The Offense, Defense and Playing Field of $$MONEY

A complete guide to the offense, defense and playing field of personal finances. Based on the best selling "Financial Fitness" Pack by LIFE Leadership.

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The Offense, Defense and Playing Field of $$MONEY by Mind Map: The Offense, Defense and Playing Field of $$MONEY

1. "Investment Diversification Checkpoints" - a personal investment prioritization guide presented by Zachary Taffany

1.1. "Imperial Overstretch" is the primary reason that the great empires in history have fallen, according to Paul Kennedy, best selling author of The Rise and Fall of the Great Powers.

1.1.1. "Personal Overstretch" is what happens when people over-leverage and over-extend their personal resources. Most people agree with the concept of diversification, but when to diversify and how much to put at risk has been a source of anxiety for many investors.

1.1.1.1. The following guide has investment categories presented in order of risk from least to highest and if completed in that order, will give all levels of investors a series of checkpoints to follow on their diversification journey

2. The Defense (How to protect your money?)

2.1. Personal investment priorities (In order of risk from least to highest)

2.1.1. The first investment category is relationships.

2.1.1.1. The rest of the checkpoints to follow will be about investing finances, but we didn't feel this guide would be complete if we didn't advise you to invest time and energy into your most precious relationships.

2.1.1.2. “The quality of your life is in direct proportion to the quality of your relationships.” -Anthony Robbins

2.1.1.2.1. “So many people walk around with a meaningless life. They seem half-asleep, even when they're busy doing things they think are important. This is because they're chasing the wrong things. The way you get meaning into your life is to devote yourself to loving others, devote yourself to your community around you, and devote yourself to creating something that gives you purpose and meaning.” - Mitch Albom

2.1.1.3. "I contend that the ability to establish, grow, extend, and restore trust is not only vital to our personal and interpersonal wellbeing; it is the key leadership competency of the new, global economy."-Stephen Covey

2.1.1.4. The golden rule is alright, but not everyone wants to be treated like you. The platinum rule is better because it acknowledges the differences between individuals and tells us to treat others as they would like to be treated.

2.1.1.4.1. "Service to many leads to greatness." -Jim Rohn

2.1.1.4.2. “You will get all you want in life, if you help enough other people get what they want.” -Zig Ziglar

2.1.1.4.3. "Love thy neighbor as thyself." -Jesus Christ

2.1.2. The second investment category is learning materials.

2.1.2.1. We don't know what we don't know.

2.1.2.1.1. We're constantly forgetting what we do know.

2.1.2.2. "Better information leads to better thinking which leads to better results every time." - Christopher Mattis

2.1.2.2.1. "The significant problems we face cannot be solved at the same level of thinking we were at when we created them" -Albert Einstein

2.1.2.3. Feed the goose that lays the golden egg. (Improving your thinking improves your results in your craft which supports and builds the rest of the investments to follow.)

2.1.2.4. Not the old broken system of conveyor belt education, but self directed education by meritocracy

2.1.2.4.1. Meritocracy: following the advice of those with results/credibility/fruit on the tree in that particular area.

2.1.3. The third investment category is a "rainy-day" fund.

2.1.3.1. We don’t like to consider the fact that bad things happen, but let us paraphrase a universal truth: “Doo-doo occurs!”

2.1.3.2. History has shown that instability is a constant and we don't know when circumstances will separate us from our income. Saving the equivalent of 3-6 months of expenses allows people to maintain lifestyle in case of cash flow interruptions. Stocking a few survival essentials and securing insurance protection can help us take care of ourselves and our families in case of disaster:

2.1.3.2.1. Water

2.1.3.2.2. Food

2.1.3.2.3. Fire

2.1.3.2.4. Shelter

2.1.3.2.5. Prescriptions

2.1.3.2.6. Insurance protection against major incidents

2.1.4. The fourth investment category is for "targeted goals."

2.1.4.1. Vacations

2.1.4.2. Cars

2.1.4.3. Homes

2.1.4.4. Toys

2.1.4.5. Causes

2.1.4.6. Debt Relief

2.1.4.7. What do you want?

2.1.5. The fifth investment category is "Inflation hedges."

2.1.5.1. Money Market Accounts

2.1.5.2. Municipal Bonds

2.1.5.3. CD's (Certificates of Deposit)

2.1.5.4. Treasury Bills

2.1.5.5. Precious Metals

2.1.5.5.1. These low risk options won't outrun inflation, but they'll preserve the value of your money longer than if you just stuffed cash in your mattress.

2.1.6. The sixth investment category is Real Estate which is the preferred playground of the wealthy.

2.1.6.1. Quotes from Historical Figures

2.1.6.1.1. "Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate." Andrew Carnegie

2.1.6.1.2. “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” ~Franklin D. Roosevelt“

2.1.6.1.3. "No investment on earth is so safe, so sure, so certain to enrich its owners as undeveloped realty. I always advise my friends to place their savings in realty near a growing city. There is no such savings bank anywhere." Grover Cleveland - American President

2.1.6.1.4. "Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth." Theodore Roosevelt - American President

2.1.6.1.5. "There's no trick to buying land, just find out where the people are going and buy the land before they get there." "Will" Rogers

2.1.6.1.6. "Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security." Russell Sage - American Financier and Politician

2.1.6.2. Within real estate there are several investment niches:

2.1.6.2.1. Wild Land

2.1.6.2.2. Flipping Houses

2.1.6.2.3. Income Properties (Commercial and/or residential)

2.1.6.2.4. Pre-developed Land

2.1.7. The seventh investment category is the stock market

2.1.7.1. "Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway." -Warren Buffett

2.1.7.2. Many people have turned substantial profits from investments made in the stock market, but Wall street has conditioned us to look for quarterly profits rather than long term investment vehicles.

2.1.7.3. Based on "fiat" currency which historically leads to deflation or inflation and economic collapse

2.1.7.3.1. Rome - The denarius

2.1.7.3.2. China - Flying Money

2.1.7.3.3. France - Livres, Assignats, and Francs

2.1.7.3.4. Germany - Marks

2.1.7.3.5. Mexican - Peso

2.1.7.3.6. Indian - Rupee

2.1.7.3.7. Thai - Baht

2.1.7.3.8. Russian - Ruble

2.1.7.3.9. Turkish - Lira

2.1.7.3.10. Zimbabwe - ZWL

2.1.8. The eighth and most risky category of legitimate speculative investments includes start-ups, inventions, technology, and currency trading.

2.1.8.1. High Risk / High Reward

2.1.8.2. Requires successful timing of the market

2.1.8.3. SUCCESSFUL Venture Capital groups pick failures 9/10 times!

2.1.8.4. Generally avoid these investment options until you have surplus money and you can afford to lose your investment without losing sleep over it.

2.1.9. The ninth and highest risk/reward ratio investment is under the umbrella of Criminal Activities (Money Laundering, drug/arms smuggling)

2.1.9.1. Super high risk / high reward / terrible downside

2.1.9.2. Avoid these avenues at all costs in order not to lose your character, peace of mind, and quality of life.

2.2. Defensive Principles

2.2.1. If you are not financially fit and you have a bunch of "toys," it means that you do not really deserve them and you are using your savings or debt on the wrong things. If your debts are all paid off, you are following the savings guidelines listed in earlier principles, and you have the cash, you can buy a few "toys" and still be financially fit.

2.2.2. If you aren't financially sound, don't get caught in the trap of using "business debt."

2.2.3. Do not use credit cards to build your credit, because this almost always leads people to more debt.

2.2.4. Never use title pawning, "ninety-days-same-as-cash" loans, payday loans, rent-to-own plans, layaway debt, or similar schemes.

2.2.5. See your car(s) as transportation, not status symbols. Save up and always pay cash for them.

2.2.6. Debit cards are better than credit cards for many people, and cash is even better.

2.2.7. Teach your children and youth the principles of financial fitness. Set the example for them. Mentoring them will help you as well as them.

2.2.8. If you are not wealthy, do not get sucked into using second mortgages.

2.2.9. Use the roll-down method to pay off all credit card debts and then apply it to all other debts.

2.2.10. Learn to be skeptical of advertising, media and marketing.

2.2.11. Accumulate slowly; build your inventory of resources and wisdom, not stuff.

2.2.12. Get right with God, apply true principles in all areas of life including finances. Pursue your stewardship, serve others, and leave impressing others in God's hands.

2.2.13. Do not use consumer debt. Wise financing for business investment may be OK at times, but consumer debt is like a cancer. Cut it out!

2.2.14. Make memories part of your lifestyle, budget, and life plan. Start simple and add big memories too.

2.2.15. Be very, very careful as you make decisions about the danger zones:

2.2.15.1. Taxes

2.2.15.2. Home ownership

2.2.15.3. Divorce

2.2.15.4. Credit Cards

2.2.15.5. Lawsuits

2.2.15.6. Insurance

2.2.15.7. Seeking status

2.2.15.8. College

2.2.15.9. Addictions

2.2.15.10. Investments

2.2.16. If you buy a home follow the 2x rule. For example if your income is $50,000 per year; do not buy a home that costs more than $100,000. If you want a bigger home, earn more money.

2.2.17. Get rid of debt.

3. The Offense (How to make money)

3.1. Woodrow Wilson

3.1.1. "We want one class of persons to have a liberal education, and we want another class of persons, a very much larger class, of necessity, in every society, to forego the privileges of a liberal education and fit themselves to perform specific difficult manual tasks."

3.1.1.1. Do career counselors ask which you'd like or do they have you take a test and then show you a list of difficult manual tasks that you can pick from?

3.2. Robert Kiyosaki

3.2.1. Cash Flow Quadrant (The four legal ways to earn money)

3.2.1.1. Employee

3.2.1.1.1. Has a job

3.2.1.1.2. Solves boss' problems

3.2.1.1.3. Trades time for money

3.2.1.1.4. Dependent

3.2.1.1.5. Values Security

3.2.1.2. Self Employed

3.2.1.2.1. Owns a job

3.2.1.2.2. Solves customers' problems

3.2.1.2.3. Trades time for money

3.2.1.2.4. Independent

3.2.1.2.5. Values Independence

3.2.1.3. Business Owner

3.2.1.3.1. Owns a system

3.2.1.3.2. System solves a market problem

3.2.1.3.3. Earns a % of the profits

3.2.1.3.4. Interdependent

3.2.1.3.5. Values Time Freedom

3.2.1.4. Investor

3.2.1.4.1. Owns lots of money

3.2.1.4.2. Solves cash flow problems

3.2.1.4.3. Puts money at risk; collects returns

3.2.1.4.4. Interdependent

3.2.1.4.5. The playground of the wealthy

3.2.1.5. Criminal

3.2.1.5.1. Owns nothing

3.2.1.5.2. Creates problems

3.2.1.5.3. Takes from others that own

3.2.1.5.4. Parasitic

3.2.1.5.5. Values plunder

3.2.2. Time = Money?

3.2.2.1. 95% of people are on E and S side and share 5% of the money

3.2.2.1.1. This is the equivalent of trading time for money

3.2.2.1.2. Employees get 7 tax deduction

3.2.2.1.3. Self employed gets about 56 deductions

3.2.2.2. 95% of the money is divided among 5% of the people on the B and I side

3.2.2.2.1. This methodology is about investing time into systems that create passive residual income

3.2.2.2.2. Big business gets 157 deductions

3.3. Offensive Principles

3.3.1. Do not ever use your savings to speculate.

3.3.2. Financially fit people are avid readers and consistently invest in themselves by increasing their financial and leadership education, skills, experience, knowledge, and ability.

3.3.3. Financially fit people excel at the work and projects they are doing now, and at the same time, they invest in themselves in order to achieve their long-term vision.

3.3.4. Never sacrifice principles for money or possessions. Be honest. Keep your integrity. Keep your priorities in the right order.

3.3.5. Do the work to gain mastery in what you do. (Usually about 10,000 hours)

3.3.6. Financially fit people don't ask, "Can we afford it?" As much as they ask the following questions:

3.3.6.1. "Do we really want this?

3.3.6.2. Will it help our purpose and dream?

3.3.6.3. How will it help our purpose and dream?

3.3.6.4. In what ways might it be a distraction?

3.3.6.5. Will it cost more money to take care of it or keep it (through things like insurance or annual fees)?

3.3.6.6. Would saving or investing the same amount be a bigger help to our purpose and vision?

3.3.6.7. Is now the best time for this purchase, or would it be less expensive or just better for our family or business at a later date?"

3.3.7. Financially fit people analyze their habits - in life as well as finances - and work to break bad habits and cultivate good ones. They think about and choose the habits they want and need to achieve their life dreams.

3.3.8. Own a business, even if you start out working on it part-time. You can apply all the other principles in this book and obtain wealth over time, but those who apply them in their own business can become wealthy much more quickly.

3.3.9. Increase your passive income to the point that 1. Most of your income is passive and 2. you can live off your passive income.

3.3.10. Retirement should not be an issue of age, but rather a function of having enough passive income to live on for life. Retirement means retiring from things that are not part of your purpose, so you can focus your productive work on your life mission.

3.3.11. To really attain financial success, focus on these things:

3.3.11.1. Truly excel in your current job and projects and simultaneously start a business.

3.3.11.2. Put in the 10,000 or so hours needed to gain mastery over your business while still excelling at your current job

3.3.11.3. Make a plan to become financially free by reaching a point where the passive income from your business more than covers your family's needs.

3.3.11.4. Once you are financially free, put your full-time focus on building your business to the point that it funds your life purpose.

3.3.12. Get good mentors and really listen to them.

3.3.13. Use your money Productively - by putting it where it will bring you back more than you put in - rather than non-productively. The best investment is in yourself and your own business. Wisely and appropriately use some of your savings to increase your business assets and returns.

3.3.14. Put some money into preparing for a worst case scenario. Don't be fanatical about this, but don't ignore it either.

3.3.15. Build up a regular targeted savings fund for things you want to buy later. Consistently fund this account and buy consumer items with cash (not financing).

3.3.16. Only invest money you can afford to lose entirely in speculations outside your area(s) of mastery. Only invest a little, if any, in such ventures.

3.3.17. People with the right "moneyview" discipline themselves to live the principles of financial fitness, make financial decisions based on a long-term vision, adopt the habit of delayed gratification, and use the compounding nature of money to constructively achieve their dreams.

3.3.17.1. Money as a mystery

3.3.17.2. Money as a master

3.3.17.3. Money as a monster

3.3.17.4. Money as a major

3.3.17.5. Money as a motivator

3.3.17.6. Money as a manipulator

3.3.17.7. Money as a minimizer

3.3.17.8. Money as a maximizer

3.3.17.9. Money as a monument

3.3.17.10. Money as a menace

4. The Playing Field (Rules of the game)

4.1. Examples of "Fiat" money throughout history

4.1.1. Roman Denarius

4.1.1.1. China's Flying Money

4.1.1.1.1. France's livres

4.2. 1913

4.2.1. 16th Amendment

4.2.1.1. Allowed a national federal tax to be levied on personal income

4.2.2. 17th Amendment

4.2.2.1. Allowed senators to be elected by society thereby expanding the impact of the 16th Amendment and eliminating the previous system that automatically checked and balanced itself

4.2.3. Federal Reserve

4.2.3.1. Neither federal, nor with any reserves; this private central bank established for the purpose of profit has the power to increase the currency within circulation thereby artificially impacting inflation and deflation

4.3. 1934

4.3.1. Rule 144

4.3.1.1. Securities and Exchange Act 144

4.4. 1935

4.4.1. Social Security

4.4.2. Unemployment Act

4.4.3. Federally Insured Deposits

4.5. 1944

4.5.1. Bretton Woods Agreement

4.5.1.1. International Monetary Fund (World Bank)

4.5.1.2. American dollar becomes the reserve currency of the world

4.6. 1965

4.6.1. Medicare

4.6.2. Medicaid

4.7. 1973

4.7.1. PetroDollar Agreement

4.7.1.1. Monopolized world oil trade to only the USD. Expanded the ability to print USD without matching hard assets

4.8. 1974

4.8.1. 401K plans

4.8.2. Uncollateralized debt

4.9. Playing Field Principles

4.9.1. Studying and understanding free enterprise is an essential part of financial fitness

4.9.2. Financially fit people who want to maintain an environment that encourages opportunity and prosperity pay attention to the principles of freedom and the ongoing actions of government.

4.9.3. In addition to cash savings, save some of your money in something other than fiat currency.

4.9.4. Study up on investments in metal and any other investment before you buy. Do your homework. Take your time.

4.9.5. Invest even more in yourself by learning to be the kind of person who consistently engages in an enterprising, creative, enthusiastic type of life. Fill your days with enterprise, action, and doing things that matter. And teach your children and the people you work with to do the same. Become the kind of person and leader who consistently works on your current enterprise.

4.9.6. Study the strength and/or weaknesses of your nation and economy (and others where you do business) and wisely consider and prepare for potential economic downturns.

5. Bonus Info

5.1. 7 Basic Principles of Financial Fitness

5.1.1. Using your time, money and talents to genuinely help others naturally increases your happiness. Seeking money for money's sake may or may not influence your happiness, but seeking money in order to fulfill your stewardship and serve and bless others automatically increases it.

5.1.2. Money is a gift. It has a specific use. This means that you have a stewardship. You are to use your money for something that matters, for your family and beyond.

5.1.3. Live within your mean. Always. No Exceptions. Period. Follow a good budget. Give each spouse a small allowance so you have a little discretionary money each month and don't nitpick each other on the little things.

5.1.4. Stop getting financial advice from broke people; get it only from those whose finances you want to emulate.

5.1.5. Consistently Budget and save for unexpected expenses.

5.1.6. Pay 10% of your income to tithing. Give even if you are really broke. Giving puts you in a mindset of abundance and puts any financial worries in their proper perspective, so it should not be limited to just tithing. The Bible categorizes giving as 1. Tithes and 2. Offerings.

5.1.7. It's not what you make, but what you keep that determines financial success. Pay yourself first and save what you pay yourself.

5.2. Ten laws of financial management

5.2.1. Know what you make

5.2.1.1. Accurately define your net monthly income

5.2.2. Know all your expenses

5.2.2.1. Document ALL expenses

5.2.3. Get your expenses to no more than 75% steady state

5.2.3.1. Set a financial goal

5.2.3.1.1. Live on 75%

5.2.4. Never finance anything that depreciates outside of your house

5.2.4.1. Never finance anything that depreciates

5.2.5. Sleep on it rule

5.2.5.1. Set a ceiling on spontaneous buys and sleep on anything bigger

5.2.6. If you can't pay your credit card monthly; you can't afford to have a credit card

5.2.6.1. Don't use credit cards if your spending goes down when you use cash

5.2.7. After interest debt is eliminated; save 10% immediately

5.2.7.1. Wipe out consumer debt before you work on building up savings

5.2.8. Interest on debt is a CANCER

5.2.8.1. Know the difference between an investment and an expense

5.2.9. Invest in your brain

5.2.9.1. As you make more money focus on quality of life and contribution

5.2.9.1.1. Don't let your life get complicated

5.2.10. Focus on quality of life and peace of mind when you do get wealthy

5.2.10.1. Never invest in a business where you are not the prime mover

5.2.10.1.1. Advance slow enough so you don't ever have to go back

5.2.10.2. Be a blessing to others

5.2.10.2.1. The richness of life is about what we can do to serve others