Dale Gillham is one of Australia’s most respected analysts (Wealth Creator magazine). A sought-after keynote speaker and author of the bestselling book How to Beat the Managed Funds by 20%, he has helped thousands of traders and investors around Australia and throughout the world become confident and profitable, not only in the stock market but also in other investment vehicles. Tired of an industry saturated with fancy marketing and quick-fix gimmicks, he co-founded Wealth Within to provide genuine education as well as independent investment advice to traders and investors who have become disillusioned with the industry for one reason or another. He has over twenty-five years of experience in various sectors of the investment industry, including banking, financial planning, stock market education, and professional trading. For more than twenty years, he has achieved profitable returns in his private trading while sharing his knowledge and guidance with others to help them reach their goals when it comes to financial independence. An excellent and expert motivator, teacher, and investment manager, he is in his element when helping others achieve their financial goals.
Highlights from John’s Interview
It’s funny. I forget which golfer it was, Arnold Palmer or somebody, who said that 90% of the shot was lining it up. And for me, it doesn’t feel like I write fast. I spent an inordinate amount of time thinking about what we’re going to talk about, thinking about the story, just kind of settling into it. Then it’s actually time to take the shot. And write two paragraphs and write two pages. It does go pretty fast. But it’s relaxed. It’s relaxed and low speed demon.
I’ve got two different seats in my little home office. I’ve got a little comfy armchair in the corner, which is where I sit with a blank pad of paper and a pen and a cup of tea and nothing else, and just try to empty my mind and come up with the thoughts. I might scribble half a page of indecipherable gibberish on that pad of paper; that’s usually where the best stuff is. But then I’ll walk over to my little laptop on the other side of the room. And that’s where 95% of the writing happens, the mechanical part of taking the idea and flushing it out.
Zoe is 28 years old. And you know Jim, neither you nor I are a woman living in New York City by the name of Zoe at the age of 28. That said, I was close to that, only one off. And I’m not going to tell you which one. So close.
I did, to an extent, aim the book at Millennials, Generation Z, and people under the age of 30. But really, Zoe is all of us. It’s just as much for Baby Boomers as it is for the young generations. Because an awful lot of us would like to be in a better place financially than we are, Baby Boomers included. So the idea of this book is to show you how to stop living paycheck to paycheck and start living your dreams. And that’s what happens to Zoe.
It starts out, first morning, Zoe is going to work, and she walks to this place called the Oculus, which is this magnificent, amazing sculptural building in lower Manhattan, built over the ashes of 9/11. She was walking through this Oculus, and she walks by this huge billboard. It’s a moving LCD screen advertisement, with a picture of a boat on a beach in the middle of a desert, kinda like the opening of Close Encounters of the Third Kind. And there’s a captain, and he is saying, “If you don’t know where you’re going, you might not like where you end up.” And it just gnaws at her, because she’s got this feeling that she doesn’t really know where she’s going.
She’s got a job. Okay, nice job, decent pay, living in Brooklyn, very expensive cost of living. And her life isn’t terrible. But there’s just something missing, and what’s missing is the Zoe’s life part. So yes, she meets this gentleman, who’s a barista at this local coffee shop where they show artwork that she covers, but can’t afford. And her standing there, covering this beautiful photograph of a dawn, and his comments about that, are what set the whole story in motion.
An old man reveals the three secrets. It’s funny, because this unlikely mentor walks her through this unlikely dialogue in this unlikely scenario. And she doesn’t really get it. She doesn’t really buy it. She’s kind of got this journalist curiosity about him and what he’s saying. It isn’t until late in the book, that the things he’s saying actually click up. Until then she’s thinking, “Yeah, this this sounds good. But it would never work for me.” Because that’s the way a lot of us think. It’s when she has a conversation with somebody very close to her, and suddenly the words sink in, and it starts to have meaning for her. But yeah, the three laws of financial freedom. So the first law is, pay yourself first.
And what comes with that is, put yourself first. What he really means by that is, yes, you’re running around. When I first met David Bach was in an interview, and he said something that really stuck with me. He said, “John, my belief is, most of us were put here on this planet to do something unique nobody else on earth can do. And the tragedy is most of us aren’t doing it. Because we’re too busy leasing and loaning our lives, and hustling at the end of the month to try to nail down bills. My mission is to help millions of people set themselves free to live and own their lives so they can do what they were put here to do.” And that’s it, that’s the resilience. She’s running around, hustling at the end of the month to make ends meet.
Pay yourself first means figure out what in life is important to you. I mean, really important to you. Figure out what it is you want to fund in your life, I don’t mean buying a yacht and a castle on a hill, I mean something real that you actually want in your life. Figure out what it is you want to fund. And every time you get paid, the first thing that happens is you take a little piece of that payoff, and put it into an account to fund that. It’s the opposite of what most of us do, which is we get paid. First thing that happens, the government takes a piece, then we take what we get after withholding, and we pay our rent or mortgage and our car payments and our credit card payments and our utilities and our cable and blah, blah, blah, blah, blah, blah, blah. If there’s anything left over at the end, well, then that’s ours. Rule number one is start out with what’s yours, what you claim for yourself, even before taxes come out. You can do that with a pre tax account.
And make it a habit to pay yourself first.
For me, the word retirement has no meaning. I think the reason that a lot of Americans are so busy with saving, and that’s just a stat that that is pretty factual, Americans have an extremely low savings rate. I think that one of the reasons that’s true is that a lot of us just don’t see a point in it, like retirement is some theoretical abstract thing that I’ll do when I’m 70, or 65, or whatever, but has no meaning to my life today.
Forget money for a moment. A more pragmatic way of approaching this first principle is to sit down and ask yourself, What is there? What’s not in my life right now? What is there that I’m not doing, or that I don’t have? What’s missing, which if I put it in place, I would have flat out unbridled joy?
Henry asked Zoe, at one point, when was the last time you experienced flat out unbridled joy? She has to go all the way back to when she took her parents to the coast of Maine to cook. It cost a lot of money, but it’s not about money. It’s about the experience, the value is what matters. You start asking yourself, what is it that I want in my life that isn’t there now, that I could put in place with a little bit of funding. That’s the reason you’re going to peel off a piece of your paycheck to stick into an account, to fund that, and not just some kind of abstract retirement.
Number two is the one reason people like to avoid personal finance books like the plague, or don’t even want to have the conversation. It is certainly the reason that for many, many years, I avoided the conversation about finance with my wife every time I could avoid it. Because we don’t want to run up against the dreaded word. And you probably know what the dreaded word is: budget. Who loves budgets? Nobody loves budgets.
Budgets work for corporations. In this book, when they come into the budget conversation, Henry totally surprises me by saying, the first thing you do with the budget is throw it in the trash. Budgets don’t work. And the reason they don’t—I mean they do for governments. Hopefully, allegedly, they do for corporations, practically and really. But for individuals, for humans, not so much. Budgets go against human nature, the fundamental identity of a budget is the word don’t. What a budget tells you is your limit, what you can’t do, what you have to do, where you have to stop. That’s not human nature. Human nature is curious, has appetite, has desires. I want to move, forward is I want to do stuff. So instead of thinking of budgets, you start thinking about what you want, what you’re funding. So principle number two is don’t budget.
Make it automatic. Make it automatic means whatever you decide you want to put money into, whatever you decide you want to fund, set it up. So it gets deducted and shunted and redirected automatically, you can set up all your bills to pay automatically out of your bank account these days, you do the same thing with your future setup. So you’re funding your future automatically, because if you’d have to rely on yourself to do it on discipline and willpower, then it’d never happen.
Number three is my favorite. And, you know, it could have been number one, but it comes last, because she’s ready for it at the end, which is live rich now. And live rich now basically means there are three myths of personal finance. And in the book, one of them is the myth that it takes money to make money. This is one of those things that sounds like worldly wisdom, and it’s actually BS.
What happens is, so many people think, “Well, it takes money to make money.” So, I don’t have the money right now to invest, I don’t have the money to save it, I don’t have the money to do this, I don’t have the money. Sometime when I make more, sometime when my ship comes in, sometime when that investment pays off, when that big client lands, whatever it is, then I’ll start to fund XYZ. But the truth is, the best time to finance something is right now.
People who are wealthy, who are in favor of tithing, they always say the time is when you’re broke. You don’t wait until you’re a millionaire to start giving 10% to your church or your temple or whatever. It’s the same thing with investing in your future. You don’t wait until you have extra, because you’ll never have it. You do it now. So yeah, live rich now means that thing that you want to do, that gives you joy, find some way of putting it in your life today. If you can’t go around the world, well, maybe you can go to the coast of Maine. You can go to the coast of Maine, maybe you can go to a local bed and breakfast for two nights. You know what, if you can’t become a world famous movie star, well, maybe you can do XYZ act in your local theater or something. Find some way of implementing the thing that matters to you most. Now, not when you’re 60.
How many great successful entrepreneurs have said that one of the great poisons for entrepreneurship is too much capital. More businesses are killed by having too much than too little. One of the fundamental truths that David teaches, which is in this book, and it surprises people, is this idea that making more income will make you wealthier, making more income will make you richer? Usually it does the opposite, because when you make more, you just spend more. It’s not about making more, it’s about shifting your everyday habits to saving.
But it’s also boring. It is boring. That’s why you’ll never do it. Here’s an example. Early in the stories you’re standing there in this coffee shop with Henry, staring at this photo, this gorgeous photo of a dawn scene at the dock in the island. By the way, this is the scene that I remember seeing when I was 13 years old, stuck in my mind. It was such a beautiful morning, and it kind of leaked into the story. But she’s seen this photograph, she desperately wants this photograph. But there’s no way she can afford it. The price tag is $1200. And Henry says, “You know it’s available, you could buy it.”
She’s like, “Ha, when was the last time I saw $1200, free and easy? Never.”
He nods at the latte in her hand and says, “You know, if you can afford that coffee, you can afford that photograph.”
And she’s like, “What are you, crazy?”
And he says, “Do the math. The latte cost four bucks, take that five times a week. Because you go out five times, your workday is five days a week. Multiply that over a year. If you redirected the cost of that one coffee into an account, in a year, you’d have your photo.”
It’s not about depriving yourself. It’s not about saving. It’s not about any of those abstractions and negatives. It’s about funding the photograph. How do I fund the stuff that I love, and direct those little daily luxuries into things that are more meaningful for you and your life?
It’s funny, the changes that I’ve made in my life that have been along the lines of latte factor, all of them have turned out to enhance the quality of my life, and not just my financial state.
One of the other myths was this myth that making more will make you okay, will make you richer. The third is actually my favorite. Because the third is that somebody else will take care of your wealth. A corollary to that is it’ll take care of itself. Neither of those is true. To me, your wealth is a lot like your health. When you’re young, it’s so easy to feel like you’re invincible. Every young person feels like an invulnerable, invincible Superman. I know I certainly did. It’s easy to think your health will last forever, or your wealth will take care of itself forever. And neither one’s true. You know, you’ve got to put them in your own hands. I think Walt Disney once said something along the lines of, someday my prince will come. And yeah, nobody will. Sorry. That’s not how it works. This whole idea of self determination is so pivotal in relation to both your health and also your wealth.
By the way, on that last point about self determination, here’s a wild stat, I think it’s in the book somewhere. 80% of men will die married, and 80% of women will die widowed. Let that sink in for a sec. I’d rather be on the man side of that equation.
Well guess what? The thing about financial self-determination is a good message for everybody. But it is especially important for women, who have for generations relied on a husband, accountant, financial advisor, whomever to look after the finances. This happens to Zoe’s mom, she says, “Oh, your father takes care of all that.” Well, you know, maybe he does. But maybe he doesn’t. And I can’t tell you how many women I know who have said, when their husband died, they suddenly realized they had no idea what was going on in their finances. And more often than not, it wasn’t good.
Whatever it is you have to make it real, as if you could go and touch it. I’ve often heard people teach that if you want to have a certain kind of beautiful car, go to the dealer and go sit in the car. You probably heard this teaching, the fake it ‘til you make it deal. I hate the phrase fake it ‘til you make it. But I do subscribe to the idea of going out and sitting in the car, going out and looking at the house. You’re going out and seeing photographs of the place you want to travel, doing whatever you can to make it tangible, real, actual to your senses.
But I have something else about your real estate. One of the distinctions that Henry draws for Zoe is that there’s two kinds of people in the world, there’s renters and owners. Even with the vagaries of the real estate market that happened in our lifetime, 10 years ago and so forth. That notwithstanding, owning real estate is never going to go out of fashion. Owning things that earn you income, owning things that represent real income as opposed to renting forever. He uses the example of going into Starbucks and buying a cup of coffee is actually renting a little piece of Starbucks, buying a little bit of Starbucks stock. You’re owning a little piece of Starbucks. In the long run, you want to be an owner and not just a renter.
You know the recipe, the parable with Chef Carol. A month ago, I sat next to Chef Carol. This dude is amazing. He’s also an amazing entrepreneur. I’ve watched him create out of nothing, and he’s got this amazing podcast now. And a year and a half ago it didn’t exist. It didn’t know what a podcast was. So yeah, Chef Carol, I wrote this book, The Recipe. And it’s about a troubled young boy who learns life lessons at the hand of a wizened, older, grizzled old diner chef, kind of a Master Chef meets Karate Kid idea. The movie doesn’t yet exist, but it’s in the developmental stage now in Hollywood. Development is code for hell. Because development means we’re looking at making it. Who knows when? Maybe now, maybe never. But it’s going to happen. It’s just going to take time.
The book’s still hot and steaming on the shelf. It’s bouncing around the internet. It’s everywhere that books can be found. You can also go to my website, where you’ll find all my books, sample chapters and excerpts of all my 30 books. This is the 30th at my website, which is simply my name, JohnDavidMann.com.
