Financial Planning is very limiting because it is very “needs-based”

  • All it does is try to help someone figure out what they want in the future…which is very difficult if not impossible to do.
  • Then works backwards to today to try and tell them what they need to do to get there.
  • Very Assumption-Based
    • Assume an Interest Rate
    • Assume a Tax Rate
    • Assume you want to Retire
    • Assume an Age
  • The software takes all these assumptions and applies mathematical numbers to your life. But your life is not Math!
  • When you try to apply all these assumptions you might get a correct function.
  • But the fact it is mathematically correct is completely irrelevant. Because it is only about your life as much as your life ends up mathematically perfect and numerical.
  • So when you are assuming and working backward, all you are doing is LIMITING your potential.
  • Financial Planning doesn’t work…go back to what worked in the early 1900’
  • People tend to inherently understand this because they understood that their needs change…so their financial strategy has to be able to change as well
  • Rather than doing Financial planning…we provide Prosperity Economics Advice.
  • Why haven’t we heard this before?
    • Because banks, brokerage houses, financial institutions don’t want you to know about it!
    • They are in the business of control…
    • They don’t want you to act like they act!
  • The Financial Institutions act under the 7 principles of prosperity…and they have been for a hundred years.
  • These are economic principles that have been around… we have put our spin on them, but they’ve been around literally forever and financial institutions operate with them every single day.
  • They do not want you to know this because if you start acting like them, it limits their ability to make money.
  • 7 Principles of Prosperity
    • Start by looking at what each of your dollars is doing.
    • Use the principles to get more out of each dollar.
  • Multiply…we want our money to multiply, not just add.
    • 3×3 vs 3+3 ….same numbers…drastically different result…its what you did with the numbers that produces the difference.
    • That is a key point…its not what’s there…its what you are doing with what’s there.



  1. THINK

  • Abundance
  • Producer
  • Prosperity
  • Optimist
  • Thinking from a prosperous point of view eliminates poverty
    • This is a challenge
    • Must constantly work on MINDSET
    • We go to gas station and say, Gosh, gas it so expensive…why not instead think…how wonderful I have a car and a place to go to work.
  1. SEE

  • We want to see things from a 30K foot view
  • Seeing things from a macroeconomic point of view will help increase prosperity
  • Must see financial decisions from the big picture..enables you to avoid economic tunnel vision.
  • When you set up to 30K feet you can see how all of your financial decisions affect each other
  • If you are buried in a mortgage analysis, trying to decide on a 15 yr or 30 yr mortgage, and that’s all you are looking at, you make mistakes because you don’t see every other thing that is going on in your financial life and how that affects your decision
  • A wrong macroeconomic decision can have a million dollar impact on a person’s financial world.



  • We must measure and be aware of opportunity costs
  • Then you can recover them and get them back (can’t if you don’t measure)
  • Opportunity costs: If you spend a dollar on a A, you can’t spend it on B and there is a cost to not taking advantage of that opportunity
    • Opportunity costs are like a ball and chain on your money
    • Example…when you send a kid to college you spend the money and you lose the opportunity to use the money for your future freedom…and you’ve lost the money for the rest of your life.
    • The way we measure Opportunity Cost is at the interest rate where our best investment sits today.
    • If I had an awesome investment earning 10% and I had $100K and sent it to the university for my kids in a way I could not get it back…that $100K is now removed from the investment at 10% till the day I die.
  • Opportunity Costs play a role in every economic decision we make
  • Why hasn’t my financial planner told me about Opportunity Cost?
    1. Financial Institutions don’t want you to know (they use them though)
    2. Ask 10 Financial Planners about it and I would be shocked if you found 1 that knew about opportunity costs…its just not taught anymore.
  • Once you SEE you will need help recovering them for a little while…once you do, you will make better decisions because you know how to MEASURE and recover…the results on our balance sheet can be in the millions
  • It’s like having a giant leak in your gas tank.
  1. FLOW

  • Cash flow is the true measure of prosperity. Ask 10 Financial Planners and they will say Net Worth is more important
  • You may have a huge Real Estate portfolio but no cash flow or access to cash…how prosperous are you?
  • So every investment we make should be looking at it from the standpoint of cash flow…and HOW CAN WE MAKE THE MONEY FLOW BOTH TO AND FROM US.
    1. Why would money flowing from us be a good deal?
    2. Because money flowing from us, assuming it’s to the right places is evidence you are using the other principles (especially 6+7)
    3. Money can’t flow to you if it’s not flowing from you in some form.
    4. So constant movement and flow of money is what you need to be focused on…again, not Net Worth
  • Why is there extreme emphasis on Net Worth in the financial world?
    1. Financial Institutions want you to build NET WORTH…because when you do, it typically sits in their coffers.
  • Think about it…
    1. What do Financial Institutions want?
    2. They want Cash Flow
    3. They want you to have Net Worth
    4. Why? Because your Net Worth is standing on their balance sheet
  • What do they do with that?
    1. They move it…they focus on cash flow
    2. They have trained us to focus on storing money
    3. If we are storing, they get to cash flow it.

  • You need control back on your side of the table
  • Not on the Financial Institutions side of the table
  • AND not on the Government’s side of the table
  1. The government is just as guilty of acting like a financial institution as the financial institutions are.
  • The golden rule – Those who have the gold make the rules
  1. Let’s look at the 401K (IRA) Profit Sharing Environment.. the government is in control of it.
  2. They made a whole laundry list of rules around this money which gives them control of it.
  3. The IRS and Government say they are not allowed to invest in the stock market
  4. But in the 401K Profit Sharing Plan you put your money in and it grows without taxes
  5. But you should also know is that when you take it out it is TAXABLE.
  6. Which means that all along the way in your 401K Profit Sharing Plan, YOU invested the Government money in the stock market for them.
  7. Let’s say you have a $500K plan and you take it out all at once, and you pay 30% in taxes, you get $350K, Govern gets $150K. Where was their $150K? In the stock market, but it was in your name not theirs so it was legit.
  • The Government gets the benefit of investing through you because they get to make the rules and have kept control.
  1. This make our money not cash flow and causes Opportunity Costs and causes us to see our money mirco-economically because this money has to sit, separated in its own trapped compartment. It also contributes to poverty thinking.
  • 401K is not all bad especially if contributions are matched and you understand that the money is trapped and you understand where those matched dollars are going to go = to the Govt. The match may enable you to get most or all of your money back while it pays taxes on your money.
  • Keeping Control is so important because when we relinquish control to others, we begin to operate from a poverty mindset instead of an abundance mindset.


  1. MOVE = Velocity of Money

  • Dollars are moving through assets not to assets.
  • When money is moving through assets it accelerates wealth and prosperity
  • When money moves to an asset, it slows down
  1. Most people define that as accumulation
  2. When you accumulate money, it builds net worth and is slowed down
  3. When dollars accelerate, that movement produces prosperity
  • What do this mean?
    1. When I put money in a regular mutual fund account and re-invest the dividend and capital gains my dollars are only doing one job = accumulating
    2. Or you can move money through the asset or mutual fund by taking the dividends and capital gains out.
    3. This is an ACTION or STRATEGY
    4. The mutual fund is still the same mutual fund…it is a product
    5. You and I can have the exact same product, but remember the earlier example of the difference between 3+3 and 3×3?? It’s what you do with the numbers that produces the different outcome.
  • You and I can have the same mutual fund but because I move my money through it, by taking dividends and capital gains out, I am going to do better with that mutual fund than you would by just having your money go to it (and reinvesting).
  • Let’s look at Real Estate
    1. We could have money just go “to it” by pre-paying a mortgage or move “through it” by paying interest only or carefully borrowing against equity
    2. Doing something that allows money to go through the real estate, or through Life Insurance, or car insurance…etc., CD, Savings Account.
    3. The asset doesn’t matter if you know how to change strategy and interact with the institution differently.
  • Institutions give us the ability to implement different strategies, but they don’t teach us about them.
    1. Check a box to take Dividends and Gains come to you in cash
    2. Check a box to take Savings interest or CD interest out
  • If you call the institutions and ask them if you should take the dividends or reinvest them, they are going to tell you to reinvest them.
    1. Why?
    2. Because that builds your Net Worth (Which they control) but moving money through assets builds cash flow.

  • Dollars that are moving get to do many, many jobs. Dollars that are stuck do only one job.
    1. This is hard to see sometimes, but is so very critical and something that is fairly easy to implement.
    2. Prosperity comes so much more readily when we can multiply our money.
  • Remember the earlier example of 3+3 vs 3×3…
    1. What you did (your actions) get you the 6 or the 9
    2. Again, prosperity comes when money does multiple jobs.
    3. The typical financial environment has dollars only doing one job.
  • What I mean is you have…
    1. Dollars for Retirement
    2. Dollars for your Life Insurance
    3. Dollars for Educating your kids
    4. Dollars that are paying your mortgage
    5. And maybe you might get dollars that do 2 jobs
      1. Mortgage provides tax deduction and a home
  • When we accumulate, we are limiting the ability of our money
  • You can get a dollar…the same dollar to..
    1. Educate a child
    2. Get some insurance
    3. Buy investment real estate
    4. Provide for charitable endeavors
    5. And come back around and be a part of your life by buying a boat or something
      1. As a matter of fact, with many of our clients, we have gotten their dollars to do 7, 8, or 9 jobs…that takes 2 or 3 years, but it’s not 20 or 30 years.
  • If you can get your dollars to do all of the above then they are obviously being more effective and working harder and moving through assets
    1. You can move money through each one of the assets or positions if you know how.
  • If you can set your dollar to move through each of these assets then $1 gets you the benefit of each of those assets.
    1. It gets the kids education, and the real estate bought and the mortgage paid and etc., etc.,
    2. So this idea of multiplying is very important
  1. The 7 Principles of Prosperity are in a very specific order

  • You can’t multiply unless you can move money, you can’t move money unless you can control money, you don’t have control if it’s not cash flowing and if we don’t have an eye on the opportunity costs. We aren’t going to have as much money as possible because we are going to be losing it, and if we aren’t seeing the big picture there is no way we can see money moving because we are just looking at the one decision we are making and clearly if we are thinking from a place of fear or scarcity then we can’t be thinking about how we can get money to do more than one job.
    1. This does not happen in the 1st year
    2. It takes 2 or 3 years
    3. After 8 or 9 years we can have money doing 10-12 jobs
  • Should we get into debt to accomplish?
    1. There are good reasons to have debt
    2. This is a difference between being IN debt and HAVING debt.
    3. =$1,000,000 home with $500K mortgage = That’s having debt
    4. =$25K in credit card debt with no job and no home = That’s in debt
  • Do I put more down on house to have lower payment?
    1. If you can take the 7 principles and work your question through them, you’ll get your answer
      1. Think = If that give you peace of mind you might have made the decision right there, but sometimes the best peace of mind decision is not the best economic decision so let’s keep going
      2. See = Clearly if we put money into that house, then we cannot put it anywhere else
      3. Measure = If we put money into our house, now we have lost opportunity to invest our money. This is detrimental.
      4. Cash Flow = This one is tricky. The down payment is going to lower your mortgage payment but is it going to necessarily going to increase your cash flow
        1. Although your monthly payments may be lower, it is reducing your tax deduction so at the end, it may end up actually causing less opportunity on the cash flow side…meaning it costs you more
      5. Control = That 10 or 20% down is now gone
      6. Move = Money can’t move because its stuck in the house
      7. Multiply = AND it cannot do more jobs if it’s not moving