The sky – in this case the stock market – is falling! The money chapter of Gorilla Mindset showed you how to take advantage of stock market declines, so I won’t repeat that here. I will, however, show you how my personal finances are arranged.
It took me a lot of learning to dial in my personal finances. What I learned was that money is deeply rooted in mindset. Your relationship with money is a reflection of your mindset and core values.
- Gorilla Mindset shift: To understand money, you must understand yourself.
Most of us do not understand our core values and lack a way of changing our mindset.
I have an abundance mindset.
I focus more on earning money than on saving a few dollars. No, I don’t spend frivolously, but if an opportunity arises I focus on the upside rather than the downside.
An abundance mindset also helps lower my stress level, as my focus is on what is possible rather than on what may go wrong.
Also, yes, banks will cheat you and Wall Street is rigged. If you go around calling everything a scam (everything in finance is, to some degree), you have a scarcity mindset and I have no time for you.
How My Bank Accounts, Credit Account Accounts,
and Student Loans are Set Up
I put the maximum amount of money in my self-employed 401k each year.
Private wealth management is largely a scam, as your “adviser” will often steer you into high commission actively managed mutual funds with hidden fees. (My financial adviser is a personal friend, whatever that means when dealing with a large bank!)
My wealth management fee is tax-deductible. It also gives me access to private banking. I do not like stress. Knowing I can send an email to ensure there’s access to my money is worth the fees.
It is also impossible to steal the bulk of my money, as my broker must speak to me personally before making any changes to my account.
My broker also keeps an eye out for good closed end funds, which trade at a value lower than their assets.
You don’t need private wealth management, though, and can dollar cost average into VTI or other low-cost index funds. (Here’s a primer on closed end funds, which often offer good investment potential.)
I play the credit card sky miles game. When a new credit card bonus is offered, I sign up for the credit card. I receive around $10,000 in free travel each year – maybe more once you factor in upgrades to business class and other bonuses.
My credit cards are set to be paid in full each month on auto-pay. The bank account my auto-pay is linked to is attached to a line of credit. Even if my checking account is low, I won’t pay an bank fees other than the (small) interest rate associated with the LOC.
Mint.com is set to email an alert anytime I am charged a fee. Banks have “errors,” cause you to be charged fees. Once Mint.com alerts me to a fee, I email my bank immediately to get the fee removed.
Learn how to manage your personal finances to increase your credit score.
Student loan debt management.
I paid off my highest student loans (8%) in full while paying the interest only on my lowest interest rate loan.
I currently have a relatively large mount of unpaid student loans. My student loan interest rate on the outstanding balance of the two loans is at 2.2% and 3.65%, respectively. I pay the interest only, as the difference between my student loan interest rate and market returns are substantial. (Why pay a 3% loan off when market returns have been crazy high? Every dollar you use to pay off a student loan is a dollar you can’t invest in the market.)
I am keeping cash on the sidelines while waiting for a market crash. My cash position is increasing. Approximately 20% of my money is in cash.
Rich people on average seven different income streams which include everything from businesses they run to investment properties they own.
For the record, I am not rich – or at least not as rich as I will be in 50 years.
- Gorilla Mindset shift: Develop small income streams today. The amount of the stream doesn’t matter. You are teaching yourself to have multiple streams of income, however small. These streams will eventually become rivers.
I am always looking for new sources of income, while recognizing no income is passive. (Even if the income is passive, you must actively keep track of it.)
My income streams are all intellectual or virtual.
Treat yourself accordingly by eating healthy foods, exercising, reading books, and taking Teaching Company Courses or watching free online lectures, and aging well.
Health is wealth. If you are healthy and fit, you can work harder than others. You have a higher IQ. You have better blood flow to your brain. You are also less likely to break down from stress or to miss work days while sick.
I have money in the markets. I leave that money alone.
I’m an attorney licensed to practice law in California. I do not take on current legal clients, other than as a favor to a friend. I keep my law license active. I referred two cases out last year. I will receive a referral fee for those cases, once or if they settle.
I help set up and optimized websites and create social media strategies. I stopped taking on clients, as people think they know more about the Internet than they actually do, and arguing with people grew old.
Frustration with people caused me to raise my consulting rate to $1,000 an hour to keep away the know-it-alls. If you want to argue with me, you can pay me $1,000 an hour. (Even then I will almost certainly fire you as a client.)
I have several websites bringing me in money each month. Some of these websites you know about. Some of them you don’t.
It’s easy to laugh at my web businesses until you run the math. I earn more in affiliate income from these sites than most earn on their investment properties. And I don’t have to deal with renters.
I have two books on the market, and am working on a third – The Last Man: Finding Yourself During the War Against Men.
The best investment you can make it in yourself – take control of your mindset.
Examine your core values.
What do you want more of and what do you want less of?
I value low stress.
Because of this I don’t like volatile investments. I am not looking for the next big stock, and I don’t momentum trade or day trade. I actually do not trade any stocks at all, but instead invest my money into index funds.
I do not check my brokerage account more than once a month. Stocks rise and fall every day. Focusing on the daily balance adds stress to my life.
I value low drama.
When it comes to writing online or launching a book, I’m pretty high up there in terms of people who know what to do. I’ve never been on TV or had news sites try giving me a hand up. There hasn’t been a “big break” for me, and yet I’ve managed to do as much online as people who are considered big names.
Despite my obvious and demonstrable track record, people with little to no experience would argue with me. I will not work with those people, as they add stress and acrimony to my life.
I value not arguing.
I won’t work with people who argue with me when I tell them to do something. Either they trust me enough to do what I say, or they don’t.
That’s their choice.
My choice is to refuse to work with such people.
I do not have to work with anyone I do not want to, and that’s a beautiful feeling.
The market might tank. Who cares? Not me.
Get your personal finances dialed in and you won’t even check the markets or know what the market it doing, as it won’t matter.
How can you dial in your personal finances?
- Dollar cost average into the market every three months on the exact same day.
- Develop a second source of income today, even if it’s only $1.
- Develop a third source of income tomorrow, even if it’s only $1.
- Start your own business, even if it’s a small side hustle.
- Remember that you are your best investment.
- Don’t watch TV or listen to talking heads or read any investment news.
You can learn more in Gorilla Mindset: