Mud 2 Millions by Ayesha Selden
3 Bullet Book: 2020, book #39: “At some time, you’ll have to deal with numbers as you amass your fortune.” — Ayesha Selden
Finished on June 6, 2020
Someone I’ve followed closely on Twitter for a while, I was excited when she launched a book. It became one of the best books I read in 2020 and definitely one of the best real estate books I read. I loved Ayesha’s approach with everything and the way that she communicates. If you look at her on any platform — or within this book, she’s consistently succinct and informative at the same time.
The 3 Bullets
1. We must be aware of the way that our lifestyle has a tendency to increase along with our income. It’s not uncommon for someone to still save the same amount of money when they are making $200,000 a year that they were when they made $80,000 a year — which doesn’t make sense since their income increased 150% over that time. It’s essential that we adhere to what Ayesha emphasized with the summer camp lesson and really stack our cash for an investment opportunity.
2. “An emergency fund should be difficult to access.” I like that. It means that unless there’s a true emergency, the money will ultimately be often too much of a hassle to access. That’s a great thing for people who struggle with the discipline needed to build up the emergency fund appropriately.
3. If there’s one thing that Ayesha exemplifies more than anything else — it’s doing the work. She pushes harder, she does more, and she gets the results to back it all up. How many people stay hours after everyone goes home to practice and memorize their scripts? People who are HUNGRY. Not everyone has that in them — most people don’t. Most people don’t want to work hard, so they don’t. Do the work.
What is the purpose of the money we make?
While that may seem like a basic question, your answer to it is probably the single greatest catalyst of whether you will defy the odds and become a millionaire or become another US statistic that is woefully unprepared for even a low cost emergency. I want you to really think about that question because I am about to get personal and, for some of you, deliver a bit of a blow.
If you don’t learn how to effectively manage your finances when you’re making $2,000 a month, you’ll still struggle when you’re making $20,000 a month because your lifestyle expenses will rise at the same, or faster, rate as your income. This is known as lifestyle inflation.
Does a wage increase require a newer car, or a new-to-us car? Does a bonus mean we have to upgrade our homes? By all means, fix what’s broken. But increasing our lifestyle at a vastly slower rate than our income rewards us with the ultimate payoff: freedom.
At some time, you’ll have to deal with numbers as you amass your fortune.
I hate when stores tell you that you’re going to ‘save money’. Technically, you’re saving money on what you’re buying from them, but then you go and spend that money somewhere else. They don’t like to remind you of that. So you should ignore how much money you ‘save’ and start paying attention to how much money you 1. Spend and 2. Invest.
On our final day of the conference, we left in the late afternoon. Q spent her last dollar at a rest stop about 30 miles from home. She was so proud of how she’d managed her money. I kept quiet and stared out the window anxious to get home. The minute I walked into my bedroom, I managed to slide $175 of the $200 mom sent me away with into a shoe box under my bed. No one got a magnet. No one got a Teen Summit Holy Spirit conference mug. This is still my entire mood.
That trip was a perfect demonstration to 14 year-old me of how differently we all view money. While I hope Merrill Lynch learned how to better budget along the way, I can’t say he’s very different than many adults today.
The very first step in building wealth comes from piling that discretionary income into 3 to 6 months of your monthly bills as an emergency reserve. If there’s anything The Rona crisis of 2020 has taught us, it’s that it is our financial responsibility to ourselves to save up 3–6 months of our expenses for the “just in case” issues or emergencies that may arise. And in this case, it isn’t getting fired on our day off, it’s a global pandemic. Whatever the reason, you have to sock away 3–6 months of your bills. That’s more important than everything except your mortgage and utilities. Once you nail that, you’re ready to move onto the next phase of wealth building — investing.
The summer I started with my firm, there were at least 100 of us hired — mostly guys that were recent college grads. LP was widely respected but not very well liked because he had zero tolerance for excuses and would embarrass you if your productivity numbers were low. He would call on you in a class of about 100 folks and tell you to sell him something. We had scripts, at the time, and if you didn’t recite the script verbatim, from memory, he would make you look like an idiot. I took what LP said as a roadmap to my success. When everyone went home, I would stay for hours after work to know my scripts cold. If everyone else in the room made 500 calls, I would stay later and hit 1000. “Rumble young man, rumble.”
LP told us to save and invest no less than 20% of our income as rookies so that when our incomes soared, we would be in the habit already. Paying myself before anything or anyone became a principal I began to live by.
We act broke and stack during periods of feast to better weather the famines. Homeowners/landlords with sufficient reserves are in a position of strength. Investors who are over-leveraged (meaning carrying too much debt), and have low to no reserves, could be in a lot of trouble.
(Your emergency fund) should be in an account that isn’t connected to your regular checking account so you can’t blow through the money easily. It should generally take a day or two before the funds can transfer to your regular account. That one to two day lag can be a cooling off period. A purchase that you may have thought you needed badly at the moment, may not seem as important 48 hours later.