In this guide, I will explain what data goes where and how to put it in as easily and quickly as possible. I won’t talk about doing a flip yet. That will be another post very soon.

Data the System Tracks

Here’s what data the system needs from you:

• Payments

• Contributions and boosters

• Credit line transactions

• Unpaid Balances by category

The Income Machine Tracking System contains data entry on a few tabs:

• Enter payments on the Payments tab

• Enter Contributions and boosters on the Contr_Boost tab

• Enter credit line transactions on the LOC Tracker(s) (LOC Tracker tabs have names like, LOC-RF1, LOC-RF2, where RF are my initials. Sometimes, instead of initials, I use a label for the bank or credit union where I have the credit line. For example, LOC-Ent or LOC-M1Core.

• Enter current balances of Unpaid Balance by category in UPB trackers. UPB tracker tabs have the following names: Liquid_UPB, Illiquid_External_UPB, Illiquid_Internal_UPB, and Illiquid_Leverage_UPB.

Enter Payments

Payments are the easiest to enter if you’ve sorted your payments table correctly.

Since we’re not doing a flip right now, the payments to enter are payments you have already entered before. Even new payments, if you flipped last month, have rows in the table for upcoming payments if you completed your flip procedure.

Sort the Payments data table so that it’s ready for easy data entry.

1. Select the whole Payments data table, including headers at the top and including the comments at the right end of the table. Don’t select any columns to the right of the comments.

2. Click Data -> Sort Range -> Advanced range sorting options

3. Select “Data has header row”

4. Select “Date” and A to Z

5. Click Add another sort column

6. Select then by “StreamID” and A to Z

7. Click then by “Pmt Num” and A to Z

8. Click Sort button

Now you’re done sorting. Navigate to the cell at the end of the blue text in the column Payments Received. You will see that the rows for your next month’s payments to enter are all together. Here’s how to enter payments:

1. Enter payment amounts one by one. Or you could even copy the payments received from last month and paste them in.

2. Then edit any payment amounts that differ from last month (e.g., Prosper payments).

3. Enter the actual dates received for each payment. To enter dates for these payments quickly, you could enter the first date and then just copy down (with the date to copy seleted, Ctrl-Shift-DownArrow, then Ctrl-D).

4. Enter the name of the credit line where you sent each payment in column to LOC. The name of the credit line is the name of the credit line tracker tab in your template. If you use only one credit line, then just copy the name of the credit line from earlier payments. If you use multiple credit lines, then make sure you use the correct credit line tab name for each payment.

5. If you want to enter any comments about a payment, enter those in columns Action (column Z) and Comment (column AA). Data in these columns are not used anywhere else, so you can enter anything you want for your reference.

Your entry of monthly payments received is done!

Double check the payment amounts are right. I always have to edit my Prosper payments because they change every month. Double check the dates for each payment. (To be honest, I just put my payments on the first of the month all the time; however, I have found myself confused later on when I have multiple payments with the same amount and wasn’t sure which payment went where.)

Enter Contributions and Boosters

Most Money Dates, I have one contribution payment and no boosters, so one transaction for this tab. But you can have as many contribution payments split over the month going to one, two, or three different credit lines. You can also have as many boosters going to various credit lines. Track copycat boosters here, too, but I will describe how to add copycat boosters in another post.

Navigate to the tab Contr_Boost. For each contribution or booster, here is the process:

1. Navigate in column Date Received downward to the cell after the last one that has blue text in it.

2. Enter the date received for the payment.

3. Enter “Booster” or “Contribution” as appropriate in column Type.

4. If you want to track any planned amount separate from actual amount, then enter the planned amount in column Planned. (This field is not used anywhere for analysis as of this post, and Income Machine Tracker version 2.3.3 .)

5. Enter the amount of the payment in column Payments Received.

6. If any portion of this payment was borrowed, then enter that amount in the column Payment Leveraged. Most of the time, this is zero, but if you use policy loans for contributions or payments, then enter the borrowed amount of the payment here.

7. In the column to LOC, enter the name of the LOC tracker tab where this payment went. The name of the credit line is the name of the credit line tracker tab in your template. If you use only one credit line, then just copy the name of the credit line from earlier payments. If you use multiple credit lines, then make sure you use the correct credit line tab name for each payment.

8. If you want to enter any comments about a payment, enter those in columns Action (column J) and Comment (column K). Data in these columns are not used anywhere else, so you can enter anything you want for your reference.

9. Repeat this process for all contribution and booster payments you made.

Update LOC Trackers

If you have entered your payments, contributions, and boosters for the current month, then updating your LOC trackers is easy.

1. Copy the rows from the previous month.

2. Paste the rows below the previous month. (I like to add a few blank rows between months of data.)

3. Update the month number in column A. (The month number refers to the month since you started your income amplifier.)

4. Update the dates of your transactions in column C. (Dates of payments, contributions, and boosters are not copied in as of version 2.3.3.)

5. Edit descriptions of transactions if you wish.

6. Update the interest and fees in column E.

7. Add any transfer amounts in column F (but not for flips or payments - those are automated). (Example: If you used your credit line to pay a bill or receive a reimbursement that isn’t an income amplifier transaction - payment, contribution, or booster).

8. The list of active income sources streamIDs should have been copied into column H automatically. All active streamIDs should be there, including streamIDs for payments made to other LOC trackers. Any payments made that were not sent to this LOC tracker show up as zero (since the payment was sent elsewhere. This way you can check that payments were not mistakenly sent to the wrong LOC tracker.)

9. Check that your contribution amount was copied in correctly in column I. If it’s wrong, double check that you entered the correct amount, date, and LOC tracker tab name on the Contr_Boost tab.

10. Verify that the payment amounts for each StreamID are correct. If not, double check on the Payments tab the date, amount, and LOC tracker tab name is correct for each payment entered.

11. If you have boosters, then add a row to this month if there isn’t a row for boosters already. Then copy the formula in column L to the boosters row. Verify that the amount is the sum of all the boosters for the current month sent to this specific credit line.

12. If you have copycat boosters, remember, copycat boosters don’t affect your LOC tracker because copycats are funded from elsewhere.

LOC Tracker Updates for a Flip

If you are doing a flip this month, then add the new income source(s) and streamIDs to the Income_Source_List tab. Then update your LOC tracker as follows:

1. Add a row in the current month and fill in the date and description for your flip.

2. Copy the formula in column G to the row that describes your new flip.

3. Verify that column G shows the correct streamIDs for your flip. StreamIDs for all income sources for the new flip should display.

4. Verify that column J displays the correct flip amounts that you funded from this credit line. Amounts that were funded from other credit lines display on other LOC tracker tabs. The LOC tracker displays the streamID for income sources funded entirely from a different credit line, but the flip amount displays as zero.

Reconciling Your LOC Tracker with a Bank Statement

1. Verify that the balance on your LOC Tracker in column O is the same as the balance on your statement. Mark all the transactions above the balance that matches with an “x”.

2. If you make any changes to earlier data, your balance might not reconcile anymore.

Multiple Credit Lines

If you are using multiple credit lines, then follow the same steps for each of the credit lines you are using.

Update UPB Trackers

For each of the four UPB tracker tabs: Liquid_UPB, Illiquid_External_UPB, Illiquid_Internal_UPB, and Illiquid_Leverage_UPB, enter the current balance from your statement or online accounts.

Liquid_UPB corresponds to balances from incomes sources, like Income Funds. Navigate to that tab and do the following:

1. Enter the balance of your investment holdings in column M.

2. If you keep a cash balance separate from your investment holdings that is specifically for this portion of your UPB, then enter that cash balance in column L.

3. If you keep any other balance separate from your primary investment and cash accounts (called a “hold store” - example, perhaps you transferred some of your UPB to hold it long term somewhere else, like a whole life policy.) Then enter that balance in column N.

Do the same for tab Illiquid_External_UPB, for balances, like Prosper or other external income sources (payments come from a source that’s not you), and that are not liquid (you don’t have access to the assets to liquidate.)

For tabs, Illiquid_Internal_UPB and Illiquid_Leverage_UPB, there shouldn’t be any data entry for balances if you are making your payments as planned. These are internal income sources, so no market volatility. If you are not making payments as planned, then the UPB will be calculated based on the payments you actually make or don’t make. No balance edits are needed. If you keep a cash account balance for making payments that is specific for these categories, then update those balances if you wish.

Money Date Conclusion

Your Money Date process is complete with the steps above.

Let me know any questions you have about your situation.

Contemplating Changes to Your Income Amplifier Plan

Your Income Machine Tracking System includes one or more tabs to model an income amplifier. With a few settings you provide, these modeling tabs calculate how an income amplifier behaves, and you can view tables and graphs of monthly cash flow, unpaid balance, debt service coverage ratio (DSCR), cash flow rate, and much more.

By changing settings in the model, you change the behavior of the system, and you can see the results and compare them to another model or even the data collected for your actual income amplifier. Here are some of the ideas you can try.

Your model tab has a name, like Model_XXX and another, like Model_YYY. (You can have as many copies of the model as you want, but you might need help setting it up. Let me know if you want help.)

Here’s the the model tab looks like. In this case, the model tab name is Model_BB which I created when I made this template for a subscriber.

In this template, there are two model tabs, Model_BB and Model_BB2. You can make any changes to settings you want on these two tabs and then compare the results.

Settings you can change are in blue cells and have blue text.

Do not change any formulas or column titles, or your system might break.

Changing Model Settings

When I talk about making changes to your model, I am not talking about making real changes to your real system. I am talking about making changes to the model that make calculations and allows you to see data tables and graphs. Making changes to the model settings does not affect your tracking system in any way. Making changes to the model settings doesn’t mean you have to change anything about your real system in real life. Changing model settings is just for seeing what happens months or years down the road so you can play around and imagine “what if” as much as you want.

Furthermore, you can compare changes in one model to a another model, perhaps your original plan as a baseline, or perhaps a completely different set of changes.

It is also possible to compare a model to your real system performance and behavior.

Viewing Model Output

Several tabs in your tracking system display data tables and graphs of the model tabs. Any changes you make to settings change the calculations, and then the “reporting” tabs show the results. I will explain how to view results later in this post.

Next, let’s see how to change model settings.

How to Adjust Monthly Contributions

You can change your monthly contribution amount in your model in any month you want. The model assumes your intent is to change the monthly contribution to the new amount for every single month going forward until you change it again or stop the system.

To make this change, simply find the column Contribution Reset (column G), and navigate downward corresponding to the month and year in the column Date (column C). Then enter the new amount you wish to contribute each month. After the system recalculates, the projections for your system are reflected in the model. You can view the changes on any reporting tabs, such as Plan Summary, Plan Schedule, Plan Comparison, and others. (More details later in this post on how to customize your view of the model results.)

Boosters

There are several ways to use boosters.

One-time Boosters

To add a one-time booster, just enter the amount of the booster at the desired month and year for the setting LOC Boost (column L). This adds a payment to your line of credit in that month and year only, and it assumes you are adding your own capital, not borrowed capital.

A Booster Series

A booster series is a set of payments of one amount you specify to begin on a particular month and to end at a particular month. All payments go to your line of credit.

For example, to booster $300 each month for 10 months, starting April of 2025, do the following:

1. Find the row for April 2025 in column Date.

2. In that row, enter 300 for the setting Monthly Boost Reset. You do not have to enter $300 for any following months. The system assumes the booster will continue until it finds a new change to the setting.

3. To end the booster series, enter 0 for the setting Monthly Boost Reset for the month after the last booster payment you intend to make. For this example, the tenth payment would be made February of 2026, so the setting to end the booster series would be 0 placed in month March of 2026.

Note there is no limit to the number of booster series you can add or change. You can have a break and then another series later with a different amount, and you can have just about any combination you can think of.

Copycat Booster

A copycat booster adds an amount to your unpaid balance with new monthly cash flow payment at your cash flow rate setting to your line of credit.

To add a $10,000 copycat booster to your plan, starting May 2025, follow these steps:

1. Find the row for May 2025 in column Date.

2. In that row, enter 10,000 for the setting Copycat Boost (column K).

To verify the copycat booster, you can check column New Invested for month May 2025 for the value ($10,000). (If you have a new flip the same month, then you would see that the New Invested value is the flip amount plus the copycat amount.) The column New Cash Flow will also show a new cash flow payment of $300 in the month following the copycat, June 2025 in this example. (Note: The settings for Loan Constant (columns V-Z, covering all different asset and income source types) is 3% in this example.)

Pre-Flip Boosters

When I’m close to the next flip, I almost always boost to get to the next flip a month earlier. Let’s think about the process. Every month, you have your monthly contribution and your monthly cash flow. I make my contributions and cash flow payments near the beginning of the month. If my credit line is fully paid as a result of those payments, I will flip immediately.

If my contribution and regular cash flow payments leave the credit line just short, then I will boost and flip immediately.

Looking at the column IRIS LOC Balance, find a cell where the balance is low, but still negative. How low? First, there is a setting in cell BL4 with a negative number, say ($1000). The model assumes that if the balance is smaller (closer to zero), than that amount, then it’s time to flip. It doesn’t wait until the balance is actually zero or above. It flips slightly early, but it does not add a booster. It just flips early, which means the LOC balance after a flip potentially could be larger than the flip size. The amount remaining on the credit line balance before the flip is still there. For modeling purposes, to get to the next flip, your booster only has to put the balance past that ($1000) threshold. (You can change that threshold to whatever you want for flipping early.) For the purpose of your real system, you simply decide whether you want to flip early (the credit line balance is not quite zero), or you want your booster to make the credit line zero.

To summarize the steps,

1. Find a low credit line balance (close to zero but still negative) in column IRIS LOC Balance. This balance should be above the threshold (farther from zero) for flipping early, cell BL4.

2. If desired, adjust the threshold for early flipping in cell BL4. It’s ($1000) by default, but you can change it to anything, including zero (no early flipping).

3. Add a booster amount in column LOC Booster in the same month as the low credit line balance you found.

The next flip and New Invested will be in the following month. (I don’t have a way yet to make the next flip happen in the same month - technical spreadsheet stuff.)

How to View Model Results

Your template includes several reporting tabs for viewing results.

• Plan Summary

• Plan Flip Schedule

• Plan Comparison

• Flip Schedule Compare

• Plan vs Actual Summary

• UPB Allocation Report Actual vs Model

• UPB Report Actual vs Expected

• Cash Flow Source Report Actual vs Model

• FlipSchedule

(I am still working on which tabs are most useful. Your feedback is welcome! It is possible to create more reporting tabs and customize exactly what data and graphs you wish to see.)

Plan Summary

To view model results, navigate to the tab Plan Summary.

If you are using more than one model tab, make sure cell B1 on this tab has the name of the model tab you want to view. (The text of that cell must match the model tab name exactly!) The Plan Summary tab displays the results of any model tab with any changes to settings as long as the model tab to display was copied from the original model tab in your template, and the column names have not been modified.

Plan Summary includes several graphs. The horizontal units is months.

• Unpaid Balance, Contributed Capital, and My Capital

  • Unpaid balance is the line on top.

  • Total Contributed Capital and Total My Capital are the same unless you use leverage for contributions. If you use leverage, then Total My Capital will be less than Total Contributed Capital.

• Temporary Cash Flow and Monthly Contributions

  • Shows a flat line for monthly contributions and the exponential growth of your monthly cash flow payments. (Of course, the flat line for contributions changes if you have changed the settings!)

• UPB Equity Multiple of Contributed Capital and My Capital

  • UPB Equity Multiple of Contributed Capital is the total Unpaid Balance divided by the total amount of capital contributed. The whole point of the income amplifier is to grow your UPB faster than simply saving your capital. The line should be going up, and it should be exponential, not a straight line. Your UPB equity multiple is amplifying.

  • If you use leverage for contributions, then there are two lines. One is the multiple of all contributed capital. The other is the multiple of your capital.

• Compound Growth Rate of Contributions and My Capital (XIRR)

  • Displays the annual compound growth rate of all contributed capital and your capital (separately only if you used leverage for contributions).

Changing the Time Period of the Data Table and Graphs

The model calculates for 180 months. You can customize the range of months to view by changing the blue text in the Date column (column A) in the data table below the graphs. The default time period is 180 months, and each row samples the data from the model at the month number indicated in the cell. By default, the data table takes data from the model by year: months 0, 12, 24, 36, 48, etc. You can change the month numbers in the Date column.

• To zoom in on data for the first 3 years, you could enter the following:

  • Enter 0, 1, 2, 3 vertically in the first 4 cells of the Month column (cells A66-A69) below the graphs

  • Then select the 1, 2, 3 cells (cells A67-A69)click and drag to extend the values down to cell A96.

  The table should show blue values 0-30 in the Month column, and the data should have been copied from the model. The graphs automatically update with the data in the data table.

To return the data table and graphs to the annual data and the full 180 months, edit the Month column to have the values: 0, 12, 24, 36, 48, etc.

1. Enter 0, 12, 24, 36 vertically in the first 4 cells of the Month column (cells A66-A69) below the graphs

2. Then select the 1, 2, 3 cells (cells A67-A69)click and drag to extend the values down to cell A81.

3. If you extend too short (by letting off the mouse button before you go down far enough, just extend again until you get to A81.

4. If you extend too long or if there are month numbers after the data you want to graph, just put dashes in all the cells from A82-A96. DON’T delete any formulas in the rest of the data table.

Quick way to fill down dashes:

1. Enter a dash in cell A82.

2. Click on cell A82.

3. Hold Ctrl-Shift-DownArrow; Let go of Ctrl-Shift-DownArrow

4. Press Ctrl-D to copy down the dash to the selected cells

Here’s what the data table looks like after returning the timescale back to every 12 months.

I hate to admit it, but I think bumper stickers are funny, and I try to read them at stop lights and in parking lots all the time. With all my bumper sticker reading, I might need this one:

“I'm not tailgating, I’m drafting for fuel efficiency.”

(Ok, I don’t really do that…)

Here’s a financial one I found via ChatGPT:

“Spent my 401(k) on this bumper sticker.”

or

“I do my own stunts… like living paycheck to paycheck.”

But why are bumper stickers funny? I think because they’re witty, snarky, and poking fun with exaggeration, hyperbole, puns, and more but often with a kernel of truth. Usually the real truth requires disregarding the full picture, essential pieces, or the nuance. Otherwise, it wouldn’t fit on a bumper sticker.

But most important, it wouldn’t be funny and easy to remember and repeat!

Bumper Sticker Wisdom for Wealth Building

Bumper Sticker Wisdom is easy to remember, easy to repeat, and sounds like wisdom.

• It takes money to make money

• No risk, no reward

• I owe, I owe, it’s off to work I go!

• Money doesn’t grow on trees

• Invest for the long haul

• Save for a rainy day

• The rich get richer

• Don’t count your chickens before they’ve hatched

• The grass is always greener on the other side of the fence

• When in doubt, throw it out

Of course, there are many more.

The problem is not that they’re all (partially) wrong. And it’s not that the true parts are half truths. The real problem is when I let them stand as wisdom. I hear it, I repeat it, and I move on. I just refreshed a belief about money that’s not totally wrong but not quite right. I’ve stopped thinking, but this wisdom absorbs into my financial belief system, subconsciously guiding my perspective and decisions about money.

Instead of Accepting Bumper Sticker Wisdom, Use It to Advance Real Wisdom

Bumper stickers trigger my curiosity.

• What point did it try to make?

• What part of it could be true? When and how?

• What part do I believe is not true, or not always true?

• What could be the motivations of the person speaking the message?

• What part am I uncertain about?

I do this with every bumper sticker I read… No, I don’t! I look at ideas that relate to my goals and values. I’m constantly adding to and subtracting from what I think I know. I’m integrating what I discover with other ideas. I create and deepen discoveries by turning them around in my head, generating still other ideas to explore. But I do this for stuff that matters to me, not every bumper sticker.

Analyzing “No Risk, No Reward”

I hear “No risk, no reward” all the time in financial media, from experts, from advisers, and from friends. This matters to me because both risk and reward affect the progress toward my wealth goals. Let’s be curious about it. I won’t go through all the questions in this post because that would be too long, but I’ll give a sample of how I would start.

What point does it try to make?

The bumper sticker claim is that there can be no reward without taking risk. Here’s where my mind goes:

• Does it mean I can’t get any reward unless I take some risk?

• Does it mean I have to take a large risk to get a large reward?

• Could I take a small risk and get a large reward?

• How do I avoid taking a large risk and getting a small reward?

• How do I measure risk? How to measure reward? How do I compare them?

• What about negative rewards (losses)? How do I avoid those?

Each of those questions about “No risk, no reward” could lead to more questions and more claims to test. Answering those questions could take more pondering, more research, more conversations with experts, advisers, and peers, more education, more books, more podcasts, and more. Of course, nothing beats your own experience for building wisdom, (but learn more about large reward for small risk, first!)

To go deeper, we might explore the meaning of key terms, like “risk.”

• What is a risk?

• Which kinds of risks do investments have?

• How do real estate risks differ risks of a stock portfolio?

• How do I measure various kinds of risks?

• What’s a large risk? What’s a small risk?

• How do I know which risks I can afford to take?

• How do I know if I am taking too much risk?

• What does a risk management plan look like for an investment?

• How do I account for risks to personal relationships when I invest?

• How do I work with an adviser to ensure the risks I care about are managed properly?

Bumper Sticker Wisdom doesn’t help much (if you’re goal is to have more wisdom and make good decisions.) It ends a conversation.

But it starts my curiosity and exploration. It gooses me to expand, to deepen, to make connections, to find experts, and more. It’s not necessarily fast, but the more I do it, the faster I get. I ask better questions. I see more patterns. I see nuance faster. Challenging Bumper Sticker Wisdom in this way helps me break out of old thought patterns, see past tired dogma, and make better decisions about my wealth journey.

So far posts for Savvy Wealth Tools have been more about Wealth Mechanics because I wanted to share ideas that were eye-opening for me even after absorbing education, mentorships, and hundreds of books, webinars, podcasts, videos, and who knows what else.

I like to frame things not just to understand but so I can make something happen. My framing for wealth building is like this:

Level 1: Wealth Mechanics

Wealth Mechanics is concepts and math. The forces propelling and slowing your wealth building. Principles, models, spreadsheets, diagrams and so on. We have learned in earlier posts that we need enough capital earning a modest, but reasonable rate of return. We have to understand the forces of inflation, interest, taxes, and opportunity cost. We need savvy tools and techniques with leverage and velocity of money to attain sufficient compounding to reach our goals. We need to minimize or avoid volatility, interest, fees, taxes, drawdowns, and other things that interrupt or slow down our compounding.

Level 2: Wealth Practices

Your decisions and actions determine the speed and amount of your wealth building. What you decide and do and when and how all matter. Avoiding what slows you down and managing risk are also part of wealth building.

Wealth Practices is not just about selecting investments that make high returns. We navigate Wealth Mechanics to make our compounding happen the way we want with fewer mistakes and surprises. Through our understanding of Wealth Mechanics, like the forces of inflation, interest cost, and opportunity cost and the tools of leverage, spreads, and velocity of money, we can decide what to do and when. We can be more sophisticated and strategic with what we want our money to do. Swinging for the fences all the time is a recipe for failure. We can be savvy, make smarter decisions, and build wealth much faster.

One of the most important wealth practices for me was discovering what I did not know that I didn’t know. Traveling the wealth journey with humility and curiosity allows me to find ideas I didn’t even know I needed to learn. That’s how I have greatly improved my own Wealth Building Capacity.

Level 3: Inner Game

My view of the Inner Game of wealth building is a nod to Timothy Gallwey’s Inner Game of Tennis, one of the most popular, and in my opinion, valuable tools for improving your skills and performance.

Your work on the Inner Game is to raise your awareness of how your humanness affects your focus, what you learn, how you decide, and what you do (or don’t do).

In future posts, I will provide many examples as well as strategies for navigating and improving your performance as a wealth builder through your work on the Inner Game. In my own wealth journey, I became aware of many patterns driving my investing decisions. Here are a few of them:

• “I promised my wife that I would help her get off the road so she could be home more.” (Fear or anxiety about not succeeding fast enough and therefore breaking a promise.)

• “I’m a new investor, so I will be more successful if I have an experienced partner.” (Fear of making big mistakes. Reliance on perceived experts.)

• “I have too much idle capital, and I need to get it working.” (Anxiety about finding deals to invest in. Money burning a hole in my pocket.)

There are dozens or hundreds of ways that your mind plays tricks that can lead to mistakes in strategy, decisions, and actions. Being ultra-rational and going only by the numbers is not enough or even the best way. That has its own vulnerabilities. Ask me how I know.

Seizing Your Power to Build Wealth

We build Wealth Building Capacity through the work in all three levels: Wealth Mechanics, Wealth Practices, and the Inner Game.

Savvy Wealth Tools is about the work we do in all three levels but with the focus on what YOU can do to improve yourself to grow your Wealth Building Capacity.

Now I’m going to pick on a talented analyst and investor, Lyn Alden - not because I think I’m smarter - but simply because I cherry-picked one post of hers that I will use to illustrate the point of this article. (Sorry, Ms. Alden!)

How to Build Wealth Fast (?)

In the post, How to Build Wealth Fast- This Chart Shows What it Takes, she provides a chart of monthly savings amount vs. rate of return to show how much wealth can be built in 25 years. In the section that follows, How to Build Wealth, she declares that there are two things to get right to build wealth:

1. Increase the difference between your income and expenses

2. Save that difference and grow it exponentially over time

That’s it.

When I first read this, I thought, “Sounds right, but I’m not totally convinced… ” (and also “25 years isn’t very fast!”

Declarations Invite Contrarians

When we declare there is only one way to do something, we also invite contrarians to search for new possibilities. I probably wouldn’t have given her comments a second thought if I hadn’t already found other contrarians and rebels who see the problem differently and have found new ways to approach the problem of wealth building.

If a declaration doesn’t trigger some curiosity and creativity, then you might just accept it without question. But if you take in a broad range of view points from many people, many sides, and many domains, you may be more likely to trigger your built-in creativity see a challenge with different eyes.

There are two ways of seeing the wealth building challenge that may change the way you think about solving the problem.

1. Acknowledging the magnitude of the wealth building challenge we face

2. Seeing and changing the flow of money through your life

The Magnitude of the Wealth Building Challenge

I discussed the magnitude of the wealth building challenge in the series, “Simple Model for Building Wealth.”

1. Part 1: Bedrock Fundamentals

2. Part 2: Setting Goals

3. Part 3: Capital, Rate of Return - and a Curveball

To summarize, the fundamental problem is that most of us simply can’t save enough money fast enough to have enough assets to generate the passive income we need for our lifestyle.

• Salaries don’t grow fast enough, and they usually level off mid career

• Life expenses keep growing as fast or faster than our incomes

• We are told that we have to save more and more, but we are squeezed to a pulp. There is just not enough margin for most of us to save and get ahead of inflation.

For most of us, the numbers are not just daunting; they are stupefying. To see your own numbers for yourself, I invite you to see a tool at Fynanc.com that explains this challenge. They call it the Compounding World problem, which refers to the fact that our lifestyle expenses continue to compound with inflation, but our savings tops out and is essentially flat. Without sufficient compounding of your savings and investments, the finish line speeds ahead much faster than we can run.

Here’s a sample chart from the tool with sample inputs:

• Desired annual passive income: $120,000 ($10,000 per month)

• Current annual salary: $80,000

• Expected annual salary increase: 5%

• Annual inflation rate: 5%

• Average portfolio annual yield: 8%

• Percentage of your income that you invest: 25%

See the problem? The gap between compounding investments and the goal is increasing even with salary increases and saving 25% of income.

Here’s the link to the Compounding Problem of Achieving Passive Income

https://toolbox.fynanc.com/compounding

I encourage you to try it out for yourself to get a view of your own finish line and the challenge you face to reach it.

When the Horse Is Dead, Dismount

After I lost my job by surprise in 2014, I believed a good salary, along with my wife’s good salary, was still not going to be enough for us to make up the ground we needed. At the time, we were in our mid forties. In addition to needing to make up ground on a finish line speeding ahead, we also had to dig out of a giant hole from debts from a challenging business, student loans, a rental property losing money… We weren’t even saving money yet.

Believing that the paths I had already tried were certainly not going to work, that predicament led me to look for other ways forward. That doesn’t mean it was clear, easy, or flawless. It just meant I was genuinely committed to learning ways to make up ground and get ahead somehow, some way by not relying on what I had already tried..

The Flow of Money through Your Life

In Ms. Alden’s post, the approach for building wealth fast is much like the conventional point of view and makes no suggestion for other avenues. The overall strategy is then

1. Save as much as you possibly can every month after you pay your expenses.

2. Invest it with the best possible rate of return you can find.

This leads many to believe that this is the best we can possibly do. After acknowledging the magnitude of the challenge, we either resign to working until we cry uncle because we believe the dream goal is impossible, or we start thinking about paths we’ve never tried before.

Many people reach their financial goals, so it must be possible to succeed. But it’s common to believe that we won’t succeed unless we have a serious head start, like we imagine others must have had. I’ve heard some say, “The only way to get a home now is to inherit it.” Well, it might be harder for most people to do it the way it used to be done, but maybe that invites us to look for new possibilities. Will you accept the invitation?

Possibility 1: How could money flowing into your life contribute to your compounding before it goes out?

We are taught to save after we pay expenses. What if we could make money or reduce expenses during the time we have received money but before we have to send it out?

There are many techniques for this, depending on how long you have the money, how much you receive, what banking tools and processes you use, and so on. It’s possible to make money or save money just by the way you guide money to flow through your life. It’s a matter of finding tools, techniques, and processes that many people already know how to use.

Possibility 2: How could you compound your savings quickly with modest returning, low-volatility assets?

We are taught that the only way compounding happens is by investing and then reinvesting returns. That is, we know no other way to create compounding besides investing and waiting for the growth (and then sale) or income (rents, dividends, etc.), and then reinvesting.

There are more ways to create and control compounding for yourself. Some ideas were given in these two recent posts:

Expanding Your Ways to Get Ahead

Recycling Capital Accelerates Your Wealth

There are many ways to use leverage and recycling capital (velocity of money) to get more compounding for your savings and investments. I would never have found them if I had not kept asking questions and found people searching for better solutions.

The theme for the annual conference for the Fynanc community was “Bend the Line.” Look again at the graph above. Imagine the blue line of your savings compounding so fast that your blue line of investments bends upwards and exceeds your finish line in less than 10 years and then stays ahead for the rest of your life. Not only this possible, everyone in this community is doing it now. We are bending our lines!

My Secret (not really a secret!)

If I have any secret to offer, it is that I never stop challenging what I know and never stop learning even when I hear pretty good answers from very smart people. There is always more I can learn, and sometimes I create breakthroughs that can change my life. I invite you to keep challenging yourself. Don’t let what you know keep you from seeing opportunities to bend your line and change your life.

I just got back from the Fynanc Annual Community Event in Las Vegas, where nearly 300 active wealth builders met to learn and connect about advanced strategies for building wealth. On the first day, I sat next to a lady who owns a 4-plex and manages the property herself. I could tell she was older, but when we went to lunch, she told me she is 80 years old. She has a vision of creating wealth and passing it on to her family, and here she was at this advanced conference, learning and implementing strategies most of my fellow real estate investors don’t even know about.

She asked if I would help her complete one of her investing actions… She wanted help using her phone to make a transfer into Income Amplifier system. (!!!) Here is someone, 80 years old, still learning new ways to manage money and create wealth on her phone. Unbelievable! She went on to tell me how a big financial firm had told her they could turn her nest egg into $1 million in 15 years (when she would be 95 years old). She told them no; she can do better herself in less time.

I know the system (Fynanc.com) she’s working on, and I know she started around two years ago when I did. That means at 78 years old, she allowed a new possibility and strategy to enter her mind, and she is pursuing it full blast. She is committed to her vision without being attached to what she may have learned before. That’s what it takes to become a savvy wealth builder.

The human experience conditions us accept and reject ideas. We can’t use or participate in everything possible, so we have to filter. Each of us has different patterns for what ideas and opportunities we like to pursue or reject. In the extremes, we do more than enough of some things, and we defend against doing other things. We adopt these habits and patterns to do what we think will lead to the experiences and success we want. Sometimes with intention; sometimes out of necessity, and sometimes without awareness at all.

Shining light on interferences

Seeing your own habits and patterns can help you become more a savvy, shrewd, and successful wealth builder. Here are some of the ways we allow attachments to interfere with considering or adopting a new possibility.

1. We’re not sure the current path isn’t working, so we hold on a little longer.

2. The current results don’t look good, but there’s a story why it’s going to come back, or it “averages out”, or it “always” works out in the long run.

3. We don’t know or believe in any alternative. How can I change if I don’t know what to change to?

4. Fear of going it alone - I might do even worse. I don’t trust myself.

5. I’m not happy with results so far, but I trust the experts and authorities.

6. I’m not happy with results, but my family, friends, colleagues, etc. are doing the same thing. It can’t be that bad if everyone else is doing it.

7. I’ve learned about alternatives, but they might be scams.

8. The current strategy might work with just a tweak or once I turn the next corner.

9. All the experts I’ve talked to are giving answers in the same general direction. How can there be a better answer that I haven’t heard yet?

10. I think I’m hearing half truths… How do I know if a half truth matters a little or a lot?

11. We are told that “too good to be true” must be a lie or a scam. How do we know?

12. If this new idea were the real deal, I would have heard about it before.

13. We often trust what is common or familiar. How do we discover something we don’t know that we don’t know?

14. Experts have told me there are no viable alternatives. How do we know whether to accept this conclusion?

15. I have done it this way for as long as I know. This is who I am. This is what I believe.

Raising awareness, having humility

The list above highlights many ways our minds lead us not to explore a new path. Stories and narratives can masquerade as sound reasoning. Having these thoughts doesn’t mean we’re on the wrong path or that another path is certainly better. Awareness of having thoughts like these can be your trigger for humility, for considering whether your thoughts are keeping you from curiosity, discovery, or deeper reasoning. The story that justifies not exploring is not proof that exploring is a mistake or a waste. The story might just be a cover for avoiding effort or defending against a conclusion we secretly don’t want.

Some might consider this lack of confidence, but I don’t see it that way. We can be convinced to pursue paths that appear on the surface to make sense but that don’t really arrive where we want to go. We might feel confidence when we repeat a story we’ve been given, but our attachment might lead us to overlook that it doesn’t really stand up to scrutiny.

The goal of the savvy wealth builder is to have the awareness, courage, and skill to challenge ourselves and others enough and to seek better ideas, better help, and better paths when the current ones are no longer convincing.

I find it helpful to be confident but with the humility that I may learn something that leads me to change my mind and adapt. Here are some ways to discover or navigate potential attachments that might interfere with your decision making.

Identity

When I say, “I am a real estate investor,” I limit myself to doing the things I believe real estate investors do. I might miss opportunities to do more or better or different, and I might fail to recognize when doing real estate can be an opportunity cost. I like to avoid specific labels for myself, but that has challenges, too. People like to know what you are and how to relate to you.

Experts

Without a doubt, using and trusting experts can be essential. I tell myself, “Do enough homework that you can see other viewpoints and that you can tell when an expert is dismissing your concerns or blowing smoke.” I want to understand my own problem, not just symptoms, as well or better than the experts I consult. I don’t want to believe a surface story and not be able to see the holes. I want to know enough that I believe in the expertise I’m buying.

Familiarity

Familiarity is good for going deeper and becoming an expert. It becomes a vulnerability when we allow fear or anxiety about the areas beyond what we know to keep us from learning.

Alternatives

There’s a continuum for alternatives between focus and shiny objects. Some focus and some variety are both good. We can ask, “Am I too focused and narrow?” and “Am I spreading myself too thin?” and “Am I exploring a possibility or doing another project I know?”

Confidence and Conviction

Strong belief in what we know and believe is great for focus, drive, and progress, but if we let confidence and conviction push us too hard and too fast, we can make mistakes. Real estate investors might do too many projects at once and get overleveraged. No matter how much I believe in a goal or strategy, I reserve just a bit of space in my mind for discovery of opposing factors I didn’t know how to apply before. Instead of allowing my conviction to become an attachment, I think “it’s working, but under what circumstances?” By checking over my shoulder, I discover things to integrate and adapt for a stronger and more resilient strategy.

Some other ways to discover attachments

Sometimes the questions we ask ourselves reveal vulnerabilities in our decision making. We want to uncover them before we make decisions that lead to bigger problems, like choosing the wrong investment partner or buying an investment that sounds good but doesn’t meet our criteria.

Here are a few question I use to challenge myself:

• What am I doing or using that might be wrong?

• What am I hearing that is not always true?

• In what way might I be lying to myself?

• In what ways might I be allowing myself to be influenced?

• What fear, anxiety, or frustration do I have? Am I allowing that to replace my clear thinking?

What are some of the ways you challenge yourself when considering new ideas about wealth building?

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Seeking Testers

I am seeking testers from the Epic Wealth group. I have a few folks from my own Epic Wealth accountability group that has been running for 2 years and a few others interested. If you are in the Epic Wealth program, and you are running your LOC Tracker successfully, then my system might be helpful.

To learn more, contact me directly.

Features of Income Amplifier Tracking System

Tracking for Each Income Source

• Unique income stream identifier for each income source

• Invested Amount

• Income source type (external, internal, liquid, illiquid)

• Supports multiple income sources for each flip

• Supports funding of an income source split across 1-3 credit lines

• All the expected things: dates, term, interest rate (cash flow rate), payment source,

• Notes for transfer process, investing process, and more

• Report tab for each income source: all characteristics, current status, payments received, unpaid balance, expected and actual amortization schedules

Tracking for Contributions and Boosters

• Includes what you would expect: contribution and booster payments received, dates,

• Supports 3 credit lines - so specify which payments go to which credit line

• Supports leverage of contributions and boosters - if you borrow to make contributions or boosters, then it tracks the difference between contributed capital and your capital. (I did this because the main source of my contributions from the beginning was policy loans).

Payment Tracking

• All payments for all income sources are tracked on one tab.

• Tracks expected payments, too

Line of Credit Tracker

• Line of credit tracker for each of 3 credit lines.

• Pulls the data from other tabs, so you don’t have to enter data twice.

• A summary of all credit lines together is kept and reported

Unpaid Balanced Tracking

• The actual and expected unpaid balance (UPB) is tabulated, so you can see the UPB stack

• UPB is tracked in categories:

  • External-Liquid (like Income Funds)

  • External-Illiquid (like Prosper)

  • Internal-Liquid (not applicable)

  • Internal-Illiquid (like Debt to Wealth)

  • Internal-Leverage (subset of Internal Illiquid, specifically for Debt to Wealth used to pay interest on leverage contributions and boosters)

Cash Flow Tracking

• The actual and expected cash flow stacks from your income sources

• Actual and expected payments, cash flow rate, and cumulative cash flow by income source category (external/internal/liquid/illiquid, etc.)

• Some income source comparison data, e.g., finding refinance opportunities

Additional Unpaid Balance Tracking by Category

• Complete tracking of actual UPB balances by category. For example, M1 and Prosper balances change based on markets or rates or defaults, etc. So you can see if your UPB is above or below what you would expect if payments and balance changes were proceeding perfectly.

Unpaid Balance Report - Model vs. Actual

• Unpaid balance model vs. actual chart

• Unpaid balance by income source category model vs. actual charts

Flip Schedule Report - Model vs. Actual

• first 10 flips: date, month number, and amount

• Model vs. actual charts for flip amount, temp cash flow, UPB, debt coverage ratio, cash flow rate, and equity multiple

Savvy Cash Flow Tools will not spend much time discussing the concepts and methods because the best training we know about is the Epic Wealth program provided by George Antone’s company, Fynanc. Some of the ideas from Epic Wealth are discussed in the section Savvy Wealth Tools, but the main purpose of Savvy Wealth Tools is to provide insights and tools related to personal development and decision making. That work will enable you to discover, try, and create more of what will lead to the wealth, life, and peace you want.

I created the tools described in Savvy Cash Flow Tools as a way to solidify and grow my own knowledge as a budding student in the Epic Wealth program. I love figuring out how things work. I can’t help myself! I like to create models and systems and see what happens when I change this or that. And after I’ve discovered something, then I love to explore what else can I do with it… One of the results is this system I created.

The Income Amplifier Model and Tracking System

I have created a model for the Income Amplifier for the individual wealth builder who is growing an Income Amplifier. Whenever I write about the “Model,” I mean my Google Sheets version of IRIS, which is George’s advanced technology. Mine is a poor adopted cousin to George’s, but to the extent that I understand how the Income Amplifier works, my model has fairly captured the real life performance of my own Income Amplifier. As more wealth builders adopt these tools, I will continue to tune the model as needed. That said, I would never suggest using my model as a replacement for the custom plans we get through the Epic Wealth program. I don’t know what I don’t know, but I never stop learning, either.

Warning: If you use my Model, don’t use it to update your strategy without going through Epic Wealth to update your plan unless you really, really, really know what you’re doing.

The Income Amplifier Tracking System

I have created an advanced tracking system for the Income Amplifier, also in Google Sheets. When I write about “tracking system” then I mean my Google Sheets version of the LOC Tracker, which includes not only tracking for the IRIS Line of Credit, but also many other things. (Like I said, I can’t help myself - plus it helps me learn.)

Warning - I Am a Student, Not a Coach or Engineer for Fynanc or Epic Wealth

Anything you learn about here or as a result of using my Model or Tracker is your responsibility. Any action you take as a result of using my Model or Tracker is your responsibility.

Epic Wealth has seen an earlier version of my system, and they are not using it or supporting it in any way.

What’s Next

The next few posts will describe many of the features of the Model and Tracker.

Seeking Testers

I am also seeking testers from the Epic Wealth group. I have a few folks from my own Epic Wealth accountability group that has been running for 2 years and a few others interested. If you are in the Epic Wealth program, and you are running your LOC Tracker successfully, then my system might be helpful.

To learn more, contact me directly.

When I was investing in real estate, I rehabbed broken down properties and then either sold them or kept them as rentals. On rentals, a.k.a. “fix-and-holds,” the idea was to buy and rehab with a short-term loan and then get a cash-out refinance when the project was done. If the numbers worked right, and project went smoothly, then that refinance would return my original capital or even more. I would have my capital to do the next project without having to wait for the rental cash flow or other savings.

This pattern is recycling capital and was made popular in real estate investing circles as the BRRR strategy (Buy, Rehab, Rent, Refinance), but it was not a new idea. Other investment strategies recycle capital, too. House flippers want a profit when they sell, but it’s not really a profit unless they have gotten back their original investment and profit after all the closing costs, fees, taxes, etc. If they have achieved that, then the original capital can be recycled (reinvested) into the next project.

I loved the idea of recycling my capital and created great spreadsheets to show how many projects I could do at a time with the capital I had. If I could speed up the projects by a month or two, then I could do more projects faster. That’s what we call “velocity of money,” or “how many times I recycle the same capital.”

I recycled my capital a few times on rentals and flips but not every time. It’s a great pattern, but as a budding real estate investor, I didn’t have flawless systems, processes, contractors, suppliers, and everything else needed to make things run smoothly every time. I burned through reserves on a few projects because of various challenges that led to cost or schedule overruns, and as a result, I didn’t always get my capital back. I guess spreadsheets are not always reality.

I had encountered two problems trying to implement velocity of money:

1. The volatility and uncertainty of my projects overwhelmed my ability to make sure the projects were smooth and got the required financial results consistently.

2. The projects were (for me) fairly large, so I could only do 2 or 3 projects at a time without raising money from partners or other investors, which I wasn’t doing then. If I had been able to do 10 or 20 projects at a time, then perhaps I could have been more successful with velocity of money.

To be clear, recycling capital is implementing a process of continual cycles of projects or investments. If the cycles are not smooth, consistent, and reliable, velocity is interrupted, and it doesn’t work well. One way to smooth out the cycles is to have a lot of projects so you can have more that are working like clockwork. Along with having lots of projects (hopefully running smoothly) is having enough reserves to solve problems and weather storms.

Until the last few years, I had not seen velocity of money used anywhere except for real estate projects, but other businesses or investments can implement velocity of money. Lenders use it all the time by structuring loan terms and payments to return capital so they can reinvest it as soon as possible. They don’t wait for all the payments on a loan. They reinvest received payments right away. That’s recycling money they loaned out as soon as they get it back - velocity of money.

You can create your own velocity of money with smaller amounts of capital and with relatively low-risk investments. The result is systematic, consistent, higher growth of your capital than you can get reliably with high-growth, high-risk investments. For most people, reliable low-volatility compounding will generate better results.

The magic is NOT settling for slow growth; it is learning how to implement velocity of money in combination with leverage and safer, low-volatility investments. If investing in high-growth equities and retirement plans is like driving a car, then leverage is like getting on a plane. Combine velocity of money with leverage, and you are now on a fighter jet. If you understand how to optimize leverage and velocity of money, and you expand it into multiple areas of your financial system, it’s like getting on the Milennium Falcon spaceship and hitting the hyperdrive button.

Unfortunately, you can’t just skip to the spaceship part. But many people can turn their financial world into financial freedom in less than 10 years. Compare that with the typical wealth plan of 30, 40, or 50 years, and the uncertainty about whether you may run out anyhow.

I’ll share the best training I know for fully implementing these ideas below, but let me give you some context so you understand how I came to this conclusion:

• I left the rat race in 2001 and started a small business (which was just owning a job even harder than the rate race job I had!)

• I returned to full time work as an IT consultant in 2006-9.

• I got an MBA in Finance from University of Chicago 2007-2010.

• I completed the Evidence-Based Coaching Program at Fielding Graduate University in 2011.

• I returned to full-time IT consulting work again in 2013.

• I lost that job by surprise in 2014 and started my real estate investing business.

• I paid off hundreds of thousands of dollars in student loans, credit cards, and business debts as a result of the education I gained from starting the investing business.

• I made and lost money in about 20 real estate projects.

• I have invested my own money since 2014.

• I took over the management of all my money from my financial advisor in 2017.

• I went from negative net worth in 2014 to well over 7 figures now.

I am NOT saying my path is the right one or the best one. I’m sure many others have done much better in the same amount of time or less. My path was much harder than it might have been if I had known how to be smarter. I have been through a wide range of experiences to find what is now working for me. I have no idea how much of all those experiences was necessary for me to find a great path.

In terms of the wealth building mechanisms, using leverage and velocity of money allows me to achieve financial goals faster than I could possibly have imagined. I will achieve my financial freedom in about 5 years after starting with the program I will name below. That freedom is without

• does not require high-risk investments

• does not require raising money from partners or investors

• does not require real estate investing (but it could include it)

• does not require life insurance (but it could include it)

There are many other advantages, but I’m not trying to sell you. I’m trying to point in a direction of what learning will lead to knowledge and skills that could change your life. It’s ideas and strategies that are hiding in plain sight but are overlooked because of so many half-truths, lies, myths, and noisy, waste-of-time information sources.

What I want more than anything is for you to believe that it’s worth investigating these ideas. Whatever success I have had in finances and life is a result of continually challenging what I think I know, what I have been taught, and what I have been discouraged, dissuaded, criticized, and sabotaged from doing.

The best training I know about for learning and implementing a complete plan is here:

https://fynanc.com/

Their programs will lead you to create your own financial spaceship with hyperdrive (my analogy).

I am not affiliated with them in any way other than being an eager, satisfied student the last 7 years.

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

When I worked as a software engineer in the 1990s, I didn’t know much about money and investments. My job paid well enough that I could save, partly because I was living like a college student, living with roommates in a rented apartment. I worked long hours because there was a lot of work, and I thought that was how to get ahead. Work hard, get salary increases, save for retirement. Everyone I knew just did that. On my software teams, we thought about systems, repurposing work, process improvement, and automation. Why did we do that? To get more done and be better at our jobs. Not necessarily anything to do with wealth building.

I mention this example for two reasons related to wealth building. First, we all use different kinds of leverage at work and at home. We use systems and process. We rely on experts or third-part services. We find shortcuts to save time. All these ways and many other ways give us leverage to get more done with less of our own time and energy. Second, we look for leverage when we have a specific problem to solve or goal to achieve, but if we don’t know the tool or technique, we might not find it and use it or apply to other areas of our lives.

As introduced in the previous post, one secret to building wealth that’s hiding in plain sight is leverage. The simple way to understand financial leverage is it’s a tool that helps you turn a small amount of your financial input to a larger amount of wealth output. You’re getting more wealth than you can get with your own money alone.

Most of us know at least a little about financial leverage, for example, getting a mortgage to buy a house. You may not have the capital to buy a whole house. (Or you might, but you decide to finance it anyhow.) With a loan, you can control an asset that’s worth more than the amount of money you put in.

But there are many kinds of leverage. Todd Tressider, one of my wealth building mentors, discusses 6 different kinds of leverage in his book called, The Leverage Equation, How to Work Less, Make More, and Cut 30 Years Off Your Retirement Plan.

• Financial

• Time

• Technology and systems

• Communications and marketing

• People

• Intellectual

Later, in my real estate business, I needed leverage in all these areas to make my projects work. However, I didn’t start by looking for leverage opportunities. I learned how to do projects, and it turned out that I needed leverage to get the projects done because I didn’t have all the money, all the knowledge, or all the skills. In fact, for me the most useful leverage was meeting people who knew how to get things done because they had done them before. A real estate agent helped me find a house. A specialized lender helped me get a loan to pay for the purchase and rehab costs of a fix-and-flip project. My mentor helped me make sure my rehab budget made sense. Contractors helped me complete the remodeling work.

Leverage is one of the major ways to get ahead. Tressider’s book describes six categories of leverage. Any one or a combination of those could be useful on your journey in life, your career, and your wealth. The more you learn about some of them, looking for ways that others use them creatively, the more you expand your knowledge and skill for bringing more leverage into your life. Wherever you are on your wealth journey, you may be able to do more and go faster if you can find ways to add or combine leverage.

Ask Yourself Where You Could Use Leverage?

Sometimes what’s needed is to recognize that where you are in your life and wealth journey have little or no leverage. For example, in my software engineering career, I focused on leverage for performance in my job, but none of that leverage contributed much to my wealth creation. My investments at the time were sitting in mutual funds, ravaged by inflation and market volatility (which I didn’t understand then).

I’m not suggesting a career change just to get leverage. The insight is to recognize that if every part of your life, career, and wealth have little or no leverage, then it is harder to get ahead. If you can see that your career or your investing has limited leverage, you are seeing the reason your progress may be slower than you want. That discovery reveals the possibility that if you learn more about leverage, you can bring more of it into your life.

Now, I know this doesn’t connect all the dots for your journey. Leverage is one kind of tool that comes in many forms, and we still need to figure out where and how to use it effectively and safely. When you take stock of your career and your wealth so far, where are you using leverage? It can be a real fork in the road to make new choices with leverage possibilities in mind. If you’re not seeing leverage opportunities, then keep talking to people who are achieving what you want to achieve. Keep exploring so you can get more ideas and see more patterns about ways people use leverage. Over time, you will find ways to bring more of it into your journey.

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

One of the most common problems investors have to solve is beating inflation. For our purposes, we define inflation as the loss of purchasing power of our money. We see this in terms of rising prices for the things we need to buy, like food, shelter, energy, household goods, cars, and everything else we need for our lifestyle. What we mean by beating inflation is that we want to grow our ability to buy whatever we need and want even though prices are going up.

The most common strategy we are taught is to find investments that gain faster than the inflation rate. To do that, we need to know the rate of inflation so we can aim for an investment that has a better rate of return. We could use the reported inflation figures from the Federal Reserve or the government, but given the motivations to underreport, you might decide to look elsewhere. Your personal inflation rate depends on what you tend to buy. I use a rate between 6% and 10% for my calculations. Sometimes inflation is much more and sometimes it’s less.

The other half of the strategy is to purchase assets that actually grow faster than the inflation rate you determined for yourself. If your inflation rate is more than 6-10%, then we’re saying we need investments that return more than 10% every year. We need 15% every year to grow 5% annually (14 years to double your money, using the rule of 72). That’s too hard to do consistently, year in, year out for even experienced investors.

No Risk, No Reward Is a Lie!

When we raise this issue, our industry professionals explain that we have to take more risk to get more reward. Without a better answer, we seem to be caught between swinging for the fences or accepting slow growth that will never be enough.

The risk-reward model is a false choice. It is possible to beat inflation without relying on high-risk investments. Let me show you how:

There is a secret formula - it’s not really a secret, but it’s not commonly discussed.

B = M * I / (1 - R)

• B = your breakeven investment rate of return - the rate at which your purchasing power will be maintained by your investment

• M = percentage of capital that is yours (0.00 to 1.00 - the remainder of the capital is strategic debt)

• I = your inflation rate

• R = your effective tax rate - this is the calculated rate of the taxes you paid after all deductions, tax strategies etc. It’s not necessarily the same as your income tax bracket. You might need to discuss with your tax accountant if you don’t know what your effective tax rate is.

Below is a sensitivity table showing the breakeven rate of return required to maintain your purchasing power given varying inputs:

• percentage of capital that’s yours (varies from 100% to 65% to 35% to 25% to 10% to 0%)

• personal inflation rate (varies from 6% to 8% to 10%)

• your effective tax rate (varies from 20% to 30% to 40%)

Here’s what to notice in the chart:

• The highest required returns are in the far right column, using 100% your own money.

• The lowest required returns are the bottom three scenarios of all 3 right columns, using none of your own money.

• All the values in the middle sections use some strategic debt.

Using Strategic Debt Passes Inflation Effects to Your Lender

Intuitively, it makes sense. The effects of inflation are on the whole investment (your capital and the strategic debt, if any). When you sell an investment you bought with debt, you pay the lender back and pass the effects of inflation on their money back to them. The effect of inflation that you bear is only on your money invested. As a result, the required return for you to break even is only for the amount you invested. If you have used debt, then the required return is less than if you had not used any debt.

As a concrete example, if you buy a rental property with 100% cash (your own money), then your required return to break even is between 7.5% and 16.67%, given the parameters of this chart.

If you buy that same rental property with 25% down and a 75% mortgage and the other variables for inflation and taxes from this chart, then your required breakeven return is between 1.88% and 4.17%.

Again, these numbers are just to break even for an investment with these parameters.

Two more important points:

• None of the scenarios using 100% your money (no debt) have a breakeven less than the inflation rate with the given effective tax rates

• If you use 65% of your own money, and your effective tax rate is 40%, then your breakeven return is greater than the inflation rate

The conclusion is you can grow your wealth using investments that have lower risk and lower volatility. Your assets don’t have to grow faster than inflation necessarily. To grow wealth faster than inflation and taxes are dragging you down, you need at least some strategic debt in your portfolio.

Three Essential Tools for the Savvy Wealth Builder

And that reveals two essential tools for the savvy wealth builder to explore and master:

1. Learn to manage debt strategically and safely

2. Build your access to credit that is appropriate for the kinds of investments you want to do

3. Notice any fears, anxieties, or anger you have about debt

If you have had bad experiences with debt or have learned that debt is bad or should always be paid off as soon as possible, this is the time to explore more. You can learn about different kinds of debt, when to use them, how much to use, what kinds to avoid, how to keep yourself safe and so on. Debt is neither good nor bad. It is a tool.

One of the best books I’ve found for learning about strategic debt is the following book by George Antone. I have read the book over and over, and I have taken his courses in person.

The Debt Millionaire: Most people will never build real wealth. Now you can be one of the few who do.

In 2013, I got a new job at a consulting firm. It wasn’t a perfect fit, but I needed some consistent income. I dove in, worked hard, and took extra work on top of a long commute. The company hit some challenges in 2014, made some cuts, and I was on the cut list. This was new territory for me. I had been a solid or star performer in just about everything I had done my whole life. But this wasn’t my day.

I had worked at companies before that had had layoffs, and so I thought I knew what it was like. But beyond the self doubt and the self pity was the real problem. Instability. What would I do about income now? What about health insurance? What would be my next job or career? And so on.

Within a few days, though, it struck me like a bolt of lightning: I was never going to let anyone or any company do that to me again. No job and no company is worth my giving them the control to determine my financial stability at their convenience. I’m important enough, and my wife and family are important enough that I will stop at nothing to make sure we are ok.

With the massive student loans and business debt from years earlier, we had gotten so far behind that even two incomes was not enough to make up ground. My financial adviser had clarified that we needed to save at least $2000 per month for the rest of our careers to get to a “higher probability of successful retirement.” We were going backwards with negative cash flow. Another “decent” salary was not going to cut it.

That’s when I understood the most important tool for creating my future: responsibility. I did not know how I was going to create the income, the stability, or the wealth we needed, but my switch had flipped. I was taking full responsibility, I would stop hoping for a miracle, and I would create my own success.

Two Ends of the Stick

Taking responsibility doesn’t mean that I automatically knew the right answers. It meant that I would relentlessly seek better answers and put real action into them. The first better answer was to stop staring at the dead ends. I knew I had to explore outside the paths I knew. I picked up responsibility, but the other end of the stick was to explore and implement.

My first better answer was to get into real estate investing. I knew a little after owning a duplex in Chicago for several years. I believed the real estate avenue would break us free from the linear trajectory of a salary. There was some truth to that, though not for the reasons I believed at the time.

I knew enough not to jump in too big, too fast, but I also knew my personal patterns of being so careful I never made it happen. I started going to investor meetings, seminars, and webinars, and I read every book and ebook I could find, and I listened to podcasts for hours and hours every time I got in the car. All to immerse myself in everything to do with real estate, making investments, being a flipper, being a landlord, being a lender - everything.

Even with all this new knowledge, I was still afraid. If I made a stupid mistake, I could lose a lot of money when we didn’t have money to lose. I thought the best step forward to succeed in spite of this fear would be to buy a mentorship and have an expert by my side. So I did, and I learned how to flip houses. I viewed hundreds of real houses for months, learned how to estimate rehab costs, evaluate investments, assess risks, build extraordinary spreadsheets, and finally I got the courage to buy a house, fix it up, and sell it. And that was WITH a mentor.

I’d love to tell you that a real estate mentor was the one switch that made all the difference, but it wasn’t. And it wasn’t partnerships. Or rentals. Or wholesaling. Or apartments. Or storage units. Or lending. Or borrowing. Or self-directed IRAs and 401ks, and on and on. Every single one of these ideas works for some people but not for others. How can that be?

The Personal Wealth Building Dynamic

Here’s my theory:

Your wealth building capacity is the dynamic among three evolving dimensions:

• The outer world of growing wealth with assets, income, opportunities, risks and so many investment types and tools.

• Your abilities for choosing opportunities and taking effective action to make those opportunities work for you.

• Your ability and commitment to work on your Inner Game to transform and improve your decision and action excellence.

Real estate was an important venue for my wealth building, but it was also where I made a lot of mistakes, including a few that cost me 6 figures. Nothing is foolproof except the will and skill to get better at finding a path that works for you and following it the best you can.

I believe your work on your Inner Game will lead you out of the Financial Hall of Mirrors and to a path you create for yourself toward the Wealth Building Capacity you want. There is no single perfect answer except to take responsibility. Then find a path that’s better than one keeping you stuck, and follow that path and never stop learning so you can adapt along the way.

My purpose is to be a model and guide for the work you do on your Inner Game so you can grow your Wealth Building Capacity.

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Welcome back to my series, Simple Model for Building Wealth. I am laying out the fundamentals so we can see how we lead our wealth plans astray and how to retake our ability to succeed.

Part 1 of this series is here: Simple Model for Building Wealth Part 1

Part 2 of this series is here: Simple Model for Building Wealth Part 2

Capital and Rate of Return

In Part 3, we are discussing capital and rate. Capital is how much you have invested. Rate is the total return, including market value changes and income from distributions.

We invest, save, and hope for enough rate of return

In the simplest model, we invest whatever we have (or feel comfortable with), and then wait for the growth. If we have savings or windfalls, we invest as much as we can. If we have income, we reinvest as much as we can. We might diversify in various ways, but the general model is to use saving and investing to grow the nest egg and leave it to an expert adviser to find the “best” returns or rebalance the portfolio from time to time.

Investment Calculator: How long will it take to reach your goal?

This investment calculator captures this point of view, so you can run scenarios for how much capital you have to start, how much you can contribute monthly, and then given an assumption on annual returns, you can estimate either the total size of your portfolio or the time to get to a portfolio goal.

For example, if you select the “Investment Length” tab, then you can enter the goal from Part 2, $1,500,000, starting amount of capital, say $10,000, 8% return rate, and $1000 per month additional contributions at the end of each month.

The result is 29.9 years to reach the portfolio goal. Yikes!

The bigger problem is that we know from Part 2 of this series that the goal of $1.5 million is much more than that in 29 years because of inflation.

What if we start with $100,000? 24.2 years to $1.5 million.

Even starting with $500,000 it takes over 12 years to reach the goal. And that achievement doesn’t account for inflation over 12 years.

What if we start with $10,000 but change the rate?

At 12% annual returns instead of 8%, the time to goal is 23.2 years.

At 18% it’s 17.8 years.

Do you know anyone who can get 18% annual returns year in, year out for 17 years? Almost no professional investors in history have achieve that for so long. What are we supposed to do?

What if we start with $10,000, keep the annual return at 12%, and increase the amount we save? Let’s double it to $2000 per month. It’s 18 years to $1.5 million.

Let’s try $4000 per month. 13 years to $1.5 million.

At $8000 per month it’s 8.9 years, finally we reach the goal in less than 10 years. That’s our best result. But remember, we didn’t adjust the goal for inflation yet. In 9 years, the goal at 7% annual inflation is $2.58 million. Back to 12.3 years. If we think inflation is really 3%, then the goal is $1.79 million, reached in 9.9 years.

The challenge is real and daunting

This analysis is simplistic, but it reveals the challenge. You can see why advisers always say you need to save more. That’s where we have the most control over the result IF we use this model.

For most of us, though, if we are doing our best to save a few thousand a month for years, and we want to double or triple that while paying life expenses that are increasing in price, it seems impossible.

This exercise shows you the real problem, that if we follow this simplistic model, it’s highly unlikely we will reach our goals in a reasonable amount of time, if ever.

Now for the hope!

My real purpose is to give you hope. The conventional model is not the only way.

• It is possible to reach your goals, even with a rising cost of living

• It’s possible to achieve within a reasonable amount of time

• The strategies are available to most anyone willing to learn, not just geniuses or pros

• You don’t have to have a lot of money or income to start (although having one or both certainly helps)

• You don’t have to invest in high-risk assets or exotic strategies, like options

• You don’t have to become a real estate investor, agent, marketer, flipper or wholesaler

• You don’t have to become an apartment investor or syndicator, raising money from other investors

• The most important asset you have is you

  • your commitment to learn and implement

  • your commitment to learn what and who to listen to and what to ignore

  • your commitment to learn more about yourself and your mind so you can make better decisions and take smarter actions

A way forward

The way out of the dead-end conventional model is to see things differently and find strategies that work differently.

• Did you know that it is possible to amplify your savings exponentially faster than with typical investing returns?

• Did you know that it’s possible to beat inflation handily with stable investments and modest returns? (And I’m not talking about gold or Bitcoin).

• Did you know it’s possible to build cash flow much faster than buying rental properties?

• Did you know that it’s possible for your portfolio to benefit in both upward and downward markets?

• Did you know it’s possible for your portfolio to grow as a result of your own spending?

There are effective ways to grow your capital and generate income while overcoming challenges, like inflation, taxes, crazy markets, and more.

I’m not asking you to take these claims at face value. I will describe these ideas and how they are being used today by myself and people I know. Feel free to shoot me questions anytime, and I will do my best to answer either directly or in posts.

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Start with Dreams

The purpose of wealth building goals is to set financial goals that, when reached, will support your dreams. We envision and describe the dream, and then we estimate the wealth needed. It’s not a perfect process, but here is an exercise to get you started.

Describe Your Perfect Day

Write a narrative description of what you have and what you do on a perfect day in your life when you have reached your goals. Be as descriptive as possible. Where do you live? What kind of car do you have? Who are the people around you? What activities are you doing? What is your health like? Where do you go? What interests are you fulfilling? Write as much as you can with as much detail as you can.

When you finished (at least for now), then make notes of what the values of the things are and the costs of services are. Of course, this is not exact. Think of the prices in today’s dollars. That is, if you had these things right now, then what would it all cost?

Some speed bumps in turning visions into goals

Some things are too dreamy or uncertain

For some of us, it’s hard to let your imagination go free if you’re not sure it’s possible, but just do your best. For things that are really dreamy, and you don’t know the costs, you might consider possibilities, like renting or leasing instead of buying. You don’t have to own everything in your dream.

Future costs might be completely different from current costs

True. There is no way to know with accuracy what your future cost budget will be. We will make adjustments for estimated inflation. We’re trying to get a direction and rough estimate.

My goal would be bigger if I knew what was possible

As you continue your quest, you will undoubtedly create more of your dreams in ways you cannot imagine right now. Think of all the things that we have in our lives today that didn’t even exist 20 years ago. What is possible continues to evolve.

For now, we are not going to constrain the dreams with strategies because we’re not going to constrain ourselves to the strategies we already know. What becomes possible for you may be much better than you know right now. You can’t see past the horizon. We keep moving forward and evolve dreams, goals, and strategies along the way.

Now make the cost of your dream a little more concrete

We’re putting an income number on your dream. You can revise it later and perhaps many times over your quest. We’re just setting direction right now.

Turn your cost estimates into a monthly income amount

I understand that’s another leap. But this kind of goal is one we can use for planning. Keep imagining and revising until you feel like the monthly income amount makes some sense to you. We don’t know how you’re going to get to the goal just yet - just that the goal is in the ballpark for being able to pay monthly expenses of your dream if you had the dream today. If you’re not sure, add some more income for a buffer. Or remove some of the really uncertain items just for now. You can adjust goals later.

Estimate the assets need that will pay the income you need

Initially, we will use a simple calculation to estimate the assets (investment amount) needed to generate the income to pay your estimated expenses. We working from today’s costs and today’s dollars for the moment.

Let’s say your estimated expenses are $10,000 per month. We will assume that we can generate 8% income from whatever assets we have accumulated.

• 12 months of $10,000 per month is $120,000 annual income required.

• We assume 8% consistent income from our investments - that’s somewhat modest, but this is just the starting point

• The required investment amount if we have the dream today is $120,000 / 8% = $1,500,000 or $1.5 million.

For many of us this amount gives us a queasy feeling. How in the world am I going to save that much money? What in the world am I going to invest in to get there? It’s going to take 30-40-50 years! Or I might never get there, and then I might run out of money because I never got to my goal.

Often this step is where we stop because the required investment level is already much higher (worse?) than we think is possible.

Unfortunately, the queasiness is going to get worse before it gets better

Every year that you have not yet reached your goal, the goal has to be increased by the amount of inflation. The math is easy, but it’s not simple to know what inflation really is. There are good reasons not to rely on the numbers given by governments and the Federal Reserve. There are also good reasons not to rely on the doomsayers that believe the dollar is going to crash next month.

I will help you with references about inflation (collecting them now). Eventually, you will just have to pick a number you believe enough in. You might have to adjust it from time to time. Keep in mind that eventually, you will have some investments and strategies that benefit from inflation, so you can have more peace of mind.

Revise your asset goal for each year you have not reached your goal

How can you say when you will reach your goal when you don’t know what’s possible? You don’t know what capital you’re going to have (or it seems like not enough), and the baseline rate (8%) is not enough to get there fast enough.

I get it. We’re not working on strategies yet, so we don’t know the time period yet. We’re still just setting the goal, and that goal moves each year. So we express the goal as a graph, like the one below:

This chart represents the goal that would preserve your purchasing power in an environment of 7% annual inflation with the intent of producing $10,000 per month income measured in today’s dollars with a portfolio yielding 8% per year.

The point at year 2025 is $1.5 million, just like we calculated. The required value of the portfolio in future years rises because of anticipated inflation of 7% per year. This graph shows the target portfolio value growing over 30 years.

The aha is that to reach our goal at any point in the next 30 years, we have to accumulate assets to or above this line. If, at any point in time, we have less than the assets on this line in the same year, then to reach our goal, we need to grow the portfolio faster than this line is growing. A few other ways to reach the goal could be

• Reduce our income goal

• Increase the income we get from the assets

• Reduce our personal inflation rate by changing what we buy along the way or in retirement.

What’s next in the Simple Model for Wealth Building series

In the next piece, I will discuss factors that affect your portfolio goal: withdrawal strategy, handling inflation after retirement, safety, and taxes.

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Simple, but not too simple

We start with a model that might seem simplistic, as in, “yeah, I already know that.” Once we understand the track we want to be on, then we will explore the myriad ways we veer into the weeds, slowing our progress.

Four elements

The four elements are goal, capital, rate, and time.

• Goal is how much wealth do you want to have.

• Capital is how much you save and invest. That includes lump sums and regular or irregular contributions along the way.

• Rate is the rate of return on savings and investments and includes a mix of rates across a whole portfolio of different savings and investments.

• Time is a result of goal, capital, and rate.

Obviously, there can be a universe of complication within those variables. Some complication helps (useful sophistication), and a lot of it is noise or mirages. We can be mesmerized by ideas and strategies that work sometimes or appear to work or promise to work, but in the end, they are still subject to the fundamentals:

• How much capital do you have?

• What rate of return can you get?

• How long do you have to reach your goal?

If we set the goal and the planned deadline, then we have only two variables, capital and rate. It is conceptually simple but not always easy to implement.

Noticing Myths, Lies and Noise

There are lots of reasons we become distracted about these fundamentals. There are dozens or hundreds of ways to invest, and because it’s not easy to reach our goals as fast as we want, we look for secrets, short cuts, and magic. We look for advice, investments, and all kinds of services and expertise that promise to turn our savings into the goals and lifestyle we want.

Some services are helpful. Others are well-intended but wrong, incomplete, or insufficient. Others are just wrong, deceptive, and therefore destructive for the compounding you need to succeed.

For many years, I listened to the people, experts, and advisers who I expected would know what was best for me and my goals, and my failed compounding showed what a mistake it was to trust without understanding what takes us off the path of the fundamentals.

Your wealth building is your responsibility. It is your job to detect which ideas will contribute positively to your compounding and which are part of the Financial Hall of Mirrors that will distract and mislead you. Later, we will focus much more on the work you can do to become a better detector of myths, lies, and noise and a protector or your compounding.

Simple Wealth Model Next Steps

The rest of this series goes deeper in to the goal, capital, and rate variables of the simple wealth building model. Most of us have adopted inferior approaches to these choices because we have listened to information and advice that compromises compounding.

This series will help you become more savvy. To do that, we will learn more about the function and decisions of the goal, capital, and rate so we can make smarter plans.

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Subscribe now

Savvy Wealth Tools is for Active Wealth Builders

1. I learned the hard way that there are smarter ways to build wealth.

The secret is there is no secret, but the myths, lies, and noise of conventional and mainstream strategies can lead you off course, like they did me.

Like many of you, I started out doing what I was supposed to. I went to school, got a good job (software engineer), and after several years, I could plainly see it wasn’t going to get me where I wanted to go. There was no end in sight to the grueling work and not much to show for it. I began looking for other paths.

I started businesses with my wife, but whether the wrong times or ideas, we worked extraordinarily hard, didn’t success financially, and left with major health problems and massive debts. Some would call those experiences failures, but they were also some of the most important learning.

I went back to full time work at a consulting firm, got an MBA from University of Chicago, then went another consulting firm, and eventually got downsized by surprise. I told myself I would never again let someone do that to me. I took control of my future by launching a real estate investing business and learned the hard way how to make and lose money in real estate. I climbed out of massive debt from grad school, business debt, and credit cards in large part because of the voracious learning I tackled to learn real estate investing.

That learning was incredibly helpful, but the ability to find profitable deals and get projects done was only part of the game. I had strong successes but also some abysmal failures. A few problems were from newbie mistakes in analysis, and some were from challenging partners that led to projects with massive cost and schedule overruns that I had to cover, investments outside my wheelhouse, and recovery from years of partner embezzlement.

But all problems of all sorts eventually traced back to me. Not because of missing strategies, techniques, checklists, mentors, or coaches on investing. Not a lack of capital or reserves. Not a mistake in analysis. The root causes were failure to perceive and guide my inner game.

The inner game is deeper than emotions. Emotions come up, and we might use them for guidance (or not!), but the inner game is the work we do that aligns emotions, thinking, and action. Without awareness of and work on the inner game, we can do lots of things that are out of alignment. Have you ever done something you knew was off kilter - what you say you want vs. what you really want? (E.g., eat donuts instead of apples; went to the bar instead of the gym - the possibilities are endless). Which is true? Which did you really want? How does your action reflect what truly matters to you?

Early in my real estate investing career, I was considering a land development investment with a partner from previous projects that had gone well. The numbers were fine, but this project was outside my experience and expertise, and I was relying on my partner to make it successful. In the bigger picture, though, I was investing on behalf of my wife and me for our future - not just for a hobby. After I invested, I told my wife, “I wanted to be a good partner!” Now, regardless of the deal, the partner, the numbers, the results… if I’m being truly honest about the real justification for this investment - what was it? My anxiety about not being a good partner led me to do a project that could have caused serious problems since I didn’t have the expertise.

Another project was a residential fix-and-flip project with a different partner, with whom I had completed a successful project before. On that one, the project got tied up for years for various reasons. During this time, I began hearing feedback from others that this partner was causing problems for others in our network, and they were losing money. It’s a long, sordid story, but what really matters is that my wife, who has a keen sense of people, had an inkling on the first deal with this partner that something was off. Is that enough evidence to kill an otherwise good deal? She was trusting me (and my focus, of course was numbers!), and I was pushing hard to do more deals and work with experienced partners. If my wife had had more confidence and courage to raise her concern with me, and I had listened more carefully to her and refined my sense about people instead of focusing exclusively on numbers, together we might have avoided a bad partnership. My over-reliance on perceived experts and my drive to keep making things happen for our future led me to enter a partnership that eventually cost us over $60,000 in losses.

The progress we had made with hard work and a lot of money at risk had major setbacks through just a couple of bad decisions. As disappointing as those experiences were, I raised my awareness of the inner game and my contributions to the challenges we were facing. These projects and interactions that led to serious problems showed me the layers beneath the numbers, beneath the partnerships, and beneath the effort. My wealth building capacity required better decisions and smarter actions. But what leads to better decisions and smarter actions? It’s the awareness of the inner game and knowing how to work on it.

I created Savvy Wealth Tools to share how, after 25 years of twists and turns in career, business, investing, and life, I had done the right work on myself to choose better goals, better education, better mentors, better information sources, and better partners. I had learned smarter strategies and better skills so I could make better decisions and get the most benefit for my capital and energy invested. I got to that place by working on my inner game, growing my ability to align intention, emotions, thinking, and action.

2. My Wealth Building Point of View

My point of view on wealth building is that your wealth depends on your ability to start, grow, and protect the compounding of your wealth. Myths, lies, noise, and other forces interfere with your compounding but only if you allow it. You begin wherever you are, and your wealth building capacity depends on

• your ability to recognize and navigate the forces that affect your wealth compounding

• your ability to manage the forces that affect your decision making

• your ability to ensure the right actions happen to start, grow, and protect your wealth compounding

I understand many aspects of wealth building are outside your control. I intentionally frame my point of view with the ways YOU can control your wealth if you choose, and if you do the work on your inner game.

I continue to see advice out there that leads people to compromise their wealth compounding. I want people to have access to the ideas and tools I have found or built that have helped me escape or avoid poor wealth building choices.

Your journey to wealth might include ideas and strategies you’ve learned so far, some of what I’ve learned so far, and perhaps strategies you discover later. Although I may mention investing strategies, I cannot offer personal financial advice, and my investing experience and knowledge may not be appropriate for what you’re facing.

What I had to learn may not be exactly what you need next, but the work you do on yourself potentially pays off in better decision making in all areas of your life and leads you to more wisdom, peace, and happiness on your journey.

My ultimate goal is to help you see yourself more deeply and with more clarity so you can navigate the Financial Hall of Mirrors and get more of the best out of yourself in the inner game of wealth building.

3. We are wealth building explorers and doers.

I help curious self starters. We are the kind who like to know how things work. We’re not content just to do what someone else advises. We want to understand how to determine appropriate goals, how to make excellent decisions, how to build more competence, how to grow better or faster, how to be strong, how to be nimble, how to adapt when things change, and how to succeed when things get tough.

I hope to engage with readers who are in the game and want to try, learn, and adapt. Your questions and ideas are welcome, and hopefully I can shed insight or references to further your goals.

In this community, we will discuss patterns of Life, the Mind, and Wealth. The decisions we make can lead to opportunities, constraints, and risks. The Financial Hall of Mirrors out there can lead us to shoot ourselves in the foot. It certainly did that to me many times.

It can be a major challenge to get on a solid wealth-building track if we started off on paths that don’t really go where we hoped. It can be hard to switch paths to a new way especially when the new way is something you were taught is wrong. The shifts often must begin in our minds because the path we know doesn’t go where we were told it would. We use critical thinking and creativity. We need both.

At times, I will post spreadsheet tools you can use to see for yourself the ideas I’m trying to convey. With the utmost humility, I say I have experienced and learned the hard way a huge amount about money and investing, and I continue to be a student.

3. Posts

After I start with some fundamental content - several posts - I intend to post once or twice a week. Most content will be free. Some of the advanced concepts may be introduced for free but then fleshed out in subscriber content along with advanced spreadsheets. Some of the ideas require more background, and for the moment, I’m not planning to create the courses to provide all that background. However, I will provide references to books, courses, and mentors I have used or am using even now that can help you on your quest.

Disclaimer: This content is for educational purposes only. You should not construe any information or other material contained here or on our Sites at www.savvywealthtools.com or savvywealthtools.substack.com, as legal, tax, investment, financial, or any other professional advice. Nothing contained here or on our Sites constitutes a solicitation, recommendation, endorsement, or offer, by Savvy Wealth Tools or its owners, affiliates, or third party service providers to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.