Financial Mistake #10b – Now, What TO DO With Your Cash

This is a FOLLOW UP – what you should do – to the 10th Mistake in the "13 Financial Blunders Newly Successful Internet Entrepreneurs Almost ALWAYS Make" series.

10b) Now, What *TO DO* With Your Cash: Turning Cash Into Assets

I first read about this in Robert Kiyosaki's book Rich Dad, Poor Dad and the better one Cash Flow Quadrant. Instead of using your cash to buy expenses (such as cars, etc) use it to buy assets that generate cash and then use that cash to buy your expenses.

But it was when Dan Kennedy explained it in his Wealth Attraction seminar that it sunk in.

He first made it clear, like we already talked about, that the #1 objective of your business is to allow you to extract cash from it into your personal life.

Then, you turn that cash into bigger and better passive cash producing assets.

Although there are some entrepreneurs that bet their long-term financial security into their business and the day they exit with the big pay day (usually selling it off). I think that's a potentially disastrous plan because you have no control over that future event.

What if something happens and the business falls apart. Or you are unable to sell it. Or your exit plan ends up being for less than you planned.

Now, we should all, as the saying goes, plan with the end in mind and have a plan to exit our business.

But that future event, in my opinion is a BONUS in your financial life, not the central pillar.

Instead, using the idea that my business's main goal is to allow me to extract cash. It is my personal goal to turn as much of that cash into passive cash producing assets.

OK, enough talking about it, here is exactly what I'm doing.

Every month I set aside at least 15% of my income into savings plus my taxes. (Don't forget, from Mistake #2 you should already be setting aside your taxes every month.)

You can start off with a smaller amount, even just 1% or $50 a month is better than nothing. In the beginning it is about starting the habit. Once you have the habit you can increase the amount.

Along those lines, I learned this from T Harv Eker's Millionaire Mindset book to also reinforce this savings habit by setting aside a small amount of money each day. So every day I put $5 into a cup to have that daily savings experience.

I use www.ingdirect.com online savings account to earn a nice 4.2% interest on that money while it is waiting to be put to use.

Then, every month I also decide if I want to set aside more than that amount.

With that money…

First, I created a personal cash safety net equal to 3 to 6 month's of my average expenses. This sits in the savings account for emergency purposes.

Second, I max out any IRA accounts I have to take advantage of the tax savings.

Third, a portion of it I am putting in my Prosper account and buying loans that earn me anywhere from 10 to 15% interest. I'm hesitant to recommend this because I am still testing it out after doing a considerable amount of research. If you use it I recommend first learning the process, if there is interest I can share some tips on what I am doing, just let me know as a blog comment.

Fourth, I am in the process of investing into real estate after studying and forming a plan. Right now is an unbelievable opportunity to buy low while everybody is getting out, you can find some amazing deals.

There are two books and a website I have found to be the most beneficial.

- Dean Graziosi's new book "Be A Real Estate Millionaire". I first saw Dean's Infomercial (yes, I find myself watching infomercials to find good marketing ideas, his gave me a really big one). And on it he was talking about the opportunity we have right now and his book shows you exactly how to take advantage of it.

- The Millionaire Real Estate Investor by Gary Keller was referred to me by a local real estate investor, Brandon Watkins, I had lunch with to pick his brain. He recommended this book and it does a great job giving you the fundamentals of having a real estate investment business. It really opened my eyes.

- And a member of our Nitro Blueprint BetaTest Group, Jackie Lange's "Center For Real Estate Wealth" is an online training center and community for real estate investors.

There are some other plays I am making but this is a great start for today.

The 11th Mistake in this series looks at debt. Did you know there is good debt and bad debt?

business, cash flow quadrant, financial mistakes, passive cash producing assets, rich dad poor dad, wealth

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