A valuable lesson learned in Hawaii

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A Hard Life Lesson Learned on Molokai Last Week
By Dr. Steve Sjuggerud
Wednesday, August 6, 2014

Stansberry Research

I learned a hard lesson last weekend… on the island of Molokai, of all places…

I was checking in as a competitor for the 32-mile Molokai-to-Oahu paddleboard race, when the race director said to me:

“Steve Sjuggerud? Are you related to the Steve Sjuggerud that writes an investment letter?”

It turns out, the race director is a subscriber of mine…

He is living right…

He is 64 years old – retired from a corporate job – and he could pass for a fit athlete in his 30s (if he dyed his hair). He lives in Hawaii, and he surfs every day there are waves.

I met up with him at his house after the race, and we talked a lot about living… and living right.

“I see a lot of friends with huge mortgages, spending more than they earn,” he said while we sat at his kitchen table.

“I do the opposite. I live way below my means… But what more could I want?”

I looked up from his kitchen table, and looked all around…

He was right. He has everything he needs, right here. He lives a short walk from his favorite surfing spot in Hawaii. He lives lean and healthy. His life is about experiences, not about stuff.

I want to be like him when I’m 64.

Heck – I want to be like him right now…

I thought I was living right. But now I think I’ve gotten off track.

The Molokai race was an eye-opener for me about getting off track…

This race is 32 miles across “the Channel of Bones” between two Hawaiian islands. I did the race as a three-man team, on a standup paddleboard. (Each person takes turns, jumping out of a chase boat.)

I’m glad I had good teammates, because I didn’t do so well…

I have excuses for not training as much as I should have – I’d broken a rib two months before the race, and I’d been sick for much of this year before that. But those are just excuses.

I had one nagging thought:

Money can buy you a lot of things in life… but it can’t buy you fitness. You have to earn that yourself.

And ultimately, if you’re unhealthy, who cares how much money you have?

Now that I’m home from Molokai, I realize I need to make some changes…

• I need to clear out more stuff. I need to live leaner.

• I need to make my health a top priority. Work and family always seem more important than working on my health – but I have to convince myself that I’m better off for my work and my family if I’m healthy.
How can I make my health a priority?

I have a clear path… for the next year at least.

I need to “right my wrong” in this year’s Molokai race. I need to get fit – for real – and do MUCH better in the race next year. (I haven’t told my wife this goal yet… I’m not sure she wants to hear right now that I want to go back next year and do this again.)

I know that nobody cares how I did in the race. But I care…

I realized on the water that I was fooling myself about my level of health and fitness… and that’s not something you want to fool yourself about!

I have a long way to go to get where I want to be, fitness-wise – but at least I have a one-year goal that will drive me.

Are you like me? Do you have some money… but not the level of fitness that you want? Then what are you going to do about it?

What is your goal?

Over the next year, I’m going to live more like my Hawaiian subscriber… I’m going to live leaner… and healthier.

How about you? What are you going to do?

Are you going to muddle along? Are you going to keep fooling yourself, like I was? Or are you going to make some real changes?

You can’t buy your own fitness. You have to earn it. The best thing, for me at least, is to have a goal in front of me that I’m striving toward.

What’s your goal? If you don’t have one, then find one… and get to it!

Best of luck!

Sincerely,

Steve

Its all about your attitude

Happy grimmace sad

As I think more and more about the road to financial independence, I become more and more convinced that your attitude is the primary factor for success. Unlike the graphic above, whether or not you are happy or sad won’t decide if you will make a million dollars but your attitude towards getting to that goal will be everything.

At my work I’m surrounded by colleagues who make six figure salaries and barely can put together ten thousand dollars for a house down payment. There is NO reason why they can’t be financially successful (savings I mean, not earnings) except for their attitude. They treat money like air, something to be breathed in and out without a thought to saving, investing or planning for the next step in their lives. Opportunities about; the average person probably has about a half dozen opportunities in their life to stake a claim on their fortune. Whether or not you are prepared will mean everything.

I have one old buddy from high school who started real estate investing in the last 6 or 7 years. I even went in on one of his deals and it is paying off nicely. He first bought a 3 room house and then rented it followed by a one bedroom apartment. He paid enough down so that his monthly cash flow was positive on both properties. Later he bought (also with positive cash flows) a 3 unit condo complex and later a 4 unit apartment building (the unit I helped to finance). He has just informed me that he closed on an 18 unit apartment building. Each property has a positive cash flow and I estimate that he is earning somewhere between $6,000-8,000 per month in EXTRA income.

I say extra because he still has his job and his wife still has hers. Because the cost of financing is cheap (rates in the 4% range), he uses the extra $6k each month to finance new properties. After a year, you have an extra $80k – this can be used for a down payment on a new property. I guess that he will hit his million in a decade.

Realize now that he started with NOTHING. He and his wife worked, skimped and saved until they had enough to buy their first rental property. After that, they skimped and saved more. And over time, it is paying off handsomely. I suppose that in a few years he will be so busy managing his properties that he won’t have time to go to work. What a glorious day that will be when he can quit his job and be self employed.

The American Dream.

And so, what set him apart from his friends and colleagues who aren’t growing their net worth like him? It was all his attitude. He made a goal to own 20 properties and started with just one. When his first was bought, he set his sights on the next.

It was all ATTITUDE.

If your attitude isn’t such that your mindset is that you’re ALWAYS looking for your chance to stake a claim to one of your life’s jackpot opportunities then you’ll probably never succeed. Have an attitude check on yourself and ask if you’re motivated and focused on becoming a millionaire. If you are, you can find a way. If you aren’t, someone else will take that opportunity that you pass. They’ll be the “lucky” one who was “at the right place at the right time.”

Luck is when preparation meets with opportunity.

Good luck!

The use of copyrighted material in this website is protected by the Fair Use Clause of the U.S. Copyright Act of 1976, which allows for the sharing of copyrighted materials for the purposes of commentary, criticism and education.  All shared material will be attributed to its owner and a link provided when available.  All other comment on this site may be reproduced with the author’s consent.  Please source any references or quotes of this website to: http://www.my1stmillion.net

7 percent

7 percent

I recently read an article explaining the benefits of long-term compound interest.  In the article, a situation similar to the one that I used in my post Compound Interest was used, but in the example in the article, an interest rate of 7% was quoted.  As I often do, I read some of the comments at the bottom of the screen and I saw over and over again that people were “complaining” that it was impossible to earn 7% interest today.  I am sure that most of these people only know of two places to invest their money, one is under their mattress at home and the other is at an FDIC insured bank.  After taxes and inflation, both offer negative rates of return.

I thought to myself, “It isn’t so hard to earn 7%” interest.  And so, here are a few places where I’ve invested in the last year and the interest rates that I have experienced:

Symbol / Name / Interest Rate / Description

TWO / Two Harbors Investment Corp. / currently pays 18.10% dividend / This is an Interest Rate REIT (Real Estate Investment Trust) that borrows short term money (low interest rate) and then buys long-term treasury backed securities.  As long as Bernacke keeps rates low, this stock will continue to pay fat dividends.

LendingClub.com / The Lending Club / I am currently earning about 16% return on my investment / Allows investors to lend directly to borrowers – most loans are used to consolidate credit cards.

NLY / Annaly Capital Management / currently yields 12.2% / same as TWO.

ETP / Energy Transfer Partners / 7.8% dividend yield / Natural Gas and Oil pipeline company – this company charges big oil to move their product and collects a steady and dependable income.

(no symbol) / Selling uncovered puts and covered calls / I have earned an annualized yield of 19% writing options contracts on stocks, gold, silver and the Australian Dollar / More about this strategy later – but it is one of the safest and highest yielding investments I know of.

EXC / Excelon Corporation / 7.2% dividend yield / United States electricity utility, is a large nuclear power producer.

DPM / Midstream Partners / 6.6% dividend yield / Same as ETP.

TGP / Teekay LNG Parnters / 6.7% dividend yield / Owner-operators of large ships that transport liquified natural gas.  With cheap natural gas prices, the demand to move it around the world is booming; TGP has good prospects for future work & stock appreciation.  I also write covered calls on this stock boosting my yield into the 10%+ range.

These are just some ideas for you to check out.  Remember to always do your own homework; I don’t know your financial situation and you shouldn’t take my recommendation as your only source of income.  I do not guarantee any return nor do I take any risk for your investments, it is up to you to do your own due diligence.  Having said that, there is always risk and return and the two (sometimes) correspond, sometimes they do not.  Most think of an FDIC insured bank as a “safe bet,” but considering a 4% inflation rate, taxes and the .25% interest the bank pays, you’re losing about 4% each year in purchasing power.  Doesn’t sound like much?  Consider that if you put $100,000 in the bank today, in ten years, that $100k will be worth $60,000.  4% isn’t much this year, but over time it will eat up your investments.

Also consider some of the “safe” Blue Chip Stocks like Walmart, Coca Cola, McDonalds and Microsoft.  If you reinvest your dividends into additional shares of stock, most of these stocks have returned upwards of 10% each year in combined dividends and capital gains.

If you want to be a millionaire, you can’t look at life through a set of FDIC insured glasses – you have to look outside the “normal” arena for investments that will provide a  return that will propel you to the next level.

Good luck and good investing!

The use of copyrighted material in this website is protected by the Fair Use Clause of the U.S. Copyright Act of 1976, which allows for the sharing of copyrighted materials for the purposes of commentary, criticism and education.  All shared material will be attributed to its owner and a link provided when available.  All other comment on this site may be reproduced with the author’s consent.  Please source any references or quotes of this website to: http://www.my1stmillion.net

Thinking Outside the Box

Some decades ago, I was sitting in a business class in University and I had a rather remarkable professor.  She approached the idea of business very differently than I was expecting.  She explained that as we (the students in the class) went out to compete for jobs, we would be against other people (and students) who would also have university degrees and bright shiny personalities.  But, some would have family connections and friends at companies they applied for.

In the past, if you were white and male, you had an advantage seeking a job over a woman or minority applicant.  While this is still the case in some places, this “advantage” for while males has waned.  And in some places, being a white male can actually be a disadvantage – especially with jobs that use affirmative action rules or impose quotas based on sex or ethnicity.

What to do?  If you are a white male applying to a company that wants a black applicant, or if you are a woman applying for a job where only men work or if you are African-American and you are applying at a company where a bunch of old rednecks work, what do you do?

This professor explained that you must “think outside the box.”  She had long taught this to her children and after they graduated from college, her son Michael had a chance to do just that.  He was a new employee at a large global company – it was foreign owned.  It was announced that the president of the company would fly in on Sunday and would spend a week visiting the Los Angeles offices beginning on Monday.

Michael nosed around a bit and found out when the president would arrive and waited at the airport for his arrival.  When the president and his family came out of the gate, Michael approached, introduced himself and then assisted loading the baggage into the waiting car.  Michael followed the president and his family to the hotel and helped off load the luggage and assisted in getting the president checked into his room.  He took out his business card and a pen and wrote his personal cell phone number on the back and presented it to the president and told him that if he needed anything at all, 24/7, he could call on Michael for assistance.  He made himself available to the president each day outside of his work hours to assist in obtaining opera tickets, in organizing a tour to Disneyland the following Saturday and to help take the President’s wife and family shopping at the galleria.

The president had assumed that the company had sent Michael to assist.  Imagine his surprise when he found out that Michael had taken the initiative to help on his own.  The president was very impressed and remembered him later when he began a new project in Los Angeles.  Michael’s prospects within the company soared.  He was really no different than any of the other new employees in the company.  He just took the initiative to do something different, something special: he thought outside the box.

I subscribe to an investment letter at Stansberry Financial.  This subscription has made me a lot of money and I recommend it (nothing in it for me, check it out if you like).  This week I received an email from the president of this newsletter company and he described how he thinks outside the box and how it has helped him.  I quote his message in full, as I received it:

You’re so lucky Steve… you’ve gotten to meet and work with all these famous guys…” 

When I hear that, I usually say something like, “Yeah, it’s hard to believe… I have been pretty fortunate!” and I leave it at that.

But the truth is much different… It’s NOT luck. It’s NOT good fortune.

There’s a secret to doing what I’ve done. And I will share it with you today…

Maybe there is a bit of “luck” involved… But it didn’t happen without me putting myself in luck’s “line of fire.” Let me give you an example of what I mean…

A while back, I knew I was going to have the chance to shake hands with one of my heroes.

When I met him, I could have just said, “Uh, gee, it’s nice to meet you. I’m a big fan.” But that would have been a missed opportunity.

Instead, I spent a few days thinking before I met him… I came up with a plan to make an impact – to give him a chance to want to get to know me…

I got out a 3×5 notecard. And I wrote out what I called “12 Ways to Take Over Your Industry.” I included my name, phone number, and e-mail address. When I shook his hand, I smiled and I handed him the card. And that was that…

He could have easily thrown the card away. He could have thought, “Who is this joker?” He could have taken my suggestions… but still never bothered contacting me. For any number of reasons, he could have ignored me.

Instead, he reached out to me… In the end, he tried all of my dozen ideas, except one. Now, when he wants a second opinion on something (from outside of his corporate “yes” men), he sends me an e-mail or gives me a call. And he has included me in events around the world and in his decisions that I’ve been grateful and flattered to be a part of.

The best part to me is that I can call a hero of mine a friend as well.

That didn’t happen because I’m “lucky.” It happened because of this simple secret. There are two parts to it:

1.   Whenever there is any moment – any crack in the door to put your foot in to meet your hero – you must shove your foot in… and not let it out.

 

2.   You must find a way to give a big benefit to your hero without asking anything in return.

Then you’re off… At that point, you have done your best to kick off a potential legitimate friendship.

I have often had to create these moments. Usually, they don’t just happen.

For example, this year, I ended up on the phone with another hero of mine. He said: “Next time you’re in Nashville, give me a call and we can get together.” Look, I’m NEVER in Nashville… but I went to Nashville that week. (I re-routed a flight to have a long layover there.)

I made it happen when the opportunity was there. And it was a fantastic few hours. Another hero of mine is now a friend of mine, too.

Most of the time, it doesn’t work out this way. But it’s 100% worth trying… Your downside risk is a little “wasted” effort. Your upside is a legitimate friendship with one of your heroes. That’s worth it to me!

You can do it. You have to get creative to create the opportunity. You have to offer something that benefits your hero. And you have to do it without asking anything in return.

You have to create your “luck.”

It has worked for me. I have been able to get close to many of my heroes – both in business and in my hobbies. And I believe it can work for you, too…

How cool is it to have your heroes as your friends? Just follow these tips, figure out your opportunity, and go for it… you can do it…

Regards,

Steve

Since I cracked the million dollar ceiling, I’ve heard from a few colleagues, “You’re so lucky.”  I scoff: it wasn’t luck at all, it was hard work.  Well, actually, there was a little luck involved, but not the kind that they were thinking of.

Edison wrote, “Luck is when preparation meets with opportunity.”

I prepared, and eventually when opportunity came, I was ready.  Every day, I see people who miss opportunity because they aren’t ready.  These people really are “unlucky.”  And I guess I am quite lucky.  Funny how that works, luck favors some more than others…

The job that I have now pays well into six figures.  This job, and maintaining a modest lifestyle has allowed me to save and invest and eventually accumulate a seven figure bank account.  But this job was no accident.  I wrote down a goal, I focused on the kind of job I wanted and then I began to network.  The job that I have now, I began applying for it 3 years before I was hired.  I went and obtained all of the training and certifications I needed and then I applied.  No call back, no interview, silence.  I applied again and again.  Every two weeks I sent my resume and I called.  Nothing.  No call backs, no emails, nothing.

One day, I was at the airport and some random guy asked me if I knew my way to a particular hotel.  I told him that I was going there and offered to share a cab.  He was quite thankful and we shook hands, exchanged names and began talking.  He asked about my work and was impressed that I was managing over 200 people.  I asked about his work and it turns out that he was a manager at the company that I was applying to.  I told him that I had submitted my resume twice a month for the past three years.  He asked me to email it to him.  I did and he walked it in to HR and I was hired right away.

Was I lucky I got that job?  Maybe I was lucky that I met this man.  But if I didn’t have the certifications for the job, if I had not applied, if I had not asked about his work (something you always do when you are networking) I would not have been so “lucky.”

Think about this.  Are you stuck in your job in your company?  Do you want a promotion but can’t find a way?  Start thinking of ways to distinguish yourself above your peers.  If you are looking to get hired at a new company, think of how you can stand out from the rest of the applicants.

We all have some advantages and disadvantages: you may be black or white, man or woman.  There is nothing you can do about your gender or your skin color.  What you can do something about is your actions, your attitude and how you distinguish yourself.  There will always be discrimination, don’t let it stop you from reaching your potential.  Think outside the box and bypass the hurdles that you encounter in life.

Good luck!

The use of copyrighted material in this website is protected by the Fair Use Clause of the U.S. Copyright Act of 1976, which allows for the sharing of copyrighted materials for the purposes of commentary, criticism and education.  All shared material will be attributed to its owner and a link provided when available.  All other comment on this site may be reproduced with the author’s consent.  Please source any references or quotes of this website to: http://www.my1stmillion.net