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Money and life advice from Nike founder Phil Knight

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“You are remembered, he said, prophetically, for the rules you break.” ― Phil Knight, Shoe Dog


Nike is one of the most valuable and recognizable brands in the world.

It has been valued at over $20 billion.

I previously wrote briefly about the co-founder in the post How being an outlier can make you rich.

How did a small company that sold shoes out the trunk of a car get this far?

One word: Endurance.

The man behind it all fought through endless money woes, legal problems, lawsuits, and inventory issues for 20 years, but came out ahead in the end.

He is now estimated to be worth over $10 billion dollars.

His name is Phil Knight and this is his story.

A RUNNER WITH NO DIRECTION

“If you’re following your calling, the fatigue will be easier to bear, the disappointments will be fuel, the highs will be like nothing you’ve ever felt.” ― Phil Knight

Phil Knight was born in Portland, Oregon on February 24, 1938.

In his youth, he liked two things: sports and running.

At the University of Oregon (OU) he earned a journalism degree in 1959.

After Phil Knight graduated from University of Oregon, he then earned an MBA from Stanford Graduate School of Business. He graduated from the school with a master’s degree in business administration in 1962. At the age of 24, he has no idea what to do.

He looks over his final paper he wrote on shoes.

In his small business class, Knight produced a paper, “Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras?,” which would foretell his eventual foray into selling running shoes.

WHAT’S IN A NAME

Ford had just paid a top-flight consulting firm $2m to come up with a name of its new Maverick, I announced to everyone. “We haven’t got $2m — but we got 50 smart people, and we can’t do any worse than… Maverick.” – Phil Knight

The company was founded on January 25, 1964, as Blue Ribbon Sports (BRS), by University of Oregon track runner Phil Knight and his coach Bill Bowerman, with a partnership by handshake and officially became Nike, Inc. on May 30, 1971.

The name from Nike, is named after the Greek goddess of victory.

When they needed to choose a name for Nike, the “Buttfaces” (an affectionate term for the inner circle) were trying to come up with something.

That night as Nike legend has it, Johnson, from a dead sleep, sat upright: “Nike, the winged goddess of victory! That’s IT!”

Jeff Johnson, employee number one of Nike, and fellow Stanford runner whom Phil hired as he hasn’t met anyone with his passion for running, suggested calling the firm “Nike,” named after the Greek winged goddess of victory.

It’s pronounced “ny’-kee.”

The name is Nike and their rival was Adidas.

It met with a lukewarm Buttface reception. In the eleventh hour, Knight begrudgingly went with it.

“‘What’d you decide?’ Woodell asked me at the end of the day. ‘Nike,’ I mumbled. ‘Hm,’ he said. ‘Yeah, I know,’ I said. ‘Maybe it’ll grow on us,’ he said.

FIND A MENTOR

FPhil had a great mentor, Bowerman, a great American running coach, who was constantly experimenting with shoes.

Bowerman would make then on his waffle iron.

Bowerman stressed that an extra ounce on a shoe added 55 pounds of lifting over one mile. As a mediocre runner, Phil was Bowerman’s favorite guinea pig (he wouldn’t dare jeopardize the top runners with experimental shoes).

He trained Olympic athletes so he knew what they needed to wear on their feet to compete. He trained one of the most prolific Olympic runners of that time: Steve Prefontaine.

Somebody may beat me, but they are going to have to bleed to do it. – Steve Prefontaine legendary runner of the 1972 Olympics

Bowerman was the most famous track coach in America, training local champions. It was said future Olympian Steve Prefontaine known as “Pre” did not want to run for anyone, but him.

He was also one of the top paid Nike endorsers before his death in 1975.

In my personal opinion, I do not think I have ever seen any runner run like Prefontaine with so much passion. I hold my breath every time I watch him run. It’s like time is standing still. You don’t want to blink because you know without a shadow of a doubt that you are witnessing greatness and what the human spirit could do without limits.

The real Steve Prefontaine

THE BUSINESS OF RUNNING

“Don’t tell people how to do things, tell them what to do and let them surprise you with their results.” ― Phil Knight (original quote by George S Patton)

Back in his day, running wasn’t a “thing.” People were ridiculed for running. There were no real running shoes. So, he set out to change that.

After graduating, he decides he must travel to figure out a plan how to see what the Japanese do with the making of shoes. Alas, he has no money. His only option is to ask his no-nonsense father. However, he feels that his father will not fund his wanderlust. But in a surprise, his father agrees and gives him $1,000 to go to Japan.

“How can I leave my mark on the world, I thought, unless I get out there first and see it?” ― Phil Knight, Shoe Dog

Phil goes to Kobe, Japan, in November 1962.

His father has two friends in Tokyo, and they dispense business advice – the Japanese are soft negotiators, not fans of the aggressive American style. Armed with this advice, he sets out.

He discovers the Tiger-brand running shoes, manufactured in Kobe by the Onitsuka Co. Phil was impressed by the quality and low cost of the shoes. Knight calls Mr. Onitsuka, who agreed to meet with him. By the end of that meeting, Knight had secured Tiger distribution rights for the western United States. Off the top of his head and thinking on his toes, he thinks of the blue ribbons on his walls in his room he won from running when asked what the name of his company as he says, “Blue Ribbon Sports.”

SIDE HUSTLE OF SELLING SHOES 

SIn the beginning, there was no money.

Phil sent shoes to his old coach to see if they would sell. Bowerman, who was obsessed with runner performance and making shoes lighter, not only liked the shoes, but asked to work on product shoe designs and from there a partnership was born. This was 1964.

His father’s friend advised him to get a CPA. With an MBA and CPA, he would likely never be out of work. So, he gets his CPA and a job at a small firm. It had 4 employees. He worked 70-hour weeks.

Phil still worked as an accountant during the day while trying to get his business of the ground.  Finally, in 1969, he quit working for the likes of firms as Price Waterhouse to work on his business full-time.  

So why was selling shoes so different? Because, I realised, it wasn’t selling. I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in. People sensing my belief, wanted some of that belief for themselves. Belief, I decided. Belief is irresistible. – Phil Knight

THE RICHES ARE IN NICHES AND PITCHES

TRunning is not a hobby or sport during his time in the 1960’s.

Mostly only student athletes were buying their shoes, as popular as they were, they appeal to just a small niche of the population.

He sold shoes at track meets out of the back of his car in the Pacific Northwest.

The pitch: Japanese shoes are extremely high-quality, low-cost shoes.

 A 300 order of shoes cost $1k. He got his half $500 from his father and the other was put up by Bowerman.

They SOLD OUT!

The shoes were so popular that people were showing up at his house to by them.

PHIL ON MONEY

P“But that’s the nature of money. Whether you have it or not, whether you want it or not, whether you like it or not, it will try to define your days. Our task as human beings is not to let it.”  ― Phil Knight, Shoe Dog

Money problems plagued the company.

Distribution rights became an issue so he had to fly to Japan (ticket paid for by credit card as he has no money) to plead his case to keep selling and got the green light. He found this out from a letter his employee named Johnson sent him. The lesson here is to listen to good counsel and advice. This very well may have saved the company from ever existing today.  

However, the company did want a bigger player in the shoe game to represent them, but Phil said they had offices in both coasts to shore up the deal.

(He was lying – they didn’t’ have an East Coast office).

No venture capitalist or angel investors in 1965. Phil had to use banks. They wanted big profits and slow growth. Phil was having none of it.

BOOTSTRAPPING IT LITERALLY 

BThe company was always strapped for cash. They had to stay lean to survive. And worked mainly in storage rooms and Phil’s apartment.  

Meeting the demands of the banks and customers became equally tougher.

EVERY. SINGLE. YEAR.

Trying to get imports on time, make cash payments to creditors, and get orders to customers was a logistical nightmare.

Onitsuka is painfully unresponsive as shoe shipments arrived late, which meant less time to sell, and each loan repayment period to creditors tougher.

EVERYDAY I’M HUSTLING

EPhil did everything he could do to keep the lights on, make payroll, and keep the company going. They were growing every year and sales were doubling, but they still had problems financially.

First year, they made $8,000 in sales in 1964. By 1967, says had grown to $84,000. They double again in 1968 to $160,000, but Phil still can’t afford to draw a salary.

So, he did what he and adult has to do when they need money: get a job.

That’s right, he went back to working in accounting.

He doesn’t love the work, but it pays the bills.

At this point in Phil’s story, I had to give him the slow clap of praise for doing what needed to be done.

However, sales double again to $300,000 in 1969, Phil is able to draw a salary of $18,000. He quits his job teaching and is at BRS full-time. In 1970, doubling again, sales reach $600,000. By 1971, they crossed the million dollar sales mark at $1.3 million.

Finally, it all came to a head when their Japanese exporter decided to buy them or give their business to someone else.

AN ACE UP HIS SLEEVE OR SOLE?

A“Have faith in yourself, but also have faith in faith. Not faith as others define it. Faith as you define it. Faith as faith defines itself in your heart.” ― Phil Knight

The biggest asset Blue Ribbon has is Bill Bowerman.

Remember the post I did on People are the greatest assets? Well, this is why. Keep reading.

Coach Bowerman continues to be a huge asset. His large reputation keeps growing – two of his runners medal in the 1964 Olympics. And he keeps tinkering with shoes.

He learns that Japanese and American bodies are simply different, and thus the shoes need to be different, like more arch support. To have a great chance in the US, he believes Onitsuka needs to customize their shoes for Americans.

He draws up countless designs and sends them to Japan, only to receive no response. Occasionally they relent and make a few prototypes, and indeed they’re far better. Undeterred by Onitsuka’s hesitance, Bowerman even experiments with producing homemade rubber to make new soles.

You might be able to see where this is going.

OUR SOLES AT KNIGHT LEARN YOYO: YOUR ON YOUR OWN

OThey secretly start manufacturing their own shoes. Having dreamed about Nike as the name for the company, it was then born and the sidestepped acquisition.

Their reputation sold their shoes and saved their company.

They also learned how powerful celebrity endorsement is as well.

When the company was in dire financial straits one of his top employees (#4 full-time) Woddell and his family gave him their life savings of $8,000 ($50,000 in 2017 inflation) to keep Nike afloat. A friend indeed.

PHIL ON MANAGEMENT

PHis employee in CA, Johnson, he sends Phil mountains of letters, detailing his every development, every sale and notable customer.

He sends advertising ideas (Phil doesn’t believe in advertising), shoe designs (Phil already has enough to deal with Bowerman), and his insistence on opening a retail shop in Los Angeles.

Phil feels smothered and rarely replies to Johnson’s letters. From studying war heroes and generals, he holds a virtue: “Don’t tell people how to do things, tell them what to do and let them surprise you with their results.”

And Johnson delivers results. His customers love him, depending on Johnson to solve their problems in both running and life. Even when he gets in a car crash and breaks his skull, he’s continuing to sell shoes. Phil even issues him a challenge – sell 3,250 pairs of shoes in a few months, and Johnson could open his retail space in LA. And sell he does – now Blue Ribbon has an official runner mecca in Los Angeles.

MARKS OF VICTORY

MOn his travels, he stopped in Greece. While visiting the temple of Athena, he notices a carving of Athena – bending down to adjust her shoe. She is known to be the goddess of wisdom, battle strategy, and victory or “nike.”

And what’s THIS?

That’s a swoosh.

The hell’s a swoosh?

The answer flew out of me: It’s the sound of someone going past you.

They liked that. Oh, they liked it a whole lot.

The trademarks of “Just Do It” and the Swoosh logo became synonymous with Nike. The logo is also one of the most powerful in the world.

The logo was commissioned for a mere $35 USD from graphic design student at Portland State University by the name of Carolyn Davidson in 1971. She charged them only $35 for her work.

According to Nike’s website, Knight said at the time: “I don’t love it, but it will grow on me.”

PHIL ON PRAISE AND CHARITY

PPhil never gave praise or money. But…

He was so pleased with the logo that in 1983 he gifted Carolyn with an undisclosed amount of Nike stock for her contribution to the brand. She had worked for the company from 1971 until 1980.

That year, 1980, is the year Nike went public with an IPO.

Phil told Oprah on her show in April 2011, that he gave Davidson “A few hundred shares” when the company went public.

For years, the value of the stock was unknown.

Well, guess what? You’re about to find out right here, right now.

What is the cost of helping someone when commissioned with a task and not thinking it is beneath you?

I did some research and located this article from Business Insider.

Counterkicks got a hold of a recent Nike shareholders meeting transcipt in which Knight reveals exactly how much stock he gave Davidson and the value of that stock today…

“…we hired a graphic art student at Portland State University, and told her to come up with something that connoted speed, and we gave her $75.00 for what she came up with. When we went public in 1980, we called her back up and gave her 500 shares of stock, which she has never sold, and is worth close to $1 million this day.”

His top employee’s or the foot soldiers as I like to call them, Bowerman is worth $9 million; Woodell, Johnson, Hayes and Strasser each about $6 million; Phil $178 million.

In 2012, it was reported that Knight himself owned 67,097,005 shares of Class A Common Stock and 7,740 shares of Class B Common Stock in the Nike corporation.

Nike has revenues of $20 billion annually.

In 2018, he is now estimated to be worth $29 billion dollars. Him and his wife donate $100 million a year.

PHIL ON HELPING OTHERS

P“When goods don’t pass international borders, soldiers will.” Though I’d been known to call business war without bullets, it’s actually a wonderful bulwark against war. Trade is the path of coexistence, cooperation. Peace feeds on prosperity. – Phil Knight

When on travels in his younger years he went all over the world.

He noticed incredible poverty in places like Vietnam.

When his goal of taking over Adidas as the number one shoe company in the world, by 1986, total sales hit $1 billion, and Nike surpassed Adidas to become the No. 1 shoe manufacturer worldwide.

He also was able to fulfill some other dream. He opened factories in Vietnam so that war would likely stop there due to commerce and work.

Luck plays a big role. Yes, I would like to publicly acknowledge the power of luck. Athletes get lucky, poets get lucky, businesses get lucky. Hard work is critical, a good team is essential, brains and determination are invaluable, but luck may decide the outcome. Some people might not call it luck. They might call it Tao, or Logos, or Jnana, or Dharma. Or Spirit. Or God. – Phil Knight

Read my post Wealth comes from doing not luck.

Knight’s memoir, Shoe Dog, was released on April 26, 2016 by Simon & Schuster, was rated fifth on The New York Times Best Seller list for business books in July 2018, and details the building of the Nike brand.

Knight has donated hundreds of millions of dollars to each of his Alma Maters including $105 million to Stanford Graduate School of Business in 2006.

As of 2016, according to Portland Business Journal, “Knight is the most generous philanthropist in Oregon history. His lifetime gifts now approach $2 billion.”

It is safe to say that Phil Knight and his Nike business are a running success.

They live their dreams. They just do it.

For Nike, there is no finish line.

Book Reviews, Celebrities and Money, Self-Made Millionaires, Wealth

Gene Simmons On Power

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“Walk amongst the natives by day, but in your heart be Superman.” ― Gene Simmons

In 2017, Gene Simmons wrote a book called, On Power: My Journey Through the Corridors of Power and How You Can Get More Power.

This book was nothing like I expected.

It was MORE.

Like the title says, it’s about getting more power. Become more powerful than you ever thought you could be. It all starts with your actions.

Let’s get right into it.

WHO IS GENE SIMMONS?

Image: Forbes.com

The short version is that he is a co-founder and front-man of the band KISS, that he helped start in the 1970’s. They are America’s #1 gold record-award-winning group of all time.

Image: New York Post

Gene grew up dirt poor. He practiced guitar for hours after watching The Beatles on an appearance of the Ed Sullivan show, he knew then that he wanted to be a rock star.

According to Harper Collins, the book was inspired by Niccolo Machiavelli’s The Prince, Simmons offers his unique take on the dynamics of power in every realm of life, from the bedroom to the boardroom, to the world of rock, celebrity, and social media, to politics. With one-of-a-kind anecdotes from his life and career, as well as stories from historical and contemporary masters of power, including Winston Churchill, Napoleon Bonaparte, Warren Buffett, Michael Jordan, Oprah, and Elon Musk, Simmons crafts a persuasive and provocative theory on how the pursuit of power drives civilization and defines our lives.

Gene Simmons has an estimated net worth of over $50 million dollars. So, I decided to give the book a quick read. Glad I did.

POWER IS WHAT EVERYONE WANTS

People want power.

  • Power over their lives
  • Power over their time
  • Power over their professional lives and career
  • Power over their money

So, how do you get this so-called power.

It’s a power grab for sure.

Gene takes a no-holds-barred approach to his life and on power. It’s dog eat dog out there. You have to be one of the big dogs.

Gene believed that everyone deserves power and that it is yours for the taking.

In his book, he gives you the key to unlock the doors to the temple of power.

GENE ON EDUCATION

“It’s up to you to educate yourself.”

“It’s up to you to learn speaking skills and people skills.”

“It’s up to you to try (and usually fail, but to try again) all sorts of ventures.”

“Believe me, the library is the temple of God. Education is the most sacred religion of all.” 

He graduated from Richmond College in New York City getting a bachelor’s degree in education. At one point, he was a school teacher in the Upper West Side.

Gene also speaks multiple languages such as German and Hebrew.

I noticed this was also a theme of Scrooge McDuck. Get a good education, become a linguist, and get to work.

I read everything I can get my little hands on. I go to the library every month. I regularly check out 4-5 books at a time. Sometimes more. I do believe in being well-read.

GENE ON SUCCESS

The rest is a combination of hard work, being at the right place …at the right time…with the right thing…oh yes…and more (never ending) hard work.” 

You want success? Well, you have to work for it.

Gene puts his money where his mouth is.

He worked for a butcher hauling up huge slabs of meat and cleaning the blood off the butcher block. Gene has worked as a typist and sold fruit on the side of the road when he was 8 years old.

Make no mistake. Gene is a hard worker and a hustler. He was working multiple jobs to get ahead. Similar to Jay Leno.

As for myself, at one point, I was working as a waitress, cashier, or in sales. In addition, to going to college and studying at times up to 5-7 hours a day! Going to bed at 1 am and getting up at 6 am. Rinse and repeat! I did that for years.

GENE ON ENTREPRENEURSHIP AND CAPITALISM

“Before I ever knew what the word Entrepreneur was, I realized in America and in the Western part of the world in general, you are given the opportunity to be whatever you want to be. And that is all anyone should ever expect from the Capitalist system. The rest is up to you.”

Yep. America is the land of YOYO (You’re on your own).

You learn real quick that no one is coming to save you. You have to create your own safety net. You can’t depend on the government. The only person to depend and rely on is self. Get it? Got it? Good.

GENE ON MONEY

“So much of our popular mythology focuses on the negative aspects of power that we forget that gaining power is, perhaps, the only way to enable ourselves to make a difference in our lives and in the lives of others.”

Gene says you must first get your financial house in order before you can espouse love.

This is similar to what I once heard Tyra Banks mother say, “you have to get yourself together first, before you can help anybody else.”

You should always be looking for ways to earn and expand those earnings. KISS started out with nothing. They slowly built a following. IT. TOOK. YEARS. They were riding around in an old van going from gig to gig and living off hot dogs.

But KISS got smart. They started licensing their name. Everything from lunchboxes to t-shirts. Their moniker is big. Multi-million dollar deals got them to the top of the heap. Monetize everything is Gene’s motto. And he has. And it’s been lucrative to say the least.

So, there you have it. Gene Simmons on power. If you want it bad enough, you just have to work and rock-n-roll all night, like KISS, to get it.

Book Reviews, Celebrities and Money, Retirement, Saving, Wealth

The Capitalist Code by Ben Stein

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The first step to getting the things you want out of life is this: Decide what you want. – Ben Stein

Ben Stein is an economist and actor, who wrote a book in 2017, called The Capitalist Code: It Can Save Your Life and Make You Very Rich. He has an estimated net worth of over $5 million. So, I thought I would check his book out.

On my quest to follow the money, I have discovered lots of books, blogs, and information about money.

I have been told I am seriously into all things money. Friends sometimes call me “the money lady.” That’s fine with me. I take that as a compliment. There are much worse things to be called than that.

But, I get it. I do have a laser-like focus when it comes to getting things done. I can be a task-master. It comes naturally to me. I just can’t help it because I believe in finishing what I start.

I learned that lesson from one of my favorite childhood books Where the Red Fern Grows.

You could say I’m a bit obsessed with learning about money. However, it has served me well to know about personal finance. I have a six-figure retirement and save over 40 percent of my income. All that came from reading finance books!

That is how I came to find this book. It is a quick read as the book is on the small side at 146 pages in length. I knew the name Ben Stein, but I wanted to find out What is The Capitalist Code?

But first…

WHO IS BEN STEIN?

“I’m an economist by training. I don’t really work as an economist. I only worked briefly as an economist.”

There is a short bio description of him online at goodreads which states:

Jewish-American economic and political commentator, writer, actor and attorney. He gained early success as a speechwriter for American presidents Richard Nixon and Gerald Ford. Later he entered the entertainment field and became an Emmy Award-winning actor, comedian, and game show host. He is famous for his monotonous yet humorous voice in acting.

For those who may not be that familiar with the name you may remember him from his self-titled television show, “Win Ben Stein’s Money” or from the film, Ferris Bueller’s Day Off.

“As to a media personality, well that just happened in large measure because people found me amusing, and I did lots and lots of T.V. news interview shows.”

“It’s a great stretch for me to do my game show. It’s very hard. It’s not me at all. The only part that’s me is sort of when I’m sitting in the booth looking tormented. That’s the only part that’s the real me.”

In Ferris Bueller, he is actually discussing a real topic of the era. During the 1980’s, Reaganomics was also referred to as voodoo economics or trickle-down economics. I’ll give you more on this topic later, in a future post. 😉

Ben has written for publication’s such as Barron’s, The New York Times, Fortune, and the Wall Street Journal. And numerous financial books including this one.

WHAT IS CAPITALISM?

By definition, an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. You will often hear it referred to as a free market or free enterprise.

Simply put, capitalism is a system of investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained by individuals and corporations instead of by state-owned means.  Participants privately own capital.

Ben says, “Free market capitalism is a fantastic wealth-producing system and allows individuals to amass wealth.”

In addition, “There is no freer, more diverse, and more equal opportunity employer than capitalism. . . If you can produce a large amount of excess over your costs, you get well paid. And if you produce very much more than you cost, you get rich.”

A free market of competition, not a central government or regulating body, dictates production levels and prices. True capitalism needs a competitive market because without competition, monopolies exist.

See my post in which I discuss monopolies for more information

WHAT IS BEN’S ADVICE ON CAPITALISM?

“If there’s a recession, I’d buy stocks. That’s when you make money: when markets are spooked.”

His primary objection of this book, is to get people off the sidelines and into the market.

“The sad fact is that spending rises every year, no matter what people want or say they want.”

This book gives you the #1 simple thing you can start doing today to grow your wealth — thanks to this “rigged” system known as capitalism.

Anyone can do it. You don’t need to have a Harvard or Economics degree or be a financial expert.

Basically, he wants you to do this: Invest in the stock market.

It’s a way to own a tiny piece of a big business and minimize your risk. Your piece of the American financial pie.

More specifically: invest in an index fund of the S&P 500.

You’ll own a tiny piece of a bunch of businesses and you’ll have more money when it’s time to retire.

That is also Warren Buffet’s advice among others.

See my post below on stock ownership

Patience is the key to wealth 

BEN ON WALL STREET

“Trying to pick individual stocks is a trap. I can’t do it. Warren Buffett can, but hardly anyone else can beat the indexes over a long period of time.”

It’s easy to think of big business as morally bankrupt, but it isn’t, really. Business leadership can make poor/unethical decisions, but being big doesn’t make them inherently wicked, and being a small business doesn’t make it inherently virtuous.

“I agree that there are some bad apples on Wall Street. I spent about ten years exposing corporate and financial fraud for ‘Barron’s’ magazine and I found a lot to write about.”

If you want to know more about stocks, you can read numerous books and magazines on the topic such as Value Line, The Intelligent Investor, and anything by Jack Bogle.

The key point is this: Free market capitalism is an incredible machine for making wealth. Corporations “rain money” year after year. If you don’t participate, you are making a huge blunder. It doesn’t take a genius, but it does take a plan—a “little bit of knowledge and an even smaller amount of action.”

SCARY STATISTICS

“The education system should teach us about money; it’s an incredibly big subject. I run into people all the time that don’t have the first clue of what they should do about money.”

Ben states the following about personal finance in America:

  • Most Americans have not inherited wealth or a successful business that could set them up for life
  • 80% of millennial’s have no plan whatsoever for retirement savings
  • Many Americans are saving NOTHING
  • The average person says they need about $50,000 per year for retirement; but only has savings to achieve 20% of that number
  • We live in a country where more than half the people couldn’t come up with $500 in cash today if they had a family emergency

Source: GoBanking

WHAT YOU NEED TO DO

According to Ben, you need to save first, and then spend— automatically.

That’s similar advice that Shark Tank’s Kevin O’Leary says: “Don’t spend too much. Mostly save. Always invest.”

Barnes and Noble provides this overview of the book: harness the incredible power of the U.S. economy for enjoyment and security by being owners of profitable businesses-by consistent, conservative investment starting as young as possible in a diversified port- folio of stocks. Anyone can be a capitalist—and should be. All it takes is a little bit of knowledge and an even smaller amount of action. All it takes is The Capitalist Code.

BEN ON EDUCATION

“There is a clear, unequivocal, if generalized, connection between the amount of education that a man or woman achieves and the amount he or she earns.”

In the book, he shows what women can earn with a degree…

And men.

Agreed. I notice that the more education you have, the more informed decisions people tend to make.

Although, in my opinion, education is not an equalizer it does; however, provide you with increased opportunity, knowledge and exposure to scholarly information.

For most folks, a bachelor’s degree is enough. Particularly, from a reputable in-state public or private accredited institution.

I will never forget when I was reading Arnold Schwarzenegger’s biography when he saw a PhD professor driving up in an old, beat up car and he said to himself that if that is what an advanced degree gets you, then that guy was in the wrong career.

BEN ON SPENDING

“You must arrange your life from the very get-go so that you are spending less than you earn.”

Yep. I have learned it is not what you make, but what you spend.

You can totally blow through $200,000 USD a year after taxes! Just keep buying big homes and expensive cars.

BEN ON PICKING STOCKS

How should you invest?

“You don’t need to “play the market” and try to pick stocks. Just buying and holding index funds is a simple, effective method that beats money managers most of the time.”

How long should I hold onto stocks?

“Hold onto these funds as long as possible.”

Should I sell as soon as I get a sizable gain?

“Take advantage of huge tax subsidies for deferring investment gains.”

BEN ON WEALTH

“A highly disproportionate amount of the good things in life accrue to those who have financial capital. The easiest way is to own index funds.”

He states you must acquire wealth.

I too have read you must pursue wealth. You may not want to chase money, but sitting on your laurels won’t attract money and abundance to you. Wealth is something that is attracted to those that have beat inertia and exhibit exertion.

Well, there you have it.

Straight from the guy who is pretty focused on one-task himself as he continued to utter that famous line, Bueller? Bueller? Bueller? Bueller? 

Just like someone had pity on him and answered him in the movie, Mr. Stein has answered a lot of your money answers in his book. The code is capitalist. He has given you the key to unlock the secrets on how to build wealth. So, use his key. Because guess what? The secret is out!

College, Financial Freedom, Financial Independence, Investing, Real Estate, Wealth

Money advice 10 Personal Finance Bloggers told me

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“Um, Anya, while I completely trust you to take care of the inventory and the money, um, dealing with people requires a certain… finesse.” – Giles, Buffy the Vampire Slayer

Yes, indeed. Say it with me, finesse. PEOPLE. REQUIRE. FINESSE.

I cannot tell you how many times I have done business with people and their attitude caused me to cancel my transaction. All I ask for is a little kindness. Being nice can go a long way.

If you are passionate about what you do, then you are generally more pleasurable as well.

People will forget the things you say or do, but they never forget the way you make them feel. I learned that from Maya Angelou. And it is so true.

Today, I want to share with you some advice from my peers. Money Bloggers.

I won’t talk your head off. Let’s dig right in.

1. MONEY IS POWER 

https://twitter.com/ApathyEnds/status/1060532542523215872

You better believe it. I read every contract. Cross every T. And dot every I.  The reason I have an Emergency Fund is for my peace of mind. It means no matter how much the government changes the laws, your job sucks, the lack of integrity around you, or people’s scruples, you are protected.

Here are some of my posts on the importance of emergency funds and having money in the bank.

How I went from $5k to a six figure 401(k) in 6 years  

How not to be house rich, cash poor 

3 Money Lessons from Til Debt Do Us Part 

How to get access to a $250,000 emergency fund with $0 of your own money

How to build an emergency fund 

2. LOOKS GOOD ON PAPER, BUT YOU NEED SIMPLICITY 

I say to people all the time to keep it simple. I use the KISS method. Keep it simple stupid.

In my experience, complexity leads to disaster. You need something you can understand and do without always needing the help of a professional.

I used advice from Warren Buffet and kept it simple.

How I used the Buffet 25 strategy to walk the talk

You don’t need money in 8 banks, 20 credit cards, and 3 homes if you can’t find a way to manage it. Simplify it. Hire a financial advisor and property manager. Or just decrease the amount of banks and credit cards you use, homes you own, and stuff you have.

No matter what, simple is best. KEEP IT SIMPLE!

3. YOU DON’T HAVE TO SPLURGE ON EVERYTHING

Absolutely, you don’t. I read a book years ago on health and fitness called Beyond Diet. She stated instead of buying all organic just get a few main items such as milk to keep your budget in check.

I have always spent my money on the things that mattered most. Namely, my health, education, a good pair of shoes, a good coat, and reliable transportation.

See more on saving and buying what really matters.

Money Lessons I Learned from Jay Leno 

Health really does equal wealth 

4. GET RID OF UNNECESSARY BULL$*IT 

Growing up, my father always said get rid of anything you don’t need.

To this day, I trash, donate, or sell anything I don’t need.

I try to live a minimalist life because I don’t want to have to buy a bigger home or storage locker just to house more STUFF!

Have you ever noticed its easier to buy stuff than it is to sell it?

Less stuff, more wealth. People matter more than things.

Less Home, More Wealth 

Money and Relationships…3, 2, 1

5. TEACH THE KIDS ABOUT MONEY AND THEY MAY BE ALRIGHT 

I take every chance I get to educate someone about money. I bought the Automatic Millionaire for my best friend years ago, so she could get better acquainted with Mr. Benjamin, cause it’s all about those Benjamin’s.

If you don’t teach your kids about money, they will grow up not knowing how to earn and manage it.

If your not sure where to start, check out my post on Scrooge McDuck. It’s kid friendly.

Money Lessons I Learned from Scrooge McDuck 

Introducing the $100,000 bottle of water 

6. START A MONEY DIARY 

https://twitter.com/TheFrugalGene/status/955032100817825792

You think you know where your money’s going, but you have no idea.

Well, welcome to the club. Most people have no idea where their money went.

I suggest you start tracking it right now. Yes, stop reading this post and go track your net worth right now!

You can only do better when you know better.

7. A CAR IS NOT AN INVESTMENT 

Don’t even get me started on cars. Like money, it is just a tool.

I paid off my car about a decade ago. Here is a screen shot of my $0 balance. I paid off that car and out that money to work for me. Forget cars! You do not need an expensive car.

It is a huge budget buster.

Just read any one of my gazillion posts on them.

A car and nothing more 

Life is good, without a car payment 

8.  GET AN EDUCATION 

I don’t care if you simply read books by rocket scientists, or you go to Yale like Rory, I just need you to get a good education.

Read my post on investing in yourself.

Forget casinos, bet on yourself

9. ASK FOR WHAT YOU WANT 

Ah yes, they say ask and you shall receive. However, you still have to ask and do the work. Nothing is for free.

The sorted topic of coin is a tricky one. Money is emotional. But side hustles can get you more money, so I say why not try to EARN money by doing something you are good at and do for free already.  Just a thought.

You want a million dollars? Ask for it

How being an outlier can make you rich 

10. FIRE’D UP, BEING GRATEFUL AND HELPING OTHERS

If you have been reading any number of personal finance bloggers, then you will inevitable come across FIRE (financial independence, retire early).

Fore more on this topic, you can check out a ton of FIRE bloggers such as Root of Good, Early Retirement Extreme, Go Curry Cracker, just to name a few and there are so many more.

You can even read this post by me, Greenbacks Magnet called How do you play with FIRE?

YOU HAVE MY PERMISSION TO PLAY WITH FIRE

How do you FIRE? Basically, you work your butt off when you’re young, live on like 50% or less of your income and save and invest the rest. You have a better chance of achieving this if you can save and invest 50-70% of your income.

From what I have read, most aspire to FIRE with 25 times their income. Could be anywhere from $500,000 to $2.5 million. Then live off the interest.

 However, whether or not you FIRE, you can help others. It can be done with money or time. Either way, with financial independence comes the ability to choose what you do, as you become the master of your time when you no longer have to punch a clock.

When is it time to leave your job and FIRE?

Ask yourself: Would you do this job for free?

You want to be able to do your passion right? Then, you have to make some changes. Leave the grind of the 9-to-5. Get out of the proverbial rat race. It all starts with what you earn and what you spend.

Financial freedom allows you to spend more time doing the things you want. You can spend more time with family, take more vacations, serve in the peace corps, help build homes for habitat for humanity, and the list goes on.

See my post Generosity can go a long way 

Well, there you have it.

Hope you enjoyed this post, as much as I enjoyed writing it. It was nice to remember some of the things I’ve learned along the way on my own journey to wealth.

Good luck!

Careers, Celebrities and Money, Relationships, Self-Made Millionaires, Wealth

Oprah’s 5 lessons for a great life

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Passion is energy. Feel the power that comes from focusing on what excites you. – Oprah Winfrey

I fully agree with that statement. I learned from Richard Branson, the founder of Virgin, to do what excites me. So, every post I write is a topic that I am excited about.

I write what’s brewing around in my head, what is burning in my soul, and straight from my heart.

Sometimes, I think of that scene in Spider-man Homecoming when Tony Stark (Iron Man played by Robert Downey Jr. aka RDJ) meets Peter Parker (played by Tom Holland).

You can check out that scene here.

He says this to him:

Tony Stark: Why are you doing this, huh? What’s your MO? I’ve got to know, what gets you out of that twin bed every morning?

I ask myself that question. What  gets me out of bed every morning and gets me going? If it doesn’t excite me, then I’m not going to do it. And that is exactly how I feel about writing for this blog.

This blog will be very lively and spirited. That’s me. Full of energy.

GET EXCITED

I don’t plan to bore you. I want to be the place you go to wake up to. Like a radio station. I want people to come here to learn new things, get inspired, and when they leave to feel good.

I also try to only do what excites me in my personal life as well. There’s no fear of missing out for me. If it’s meant to be, it’ll happen. If not, move one. There’s always another rainbow, opportunity, or chance for adventure somewhere. I say, onward and upwards.

Obviously, Oprah needs no introduction. You know the face and you know the name.

She has won multiple Daytime Emmy’s, been nominated for an Oscar, and is regularly asked to attend and speak at major events all over the world.

Well, Oprah once did the commencement address at Wellesley in 1997. In her address, she discusses 5 important lessons she has learned for a better life.

Here are  the 5 quotes from Ms. Oprah Winfrey that have inspired me and I hope they do the same for you.

OPRAH ON LIFE

My mission in life is not merely to survive, but to thrive; and to do so with some passion, some compassion, some humor, and some style. –  Maya Angelou 

  1. Life is a journey. Every day experiences will teach you who you really are.

I remember reading a book and a man commented that he witnessed someone being mistreated. When he asked the man why he didn’t say mean things back to those who were saying awful things to him, he responded, “You cannot fight hate with anger. You can only show people who you are by how you live your life.”

Indeed.

See my post on how to thrive by working harder than others that I learned from Jay Leno

Money Lessons I learned from Jay Leno

OPRAH ON PEOPLE

When someone shows you who they are, believe them the first time. – Maya Angelou

2. When people show you who they are, believe them the first time. This is especially helpful with men. Don’t force them to beat you over the head with the message.

I have definitely learned this lesson.

In this life, if you want to not only survive and thrive, then you must learn to weed out the good from the bad apples quick!

Check out my post on what can happen to people that learn to value things more than people.

Money and Relationships…3, 2, 1

OPRAH ON WISDOM

A loving heart is the truest wisdom. – Charles Dickens

3. Turn your wounds into wisdom. Everyone makes mistakes. They are just God’s way of telling you you’re moving in the wrong direction.

If you ever saw that movie Sky High, his mom told him the following:


OPRAH ON BEING GRATEFUL

Let us be grateful to people who make us happy, they are the charming gardeners who make our souls blossom. – Marcel Proust

4. Be grateful. Keep a daily journal of the things you are grateful for. It will keep you focused on the abundance in your life.

It most certainly helps to think about all you do have, instead of what you don’t.

OPRAH ON HAVING VISION

Gratitude makes sense of our past, brings peace for today, and creates a vision for tomorrow.  – Melody Beattie

5. Create the highest, grandest vision possible for your life because you become what you believe.

We have to teach our girls that they can reach as high as humanly possible. – Beyonce

I remember reading that Bella Thorne creates a vision board for herself every year. Say what you want about her, but she is a hard working woman. You know why? It’s because she has a vision.

Arnold Schwarzenegger does something similar. Read all about it below. Very motivational.

How Arnold Schwarzenegger Totally Recalls making $20 million-dollar paychecks

If you want something in this life, you better be prepared to work for it. Nothing is free. Rarely is anyone ever handed anything in life. And even if you are, do you know what to do with it? Or how to manage it? It’s a lot harder to stay on top, when you haven’t done any of the work it takes to get there in the first place.

It wasn’t until I decided that I would be rich, that I started earning and attracting more money.

I learned that it all starts with the mind. Change your thoughts, change your life.

Budgeting, Celebrities and Money, Real Estate, Saving, Wealth

Less Home, More Wealth

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You’ve got to work to succeed. – Owner of a Lonely Heart Song and Lyrics by Yes

If you crisscross the country, you will see home prices are highly inflated. Homes values have gone up, but so too have prices.

I look to my left and to my right, but I don’t really see any new starter homes being built.

How is a family just starting out supposed to find affordable housing without any affordable homes?

You need to keep your fixed expenses low, so that you can keep more of your money in your pocket.

Remember the future is more expensive. Things do not go down in price. Prices go up.

I urge you to reconsider purchasing anything that will mean paying a high fixed amount over a long period of time such as a mortgage.

High fixed expenses can cause folks to go bankrupt.

If you do an online search, you can lookup bankrupt celebrities and see my point.

When going through their financial records and bank statements you see the glaring red flags right off the bat.

Here is a typical list of items I see when high profile people file for bankruptcy:

  • The newest or latest Range Rover
  • Large wardrobes and expensive designer suits or furniture
  • Huge credit card bills
  • Expensive foreign car leases
  • Tax liens
  • Medical debt
  • Back mortgage payments
  • Multiple child support or alimony payments
  • Back taxes owed to Uncle Sam

There is one-line item I would like to pull out in particular and that is the mortgage payment.

Let’s say hypothetically speaking, one was to bring in $70,000 a year, but was once pulling in $520,000. That’s a pretty huge drop in income right there. Would signify some belt tightening needs to be done right?

Nope.

Instead folks were continuing to live in the same neighborhood and even in the same house. In addition, driving fancy cars, and pretty much were living as if there had been no drop in income.

That is no way to do your finances.

You have to respect money. You cannot spend before you earn. As the song goes in the lyrics stated above, you’ve got to work to succeed.

You can’t continue to have the trappings of success, if you truly can’t afford them.

So, let’s discuss buying less home in order to be wealthier.

HOME PRICES ARE THROUGH THE ROOF

According to Zillow.com, the median home price in Washington DC is $575, 800.

If you have a 5% interest rate and a 30-year mortgage, that means you will owe $3,091 a month. And that’s just for the bricks! You have not paid property taxes, closing costs, home warranty, or utilities.

Adding in homeowner’s insurance and property tax, you are looking at $3,419 a month.

The Mortgage affordability rule states you should spend no more than 36 percent of your gross income on all your total debt, and this includes mortgages.

Based on the numbers, to purchase a home at this price point, you would need to bring in over $12k a month. That’s $150k a year. And this amount includes no down payment no debt except a mortgage.

Who doesn’t have a car payment these days? However, make anything less than that and its sorry game over.

Let’s not forget that this is for a property in Washington DC. There are tons of other metropolitan areas where to pay to play is even more egregious.

What a home in swanky parts of New York, California, Connecticut, Florida, Colorado, or Texas? Well, it’ll cost you.

Homes in gated communities can be well into the seven figure range.

If we take three times $575,800, that gives us $1,727,400. A $1.7M home will cost you approximately $10k per month, which is $120k a year and $10k of that goes just to property taxes.

In a decade you would have paid $120k for property taxes, just for you to sit on your couch in your living room .

That means a $3.5M home would cost the homeowner $250k over 10 years.

That’s right. A quarter of a mil. Just because the house is standing.

PROPERTY TAXES ARE FOREVER

Oh and by the way, did I mention that property taxes are forever?

You don’t ever stop paying it.

That means you will always have some cost associated with owning a home, even if everything inside of it and the dwelling itself is paid for.

Wishing you could buy a manse like Hova and Beyoncé. Well, be prepared to shell out big bucks cause the property bill alone is massive.

It was reported they bought an $88M mansion in California. A pricey piece of property indeed. A ritzy neighborhood for sure and a jaw-dropping beauty of a home.

In sunny California, the property tax rate is composed of three types of levies: general tax levy, voter approved bond indebtedness repayment, and special district assessments. The general tax levy was frozen by Proposition 13 at 1 percent of assessed property value.

According to Joel Fox of The Sacramento Bee, “Taxes haven’t exactly disappeared under Proposition 13. Property tax revenue is up 1,000% since 1978 and is growing faster than personal income. However, individual taxpayers are protected by Prop. 13, locking in property taxes when they buy their home and limiting future increases.

So, let’s get down to the bottom-line. Property taxes on an $88 million-dollar home at 1% is $880,000 dollars! That is for one year. I shudder to think about the cost of upkeep.

Although, this is obviously not what the average American homeowner is paying in property taxes, it does illustrate that paying these taxes can be mighty expensive. Especially, if you are living on a fixed income, which many Americans one day likely will be.

HOW MUCH CAN YOU SAVE

What can you do instead of buying a huge property?

Glad you asked.

You can buy less home and save money.

This will effectively allow you to increase the amount of money you save.

For example, just buying a property that is $100,000 cheaper could allow you to save $584 a month in mortgage payments and property taxes.

Investing that $584 over 30 years at an 8% rate of return could net you $877,423.

You would be giving up close to $900k in wealth to live in a neighborhood that ends in the name of Hills instead of Heights.

Basically, you could save a small fortune.

HOW MUCH GREENBACKS MAGNET SAVES

I decided to buy a smaller home than most friends and family members I know.

In one case, I paid $500k less than my peers or their families. In another, I paid less than $700k!

Just figured less home would mean less to do for maintenance, lower utilities, and more freedom because less time is needed to manage my household.

I was right.

It is way less stress to care for a smaller versus a larger home.

You have less stuff because you have less space.

Either you throw out and donate crap or get creative in storing it. I prefer to come up with less storage solutions and just stop buying stuff.

It has paid off handsomely.

I gave my savings amount in a post I did called How Millennial Money inspired me to save $13,333.06 a year. Well, now I’m giving you the visuals. I highlighted in red what I’m saving now.

GBM savings growth chart 

After, I started ramping up my savings it just took off. I am on track to save 1,000% more income than I did in 2015. Not too shabby.

I say buy less home, build more wealth.