Posted on December 8, 2007 - by Lance Ong

Money, Money Come to Me!

Welcome back!

I’m sitting in a taxi on the way to the hospital. The driver is an elderly man, with white hair all messed and uncombed. Halfway down the expressway, he points to the fare meter and says, “Wah… $3.80! Not good value to take a cab now hor… can buy a packet of chicken rice already.” I smile and nod my head. It reminds me of the days when I was a little boy, $10 seems like much money — I could buy ten ice-creams or sixteen chicken wings. As the cabby drops me off at the hospital, I pass him a fare of $11.50 and say, “Here Uncle, this can buy four packets of chicken rice.” He laughs.

I have a friend, who has to support her family using her monthly paycheck. After minusing family expenses and personal purchases, she says she can save $50 a month. She and her boyfriend want to marry. But with a new flat costing about three hundred thousand dollars and the added price of a wedding, they can’t afford to start anytime soon. Now… I’m no financial guru, but I do know what it takes to escape this fix.

What does it take to get rich? What must you do to put more money into your pocket, more food on the table, and live a better quality of life? The more you earn, the more you spend. There are so many wonderful items to own…. Some people spend whatever they earn, so they have much stuff, but no money left at the end of the month. So their only choice is to go back to work. They need their job to pay their expenses, and that’s why they put up with it, even though they don’t like it.

The method to break out of this earning-spending cycle is simple. But to do it, requires much discipline. That’s why the rich people are those who are smart, persistent, and disciplined. Smart enough to know what to do to make cash, persistent enough to work at it till it succeeds, and disciplined enough not to splurge all the money on luxuries. Cash is king. You make it, you keep it, and you use it to create a new stream of income. For example, a businessperson makes $15,000 from a business deal. Instead of spending it, he uses the money as down payment for a $300,000 apartment in Melbourne, which is worth $600,000 (seller in distress). He rents out the 5-bedroom apartment for $3,000 a month. The bank gives him a loan of $285,000 ($300K-$15K), and the interest on that loan is 6% a year ($1425/mth). Using the rental income of $3,000 to pay off the monthly interest of $1,425, he has a positive cashflow of $1,575! That’s $1,575 dollars every month, without having to work for it. Plus, he still owns the apartment, which appreciates, and he can sell it for more money next time. The only money he put in, was the first 15K. His monthly profit of $1,575, will make back the $15,000 in nine and a half months, and he will own the apartment for free (using the bank’s money)!

If you are not smart, would have known what to do with the 15K? If you have no discipline, would you spend the money on something else, like modifying your car or remodeling your kitchen? If you have no patience, could you wait nine months to break even? Yes, there are many techniques to make money grow like a snowball rolling down a hill, but to successfully use them requires you to be smart, persistent, and disciplined. If you spend whatever you have, you will never accumulate enough to make even the smallest investment, and worse, you won’t even be able to start-up a small business.

There are two ways of transacting. One is buying, the other is selling. Everyone knows how to buy. But few people know how to sell. When you have a job, you are selling your skill and labor by the hour. But you can’t make much that way because there is only one you, and you have a fixed salary. If you want to make tons of money, you’ve got to think MULTIPLY. How can you multiply your effort so you can sell it many times over?

Let me give you a simple example. I used to be a magician doing children’s magic shows. The magician has many secret moves and magic theory all locked up in his head, which he uses to wow the audience during a performance. But unless he has the finances to build huge illusions and buy Persian tigers, he will always remain a small-time children’s magician. His product (children’s magic shows) and his time ($350/hour) limit his earnings. He needs to multiply himself so he can make more money. Here’s an easy way: First, he turns his magic knowledge into a video product (a five-tape set) he sells over the Internet for $350. Second, he sets up a magic school in his city, conducting magic classes for 30 students at a time, each paying $1000 for a six-day workshop (five-tape set worth $350 included). Let’s say he say he did his Internet Marketing well, and his tape sets are selling at three a day. That’s $1050 a day! Three times more than he could earn doing a regular magic show. In a month, just Internet sales alone would net him $31,500 — that’s more than some General Managers earn. Now he conducts only one workshop a month. But that makes another $30,000 ($1000 x 30 ppl)! So his total gross income is $61,500! Even if he did one $350 magic show three times a week, that would only earn him $4,200 a month ($350 x 12 shows). Fourteen times less than he could earn if he multiplied himself by creating a product and running a business.

So once he makes his $60,000 a month, what’s he suppose to do? Spend it all? No! He must use his money to buy cash generating assets, so he doesn’t have to keep working! He can use his 60K as down payment for a $570,000 prime-district landed property ($510,000 mortgage, 6% interest = $2,550/mth). He can rent it out for 6K, and will break even in one and a half years, with $3,450 positive cashflow per month ($6,000 rental income – $2,550 loan interest). You see… it takes $60,000 dollars which you have to work hard for, to produce a monthly residual income of $3,450, which you do not have to work for. That’s a great difference. Your money shrinks to 5.75% of what it used to be (60K into 3.45K). So if you want to create a residual income $10,000 a month, using property as your investment vehicle, you need to pump in $173,913 dollars of your own hard-earned money! And it’s going to be difficult to accumulate that amount if you rely on a fixed salary.

I hear someone saying, “But Lance, I have no magical talent, no financial skill, and no business experience. What can I do?”

Well I say, if you continue to be like that, you’re a sitting duck. But it’s good that you realize your situation because being aware is the first step to making a change. As babies, everyone starts with a clean slate — an empty brain. How you think depends on what information you put in there.

“But Lance, I come from a poor family. I don’t have the money and resources to learn all these things.”

Well go to the library. The library is free, isn’t it? I used to be a librarian in my school days. And there is tons of life-changing knowledge and moneymaking ideas to discover at the library. With the Dewey Decimal System, all knowledge is at your fingertips, anything you want to know, it’s all there.

“But Lance, reading puts me to sleep. I become drowsy after the first three lines.”

My friend, there are so many good books on making money that it’s a shame not to read at least some of them. If reading puts you to sleep, it’s also putting your finances to sleep. Without these new ideas, you won’t know what you should be doing to make more money. Instead, you’ll be waking up, dragging yourself to work, earning a paycheck, spending it all, and ending back at square one at the end of the month.

“But Lance… but… but… but….”

No more ‘buts’! Either you read or you stay broke. Reading makes you smart, and the written word is still the most accessible form of transferring information and ideas. Put those ideas into action and watch the miracle of knowledge transform your life.

In a life coaching session:
“So Victor, have you been keeping up with your success reading?”
“Yes, Lance. I’ve been doing lots of reading and it’s really enlightened me.”
“Really? What titles have you read?”
“I just finished The Da Vinci Code, Digital Fortress, and I just completed Angels & Demons last week!”
“What! Those are fiction titles… You’re suppose to be reading NON-FICTION personal development and wealth generation.”
“Oh… I just found them too boring, so I decided to read something more exciting.”
“Victor, buddy, EXCITING does not make you rich. Exciting, does not give you the secret formulas to winning. Exciting does not put food on the table. Novels are a wonderful source of entertainment, and Dan Brown is a great writer, but you need to focus your reading if you want to build a moneymaking mind. You’re already behind in your reading… by about twenty years. It’s time to be discerning in what you choose to read. Always ask yourself, “Is this quality information I can use?” And if yes, then read it. Flip through the book if you have to — see if the author’s ideas give you an ‘ah-hah’. Your reading time is your chance to gather valuable ideas and techniques you can use in your life and business. Use it wisely.”
“Oh, okay…”

An entrepreneur is someone who solves other people’s problems at a profit. Solve more problems, for more people, and you make more money. Don’t sell your personal labor; sell a product or a service. Don’t wash cars by hand, build a car wash. Let the machine do the work; multiply your effort. Don’t do low-paying magic shows; multiply yourself through products and seminars. Don’t drive a taxi, start your own delivery or courier company; get your cabby friends to join your team. Roll your hard-earned money into stable investments like property and franchises, which create a monthly stream of work-free money. You don’t have to count the dollars you earn by plates of chicken rice anymore, if you know how to multiply your effort. And if you don’t know how to ‘multiply’ yet, do a search at the library. Here are a few keywords: business system, start-up, licensing; leverage, cashflow, get rich, and millionaire.