Greetings, welcome to our blog!
Thanks for joining me in part 5 in the 15 part series of The Millionaire Fastlane by MJ DeMarco. We have much to cover so let’s get started with the video and notes below:
Chapter 13: The Futile Fight: Education
a) The Fight Against Uncontrollable Limited Leverage: Education The Slowlaner’s natural reaction to the Uncontrollable Limited Leverage (ULL) inherent in their wealth equation is to wage war with intrinsic value by deploying the education weapon.
b) I need to make six figures! I need to make more money! So, predictably, they go back to school and get an MBA or some certification. The cost of the MBA is $ 44,000 and 800 hours.
c) Steve justifies this twofold expense (time and money ) because he anticipates his intrinsic value to rise. Upon completion, Steve expects to be worth more to his company and worth more in the competitive marketplace.
d) Unfortunately, he still trades his time for money— just at a higher rate, yet still uncontrolled and unleveraged.
Susan goes for a project management credential that would raise her intrinsic value in the marketplace.
As a certified project manager, she exposes herself to new opportunities at higher grades of pay. But still, a trade of time for money.
e) Not All Education Is Created Equal – We have Google, YouTube, Udemy, Coursera, and an abundant supply of books to supplement education.
f) The problem with formal education used to raise intrinsic value is that it’s ungodly expensive in time and money. Not a week goes by when I don’t hear about some freshly minted MBA graduate who struggles to pay his student loans while working a mid-grade job he could have gotten out of high school.
g) A preoccupation to become “highly educated” could be a Trojan horse to your freedom and lifestyle. Debt that traps you to a job is not good debt.
h) If an education entombs you under a mountain of debt and shackles you to a job for the rest of your life, is it really a good education? If an MBA increases your salary by 15% but takes 15 years to pay, was it a good investment?
Financing expensive college tuition for an education is a dangerous game that can lead to Slowlane entrapment: conformity and education servitude. A typical collegiate study progresses from general knowledge to very specific skill sets.
i) If there aren’t opportunities in my field, my education becomes marginalized and devalued. If the opportunities available require less education than I have, I become overqualified and unemployable.
j) The second educational entrapment danger is “education servitude.”
k) Keep in mind that indentured time is time you spend earning a living. It is the opposite of free time. Parasitic debt is debt that creates indentured time and forces work.
And now proceeding to:
Chapter 14: The Hypocrisy of the Gurus
a) There was a time when a fool and his money were soon parted, but now it happens to everybody. – Adlai Stevenson
b) When it comes to gurus and financial advisers this is what you must do: leave class and request a refund because they’re guilty of a Paradox of Practice.
Do as I Say, Not as I Do
A Paradox of Practice exists when someone promotes a moneymaking strategy but that strategy is not what made him or her rich. These people effectively teach one wealth equation (the Slowlane) while they get rich leveraging another (the Fastlane).
c) The Slowlane roadmap is sanctimoniously trumpeted by best-selling book authors who dispense financial and lifestyle advice through TV, radio, and books. The strategies they sell are a travesty of grand illusions. Do you seriously think these people are rich from their preachings? Or, are they selling you the Slowlane while they get rich in the Fastlane?
d) “Broke Know-It-Alls”— the scholar living paycheck to paycheck, the hard worker who earns a steep paycheck but also spends it all.
e) Listen to these folks with an entertainment expectation, not advice. Good advice comes from the guy who scores all the touchdowns— not the guy shut out in the fourth quarter!
f) Take advice from people with a proven, successful track record of their espoused discipline. Many money gurus often suffer from a Paradox of Practice; they teach one wealth equation while getting rich in another. They’re not rich from their own teachings.
Chapter 15: Slowlane Victory… A Gamble of Hope
I’d rather live in regret of failure than in regret of never trying. ~ MJ DeMarco
a) Wealth by the Slowlane roadmap is analogous to Exodus, the biblical story of Moses. God leads Moses out of Egyptian bondage into a daunting 40-year journey through the desert, with the promise of a glorious future in the land of “milk and honey.”
After a lifetime of toil and struggle, Moses arrives at the doorstep to his destination and— wham! He dies. He never sees the promise of the journey because life has no guarantees.
b) Yes, graduate from college, get a good job, entrust your money to the stock market, serve the boss well, and you might be rewarded. In today’s financial climate, I’m surprised people still believe it.
c) To assume that life won’t throw you any curves is naive. For the Slowlane to prevail, it assumes life is predictable and forgiving
d) Life is a menagerie littered with crisis points (health, emergencies, kids and family), which make the Slowlane roadmap a risky bet that consumes your most precious asset: time.
e) Seven Dangers of the Slowlane:
1) The Danger of Your Health
The Slowlane HOPES you will live long enough to enjoy the fruits of your savings as you hit your late stage years . Remember, you will have millions when you retire at 65!
2) The Danger of the Job
The Slowlane HOPES that you’ll be gainfully employed at all times, safely climbing the corporate ladder year after year. You must avoid layoffs, corporate politics, firings, poor industry cycles, job skill degradation, and bad job markets.
3) The Danger of Your Home
Home equity is lauded as a middle- class wealth vehicle. Many gurus have shouted from the rooftops, “Retire on your home equity!” and “Your home is an asset!” Capital BS. The Slowlane HOPES that real estate values always rise, and it’s patently false. In 2008, the value of my home equity plummeted $ 800,000. I disavow my home as an investment and, thankfully, I do not rely on it.
4) The Danger of the Company
Not many companies outlive the centuries. If your retirement faith is put into one company in the form of either 1) your job, 2) your pension, or 3) their stock, you HOPE the company survives.
5) The Danger of Your Lifestyle
The Slowlane begs you to settle and become a miser. Want to own an exotic car? Forget it. Want to live on a beach? Wishful thinking. If you cannot control your temptations of lifestyle improvement (a nicer home, a nicer car, a nicer meal out), the Slowlane becomes slower and reverses course.
6) The Danger of the Economy
The Slowlane HOPES that your investments will yield a predictable 8% return year after year. You must believe the theory that “buy and hold” works. It doesn’t, because economic busts, recessions, and depressions happen.
7) The Danger of the Sidewalk
Frustrated Slowlaners often revert to the Sidewalk. Why? Hope over control. When you can’t control time, when you can’t control your job, when you can’t control five days of your life each week , you feel powerless.
A Slowlaner will try to manipulate his/her weak mathematical universe by trying to make the variables malleable.
- Manipulate intrinsic value by increasing hours worked. (I need to make more money!)
- Manipulate intrinsic value by changing jobs or adding jobs. (I need to get paid more!)
- Manipulate intrinsic value by going back to school. (I need a better career!)
- Manipulate compound interest by seeking better investment yields. (I need better investments!)
- Manipulate compound interest by increasing the investment. (I need to save more!)
Overdrive in the Slowlane is like pushing a car’s accelerator to the floor, hoping its upper speed limits somehow will mystically extend higher, when in fact, the racetrack itself is the problem— not the accelerator.
f) The Slowlane is predisposed to mediocrity because the numbers are always mediocre. The Slowlane is predisposed to mediocrity because its mathematical universe is mediocre.
This pretty much wraps up my discussion for this week. Please keep in mind that Slowlaners attempt to manipulate the “expense” variable because it is the one thing they can control while Fastlaners have control over each of the variables that govern their wealth equation.
It has been my pleasure discussing these prized ideas with you, thanks for reading. The journey to the lofty life is not an easy one but rather one of routine and process. I say – continue to read and improve everyday & I would love to hear your comments on how books have shaped your NOW.
Have a brilliant day!
P.S. If you missed last week’s review, you can find it here.