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Dumb Money

Now, this post is the follow-up to my recent "What's The Point?" post that went deep into how 'The System' is designed to trap you on the treadmill...

Forcing you to work more and more over time... Instead of less.

Click here and give it a read if you haven't already.

But that post was incomplete.

Because the truth is that we all spend dumb money on some things...

And that's not a problem. Nor is it something to be avoided.

Instead, it's something to be done consciously, with your eyes wide open.

And there's a strategy that you can leverage to continue to enjoy your growing wealth without risking getting trapped on the treadmill.

What is dumb money?

Well, it's those things that we all indulge in and LOVE.

For me?

Well... Generally I'm quite frugal.

I drive a 5 year old pickup that I bought used. My mortgage payment is under $2,000/mo because I chose to move out to the sticks... So I could garden (which is a very inexpensive and valuable hobby).

But I've got things that I spend a LOT of money on, without thinking twice.

These are my 'dumb money' purchases.

First...

I've built this virtual racing simulator that is amazing.

 

Professional racecar drivers use simulators like this one to get more seat time and to learn tracks because it lets you feel every aspect of the road.

It has 6-degrees of motion meaning it surges you back in your racing seat when you stomp on the gas.

It rolls left and right as you fly around the banked corners on tracks from around the world.

The wheel and the pedals give real-world feedback just like in a real car.

I race wheel-to-wheel with other people from around the world on iRacing... On laser scanned tracks.

It's the most realistic virtual racing experience in the world and I LOVE it.

I've sunk over $20,000 into this contraption at this point... lol.

That's my dumb-money, right there.

But it brings me true joy.

So, for me... It's worth it.

Another is my 4x4 Mercedes Sprinter Campervan.

 

I LOVE driving (did I mention that?) the backroads and dirt roads that criss cross our parks and public lands here in the USA.

This thing is decked out with a fridge, a full bathroom with toilet and show, a sink, fridge, big water tanks, 2 tables, a queen size bed...

Lifted on offroad tires... A brand new Mercedes turbo diesel engine with an 8 speed transmission and it drives like a dream. Honestly, does better than my Overlanding Jeep build and gets better gas mileage!

It's the best RV for Melanie and I, no doubt.

All in on this thing is close to $200,000.

And I'm just getting started adding on my customizations...

I'll upgrade the suspension, add a bigger lift, bigger tires, add on some storage to the back, etc.

Easily another $20k - $50k going into this thing in the coming years.

And I love it.

So...

How the hell do I balance my 'dumb money' things with the 'avoiding lifestyle creep' mindset?

That's the key... and there is a 'trick' to it.

But first, it's important that you know I'm human and I'm not some frugal saint.

This is me fessing up.

I spend money on liabilities, too.

(If you don't know the difference between an asset and a liability, watch this video ASAP. This is the most important piece of knowledge for everyone who want's to retire early, grow wealth and escape the rat race)

As I talk about keeping the treadmill turned down in the previous "What's the point" post, I want you to know that I also spend dumb money on those things I truly care about.

Here's the key idea that will help you grow your business:

Everyone spends dumb money on something.

Truly passionate golfers won't think twice about spending $400 - $2000 on a new club that may help them shave a stroke or two off their game.

Fly fishermen? Well, they buy all the fancy rods, reels, flys, etc.

Folks who like knives or guns don't buy just one! lol.

People who are into "looking younger" don't just try the one, cheapest anti-wrinkle cream or facial treatment...

They try them all and often become addicted to the next, newest, fanciest anti-wrinkle tech.

This is the big opportunity.

Because EVERYONE spends dumb moeny on something.

In this idea, there are 2 keys for you to remember...

First, from the internet entrepreneur side:

Figure out what your audience spends dumb money on and sell it to them!

This will do 3 things at the same time.

  1. Higher ticket sales will mean higher commissions and a greater average order value.
  2. The right 'dumb money' products are no-brainers for your audience so they're easier to sell
  3. Increases your lifetime customer value because folks keep buying their dumb money items!

But this post is more about you and your spending habits.

It's about you getting the things you dream about...

Enjoying your dumb money!

So...

How do we as entrepreneurs focused on freedom (getting our cashflow from our assets to cover our lifestyle expenses) supposed to follow our passions and buy our dumb money items without turning up the treadmill.

Here's the wealthy person's trick.

Build or buy an asset that generates enough cashflow to cover the cost of the liability.

This is the magic and this is how wealthy families work.

Let's use my fancy camper van as our example... Shall we?

 

Great.

Now, I didn't cough up the $200,000 to buy this thing... I've got a loan on it.

I had to come up with $40,000 for the down payment and the monthly payment is $800/mo.

Add on insurance and it takes just under $1,000 out of my pocket every month.

Now.

I don't want this to come out of my pocket or any of my investments...

So, I built an asset (my affiliate case study site I documented here) that is generating more than enough positive cash flow to cover the cost of the van.

Let's look at the numbers on the affiliate site:

Took me 2 years to build... So I had to be patient.

No instant gratification for me, here.

I outsourced EVERYTHING so it cost me $60,000 in pre-tax dollars.

To date, it's brought in over $100,000 (there's my down payment) and it continues to bring in $1200/mo.

Bingo.

My asset (the affiliate site) pays for my liability (the camper van)

Once the van payments are done?

I have my dream RV and an extra $1,200/mo cashflow from my affiliate site.

Bada-bing.

This is why I continue to build more and more assets.

It's the same reason I launched and ran a membership site for several years.

I wanted to buy a second home...

I didn't want to change the amount of money I was contributing to my investments in order to buy that 2nd home...

So I created a new asset...

A membership program that required a few hours per week from me to run that generated $15,000/mo.

That covered the cost of the mortgage, the down payment and all the rehab/fix up costs.

When I sold my second home at a 70% increase in 3 years... I now had an extra couple hundred grand AND $15,000/mo extra income from the asset.

Bingo.

I re-invested most of that into more assets but took a little off the top to build my racing simulator.

Is this making sense?

We all spend dumb money on certain things.

Poor people use credit cards or their savings accounts for their dumb money purchases... And these purchases keep them poor.

Wealthy people buy, build or flip assets to generate the cashflow needed to buy their liabilities.

And this is how you can continue to indulge in your passions and hobbies without risking a 'day of reckoning' because it's all backed by positive cash-flowing assets.

And this is why I keep hounding you about this idea of 'Assets vs. Liabilities' because it holds the secret to true wealth.

Plenty of cashflow for your dream life.

A budget for your dumb-money purchases.

While slowing the treadmill down over time so you can eventually exit the rat race completely and live your dream life supported by your automated income from your cashflow positive assets.

This is the way.

Miles "Wealth Coach" Beckler