Read the book with me, pick it up here: https://amzn.to/2OLDCIH
Lesson 3: Mind Your Own Business
This is a bit of a call back to chapter one, but the author summarizes it well:
The rich focus on their asset column while everyone else focuses on their income statement.
We open with an interview with Ray Croc, he is known for a little company called McDonald's. He asks a group of MBA students, “What business am I in” and after the obvious guesses (burgers, food, etc.) he corrects them, “My business is real estate”.
He explains, the problem with the way our schools are designed is they train you to be one thing and single focused. This style of thinking is not a good way to become rich, but it is a great way to be a good employee. If someone asks what you do, you may reply to any number of things (banker, grocer, chef) but rarely do you own the business (bank, grocery store, restaurant).
Also, people may discuss net worth, but net worth is not a great indicator of wealth. A lot of these “assets” cannot be resold for full value, but normally a fraction of their value. Especially with limited time to sell them.
The best way to build wealth is to keep expenses as low as you can, reduce liabilities and build assets that generate wealth.
What are Assets?
There are any number of assets, but some examples are:
Rob uses an example that you can take profits and funnel it into real estate, once your dollar is in an asset leave it there. It is a worker that is there to make you more money. Poor people buy luxuries first, but rich people buy them last.
This chapter is interesting, but you can tell it was a bit of an information dump. Still required to understand the next chapter, stay tuned.
I am just a regular guy who does far to much research on financial independence and early retirement (FI/RE). I look forward to sharing my journey with you all.