Imagineering Your Dream Life with special guest “The Art of Purpose”

I’m thrilled to have “AOP” from the “The Art Of Purpose” as interview guest on my blog today.

If you don’t know him yet, here’s why I believe you should get to know him soon:

He’s taken “Money Twitter” by storm this year.

AOP used the Covid crisis as a chance to adapt and use his skills to start something new in his life. Right from the moment when Covid hit first in March 2020, his Twitter account @creation247 started to defy “social media gravity” and soared quickly past many others – at light speed!

Today, we’re going to explore his background story and I’m most certain you can take away inspiration and valuable insights about how to imagineer your own dream life going forward!

Don’t just survive, thrive in the 2020’s!

Before you continue, please click “play” below and listen to AOP’s personal music recommendation for reading this post!

Background: Brahms only wrote 4 symphonies during his life as creator: Quality was everything for him.

Now, without further ado, let’s dive into the interview, shall we?

Q: Who is “The Art of Purpose”?

My Twitter name is “The Art of Purpose” or short AOP. I used to be an opera singer touring the globe with some of the biggest performers in the world. For the past 35 years I’ve been involved with all forms of art. First as student, then as creator, and now as teacher. As of now, I’m a certified public-school teacher with more 20 years’ experience.

Luckily, I discovered my passion to learn, perform and teach at an early age.

It was also from an early age that I saw many good artists creating beautiful work but how they remained “starving artists”.

In early 2020 I’ve started as “AOP” on Twitter with the aim of turning Twitter into my personal Art Gallery. The AOP Twitter account is about 90% of who I am in real life.

Without an alarm clock, I usually raise around 5 am to devote time for my online presence. This includes my Twitter account and my The Art of Purpose webpage. Once the sun rises, I’ll be a teacher and keep engaging with my online audience during my breaks.

If you do what you love, you won’t feel like working at all.

It rather becomes like some kind of computer game.

And we all know how addictive games can become – that’s why Creation247.

While I like to create and teach my lessons learned online, it’s my outspoken goal that artists got to eat and I don’t want to become a burnt-out, starving artist myself!

Q: AOP, how does someone go after finding their purpose?

It’s a sad fact but too many people go through life without having any plan at all. They wake up, go to work, go to sleep, and before they know it, get old. Their life will have zoomed by – and that was it!? If that’s you, you will fit in, but you will never stand out. For many thinking and reflecting about life is too hard.

Make it a priority to take the time to do so!

(Financial Imagineer: find your technique, some people swear on hiking, working out, practicing meditation, for me Jaccuzzi Beerstorming works best! )

Start by imagining who you’d like to become and what you’d like to achieve.

Write your thoughts down. Use this as your mission and vision statements. This must be your compass. Re-read it from time to time. Stick to it mostly, however, don’t aim for perfection, let yourself and the idea of your future self evolve and allow a certain degree of flexibility as well.

Keep asking yourself: What is YOUR best life? What is YOUR purpose?

Today is the first day of the rest of your life!

Comment by Financial Imagineer: If you’d like to read more about finding your purpose, you can read more on AOPs “Find Your Purpose” post or on my “Ikigai” post.

Q: Did you have a “Pivot Point” in life?

There were actually two distinct pivot points in my life so far.

The first one was back in my early 20s: I had a negative net worth. One morning I woke up and decided to no longer be poor. I wanted to become wealthy! The key lesson here is: It was a mindset shift. It all starts with mindset! The day I decided to no longer be poor and instead become wealthy was the day my mind got primed: I am going to make this happen.

Once my mind was aligned, I had to take action. The very first step was to get rid of my loaded GT Mustang Convertible. If you are not a millionaire, don’t act like one!

I immediately drove my gas guzzling Mustang to the very next car dealership and exchanged if for a Nissan Leaf – an electro car. Imagine that!

The line of thought was: Since I will take my family on the journey to get wealthy, I got to make a big sacrifice first to make a point visible to everyone. At first, they all thought I’m crazy. But hey, seven years from that “point” we actually became millionaires!

The facts behind the scene: By tackling the car costs I managed to reduce the annual commuting costs (in terms of gas only) from $7,000 for the Mustang with 20 miles per gallon to an e-powered 7 cents per kilowatt solution. This alone resulted in new commuting costs of $150 per year. This swapping yielded a recurring saving opportunity of $6,500 – annually – which went right away into the stock market in tax sheltered accounts. Boom!

You do the math.

That set my dreams to get wealthy in motion.

The second tipping point was during the Corona Virus crisis in early 2020.

One evening I logged into my account and realized a double comma figure popped up.

It has happened. Age 39: Millionaire!

At first, I expected this point in life to feel different. But there was nothing special about it. We celebrated, we were happy, our plan worked out, but hey: Life goes on. What’s next?

That’s when I decided to start sharing my path and story and help others. I needed a platform. I had been on Twitter before, but more as a reader, a consumer.

Now, I decided that I’d like to give back and teach others how to become creators and influencers in the new world! That’s when and why I started my Twitter account @creation247.

Comment by Financial Imagineer: If you’d like to, you can read more about these crucial pivot points on my blog post “The Day I Became a Millionaire”.

Q: How did you prepare yourself? How did you get started?

As mentioned earlier, I’ve been trained to be a professional performer in all arts. I also used to read a lot about persuasion skills from Scott Adams. You take all this add it together and cross it with me playing video games for 8-9 hours a day. You could say my life led up to this point where I was fully equipped to take that next step to start my online story!

In order to create AOP I used all my knowledge, the best knowledge and insights available in the world, to take the step and become an influencer. You could call the AOP account a well designed persuasion hack, it combines the picture of Brad Pitt with beautiful paintings that speak to the audience with a strong and convincing voice. The overall package combines things you’re familiar with but haven’t heard or seen before in this exact way.

For me going to social media and becoming an influencer was like levelling up my computer games skills and creating something to inspire others to take action to improve their lives.

Q: What was your learning curve? Do you have any tips for others who like to follow your footsteps?

Playing computer games is fun. But hey, let’s face it: It’s also a huge waste a lot of time! Time you will never get back anymore. Creating something as an artist, be it online or not, may not be as easy as it may seem. First and foremost, it’s a lot of work.

After having started the AOP Twitter account in May 2020 I gained 470 follows, in June I just managed to add another 100 follows. Later on more follows came faster. Growth and success never come in a linear form. During those first months I was posting very decent stuff, the same level quality as now with more than 17,000 follows.

Sometimes it works, sometimes it does not.

My learning curve was to focus more on networking and connecting with others [on Twitter]. I aimed at figuring out how “to play the game”. I can confirm, if you really want to grow on Twitter, you got to connect with others. One of the biggest benefits of doing so is you can get connected with some of the smartest people in your field.

They are literally just one mouse click away!

Recently I’ve started an online course to teach people interested in exploring this path.

My online course “Create 24/7” starts with a Twitter growth book and comes with additional video modules. More modules being uploaded in the future: It’s a truly unlimited Twitter growth course!

You can find my course here: “Create 24/7: The Blueprint to Unlimited Content Creation”

Q: What does “success” mean to you?

Success can be defined in many ways.

Not everyone can become “the wealthiest” person in life.

For me success means being strong enough to help others, at first providing for my family.

Right after that comes being able to walk my own path and avoiding starving artists syndrome while doing so.

To me success means: Fulfilling your purpose.

Q: What is your success formula?

My success formula revolves around my family values. At times, I can be a pretty competitive person – but all I want is a building a better life for my family. The “formula” could be broken down into three main pillars.

First: College education.

Thanks to a scholarship I got a college education without student debt!

Having an academic background shaped my mind to constantly research anything that interests me – in depth. When getting into a new subject, I can spend hours and hours to find and study the best information available. Make it a priority to learn everything you can from the best.

Second: Take action

Once you start getting relevant information, learn how to use it and act upon it. Becoming successful is a lot of learn by doing. Don’t just accumulate theoretical knowledge without ever taking action. Get started, learn from mistakes, and keep going.

Third: Never be denied!

If you want something, go out and get it. Determine the cost – be it your time, your effort, and/ or money – and if you deem it worthwhile: Pay the price!

Never be denied.

The above are the three main ingredients that defined my personal growth trajectory.

When it comes to money, you should also do the same things as mentioned above, learn from the best…

…educate yourself, take action and go for your goals despite naysayers.

Especially for money, my extra advice is to automate as much as possible. If interested you can read more about how to do this in my blogpost “Automate Your Life to a Million”.

Beware who you’re surrounding yourself with.

You become the average of the five people you spend time together the most.

Similarly consume news or music carefully. Anything that you let to your mind is influencing you in a way. Avoid getting programmed.

Control the quality of what you consume!

The quality of what you consume is what you become.

Q: What inspired you to “build” your life?

In my life I was blessed to grow up and study with and from the best since I was a child. My inspiration came from the best teachers, the best artists and later the best writers and online sources I could find in this order.

For the art of performing and persuasion the most inspiring sources where Scott Adams and and Dr. Robert Chialdini.

For going online, I got mainly inspired by the fitness guys and mindset hack bloggers.

Let the main take away be this: No matter what you do, learn from the best and learn how to play the game!

“When you play hockey, you don’t go where the puck is at, you go where the puck is going.” Wayne Gretzki

With the above quote in mind, “playing Twitter” is NOT different.

As of now, I have around 1,000 tweets prepared on the side and I’m observing the “mood of the day” to play my best tweet accordingly!

Q: How do you make decisions?

First and foremost and as mentioned before, family comes always first for me!

Beyond that: Have a plan.

Know where you’re going. See the big picture. When caught up in the moment, remain flexible, flexibility is key to improve yourself. Keep an open mind, try to always keep all options open.

This doesn’t translate in me changing my course all the time. No. But if I happen to come across new superior information, I’m more than willing to drop my old beliefs and adapt.

This is a super crucial aspect for making good decisions during the information age. Our world is constantly evolving at speeds unimaginable just a few decades ago.

The most adaptable survive, not the strongest ones.

Comment by Financial Imagineer: Click to read how to make a 5 year plan with your partner to design your life.

Q: How will digitalisation shape our lives in the next 10 years?

I’m a kid of the 1980’s and remember how back in the days, when the internet was in its infancy, its builders believed in being able to solve the wealth inequality issue by democratizing access to information!

A few years fast forward and we know: The exact opposite happened.

Poor people don’t know what to do or how to work with information.

Rich people use information and improve.

In fact, the internet somehow made the problem worse!

Right now we can still say we’re in the infancy of social media in some way. We’re slowly seeing how mainstream media is on its way out. Ultimately it will get replaced. Users prefer to consume content from social media instead. Their timelines are highly customized and each person has their “own channel” in a way.

We have now personalized news on demand on a global scale.

Nothing beats unfiltered information from bloggers, from influencers and from people who have something to say.

Unfiltered information coming from the heart is unbeatable.

That’s why I believe digitalization will create huge opportunities for many to build their own brand. Start today, begin your brand, and understand how to use social media instead of consuming from it.

My vision for the AOP account is to create the best course on content creation that there is!

Comment by Financial Imagineer: Read more about how to thrive in the 2020’s on my blog post “The 2020$ – Thriving In The New Decade”

Q: What would you recommend for living a happy life?

It’s an amazing fact: 75% of all people believe money buys you happiness. But only a few people know that happiness somehow plateaus at an annual income level of around $70,000.

From well researched studies it was also shown: If you won the lottery or you lost your limbs – you will be overjoyed or depressed at first but eventually your level of happiness will revert to your mean, no matter what.

This is called hedonistic adaptation.

That’s why my recommendation for young people is to get familiar with stoicism.

It teaches the development of self-control and fortitude as a means of overcoming destructive emotions. Being stoic is being calm and at times without any emotion.

When you’re stoic, you accept whatever is happening. This is the one part where you can truly control your level of happiness!

Happiness = Expectations – Reality.

Q: What is your personal ultimate goal in life?

I imagine myself having real estate in a few places around the world. Ultimately my dream revolves around having beach access. My home base is and will be Texas.

No matter what will happen, I still want to be engaged on social media, learning, growing together with you!

Final Words

Thanks for your time and sharing your insights with my readers today AOP!

If you’re interested to grow your Twitter or become a creator of some kind, please feel free to reach out to us and stay connected for more! Never ever in the history of humankind was spreading your ideas with a global audience as easy as today. The world is wide open and hungry for good content.

If you liked this interview please share it (social media buttons are below, comment, retweet) or leave a comment below about what you think would be interesting to learn about imagineering your life in the 2020’s!

Learn from the best,

Matt, Financial Imagineer

If you’d like to read more from AOP, click here to join “the rebellion” and to add yourself to his newsletter or follow him here on Twitter.

If you didn’t join my inbox crew yet subscribe by email in the box below, like my Facebook page or follow me on Twitter.

Equal Partners Podcast

Adam Kol helps couples who love each other make sure that the money conversation doesn’t get in the way. His aim it to take couples from fear and fights to partnership & prosperity.

As a Couples Financial Counselor and Certified Mediator, Adam provides customized counseling and tailored tools to give you intimacy, peace of mind, and ultimately: cash.

His services are available worldwide via video coaching.

Learn more about Adam Kol’s offering on his website AHK Coaching.

It was an honor to have been a guest on Adam’s 30th episode of his “Equal Partners Podcast” together with my wife Martina who was speaking as a podcast guest for the first time in her life!

Listen to our episode right here or find more links below.

During our show with Adam we introduce ourselves, how we got to know eachother in Taiwan and how we started planning our lives together in Taiwan as we quickly fell in love.

From two worlds apart, a lot of sacrifice went into figuring out our future together. After Matt moved back to Switzerland, we knew that we couldn’t be apart for too long and made a five-year plan to be together.

In this episode, we share how we turned our post-it note dreams into our thriving reality via financial planning and selfless compromise, we share some of the things we sacrificed and how we helped eachother along the way as well. 

Now, with a family and financially independent we love to share in this podcast that if you plan your couple as a dream team, you can superspeed your life goals while still afford the things that make life exciting.

Be careful, because once you tune in to this podcast, your interest is sure to …compound!

Listen to this episode either directly on Adam’s website: The Equal Partner$ Podcast

Or click here for: Spotify

If you found today’s post helpful, kindly consider sharing it with your spouse, brothers and sisters, friends and colleagues. Please don’t forget to subscribe my blog by email, like my Facebook page or follow me on Twitter.

Go after your goals as a dream team!

Matt

Unlocking Geographic Arbitrage

If you have ever travelled before, you most certainly noticed how price levels for the same thing can be hugely different depending on where you are. This may even happen within the same country.

Why is that?

[Income] earning potential, taxes, rent, everything is changing depending on where you are. It’s all about supply and demand. Some differences might also be linked to currencies, strength of economy, competition, or different methods of taxation.

Take away 1:

Things have different prices at different places.

Spend your money at the right place!

Done the right way, geoarbitrage can unlock tremendous potential.

It is a powerful tool to shorten your way to [an earlier] retirement and even without planning for the ultra long run, it can immediately boost your purchasing power to new heights, improve your quality of life and give you more bang for the buck.

Simple geoarbitrage starts with earning your money in a high earning location while spending it in a low cost of living area. More complicated versions thereof will go into details about where to source for what and optimize for the best outcome across all financial dimensions.

Take away 2:

Salary levels for the same work differs tremendously depending on where you work.

Earn your money from the right location!

The more flexible you are in terms of travel or location independence, the more you can take advantage of both sides and the higher your potential to really taking advantage of geoarbitrage.

The third area where geoarbitrage is highly underestimated is: Taxes.

In Europe tax levels even differ from village to village! Imagine how vastly different the various tax codes can be if you increase the universe of potential tax domiciles and regulations…

Multinational corporations have improved their “play” in this game to perfection. For “natural persons” you should take some time to explore differences in terms of income, property, asset, inheritance, retirement-benefit taxation – you might be astonished what’s possible.

Take away 3:

Learn how to unlock the tax-code and optimize your situation accordingly.

Geographic arbitrage – or “geoarbitrage” in short – is the concept of identifying differences in prices, earnings and taxes while finding ways to exploit them.

Geoarbitrage in the Heart of Europe

Geoarbitrage may be possible right where you are now. Take Basel, Switzerland, as an example.  Here my family lives. From our family home we can reach either Germany or France in as little as 10 minutes by car: We can go shopping in three (!) different countries – in just less than half a day!

Since we’ve been living between Singapore, Switzerland and Taiwan and go crossborder grocery shopping in France and Germany, our kids have realized from quite an early age that it truly depends on “where to get what” in order to get “more bang for the buck”.

The most common example to compare price levels is the Big Mac Index.

Big Mac Index

The most famous measure to compare purchasing power globally is the so-called Big Mac Index. Since a Big Mac has to be the very same no matter whether you’re ordering it in America, Europe, Asia or Africa – it’s one of the very few items you get to purchase at the same quality across the globe.

Of course, a Big Mac may cost a very different price depending on where you buy it. Again, this has to do with many factors, mainly: purchasing power, salary levels, rental costs, availability and prices of ingredients at required quality levels.

Click here to get to the interactive page of the Economist about the Big Mac Index.

In the Basel area a Big Mac costs around €4.79 (or USD 5.60) in Germany or France while the Swiss price for the very same product is CHF 6.50 (or USD 7.05) – this is a whopping 25% price difference!

My son is a big fan of comic books and loves to read Disney comics. The german version “Lustiges Taschenbuch” sells in Germany for €6.50, in Austria for €6.70 while in Switzerland is costs you CHF 12.50 – the last price is about 78% more considering the FX rate. 78%!

Since my son uses his own money to buy these books, he regularly insists to take the 10 minute extra-trip to Germany so he can boost his purchasing power by 78%. Not bad!

Living Geoarbitrage

We enjoy visiting restaurants, pharmacies and more just across our border. Some people also travel for dentist visits, haircuts, and car repairs. The other way round our German and French friends come to visit Switzerland to refill their gas. Many also like to work in Switzerland as the salary levels are higher.

This three-country area is highly interesting for an economist like me.

In recent years and due to increased online shopping habits, the Germans have even started a wonderful business – its name is translated to “delivery address service center” (original name: LAS Burg). If you sign-up with them, you’ll get a “German delivery address” just 1 minute beyond the border which you can use for German online shopping at much lower prices. Once your parcel reaches, you’ll get a email notification and you have a few days to pick it up. The small cost for this service is totally worth it.

The internet allows you to purchase goods from a global market. You just got to understand any potential delivery costs or tax implications depending on where you get your goods delivered to.

Digital nomads live geographic arbitrage as they can easily work and live from anywhere as long as they still are somehow connected to the internet. In places such as Bali or Thailand the purchasing power of your $$$ will be tremendously boosted – sometimes you get up to 5-7 times more for your money depending on what you use it for.

You could now be living anywhere and selling your goods and services everywhere.

That’s the true potential of unlocking geoarbitrage.

Online Tools

The best part about geoarbitrage?

You can start comparing different options and scenarios right away from the comforts of your home.

Check out this amazing online tool to plan geographic arbitrage.

Discover a world full of adventure: The Earth Awaits!

On this website you can create custom lifestyles, compare and share cities with friends and family, and much more! The creators want to help you travel the world, live better, retire early, and have amazing adventures.

Another great tool is the UBS Prices and Earnings tool:

The bank researched 128 goods and services, and earnings for 15 professions in 77 cities worldwide. More than 75,000 data points were collected and included in their calculations. The result of this study is the so called “prices and earnings report”, a global comparison of the cost of living in cities with separated findings for prices, earnings, purchasing power and working time.

Explore the data based on one of these factors, you can find out how many hours someone must work in order to purchase the latest iPhone, a loaf of bread or, yes, the Big Mac itself.

Conclusion

For anyone on their journey to financial independence or to living a wealthier life, geoarbitrage is one of the most powerful tools to reach your goals sooner.

Please take your time to explore the options available to you.

Trust me, it’s a immeasurable lifehack!

If you found today’s post helpful, kindly consider sharing it with your friends and don’t forget to subscribe my blog by email, like my Facebook page or follow me on Twitter.

Happy lifehacking!

Matt

Budgets & Brews Podcast

If you haven’t listened to Rich and Tony’s “Budgets & Brews Podcast” yet, you got to check it out! The hosts Rich and Tony are finance and hop-juice enthusiasts!

They created the “Budgets & Brews Podcast” as their way to spread financial literacy to family & friends at first. Then they added a special “splash” to their show: Beer!!!

[yes, I count myself to the hop-juice enthusiasts as well]

My grandfather used to say: There’s nothing better than something good together with something good. That’s what Rich and Tony did: A perfect combination of their two favorites – finances and beer – in order to create a more relaxing and welcoming environment.

The other aspect is: Rich and Tony like to remove the naturally intimidating feeling of finance terms and lingo and make financial literacy more fun and accessible to a broader audience!

This is 100% aligned with my mission.

The show is intended for anyone seeking more financial education and potentially getting started working towards financial independence.

There’s no better way to start THAT conversation than with a fresh beer!

For the show I’ve chosen Brewdog Punk IPA.

Two reasons:

  1. It’s a wonderful IPA
  2. like the financial advice I’d like to provide: It’s “fiercely independent, forever craft!”

During our talk we dive into how I started my journey towards financial independence more than 20 years ago and how I wanted to be a millionaire. During my journey I used the power of financial life planning to reach my goals. We also cover how jacuzzi beerstorming can improve your creativity and finances and we take a deep dive into how money is created and how YOU can make more with your bank accounts, unlocking YOUR gravity defying money bazooka!

If you have any questions regarding the covered topics, please feel free to reach out by email.

But now, open a can of hop-juice yourself and let’s proceed directly to the show, cheers!

Website: Budgets & Brews Podcast with Matt|Financial Imagineer

Click here for: Spotify 

Click here for: Google Podcasts

Click here for: Apple Podcasts

Click here for: Overcast

Click here for: Pocket Casts

Click here for: RadioPublic

How To Marshmallow Test Yourself

The “Marshmallow-Test” was first conducted back in the late 1960’s by a Stanford professor named Walter Mischel. Over the years and due to its results, it became one of the most famous studies for the subject of delayed gratification.

What is it about? It’s about measuring how young kids can use their willpower to delay their gratification and what impact this has on their potential in many areas of life.

The test was simple: A kid was brought into a room and given a plate with one marshmallow on it. Then it got asked to make a simple choice: Eat this marshmallow in front of you now, or wait 15-25 minutes in order to receive a second marshmallow on top!

Simplified: Each child was given a choice between having one marshmallow now or two marshmallows later. Most kids choose to have two marshmallows later. However, then they were left alone somewhere between 15 and 25 minutes (depending on age) with the irresistible sweet marshmallow right in front of them…

The test was then measuring the number of seconds that a child is able to wait. A few decades later, the researches went back to examine the life of those kids. They could prove the longer a kid was able to wait before devouring the marshmallow at age five was significantly predictive for a few very important life outcomes in their adulthood later on.

They found that kids who could wait [longer/ for the second marshmallow] where more likely to pass more difficult exams, had better social skills, where more confident, successful, healthy, and yes: Happy!

Of course, this test may have some limitations, however, the key essence holds true. More on those critical thoughts that challenge the test at the end of this post.

How to pass the Marshmallow Test?

First and foremost, it’s so simple: DO NOT EAT THE MARSHMALLOW!

That sounds simple but is not as easy as you think for a little kid.

The researchers highlighted two significant findings about how kids successfully passed the test:

First, not physically seeing their reward made it easier for the children to wait longer. This means, don’t look at the damn marshmallow all the time. Find a way to trick your mind into changing your thoughts.

Second, using distraction strategies also had a positive impact on how long the children managed to wait. Some of the kids started so sing songs, covered their eyes with their hands and arms, started to tip-toe on the floor, prayed to the ceiling and so forth. One little girl even tricked herself into falling asleep – a highly successful way to earn big rewards as André Kostolany confirms:

“Buy shares, take some sleeping pills and stop reading the papers. Many years later, you’ll see that you’re rich.”

André Kostolany

The key to success seems to be the ability to focus on the long-term goals despite short term attention magnets.

It’s some kind of trade-off.

Most people are programmed to chose instant gratification over all else.

If you find a way to trick yourself to “suffer” short-term you can unlock the door to the promised land of more enjoyment later:

  • If you exercise now: You will get healthier.
  • If you study hard: You can go to your dream school.
  • If you work smart: You will have a great career or even start your own business.
  • If you don’t eat out: You will save more.
  • If you don’t buy that toy now: You will invest more and become wealthy.
  • If you don’t waste your time and focus: Your dreams will become true!

While we are all different from each other. The remedy is the same.

The key is to find areas where YOU are capable to delay gratification.

Self-control is the key to success.

If you manage to resist short term temptations, you will go far!

How to Teach the Findings of the Marshmallow Test

While it’s easy to teach information and facts as above, the hard part is to teach methods that you can apply to actually improve your behavior and results.

According to Stanford psychology experts, the most important skill parents need to teach their kids for the 21st century is to “become indistractable”. This is a tough one in our modern society where the new currency on the street is “attention”. Even the more, it’s super important to take some time to learn to focus either yourself or teach your kids this skill in one way or another.

A counterintuitive way to teach focus was a study by Michael Posner and his colleagues at the University of Oregon who worked with 4-6 year old kids with the aim to teach them better focus skills using video games. In one of the exercises the kids had to use a joystick to control an umbrella above a cat with the aim to keep the cat dry as it runs around. Kids could manage to stay focused and kept the cat dry. Such sessions led to substantial increases of skillset in kids, including a higher nonverbal IQ level.

Another way is teaching through stories.

Sesame Street for instance has created situations in which Cookie Monster must learn to control himself. Instead of gobbling up his cookies right away – like eating the first marshmallow right away – he’s got to behave and wait. His goal was to join the “cookie connoisseur gourmet club” and – yes- for that one you got to be able to wait for your cookies. In the episode, Cookie Monster learned strategies such as “framing” where he’d pretend the marshmallows are just a picture – and because if it’s just a picture, you can’t eat it. Cookie Monster also had the idea of tricking himself into believing that the cookies are smelly fish, then he will not want them at all.

The key concept for yourself as well as for kids is to get exposed to strategies that showcase what self-control is, while having fun. The best strategies are including both: A great teachable and the self-motivation within. Kids – and adults – must want to change themselves.

Ultimately such exercises will help build character, grit, persistence, tolerance of frustration (!), gratitude, optimism, excitement and how to build energy going into a new project.

Even more important than simply teaching something to your kids is once again: You got to model it. If you promise something, you got to keep your promise. It will get tough to expect your kids to delay gratification if you are breaking your own promises to them.

Finally: Kids must understand that their behavior has consequences.

If they behave in constructive and creative ways, the consequences are good. If they behave in negative ways, the consequences are “less good”. As a parent, it’s your job to create that environment to let them become aware there’s a relationship between what they’re doing and what happens to them in the end. This way, they can internalize those lessons and have a better chance to later live the life of their dreams.

Here another post I’ve written about how to teach kids towards becoming truly (financially) independent.

How to Marshmallow Test Yourself?

As mentioned above, there are many ways to delay gratification. The essence is not to delay everything 25 years out and have absolutely zero enjoyment right now.

That’s no way to live!

However, there are many small things that you can do, to marshmallow test yourself right now, here are the five most important ones in my personal view:

1] You saw something that you’d like to buy:

Try to not look at it, hide it, wait – hold on for a few days and let your emotions cool down.

In more than 80% of cases you may as well forget about it again. If not, maybe yes, buy it.

  • remove temptation, install “spending speedbumps”

2] You check your account and see your stocks are up or down a lot – you’d like to take action:

Take some time to think again why you bought these holdings in the first place? Try to think if any of your long-term assumptions has dramatically changed? Are your emotions rather than your rational mind guiding you? Control your emotions and check the fear and greed index. Maybe sleep over it. Most often your conclusion will be unchanged from before. If not, maybe take action!

  • learn how to manage emotions and stress, align your short-term actions with your long-term goals

3] It’s late at night, you’d like to Netflix and chill – but you also have that great idea right now…

Don’t stress it too much, but do this: Take 5 minutes first, sit down, bring your idea to paper. Once you write it out, you can tell if you’d rather like to work on your idea now or still watch Netflix. Maybe you’re super tired and rather go to sleep than watch TV so you can work on your idea early in the morning?

  • prioritize your time, be intentional, beware of time bandits

4] It’s the last Friday of the month and you’ve just received your monthly salary.

It’s wonderful to see your cash account nicely filled. The weekend is coming. You’d like to go out for dinner, get a haircut, buy some new clothes and splurge a little, maybe stack-up on some exclusive artisan bread for Sunday brunch – after all: You’ve earned it! Right?

How about marshmallow testing yourself first? How? Yes, you’ve earned it: Pay yourself first! Automate a monthly deduction from your salary account to your savings and investing account. Invest into your system of abundant income streams before you spend. Then go have fun!

  • set goals, measure your progress, pay yourself first, automate where needed and control your urges

5] Last but not least, we are all human and yes, you are going to fail. It’s natural.

However, beating yourself up and being harsh to yourself doesn’t help. It’s wasted energy. Eighty percent of achieving your goal is based on your attitude. Attitude defines altitude. If you’re planning to work on ambitious goals, you’ll need time to build sufficient self-control, discipline and focus.

  • learn to forgive yourself and move on – learn from mistakes, stay passionate

“Success consists of going from failure to failure without loss of enthusiasm.”

Winston Churchill

Some people have valid reservations why the marshmallow test turned out as it did. As promised at the beginning of this post, here the disclaimer: It was argued kids of successful parents are usually doing better at the marshmallow test not because they control their willpower better, but rather because those kids were around “trustworthy adults”. Thus, the kids trusted that the second marshmallow would be there in the future.

Nevertheless, I strongly believe that mastering self-control and working on long-term goals with persistence, grit and endurance is more rewarding than not. My dad had me marshmallow tested as well during my own childhood. It’s something you can learn and pass on to the next generation.

A Finish proverb goes like this:

“Life is uncertain, eat your dessert first!”

However, the average human lifespan has increased steadily. We have now more “future” than ever before to spare. Therefore, despite life’s uncertainties, try to focus on your future enjoyment and picture your imagineered life – then you can stand this experiment, this method, better.

Do sustainably, in a fun way please.

Eat more marshmallows!

Tomorrow – not today!

Train yourself!

Make it fun.

Matt

If you liked this post, please consider subscribing to my blog by email, liking my Facebook page or follow me on Twitter, more details here:

Fear And Greed

Are you frightened when markets go crazy once again? Afraid of not making the rationally and scientifically proven right choices about investments and life? Suffering from keeping-up with the Joneses and chronic herding-fatigue?

Then you are more than ready to dive deeper into this post where we take apart the two most powerful human emotions that make our world go round:

Fear and Greed.

These emotions have the strongest impact on human behavior individually as well as on a collective level.

They impact your life and [financial] markets in a powerful way.

Read on if you like to understand and manage fear and greed to build a better, happier, and wealthier life.

Step 1: Understand what drives behavior

All free markets are driven by supply and demand. Hence, all transactions need at least three things:

A buyer, a seller and last: The first two need to agree on a price!

Imagine an increasing number of people chasing the same limited assets or resources. The more people like to buy and the less want to sell – the higher the price will climb for supply and demand to meet.

Usually if prices do climb higher, it attracts “more eyeballs” in society and even more people join the party. That’s how greed works and this is what makes financial bubbles grow.

On the other side, think of fear as when suddenly nobody wants to buy anymore but an increasing amount of people is eager to sell.

The price will drop until someone is eager to buy again. Price level will be defined by where sellers and buyers agree to transact.

Markets reflect nothing else than the aggregated sum of individual behaviors.

And yes: It does get messy!

Step 2: Understand how markets work

In most fearful markets, people irrationally sell stock while in greedy markets people are looking to buy.

The wise ones may try to go against the heard and do the opposite, and as the saying goes, “buy low and sell high.” not otherwise.

My father has a great saying:

Some people are wise.

Some are… otherwise.

My dad

Before we draw to conclusions about how to make understanding fear and greed work for you, let’s go get a deeper understanding of them.

What is Fear

Fear is a deeply intriguing component of life.

In our culture, people believe failure is what to be most afraid about. Let me say, they got it all wrong. It’s the fear itself that is the most detrimental to success no matter what you’d like to achieve in your life.

Fear…

It helped us with surviving.

Protected us from sabre tooth tigers.

But it holds us back.

It creates comfort zones.

It keeps us from pushing onwards.

However, in our modern society, fear is mostly the source of all that is wrong in the world:

Fear of failure: “I’m not good enough!”

Fear of embarrassment: “No one will care!”

Fear of starting: “What if I fail?”

Any of these sounding familiar?

Fear is the most sinister made up thing of all time and the guaranteed fastest way to live below your meaning and potential.

Action is the savior of dreams.

When was the last time you did something about it?

Use fear as a tool for growth and challenge yourself.

Learning how to push through fearful moments is most beneficial and shaping your character.

Afraid to try or go “do”?

Face your fears!

Ask yourself: What’s the worst thing that could happen?

You either win or you learn!

Keep learning until you win.

Find a way to the other side of fear because that’s where dreams become reality.

The other side of fear is where your world starts to change, if you just allow it to.

Fear can be so valuable, but at the same time so debilitating. It’s up to you to decide whether to use fear as a tool for growth or as a reason to settle in life. Whether we bravely overcome obstacles or hide away scared is up to you!

Fear can be the biggest killer of dreams.

The sole difference is the decision of either overcoming fear and grow – or to allow fear to limit the life you dream of!

Instead of having fear killing your dreams, kill your fears!

Most of the good things in life are on the other side of fear indeed.

If you’re happy to sit at your desk and not take any risk, you’ll be sitting at your desk for the next 20 years.     

David Rubenstein

Step 3: Kill your fears!

No fear!

What is Greed

Greed is a mostly uncontrolled longing to increase the acquisition or use: of material gain (food, money, land, any possessions) or social value (status, or power). During human history, greed has been identified as “undesirable” because it creates behavioral conflicts between personal and social goals.

Greed is a powerful thing.

In my view, it comes right after fear.

In terms of motivational power, it captures the essence of the evolutionary spirit. Greed can show itself in different forms. It was and still is the driving force pushing mankind forwards and upwards – through history.

That’s why in the 1987 movie “Wall Street”, Michael Douglas as Gordon Gekko preached his words: “Greed, for lack of a better word, is good.”

The problem: Greed comes with downsides. Every once in a while, greed causes asset bubbles where greedy investors keep buying and ignore all the flashing blinking warning signs of impending potential for a collapse.

The 2008 crisis was mainly caused by “sophisticated derivatives” constructs where the end product got abstracted by two to three dimensions from the underlying business case and due to broad diversification and lower transparence everything was made to look just fine.

Don’t get me wrong, being ambitious is good. Wanting to get somewhere in life is great. Wanting to learn, achieve or grow is nothing but natural. As a trained economist myself I studied how a healthy form of greed is behind microeconomic decision finding.

If free market forces are left to themselves [meaning no government interference], the “good qualities of greed” appear. Goods and services will be exchanged at the most optimal allocation for all parties involved. The equilibrium point has its corresponding equilibrium quantity and an equilibrium price which leads to the most efficient allocation of scarce resources.

Would Wall Street, the economy or our capitalistic system function without greed? I don’t think so. Economic activity depend on the profit motive. Greed as such has never been left completely on its own on a macro level. Governments across the globe kept influencing markets. However, on a personal level we know what greed can do.

For a single human being the big problem is always the question: How much is enough?

Greed is a good motivator to chase ambitious goals, but the trap is often such that goals are getting adjusted higher and higher. Too much is never enough anymore. People tend to lose control over themselves. Greed often takes over when it comes to money and power.

Step 4: Learn to control your greed.

Overconfidence, lifestyle inflation, taking too many risks and trying to play bigger and bigger will often cost a lot. It can cost love, friendships, trust, or simply some money.

Beware: Greed is frequently used to sell stuff. If it’s not for fear, marketing often appeals directly to [your] greed. People will listen and buy.

How to conquer greed?

The Stoic mindset is the antidote.

Control your greed!

Know what you have.

Appreciate it.

Avoid lifestyle inflation, don’t let hunger for increased pointless over-consumption run your mind. Forget keeping up with the Joneses. Avoid herd mentality.

That’s where it gets problematic.

Lead your life and remember: True leaders remain committed to what really matters!

You are the leader of your life.

You run your mind.

Shitting Your Pants in Real Time

In this third part of this post, we will combine the concepts of fear and greed.

The initial motivation for (or purpose of) fear and greed and actions associated with it are  the promotion of personal or family survival and safeguarding future opportunities. In our modern world, controlling fear and greed are still important as ever:

The hardest thing an investor ever must learn is to manage his emotions.

Fear, greed, overconfidence, impatience, desperation, panic… I’m certain if you read financial news every once in a while, you may have come across these concepts.

The key here is to avoid the mistake of letting fear OR greed paralyze and impact your investment decisions.

Watching CNBC on a perpetual loop will not make you a better investor. Following such news will simply give you either mental breakdowns or orgasms – depending on the “mood of the day”. Like a drug addict you’ll constantly be like “pheeewwww”, “oh gosh”, “aaah”, “yesss” or “noooo” and keep watching the garbage broadcast: Triggering you to take action when everyone else does!

You’d be shitting your pants in real time or suffer from orgasm exhaustion sooner or later.

You’d be riding the waves of fear and greed.

The wrong way.

Without control.

Yes, if you invest in stocks you will be exposed to volatility. Sometimes this volatility can become nerve wrecking. Once markets go deeply into the red, you will face the situation where you’d love to throw the towel and sell everything. On the other side when certain stocks grow through the roof up into the sky your greed will trigger the so called “fear of missing out” and you’ll join the ride at a rather stupid moment.

“Be fearful when others are greedy and greedy when others are fearful.”

Warren Buffett

Now you’ll say: Okay, I get it Matt. Don’t do what the others are doing. But hey, how would you suggest dealing with stock market fluctuation then?

First, understand that volatility is part of the game. You and me, we can’t control it. Stocks will fluctuate today, tomorrow, next week. It doesn’t matter if you look – or not. Neither does it matter if you like it or not.

Sometimes people claim they prefer real-estate investing over stocks because of lower volatility. I’m also a great fan of real-estate investing by the way. But now, imagine you’d have a crazy neighbor. Imagine this neighbor would scream the actual real-time price of your home over the fence. Every. Fucking. Minute.

How would you feel about that?

I’d say you’ll probably get yourself earplugs.

You don’t check the real time value of your home.

So why would you do it with stocks then?

Ignore the Noise, off the media.

No worries, with time you will grow into this!

Step 5: If you can’t control it. Learn not to let it control you!

The stock market is a device to transfer money from the impatient to the patient.”

Warren Buffett

If you’re a well-diversified long-term investor, the only media I’d allow you to watch on a “red day” on Wall Street is this one here:

A Guided Meditation for When the Stock Market Is Dropping

By JL Collins

The Fear and Greed Index

In the last part of this post, we learn how understanding fear and greed can be useful whilst navigating the seven capitalistic seas.

Many traders use technical, fundamental, or other quantitative analysis. However, market swings are largely driven by human emotions. Hence, the sentimental one analysis is often overlooked.

The “Fear and Greed Index” can help you read the market sentiment. Please beware, you can never base your trading decisions just on this indicator alone. It should be used as a supplement to complement your initial strategy.

Understanding this indicator is relatively simple:

  • extreme fear indicates possible buying opportunities
  • extreme greed indicates a market correction could be expected

The key to making money in stocks is not to get scared out of them.

Peter Lynch

One simple way to apply this would be to rebalance your asset allocation based on certain readings of the index. If the index shows fear, you could reduce your bond or precious metal allocation and increase equity allocation. Or vice versa if the index shows greed.

This is the simple and easier way to make use of it.

Disclaimer: Beware – this is not direct investment advice but rather an introduction of concepts to help you expand your financial literacy. Execute and trade at own risk.

Having been a Wealth Manager and helping sophisticated investors with their money for most of my professional life, let me introduce to some more options here.

Greed Stage:

If markets are high and the Fear & Greed index is above 80 points, a correction of roughly 8% can be expected (data since 2011 till 2020). A high index reading usually also indicates low volatility and a good chance to reduce holdings.

Actions to consider:

  1. Sell covered call options on your holdings/ the index
  2. Use proceeds of 1. to buy put options on the same holdings to install a hedge

In short: Reduce exposure and hedge potential downsides.

Fear Stage:

If markets are fearful, volatility is generally high, and stocks are relatively cheaper. One thing is rather for sure, markets will not remain in fearful territory for very extended periods of time.

Actions to consider:

  1. Buy an inverse VIX ETN such as the SVXY – let go again once situation normalized
  2. If you plan to increase your equity allocation: Sell puts on your desired additions at desired strike price levels, collect premium and wait.

In short: Sell fear, sell volatility, potentially increase exposure.

If you’re as passionate about investing like me, learn to listen to the heartbeat of the market. Add the VIX and Fear and Greed index to your watch-list!

Step 6: Learn to listen to the heartbeat of the market.

Beware, the Fear & Greed Index is not an official index or tool, it’s a construct by CNN. Understand how it’s calculated and take note that CNN may change the way it’s calculated going forward without notification.

The wealthy know the short-term stock market is driven by emotions such as fear and greed.

The average think it’s solely driven by logic and strategy.

They fear when they should be buying.

… hope when they should be cautious

… get greedy when they should be selling

The wealthy have a powerful advantage over the average though:

They have maneuvered themselves in a position where they can allow themselves to take risks.

If your capability to take risks is not there yet, work on it!

Taking calculated risks and expanding your capacity to take on more risks, to build your assets and cash-flows is one of the best kept “millionaire’s secrets” there is!

Step 7: Put yourself in a position where you can allow yourself take risks.

Financial independence allows people to take more small, calculated risks – over and over again.

But remember: Pigs get slaughtered.

“Bulls make money, bears make money, pigs get slaughtered”

old Wall Street saying that warns investors against excessive greed

The more risks you can take, the less you will shit your pants the going gets tough and the more exposed to the upside you will be when the tide will turn once again!

Happy conquering your fears!

Matt

If you liked this post, please consider subscribing to my blog by email, liking my Facebook page or follow me on Twitter, more details here:

Winter is Coming

In this world, there’s nothing as stable as change. Spring adds new life and new beauty. Summer stands for sweet weather, sunshine and swimming in the sea. Then, all at once, summer collapses into fall and shortly thereafter:

Winter is coming!

While for “Game of Thrones” winter has already reached, in this post I refer to winter to that “thing” that happens to each and everyone of us – eventually. Winter, the seven bad years, disease, old age whatever we wish to call it: It’s coming to us all eventually!

You most likely have experienced or heard about some kind of seasonality in your life. Stories about changing times can be found plenty. The oldest stories are originating in the book of Genesis from the bible about seven good years followed by seven bad years.

Not much has changed ever since.

People as well as animals ought to build reserves during good times:

Winter is coming!

Just think of how certain animals are preparing themselves for tough times.

Squirrels prepare for winter by bulking up. Throughout fall, they maximize food consumption and body mass. In winter, when food is hard to come by, these reserves will help them survive. Groundhogs spend the warmer months eating as much as they can to build up their fat layers needed to survive winter in hibernation. There are many more examples alike.

We humans have this “alertness” embedded into our culture – depending on where we live and how much we’ve been exposed to seasonality ourselves. But more on that later.

First, let’s read a story about a businessman who goes see a fisherman:

Once upon a time, there was a businessman sitting by the beach in a small tropical village.

He was observing a local fisherman rowing a small boat towards the shore, having caught quite some big fish. The businessman was impressed and went to ask the fisherman, “How long does it take you to catch so many fish?”

The fisherman replied, “Oh, just a short while.”

“Why don’t you fish longer and catch even more?” The businessman asked.

“This is enough to feed my whole family,” the fisherman replied.

The businessman then wondered, “What do you do for the rest of the day?”

The fisherman said calmly, “Well, I usually wake up early in the morning, go out to sea and catch a few fish, then go back and play with my kids. In the afternoon, I take a nap with my wife, and evening comes, I join my buddies in the village for a drink — we play guitar, sing and dance throughout the night.”

The businessman felt he better offered a suggestion to the fisherman.

“I’ve got a MBA and could help you to become a more successful person. From now on, you should spend more time at sea and try to catch as many fish as possible. When you have saved enough money, you could buy a bigger boat and catch even more fish. Soon you will be able to afford to buy more boats, set up your own company, your own production plant for canned food and distribution network. By then, you will have moved out of this village to the big city, where you can set up your HQ to manage your other branches.”

The fisherman continued, “And after that?”

The businessman laughed heartily, “After that, you can live like a king in your own house, and when the time is right, you can go public and float your shares in the Stock Exchange, and you will be rich.”

Once again, the fisherman asked, “And after that?”

The businessman said, “After that, you can finally retire, you can move to a house by the fishing village, wake up early in the morning, catch a few fish, then return home to play with kids, have a nice afternoon nap with your wife, and when evening comes, you can join your buddies for a drink, play the guitar, sing and dance throughout the night!”

The fisherman was puzzled, “Isn’t that what I am doing now?”

You guessed it correctly: For the fisherman, winter is NOT coming.

You may probably have read this story in one form or another before.

I love the powerful lessons within:

1. Life is not linear and everyone has their own path. Some paths are safer and more frequently used. Other paths might be shortcuts or even detours.

2. Knowledge and wisdom are not the same – don’t let schooling interfer with education.

3.  Beware of the “deferred life plan” – money is renewable, time is not.

The main difference between the businessman and the fisherman is: Seasonality!

The businessman grew up with a different mindset and could not believe there is someone simply living day-by-day without worrying about the future and living a happy life.

When the businessman returns to his big city and fall arrives, the weather turns cold and the days get darker. This triggers a natural human instinct of preparing for winter.

Weather changes will activate our brains and concerns that we will not be having enough food or money to carry through a though winter.

As we all know, fear is one of the strongest motivators. Hence, we usually don’t get paralyzed by it but motivated to get busy preparing ourselves to pull through the dark times ahead. Bulk shopping before hurricanes, toilet paper shopping in 2020 and to preparing for a blizzard – winter is coming – is part of our DNA.

It’s our reptilian brain triggering the survival instincts.

In Europe we have countries high up north with very though, long, and dark winters. In the south we have places where winters are mild, and people are not that much bothered by seasonality. Coming from Switzerland I know that being landlocked and having survived two world wars without getting involved: We have our ways to prepare for bad times.

Like the squirrel, we are good in stashing resources.

I have met people from Scandinavia who strategically make use of winter to travel south for marketing purposes or recreational travelling when business comes to a halt at home.

Taking advantage and embracing winter to take actionable steps to move yourself forward are great ways to pass through tough times. Taking a well deserved break and flee the cold for tropical locations to “hibernate” are also legit reasons to do so.

Hence, there seems to be some sort of correlation between weather and the saving rate of whole countries depending on their exposure to seasonality. Just compare the northern with southern European nations to start with. In the north, people stash resources to empower them passing tougher times easier.

The one big exception with that regards that I’ve experienced myself is Singapore. Its founder Lee Kwan Yew [Singapore’s founding father] thought air conditioning was the secret to his country’s success!

When I started spending more time in Singapore, it was a new experience for me. Singapore is almost on the equator and weather doesn’t fluctuate too much; there’s no seasonality and most days have a similar amount of sunshine. Most days are mostly alike. Hence, less external stimulation is given and subjectively – time speeds up!

Personally, seasonality helps me put memories and events into relation with a timeline. I’ve got many memories from Singapore that I can’t assign a season or month anymore.

Sometimes it seems that just yesterday I was young and just about to embark the journey of my life. Luckily, I’ve made good use of the time given to me so far.

But still, I try to find ways to somehow “slow life down”.

How to?

You can do so by keeping life more “interesting”. Expose yourself to new things, experiences, learn a new language, new skills or do something you’ve never done before.

As for myself, I optimistically consider myself in very late spring or early summer – of my life.

Winter is not too close yet.

Readers in their early spring years have it the best. Instead of just saying: “Winter is coming” – get prepared. You know, time has a way of moving quickly, even speeding up somehow through life and ultimately catching you unaware of how fast its passing by. Build your nest-egg, start saving and investing now!

But if you’re not in your winter yet. Let me remind you: It will be here faster than you think.

When I turned 36, my dad (back then 72 y/o) called me and wished me a Happy Birthday, he said:

1. Congratulations son, you’re now already HALF my age!

2. You’re catching up!

3. The second half goes faster…

Whatever you would like to accomplish in your life, please do it timely. Plant your seeds now. Don’t put life on hold. Do what you can today. Nobody knows if you’re in your winter already or not.  “Waiting for better times” is a lot like waiting for spring to come early while shivering through winter.

Life is a gift.

The way you live your life serves as inspiration to the people around you. It is also a gift to those that come after you. Live it well, make it a fantastic one, make it count!

Today is the oldest you’ve ever been and the youngest you’ll ever be again.

The rest of your life starts right now!

Winter is coming!

Matt

Miles Ahead

How Travel Hacking Itself got Hacked – and what we can learn from it.

Many airline passengers whose trips got cancelled some months ago are still waiting for their ticket refunds as carriers and travel agencies are running low on liquidity. As of August 2020, airlines are withholding billions in refunds – that’s Billions with a capital B!!!

The current corona pandemic leaves airlines stretched.

They are suffering liquidity shortages. While this may seem historic for most, it’s for sure not the first time airlines are struggling. Let’s take a walk down history lane to see what we can learn from the past: This has happened before!

We shall get back to 2020 and the Covid pandemic towards the end of this post!

First let us travel back to 1981.

In that particular year American Airlines was in deep sh*t.

After the oil crisis of the 1970’s, in 1978 the US enforced the Airline Deregulation Act to deregulate the airlines industry. Just a few months later in the early 1980s the economy was in a period of sky-high interest rates and roaring inflation. In 1980 AA posted a $76 million loss while facing new competition, lower ticket prices and high borrowing costs and fuel prices.

It was a tough time and AA was in urgent need for cash. Due to exorbitant interest rates borrowing was not an option to consider.

Therefore AA came up what later got coined as the one of the most epic marketing failures ever: They started offering the best deal frequent travelers could ever lay their hands on – ever!

First Class for LIFE!

The legendary AAirpass was born.

For a hefty $250,000 the AAirpass offered nothing less than:

UNLIMITED FIRST CLASS TRAVEL FOR LIFE!

Can. You. Actually. Imagine. That!?

FYI: $250,000 would be $700,000 inflation adjusted to 2020

Over the course of the years, AA sold about 65 unlimited lifetime first class passes until they stopped selling them in 1994. Apparently, Billionaire entrepreneur Mark Cuban said that it was “one of the best purchases he’s ever made – it opened the world to him: He could go anywhere anytime he wanted to – first class! Other notable customers included Michael Dell and Willie Mays.

And hey, it doesn’t stop here!

For some extra cash, you could also get yourself a companion pass.

First class is more fun if enjoyed together!

Originally the idea was to offer this product exclusively to existing frequent business travelers…

However, some travel hackers did their math correctly and this was how a certain Mr. Rothstein purchased his own AAirpass plus the companion pass for $383,000.

Mr. Steve Rothstein was a Chicago based investment banker and he loved the idea: “Instead of getting interest paid from a bond, you could redeem your returns in air travel.” A very fair deal in his view: “They need cash and they can pay me in miles.” Why not! Right?

Travel Hacking Itself Got Hacked

Soon American Airlines had to learn the airfare market is not comparable with, let’s say an “all-you-can-eat” buffet or “all-inclusive” vacations where customers would have natural limitations of how much they were able to consume.

When it comes to first class tickets just imagine how many folks are literally ready to go “the extra mile” to profit from such an offer.

Starting from 1987 Mr. Rothstein went many many extra miles with his AAirpass, he booked more than 10,000 flights to anywhere. Sometimes he simply flew somewhere to grab his favorite sandwich. He also frequently just took complete strangers along into first with his companion pass.

He basically used the airlines’ network like a bus…

From Chicago, he reportedly flew:

  • 1,000 times to New York City
  • 500 times to San Francisco
  • 500 times to Los Angeles
  • 500 times to London
  • 120 times to Tokyo
  • 80 times to Paris
  • 80 times to Sydney
  • 50 times to Hong Kong

Another gentleman, Mr. Vroom from Texas, even took out a loan (!) to finance (!!) the $400k (!!!) – by the time he bought – AAirpass fee.

He flew well above 2 million miles per year thereafter. Mr. Vroom sometimes simply flew to Paris to have lunch and would return shortly thereafter.

The next time AA got into financial trouble was in 2007. Once again, they went through their books just to figure this time the AAirpass program was costing the company too much. What a surprise. American calculated the two top-clients Mr. Rothstein and Mr. Vroom cost them well above $1 million in taxes, fees and lost ticket sales – per year!

What an amazing return on investment for the two of them!

They were miles ahead!!!

The Revenue Integrity Team Steps In

Unfortunately, good things seldom last. The story ended bitter for our unlimited lifetime loyal frequent flyers! Once the airlines’ “revenue integrity team” (what a name…) started to get active, their AAirpasses got revoked.

The airline claimed the reason being “fraudulent activities”. Both clients got stripped of their passes and were told they would never be able to fly on the airline again. Ever.

Nowadays, the American Airlines Airpass is merely known as an all-inclusive membership program that offers elite status, flight discounts, and other rewards. It now comes with an annual fee.

In hindsight this offer was coined one of the worst marketing disasters in human history.

According to an American Airlines spokesman, there are still about 25 valid unlimited passes out there in use as of 2018. It seems therefore unclear if all the unlimited passes got cancelled…

Let me know if you are a passholder please, leave a comment below or shoot me an email, please!

If you want to improve your life with similar or other life-hacks and imagineer your life, please consider to follow me on Facebook or Twitter:

Miles Programs Used as Collateral for Bank Loans

This is all history, so why do I write about the above story at the current point in time?

Well, due to the current pandemic, we have arrived at a similar “situation” once again. Airlines are short on cash! And as before, in 2020 airlines are reaching out to their largest customers and are offering to sell miles directly to them – to secure liquidity.

History doesn’t repeat itself, but it often rhymes.

While in the early 1980’s the largest clients where direct business travelers, the largest clients in 2020 are – yes – you guessed it: Credit card companies with reward systems such as American Express, Chase and others! These large corporations are currently winning big and can purchase points at deep discounts – just to offer them to you later.

American Airlines and United Airlines also ventured out to conduct more innovative financial engineering recently. They are mortgaging (!) their mileage programs with financial institutions to borrow against and “monetize it”. Due to this new way of “banking points” both airlines have recently disclosed valuations of their mileage programs.

The numbers are in the tens of billions of dollars!

Why is this scary? Imagine that both, American Airlines and United would be worth a negative valuation after discounting the value of their points programs…  

Here some numbers:

Just the U.S. portion of the AAdvantage program is currently valued around $19.5 billion (subtract that from it’s market capitalization of $5.6 billion…).

Uniteds’ MileagePlus program got valued at $21.9 billion (now compare this with it’s market capitalization of $10.1 billion…).

This is how valuable the reward systems have become and how crucial they are for the industry.

While I don’t believe the airlines will disappear just yet and like that, there’s a certain risk also on the respective banks’ books now. Hope they know what they’re doing. But the main point I’d like to convey today is another one.

Travel Hacking in 2020

Since Mr. Rothstein got his AAirpass, airline loyalty programs have transformed from a way to simply increase customer loyalty to a massive profit center.

The above example of how American Airlines and United are even empowered by the system to “mortgage” these hugely valuable assets – to unlock billions of dollars in bank loans to help survive the pandemic – shows the world the true size and value of their programs.

According to my opinion the most recent developments may lead to the following potential outcomes.

View from Singapore Airlines “old” Suite Class chair 3F on their A380-800s

Here my considerations for travel hacking in 2020:

  • There will be some sort of “inflation” in point values coming up – your points today are more valuable than your points tomorrow. In other words: The earlier you book your flight, the better deal you can get. Airlines are happy at the current moment for miles holders to redeem points!
  • With inflation and more points being “monetized”, the rewards, in terms of points – not in actual value – will move up in the near future. Look out for a changing landscape of reward systems and re-position yourself if needed.
  • Buying extra miles could be a true bargain during this period of time. Try to take advantage of it strategically. AA has launched a new offer allowing frequent flyers to purchase miles with up to 100% bonus through Aug. 31, 2020. This offer brings the cost per mile down to as low as 1.71 cents.
  • Be sure to understand the involved risks such as prolonged insecurity regarding flight plans, countries having closed their borders, airlines getting stretched, potential airline bankruptcies and still yes: getting exposed to the virus itself.
  • If you hold a substantial amount of travel points and miles (like me), make sure you keep them with the right “bank” – or airlines. Some airlines might go bankrupt depending on how long this pandemic will continue. Nobody knows. If your points are with them, you may lose them. One way to secure points is to keep them with the credit card company or bank first and only convert them to miles once you’re about to redeem a flight. Buy points now and buy yourself time!

Maybe as of 2020 we can’t just buy a first class for life pass quite yet, but I’m looking forward to learn more about improving deals coming our way to stay miles ahead.

How do you travel hack in 2020?

Happy travel hacking!

Matt

Picture by Christophe Randy, Singapore Airlines A350 from Hong Kong to Singapore over the South China Sea

How To Build Your Abundant Waterfall of Income Streams

Regardless of what people think or try to tell you, the easiest and most common way to get wealthy is to build multiple streams of income.

Did you know the average millionaire has seven flows of income?

Yes, it’s possible to get reasonably wealthy with a good job. Yes, you can strike it rich with equities. Yes, you can focus all your efforts into your job or business. However, if you are too concentrated on one single source of income, you limit your growth and remain at risk.

Having added additional income streams for myself allowed me to take more risks, to quit my 9-5, to venture out exploring and growing into an entrepreneur – improving the quality of my life.

Don’t solely rely on one stream of income: Grow and diversify your streams of income.

Diversified growth is a most natural phenomenon. Look at how trees also don’t rely to grow on a single root or branch. As trees grow, its roots and branches start to spread. By reaching out, they are attempting to tap into uncontested soil while branches try to maximize sunlight intake. If a tree fails to obtain sufficient nutrition from either side, unable to support itself, it will die and give way to other trees.

The question about streams of income is somehow a chicken and egg dilemma. It’s not clear if additional income streams make millionaires in the first place – or – if it’s millionaires that simply understand the rules of the game and keep more income streams flowing to them.

Either way, one thing is clear:

Multiple income streams are a crucial part of the wealth creation formula. Increasing your income [streams] counts as the most secure path to financial freedom and abundance.

The starting-point is where you are now. How many streams of income do you currently have? How many of those are you aware (!) of? Which stream is working the best for you? Which stream has the highest potential to improve going forward?

Learn how to optimize existing flows and add additional ones.

“If you don’t find a way to make money while you sleep, you will work until you die.”

Warren Buffett

In other words: Don’t stay in bed unless you’ve learned how to make money – from bed. The goal is to sleep rich and wake up richer.

Primary Stream of Income

Most people are getting started with their money-life earning income through a job. A job is selling your skills and time against money. Jobs can provide security, comfort, and to a certain extend satisfaction. Employed people usually get paid regularly at the end of the month. While different jobs pay different amounts of money – some less, some more – they all pay.

Primary stream of income – your job.

Keep your job and find ways to optimize it. You could start working your way upwards [the corporate ladder] by aiming for a promotion. You could target a salary rise by analyzing your value contribution. Another approach could be to negotiate for part-time work, maintaining your baseline contribution [and maybe even your salary] freeing up yourself more time to work on additional streams of income.

Figure out how much is your real – actual – dollar earned per unit of time you need to sacrifice in order to maintain the job. Your real dollar earned is your salary, less deductions, less taxes, less your costs of maintaining your job (e.g. your commute, expensive clothing, socializing etc.). Deduct the final $$$ amount and divide by your total time effort and you might be surprised how little you actually earn – per hour of your life.

Still, priority one should be to keep optimizing your main stream of income until there are no further improvements possible.

This is where to get started.

Secondary Stream of Income

For this second point, let’s assume you’ve got a partner that is equally engaged in the workforce. This may or may not be the case. If your partner is earning [a stream of] income independently from yours, you can engage in teamwork and optimize for two instead just one main stream of income.

Two streams of income – two jobs – teamwork!

Considerations: If both of you work in the same company or industry you might still have to think of concentration risk in the potential case your industry gets hit or the company lays-off staff.

Diversification is not a must, but could be a meaningful consideration here.

Your partners’ salary might allow one of you to let go of the job in order for the other one to work on building additional income streams or explore entrepreneurship.

It’s a great option to have if you work as a team!

Creating Additional Streams of Income

Whenever someone needs additional income, the stereotypical suggestion offered is to “get a part-time job.” This could be a solution. But it’s not good advice. Mostly. What if you don’t have the time or energy to put in extra hours? Going down the path of part time jobs may still count as “trading time for money”.

There are some exception to where selling more of your time makes sense.

Leverage on stuff you have to “do anyways”. Let me explain. If you consider working as UBER driver, try to only drive UBER on a route you got to drive anyways: E.g. your daily commute. This way, you don’t spend more time or do something you wouldn’t do in the first place, unlock your time-potential and “activate” an additional income stream without changing your daily life or habits or selling more of your prescious time.

Other examples are to pool laundry (charge others for helping them doing theirs), babysit (“kid-pooling”), cook bigger portions of meals and sell the surplus, or anything else you do anyways and think you could “share” out to get paid.

Adding more streams of income will take an effort. Nothing comes for free. Expanding your income potential usually “cost” either a monetary amount or a time investment. Whatever you have in mind, get your focus away from just selling your time.

Your time is your most valuable resource.

When I was younger I’ve read books like “Rich Dad Poor Dad” and “4 Hour Work Week”, they lightened the FIRE in me to become extremely interested in building streams of passive income.

You see, selling your time is considered “active income”, but earning money without selling your time is called “passive income”. If you solely focus on “active income” you cap yourself at 24 hours per day and will not unlock potential additional income.

Try to find ways to open up additional income streams that are not directly linked to you selling (more of) your time. Build systems. Little currents, becoming bigger, growing to streams, streams of income.

Streams of income flowing towards you.

Small things you can do right away are filling surveys online, monetizing your beautiful photos online, hey, in todays world you can even sell your online behaviour. Yes, you’re the product if you want to be. Some apps actually pay YOU for having them installed on your phone. Having a spy installed may not be the most preferred way to earn money for some, to others this might be perfectly legit.

In my case counting my credit card reward points as a flow of passive income makes totally sense. Those reward points allow me to circle the world in business or first/ suites class at least once a year without spending additional money. Just figure out which credit cards are most rewarding and channel your expenses accordingly.

Singapore Airlines Suites Class Flight Zurich to Singapore – for free!

Unlock hidden potential. Otherwise you let it go to waste.

Simply selling your time is limiting your full income potential and it’s not leverageable.

Create Wealth – Passive Income

Did you make more than you spent today? Awesome! Do you need that extra money for expenses tomorrow? Save it! Do you have more than you need for tomorrow? Invest it!

Earn. Save. Invest. Earn more. Save more. Invest more. Repeat!

This wealth creation formula is simple: It’s like holding back your earned money and send it – not YOU – back to work – FOR you – to boost future streams of income higher again.

The most common and easiest additional streams of passive income are investments in capital markets. Invest and earn either interest from bonds, dividends from equity holdings or – depending how you want to look at it – generating capital growth through increasing asset prices over time.

A portfolio of securitized assets that provides sufficient income to cover your expenses is the cornerstone element for most people working on financial independence.

Diversify Your Streams of Income

The capital markets are fluctuating and while it’s the easiest option to build true passive income, you may also diversify into additional income streams that have nothing to do with your investment portfolio.

The second most common is real estate.

If you’re serious to build wealth, please refrain saying you’ll never have enough money, time or expertise to get into this one. You can start small and learn by doing while growing into becoming a landlord.

Room Rentals

One of my friends started out representing his company in another town. For sending him there the company offered him a housing allowance. He optimized that offer in a smart way. Instead of renting a place, he purchased a small two-bedroom apartment with almost no cash down and used his company’s housing allowance to serve the mortgage on it. At the same time he rented out his second bedroom and received passive income from his first tenant. Ten years later, his flat increased in value, the mortgage has shrunken, and my friend kept investing the difference into equities all along. This is how to build wealth from scratch. Beautiful.

In a later stage in life, many are looking to start a family and desire to level up their homes. If you purchase a bigger apartment did you ever consider renting out one room to a tenant? If you choose the right and suitable tenant it could be a great solution. We have done this successfully in the past and enjoyed good times co-living with our tenants.

AirBnB

We also have friends that offer their extra bedroom(s) on AirBnB like a hotel and charge by night. They get to know a lot of interesting people and have extended their network tremendously! Doing AirBnB is a very flexible way to “activate” existing capital and let it work for you. You’re the boss of your AirBnB and may “close shop” if one day you’re no longer in the mood.

Parking Lots

You may happen to own extra parking lots: Try to rent it out.

With parking lots you don’t have to fix the toilets or invest in a renovation budget. Depending on the yield you may earn, it may be even the better choice as compared to rent residentials. It may make sense to invest in parking lots and simply focus on this for passive income generation.

How many streams of income do you have?

Tax Advantages and Credit

In most jurisdictions real estate comes with tax advantages – something that investing in stocks and bonds usually don’t have (except for retirement accounts) – and can boost your credit lines with banks which can be used again to further optimize your bank platform set-up. Speaking about optimizing: IF you have existing mortgages, please check now if it would be a good idea to refinance as interest rates are rock-bottom.

It’s not “the bigger, the better”. Sometimes a few small passive streams of income together may work better than one big one.

Entrepreneurship

Starting a business might not be a goal for everyone. It requires more time and effort as compared to holding a job and building more passive flows of income. However, if you go about it the right way it can be most rewarding in many ways.

Find your Ikigai and create a professional life/ identity around it.

Start it as a side-hustle to test the waters. Offer a service or create product you can sell. Think selling your expertise as consultant, digital products, courses or writing a blog or book.

Hesitating because you’re not sure you got value?

Know that you’re better than 99% of all people at doing something.

Find this something, your core competence, your “ikigai”. Most people that are as good, or even better than you, are simply too lazy to do something with it. This is your chance.

Entrepreneurship is taking control of your own life. You have all the power. But as the saying goes “with great power comes great responsibility”. When you’re an employee and things go wrong, you can blame it on the economy, the company, your co-workers or the boss. When you take charge and become the boss its 100% on you. No excuses.

The upside however is that IF you do it right, all the benefits are yours as well.

It’s simple arithmetic: Your income can grow only to the extent that you do.

T. Harv Eker

The benefits of performing well as entrepreneur are naturally much greater as compared to outperforming on your 9-5 job as you don’t have to pay your company shareholders, your bosses, your service departments such as HR, the office rent, marketing and so forth. However, you’ll also have to do all those things yourself. It’s a give and take.

Entrepreneurship is a wide topic. Once you have built sufficient income streams to sustain a comfortable lifestyle it’s the next logic step for most. You don’t have to build an empire, build a lifestyle business. Owning a company comes with even more tax benefits as compared to real estate.

Building an online business is the most fashinoable way to go. But don’t limit yourself to that thought. There are so many ways you can untap additional streams of income as long as your focus on adding value serving your clients.

Focus

If you’re working a very high paid profession and are happy at your job, shouldn’t you be focusing more time on your vocation instead of venturing into building other streams of income?

My thought on this is simple: Yes! Do focus on what you’re passionate, good at and can get paid for.

However, you don’t have to keep selling your time and skills to an employer.

The only difference between a rich person and a poor person is how they use their time.

Robert Kiyosaki

The more you rely on one stream of income – as high or good it may be – the riskier. Imagine getting laid off tomorrow.

Congratulations if you have a well paid job, it’s actually easier [to get started] as you can re-channel more of your excess cash into assets, trying experiments and you can afford to make more mistakes on your journey.

Simply put, more streams of income equal more security.

Work on becoming your own boss – cut the middleman – and get paid by your clients directly. This is also beneficial to reduce potential conflicts of interest as you can serve your client better if you do so without having to satisfy your employer as well.

Focus to master and bring a first additional stream of income it to fruition, stabilize it, only then move your focus to the next one and repeat. Over time you will build an optimized system of well diversified passive and active income streams that is aligned to your ikigai, lifestyle, dreams and ultimately let you forget when its payday.

This is how financial abundance looks to me.

Coming from a banking background, my own major streams of income are business (consulting, advising, managing money for others), capital growth, dividends and rentals.

Conclusion

Selling more of your time is not scalable. It might also not be sustainable nor enjoyable. Go for additional income streams that are aligned with your envisioned lifestyle and that are mostly flexible and as passive as can be.

Increasing and diversifying your income is simple – but not easy.

It’s definitively worth it.

If you don’t get started, you will always just be one paycheck away from being on the street.

Don’t downgrade your dream to match your reality, upgrade your faith to match your destiny!

How many streams of income do you have and which ones are you currently working on?

Financially Imagineer your life,

Matt

Disclaimer: Please be made aware that the some of the links used above may be affiliate links for which Financial Imagineer could receive a compensation.

If Youth Knew If Age Could

Have you ever wondered what advice you would give to your younger self? Or similarly, have you ever thought about how your future self would show up and how it would want to guide you today?

Since we haven’t built a real flux-compensator [yet], wouldn’t it be easier to simply start asking those older and smarter than you to share their most valuable lessons?

I’ve spent some time to gather some nuggets of wisdom from people I’m surrounded with and decided to sort them systematically. Maybe first and foremost, one of the key lessons that I’ve learned is that’s it worth it to pursue what your longing for, especially if it’s difficult.

The most valuable things in life are often hardest to obtain.

This rule of thumb is valid for experience, wisdom, skills, technical talent and of course wealth. At the same time, the most valuable lessons of life are often the ones you try to avoid, resist, or simply miss for years – as you’re following your current routine indefinitely.

If you are willing to do only what’s easy, life will be hard.

But if you are willing to do what’s hard, life will be easy.

Life is simple. But not easy!

In this post, I’ll try to summarize all the thoughts and ideas about what I’d be telling my younger self.

No Fear

Dream big – if your goals don’t scare you, set bigger goals!

Your true potential is only limited by your passion and imagination. Imagination is the workshop of your mind, capable of turning mind energy into accomplishment and wealth. What the mind can conceive and believe, it shall receive.

Work on making your dreams come true by finding your true ikigai. This planet needs more people that dare to dream – learn to dream with eyes wide open. Keep in mind that if it doesn’t challenge you, it most likely also doesn’t change you.

“It’s kind of fun to do the impossible.”

Walt Disney

The biggest risk in life is actually to play it too safe. You might end up with regrets for not having tried. We all just have one life. Use your time wisely. Time is the only wealth we’re given.

The biggest obstacle to get started is fear. People are afraid to think big, of trying new things and of making mistakes. However, if you think too small, you’ll only achieve small things.

Some of my friends confirmed they achieved the greatest advances in life in moments where they stayed calm and did it anyways. This is true for your career, for love and for making new experiences!

I would tell my younger self: “Trust me. The best things in life are on the other side of fear!”

“The problem human beings face is not that we aim too high and fail, but that we aim too low and succeed.”

Michelangelo

Find your true north, your direction, your why.

Then stick to who you are and keep building on it.

Do not try to impress parents, partners, the other gender, friends and bosses. In doing so, you would only head in directions that are at odds with who you really are or could become.

Yes, you will make mistakes.

Yes, you will have to learn more on your journey.

But all this is worth your while as long as you keep an open mindset and stay open to possibilities and chances.

“Anyone who has never made a mistake has never tried anything new.”

Albert Einstein

In order to strengthen your foundation, do keep your partner and family onboard, you have higher odds as a dream-team!

Don’t be the guy that spent his entire life in the comfort zone.

Have no fear!

Start Now

Some say, the best time to get started was twenty years ago. The second-best time of course is today, not tomorrow. Don’t wait for the perfect time – it will never be perfect. Forget about waiting until you know everything – you never will. Start now.

The actual root of procrastination is doubt. Find a way to increase your belief and you will increase your activity. Of course you will be disappointed if you fail, but you are doomed if you don’t even try.

Keep in mind that people who never try are failing already.

For all you know, no one else knows what they’re doing either. Everyone feels insecure sometimes (some even a lot of the time).

Simple truth of life is: Those who keep going, keep winning.

Keep in mind: Tomorrow is not promised to anyone. Take risks while you’re young and while you can.

“Everybody dies, but not everybody lives.”

A. Sachs

In case you don’t like where you are now, move. You are not a tree.

Move towards your goals starting now. Other than your partner and family (teamwork!) don’t wait for someone to give you permission – they won’t.

Just start now!

Stay Curious: Keep Learning

Unless you are completely retired, earning money is still the best form of building and preserving wealth. Anything that you learn will somehow become your wealth, a wealth that cannot be taken away from you anymore.

Invest in yourself so that you’ll never have to worry about earning an income whether it be from a full time job, side-hustle, or business.

There are many ways to learn new things: Reading books, attending classes or through experience. I’m a strong advocate of learning desirable skills and my favourite way to go about it is through exposure: Experience is king.

Experience are the raw form of learning and will put you in a situation which pure (book-) knowledge cannot give. Life greatest lessons come from experiences.

Get started with learning “how to money”. Use this key-skill to buy more of your time and expose yourself to learning more: New languages, new technical skills, how to write, give public speeches, how to start a business and so on.

Make your brain faster, smarter, more confident and more savvy!

Stay curious and keep learning!

Move the Needles

How to money?

The very first step to building wealth is to spend less than you make.

Simply put, focus on increasing the gap between income and expenses.

The bigger the difference, the more “free cash flow” you have flowing and the faster you cruise towards your (monetary) goals – be it net-worth or cash-flow.

The Crossover Point — illustration from “Your Money Or Your Life” – by Vicki Robin

The higher your monthly income and the lower your monthly expenses, the more you can save and invest. The more you invest, the faster the third curve, the monthly investment income, will move higher up. Once the “passive income” reaches your expenses, you’ve reached the crossover point. Congratulations, you are now financially free!

Read more about this in the wonderful book “Your Money Or Your Life” by Vicki Robin.

Reduce your expenses by listing them all up and question them one by one. You will be surprised how much potential most people are able to unlock doing this exercise. Focus on ongoing savings, not on one-offs. Explore saving more money by going for the “Million Dollar Haircut” or work on similar new habits. A budget might help.

On the other side, work on increasing your income either by adding more value to this world either on your job or with your business or by investing more into cash-flowing assets.

Move the needles [income and expenses] into the right direction over time.

Pay yourself first!

Don’t save what’s left after spending, spend what’s left after saving.

Start Investing Now

Very often people tell me they don’t have enough money to get started with investing. Well, how much is enough? I’d say, if you found a way to have your basic needs covered, anything above that is fair game.

No amount is too small, so start NOW!

Know the power of compounding in investing in financial assets as well as other areas in life. Whatever it is you like to get started investing: Start your compounding journey with your first paycheck and keep going from there.

Never stop.

By setting-up automatic bi-weekly investment contributions to a stock market index fund as soon as you open a bank account you’ll most likely be well served. Try not to look at it until you’re much older.

“Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”

Albert Einstein

Buy Assets instead of Liabilities

Learn the difference between assets and liabilities.

Assets are anything that puts money into your pockets.

Liabilities are anything that takes money out of your pockets.

Simple as that!

Following this definition your car, expensive toys, boats or even your oversized home most likely qualify as liabilities (!) while investing into your education, equities or your business will be assets.

Never finance depreciating “assets” and be careful with financing liabilities even more. Better to purchase second-hand cars or wait until you have sufficient free cash-flow to indulge purchasing “fun-items” – if must be.

Most people can afford NOT to be a great investor, but probably can’t afford to be a bad one. Invest early in Index funds: You’ll worry less and earn more. Index and chill.

Once your assets are accumulating capital understand that capital is that part of wealth which is devoted to obtaining further wealth. This can be human capital (yourself) and/ or financial capital.

Keep accumulating capital.

Understand Your Taxes

The average person will view taxes as something inevitable and therefore not spend too much time understanding the “tax-code”. Each tax jurisdiction has different rules and loopholes. Understand the rules of the game before you start playing.

For most tax-codes the advice is similar: Maximize your retirement-account contributions, untap others such as health savings accounts, know how to optimize mortgages, debt, and real estate. Figure out how capital growth and dividends are taxed. Implement more tools if and when needed as your net-worth grows.

At a certain point in time you should consider starting your own business for employing yourself and/ or holding assets. From eight digits upwards the topics could be your personalized fund vehicle or to collateralize your assets within or establishing foundations and trusts with insurance shields to prepare for handing over your wealth to the next generation.

Beware, the rules keep changing.

Keep yourself updated.

Socialize with intention

You’ll become the average of the five people you spend the most time with!

Choose your friends wisely.

Who you hang out with determines what you dream about and what you collide with. And the collisions and the dreams lead to your changes. And the changes are what you become. Change the outcome by changing your circle.

Seth Godin

Take people for who they really are and not for who you want them to be. They show you everyday just look. Make sure you don’t confuse looking rich, (buying fancy toys and big houses), with being wealthy. The people we think are rich are often deep in debt.

Stay away from people that think you’re lucky if you succeed or that you’re greedy if you acquire wealth. Pay no attention to them. They simply doesn’t understand. Avoid people that don’t understand.

Choose your tribe. Surround yourself with energetic people that like to discuss their ideas instead of talking about other people. Engage in some #JacuzziBeerstorming for getting more creative with your social circle. Wealth flows from energy and ideas.

It is the product of man’s capacity to think.

Build your relationships, your network is your networth.

Fuck the Joneses

Avoid keeping up with the Joneses.

Avoid herd-mentality and most money problems will avoid you throughout your life. Instead of spending too much time with what the average Joe on your street does, says or thinks of you, focus on what you can control.

Why bother trying to “fit in”?

What other people think of you is none of your business. Don’t be in a race with your social media neighbours. No one is so miserable as the poor person who maintains the appearance of wealth. Be content with enough and stay clear of lifestyle creep.

“I’d like to live as a poor man with lots of money”

Pablo Picasso

Never ever, ever, ever give up! Ever!

Be patient and be prepared for set-backs.

Life is not a sprint, it’s rather a marathon. The greatest of all works have not been performed by strength but by perseverance.

Be more tough!

You may have to fight a battle more than once to win it.

Every journey starts with a first step. Get started and then focus on daily progress. Take small steps if needed. But steps into the right direction. Patience, persistence and perspiration make an unbeatable combination for success. Most of the important things in the world have been accomplished by people who have kept on trying when there seemed no hope at all.

Aim high, be unrelenting in your pursuit of your goal, but flexible in your approach of it. Stay true to your values and don’t compare yours with anyone else’s journey. Challenges are what make life interesting. Overcoming them is what makes life meaningful.

„When the going gets tough, the tough get going.“

Ignored the haters in the late 1990’s and 2020 again, never give up.

No Regrets

Sometimes when you think back you will realize in your life there are certain important decisions that have led you to where you are today. It could drive you mad if you keep thinking in “what ifs” all the time.

Imagine, back in 2004 I got accepted to work for Google through an AIESEC traineeship, said no and decided for the more adventurous challenge of working in Taiwan. Was this a stupid decision? You could argue so. However, I chose to venture out to Taipei instead and got to know my wife. There are many such crossroads in anyone’s life.

My advice here: Once you’re at that crossroads, listen to your heart, your passion. Choose wisely. Make a decision. Go for it. The path you take will define and form you. In the end, it doesn’t matter which path you take, as long as you move forward. And have no regrets.

Listen to your heart – keep your passion alive.

Seriously, it doesn’t matter too much what others think.

Regrets don’t help.

Take Care of Yourself so You can take Care of Others

When you fly on an airplane, the flight crew instructs you clearly to “put your oxygen mask on first,” especially before helping others, including your own children!

Wrong (credits to “Fight Club”)

Why is this such an important rule? It’s a rule to ensure a higher rate of survival. If you run out of oxygen, you wouldn’t be able to help anyone else with their oxygen mask anymore. Put more simply: if you die, you can’t help anyone else.

That’s how to do it.

Again, the life advice here is not to push forward at any price. You got to know how to take care of yourself. Especially when to take a rest. If you don’t take care of yourself, you can experience burnout, stress, fatigue, reduced mental effectiveness, health problems, anxiety, frustration, inability to sleep, and more.

Keep in mind, whatever you try to attain here: You’re doing this to improve your life! Money is not the end goal. It’s a means, a tool, a way to have options to build the life of your dreams but not worth anything in its own right. Don’t lose sight of what really matters. Happiness over being “rich”. The journey should be as remarkable as the destination. While wealth is the ability to fully experience life please ensure to enjoy the ride: Life is about being and becoming, not having and getting.

Remember: You only live once!

What advice would you give to your younger self if you could?

Tomorrow is the first day of the rest of your life.

Financially Imagineer Your Life!

Matt

Disclaimer: Please be made aware that the some of the links used above may be affiliate links for which Financial Imagineer could receive a compensation.