Millionaires Know What to Do and When to Do It

Millionaires Know What to Do and When to Do It

by Loral Langemeier, author of The Millionaire Maker

Who wants to be a millionaire? That’s the first question I’ll often ask a group. I’m not surprised to see most of the hands shoot straight up. Then, I’ll ask who thinks they can become a millionaire. As long as the audience isn’t peppered with my clients, many of whom have already become multi-millionaires, many of the hands quickly drop.

The truth is that it’s not hard to make a million dollars today. Unfortunately, there isn’t very much good information about how to do this effectively. Get rich quick schemes often make you poor just as quickly. Through a lot of real-life experimentation and working with an incredible team, I’ve created a process by which anyone, and I mean anyone can become wealthy. These are wealth secrets that have been hidden to the general public – until now.

I’ve learned that to become – and stay – a millionaire, there are certain steps you must take. But crucial to making a ton of money that you can actually keep and use is knowing when to take these steps. This is one wealth secret you won’t learn anywhere else.

Start at the beginning. The first thing I do with a new client is ask them eight questions to assess their current financial situation and determine where they want to be. From this information we create a plan called a Financial Makeover. A Financial Makeover is a road map that will get you from where you are right now (your Financial Baseline) to where you want to be in one year (your Financial Freedom Day.)

In every effective Financial Makeover, the gap between where you are and where you want to be in a year is quite sizable, and the steps that will propel you toward your goals are many. This is where most people, no matter how committed they are to change, get stuck.

“Which step do I take first?” “I’ve never done this before.” “What if I make the wrong choice?”

Sound familiar? All your doubts, along with your resistance to doing something new, tend to pop up here. Typically, this is when most people turn to a traditional financial analyst or stock broker who tells them to “safely” park their money in a low-returning asset like a stock, IRA or mutual fund.

I call this the park and pray method and I can think of nothing riskier. In this day and age, taking your hard earned money, parking it with a financial institution, and praying that it increases is, frankly, pathetic. I believe any plan that requires you to cross your fingers is not a good plan. That’s like dropping your kids off with someone when they’re infants, taking them back when they’re 18, and hoping they turned out alright.

Although many analysts feel this is the safest and most profitable route, I strongly disagree. By investing in passive assets, not only will you be sacrificing opportunities to make a lot of money through less traditional means, but with inflation continuing to rise at a higher rate, in many cases you’ll actually be losing money over time!

Instead, I suggest you participate in what I call the Wealth Cycle™. The Wealth Cycle creates and perpetuates lasting wealth. It’s an active process in which you are the leader of your financial destiny. Instead of passively investing and crossing your fingers, you create wealth by direct investment in a diverse number of assets. The difference between direct and indirect investing is the difference between driving a car and holding onto the back bumper for dear life.

You’ll learn more about the “what” of investing in my book, The Millionaire Maker. What’s important to remember is that you want to take control of your money and to have it work for you. Now, on to the “when” of becoming a millionaire.

First things first

To successfully activate the Wealth Cycle™, you need to take the right actions in the right order. Remember that your situation is unique, so the order in which you take these steps will be different from everyone else.

1. The Financial Makeover – The map, or model that describes where you are, where you’re going, and how to get there. To create this map, you’ll need to define:

2. Your Financial Baseline – a detailed overview of your current financial situation in terms of your income, expenses, assets and liabilities. This is the complete picture of where you are today. And, you’ll need:

3. Freedom Day – This is where you want to be in a year – all your financial goals defined in one place.

Now, depending on your particular financial situation and goals, the following steps may change order. But you will complete each and every one of these steps. It’s what millionaires do, and if you want to become a millionaire, it’s what you’ll do.

Asset Allocation – this is where you take the assets you already have (e.g. the equity in your home) and use them to purchase new assets to either create cash flow or build more equity.

Cash Machine – the creation of, or pumping up of, your revenue through a legitimate business venture. This is not necessarily your “job.”

Entities – the organization of trusts, partnerships, and corporations that maximize your tax strategies and allow you keep more of what you make.

Forecasting – Figuring out what money is coming in and what’s going out, and how to move that money around in a way that legitimately safes you from paying taxes (yes, this is possible).

Debt Management – a five-step debt elimination plan that erases consumer debt.

Wealth Account – a priority account you pay into monthly that is ONLY used to buy new assets (not goodies).

You might have a lot of assets but no real passive income to speak of. In that case your first step would probably be Asset Allocation. But if you are deeply in debt and have no assets, your first step would most likely be to develop a Cash Machine. To determine the best order of steps to take in your particular situation, you need the help of a financial mentor (I’ll tell you how to find a financial mentor in my book, The Millionaire Maker).

“Untraditional” pays off

Most people think the first step to financial freedom or wealth is to get rid of their consumer debt. “How can I justify any of my money going anywhere besides toward my debt?” That’s a common way of thinking. Yes, consumer debt is the biggest barrier to wealth. However, what I’m suggesting is that you focus first on making more money by taking the steps outlined above in the right order. Once you are generating a bigger income, then you can pay off your debt more quickly. In fact, good asset allocation can eliminate debt faster than scrimping and saving.

There are two key elements to my wealth building strategy that most people don’t consider doing when trying to build lasting wealth:

assessing your skills to determine alternate ways of making more cash, and seeking the guidance of mentors and a team. The right skills at the right time

Let’s say you’re one of the thousands with massive (or at least uncomfortable) consumer debt – credit cards, car loans, etc. Most financial advisors will tell you to cut back on your purchases and pay down the debt. I’d look instead at your whole situation.

One client, for example, had $30,000 in credit card debt, was spending what he was earning each month, and had few assets. It sounds like an impossible situation, doesn’t it?

I knew we had to get his cash flow machine going first, so we looked at all his skills. Because he was both a talented marketer and a nutrition expert, we got him going in a separate network marketing business in the nutritional supplement area. Right away, he started making more money every month without quitting his job.

Once in a while a Cash Machine is a 9-5 job, but most of the time that’s not the best way to bring in the most cash the most quickly. In fact, in jobs where you have your assets tied up in IRAs and stock, it’s sometimes more profitable to actually quit!

The key here is to use your existing skills, and then to build the right team to take each step in the right order. YOU don’t have to know what to do. That’s what your team is there for.

There is a sequence of steps that millionaires follow to accumulate their wealth. The key to success is in knowing which steps to take when. And although as a millionaire in the making you will be leading your team, your decisions will be based on the insight and input from your wealth team members. Becoming a millionaire is truly a team effort.

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