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Basic Money Skills

By Frederick Mann

Introduction
There are thousands of self-improvement, success, and money-making books. Many of the authors have attempted to put together some "integrated formulation" from their own experiences and from all the other sources available to them. Unfortunately, most of them -- if not all of them without exception -- are somewhat incomplete and sometimes even hopelessly misguided in some respects. I hope my attempt at formulating some money skills will become more complete than most. If you know or think of any money skills I should add to my list, please e-mail Frederick Mann.

Robert G. Allen (also best-selling author of Nothing Down, Creating Wealth, and Challenge) writes in Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth:

"Prosperous people practice seven financial secrets. I call them "secrets" not because very few of us are aware of them, but because very few of us use them. The secrets are, in reality, skills ... essential money skills that all wealthy people practice. I believe that if you learn these skills, wealth can flow into your life ... multiple streams of increasing prosperity. Wouldn't that be nice? Money to buy whatever you want ... houses, cars, travel, freedom. Surplus to share with the people you care most about. Security. Peace of mind. That's what these skills will bring you."

Allen also devotes a chapter to network marketing (or MLM = multilevel marketing), which he calls "the ultimate money machine."

During 1995 and 1996 I wrote my Millionaire Reports. In 1999, after reading Robert T. Kiyosaki's Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor & Middle Class Don't, I realized that there were many "gaps" or important areas not covered in the Millionaire Reports. This article is an attempt to fill some of the gaps. The article is particularly oriented toward my favorite money-making programs, which can be found on my Risk Meter.

Basic Money Skills:

Money Skill #0: Overcoming the denial of personal disadvantage

This may be the most important money skill of all. It is also a most important life skill. It's a central aspect of the most powerful success principle ever discovered. If you cannot master this skill, you may not make much progresss with any of the others. If you do master this skill, then all the other money skills will be easier to master. See #TL04C: The Ultimate Success Secret.

A reader wrote me, "...How can anyone be expected to understand a phrase like, "Overcoming the denial of personal disadvantage?"" What may seem obvious once you've recognized it, may seem incomprehensible to someone else. Some people have "personal disadvantages." Some of them deny to themselves that they have these disadvantages. In order to handle this situation, they need to overcome the the denial of their personal disadvantages.

Money Skill #1: Thinking and speaking about money in enriching ways

In Rich Dad, Poor Dad Kiyosaki compares his "two fathers": his biological father who was a teacher and his mentor who was a businessman. The teacher was his "poor dad" and the businessman was his "rich dad." His poor dad said, "The love of money is the root of all evil." His rich dad said, "The lack of money is the root of all evil."

The quote below from Rich Dad, Poor Dad is extremely important. It powerfully illustrates what I call "Slavespeak" -- the phenomenon of certain words having hypnotic, stupefying, and debilitating effects on their users. See The Anatomy of Slavespeak.

"Because I had two influential fathers, I learned from both of them. I had to think about each dad's advice, and in doing so, I gained valuable insight into the power and effect of one's thoughts on one's life. For example, one dad had a habit of saying, "I can't afford it." The other dad forbade those words to be used. He insisted I say, "How can I afford it?" One is a statement, and the other is a question. One lets you off the hook, the other forces you to think. My soon-to-be-rich dad would explain that by automatically saying the words "I can't afford it," your brain stops working. By asking the question "How can I afford it?" your brain is put to work. He did not mean buy everything you wanted. He was fanatical about exercising your mind, the most powerful computer in the world. "My brain gets stronger every day because I exercise it. The stronger it gets, the more money I can make." He believed that automatically saying "I can't afford it" was a sign of mental laziness."

According to Suze Orman in The 9 Steps to Financial Freedom, "The road to financial freedom begins not in a bank or even in a financial planner's office like mine, but in your head. It begins with thoughts."

Another book that may assist you in how you think about money is Why Am I Always Broke? How to Be Sane about Money by Albert Ellis & Patricia A. Hunter -- see Albert Ellis Institute.

Many people live their lives at the effect of unconscious "scripts" consisting of all kinds of "do's" and "don't's." About 15 years ago, I read Scripts People Live: Transactional Analysis of Life Scripts by Claude M. Steiner. This helped me considerably to overcome some personal scripts. When I was about 17 years old I told my father (who had much in common with Kiyosaki's "poor dad") that I could go into business. He proclaimed emphatically, "You will never succeed in business." After reading Steiner's Scripts People Live I realized that I had accepted my father's "curse" as a script which had prevented me from being as successful as I could have been.

There are certain common "money myths" that are held as scripts or curses by many -- see Millionaire Report #2. "Economic correctness" basically consists of money myths. The "economic correctness" article includes reference to what I call "label-think." Here's another example from the Perpetual Tourist List: "Nobody had said that one can't make money from running scams. It doesn't change the fact that MLMs, etc. appear to be scams and it may be unwise to fall for them. Perhaps less-than-moral to try to do them, as well." The essence of label-think is that you don't examine something thoroughly. After a superficial glance you categorize it into a "hold-all box" with a label such as "MLM." Your MLM box (label) may include everything you deem after a superficial glance to be "multi-level marketing," "pyramid scheme," "chain letter," "Ponzi scheme," etc. And, just because you've put the label "MLM" on something, therefore it "appears to be a scam" -- irrespective of the real nature of the thing. This is thinking similar to having the label "Jew" which equals "dishonest money grabber." Whenever you see anyone to whom, for whatever reason, you attach the label "Jew," then, irrespective of the real nature of the person, irrespective of his or her actions, he or she is automatically a "dishonest money grabber" -- just because you've labeled the person a "Jew." See also Money Skill #18. Label-think often includes fixed ideas -- the opposite of flexible thought -- Money Skill #34. Robert G. Allen has some interesting things to say about MLM in Money Skill #12A .

Some very important ways of thinking about money can be found in the book Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence by Joe Dominguez and Vicki Robin -- see The New Road Map Foundation. There's a great deal of value here you'll find nowhere else.

Money Skill #2: Improve your thinking

"For an idea which, at first, does not seem absurd, there is no hope." -- Albert Einstein

Thinking can be described as a process whereby in our brains we create maps, representations, models, or simulations of the "world out there." The more accurate our maps, etc., the more effective our thinkings tend to be and the more likely we are to achieve the results we desire. Thinking can also be described as recognizing and defining identities, similarities, differences, relationships, and patterns. Discovering causal connections (or recognizing those others have discovered) is an important aspect of thinking. This is closely related to discovering the origins, predecessors, or causes of things. Critical thinking, particularly the ability to question everything, is crucial to effective thinking. It helps a great deal if you can spot errors in the thinking of others (relatively easy) and in your own thinking (much more difficult!).

Prediction is a most important aspect of thinking, particularly related to money. You often need to make decisions about what to do and what not to do in order to make money, to not lose money, or to cut your losses. These decisions are based on probabilities of future prices going up or down, projects or programs working or not working, products achieving market acceptance or not, being able to sell something or not, etc.

Learning from your own experience -- and, even more important, from the experience of others -- is another important aspect of thinking.

Yet another important aspect of thinking is to recognize that something you're doing isn't working and isn't likely to work, therefore you should do something different. You could also recognize that something isn't working very well (or as well as it could or should) and needs to be improved. You can apply the scientific method to come up with better formulas for what to do (see also Money Skill #23) as follows:

  1. State the problem (You may need to make some observations and ask some questions in order to do this.)
  2. Research the problem (What will it take to solve the problem? What do I know and what do I need to find out?)
  3. Form a hypothesis (Or a formula you can apply to solve the problem. The simplest solution is often the best.)
  4. Test the hypothesis (Apply the formula experimentally to see if it works.)
  5. Draw conclusions from the results (How well did the formula work? Do I need to do more experiments?

Return to (a) or (b), if necessary. See The Scientific Method. See also Money Skill #23.

A good way to continue improving your thinking is with the "Brain Freebie" course from School of Thinking. See also Improving Your Information and Thinking Skills, Creativity & Problem Solving.

To further improve your thinking, you need to think about how you think. You become aware of how others typically think and how you typically thought in the past. This is called "metathinking" -- see Metathinking Explained.

Earl Nightingale points out that your mind is like a garden, which may be cultivated or allowed to run wild, but whether cultivated or neglected it must and will produce results. Good thoughts bear good fruits, bad thoughts bear bad fruits. You can lift your thoughts high. To lift your thoughts, you may need to renew your mind. And once you renew your mind, you will soar like an eagle. The sky is the limit. Energetic thoughts bring achievements. Choose your thoughts carefully to shape your character, life, and the results you produce.

Anxiety, fear, worry, and self indulgence tend to weaken and demoralize your body and damage your nervous system. Your body tends to obey your mind. So negative thoughts can ruin your body. Joseph Murphy points out you are the captain navigating a ship. You should give right orders to your subconscious mind. Uplift your thoughts to improve your destiny!

Money Skill #2A: Numeracy

"People would rather commit suicide than learn arithmetic." -- Bertrand Russell.

"There are three kinds of people; those who can count and those who can't." -- Robert G. Allen

Numeracy is to numbers as literacy is to words. To succeed with money, it helps to understand numbers, to be able to deal with them and manipulate them, to use them to better understand certain important aspects of the world we live in, to use them to assess risk, and to use them to better predict the future.

If you haven't mastered addition, subtraction, multiplication, division, fractions, decimals, percentages, etc., I suggest you start with Maths Matters! and Maths.

For an overview of numeracy, see Numeracy and Adult Numeracy Down Under.

Understanding and appreciating PROBABILITIES is one of the most important skills, not only for succeeding with money, but in life generally. Says John Allen Paulos in his book Innumeracy: Mathematical Illiteracy and Its Consequences:

"And if you don't have some feeling for probabilities, automobile accidents might seem a relatively minor problem of local travel, whereas being killed by terrorists might seem to be a major risk when going overseas. As often observed, however, the 45,000 people killed annually on American roads are approximately equal in number to all American dead in the Vietnam War. On the other hand, the seventeen Americans killed by terrorists in 1985 were among the 28 million of us who traveled abroad that year -- that's one chance in 1.6 million of becoming a victim. Compare that with these annual rates in the United States: one chance in 68,000 of choking to death; one chance in 75,000 of dying in a bicycle crash; one chance in 20,000 of drowning; and one chance in only 5,300 of dying in a car crash."

Many money decisions -- which stock to buy, which money program to join, how much money to commit to the stock or program, etc. -- can be good or bad, depending on your ability to estimate risk and probabilities. According to Peter L. Bernstein, in his classic Against the Gods: The Remarkable Story of Risk:

"The revolutionary idea that defines the boundary between modern times and the past is the mastery of risk: the notion that the future is more than a whim of the gods and that men and women are not passive before nature. Until human beings discovered a way across that boundary, the future was a mirror of the past or the murky domain of oracles and soothsayers who held a monopoly of anticipated events.

This book tells the story of a group of thinkers whose remarkable vision revealed how to put the future at the service of the present. By showing the world how to understand risk, measure it, and weigh its consequences, they converted risk-taking into one of the prime catalysts that drives modern Western society. Like Prometheus, they defied the gods and probed the darkness in search of the light that converted the future from an enemy into an opportunity. The transformation in attitudes toward risk management unleashed by their achievements has channeled the human passion for games and wagering into economic growth, improved quality of life, and technological progress."

See also: Arithmetic & Numeracy, Mathematics & Statistics, Statistics, and Money Skill #24.

Money Skill #3: Understand money

Money can be understood in terms of what many consider to be its main functions:
(a) Medium of exchange;
(b) Unit of value/money as information;
(c) Store and transmitter of value.

Without money, if people want to exchange goods and services, they barter. "In exchange for filling my car's gas tank I'll work for you for an hour." In most cases this simply wouldn't work because party A doesn't want what party B has to offer in exchange. With the use of money as an intermediary (or go-between), a wider variety of transactions become possible, increasing the chances that more people will satisfy their needs.

To facilitate exchanges of goods and services, it helps if we have a sense of the worth or value of things. I might value my time at $15 an hour. In that case, if someone offers to pay me $15 an hour or more, I would consider working for him or her. If offered less, I would probably decline the offer. Similarly, I might value a loaf of bread at $1. Money as a unit or measure of value helps us to make better economic decisions. In the absence of money it would be much more difficult to make sensible economic and financial decisions. How things are currently priced by most people provides indispensable information for guiding economic and financial decisions.

The store-of-value function of money makes an important dimension to economic and financial life much easier. It enables us to produce a surplus in the present, to save the surplus, and to "move" it to different places or into the future. Money makes it easy to transfer value from place to place or present to future.

In Your Money or Your Life, Joe Dominguez and Vicki Robin provide four perspectives of money:
(a) The street-level perspective (practical, physical realm);
(b) The neighborhood perspective (emotional/psychological realm);
(c) The citywide perspective (cultural realm);
(d) The jet plane perspective (personal responsibility and transformation).

The street-level perspective (practical, physical realm) includes the physical aspects of notes and coins and all our financial transactions: allowances, jobs/paid employment, banking our checks, balancing our checking account, credit cards, insurance, buying a house, investing, assets and liabilities, etc.

The neighborhood perspective (emotional/psychological realm) includes beliefs and myths about money: what you have to do to get money, money as security, money as power, money as social acceptance, money as evil, etc. "Economic correctness" is at this level. So is money as a problem for couples to fight over and as a cause to break up their relationship. You can also get murdered for your money.

The three main functions of money I've described above can be assigned to the citywide perspective (cultural realm). So can "economic bogeymen" such as GNP (gross national product), CPI (consumer price index -- a measure of inflation), cost of living, recession, depression, economic expansion, bull and bear markets, etc. Ideas about using gold (and other precious metals) as money belong to this level. So does complementary currencies -- see Complementary Money System.

The jet plane perspective (personal responsibility and transformation) involves letting go whatever you think you know about money. At this level money becomes something we trade some of our life energy for.

See also "Unconstitutional Money" and The Economic Rape of America.

Money Skill #3A: Understand value

"I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things." -- Benjamin Franklin

There are two main "theories of value":
(a) Labor theory of value -- the classical theory that the value of any good derives from the value of the labor used to produce it. Karl Marx and many socialists and communists adhere to this theory. (b) Subjective theory of value -- something is worth whatever people are willing to pay for it. Austrian economists and many capitalists adhere to this theory. Value (like beauty) is in the eye of the beholder.

When you buy something with the purpose of making money, it's because you expect or hope its price will increase. (When you sell something short with the purpose of making money, it's because you expect or hope its price will decrease.) Prices often depend on how large numbers of people (the market) value things. Some price changes reflect changes in valuation by large numbers of people (the market).

Supply and demand affects prices. Droughts can result in rising prices of certain commodities. Competition often results in lower prices as in the computer industry. Monopoly-like economic power can result in increased prices.

The value of a money-making program to me is based on how much money I make with it. See Risk Meter.

Money Skill #4: Understand life energy

Your life energy is that which animates your body. You and only you control your life energy. This has profound implications which are further explored in How to Discover Your Freedom. Life energy enables you to perform purposeful and productive activities.

Whatever life energy you've expended in the past is gone -- except for the money and other values, including knowledge, that you've saved and accumulated and are available for present and future use. The life energy available to you is a function of: (a) What you've saved and accumulated in the past in forms that can be carried forward; (b) The time you have available during the rest of your life on earth; (c) The "quality" of this time.

Under (a) you could include family connections, friendships, knowledge, skills, reputation, money, and any other assets that can be carried forward for future use. To think of your time left on earth (b) as limited is to think like a "deathist" who says, "Nothing is as certain as death and taxes." (See Health Freedom & Life Extension and Fiscal Freedom. The "quality" of the time (c) you have available is basically a function of your physical and mental health plus your knowledge and skills.

The limited view of life energy expressed by Dominguez and Robin is grossly mistaken and impoverishing. Life energy is unlimited. There are no bounds to the extent to which you can increase your life energy by improving your knowledge, skills, and health, and by extending your life. Their notion that "money = life energy" is also inaccurate. It's more accurate to say that you can save and accumulate some of your life energy as money and in other forms and transport it into the future.

Money Skill #5: Understand work and its history

"I don't like work -- no man does -- but I like what is in work -- the chance to find yourself. Your own reality -- for yourself, not for others -- what no other man can ever know." -- Joseph Conrad

"The return from your work must be the satisfaction which that work brings you and the world's need of that work. With this, life is heaven, or as near heaven as you can get. Without this -- with work you despise, which bores you, and which the world does not need -- this life is hell." -- W.E.B. Ddu Bois

It's worth it many times over to buy Your Money or Your Life by Dominguez and Robin just for what they say about "work" in Chapter 7. They quote >>>from Working by Studs Terkel:

"This book, being about work, is, by its very nature, about violence -- to the spirit as well as to the body. It is about ulcers as well as accidents, about shouting matches as well as fistfights, about nervous breakdowns as well as kicking the dog around. It is, above all (or beneath all), about daily humiliations. To survive the day is triumph enough for the walking wounded among the great many of us... It is about a search, too, for daily meaning as well as daily bread, for recognition as well as cash, for astonishment rather than torpor; in short, for a sort of life rather than a Monday through Friday sort of dying."

Most importantly, Dominguez and Robin indicate that for most of human history (and prehistory) people have had to work only two to three hours a day to survive. To me it seems that, given all the machines and technology available in our "modern" world to do all kinds of work, it shouldn't be necessary for anyone to work more than about one hour a day to be able to survive comfortably!

Most people seem to think that work is what we do for a living and that in order to work you must have a "job." Dominguez and Robin indicate that the way most people define work is part of the problem. You can start deconstructing your idea of work by reading The Strange "Job" Concept. Dominguez and Robin quote from Benjamin Kline Hunnicutt's Work Without End:

"Since the Depression, few Americans have thought of work reduction as a natural, continuous, and positive result of economic growth and increased productivity. Instead, additional leisure has been seen as a drain on the economy, a liability on wages, and the abandonment of economic progress."

Confusing "be" and "do" is also part of the problem, according to Dominguez and Robin. "What do you want to be when you grow up?" You're supposed to answer that with what you want to do. So most people think and talk in terms of, "I'm a doctor, a nurse, a policeman, etc." It would be more accurate to think in terms of, "I'm a human being who sometimes does medical work, etc." Dominguez and Robin suggest we redefine "work" as "any productive or purposeful activity, with paid employment being just one activity among many..." They emphasize that "breaking the link between work and money" opens us up to many other options.

The reasons why so many work for 40 hours a week or more to be able to pay the bills, rather than 5-7 hours, will be covered in Advanced Money Skills. See also: (a) What I Learned When I Quit My Job: Part One by D.J. Swanson; (b) Creating Livable Alternatives to Wage Slavery: "Re-thinking the work ethic"; (c) The Abolition of Work by Bob Black.

Money Skill #6: Don't work for money; have money work for you

"Money is the seed of money, and the first guinea is sometimes more difficult to acquire than the second million." -- Jean Jacques Rousseau

The first lesson Kiyosaki emphasizes in Rich Dad, Poor Dad is that rich people don't work for money; they have their money work for them. Personally, I'm satisfied when my money earns a 10% return per month for me. If my money isn't providing this kind of return, I start looking elsewhere. For examples of how you too can achieve this kind of return, see Risk Meter.

Fortunately, you don't even need to have money in order to make money work for you. There are millions of people in the world with "surplus" money that's not being put to very good use. You can organize your money-making activities so that some of this OPM (other people's money) works for you. For a general approach to achieve this, see Zero-Risk Money-Making.

See also Make Money Work for You in Millionaire Report #7.

Money Skill #7: Work to learn

Many people are in a situation such that the only practical way for them to be able to pay the bills at the end of the month is to work at some "job" ("just over broke!"). Many of these people work at essentially "dead-end jobs." I once worked for a publishing company. After about 10 days of working there it was clear to me that working there was of limited benefit to me... unless I could learn a great deal which I could apply elsewhere to make money for myself. It so happened that this company sold their products through direct-mail marketing. So I decided that it would be worth my while to work for the company if I could learn about marketing, particularly writing advertising copy that sells. I worked for the company for nearly two years, learning all I could. After I left them I wrote two books, The Economic Rape of America: What You Can Do About It and Wake Up America! The Dynamics of Human Power. I published them myself and started selling them. Later I also wrote most of the Build Freedom Reports. Selling these books and reports eventually became a thriving business. Much of the success stemmed from what I had learned while working at the publishing company.

The moral of the story is that if your situation is such that you have to work for money, then be sure to put yourself in a position that enables you to learn what will later enable you to make much more money.

Money Skill #8: Ask for and receive assistance

When a friend asked W.C. Fields for a loan, he replied: "I'll see what my lawyer says, and if he says yes, then I'll get another lawyer."

It's astounding to me how many people approach me with questions that indicate they need to upgrade their lives financially. I usually suggest that they join the Prosperity Case Studies by telling us on the Upgrade Your Life List what their current situation is and what kind of assistance they think they need. In the vast majority of cases I never hear from them again. The irony is that probably over 90% of humans could benefit greatly by upgrading their lives financially. It could be that all they want are simple answers on a platter and they shy away from the intensive and extensive work they might have to do on improving their thinking about money, work, and related issues. Quite a few people have asked me to loan them money for various money-making ventures. I'm not interested in giving (or lending) people fish; I want them to learn how to catch fish for themselves. "Psychological reversal" may play a role in some people's inability to receive assistance -- see Money Skill #17.

Money Skill #9: Give yourself permission to succeed

Many people suffer from "success anorexia" -- they literally starve themselves of success. See The Success Clinic. See also psychological reversal -- Money Skill #17.

Money Skill #10: Understand money-making programs

"My formula for success? Rise early, work late, strike oil." -- J. Paul Getty

See What Criteria Do You Use to Select Your Programs and Understanding Money-Making Programs.

[DTF's note: Links to bogus articles removed. The main thing you need to understand is that 99.9...% are scams which don't actually make anything! (Zero-sum or negative-sum "games", or increasingly sophisticated ponzi-schemes of some sort or another.) Avoid, unless perhaps you're already an experienced expert on the matter and still want to anyway! See also Money Skill #44: Gambling rules.]

Money Skill #10A: Generate multiple income streams

Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth by Robert G. Allen is a great book on the topic. See also Risk Meter.

Money Skill #11: Utilize opportunities

"You miss 100% of the shots you never take." -- Wayne Gretzky

"The greatest losses of all are those from missed opportunities." -- Robert T. Kiyosaki

"The secret of success in life for a man is to be ready for his opportunity when it comes." -- Benjamin Disraeli

We live in a world with billions of humans. Is there even one among us who is completely satisfied with all aspects of his or her life? Not very likely! Everyone wants something different, more, or better! Everyone has unsatisfied needs and/or wants. This effectively translates into unlimited opportunities for those can come up with ways to satisfy needs and/or wants. And some of them are money-making opportunities.

Because people need and/or want certain things they don't have (or don't have enough of), certain things are considered "scarce." If people think something desirable is going to become more scarce, then more people want to buy it, and its price goes up. This phenomenon results in money-making opportunities.

Most people need and/or want more money. If you can provide people with ways to make more money, some will be willing to reward you. This phenomenon also results in money-making opportunities.

Most people don't want to lose money. If you can provide people with ways to protect themselves against loss, some will be willing to reward you. This phenomenon also results in money-making opportunities -- such as insurance.

Many people earn more than they spend, resulting in savings and surpluses. Some want to put there savings and surpluses to work to earn more money. If you can help the, some will be willing to reward you. This phenomenon also results in money-making opportunities.

Money-making opportunities are endless. See also The Opportunity Gap Principle in Millionaire Report #7.

Marketing gurus Al Ries and Jack Trout have written an excellent book Horse Sense: The Key to Success is to Find a Horse to Ride. The "horses" I'm riding to success can be found at Freedom Business Opportunities.

Most "opportunities" offered to you over the Internet (or via junk mail) are unworkable or scams. "Whenever something sounds too good to be true, it is too good to be true!" In my experience, out of every 1,000 - 10,000 things that "sound too good to be true," one is actually true. Great benefit can be derived from finding this "1 in 1,000 - 10,000" thing and utilizing it as an opportunity.

"If the opportunity looks like it might succeed for a few months, but will definitely fail in the long term, walk away from it!" All kinds of products, projects, activities, programs, or businesses have an "s-curve-type" life cycle -- some longer than others. Great benefits can be derived from something that you expect to have a life-cycle of 6 - 24 months before it becomes obsolete for reasons such as being replaced by something better.

Do not let "economic correctness" "label-think" (Money Skill #1 and Money Skill #18) prevent you from utilizing an opportunity to make a great deal of money. See also Money Skill #12A.

Money Skill #11A: Use e-gold and other payment systems

You can open an e-gold account for free here. An account can be opened in the name of any entity (identification may or may not be required). "Out exchanges" (withdrawal in national currencies) can be made to any payee. Accounts and transactions provide for gold, silver, platinum, and palladium. I maximize the use and benefits of the service by participating in some "economically incorrect" programs that add many grams of precious metals to my account practically every day. As a payment system for business, e-gold has some major advantages: (a) Virtually instantaneous transactions; (b) No waiting for checks to clear; (c) Shopping-cart interface available; (d) Cheaper for a business than accepting credit cards; (e) No verification necessary as for credit cards; (f) No bounced checks or charge backs. Open your free account here.

The following payment systems are also available:

Money Skill #12: Create automatic money machines

See Liberty Money Machines.

Money Skill #12A: MLM -- the ultimate money machine

"Network Marketing: The Ultimate Money Machine" is Robert G. Allen's title for Chapter Seven of Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth. (Allen is also the best-selling author of Nothing Down, Creating Wealth, and Challenge.) Says Allen:

"Let's start with network marketing (also known as multilevel marketing, or MLM) ... being an intrapreneur ... an independent distributor for a company in the burgeoning network marketing industry. Network marketing. Just saying the words conjures up lots of emotions for most people. You either love it or you hate it. Sometimes both. But just what is it? ... word-of-mouth advertising.

...Collette phoned the next day and asked, "What do you think of the video?" Despite my strong intuitive hunch, I replied, "Sorry, Collette, I just don't think I'm interested."

To her credit, she didn't let my negativity stop her. She took my wife to lunch, and they decided to go ahead without me. I was so close-minded...

Now, several years later, a very, very large check is automatically deposited into my wife's bank account every Friday, but it doesn't have my name on it. It's my wife's check. Mr. Skeptical here didn't want anything to do with it! So she gets the check and occasionally shares some of it with me...

Blinded by False Information
Why do you think I voted against my own intuition? Perhaps it was because I had heard some negative things about network marketing ...and without checking things out for myself, I made some snap judgments that turned out to be completely wrong.

...Would you donate a few hours of your flexible time each week if you knew you could be earning $2,000 to $3,000 a week in residual income in two to three years?

Are You Crazy?
When I explain how simple this can be, some people look at me as though I'm crazy. So I give them the financial-freedom test:
"Do you have multiple streams of income flowing into your life?" (They usually answer no.)
"Do you get paid multiple times for every hour you work?" (Again no.)
"Are your hourly earnings potentially unlimited?" (Still no.)
"Do your income streams flow 24 hours a day with or without you?" (No.)
"Do you own or control these streams of income?" (No.)
"Will your income streams continue to flow after you die?" (No.)
"Can you give yourself a raise any time you want?" (No.)
"If your main income stream dries up, could you survive for a year without income?" (No.)

Then I say, "Because of network marketing, I can answer yes to each of the preceding questions." I wonder which of us is the crazy one?

This is my definition of crazy: Crazy, n. Work for peanuts at various jobs you hate for 50 years. Then die poor. This is my definition of smart: Smart, n. Work hard for a much shorter period of time. Retire with multiple streams of residual income...

If you can find just one or two customers in every 100 contacts, you can build a fortune.

Collette, my ex-secretary, invited 44 people to her first meeting. Four people showed up and two people left early. But the two who remained were excited and signed up. From the genesis of those first two people, Collette today earns an income in excess of $1 million per year."

(By having a website and attracting visitors to it, there's no need to hold meetings or even phone people. The website does practically all the selling.)

Money Skill #13: Apply the small-step progression principle

See Millionaire Report #1.

Money Skill #14: Generate residual income

"Ben Franklin may have discovered electricity -- but it was the man who discovered the meter who made the money." -- Earl Warren

See Millionaire Report #1 and The Combined Power of Real Free-Enterprise and Residual Income.

See also Chapter Three of Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth by Robert G. Allen.

Money Skill #15: Overcome the "unreality imperative"

The "Unreality Imperative" is a primary motivator (or driving force) for many people. John F. Schumaker has written two very important books: Wings of Illusion and The Corruption of Reality. I've referred to the "Unreality Imperative" and also written about "unreality" in CREATIVITY REPORT #1.

Overcoming "economic correctness" is really a subset of overcoming the "unreality imperative."

Psychological reversal -- see Money Skill #17 -- could also be regarded as an aspect of the "unreality imperative."

Money Skill #16: Eliminate self-defeating behavior

See Millionaire Report #3.

Money Skill #17: Understand psychological reversal and psychological alignment

See Millionaire Report #6.

Psychological reversal could be regarded as an aspect of the "unreality imperative" -- see Money Skill #15.

See also "success anorexia" -- Money Skill #9.

Money Skill #18: Understand and eliminate identification

Suppose one of the activities you regularly perform is teaching. So you think of yourself as a "teacher." You identify some of what you do with your identity (self). This is the confusion of "be" and "do" discussed earlier under Money Skill #5. If you then "lose your job," you're likely to suffer an "identity crisis" -- at least, a big blow to your self-esteem.

In Chapter Four of his superb book The Survivor Personality, Al Siebert has the following section on what I call "label-think" and which I take the liberty to quote in full:

"THINKING OF PEOPLE AS NOUNS OR LABELS IMPAIRS THINKING
To understand the highly flexible nature of life's best survivors, it is important to examine another barrier to understanding. The first barrier is the tendency to think in either/or terms rather than both/and about personality qualities. The second barrier is to use nouns or labels when describing people. We live in a world where it has been common to call people "pessimists," "optimists," "liberals," "extroverts," "alcoholics," "schizophrenics," and "co-dependents." Turning people into such nouns, however, is a child's way of thinking. It limits understanding. It strips away what is unique about an individual and restricts the mind of the beholder to inaccurate generalizations.

A more effective way to view people, and one that allows better understanding, is to assume that every person is more complex, unpredictable, and unique than any label. To assume a person is more complex than any theory opens up the possibility that a person can be both one way and the opposite.

An advantage of describing what people feel, think, and do instead of labeling them with a noun, is that when a person changes from one situation to the next, we can be comfortable with his or her shift instead of getting upset when they don't stay consistent with the way we have them categorized."

I recently received an email from someone who should remain anonymous:

I read your Liberty Money Machines and I don't see haw it helps me to build a webpage... fellow SG victim.

Someone else sent me an email in which he called himself "SG survivor."

"SG" refers to Stockgeneration.

These self-applied labels indicate that the writers identified themselves with SG and that SG became part of their identities. So when their SG accounts were stripped to zero or nearly so, it was probably a major blow to their sense of self. It's unlikely that you can make rational financial decisions when you identify yourself with a stock, financial instrument, or money-making program. Such identification is likely to also prevent you from diversifying properly -- see Money Skill #25.

(When my personal SG account was stripped from over $300,000 (in "cyber-profits") to zero, it was only a minor disappointment because I didn't identify with SG and had already been involved in numerous other successful programs for several months.)

Identification can be subtle, for example:

By the way, there are some new/excellent games coming on stream that DO offer us great odds again, so let's play those, and get going on learning their strategies. It's possible to win back all that was lost in SG by the end of the year!

Whatever anyone has lost in SG (or any other program) is gone forever. Whatever money anyone makes in any other program has nothing to do with past SG losses. To regard new winnings as "to win back all that was lost in SG" is a form of irrational identification. It's a thinking pattern that is likely to cause irrational decisions. For example, in another program you might be in a position where, considering only the program itself, your correct action is to sell. But the position might also be that, if you sell now, you'll "recover only half of what you lost in SG." So you irrationally try to wait until you can "recover everything you lost in SG."

Money Skill #19: Understand and reduce bicameral thinking

Some time ago, a subscriber posted the following to the Financial Independence List:

What really counts is cash-in-hand. Cyber profits don't buy groceries as witness SG, VBT, BIG, etc. Until the money is in my account I don't count it. The games have proved embarasing to me and my referrals. Produced nothing but confusion, frustration and anger. I had a lot of respect for you because of your freedom website, but since the SG, VBT and BIG debacles I don't know what to think. Well actually I do know what to do. Back to moving more real product that produces real referral commissions that shows up like clock work ever month in my account. I do appreciate the lists and forums and I think your freedom website is awesome.

See Model of the Bicameral Mind and Bicameral Mind (Julian Jaynes).

Here's my response:

What really counts is cash-in-hand.
Did you read what I wrote about taking out cash? We use judgment to take out as much cash every month as we think appropriate.
Cyber profits don't buy groceries as witness SG, VBT, BIG, etc.

I've taken about $100,000 in cash from SG, $15,000 from VBT, and $50,000 from BIG.

Have you read any of the materials on BigBooster related to understanding money-making programs and how to deal with them?

Do you try to understand the programs you're in, and their current status, or do you just try to play them blindly?

Until the money is in my account I don't count it. The games have proved embarassing to me and my referrals. Produced nothing but confusion, frustration and anger.

Maybe that's partly because you didn't use analytical thinking skills to assess situations and what your actions should be, given current and developing situations.

I had a lot of respect for you because of your freedom website but since the SG, VBT and BIG debacles I don't know what to think.

I suspect you haven't really been thinking effectively enough and you need to improve your thinking skills. One of the most ineffective and futile things you can do is to blame someone else for actions you took because of a failure on your part to think and analyze sufficiently.

Among other things, I've over and over indicated to people on this list that for best results they should focus on the programs rated high on the Bigbooster Risk Meter. I started indicating SG weaknesses on this list about seven months ago. I think one of the debacles here has been the failure on the part of some players to properly think and analyze before they act.

Money Skill #20: Learn the traits of successful people

"Can success change the human mechanism so completely between one dawn and another? Can it make one feel taller, more alive, handsomer, uncommonly gifted and indomitably secure with the certainty that this is the way life will always be? It can and it does!" -- Moss Hart

See Millionaire Report #3.

Money Skill #21: Learn J. Paul Getty's wealth secrets

"I'd rather have 1% of the efforts of 100 people than 100% of my own efforts." -- J. Paul Getty

See Millionaire Report #4.

Money Skill #22: Learn to set appropriate goals

"Your direction is more important than your speed." -- Richard L. Evans

Many studies on peak performance have indicated that most people, who can be described as peak performers, are also habitual goal setters. They all have a burning desire to reach their goals. As "average" individuals (formerly underachievers!) begin to set goals, their level of achievement tends to rise dramatically. Their subconscious minds starts to assist them in realizing their goals.

I've heard of a study at Yale University which started in 1953. They asked graduating seniors, "Have you set specific goals for your life, written them down and made plans to reach your goals?" The replies indicated that only 3% had done this. Twenty years later, they found that, together, the 3% who had set goals, written them down, and had made plans to realize their goals were financially worth more than the other 97% put together!

The term "appropriate goals" is important. You don't want to set goals that are too high or too low. It may be worthwhile to review your goals once a month or so.

It may not be appropriate to share your goals with family and friends. They may use your goals as an opportunity to put you down by telling you that you'll never succeed. Secretly, they may want you to fail, because they don't want to be shown up by your doing better with your life than they are doing.

Money Skill #23: Apply appropriate formulas

"Life is the only game in which the object of the game is to learn the rules." -- Ashleigh Brilliant

"I can give you a six word formula for success: think things through -- then follow through." -- Eddie Rickenbacker

A most important general money skill is the use of formulas. My Webster's defines "formula" as: "1b. a conventionalized statement intended to express some fundamental truth or principle especially as a basis for negotiation or action; 2a(1): RECIPE; 2a(2): PRESCRIPTION; 3a: a general fact, rule, or principle expressed in symbols; 4a: a prescribed or set form or method..."

In CREATIVITY REPORT #1 and CREATIVITY REPORT #2 I provide a number of formulas for a range of "levels of creation."

You can continuously improve the formulas you apply in relation to money (and every other aspect of your life). You can apply the scientific method to do this -- see Money Skill #2.

Money Skill #24: Risk and money management

"Behold the turtle. He makes progress only when he sticks his neck out." -- James Bryant Conant

Before you buy a stock or put money into an MLM company or money-making program, you should consider the risk. Generally, the risk is that you could lose some or all of your money. See Money Skill #2A.

When I joined SG, after several hours of analysis, I decided to risk $6,000. That's how much I was willing to lose if my decision was a mistake. As soon as convenient (after about three months), I took out $6,000 to get to the "can't-lose" position. I want the "risk-window" to be as short as possible. During the three-month risk-window my $6,000 capital was at risk. I could have lost all of it.

There are six general approaches to minimizing this kind of risk:

  1. Utilize programs where you don't have to commit any of your own money -- Money Skill #26.
  2. Suppose you're "playing" with $10,000 in "high-risk capital." The maximum you put into any one program is $1,000 -- or maybe $2,000 if you're very confident about the program.
  3. Diversification -- you spread your capital over 10 - 20 different programs -- Money Skill #25. [DTF's note: No! You're best off to just not get involved in any at all! Chances are most-likely you'll lose the lot! Plus, the more you have to keep track of, the more time and money you'll waste!]
  4. You take out your original capital (maybe plus a modest profit) as soon as convenient. Thereafter you play with the "house's money." (In the case of stocks, when your stock's price has doubled you could sell half to recover your original capital.)
  5. With programs that pay referral fees you may be able to quickly earn more in referral fees than your original capital.
  6. You make an assessment of the maximum amount of money you think you'll be able to take out of a program per month. WQNS has a "buy back" index on their price page. They also have a publicly viewable e-gold account which you can access from their FAQ page. As a general rule of thumb, you should probably put no more money into a program than the amount you expect to be able to take out per month, after 2 - 3 months. (I put in $5,350 into WQNS, figuring that within two months or so I would be able to take out around $5,000 per month.) WQNS also has their "latest news" on their website. There are forums for most programs. From all the available information, you can make an assessment of the maximum you should risk on any one program.

A great deal can be learned about risk and money management >>>from professional gamblers, particularly blackjack players -- see BJ21.com: Winning at Casino Gambling. For example, a blackjack player with a bankroll of $10,000 might visit a casino with one-tenth: $1,000. If he loses that, reducing his bankroll to $9,000, on his next visit he risks $900. On any casino visit he risks one-tenth of his bankroll. (His basic betting unit might be $10, dropping to $5 when the "count" is negative and going up to a $100 bet, depending on how positive the "count" and what range of bet size it takes to "alarm" casino personnel.)

"Gambler's ruin" is a very important concept. In a game like blackjack, even where the professional has a statistical advantage over the casino of around 1%, he can still lose all his money, because of wild fluctuations that include massive "losing streaks," if his bet size is too large for his bankroll. Similarly, in the stock market or with money-making programs, people can lose all their money if their individual "bets" are too large compared to their bankrolls. See "Gambler's Ruin" Calculator for Video Poker. (Jeff Lotspiech's Video Poker Page is a good example of how professional gamblers manage to enjoy a statistical advantage over casinos.)

This Basic Money Skills article is oriented toward people starting with nothing or limited capital of a few hundred to a few thousand dollars. If you apply these money skills, the day will come when your capital has grown to $100,000 or more. At some point you may want to split your capital into separate bankrolls. You could have one bankroll for high-risk speculation such as money-making programs, stock options, futures contracts, etc. You could have a second bankroll for medium-risk speculation such as high-tech stocks. And you could have a third bankroll for safe long-term investments such as Swiss annuities, government bonds, etc. More on this in Advanced Money Skills.

The Risk Meter may assist you with managing risk related to the programs it features.

Another important consideration in risk management is "potential downside" versus "potential upside." As I write this (4/29/2000), American Millennium Corp. is priced at $1.00. I could buy it with a stop-loss at maybe 74c. Allowing for "slippage," I risk about 30% of my money. (Of course, there could be circumstances that result in the price dropping to 1c before a buyer can be found, or the stock could be delisted, in which case I effectively lose all my money. These are unlikely possibilities, but I don't ignore them.) Now, if I put $10,000 into AMCI, with a $3,000 risk, and I think that AMCI has an upside potential of $20, it would be a good bet. On the downside, I could lose $3,000. On the upside, I could win $190,000!

In some money-making programs, particularly if you can build a substantial downline, you can achieve a huge "upside vs. downside ratio." For example, if you pay $100 to join a program and you're in a position to recruit 20 people, earning you $1,000 (depends on the nature of the compensation plan), then you effectively have a 10/1 "upside vs. downside ratio." These are very good odds!

Money Skill #25: Diversification

"Money is like manure. You have to spread it around or it smells." -- J. Paul Getty

Having "all your eggs in one basket" is a formula for certain ruin! Mathematicians often use coin tossing to illustrate gambler's ruin. For example, you start with a quarter. On the first spin you lose; you're out of the game, ruin. If you start with ten quarters, spin a quarter at a time, and every time it's heads you gain a quarter while every time it's tails you lose a quarter, it'll take much longer to lose all your money. In fact, given the 50/50 odds, you may be able to play for many years without losing all your money.

In order to have a high probability of winning in the long run, you must make "bets" where you have an overall statistical advantage. I put over $4,500 into WHP because my analysis of the program indicated a high probability that I would be able to not only recover my capital fairly quickly, but also take at least $5,000 a month out of the game subsequently. But my analysis could have been mistaken and I could have lost my $4,500. However, because $4,500 is a fraction of my bankroll, losing it would only have been a minor setback.

In the case of SG, I put in $6,000 and took out $100.000 during about a year. Suppose there are ten programs, each with the potential to return 10 times your capital in one year, and you risk $5,000 on each for a total of $50,000. Suppose that in 80% of the programs you lose all your money -- $40,000 down the drain! Suppose that the two winners give you back $50,000 each (achieving the 10-times potential) -- a total of $100,000 -- overall, you've doubled your money!

Suppose that in half the programs you lose all your money -- $25,000 down the drain! Suppose that among the five winners, two give you back $50,000 each (achieving the 10-times potential) and three give you back $25,000 each (achieving half of the 10-times potential) -- a total of $175,000 -- overall, you've more than tripled your money!

(There are also some programs, where because of referral fees, you can take out vastly more than you put in. A case in point is PILL -- Build Freedom put in $200 about five years ago, and has taken out over $100,000! Build Freedom did spend money on promotion. Fortunately, over the Internet you can market without spending money! -- see Money Skill #40.)

Because, despite anyone's best analysis, the future is never completely predictable and any program can fail for any number of reasons, it's absolutely vital to diversify!

Money Skill #26: Zero-risk money-making

Fortunately, you don't even have to risk any of your money! -- see Zero-Risk Money-Making.

Money Skill #27: Improve your discipline

"I count him braver who overcomes his desires, than him who conquers his enemies, for the hardest victory is the victory over self." -- Aristotle

Discipline basically refers to doing what you know you should do and not doing what you know you shouldn't do. As with your diet (not to speak of potential sexual delights!), there are many temptations to deviate >>>from the formulas and goals you've set for yourself. Lack of discipline can be a major reason for not achieving your goals.

To become more successful with money, you may need to develop your self-discipline, which begins with your thinking: Money Skill #1 and Money Skill #2. Develop the habit of observing your thoughts. Particularly if you find yourself tempted to deviate >>>from your chosen path, ask yourself: "What thoughts are trying to seduce or betray me?" If you find yourself actually having deviated, ask: "What thoughts preceded and led to my failure of discipline?" And don't put yourself down too much for having failed! Learn from your failures to prepare yourself for future success!

Improving your attitude -- Money Skill #42 -- could have a major effect on also improving your discipline. Fear and greed -- Money Skill #29 -- may interfere with discipline.

See also How to Develop Discipline to Become a Successful Investor.

Money Skill #28: Learn how to cut your losses

See Millionaire Report #5. Generally, if you're in a losing situation, the best strategy is to cut your losses and move on to other better opportunities. Beware of "throwing good money after bad money." Some time ago, Stockgeneration became a "losing proposition." Several subscribers to the Financial Independence List spent hours discussing what had happened, instead of just moving on to better opportunities. Essentially, they were "throwing good time after bad time." They would have been better off utilizing their time to explore better opportunities elsewhere. There is some value in analyzing past failures and learning from them. However, to waste time on endlessly and pointlessly discussing past failures is to add to your loss.

When buying stocks, you can determine how much you're willing to risk and then set a "stop loss" accordingly. If the stock drops to that price, it's sold automatically and you're out with a limited loss. You could take a similar approach with some money-making programs. If prices fall, you sell and get out with a limited loss.

Minimizing your losses is a most important part of discipline -- see also Money Skill #24, Money Skill #25, and Money Skill #26.

Money Skill #29: Understand fear and greed

See Psychology & Behavioral Finance.

The following is from an article in Business Times:

Fear and greed are an investor's greatest enemies
Some interesting studies have been done in the US relating to the average return achieved by average investors over extended periods. Both the Morningstar and Dalbar Inc studies show that where the market achieved an average return of 12% a year, the average investor achieved a loss of 2% a year over the same period. In other words, you are not alone if you are making poor returns on your investments - most people are going backwards!

Why should this be the case?

Is it simply because the average investor experiences the two "investment emotions" almost all the time? Fear and greed lurk in the background of their decisions. Then along comes a well-meaning "Pied Piper" in the form of an investment newsletter, a newspaper reporter, or a radio journalist with a specific theory of what the market is about to do and the investor, "warped by lurking fear and greed", makes a radical decision.

From the information on capital flows it is clear that the average investor buys high and sells low. This can only be explained by greed (when everyone else seems to be making money) and fear (when there is "blood on the streets").

Fear and greed may interfere with discipline -- Money Skill #27. If fear and greed cause you to do the opposite of what you should, then they're related to psychological reversal -- Money Skill #17.

Money Skill #29A: Understand human motivation

In his ground-breaking article Why I'm a Libertarian, Mack Tanner writes:

"The naked fact of human nature is that most of the time, we don't decide what we really want through a logical process using moral or utilitarian arguments. The more we want something, the less logical we are about the reasons why we want it. People do what they want to do for a lot of reasons that are determined by instinct, training, culture, environment, and heredity. The smarter of our species may sometimes use a rational process in deciding how to act in order to get what they want, but they don't start with a moral principle or a question of social utility in determining what it is they really want.

If we engage in a rational process beyond answering the question of "what do I want and how do I get it?", it is almost always a process of self-justification. We first define what it is we want, then we look for the philosophical arguments that will justify our wanting what we want. The young person who wants sex, but who has been taught that sex outside of marriage is morally wrong, thinks up a justification that will allow him to drop his previous beliefs and take what a willing partner is offering. Most often, the rationalization comes after the deed is done. Usually, we only bother indulging in such a rational process when we are challenged by others and we don't want to admit the basic selfishness that drives us. Then we think up the moral arguments for why our course of action is the right thing to do. Once we decide what we want, all the moral or utilitarian arguments in the world won't change our mind, except possibly an argument based on a threat of force."

Money is something many people want at a deep level. They may identify money with survival; lack of money, with starvation and even death. It may be difficult for some to think rationally about money, to make rational decisions. If Mr. Tanner is right, the more you want something the less likely you are to think rationally about it.

So there may be more than just fear and greed behind irrational money decisions. In order to make rational money decisions, you may have to transcend aspects of "instinct, training, culture, environment, and heredity." And the "training" may include brainwashing!

Money Skill #30: Signal detection

Have a look at the SG Earnings Report for 3/6/99 where I wrote: "It also means, at least in some respects, that it's prudent to not trust the SG people. Does this mean that I think the game should be abandoned? Not at all! I think the SG people are most resourceful in "keeping the game going" and the probability is high that a great deal of money can still be made by playing the game. However, I also think that it's a very risky game indeed and needs to be played very cautiously."

There was no doubt in my mind at that time that the SG people were providing fake sales volume numbers. That was a warning signal to me, a red flag. After that, my main focus was to get as much cash as possible out of the game. Another big red flag from SG came around Sept/Oct '99 with excessive payment delays -- two months or more between the time a withdrawal was requested and the date the payment was received. This indicated cash-flow problems. Another red flag is a declining level of customer service. There are forums for many programs were warning signals tend to appear when a program enters a phase of decline or breakdown.

For stocks there are buy signals and sell signals. Green flags and red flags. When I originally checked out SG it was all green flags. Same with WHP and WQNS. At this time (4/28/2000) there are still no red flags for WHP and WQNS.

It's very easy to identify and fall in love with a stock or program that's making money for you. See Money Skill #18. That can be dangerous because it may blind you to red flags.

Money Skill #31: Avoid traps and scams

During March, 2000, SG applied "rule 13" (a rule they can effectively use to wipe out all or most of your "paper profits") across the board, reducing many accounts to zero or near zero. Then they announced that all accounts would be immune from "rule 13" until May, 2000. This seemed like a guaranteed golden opportunity to double your money and more within a few weeks. I was tempted to put money into SG, but resisted the temptation. I don't know how many people fell for the "guarantee" and how much they put in. Anyway, during early April, 2000, SG again applied a "version" of rule 13 that reduced all or most accounts, some to about one thousandth of their former value.

Many "money-making opportunities" are unworkable or outright scams. Some become scams after starting out honest. Some fail because they grow too fast. Some fail because of poor management. Some fail because of the heavy hand of government. You can never completely avoid traps and scams. But, by understanding money-making programs (Money Skill #10), risk management (Money Skill #24), diversifying (Money Skill #25), rational buying (Money Skill #32), rational selling (Money Skill #33), minimizing your losses (Money Skill #28), and discipline (Money Skill #27), you can make a great deal of money despite all the potential pitfalls.

Money Skill #32: Rational buying

"Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell. If it don't go up, don't buy it." -- Will Rogers

"Optimism means expecting the best, but confidence means knowing how to handle the worst. Never make a move if you are merely optimistic." -- The Zurich Axioms

Both fear and greed (Money Skill #29) can get in the way of rational buying. You fear that if you don't get into something immediately, you'll lose out on a "once-in-a-lifetme!" opportunity. Fortunately, there's never a scarcity of opportunities, so missing out on any particular opportunity isn't the end of the world. You can also put too much money into something because of greed. (I just saw on TV someone (of modest means) featured who borrowed about $50,000 so he could put something like $56,000 into AT&T's IPO (initial public offering). I wouldn't even consider such a risk. If I had $50,000 to "play" with, I would put no more than $10,000 into such an IPO. Martha Stewart's IPO went public a few months ago at around $37 a share. Last I heard, it was down to about $14. If I were playing the "IPO game," I would have a bankroll for this purpose and put no more than 20% of this bankroll into any one IPO.)

It's worth spending a few hours in research before committing any substantial amount of money to anything.

A key consideration for me, before buying, is how long I expect it will take to "close the risk window." I want to get to the point where I can sell part of my holdings to recover my original capital, but have sufficient holdings left to continue significant earnings. As soon as I've recovered my capital, I've achieved a "can't lose" position -- I've closed the risk window. Generally, I don't like any risk window of more than three months. So, if it looks to me like I won't be able to double my money in three months, take out my original capital, and continue significant earnings, I don't buy into a money-making program.

When I sit down at a blackjack table my first step is to test (usually playing the table minimum) if I have a significant statistical advantage or can fairly quickly get one. If getting my advantage seems unlikely I move to another table until I find one where I have the advantage. (Counting cards and a few other techniques give me an overall advantage, but not an advantage at every table. Don't ask me for details, I ain't tellin' nobody!)

Similarly, when I join a money program or buy a stock, I want to know that I have an advantage -- a high probability of making money -- and I want to know why I have this advantage. And I want to know how big my advantage is. Do I have a 60% probability of making money, or is it a 90% probability?

When I go to a casino with $1,000, or put $5,000 into a money-making program or stock, I also want to be clear about the potential downside. I could lose all the money. I'm psychologically prepared for this. I'm also monetarily prepared in that the amount is a fraction of my bankroll and losing it would be no more than a minor setback.

Another key consideration, before buying, is how much time you're likely to spend on achieving your anticipated earnings -- see Money Skill #43.

Money Skill #33: Rational selling (taking profits)

Having put money into a money-making program, I'm immediately psychologically prepared to sell. I'm impatient for the time to arrive when I can get my money back and get into the "can't-lose" position! I'm also ready at any time to admit that I made a mistake and to get out, even if it means taking a loss. If after a few days or weeks it looks like I made a mistake in buying, I'm psychologically ready to sell and get out. (When I originally bought into Bessarabian Collection and added it to the Risk Meter and several people indicated that it looked like a scam similar to a scam called "Close2Art," I took it off the Risk Meter and indicated on the Financial Independence List that it had probably been a mistake to add. Later, when BC improved their credibility by paying referral fees, improving their website, and providing good service, I restored BC to the Risk Meter. I kept my $1,000 position in BC, because I sensed that it was legitimate, despite original appearances to the contrary.)

My general strategy with programs such as WHP is to recover my original capital in 2 - 3 months (by selling at the appropriate time). Then I want to take out (by selling) every month at least the equivalent of my initial capital. If possible, I want the remainder of my holdings plus my referral fees to be such that I can increase the amount I take out every month (by selling). I may also decide to take out money (by selling) every three weeks or even every two weeks.

I'm not interested in building up huge "paper profits" (or "cyber profits"). I want a growing income stream of cash coming in every month. I want to use some of the cash to diversify into other programs and multiply the number of income streams.

Nevertheless, in the case of BC, because I risked only $1,000 and I've earned some referral fees that were paid directly into my e-gold account (that's how BC worked before their website was upgraded), I've decided to wait until my holdings are up to about $4,500 before taking out $2,000 or more periodically. An important consideration is that I don't want to spend about an hour a week on a program that's only going to pay me $1,000 a month. If I can earn $2,000 or more a month from a program, then it's worth spending four hours a month on. Otherwise, I'm better off spending that time on a more lucrative program -- see Money Skill #43.

(Note: When selling short, you start with rational selling. Then you take profits (or minimize losses) through rational buying.)

Money Skill #34: Flexibility

Chapter Four of The Survivor Personality by Al Siebert is titled "Flexibility:An Absolutely Essential Ability." When it comes to handling money, flexibility is vital. We live in an ever-changing world. And for some things the rate of change accelerates. Today's fabulous money-making program can fail tomorrow -- though usually there are warning signals when things start to deteriorate -- Money Skill #30. Today's high-flying Internet stock at $100 a share can become next month's "dog" priced at $10. So you need to flexible, ready to change your mind at a moment's notice. A very good reason to never fall in love with or identify with any stock or money making program -- Money Skill #18.

Fifteen years ago, I was a "gold and silver bug." I had the fixed idea that gold and silver prices just had to go up dramatically. A fixed idea is the opposite of flexibility. At any given time, I could give you 10 - 15 reasons (exploding debt levels, inflation, war, etc.) why gold and silver prices just had to go up. I was watching gold and silver charts. Every time a price "broke out" above the downtrend, I would interpret it as a buy signal and I would buy futures contracts. Over a period of about six months I lost more money than I care to admit. For the professionals, all these "price breakouts" were sell signals. They sold short when I bought. They got the money I lost. My fixed ideas caused me to do the exact opposite of the winning strategy -- psychological reversal, Money Skill #17.

Label-think often includes fixed ideas, the opposite of flexibility. See Money Skill #2 and Money Skill #18.

Adaptation is a most important survival skill. Adaptation requires flexibility. According to Al Siebert in The Survivor Personality, "Having a variety of available responses is crucial when handling variable, unpredictable, chaotic, or changing conditions." Flexibility means having a range of responses available to deal with a changing (money) world.

Money Skill #35: Control

Flexible Thought + Formulas + Discipline = Control. Thinking sufficiently about money (flexibly without fixed ideas) will result in formulas on how to best act in relation to money. Applying formulas requires discipline. The combination of flexible thought, formulas, and discipline will result in control over your financial affairs. Your Money or Your Life by Dominguez and Robin provides some useful formulas for gaining more control over your financial affairs.

See also "Control" under Key Freedom Factors.

Money skill #36: Recognize, acquire, and develop assets

"Never put your money in anything that eats or needs repainting." Billy Rose

In "standard accounting," if you buy a house, it's considered an asset. As Robert T. Kiyosaki indicates in Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor & Middle Class Don't, "Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets... people do not know the difference between an asset and a liability... assets put money in your pocket... A liability is something that takes money out of my pocket."

From a cash-in-your-pocket perspective -- which is all important -- if you put $1,000 into money-making program X, initially you've incurred a liability -- $1,000 out of your pocket. As soon as program X starts putting money back into your pocket, it starts shifting toward becoming an asset. After it has put $500 back into your pocket, on balance it's still a $500 liability. That's why the "can't-lose" position (see Money Skill #24) is so important. This is the point where you've recovered your $1,000 completely. Now program X has become an asset if it continues to put more money into your pocket.

When you buy a house and you have to make $1,000 mortgage payments every month, you've bought a liability that takes $1,000 out of your pocket every month. On top of that, you may have to pay a further $100 or more per month in property taxes. As Kiyosaki indicates:

"As an employee who is also a homeowner, your working efforts are generally as follows: 1. You work for someone else. Most people, working for a paycheck, are making the owner, or the shareholder richer. Your efforts and success will help provide for the owner's success and retirement. 2. You work for the government. The government takes its share from your paycheck before you even see it. By working harder, you simply increase the amount of taxes taken by the government -- most people work from January to May just for the government. 3. You work for the bank. After taxes, your next largest expense is usually your mortgage and credit-card debt. ...You need to learn how to have your increased efforts benefit you and your family directly."

This is a good point at which to briefly analyze aspects of World Network Holdings -- see The Harry Plott Saga Part-I. In 1996 WNH started getting into serious cash-flow trouble and couldn't meet all its obligations. Although Harry Plott is an astute businessman, in my opinion, his problems were partially due to not sufficiently understanding and appreciating the difference between an asset and a liability. WNH was originally a cooperative membership organization paying members 3% per month on loans made to WNH. In addition, WNH paid a referral fee of 1.5% per month to those who recruited other members. Build Freedom earned phenomenal returns, largely because we recruited about 900 people. Harry invested the money received from WNH members in a wide range of businesses.

Early in WNH's life I asked Harry, "Are the businesses you're investing in returning more than 4.5% per month on the money you're putting into them?" Obviously, for WNH to be a viable company, it had to earn more than 4.5% per month on its money in order to pay its members 3% interest plus 1.5% referral fees. Harry replied, "Yes." I have no reason to doubt that at that time this was true.

Altogether, I believe that Harry collected about $20,000,000 from members. I also believe that at a certain point Harry ran out of businesses to invest in that returned more than 4.5% per month in cash. So he started investing in start-up businesses that required monthly cash to stay in business but had the potential for large long-term cash returns.

The first thing to realize is that as soon as a member stopped putting money into WNH, he or she became a liability who effectively had to be paid 4.5% interest every month. At a certain point, Harry closed WNH to new members. At that point, I believe, WNH had about 9,000 members all of whom were (from a cash-flow perspective) liabilities because they had to be paid, taking money out of WNH's pocket. Some members also withdrew their original capital, further straining WNH's cash flow. Some members had to wait for repayments and complained to government agencies. Harry had to spend a lot of time warding off attacks and keep going. It says a great deal for Harry's resilience that he didn't give up and run.

At one point, Harry calculated total WNH assets at about $40,000,000. I have no doubt that in terms of "standard accounting" this figure was accurate. However, from a cash-flow perspective, Harry couldn't have been more mistaken. WNH's "assets" included what I believed was the largest ostrich farm in the world. Mortgage payments had to be made. Birds had to be fed. Farm workers had to be paid. When NAFTA made it virtually impossible to compete with ostrich farms in Mexico, WNH's ostrich business went "south." The farm was eventually lost to foreclosure. The "asset" (which had probably been a substantial liability in terms of cash flow for most of its life as part of WNH) was wiped out.

Meanwhile, there were all the new businesses that required cash inflow every month to keep going. From a cash-flow perspective, they were all liabilities. And the businesses that were really assets, making money for WNH every month, had to be drained of cash to pay all the liabilities. This must have greatly reduced their ability to expand. Most of the negative-cash-flow businesses eventually had to be abandoned.

Had Harry sufficiently understood and appreciated the difference between an asset and a liability from a cash-flow perspective, he would never have structured WNH the way he did. He wouldn't have gotten into the trouble that he did. He wouldn't have saddled himself with about 9,000 "liability-members." He wouldn't have put any money into businesses that couldn't very quickly return more than 4.5% per month.

Nevertheless, it speaks volumes to Harry's determination, perseverance, and integrity that he didn't run away when the difficulties became so great that they would have overwhelmed 999,999 out of every 1,000,000 businessmen. I believe that there's a fair chance that the erstwhile WNH members will get most or all of their money back within the next 2 - 3 years. Some of the core businesses started by WNH are moving ahead strongly. See Harry Plott Saga - Part V.

Personally, in the past I've also run into problems because I didn't understand and appreciate the difference between an asset and a liability. Now I'm very hesitant to organize or run any business in a way that involves me paying out money to members, making them liabilities from a cash-flow perspective. I prefer to have associates and contacts put money into highly profitable programs, enabling them to make money and earning me referral fees. That way they are assets to me, and indirectly I'm an asset to them if they're successful in making money from the programs I recommend -- see Risk Meter.

I develop my assets by playing a role in my associates and contacts increasing their wealth, earning me more referral fees. I develop my assets by increasing the number of my associates and contacts. I also develop my assets by increasing the number of profitable programs I'm involved with and playing a role in making these programs more profitable. Hopefully, the money skills explained here will be assets to my readers in that they will use them to put more cash into their pockets.

Money Skill #37: Generate positive cash flow

"All progress is based upon a universal innate desire of every organism to live beyond its income." -- Edmund Burke

"Positive cash flow" means you have more money coming in than going out. Much of the "financial world" is organized so many individuals, companies, and other entities increase their debts over time. The effect of this is that the many in debt have to pay interest to the wealthy few who lend out the money. My father was a farmer with a huge overdraft. He may have farmed more for the bank than for himself. After he died and the farm was sold to pay off the overdraft very little was left.

In order to generate positive cash flow you need to produce more than you consume -- see Millionaire Report #1.

In Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor & Middle Class Don't, Robert T. Kiyosaki says, "Wealth is a person's ability to survive so many number of days forward... or if I stopped working today, how long could I survive? ...Wealth is the measure of the cash flow from the asset column compared with the expense column."

It's much easier to generate positive cash flow if you work for yourself. According to Kiyosaki, "...[M]ost people work for everyone else but themselves. They work first for the owners of the company, then for the government through taxes, and finally for the bank that owns their mortgage." He devotes a major portion of Rich Dad, Poor Dad to the generation of positive cash flow.

Money Skill #38: Leverage

"Wealth is when small efforts produce big results. Poverty is when big efforts produce small results." -- George David

A lever essentially anything you use to multiply your power. A crow bar makes it possible for you to lift a much heavier weight than you could lift with your bare hands.

According to my Webster's, leverage is:
"1: the action of a lever or the mechanical advantage gained by it
2: POWER, EFFECTIVENESS - organizing ... to gain greater professional, economic, and political leverage/change
3: the use of supplementary non-equity capital (as senior securities or borrowed money) to increase the return on equity; also: the resultant economic advantage."

If you work for a paycheck, you have practically no leverage. If you own a businesses employing 100 people, you effectively get paid for part of their efforts. You have considerable leverage. If you're in an MLM program, and have 100 people in your downline, and you get paid far part of their production (depending on the compensation plan), you can get phenomenal leverage.

"The greatest mathematical discovery of all time is compound interest." -- Albert Einstein

If you have your money work for you, particularly at high rates of compound interest, you gain phenomenal leverage. See Money Skill #6.

You can gain even more leverage (at lower risk), if you have other people's money work for you. This is the case with many of the programs on the Risk Meter.

If you can borrow money, paying 10% in annual interest, and you can utilize this money to earn you a 20% return per year, you get leverage. You can get similar leverage by buying stocks on margin. You can gain an even greater degree of leverage by buying or selling futures contracts. However, these forms of leverage are double-edged swords. If instead of making 20% per year, you lose money, or if markets turn against you, your losses could compound alarmingly to the point of forcing you into bankruptcy.

In Chapter Seven of Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth, Robert G. Allen has a section called "The Awesome Power of Leverage."

Money Skill #39: Eliminate debt

"A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain." -- Mark Twain

From General Financial Independence FAQ:

Q. What steps would you suggest for the average person to achieve financial independence as quickly as possible?

A. In the Money Masters Seminars' newsletter by Melissa Foster, YOUR MONEY - YOUR LIFE - Volume 2, Issue 1, January 24, 1999, three steps are given (edited):

Step 1 is to eliminate (NOT reduce) your debt in as short a time as possible, INCLUDING your mortgage. Less than 10% of people will ever live without a mortgage unless they own the same home for 30 years or more, and statistics show that almost no one does that. But it can be done step by step -- in most cases with money they already have. A key component of this strategy is that -- once you HAVE thrown off the bonds of owing money to someone else -- you never put yourself in that position again. Plastic has become necessary in our society for a lot of things -- renting a car, reserving a hotel room, for instance. But a person can accomplish the same goals with a debit card, or a credit card that doesn't carry a revolving balance, like American Express.

Step 2 is to protect your assets -- this becomes really important when you DO own your home mortgage free, and your vehicles, and things like that. Another reason is taxation. Folks, the biggest expense you will EVER have throughout your life is NOT your mortgage, and NOT your kids' college education. It is taxes. You can minimize your tax liability through the use of entity structuring that is commonplace among wealthier people. In fact, I was just reading the book The Millionaire Next Door again this weekend, and it made the point that the affluent (those with a net worth of $1 million or more) consistently and statistically pay a much, much lower rate of their income and their net worth in taxes than does the average, middle-class household.

And step 3 -- the step that no one else has ever thought to incorporate into their plans -- is the use of the private financial sector to enhance the value of their assets -- to make even the smallest amount of money grow at rates that are not available to most people.

Q. How do the above steps correlate with your personal thinking on these issues?

A. Precisely what steps particular individuals need to take depend on their circumstances and what kind of risks they're willing to take.

Personally, I don't like those forms of leverage that involve getting into debt. They tend to magnify the potential downside if you make mistakes. I don't even consider buying anything except with cash. Instead of regular credit cards I use debit cards (or secured credit cards) where the maximum I can spend is based on money I have advanced to the cards.

Few Americans appreciate the extent to which their wealth is drained by paying interest on debt. The typical American spends about $1,000,000 on interest during his lifetime... and then dies nearly broke.

If you have debts to institutions that operate fraudulently, you may be able to get those debts cancelled. See:

Although I don't recommend it because of moral implications, anyone who considers certain lending institutions as "fair game" because of the way they operate, could follow a strategy of building up his or her unsecured debts as high as possible, and then legally cancelling the debt.

Money Skill #40: Marketing

"The key to success is to find out where people are going and get there first." -- Mark Twain

"The shortest and best way to make your fortune is to let people see clearly that it is in their interest to promote yours." -- Jean de la Bruyere

"The General goal of selling is to "heighten the perceived value" of something to create a desired result." -- W. Timothy Gallwey ('The Inner Game of Work')

The single most powerful book on selling I know of is NewSell by Dr. Michael Hewitt-Gleeson, available from Wrightbooks.

There's a great deal of powerful marketing information in Robert G. Allen's Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth.

A groundbreaking book on marketing is The Tipping Point: How Little Things can make a Big Difference by Malcolm Gladwell. Here's a brief interview with the author.

There's some very important marketing information in Zero-Risk Money-Making & No-Cost Marketing and what I call "Bandwagon Marketing" - quoted from my unofficial Galaxy FAQ:

Have a look at our Galaxy Earnings Report. When I promote Galaxy to prospects, I include information that shows the week-to-week earnings. You often have to promote something multiple times to prospects before they "get the message." So, every week I promote Galaxy, including multiple times to the same people. Each week (or most weeks) they see higher earnings reported with a rapidly growing cumulative total. Eventually it dawns on some of them that if they don't "get on the bandwagon they'll miss the boat." Some come to realize that by not joining Galaxy they're missing out on a "bonanza." This Bandwagon-Marketing can eventually result in 10% or more of the prospects you promote to joining.

For a real-life example, see Economic Means to Freedom - Part VIII. Starting in 1994, I promoted WNH to prospects every month. Each promotion included an earnings report showing the steady increase. Such repeated promotion, each month showing more money earned, eventually creates a "bandwagon effect." Eventually I sponsored about 900 people into WNH in this way. This is an extremely powerful marketing method. (That WNH later got into trouble -- see the five "Harry Plott Saga" reports -- does not detract from the effectiveness of Bandwagon Marketing.)

You can also use your Freedom Card for marketing. You can make many purchases with your card and tell people it's part of the Galaxy program. You can print business cards that include reference to Galaxy and the URL .../galaxy/galaxy.php?id=YourID. You can tell people about Galaxy and give them your business card.

Another marketing method is to attend free seminars on the subject of making money on the Internet. If appropriate, you could talk to other attendees about Galaxy and give them your business card.

See also Money Skill #48: Massive action.

Money Skill #41: Create credibility and trust

The main reason people don't buy is because they don't believe the offer. They fear being "taken." The longer a website such as BigBooster remains in existence, and the more money people make from its recommendations, the more credible it becomes and the more trust it engenders.

Testimonials can be used to create credibility and trust:

The programs you promote on BigBooster are already allowing me to reap profits that would be unprecedented in more "traditional" investments, so thank you! I'm just wondering what the "smart money" is doing with their profits! C.E. [Posted to the Upgrade Your Life List.]

Money Skill #42: Improve your attitude

"Sow a thought, reap an act. Sow an act, reap a habit. Sow a habit, reap a character. Sow a character, reap an eternal destiny." -- David O. McKay

"I've never been poor, only broke. Being poor is a frame of mind. Being broke is a temporary condition." -- Mike Todd

"Yes, even as you read this the universe is plotting to make you utterly happy, healthy and successful, and there isn't a thing you can do about it." -- Steve Bhaerman

Chapter 12 of Al Siebert's The Survivor Personality is titled "The Roots of Resiliency: Your Inner "Selfs"." According to Siebert we have three major nervous systems: (a) Autonomic nervous system -- seat of feelings -- self-esteem -- emotional opinion of self. (b) Somatic nervous system -- seat of physical actions -- self-confidence -- how well you expect to do in a new activity. (c) Central nervous system -- thinking (verbal, conceptual, and visual) -- self-concept -- your idea about who and what you are. All three of these "selfs" -- which I lump together as "attitude" -- can be strengthened. Siebert provides some guidelines for this.

Kathy Kolbe has written a very important book: The Conative Connection: Uncovering the Link between Who You Are and How You Perform. (Kolbe is also the author of Pure Instinct: Business' Untapped Resource.) Kolbe's "conative mind" refers to the somatic nervous system -- the "action mind" or "performance mind." Kolbe describes "conation" as, "One of the three parts of the mind; controls conscious effort and strives to carry out volitional acts." She describes the "Kolbe Concept" as, "Concept that helps discover natural talents and build on those strengths." A great value of Kolbe's work is that it reveals important aspects of each individual's unique nature and helps you focus on doing what you are naturally most suited to do. Her "Kolbe Conative Index" also makes it easier for individuals to work together harmoniously and to not have unreal expectations of each other.

See also Attitude Is Everything.

Money Skill #43: Time is money; spend it well

"You may ask me for anything you like except time." -- Napoleon

"The way to wealth, if you desire it, is as plain as the way to market. It depends chiefly on two words, industry and frugality; that is waste neither time nor money, but make the best use of both." -- Benjamin Franklin

"For me, it's not about the money. It's all about lifestyle. For example, my commute time from my bed in the morning to my office is 26 seconds (I know because I just timed it). This saves me an hour in commute time. That's an extra hour I can spend with my family. That's something you can't put a price tag on." -- Robert G.Allen

A few weeks ago, I joined the DHS Club as a free member. I was interested in this program because they seem to have a superb recruiting system and a good compensation plan. But when I examined what kind of earnings I could expect, I decided to pass. The potential earnings just wouldn't justify the time I would have to spend. Their "VIP" agreement also has a non-compete clause. If I could have access to my downline and promote other programs to them, DHS might be worthwhile. (In any case, any program where people pay an amount like $25 a month, and your earnings basically depend on recruiting many people paying $25 a month, isn't very likely to work well for most people. After a few months, many people usually drop out.)

When you spend time on something, you're also spending your life energy -- Money Skill #4. You want to spend it as productively as you can. As your bankroll grows, you should increase the amount you earn per hour spent on money programs and investments. My current threshold is about $500 an hour.

Money Skill #44: Gambling rules

The following is from golwis@yahoo.com - "desertrat":

Rule #1: NEVER gamble with money that it would bother you to lose.

Rule #2: NEVER be bothered for having lost money gambling. How? By following rule #1. If you're bothered for having lost money gambling, you haven't followed rule #1 and you aren't following rule #2.

Rule #3: NEVER spend time gambling if it would bother you to have wasted your time without winning anything.

Rule #4: NEVER be bothered for having wasted time gambling without winning. How? By following rule #3. If you're bothered for having wasted your time and energy in a gamble, you haven't followed rule #3 and you aren't following rule #4.

Rule #5: Get to the "can't-lose" position as soon as possible. Recover your initial bets and put the cash in your pocket.

Rule #6: Make the game worth your while as soon as possible. Take a portion of your winnings and put the cash in your pocket.

Rule #7: While money is in the game, whether it's yours or the house's, no matter how much, try never to think of it as cash in your pocket. You can make plans for spending your winnings, but don't make dreams for spending your winnings [except for "chips you've cashed out"].

Rule #8: Don't rely on any one game to realize your dreams.

Rule #9: IF YOU LOSE, don't waste your time and energy on negative emotions calling people cheats or saying the game was rigged. It's not likely to get any of your money back. It's more likely to have a very real negative impact on your health and your dealings with others. If you lose, LET IT GO. DON'T LET IT BOTHER YOU.

Money Skill #45: Persistence and determination

"Nothing in the world can take the place of persistence. Talent will not. Genius will not. Education will not. Persistence and determination alone are omnipotent." -- Calvin Coolidge

This famous quote emphasizes the importance of persistence and determination. Unfortunately, it also contains the fallacy that "persistence and determination alone are omnipotent." You see, if you persist in doing the wrong thing, you're unlikely to progress. Now if you were to couple continuous learning and improvement with persistence and determination, then you have a formula for success!

In order to succeed at something, there is often a learning curve involved. When you start off you may have learned only a small portion of what you need to know and master before you can succeed. Most people who fail probably do so because they give up before they reach the point where they know enough and have mastered enough in order to succeed. We can think in terms of a threshold -- Money Skill #100: The Threshold Principle. On the one side of the threshold is failure; on the other side, success. People who fail give up before they surpass the threshold.

"Nearly every man who develops an idea works it up to the point where it looks impossible, and then he gets discouraged. That's not the place to become discouraged." -- Thomas Edison

It took Edison hundreds of experiments to invent the light bulb. He demonstrated tremendous persistence. He also learned from each "failed" experiment. Edison could have given up one experiment before he "saw the light!" Then his attempt to invent the light bulb would have failed for lack of persistence.

"The difference between the impossible and the possible lies in a person's determination." -- Tommy Lasorda

So persistence and determination in mastering the money skills you need for success are most important.

"Before success comes into anyone's life they are sure to meet with much defeat." When defeat overtakes a person the easiest and most logical thing to do is to quit. That is exactly what the majority of people do." -- Napoleon Hill

"My greatest point is my persistence. I never give up in a match. However down I am, I fight until the last ball." Bjorn Borg

"Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative and creation, there is one elementary truth the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, the providence moves too. A whole stream of events issues from the decision, raising in one's favor all manner of unforeseen incidents, meetings and material assistance which no man could have dreamed would have come his way. Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now." - Johann Wolfgang von Goethe

Edison was at one extreme of the "persistence scale." At the other extreme are people who embark on a journey, but never take the first step. They are like people who enroll in a race. They step up to the starting line. When the starter's gun goes off they just stand there as if paralyzed -- or they take a few faltering steps and then give up without even trying to run. My experience with Internet money-making programs is that 80-90% of people give up without really trying.

Money Skill #46: Overcoming helplessness

The problem with helplessness is that helpless people also tend to be helpless about doing anything about their helplessness. They may also be helpless about improving their helplessness. See #TL03B: Apathy, Psychological Inertia & Success, #TL10B: Escape from Helplessness and Move up to Power, and Money Skill #100: The Threshold Principle.

Money Skill #47: Valuable and/or useful products and services

A basic business formula is to create, develop, and/or provide some valuable or useful product and/or service and to exchange it in the marketplace at a profit. In general, information products are the easiest to develop, market, and deliver. Software can be a very profitable product, because it can be sold at a high price in relation to the production cost. The purchase and delivery of information products (including software) can be automated. Customers can purchase online and gain access to the information on a password-protected website, or they can download software onto their own computers.

Money Skill #48: Massive action

Some people may have unrealistic expectations about the marketing effort necessary to succeed. They may deceive themselves by thinking, "I just have to present my great program to a few friends and contacts; they'll present it to their prospects; it will quickly snowball; and I'll make a fortune!"

Unfortunately, it seldom works that way in practice. Particularly, on the Internet, you may need to present your message to several hundred (possibly more than 1,000) people to get just one sale -- provided these are prospects who know you. When promoting to complete strangers, you often get a zero response, no matter how many you promote to.

In addition to massive action by reaching multitudes, there is massive action by promoting to the same prospects over and over. Sometimes, after 50 or more mailings over a year, a prospect will finally respond.

General question: To succeed with this (whatever), is massive action necessary (to acquire know-how, contact people, etc.) for success?

Some people may underestimate the required effort to succeed by a factor of 10, 100, or even 1,000!

Further Reading:


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