finance
Financial struggle is often the result of people working all their lives for someone else. (Location 1165)
Struggle = month to month subsistence type living (202301110102, 202301130002), always on the financial back foot
Because the incentive of any owner is to pay the lowest amount possible for an employee, the employee will forever be chained to the whims of the operation, while also not receiving any share of the business success. Stock packages are risky and a way for certain startups to avoid paying people, but also align the incentive of the employee with the company better.
As a young boy, my educated dad encouraged me to find a safe job. But my rich dad encouraged me to begin acquiring assets that I loved. “If you don’t love it, you won’t take care of it.” I collect real estate simply because I love buildings and land. I love shopping for them, and I could look at them all day long. (Location 1208)
Find asset classes that work for your personality and that you will be excited to interface with (202301110059). For example, I like:
- writing
- making open source apps
- streaming
Start minding your own business. Keep your daytime job, but start buying real assets, not liabilities. (Location 1219)
The ideal path is to have a three part pie graph with moving percentages:
- Working for others
- Working for yourself
- Having assets work for you
You should leverage #1 to build the skills and relationships for #2. Eventually automate/delegate your role out of #2 to get most of your income from #3 so that near/all of your income comes from #3 or projects you choose take on in #2 with asset classes you enjoy 202301130022
Pieter Lievels does this really well.
Morse, who was living on a tiny salary after being appointed professor of literature of the arts of design at New York University, frequently had to choose between spending his money on food or components for his telegraph. So it had taken him a long time to build the device. (Location 463)
A Home is a BadAss…et
Understand the difference between an asset and a liability, and prioritize buying assets that will generate cash flow to pay for a house instead of incurring a home-equity loan. Why The Home Mortgage Interest Tax Deduction is a lie for most people.
Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets. (Location 836)
- Housing
- Cars
- Expensive Colleges[1]
All too often, a house only serves as a vehicle for incurring a home-equity loan to pay for mounting expenses. (Location 1023)
I am not saying don’t buy a house. What I am saying is that you should understand the difference between an asset and a liability. When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house. (Location 1036)
The Home Mortgage Interest Tax Deduction is a Lie
Less than 1/3 of homeowner’s benefit from the deduction of mortgage interest.
More interesting than how many people benefit is who benefits. A nice middle class family in the 15% tax bracket might save an Andrew Jackson or a Benjamin Franklin every month for the first few years of home ownership. But a Senator might save $1,500/month at the 39.6% marginal rate on his new DC Mansion
The Middle Class often buys houses based on size of payment, per the common advice of, “Buy the biggest house you can afford.” Since every How Much House Can You Afford calculator includes estimates for a tax benefit, the result is just higher housing prices.
For the rich, the interest tax deduction is a great subsidy. For everyone else The Home Mortgage Interest Tax Deduction is a lie. People in SF and NYC get their mortgages subsidized by the rest of the country (View Highlight)
If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. (Location 882)
Assets:
- Profit earning vehicles (companies, stocks)
- Bonds
- Knowledge (create new wealth vehicles)
allows you to cheat your class and shortcut to a higher one