The Millionaire Fastlane is a book written by MJ DeMarco about how to become rich.
Here are some highlights from the book (via here).
If you’re not getting wealthy, then STOP doing what you’ve been doing.
Becoming wealthy is not about having the right prerequisites(a prestigious background, a great business plan, and so on ); it’s about taking smart risks, putting in the hours, and not quitting.
Being wealthy means being healthy, being surrounded by great friends and family, and the freedom to live life how you want to live it. DeMarco calls these the 3 Fs (family, fitness, freedom).
It’s easier to avoid debt if you don’t buy useless things. When you’re thinking about buying something, think about whether you really need it, whether you’ll still be using it 6 months from now, and so on.
Your goal net worth should be about 20x of your yearly requirements (5% return is a good, safe ROI to assume for your assets). Your money system/business goal should be about 5x of your monthly requirements, so that 40% goes to taxes, 40% goes into the money system, and 20% goes into your lifestyle.
Fastlaners view debt as a useful tool for growing their systems, time as their most important asset, and making something of value as their primary means of wealth accumulation.
The Fastlane is all about “Get Rich Quick”, but that is NOT the same thing as “Get Rich Easy”. It will take a lot of work and you might spend 5-10 years focusing on your business before you reach the kind of success that you want.
The key to the Fastlane is producing instead of consuming. Don’t be the guy who buys a franchise, be the guy who sells franchises.
Fastlaners are frugal with time while Slowlaners are frugal with money.
Process and Event
People focus on events like selling their company or winning a big contract, but the real story is not the events but the processes and hard work that made those events more likely. If you skip the process, you won’t get the events.
A good process creates events that others view as luck.
Faux wealth is the illusion of wealth. It’s having nice, flashy things that you can’t afford which take away your freedom and make you even more dependent on your existing sources of income.
Can You Afford It?
If you think you can afford it, you can’t. When you buy something cheap, like a candy bar or a pair of $10 sandals, you never ask “can I afford this?” or “how can I make this purchase work?”. If you are trying to justify a large purchase to yourself, then you can’t really afford it.
Wealth is best enjoyed when you’re young, and not after decades of soul-sucking work.
People don’t take action because they’re waiting for someday. Someday I’ll start a business, someday I’ll do this or that, etc. The problem is, someday never comes. Making plans but not acting on them is dangerous and paralyzing. Make someday today.
Your time is precious, don’t waste it (on video games, tv, etc.) and don’t trade it away for pennies (e.g. wait in line for 4 hours on Black Friday so that you can get a $30 discount on a TV). Don’t value your time at zero. Your time is finite and always decreasing — treat it as such.
Money buys free time and eliminates indentured time.
Having to work limits your choices. When you’re making a big purchase, consider its time cost. Is that $50k BMW worth 1 year of your life?
Don’t trade time for money.
In general, jobs suck because you have limited leverage (being 50% more productive will not get you a 50% raise) and limited control (what if you’re fired? What if your company is doing poorly and forces you to take a pay cut? etc.)
Hope is not a good plan. If you don’t control the variables in your plan, then you can’t control the outcome.
You’d learn much more running your own business for a month than working for someone else for a year.
Things that are too niche to work on a local level can be big successes with a global audience.
You can make two types of choices: what to think and what to do. The first step to making better choices is to work on how you think and perceive things — that will dictate the actions you decide to take.
If you want extraordinary results, you need extraordinary thinking.
You can’t experience success without failure.
Never start a business just to chase money, start a business to chase needs, pain points, etc.
Accept rent and royalties, not pay them.
Can the business be automated? Are margins large enough to hire others to do your work? Could you (eventually) get the business to operate without spending much of your time on it?
The “do what your love” meme is nice, but in order to work, what you love must solve an actual need.
You do need to be passionate about your business, however, and you will need to find a source for the passion.
Basically, you want a compelling reason to get out of bed every morning and give 100%. Passion erases the suffering of work.
If your advertising shop makes \$100k/year in profit, and the multiple for the advertising industry is about 2.9, then your business is worth approximately \$290k. Multiples range from 3-5 for traditional stores to 6-10 for computer and engineering related businesses to 15+ for things involving patents, medical devices, etc. If the multiple for your industry is 10, then making an extra \$1 of profit raises the sale value of your business by \$10.
The problem is education is expensive in terms of time and money. Becoming a doctor will get you a $200k salary, but it will also take 10 years (leaving you fewer years to work) and saddles you with a lot of student debt.
A lot of times, your spouse will be you biggest detractor or your biggest supporter.
“By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day” — Robert Frost
“Only those who risk going too far can possibly find out how far they can go.” T.S. Eliot