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  • 01:55:35 am on June 11, 2009 | 6 | # |


    Well, right out of the gate, I’m guessing that we can give the ‘best graphic accompanying a post’ award to Ryan for a real cracker!

    Ryan at least knows EXACTLY what he needs in order to get to his Number (BTW: a great place to start); I think it’s the ‘how’ that’s bugging him … any help, anyone?


    My number is set at $16,000,000 in 8 years which leaves me with a monstrous (though not as big as some!) compound growth rate of 82%. When you look at Masterson’s Table you will see that I am left with only one option to get me to my number…start my own business.

    This is actually quite convenient as I’ve been wanting to do this for as long as I can remember anyway! The problem is, I’ve never been able to decide WHICH business to start. That is, until now. If I were advertising on craigslist for exactly what I want in a business to get me to my number, here is how it would look:

    Wanted: 1 Big Idea. Specifically for an innovative medical device implant designed for use in spine surgery to alleviate a very common back condition. Must be easily and inexpensively manufactured and come complete with drawings and ready to be patented. Also should be easily approvable through the FDA with limited amount of testing and human studies needed. Once approved, must have the option to be saleable at that point or be easily distributed through contractors or licensing and then either sold at a later date or taken to IPO.

    As you might have guessed, I have never patented an idea, done marketing research, manufactured a product, gotten approval for and coordinated studies, gotten FDA approval, sold a business, or taken any business public, so this will be quite an adventure and learning experience for me. I’m really looking forward to it, but want to make sure I have a solid idea for a wide total available market before I take the leap. The good news is, I have a lot of contacts and a lot of ideas so it’s just a matter of finding the right one.

    The even better news is that I have a whole community (that’s you) to help me through this process. So, for starters, what do you think of my plan to get to my number? See any flaws? Have any personal experience with any of these things you’ll be able to share with me? Leave me a comment below and let’s get a discussion going!

  • 02:32:18 am on May 25, 2009 | 10 | # |
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    Photo credit: http://www.bangitout.com

    It’s always tough – but, good – to be first out of the gate (I imagine that’s a horse-racing term) … and, Ryan’s certainly taken the leap.

    Love the image, Ryan!

    One of the things that we’ll be exploring with Ryan as we go along is how best to commercialize his ‘new product’ idea: Ryan will (hopefully) learn a lot from us and we – in turn – will have the opportunity to learn about taking a new idea from start finish …


    The 7 MIT’s are finally wrapping up money making 101 (mm101) and moving on to the next step!

    MM101 is mostly about getting out of debt and saving what you can, which is probably the most discussed, and published about step in the world of finance. But, hardly anyone talks about what to do once you’re out of debt and already saving. Even fewer still talk about the fact that being debt free and a having a savings account (or even stocks) does not mean you will be able to retire even at 65. The 7m7y community is dedicated to not just getting out of debt a la Dave Ramsey, or saving cash and mutual funds with Suze Orman, but to understanding what it takes to get rich(er) quick(er) in the real world and retire the way you want, when you want.

    While I thought I was ready for the next step before I started this experiment, there are a few things I’ve learned so far that will likely prove to be invaluable.

    First, I’ve set plenty of goals in the past, but the financial goals I’ve set have never been as specific as the ones I have now. Finding my “number” ($16 million in 8 years) was the single most important thing I’ve done so far. It’s not just about picking a number that you think will make you happy and a date to accomplish it by, it’s about picturing your retired life and everything you want it to be and KNOWING how much your dream will cost by the time you get there. It’s about finding your passion/purpose in life (mine is to build relationships that build dreams) and using it as a motivator and accelerator to your goal. It’s about knowing precisely what it’s going to take (like a compound growth rate of 82%!), and what types of investments can give you your needed growth rate (I’ve chosen starting a business with some intellectual property in the medical device arena) to get from where you are now (my net worth is $131,000 and you can see the details here) to where you NEED TO BE by your set date.

    Second, based on my number and my date, I’ve learned that a 401K is not that important for me. Don’t get me wrong, I will always have a safety net to support my family in a dooms day scenario. But why invest my money in a vehicle that will only get me to a fraction of the number I need to retire and won’t even do that until well after I want to retire?

    So now I feel like I have a solid foundation in mm101 and can’t wait for mm201 to get started.
    I will be looking forward to working with the 7m7y community to help me get to my number and helping all of you get to yours.
    I’ve already taken some of my ideas to a few engineers and surgeons to get feedback and will be going back to the drawing board to make adjustments. I’ll keep you posted on any news!

  • 01:15:53 am on May 9, 2009 | 5 | # |
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    Photo credit: http://www.hot-screensaver.com

    On a Budget? No Problem!

    For a moment I thought this was Jeff’s post … after all, he’s the pilot, right? 😛 But, no, this is Ryan’s post and he chose the image …

    I like Ryan’s ‘electronic envelope system’ for budgeting expenses throughout the month. Would a cash budget be more effective? And, do children see cash any more ‘real’ than plastic, anyway?


    In looking for an image to go along with my post, I googled “budget” and up pops this image. I couldn’t resist.

    After keeping track of everything we spent money on in the month of April, I wasn’t really surprised by anything I found.

    Early on in my mm101 process I took a serious look at spending and we implemented an “envelope system” albeit with electronic envelopes to make things dramatically easier. Money comes into one main account and is then automatically filtered into multiple other accounts, each specific to a class of purchases (i.e. – groceries). So when we are buying groceries we use our “grocery” debit card, and so on.

    We went slightly over on eating out (specifically lunch) but nothing to panic about.

    One seemingly unrelated thing I thought about as a result of this process is how it must be perceived by my kids. What I mean is, they almost never see me or my wife use physical money. They just see us wave our magic plastic card and get whatever we or they want!

    Now we talk to them (we really only talk to my daughter, age 3, because my son is only 1) about how we are able to earn money and how the card actually works. We also are starting to have my daughter earn money by doing small chores, but I’m a little concerned that as they get older they will do like they’ve seen mommy and daddy do and only use a card.

    I’m concerned because, for the same reason a casino uses chips instead of money, there is a mental separation when you use a symbol for money instead of the real deal. Studies have shown that people usually spend significantly more if they use a card instead of laying down cold cash.

    So what do you think? Should we start paying for things in cash? Do you?

  • 12:41:42 am on April 18, 2009 | 9 | # |
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    Wrapping up MM101

    [Graphic added by AJC]

    I’m interested in hearing what other readers have to say about Ryan’s “upside down mortgage” … after all, that’s what we’re here for: new perspectives on age-old problems! Other than that, sounds like Ryan’s pretty happy with where he’s sitting … what do you think?


    gift_wrapping_2In wrapping up our discussion of MM101, Adrian has asked us the following questions to make sure we have properly vetted our current situation and are ready to move on the next step of our number journey:

    1. What, if anything you will change in relation to your current financial situation?

    If I could wave a magic wand, I would not be upside-down on my mortgage, but that will correct itself over time as we are not planning on moving soon. That (our mortgage) is the only MM101 related item we are currently dealing with and…

    2. How / when you intend to go about it?

    …while we could short sell the house and rent, we will not likely do that. We are emotionally tied to the house and would not, in my opinion have much upside with a rental because we would have to either float the note on our mortgage or pay the taxes on the difference on a short sale, all to pay MAYBE $1000/month less and not have the mortgage interest to write off come april 15th.

    3. What results you are hoping to achieve?

    An appreciation of our home of around 5%/year starting in 2010, bringing us back to an equity position around 2012.

    4. If you haven’t specifically addressed debt in your response/s to 1. – 3. (above), what (if anything) you intend to do about your current debt?


    BTW: if you are planning to increase/decrease your current debt via a debt snowball, avalanche, bazooka, cash cascade, all, none, or I don’t know … this would be a GREAT place to discuss it.


  • 02:06:23 am on April 6, 2009 | 9 | # |

    Take note of Ryan’s list of 5 things that he has learned from this ‘grand experiment’ so far … they are all important observations. Ryan may be surprised to learn that I am equally risk-averse and DO advocate a safety net …

    As Ryan asks, what advice can you give to Ryan? I’m sure that he’d love to hear from ALL of our readers, not just the  other MITs …


    cash-flow-ryanI’m sure there are a lot of ways to get out of debt. I’m so sure because I see ads everyday on T.V., hear them on the radio, and see books packing the shelves of Barnes & Noble all about how to do it. What you don’t see in any of those places is a reputable way to get from debt free to wealthy.

    That’s why I’m part of this experiment and it’s in that area that I’m learning a lot from this blog and from those of you that are kind enough to continue the discussion in the comments section of each post.

    Things of note that I’ve learned so far include:

    1.) Consider the percentage of compound growth you need to reach your number – and, by when – for the investment decisions you make.

    2.) As with #1, just because something (i.e.- 401k) has good tax advantages now, doesn’t make it a good investment. If it doesn’t pay out until well after you want to retire, what good is it? (Though I probably will continue my existing 401k, on the back burner, and may or may not make SMALL contributions just in case!)

    3.) I can’t get to my number with stocks, bonds, and real estate alone.

    4.) If you “strike it rich” without a pre-established goal or “number”, you won’t know you’re there!

    5.) The 25%, 20%, and 5% rules.

    I’ve also learned that risk aversion may be my biggest struggle in my personal journey. I have confidence in myself that I will succeed and rarely think about failure. That said, I have a wife and two kids and need them to be and feel secure, so I will probably have more of a safety net than Adrian might suggest.

    The other big question I currently have is which investment vehicle to go with next while I develop my intellectual property. I want to buy either a rental property or commercial office/retail space and would love to hear from any of you that have experience with either.

    Now you know what I’ve learned, and what I want to learn near term. Here is a look at my current financial situation at networthiq

    And Here are some clips from my monthly financial spreadsheet:

    Monthly Income Statement
    A.Earned Income
    Job / Self Employment Salary $28,140.00
    B.Passive Income
    Net Real Estate Income $-
    Net Business Income $40.00
    B.Passive Income Total $40.00
    C.Portfolio Income
    Interest $33.00
    Dividends $12.00
    C.Portfolio Income Total $45.00
    D.Total Income $28,225.00
    Total Passive Income

    Credit Card Payments $-
    Personal Expense Ryan $200.00
    Wife (mostly groceries) $900.00
    Gross Mortgage $3,301.00
    Utilities $225.00
    Entertainment $687.95
    Life Insurance
    Other Payments
    Auto Insurance
    Business Expenses
    E.Total Expenses $8,556.20

    Gross Earnings

    My “job” $19,700.00

    My company $8,000.00

    Wife’s job $400.00

    MLM $40.00

    Total $28,140.00


    IRA $7,000.00

    Wife’s IRA $34,000.00

    SEPP $25,000.00

    Total $66,000.00


    GE $1,408.00

    Target $1,344.00

    JNJ $49.00

    Other $1,300.00

    Total $4,101.00


    Charity $100.00

    xm $12.95

    other $100.00

    gifts $125.00

    medical $150.00

    eating out $200.00

    Total $687.95


    Gas $28.00

    Cable $102.00

    Phone $95.00

    Electric $85.00

    Water $50.00

    Trash $15.00

    Total $225.00

    Business Expenses

    Rent $1,200.00

    Healthcare $393.00

    Child Care $250.00

    Auto Fuel $200.00

    Sepp $833.00

    MLM $120.00

    Total $2,996.00


    Home Mortgage $2,100.00
    Homeowner’s Insurance
    Earthquake Insurance
    Association Fees $216.00
    Property Taxes $900.00
    Gross Mortgage $3,301.00
    % of gross income

    Balance Sheet
    Assets Liabilities
    Savings $45,000.00

    Stocks $4,101.00 Credit Cards $-

    $- Car Loans $-
    IRAs $66,000.00 Student Loans $-

    $- Home Mortgage $665,000.00
    Real Esate (Less Mortgage) $- Personal Loans $-
    Business Value (Net)
    Other Debt $-
    F.Assets Subtotal $115,101.00 J.Total Liabilities $665,000.00


    Home $630,000.00

    Cars $30,000.00

    Other $12,000.00

    G.Doodads Total $672,000.00

    H.Total Assets $787,101.00 K.Net Worth $122,101.00
    (Bankers Version)
    (Bankers Version)
    I.Total Assets $115,101.00 L.Net-Worth $(549,899.00)
    (Rich Dad Version)
    (Rich Dad)

    Gross Income Less Expenses $19,668.80

    Net Income Less Taxes
    $18,062.80 Amount Available to Invest this month


    I usually use about $14,500 as an average after tax monthly income for planning purposes.
    Intend to use surplus funds for commercial or residential RE and potentially develop IP

    So what stands out to you? Any advice?

  • 02:43:49 am on March 23, 2009 | 10 | # |
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    Photo credit: hubpages.com

    Debt Free!

    (except the over half a million dollar mortgage!)

    Ryan, Dave Ramsey would NOT be happy … he would want you to pay that l’il ol’ mortgage off. But, what do you want to do? What do our readers think you SHOULD do?

    I would also like to know more about the mortgage (interest rate; fixed/variable; etc.)


    A short time ago I was deep in debt, and constantly stressed and worried about it. I wasn’t (and my wife definitely wasn’t either!) going to live like that anymore. So I took action to aggressively pay down all my debt and find a job that paid significantly more than I was making at the time.

    Since that time (about five years ago) I have paid off all of my debt (including student loans, credit cards, and cars totaling around $60,000) except our house.

    Granted the mortgage on our house is $665,000 and our home is worth around $600,000, so technically that puts us about $65,000 in the hole. We don’t, however, plan on selling anytime soon, so that loss is not yet (and hopefully won’t ever be) realized.

  • 03:02:43 am on February 28, 2009 | 9 | # |
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    Photo credit: bigpicture.posterous.com

    401 Que?

    Very punny title, Ryan … I’ll leave the comedy to you, from now on 🙂

    Ryan raises the critical conundrum coherently (see, I’m already switching from puns to alliteration?!): when does it make sense to invest inside the tax-advantaged vehicle v outside? One gives you tax and employer-matching advantages and the other gives you earlier/easier access to your funds and (perhaps) better ‘investment’ choices … what would YOU do?


    Our official retirement funds are divided between three accounts:

    – My wife’s California Teacher’s Pension Fund, which claims it is unaffected by the current fiscal crisis of California, is the result of steady stream of saving from 8 years of work (she’s now “retired”) and some employer matching, though I’m not sure how much.
    Current Value: $34,000

    – My 401K which is a rollover from about 4 different jobs, most non profit, some that matched my contributions, all that paid very little compensation.
    Current Value: $6,000

    – My SEPP that I formed when I started my company (It’s my company, so I guess it’s all matching funds!).
    Current Value: $15,000

    We lost about 45% of these funds over the past year. (hence the cartoon!)

    As for what I’m going to do to get that money back? To be frank, I’m not sure!

    For starters, I’m going to focus on other types of investment (RE, small business, intellectual property, etc.) and less on 401ks and SEPPs. I’m only going to contribute as much to my SEPP as I believe makes good sense from a taxation standpoint. For example, if I owe $3,000 in taxes but I contribute $10,000 to my SEPP, then I owe $0 in taxes.

    Now, I could pay the $3,000 in taxes and invest the remaining $7,000 in something that will not only return enough to make up for the $3,000 paid in taxes, but also outpace the return of the SEPP fund thereafter (the latter being the decidedly less difficult task), but if I knew what investment does both, I could reach my number in a significantly shorter time frame!

    Though maybe I’m way off base with this. Adrian has made intriguing arguments for not contributing to a 401k that the company matches (a practice that most pundits deem as a “no brainer”), so maybe my logic is flawed with my tax theory too! What do you think?

  • 03:10:08 am on February 7, 2009 | 13 | # |


    Photo credit: maniadb.com

    Dude, Where’s my car fit in with my number?

    I was waiting for somebody to post this picture with this post, and I’m glad to say that Ryan didn’t disappoint! 🙂 Ryan’s post is a short-but-sweet one that raises some questions on buy v lease/finance and new v used … any thoughts?

    By the way, Ryan’s current Net Worth can be found at: https://www.networthiq.com/people/PassiveSeeker


    I feel like we’ve done some good things with our auto purchases and some not so good things. We currently have a 2002 Mazda Tribute (Kelly Blue Book $8,700) and a 2006 Acura TSX (Kelly Blue Book $18,000). The Mazda we bought (I don’t believe in leasing) through payments over 60 months for a total of around $23,000. The Acura was $26,000 and we paid cash. We bought both of them new, which I think is the not so good thing, financially, but because we keep cars so long (at least 8 years) I’m not sure if that changes the situation. What I mean is, if we bought our cars when they were two years old, we certainly would have paid less, but there is some question as to whether or not we could keep them for the same amount of time.

    I’m interested to hear what you guys think about new vs. used when keeping a car that long, and if there is ever a good time to lease.

  • 02:50:01 am on January 22, 2009 | 9 | # |
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    House Vacuum

    Photo credit: loanswithrob.comt

    Home Sweet Home

    I have to admit that I admire those who jump in early … writing these posts is no exception: by posting first, Scott – and now Ryan – are taking a chance. But, taking chances is what life is all about: jump in and see if the water’s fine … find out for yourself, don’t wait for somebody else to tell you 🙂

    I think there’s a flaw in Ryan’s reasoning around the 20% Rule – but, I’ll have to double-check his NetworthIQ profile to be sure – in the meantime, can anybody else see it?


    I purchased my house in February 2007 for $685,000. It was just after everyone knew the bubble had popped, which is why we were able to purchase it for $65,000 less than it had previously been listed for (what we thought was a great deal!). Since then, it has dropped in value to around $630,000 (Yikes!), and we have paid off $20,000. This means we owe about $35,000 more than our house is worth.

    My monthly “nut” for this house, including everything, is $4700 (hence the picture at the top of the post!). This is 34% of my net income, BUT, because my home is large enough to serve as my office as well (large dedicated space for storage of product, meetings, etc.), I do not have to lease another office. Therefore, my corporation pays me $1200/month for the use of that space, taking my gross house liability to $3500, or 25% of my net income.

    As for the 20% rule, I would be right on with $101,000 net worth and $20,000 of mortgage paid off. BUT, the value has gone down, so technically the 20% rule says I should pay off $55,000 more, right? Though if that is the case, I would probably not follow the 20% rule due to my adherence to the 25% rule and not seeing any additional return on that investment (of course, my payment would go down, but it’s only at 5.25% and I can write off the interest). What do you guys think? What would you do?

    As for our plans with this house, we will likely live here for another 8 years or so, until I retire with my number!

  • 02:48:19 am on January 9, 2009 | 8 | # |

    IP or Bust?

    Ryan definitely wins the image award for the best photos used on a post on any of my sites! I see a strange family resemblance in Image # F … now, if only I knew what it represented 😛

    Reading between the lines, Ryan has an idea in his mind – perhaps it’s already beyond and idea? – for a ‘medical device’, but it’s a good idea for him to develop (at the very least) an investment line, as well.

    Ryan should also go back and read the article about [another] Scott, who is a prolific inventor and was the inspiration for my Perpetual Money Machine series


    As an exercise to clarify our abilities, passions, likes, and money making history, Adrian has given us the following table to complete:

      How do you make $ or want to make money, past/present/future?(e.g., teacher) How do I spend $ or want to spend $ ? (e.g., clothing) What are you good at?What do you wish you were good at?What sparks your creative juices? What do you enjoy? (e.g., writing) What are your hobbies or qualifications/jobs? What would you want to do, even for free?(e.g., wood-working)
    1 sales eating out sales (surgery) sports
    2 management Travel problem solving deal making
    3 problem solving music photography photography
    4 consultant sports deal making networking
    5 networking building things/home improvement building things/home improvement building things/home improvement
    6   wine networking electronics
    7   Music Cooking surgery
    8   electronics finance reading
    9   music I wish I was good at: learning new things
    10     pro sports travel
    11     singing finance

    The images above are films of patients (none that I have any known affiliation with) with screws and other implants used to fuse their spines and/or correct a curve in their spine. I used these images because they represent what I currently do, sell spine implants, and what I hope to accomplish in the near future, develop IP (intellectual property) for a surgical implant and sell it or develop a business around it.

    The prospect of developing something that will be used in surgery to improve people’s lives (and only if you can’t fix them first, Scott!) is really exciting to me. It also is probably necessary for me, in order to accomplish the type of growth that I need to reach my goal.

    The problem I see is that it is by no means certain, and there really isn’t a “system” (that I know of) to accomplish this task, though I have made connections with medical device engineers, manufacturers, patent attorneys, and spine surgeons. I also don’t believe this will be tremendously cost intense (though there will certainly be costs for prototypes, paper work, and legal fees).

    Therefore, I believe that I should also have other investments to carry me to the promised land of my number and the retirement I want/need.

    In analyzing my table, I think that my desires and abilities lend themselves well to owning real estate (problem solving, home improvement, learning new things, deal making, networking), and if I had the abilities in my “wish I had” section, pro athlete or rock star, it would make things a lot easier!

    But, I REALLY like Diane’s idea of using this great community we have to help me analyze my table and come up with other suggestions, and BIG ideas to jump start me on my journey. Thanks to everyone in advance for your help!

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