33 Lessons I’ve Learned

33 Lessons:

Tomorrow I turn 33 years old. So, here is a lesson for every year that I have learned and find valuable enough to share with all of you.

-Think about business from a customer centric angle to find insight.
-Save money. At least 20%. if you don’t, you’ll be at the mercy of those that did save.
-When you first date someone, you’d do anything for them including rubbing their feet and taking out the trash. Don’t lose that if you want a lasting relationship.
-Don’t always react immediately. Acting without thinking is usually worse than not acting.
– Don’t let fear drive you. Life is scary. If you want security, go to a mental ward. They’ll take care of you.
– All government is force. It is a monopoly on violence. Nothing more, nothing less.
– You and I owe to each other to look out for our common good. But I have no right to rob another because I believe I can use their property better than they can. (That’s called taxation)
– Read to your children and spend most of your days with them.
– Only you can teach yourself. Others can provide information, but you must do the learning.
-Read at least a book a month to ensure a better future.
– Work harder on yourself than you do on your job and you’ll get better at both.
– You are not poor because someone else is rich.
– Don’t wait to be wealthy;start helping others today.
– You don’t know everything. But God(the Universe if you prefer) does, so it might be wise to ask for guidance.
– Treat everything as if it was the last time you will see it. You quality of life will improve dramatically.
-Whoever has will be given more; whoever does not have, even what they have will be taken from them. Mark 4:25. ( This is talking about gratitude)
– Crap attracts flies. Don’t have crappy thoughts.
-Music makes life fulfilled in every way. It makes your mind vibrate at higher frequencies and attracts love to you.
– Your success will always reflect the standards of your peer group.
– Start everyday by writing down ten things you’re grateful for.
– The quality of your life will be determined by how comfortable you are with uncertainty (risk).
– You are not a goose. You don’t have to fly south during winter. Choose your own direction.
-Carbohydrates make you fat because of insulin. Earn your carbs. Don’t just eat them without training to use them.
– You can change your attitude by changing your state. Do some push-ups or train to operate at a higher level.
-Most people believe they desire Liberty, but sell themselves into a slave- like existence for false security or because of a lack of creativity.
– Skip a meal once in a while, it can help you feel better and get in touch with yourself.
– Any disease can be defeated if the reasons behind beating it are strong enough and the mind believes it can be done.
– If you want a great life focus on appreciation instead of expectation.
– Use your money to buy assets that produce income and not liabilities.
– Energy is something you produce, not something you have.
– The quality of your life is determined by your philosophy towards life.
– Disciplines are the keys to success in any area. The first discipline to learn is controlling your thoughts.

-You become the story you tell yourself. To change your life, start telling yourself a different story that serves you.

In Health,



What Really Matters

What Matters Most

What really matters in building a great life? Your individual answer will differ from others, but I believe it’s very useful to reflect on what really matters versus what does not. Not enough thought is given for reflection and meditation about the important matters of life. Moreover, so many of the negative experiences we have in life stem from focussing too much on things that do not truly matter the most in life. I can tell you from personal experience that when I have the most stress, I tend to be focussing on things that don’t truly matter like what others think of me and so on. What follows is a list that I’ve compiled of things I believe are truly important versus things than are not important, but receive too much attention. This list is not complete and will likely never be, but my goal here is to provoke some thought about what really makes a good life, compared to what we think makes a good life.

Here’s What Matters:

What you can control
Meaningful relationships
Doing the best you can
Being resourceful
Being a good person
Reflecting on your life
Having a philosophy that serves you
Helping others where possible
Growing as a person
Contributing to something greater than yourself
Having thoughts and emotions that serve you
Fulfilling goals
Having a team of people you can rely on
Living according to your values
Finding internal strength
Taking care of your family
Finding purpose for your existence
Experiencing joy
Knowing what makes you feel good
Surrounding yourself with good people (the right people)
Having adequate financial resources
Adding value to others

What Doesn’t Matter:

Controlling others
Being powerful
Being rich
Being famous
Being liked by others
Adopting the values of others
Doing what others want of you (you’ll violate your own values)
Making others upset (it will happen because you have different values)
Being happy all the time (not possible)
Feeling upset once in a while (it’s normal)
Letting others down (you cannot control how others feel)
External events outside your control
Paying too much attention to emotions (They can deceive you)
Buying a House (it’s not a great investment)
Criticism from others
Staying in relationships that don’t serve you

By focussing on what really matters in life, we can avoid unnecessary stress and negative emotions. Staying focussed on what matters will also steer our thinking and actions towards living a great life. How many of the things on the unimportant list are you guilty of thinking about too much? How has it impacted your life? Let me know what you think is important versus what is not by commenting below!

In health,


The Right Things

One of the Harder Things in Life

Sometimes it’s really hard to know if you are doing the “right” thing. It’s often hard to even know what the right thing is. No matter what my age is or how much experience I’ve gained, I continue to wonder if what I’m doing is really the right thing to do. I don’t think anyone can know for sure until time passes and they can see the look at the result of their actions. Therein lies the hardest part- you have to wait to find out whether the actions you have taken were actually the right ones in getting you towards your goal. The waiting part is what drives me nuts. I’m the type of person that likes to see results as quickly as possible and I despise waiting long periods. I know that this is the source of most of my anxiety. I’m constantly questioning, which can be good to a point, but will quickly lead to either analysis paralysis or can lead to me second-guessing myself.

I don’t think I’m alone here. If you are a parent, a business person, an athlete, or a partner in a relationship, I think it’s very common to second guess whether your are doing things the best way possible. I’m all of these things, so some of the questions that run through my head are the following; “Should I have gotten angry with my kid?” “How do I communicate well enough to make an impact?” “What is the best way to teach this person?” “How do I know what the best way to invest is?” “Are they acting this way because of something I’ve done?” “Am I doing things the best way possible?” “Is there a better path that I’ve ignored?” “Am I a good father?” “How can I be a better athlete, husband and business person.” “Am I spending money on the wrong things?” “Why do I always second guess myself?” I’m curious, do any of these questions sound familiar?

Of course, all of these questions stem from the possibility that I could in fact be wrong. And being wrong about anything could have some consequences. We are fearful of the consequences of being wrong because our most basic fears are that we are not enough, and that we won’t be loved. Being wrong can lead to both of these fears. For instance, if I spend money in the wrong areas of my business, I could go out of business, significantly affecting the lives of my family and employees as well as my customers. If I yell at my wife or kids, they could grow to resent me and I won’t be loved. If I train a certain way because I think it’s the best way for me to train, I could be hampering my ability to reach my full potential as an athlete. These are all things that I fear. Although I realize the harm and futility in allowing this fear into my thinking, I also realize the dangers of being too naive about the consequences of all my actions.

I bring all this up, not to complain or admit that I have weaknesses, rather I’m writing this to remind us all that doubt and fear is normal. It’s truly very difficult to know if you are doing the right things in every area of your life. There are some things that I’ve recently been doing that I believe have eased my anxiety in this area. The first is meditation. I can’t honestly say that I’m great at clearing my head of all thoughts, but meditation has helped me distance myself from my thoughts and take a more rational approach to analyzing whether these thoughts are helping me or hindering me from my desired outcome. The second thing that has helped me is to remember the times when I did something extremely well and how I felt before, during and after. This exercise helps me gain perspective on how I was able to deal with other obstacles and events in my life and how I felt during those times. If I remember that I was nervous and stressed out during a past event, but I still achieve the desired outcome, I can ease my mind about the stresses I currently have by reminding myself that it will work out. If I was absolutely confident, that will help me to realize I need to replace my current thoughts or doubt with those of strength and confidence.

The last exercise that has helped me is to visualize who I have to become to attract the things and feelings I truly want in my life. For example, the current version of me is only capable of achieving a certain level. But, how would the best version of myself act right now? What could he accomplish? I like this exercise because it reminds me that to “get more than I have, I have to become more than I am”. By focussing on how the best version of myself would act, I find that negative thoughts fall away quickly, because my highest self understands the futility of constantly criticizing and second guessing myself. “How would my highest self act right now?” I think that’s a great question we should all ask more.

Remember, doubt and fear is a normal part of life. It’s not shameful to admit that you have both fears and doubts. But, remember also that there is something you can do to overcome the fears and doubts that creep in. By distancing yourself from your thoughts, changing your state and focussing on times that you did extremely well, you can change the biochemistry of your brain and switch the focus from fear to confidence and tranquility. After all, I think one of the most truly helpful beliefs is that you should remain calm that it will all work out! If we believe it will work out, many new possibilities will open up to us. We must have faith in ourselves that we can figure it out and live an incredible life.

In health



Business and Finance 101

Get Your Money Right!

I’ve had a large number of requests to write about business and personal finance. So many thousands of books and essays have been written on these subjects that I feel it will be difficult for me to add much more. However, I will cover a few crucial areas that I believe most business and households neglect when it comes to managing finances. The subject of money is often stressful so I understand the temptation to avoid looking at your bank account on just praying that it will all be ok. Every time I get hit with a huge tax, fee, rent increase or my businesses have a lousy month for revenues, I feel the stress as well. However, if it’s one thing I’ve learned, pretending it will all be okay without any strategy or action to back it up is useless. As Jim Rohn liked to say, “You can’t go in your garden and chant ‘there’s no weeds’!” The weeds will grow right up over your toes if you don’t recognize them and pull them out. So, here are the areas I think most households and businesses should pay attention to on a weekly basis:

1. Cashflows and income. It’s absolutely imperative that you track your income regularly. If you are in business, this will help you identify trends throughout the year and allow you to plan accordingly. If you get paid a paycheck once or twice a month, count that too. Make sure that you’re netting the correct amount. I can’t even tell you how many people I come across that don’t know how much was in their last paycheck. The same goes for business. Most small business people I know don’t know how much they made last month! They just keep grinding, spinning their wheels and getting nowhere! I’m asking you to keep track of the amount of money coming in on at least a weekly basis. If you only get one paycheck monthly, try to increase your streams of income so that you are getting paid multiple times a month from different sources.

2.Expenses. How much does it cost to run your business every month? How much does your family spend monthly? From my experience, the majority of people sorely underestimate their monthly expenses. Every business and individual should have a very detailed breakdown of every single category in which money was spent. Once you see how much you are actually spending, I guarantee it will be eye opening. When it’s all said and done, how much money did you have left over at the end of the month? Everything else was an expense that needs to be accounted for. If you had a little too much “month left at the end of the money” so to speak, it’s time to cut back your expenses and try to simultaneously to increase your income. If you can do both, you have discovered the fastest way to becoming financially free.

3. Know your numbers and what they mean. TRACK EVERYTHING!!!! This is the area that most business are neglecting. For example; what are your payroll hours as a percentage of revenues? What about rents as a percentage of revenues? What is the lifetime value of a new customer? How much new revenues does a new client produce in their first transaction? How much revenue does each billable payroll hour produce? What are the total costs per operating hour in your business? How much net revenues or expendable income are you left with at the end of the month? What is your best quarter for growth historically? How much are your COGS or costs of goods sold? You must know the answers to these questions and more if you want your business to succeed for longer than just a few years.

4. Work on your business and not in your business. If your business depends on your daily efforts to succeed, you are self-employed. You do not actually own a business. There’s nothing wrong with that either, just don’t be fooled into believing that you are an entrepreneur when you’re really working 80 hours a week and only making a few thousand a month. You may just be the lowest paid employee in your business. A true business owner spends most of his or her time reading market trends, strategizing, optimizing systems and making sure the business follows the regulatory and tax requirements. If the owner is not present, the business should still function well. The owner simply works to optimize the profits and expansion of the company and then decides how best to spend or reinvest the profits.

5 . For households, follow the 70-10-10-10 RULE. When your determine your monthly profits or wages, never spend more than 70% of the money you earn. This includes all expenses like housing, cars, insurance, food and entertainment. 10% of your left over money should go to active capital, or starting your own business which will produce additional monthly income. 10% of your income should go passive capital, or an investment run by others that will produce monthly passive income. The last 10% should go to charity or helping others that you care about. I strongly believe in this last one because the secret to living is truly giving. Helping others succeed will result in you doing even better. What goes around comes around and when you help others, you will reap the benefits. (If your monthly expenses are taking up more than 70% of your income currently, work immediately to reduce your expenses and increase your income. Eventually, as your income increases greatly, your expenses may only by 50%, leaving you with more to invest in businesses and spend more on helping others.

6. Know how much it costs to acquire a new customer. Track your marketing ROI or return on investment. Many companies that advertising budgets are not properly tracking the lifetime value of a client, the efficacy of their marketing or the total cost that goes into acquiring a new customer. I have made this mistake many times. I’ve spent hundreds of thousand on marketing without calculating my exact return from the ads. My new rule is that if I spend one dollar in advertising, it must produce more than a dollar in revenue in the first month. Other companies use a longer time frame as their metric depending on what they sell, but this rule has helping me control my marketing costs significantly. I also focus as much as possible on direct marketing so I can track who is engaging with an advertisement and then I can subsequently track what marketing pieces led to new clients. Another cost associated with new customer acquisition is the payroll hours it takes to call prospects, past clients media such as signage in and outside the business, etc. Just be sure to track all costs associated with new customer acquisition. As a general rule, the companies that can afford to spend to most to acquire a new customer and then have that customer produce higher than market average revenues for the business will win!

7. Love the business you are in, but fall in love with the customers more. Business is hard, so it helps greatly if you are passionate about the business you are in. I love health and fitness and bodybuilding, so this is easy for me. But I’ve learned that companies do best that obsess over their customers rather than the products or services they produce. Customers are the ones who pay all the bills at the end of the day. They are the real boss. Every one needs to feel special or significant, so if a company can solve a problem with their products while making the customer feel special, they will do better than companies who do not.

8. Know the difference between good and bad debt
. We live in a debtor nation. The country itself has a 20 trillion dollar federal debt and household debt is at record levels. Debt cycles are the reason for booms and busts in economies and a business or family that takes on too much debt will face significant financial hardships. However, there is a difference between consumer debt and business debt. The latter is a type of debt that produces income and is paid for by others. For instance, if I take out a mortgage to buy and apartment complex that produces cashflow, the tenants are paying for that debt. I am using the debt to create profit. This is called leverage and can be a good thing if used wisely. Consumer debt on the other hand is debt that is paid by the debtor. This includes home mortgages, student loans and auto loans as well as most credit card debt that we are familiar with. Do not let debt sink you or your business!!!! Go back to the 70-10-10-10 rule and see how much of your monthly expenses are debt service, or paying back money you’ve already spent.

There are so many more business lessons, but I think these eight rules are a great start for any business owner or head of the household. I’m hoping any of these tips will lead to financial abundance for you and your family for many years to come.

In health and riches,



Living With Disabilities

Living With Disabilities

I asked the question on social media, “What topic would you like to read about most?” The majority of people asked me to write about business, but there were a good number of respondents who requested I write about living with disabilities. I should note, I’m hesitant to state that I have a disability. There are so many millions around the world who have much more restrictive afflictions than me. I don’t consider my life to be restricted by my disability, however, that does not mean I do not have to cope with incredible discomfort, pain and mobility issues all the time because of auto-immune disease. Auto-immune diseases are very prevalent today. Over 24 million (or 7% of) Americans suffer from an immune system disorder and there are over 80 auto-immune diseases that have been identified, including Lupus, Type 1 Diabetes, and Rheumatoid Arthritis. I live with a form of reactive arthritis called Ankylosing Spondylitis in which my joints, my spine and hips in particular, are plagued with long term inflammation and pain. This disease can lead to fusion of the vertebrae as well as damage to the eyes, bowels and heart in some cases. Most people that live with this condition have terrible back pain, stiffness and fatigue almost every day. The limited mobility of many sufferers of this disease can lead to vascular disease and reduced life expectancy is severe cases.

 A man with spondylitis circa 1857

This disease, which I think is fair to call a disability, used to control my life. After my diagnosis, I used to take anti-inflammatories daily in addition to other painkillers. (An interesting side note, I did not do this before I was properly diagnosed. I used to just deal with the pain.) The quality of my life from medication had decreased significantly. I was depressed, I was angry and I felt like a zombie. Moreover, my pain did not lessen. My rheumatologist recommended I take immunosuppressant and chemotherapy drugs, and to never lift weights or work out with any sort of intensity. Based on how I was feeling just from painkillers and over the counter medications, I decided against taking these to further to modulate my immune system. To be frank, part of this decision was based on sitting in a waiting room full of people on these drugs who looked, tired and miserable. I decided I did not want to further alter my immune system and instead I turned my life’s work to exploring how to ease my pain with diet and exercise. Funny story, after the doctor suggested that I not engage in sports or lifting weights I told him that if I was going to be disabled, I at least wanted big muscles so I could push myself around or pull myself up if need be. Fast forward 14 years and I’m now a professional bodybuilder who still plays sports, plays with my kids, and obviously lifts weights. I still have pain and stiffness, but it is nowhere near what it used to be. My mobility is decent (could be better) and I have more than enough energy to get through the daily activities of life and the demands of physical training. I get questions on how I have been able to carry on a normal life without the aid of prescription drugs. I believe there are a few decisions I made that have allowed me to persist which I will share here.

I made the decision to not let my disease or disability define me as a person. In fact, I rarely even think about my condition. Even when I’m feeling pain or stiffness, I focus on how to get myself into the physical state needed to accomplish what I need to get done. When I think about myself, I don’t think about a man with a disease. I refuse to give anything that much power over me.
I made the decision that I would exercise all the options within my control to ease my symptoms. I believe that we always have choices available to us. In fact, I believe that it’s not what happens to us in life that defines us. Rather, it is how we choose what to do about what happens that defines us. For me, I knew there were a number of choices available to me that I could control including, diet, physical therapy, supplementation and physical exercise.
I made the decision that I would always try to feel my best rather than focus on how bad I am feeling. I knew this meant that I had to go full tilt with my physical training because I always feel great when I am lifting weights and my muscles are pumped up. Lifting weights makes my body feel powerful and that gives me an emotional high. Motion is the root word of emotion. When I’m in motion, my emotions are positive and this allows me to think clearly. Even when I’m in pain, I make the decision to MOVE something. I have found there is always something I can do to feel better.
I became obsessed with researching ways to alleviate my symptoms. It’s the body that is responsible for all the healing that takes place. I knew that whatever was wrong with my immune system, at the end of the day I had to give the body what it needed to facilitate healing. This is why I consider myself fortunate. Despite my affliction, I still have the ability to aid my body in healing itself through movement, diet and supplementation. Others with disabilities do not have this option. By remembering this, I remain grateful. By the way, what has worked for me, may not work for you, but I suggest you research all options available to you. There are often more options than we can initially conceive.
I decided to never, ever, ever give up. Living with a disability or battling a disease is a scary proposition. When I was diagnosed I decided that my best option was to take action and try to heal myself to the best of my ability. I knew that I was going to deal with this disease for the rest of my life in one way or another. Given that prognosis, I believed this meant I had to fight daily to live the life I wanted, rather than become comfortable in a life I didn’t want. Somedays this battle is harder than others. I still deal with pain, stiffness, fatigue to a certain degree, but this simply means I have to take more action to achieve what I desire.
I decided that I could become a better person because of this disease. Having spondylitis has allowed me to learn a great deal about what I am capable of and what type of person I am. Sometimes we don’t really know who we are and what we are capable of until we are faced with incredible adversity. All growth comes from discomfort and perhaps the greatest discomfort in life is being afflicted with a disability. As strange as this sounds, I believe my disease has become an asset for me. It has forced me to examine my life in new ways. It has reminded me daily that I am mortal and I can be hurt. This alone has put much in perspective and inspired me to live better. Spondylitis has helped me to empathize with others in pain. It has also allowed me to meet and even help other that live with similar diseases. Lastly, I changed the direction of my life from entertainment and communication to health and fitness. This led me to become a personal trainer, bodybuilder and eventually open a successful health club chain that helps thousands get stronger daily.

This disability is something that I will live with forever, but it does not define who I am. Again, I am usually hesitant to even acknowledge that I have this affliction. Not that I want to live in denial, but I find it a waste of mental energy to even think about it. I have it. I can’t magically make it disappear. All I can do is what is in my control to design my life the way I want. So I focus on what I can control and try to keep my mind off of what I cannot. I think it is worth repeating what has worked for me may not work for you. There is no guarantee my current actions will even work for me in the future. Things change over time and I may have to adapt and evolve my methods for living. I suggest you research and find what works for you and decide to keep on taking action daily to design the life you like. That’s all we can really do! Life is a battle for us all, especially those living with disabilities. Keep on fighting and live and incredible life.

In Heath,



Winning Matters

The Importance of Doing Well

In our culture, there is far too much emphasis placed on the virtue of failure. Sure, failure can be valuable is you can ascertain the exact reason for failure and learn from it, but the truth is that we don’t always know why we fail and there are often many causes for failure, not all of them being recognized as part of not failing endeavor. If you believe you failed because of X, but in reality, you have failed because of X, Y and Z, you will not have truly learned anything and the failure will be a tragedy. That’s what I believe every failure really is- a minor tragedy that should be avoided if possible. Furthermore, I think the biggest cause of failure is not doing the very best we can at the tasks we are charged with. In other words, not performing your very best at whatever job you have is the biggest cause of failure, disappointment and unhappiness.

Many claim they have lousy jobs that don’t deserve their highest level of effort. So what? If you have a lousy job, do the very best you can at it. That is your fastest way to get out of the job and into a better position. The disease that pervades every single business is the mindset that “What I do doesn’t really matter, so I’m not going to try.” This type of thinking leads to an unhappy workplace because it is so contagious. I have been guilty of it myself. It leads to a destruction of the culture and a slowdown of progress in the business as well as a slowdown in personal growth of the employees of the business. Of course what you do matters! Otherwise, there would be no reason for your job to exist. If you are unhappy with what the job has become, try doing even better at it and see what happens to your level of happiness. I strongly believe that mastery leads to happiness. If you do something well, anything at all, your level of pride and confidence will increase and result in being happier than if you were to do poorly or not try at all. We all have an innate desire to do well at something in life.

Of course this all seems basic, but the basics are worth repeating. The number one reason to do well is because it leads to happiness. If you do well in a sport, on a test or at work, you’ll likely be much happier than if you do poorly. This happiness, just like sadness or negativity is also contagious. Energy flows to whatever you focus on, and those around you and your employers will focus on your mental attitude and how you carry yourself. This is another and perhaps the most important reason to do well, it will lead to a happier workplace. Winning (doing well) is important. People want to be a part of a winning team. The best players in the world want to be around other great players. Winners are attracted to success. Failures are attracted to more failure, because they don’t have to try as hard. They are off the hook from responsibility. Failure is the easy road and it becomes addictive. In fact, both success and failure is addictive, but it’s better to be addicted to success so that you are trying constantly to do well and grow.

There is a term, “feed the beast”. It means, essentially, that you should focus on what you are exceptional at doing so your level of happiness and confidence is high while you work on correcting areas where you are lacking. Whenever you are feeling down, “feed the beast”. Remember what you’re good at to get the confidence and vitality you need to succeed back into your life. A simple shift of focus; to working hard instead of taking it easy, to things that you are great at instead of what you are lousy at, to what makes you feel incredible instead of what makes you sad- will lead to incredible results. Winning (which is doing the very best you can) is important. The first step to winning is action. Taking action by doing the very best you can at what you do will not only lead to eventual success, it will create happiness in yourself and the workplace. Do well, and those around you will start to do well also. Hard work is infectious, as long as it is part of the expectation and the culture of the workplace. So, find a place where people like to work hard and then begin to do the very best to master the job. Mastery leads to happiness and fulfillment.

In health,


A Warning

How the Economy Works

Americans are not taught enough at young age about how money and the economy works. It’s an uncomfortable subject and most believe it’s impolite to talk about money. So, we go on through life not fully understanding the subject of finance or how succeed in accumulating wealth. Most of what I know, I had to learn through trial and error as well as reading about how ultra wealthy people think and act. Unfortunately, despite volumes of literature having been written about the subject, most people consider economics a boring and complicated issue that should be left to the experts. I feel the need to dispel some myths about economics so a better understanding can be reached about where we stand economically today.

Myth 1. The economy is complicated. This is false. An economy is simply the sum total of all the transactions that take place in a given market. Everything can be boiled down the basics, the broad economy is nothing more than individuals trading goods and services for something they deem more valuable than what they are trading. If people are spending less, the economy slows. If people spend more, it expands.

Myth 2. Savings doesn’t matter. We are told to save money at a young age, but if you look at the pundits on television talk about the health of the economy, rarely do they refer to how much a family has stashed away for savings. Instead, they talk about consumer spending. Now, spending is an important indicator of economic health, but so is savings because savings is a measure or future investment and spending. If you are saving your money, it’s because you intend to spend it at a future date for something you need at that time. If you are not saving, you are limiting your ability to spend money in the future, instead opting to spend it now. Savings is one factor that leads to the creation of new capital investments and businesses. If the savings rate is low, this is an indicator the future business creation may slow.

Myth 3. All debt is bad. This is wrong and it keeps people from thinking and expanding in a big way. Most big companies use leverage, (debt) as a way to expand business and income. There are two types of debt, consumer and business. Consumer debt can be bad because generally we are using it to buy goods and services that do not produce future income. Business debt can be good if it is used to produce future income.

Myth 4. People spend based on how much money they have. This is wrong. The ability to spend and the total economy is based on two things; income and the credit (debt). You can buy things with cash, or with credit, which is a future promise that you will pay. The biggest indicator is how people will spend is based on their available credit. Unfortunately, people buy things based on what they believe their future income will be, not what they make now. So, they use credit to buy things that don’t produce income. Eventually when the bills come due, if their income has not gone up enough to cover the new debt plus interest, the person has to default on their credit payments. The company that holds the debt must now take a loss of income and subsequently reduce the amount of credit to consumers. If this happens on a large scale with many people, the reduction of credit will lead to less available purchasing power and less transactions in the economy. Less transactions leads to a slow down in the economy, job losses because companies are selling less and often a reduction in pricing of products.

Myth 5. Wealth is money. False. Wealth is an increase in production and output. If you have a farm and are able to collect twice as much crop as the year prior, you have increased your wealth. People think that the government can just print money to take care of all debt and economic problems. If this were true, we could just all quit our jobs and have the government give us money. Obviously, this cannot happen or basic services necessary to living would never get accomplished. Moreover, an increase in the money supply, if credit levels are still high, without a corresponding increase in the production of goods can lead to an inflation in pricing. In other words, the ability of your money to buy products and services is reduced as more money enters the economy.

Where We Stand Today

At the time of this writing, household debt and government debt has reached record levels. (1.06 trillion for consumer credit card debt, 1.5 trillion in student loans and a total of 18 trillion if we include personal mortgage debt). Government debt has also reached a record 20.6 trillion largely due to unfunded liabilities such as pensions, MediCare and Social Security. The average cash savings of the typical American family is less than $1000 dollar. Nearly 40 percent of families have no cash savings at all, meaning the ability for these families to make future purchases is significantly reduced unless their income expands greatly. Already, auto loan defaults, student loan defaults and credit card defaults are on the high and expected to reach higher levels. In my own businesses, I have seen more credit card declines every month. We have a serious debt problem happening right at the same time the stock market is at an all time high.

What It Means

The American consumer is tapped out as far as their available credit. This likely means that despite all time record level stock prices (which have very little to do with the real economy for most people) their ability to make future purchases will decline, leading to a slowing economy. Of course, no one can predict the future, but if the numbers are any indication, we are at the peak of the debt cycle and what follows will likely be more defaulting on debts and subsequently job loss and a retraction for many businesses. Be warned. Invest in yourself, your skills, your health and save the rest of your money so you can capitalize on lower prices during a downturn. Remember, people always sell things for less when they believe times are bad.

Sorry for the negative note. I’m just trying to be clear on what I see happening so I can help you and your family thrive! If you want a great YouTube video on some of these concepts, look up Ray Dalio’s video on “How The Economic Machine Works.” I promise you’ll learn something.