Prosperity Consciousness
After shoveling 16 tons of gravel into the front yard of my rehab project, I listened to an audiobook by Frederic Lehrman titled "Prosperity Consciousness." I thoroughly enjoyed it, and actually took detailed notes into his banking system to develop wealth. In his book, he also encourages the listener to teach what they are learning to help better learn it themselves. Pretty much gonna outline it here for you.
You are to have two types of savings accounts. The first type include accounts in which we can put money into and pull money out of, whereas the second type we deposit money into and never take out. This is, to paraphrase the 6 hour audio set, how you create wealth.
He suggests you open 5 accounts. 1) Income account 2) Large Purchases 3) Annual Income 4) Investments 5) Financial Independence (the money you never take out!)
He stresses that it really is not too difficult, logistically, which I agree with. It is going to be a "new way" of doing things and will take some time to get used to, but it is taking that little extra time is spent creating wealth!
1)Income account: This account is to keep track of how much you are earning. Rules:Whenever you earn money or receive money, you deposit it into this account first. This will keep a concise income record and be the source of your living expenses (rent, food, gas, etc). Here is another part of that whole creating wealth bit. You must take a minimum of 10% of that deposit and distribute it into the remaining 4 accounts. Of these 4 accounts, you decide what portion of the 10% min. redistribution.
Put all money in here first, immediately transfer a minimum of 10% to other accounts, live off the rest. Simple
5) Financial independence account: Rule:Any money deposited in here is to never ever be taken out. My personal take on this is to use this account to fill your IRA and other tax deferred investment vehicles, and reinvest those in real estate to let that money grow! The interest you gain on this account you can feel free to spend freely, he adds. *Financial independence means having an income sufficient to live on which continues forever if you work or not. Personally I figure $10,000/month residual would be financially independent.
2) Large purchases account: Polar opposite of financial independence. This teaches you how to spend money freely, with out guilt or anxiety. You can either spend the balance of the account on a said time period, like monthly, or you can spend it when you reach a certain amount. Then when your hurdle has been cleared, you simply go out and spend the money. He does elaborate on this point a ton with a very insightful game, which for that, your gonna have to buy his set.
3) Annual income account:This is my personal favorite account, designed to give you the time and confidence needed to embark on your entrepreneurial endeavors. You first select a figure which will be sufficient for you to live on for a year, for example, 36,500. Then divide by 365 to get it to a daily figure, one the mind can more easily grasp. For my example, it is 100$/day.
When you reach one week's pay in that account, you pay yourself forward for a day. Before you go to sleep, you place $100 in an envelope and leave it for yourself in the morning. When you wake up, your day's pay is already there for you on the table. Your money is already made, and you can do as you please... Go back to sleep, see a movie, hit up the horse races... whatever you want to do.
When your account reaches one months salary, you can then pay yourself forward 7 nights in a row, to begin to taste what it is like to be self employed, or better yet, independently wealthy! At six months you can do a month, and after you hit the one year mark, you can take an entire year off if you choose!
4) Investment account: This is your capital. This is the portion of your income which you dedicate to creating more money. This money cannot be withdrawn unless it has an opportunity for a higher percent yield. I will be focusing this money on buying notes for cash flow. Thusly generating my residual income.
This is a lesson in both patience and discipline. The consistency in distributing the funds through the accounts detailed is it. You are to never borrow from other accounts, wait to find a solution which works for your current situation. If followed exactly, this method will ensure anyone under the age of 40 a happy retirement, and possibly an early one!
You are to have two types of savings accounts. The first type include accounts in which we can put money into and pull money out of, whereas the second type we deposit money into and never take out. This is, to paraphrase the 6 hour audio set, how you create wealth.
He suggests you open 5 accounts. 1) Income account 2) Large Purchases 3) Annual Income 4) Investments 5) Financial Independence (the money you never take out!)
He stresses that it really is not too difficult, logistically, which I agree with. It is going to be a "new way" of doing things and will take some time to get used to, but it is taking that little extra time is spent creating wealth!
1)Income account: This account is to keep track of how much you are earning. Rules:Whenever you earn money or receive money, you deposit it into this account first. This will keep a concise income record and be the source of your living expenses (rent, food, gas, etc). Here is another part of that whole creating wealth bit. You must take a minimum of 10% of that deposit and distribute it into the remaining 4 accounts. Of these 4 accounts, you decide what portion of the 10% min. redistribution.
Put all money in here first, immediately transfer a minimum of 10% to other accounts, live off the rest. Simple
5) Financial independence account: Rule:Any money deposited in here is to never ever be taken out. My personal take on this is to use this account to fill your IRA and other tax deferred investment vehicles, and reinvest those in real estate to let that money grow! The interest you gain on this account you can feel free to spend freely, he adds. *Financial independence means having an income sufficient to live on which continues forever if you work or not. Personally I figure $10,000/month residual would be financially independent.
2) Large purchases account: Polar opposite of financial independence. This teaches you how to spend money freely, with out guilt or anxiety. You can either spend the balance of the account on a said time period, like monthly, or you can spend it when you reach a certain amount. Then when your hurdle has been cleared, you simply go out and spend the money. He does elaborate on this point a ton with a very insightful game, which for that, your gonna have to buy his set.
3) Annual income account:This is my personal favorite account, designed to give you the time and confidence needed to embark on your entrepreneurial endeavors. You first select a figure which will be sufficient for you to live on for a year, for example, 36,500. Then divide by 365 to get it to a daily figure, one the mind can more easily grasp. For my example, it is 100$/day.
When you reach one week's pay in that account, you pay yourself forward for a day. Before you go to sleep, you place $100 in an envelope and leave it for yourself in the morning. When you wake up, your day's pay is already there for you on the table. Your money is already made, and you can do as you please... Go back to sleep, see a movie, hit up the horse races... whatever you want to do.
When your account reaches one months salary, you can then pay yourself forward 7 nights in a row, to begin to taste what it is like to be self employed, or better yet, independently wealthy! At six months you can do a month, and after you hit the one year mark, you can take an entire year off if you choose!
4) Investment account: This is your capital. This is the portion of your income which you dedicate to creating more money. This money cannot be withdrawn unless it has an opportunity for a higher percent yield. I will be focusing this money on buying notes for cash flow. Thusly generating my residual income.
This is a lesson in both patience and discipline. The consistency in distributing the funds through the accounts detailed is it. You are to never borrow from other accounts, wait to find a solution which works for your current situation. If followed exactly, this method will ensure anyone under the age of 40 a happy retirement, and possibly an early one!
posted by Miles at 10:20 PM
1 Comments:
Thanks for putting this out there!
I was wondering how to channel existing investment accounts, ie: 401k, IRA, IUL...
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