Download (direct link):
Now, the purpose of becoming rich—you would think—is to make each of these experiences as rewarding as possible. The more money you have, the more choices you have.
Take sleeping. What does a billionaire want out of sleep time? I’d say the same thing you do: blissful, uninterrupted unconsciousness. And (aside from peace of mind, which you can’t buy) what will give you that?
Answer: a great mattress.
And how much does the world’s best mattress cost? Maybe $1,500. That means you can buy yourself a million-dollar sleep on a billion-dollar mattress for no more than $1,500.
So get rid of that lumpy thing you are sleeping on and find yourself the absolute best mattress you have ever sat on. Buy it and go to sleep content that Bill Gates can do no better.
You can pay almost any price for anything—but after a certain price point, you are paying for prestige rather than quality.
Take steak. Ask those who know about beef and they’ll tell you that the quality of a steak depends entirely on the meat. Buy a New York sirloin at Ruth’s Chris and, for around $30, you are eating the best steak money can buy. Eat the same piece of meat at Le Cirque and you’ll pay $75. What’s the difference?
The same thing is true when it comes to your clothing. Beautiful, comfortable clothes are not cheap, but they don’t have to cost a fortune. You can buy the world’s best pair of slacks for $150 or you can spend 10 times that amount. The difference is the label on the waistband.
Champagne, anyone? Consumer Reports had some wine experts test a variety of champagnes and found that out of the five best, four were less than $40. Dom Perignon, listed fifth, will set you back $115. But
Step 3: Develop Wealthy Habits 101
you can have a better champagne for only $28.
And so it goes on.
The point is this: The best material things in life are affordable. They are not cheap—quality never is—but if you buy them selectively and use them with care, you can enjoy a life as materially rich as Bill Gates on an income that wouldn’t get him through lunch.
Your Dream House
I’ve lived in a three-room mud hut in Africa and a 5,000-square-foot mansion, and I can tell you this: The quality of a home has little or nothing to do with its cost or size.
Think about the houses you most admire. They are probably not huge and flashy. One of my current favorites is a modest, three-bedroom house in Cleveland that its owner transformed into a lush, luxurious museum of her love of travel, dance, and learning. Every room is a gem. I am completely comfortable and endlessly amused in this rich and interesting house.
Its value? As great as Bill Gates’s 40,000-square-foot monstrosity in Seattle—yet this one has a market value of about $150,000.
There is no cure for birth and death save to enjoy the interval.
—George Santayana, 1863-1952
RADICALLY INCREASE YOUR PERSONAL INCOME
When I met Steve Paulson, he was working as a research assistant for a publishing company, putting in 12-hour days and making $17,680 a year. This was not, as you might guess, 20 years ago. It was in July of 1996.
Steve, 23 at the time, was giving up sports, forgoing girlfriends, and eating lunch at his desk for a paltry wage—not because he was unable to find a higher-paying job (he could have earned more managing a fast-food restaurant), but because he had a hunch that this job as a research assistant would give him an opportunity to do well in the future.
He was right. And it happened faster than you might think. A year after he began, he got his first raise—a substantial 20 percent increase to $21,216 a year. Since then, his income has increased dramatically. In fact, this year, Steve’s compensation will exceed $1 million.
Steve’s income history has been extraordinary, but he’s not alone. Don O’Hara’s income during the same period of time has had a trajectory almost as strong:
2000: Around $185,000
2001: Over $100,000 (divorce year)
104 AUTOMATIC WEALTH
2002: Around $200,000
2003: Around $300,000
2004: Much, much more . . .
Phil Hammer’s income went from $29,500 a year in 1996 to $50,000 in 1997 and then $215,000 in 2000—and since then has never dipped below $200,000. In fact, Phil broke into the $350,000 range last year.
Ted Johnson has had a similar experience, seeing his personal compensation rise from $31,000 in 1998 to $59,000 in 2000 to more than $400,000 today.
And that’s not to mention Marion Oaks (from $50,000 to $240,000 in six years) . . . and dozens of other people I’ve known and worked with.
Let’s talk about how these people boosted their incomes so dramatically and figure out how you can do the same in the near to medium-range future. Or, at the very least, radically better than you are doing now.
But first, let’s talk about why you’ll never get rich by increasing your income the old-fashioned way—by working hard and waiting a long, long time.
WHY ORDINARY PAY RAISES WILL MAKE YOU POORER INSTEAD OF RICHER
Most people go through their lives working for businesses they care nothing much about, dealing with problems they’d rather not face, and getting paid wages they’d very much like to change.