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Kindle Notes & Highlights
by
M.J. DeMarco
Read between
January 3 - July 14, 2022
Live within your means with the intent to expand your means.
porous fiscal
Yet a strong offense can do little to temper a bad defense. Poor money management can’t be medicated with more money.
Don’t Use Market Investments for Wealth, Use Them for Income
dividends.
bond,
invested in bonds: tax-free municipals, corporate, emerging-markets, and closed-end funds. Other investments are in dividend stocks, like Abbie Vie (a healthcare company) and a nice allocation of real estate trusts.
This capital allocation gives me diversification where my money isn’t parked at one place and solely denominated in cash.
Its yield hovers around five percent, and as of this writing, the dividend is about $2.66 per share a year. The company hasn’t cut its dividend in nearly 70 years. Seventy years! Ten thousand shares equal $27 ,000 a year, completely “sit on your ass” income.
we’re not using the stock market for wealth creation, we’re using it for income, liquidity, and inflation protection. We’re not trying to turn a hundred bucks into $10 million over forty years, we’re trying to turn $10 million dollars into a $30,000 paycheck every month. Specifically, don’t use the capital markets to make you rich, use it to keep you rich.
the stock market is risky place for your life savings. Should the markets crash, my life wouldn’t change. I’m not dependent on Wall Street.
For compound interest to be effective, you need to start with a large sum.
Your business is for creating wealth; the capital markets are for renting your wealth which pays you passively.
miscellaneous
If you want to escape the rat race as a Liberated Unscriptee like myself, you’re going to need a ton of money. In that case, you need at least $1.2 million, earning at least five percent yearly to pay for the annual overhead. You’ll also need to come up with several million dollars to buy the houses and cars on top of that. And you’ll need a safety net.
Freedom is not free, but damn expensive.
how much money do you need to enjoy your optimum lifestyle as designed in your 1/5/10 Planasy?
In truth, I think everyone is motivated by freedom.
An Escape Number is the dominant goal that represents the amount of pretax money you need to earn to escape the rat race in the desired lifestyle specified in your 1/5/10 Planasy. Here is the equation:
Escape Number = PTEA + Money-System + POM
PTEA = The pre-tax income you need to EARN to purchase the assets you specified at your ten-year vision.
Money-System = The pre-tax earnings you must earn which must be SAVED in a lump sum investment which pays the yearly carrying costs of the assets plus the yearly lifestyle and existence expenses.
POM = The “Peace of Mind” variable is an arbitrary percentage of your money-system which represents liquid, surplus cash providing you with insurance from lengthy economic recessions and/or stock market crashes. This is also calculated on a pre-tax basis (divided by [1 - tax rate]). In Unscripted Book One, I call...
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Reviewing your 1/5/10 Planasy, calculate the pre-tax earnings needed to purchase the assets you envisioned at your 10 year vision.
To calculate the tax rate, divide the asset cost by top tax rate in your country subtracted by 1. At 40%, you would divide by .6, or 60%. Example:
miscellaneous
Because Liberated Unscriptees are not dependent on investment returns, this metric is your insurance policy and immunity from economic recessions.
The Escape Number is the sum of the pre-tax earnings needed to purchase the assets specified at your ten-year vision, plus the pre-tax investment sum which funds the carry-cost for your dream lifestyle, plus additional pre-tax funds for economic immunity.
voracious
leprechaun in Alaska. So they sought the advice of best-selling authors.
ogle
jested,
Every day, your brain is flooded with billions of bits of data. To survive the chaos, your mind has to ignore most of it. Put another way, you’re blind to what hides in plain sight.
reticular activating system, simply means that once you’re made of aware of X, you brain no longer filters for X and X becomes highly visible. Think of it like a radio—while there are hundreds of frequencies, you only hear the one you’re tuned to.
the rat race has trained your brain to perceive the frequency i...
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presages
reticular
Namely,
Money is always a function of time traded at a job, jobs which are often paid poorly. Retail clerks, delivery drivers, cashiers, construction laborers, and fast-food cooks—all jobs where your boss views you as a disposable body, an easily replaceable cog in a system.
With a wage-locus, financial distress is attacked by looking for a new job with better wages. Carry a wage-locus through life, and your likely rat race outcome will be poverty.
piñata.
dithering
A wage-locus sees money as a function of unskilled labor earned by an hourly wage. A salary-locus sees money as a function of specialized-skills earned by yearly salary. A profit-locus sees money as a function of profit from units of net perceived-value and unlocks the door to a rat race escape.
Income and wealth are correlated to time.
Carry a wage- or a salary-locus and the rat race will convince you that the only way to make money is to trade your time for it, either by the hour or the year.
My income was limited by the hours I traded and the hours available, both uncontrolled and unleveraged.
When you have a wage-paying job, your income is limited by the number of hours you work.
When a gazillion people can do what you do, you have no leverage.
The human talent itself is the system of leverage, usually
But everything changed when I taught myself a specialized-skill,
