There can be no real individual freedom in the presence of economic insecurity.
– Chester Bowles
I’m trying to be 100% transparent in this book. I don’t want to sugar-coat the instruction with motivational cheerleading that encourages you to do something without full awareness.
Leverage may sound great, and it truly is amazing when it’s working for you. In fact, you’ll pinch yourself because the results defy intuition. But the truth is, it can be a tough slog to get there. The goal is valuable, but the journey can be a lot of work filled with difficult challenges that have to be overcome.
But there’s no other choice that makes sense when your goal is financial freedom. Expectancy math necessitates that you spend your limited time pursuing big wins, and big wins come through leverage.
Besides, there’s no tougher life than working away all your years to achieve financial mediocrity… or worse. If you’re going to spend all those years working anyway, then you may as well design your work with leverage so it can lead to outsized wins that result in financial freedom. No other alternative makes sense.
Life is an adventure; embrace it and live it fully. Who cares if it’s hard? Comfort and ease are overrated. Just go for it by playing smart with careful risk management to control losses while pursuing big wins with leverage.
It’s literally that simple. Even though the high leverage alternatives that I pursued throughout my career were universally more difficult, there was never really another choice because nothing else made sense for my plan, given my goals. It was the only path worthy of my scarce time.
And this brings us to our final principle: financial independence is the ultimate leverage in life. When you’re financially independent, your passive income exceeds your expenses, giving you the freedom to create whatever you want with your life. The bulk of your waking hours that were previously spent earning money, managing money, worrying about money, and spending money are suddenly available for anything you choose, and time is your ultimate scarce resource. Not only that, but you also have the money to do whatever you want with that time. It’s that rare combination of both time and money that opens up possibilities for your life. No other goal opens up more possibilities for fulfillment.
Financial freedom gives you the opportunity to serve others without worrying about how much it pays. You can volunteer your time for worthy causes that are personally fulfilling, or you can pursue creative interests in the arts, music, or theatre – even if they never pay you a dime. You can even try that crazy business idea lurking in the back of your head – the one that’s personally motivating because it honors your values, but you know it may never pay well.
You can leverage your money to buy the best education available for your children, giving them a solid start in life, and you can free your spouse from having to work for money so you can both pursue a fulfilling life on your own terms.
Financial freedom is the ultimate leverage because it gives you the time and money to live the life you want to live. Nobody ever lay on their death bed wishing they had lived more selfishly or spent more time in the office, so use leverage to free yourself from economic bondage and buy back your time. Once you become financially independent, you can use that time and money to live a full and creative life that gives back to others.
The 9 Principles of Leverage govern how the 6 Types of Leverage operate in your wealth plan. They are the “how” and the “why” that drive every strategy you’ll use to overcome the resource limitations you face and to break through the constraints that block your wealth growth. By understanding the 9 Principles, you keep yourself from becoming over-worked, distracted, hampered by limited resources, or tempted into risk beyond your tolerance.
It’s about getting the fundamentals right so that you’re building on a solid foundation. If you’re a kid and your goal is to be in the NBA, you need to master the fundamentals. The best players have unbelievable practice discipline to remain at the top of their game. Like an NBA player, you have to focus on drilling the fundamentals of your leverage game. Don’t worry about specific outcomes or short-term gains. Play the long game by focusing on the process that reliably produces results and the outcome will be inevitable.
To recap, the fundamental principles of the leverage game are: