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or three years； while working for Xerox； I spent my spare time learning to master the art of buying foreclosures。 I've made several million dollars using that formula； but today； it's too slow and too many other people are doing it。
So after I mastered that formula； I went in search of other formulas。 For many of the classes； I did not use the information I learned directly； 'i｜ but I always learned something new。
I have attended classes designed for only derivative traders； also a class for modity option traders and a class for Chaologists。 I was way out of my league； being in a room full of people with doctorates in nuclear physics and space science。 Yet； I learned a lot that made my stock and real estate investing more meaningful and lucrative。 Most junior colleges and munity colleges have classes on financial planning and buying of traditional investments。 They are great places to start。
So I always search for a faster formula。 That is why； on a fairly regular basis； I make more in a day than many people will make in their lifetime。
Another side note。 In today's fast…changing world； it's not so much what you know anymore that counts； because often what you know is old。 It is how fast you learn。 That skill is priceless。 It's priceless in finding faster formulas…recipes； if you will； for making dough。 Working hard for money is an old formula born in the day of cave men。
5。 PAY YOURSELF FIRST： The power of self…discipline。 If you cannot get control of yourself； do not try to get rich。 You might first want to join the Marine Corps or some religious order so you can get control of yourself。 It makes no sense to invest； make money and blow it。 It is the lack of self…discipline that causes most lottery winners to go broke soon after winning millions。 It is the lack of self…discipline that causes people who get a raise to immediately go out and buy a new car or take a cruise。
It is difficult to say which of the ten steps is the most important。 But of all the steps； this step is probably the most difficult to master if it is not already a part of your makeup。 I would venture to say that it is the lack of personal self…discipline that is the No。 1 delineating factor between the rich； the poor and the middle class。
Simply put； people who have low self…esteem and low tolerance for financial pressure can never； and I mean never； be rich。 As I have said； a lesson learned from my rich dad was that 〃the world will push you around。〃 The world pushes people around not because other people are bullies； but because the individual lacks internal control and discipline。 People who lack internal fortitude often bee victims of those who have self…discipline。
In the entrepreneur classes I teach； I constantly remind people to not focus on their product； service or widget； but to focus on developing management skills。 The three most important management skills necessary to start your own business are：
1。 Management of cash flow。
2。 Management of people。
3。 Management of personal time。
I would say； the skills to manage these three apply to anything； not just entrepreneurs。 The three matter in the way you live your life as an individual； or as part of a family； a business； a charitable organization； a city or a nation。
Each of these skills is enhanced by the mastery of self discipline。 I do not take the saying 〃pay yourself first〃 lightly。
The Richest Man in Babylon； by George Classen； is where the statement 〃pay yourself first〃 es from。 Millions of copies have been sold。 But while millions of people freely repeat that powerful statement； few follow the advice。 As I said； financial literacy allows one to read numbers； and numbers tell the story。 By looking at a person's ine statement and balance sheet； I can readily see if people who spout the words 〃pay yourself first〃 actually practice what they preach。
A picture is worth a thousand words。 So let's again pare the financial statements of people who pay themselves first against someone who doesn't。
People who pay themselves first
＋＋
Job………》｜Ine ｜
^ ｜… ｜
｜ ｜ Expense ｜ ｜
＋＋ ｜
＋……《
…｜＋
｜ Assets ｜ Liabilities ｜
｜ ｜ ｜
｜_________｜____________｜
Someone who pays everyone else first… Often there is nothing left
＋＋
Job………》｜Ine ｜
｜…
｜ Expense ｜ 》 Nothing left！
＋＋
………＋
｜ Assets ｜ Liabilities ｜
｜ ｜ ｜
｜_________｜____________｜
Study the diagrams and notice if you can pick up some distinctions。 Again； it has to do with understanding cash flow； which tells the story。 Most people look at the numbers and miss the story。 If you can truly begin to understand the power of cash flow； you will soon realize what is wrong with the picture on the next page； or why 90 percent of most people work hard all their lives and need government support like Social Security when they are no longer able to work。
Do you see it？ The diagram above reflects the actions of an individual who chooses to pay himself first。 Each month； they allocate money to their asset column before they pay their monthly expenses。 Although millions of people have read Classen's book and understand the words 〃pay yourself first；〃 in reality they pay themselves last。
Now I can hear the howls from those of you who sincerely believe in paying your bills first。 And I can hear all the 〃responsible〃 people who pay their bills on time。 I am not saying be irresponsible and not pay your bills。 All I am saying is do what the book says； which is 〃pay yourself first。〃 And the diagram above is the correct accounting picture of that action。 Not the one that follows。
My wife and I have had many bookkeepers and accountants and bankers who have had a major problem with this way of looking at 〃pay yourself first。〃 The reason is that these financial professionals actually do what the masses do； which is pay themselves last。 They pay everyone else first。
There have been months in my life； when for whatever reason； cash flow was far less than my bills。 I still paid myself first。