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How to Move from Debt to Wealth
If you've read my books, then you'll know that I use case studies to illustrate how I help individuals escape a variety of financial problems and begin their path to financial freedom. Jed Stone was one such case study.
Jed was in a tough situation. He wanted to escape his day-to-day existence of earn-pay, earn-pay but Jed didn't want to move up the corporate ladder. Instead, he wanted more money, more freedom, and to eliminate his debt without infringing on his lifestyle.
Sound familiar?
Jed is like many people who come to my Team Made Millionaireâ„¢ workshops or start working with a coach through Live Out Loud. In fact, when I first learned about Wealth Cycle Investing, I wasn't far from where Jed was.
Jed earned a decent income and kept his expenses at just below his income. He rented an apartment, and owned little but his bike and some furniture. In other words, Jed had a negative net worth but a positive cash flow each month.
The first step
The first step for Jed to move from debt to wealth was a Gap Analysis. Here's where Jed had to get brutally honest about his current situation and his goals. First, he had to honestly state his current financial situation: his pretax income, monthly expenses, his assets (few) and liabilities (more than his assets).
Jed's Gap Analysis also included an assessment of the skills he could use to make money. I didn't ask Jed about jobs he might apply for. I asked him about the skills he had with which he could make money running his own business.
You see, in order to become wealthy, Jed needed to increase his cash flow. This additional cash would be used not to repay his debt but to purchase income-producing assets. The money from these assets would be used to repay his debt and give him more money to purchase more assets.
The second step
Jed completed the first part of the Gap Analysis and began preparing the next step: his Financial Freedom Day Goals. This is where Jed got to dream about the future and I encouraged him to dream very big.
Here's a guy earning less than $4,000 a month from his job with virtually no assets and he wanted to have $1 million invested in assets generating $10,000 a month in passive income. He wanted to achieve these goals within one year. He also wanted to own several gyms and live this wonderful life without a full time job.
Was Jed dreaming? Sure, he was dreaming. But if you don't dream, you can't ever create that dream. What I taught Jed was a system by which he could actually achieve his dream. It's the same system the wealthy have used for years, and I call it Wealth Cycle Investing.
The third step and beyond
For Jed (and for you), Wealth Cycle Investing isn't a solo affair. Working on his own, Jed was able to create a small side business and make an extra $1,000 a month within four months. But, he was a long way from his ultimate goals. To accomplish his dreams, Jed needed a team and a mentor.
At Live Out Loud, we emphasize team building because it's your team that will help you accelerate well beyond your individual capacity. For Jed, this meant finding and introducing himself to experts in stock analysis, an area in which he was keenly interested. As with any such effort, Jed was rewarded with more than he'd asked for, meeting several wealthy individuals who had the capacity to fund deals in which Jed was interested.
Moving from debt to wealth takes some risk and a lot of action. Jed didn't have a lot of money but this never stopped him. He educated himself about various deals in play, and was able to use OPM (Other People's Money) to invest in these deals. Using OPM is a smart way to quickly accelerate your asset allocation, but you still have to do your homework.
Once you get into the deal flow by aligning yourself with the right people, the payoff will come. It may take a year, two years, or three years. But, come it will. You'll move from debt to wealth by using Wealth Cycle Investing. Remember what Jed did and know that you can do it too. Just get into action, start today.
All names have been changed to preserve my clients' privacy.
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