Chase) of different aggravating conditions coming up.
• I still like Verizon’s access, but the hassles now with service aren’t worth it. 
• Same for Chase.  Bills by them aren’t accessible online to my bank, dont’ always show up in the mail, and therefore trying to pay the minimum monthly and on-time has been problemmatic. 
• They recently reduced credit limits – which wouldn’t be a problem, but they raised my rate so that my next payment, being the “old” minimum, would now make me late on the payment and additional fees can take me over the new limit , thereby allowing Chase can tack on new charges for being “over limit.”  Games, games, games. 
• I’m tired of chasing my tail with them.  But, they have one last chance to fix things and that is to return my rate on one card back to what it was. 
• I’ve paid off another card and will transfer this card’s balance if Chase won’t work with me.

3.  I’m combining debt snowball with avalance right now.  (Here‘s AJC’s take on that.)

• Typically, I work on the largest interest first (since I work with numbers, this was logical to me). 
• Because of what Chase has been doing, I decided to pay off the smallest. 
• I just finished that and freed up a card for re-use.  This was Capital One and they have always played fair by me.  (Discover Card is another one that has always been good at this as well, so I’m happy to see another card showing the same honesty in its dealings with me. (Can’t speak for anyone else’s.))

4.  I’m looking ahead to Making Money 201 - future investments. 

• I’ve stopped my 401k temporarily as it was losing money lately and I am using that to pay down debt that will free up the ability to make future investments less stressful for me (I still have plenty of credit).
• Started reading about real estate investments.  Adrian had recommended some books on his 7million7years.com blog and I picked up a couple of them and am studying them. 
• Since time is not plentiful, I have set aside to read 1 chapter or 30 minutes a day, whichever is the most logical break.  I want to give myself time to think about what I am reading and not merely to skim it.  I note to myself that I will probably want to read these again and again – they are that good.

5.  I’m looking at some of Adrian’s suggestions about e-businesses. 

• From that, I have recognized that I have something similar to offer others who, like me, struggled with weight/diets after children or “just because” and that I can probably organize my personal blog on that better and offer it to others in an e-book format as well.  It would be a good learning experience for me, as well as help others (which is why I started that blog in the first place).

From this above, I’ve attempted to assess “where I AM” and define “what IS” for me. 

My next step will be to look at where I want to be (Adrian’s Rear Deck Speech and my $/Yrs goal) and start organizing the steps I’m taking NOW (notes above) and see if they are moving me in the direction or not (that would be called a “value-added assessment, btw”). 

• I should also brainstorm other ideas, not limiting myself but seeing if I know other options that are better than what I am doing now.  (Like, is there something Adrian can help me understand better? or, Can he turn me in a better direction than where I am headed? ….)

In order to get to A from B, you first have to define A and B – so, where are YOU and where do you want to be?

Meet Scott!

Scott and I ‘met’ on Networth IQ quite some time ago … he sent me an e-mail regarding some topic of discussion at that time on my blog or on NWiQ and I shared my concept – in order to get some feedback – to ‘give back’ more directly than I could in my blog, by actually creating (what ultimately became) this 7 Millionaires … In Training! ‘experiment’ …

… I say experiment, because – to my knowledge – nobody had undertaken a project of this scope before … and, for free!

Anyhow, I’m pleased to welcome Scott to the Final 30 …

I truly believe as a person builds great wealth and achieves financial freedom, they are provided with greater opportunities.

This provides more choices and allows you to ascend a hierarchy that can lead to greater service to others. I spend my days helping patients function at their best and I believe that by becoming wealthy, it will allow me the freedom to create opportunities to help more people.

Although I have no plans to “retire,” developing a wealth of 10 million in 12 years will “retire” me from working for money and allow me to better fulfill my life’s purpose.

Good Luck, Scott!