I wrote a post a while back about How to Get Rich. The no shortcuts version. It is posted below. I wanted to repost it because its been so popular in the archives. Plus, with the advent of some new banking laws, I wanted to update it with a quick note.
On July 1, laws for banks change so that they can not charge you overdraft fees UNLESS YOU OPT – IN. In other words, if you want your bank to give you cash at an ATM, or cover a debit charge on your debit card when there isn’t enough money in your account to cover it, you have to give the bank permission to do so. When you give that permission, you also give them permission to charge you HUGE amounts of money in the form of an Overdraft Charge. When I say HUGE, I mean HUGE. To the impact of 10s of Billions of Dollars per year in revenue for banks.
If you want to get rich, one of the first steps you need to take is NOT OPT IN. No matter how the banks package and market the benefits and wonders of overdrafts at the ATM or on your debit card, don’t fall for it !
Thats the How to get Rich lesson for the day. Dont be an overdraft sucker !
And here is a repost of my How to Get Rich post from 2008
Thats what so many want. Right ? I’m certainly not going to lie and say it is not a whole lot better having lots of money. I had a whole lot of fun and loved my life when I was eating mustard and ketchup sandwiches and sleeping on the floor of a 3 bedroom apartment that housed me and 5 buddies.
I have a whole lot more fun now. It doesn’t suck to be rich.
The question everyone wants answered, is how to get there. There are ways to get there. But there is not a template that works every time for everyone. It works sometimes. Getting there requires being ready when opportunity presents itself.
IMHO, change and uncertainty create opportunity. Times like we are facing now, with complete financial uncertainty are perfect times to start on the road to getting ahead financially.
First, here is WHAT NOT TO DO:
There are no shortcuts. NONE. With all of this craziness in the stock and financial markets, there will be scams popping up left and right. The less money you have, the more likely someone will come at you with some scheme . The schemes will guarantee returns, use multi level marketing, or be something crazy that is now “backed by the US Government”. Please ignore them. Always remember this. If a deal is a great deal, they aren’t going to share it with you.
I dont broadcast my great deals. I keep them all to myself. The 2nd thing to remember is that if the person selling the deal was so smart, they would be rich beyond rich rather than trolling the streets looking to turn you into a sucker. There are no shortcuts.
So what should you do to get rich ?
Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water. Instead of going to McDonalds, eat Mac and Cheese. Cut up your credit cards. If you use a credit card, you dont want to be rich. The first step to getting rich, requires discipline. If you really want to be rich, you need to find the discipline, can you ?
If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. Yeah you have to give things up and that doesn’t work for everyone, particularly if you have a family. That is reality. But whatever you can save, save it. As much as you possibly can. Then put it in 6 month CDs in the bank.
The first step to getting rich is having cash available. You arent saving for retirement. You are saving for the moment you need cash. Buy and hold is a suckers game for you. This market is a perfect example. Right at the very moment when cash creates unbelievable opportunity, those who followed the buy and hold strategy have no cash. they cant or wont sell into markets this low, that kills the entire point of buy and hold. Those who have put their money in CDs sleep well at night and definitely have more money today than they did yesterday. And because they are smart, disciplined shoppers, their personal rate of inflation is within their means. Cash is king for those wanting to get rich
The 2nd rule for getting rich is getting smart. Investing your time in yourself and becoming knowledgeable about the business of something you really love to do
It doesn’t matter what it is. Whatever your hobbies, interests, passions are. Find the one you love the best and GET A JOB in the business that supports it.
It could be as a clerk, a salesperson, whatever you can find. You have to start learning the business somewhere. Instead of paying to go to school somewhere, you are getting paid to learn. It may not be the perfect job, but there is no perfect path to getting rich.
Before or after work and on weekends, every single day, read everything there is to read about the business. Go to trade shows, read the trade magazines, spend a lot of time talking to the people you do business with about their business and the people they buy from.
This is not a short term project. We aren’t talking days. We aren’t talking months. We are talking years. Lots of years and maybe decades. I didn’t say this was a get rich quick scheme. This is a get rich path
Now you wait for times of uncertainty and change in your business. The time will come. It may come quickly, it may take years and years. But it will come. The nature of our country’s business infrastructure is that it is destined to be boom and bust. Booms are when the smart people sell. Busts are when rich people started on their path to wealth.
You will know when that time is here for you because you will know your business inside and out. You will be ready because you will have been saving up for this moment in time
With all the change and uncertainty in the financial markets, there are people right now making more money than they ever dreamed of. They are the ones who have been living the real estate market and the financing behind it and understanding what actually what was going on. They re the one who understood the complexities of the credit markets. When everyone was following the crowd, they kept on saving their money and avoiding the temptation of groupthink.
Boom and busts happen to every industry. The question is whether you have the discipline to be ready when it happens for you ?
Hello. This is my first time reading the article. Thanks for sharing some of your knowledge, Mr. Cuban. I have a question though, what is “CD”? Sorry, I’m not familiar with this abbreviation. If anyone could help, I would really appreciate it. Thank you.
Comment by codeskye -
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Hi Mark,
Thanks for this post. I guess there is a reason you are where you are. You know how to do stuff. The idea of working v.s. going to school, brilliant for most professions.
I’ve been enjoying your other posts about Blogs and the problems of splog. I’m trying to build http://www.DisplacedGuy.com a REAL blog and I bust my butt all waking hours of the day writing content because I lost my job. I earn a whopping .50 a day but stick to it hoping hard work will pay off, sad to see the cheaters winning and I can’t pay the mortgage.
Sincerely,
Rich
(aka The DisplacedGuy)
Comment by displacedguy -
Getting really lucky doesn’t hurt either. Everything Mark writes is reasonable, but I think the whole “read everything” is somewhat misleading. For one, reading too much can get in the way of acting. Second, given that human beings have been shown to be poor processors of information when we have too many sources, it’s quite possible that reading too much will confuse you.
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Exceelent info. Cheers.
Paul
http://www.learn-new-skills-from-home.com
Comment by learner1234 -
Mark,
Reading carefully to your advices makes me think about one interesting question to ask you. In addition, your comments about saving as much as possible and discipline encourage me to post this comment. Are you a firm believer of bootstrapping the process rather than going for investor´s funding? What is your suggestion to startups?
I´ve been through Startups.com and I recommend readers looking for funding alternatives to their startups checking out this question here http://bit.ly/ciRAmV
Startups.com is a Q&A business social network where you can get quick answers to your business related questions.
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I read this post every time and love it. Completely opposite of most advice this crazy connection of tubes we call the internet is giving us.
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This post really makes me rethink my savings strategies. We are currently digging out of debt (boo!). And once we do, I am really loving what you have to say about sacking away cash. I want to get a good solid amount of cash together so that I can take risks and purchase things we need for less. Too many times, I save just enough to buy what we need instead of saving more and taking more risks. I wish I had enough cash on hand to walk into a toyota dealer and see how great of a deal I could get on a car from a desperate dealer. Until then- I will keep digging out of debt until the time comes when I can get the cash on hand. Thanks Mark
Comment by theopaulson -
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> The person who said we tend to spend more buy using plastic might
> be write—but what is the alternative? A debit card is plastic too.
> If you’re traveling, places might not accept checks.
Um, cash?
I have a debit card, but I use it as little as possible because I know I spend more with it.
McDonald’s found people spend 47% more when they use credit cards. It’s not a conscious thing. Plastic doesn’t hurt as much as cash.
And everyone says “I’m the one who is disciplined.”
To be blunt, they’re wrong.
I have friends that said that. They were the “we pay it off every month, we’re disciplined” people.
Then they switched to cash and you know what they figured out?
They spend less. Surprise!
Comment by pspmikek -
The beginning of this post about overdraft fees is wrong, wrong, wrong! I think you’re confusing several changes:
– The Credit CARD Protection Act of 2009, signed into law by President Obama, will require that consumers “opt-in” to over-limit charges for CREDIT CARDS. Consumers who choose not to opt-in will be unable to make purchases over the limit; the card will simply be declined and no fees will be imposed. This legislation took effect on February 22, 2010.
– There was a proposal (HR 946) in early 2007 to amend the Truth in Lending Act (Regulation Z) to clarify that overdraft fees are covered, require written consent before enrollment in the overdraft loan program, require financial institutions to warn the customer when an ATM withdrawal will trigger a fee, and prohibit financial institutions from changing the order of check clearing or delaying the posting of deposits solely to increase overdraft fees. That bill died in committee in April 2007, but it appears that the Federal Reserve took public comments earlier this month on applying a similar rule administratively.
There is no way currently to opt out of bank overdraft fees. The best you can do is opt out of overdraft “protection”; your transaction would be declined (checks would bounce) and you’d probably still get an overdraft fee on the bounced check.
Comment by cmadler -
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Understanding how to use credit wisely is something maybe 1 out of 100 people really know how to do. Credit has the potential to be a tool to help build your wealth, but if you don’t understand how it works, you could demolish it. That’s why the credit card companies stay rich and 99% of us aren’t. They are banking on the 99% of us who aren’t playing the game right. And if you aren’t an expert at the game, which many of us aren’t, myself included, you should stay out of the credit game. Not using credit cards is great advice from Mark, and many, many financial gurus have been preaching this for years.
When it comes to opportunities, it’s not about being lucky. Luck has nothing to do with it. It’s about being prepared when the opportunities arise. Huge difference. And this isn’t limited to just business and making money, it can be applied to many aspects of life.
6 month CDs sounded like a great tip to me but then I remembered “I don’t broadcast my great deals. I keep them all to myself.” But I guess a 6 month CD is far from a real “deal”.
dannomack – You could save your cash, so when the opportunity comes, you can afford to take more risks when it comes to writing opportunities. For example, take a job that pays less, but get’s your more exposure. You could afford to support yourself financially for a period while bringing your own ideas to life on spec.
Your “capital” as a writer could be your content or your ideas. You could build up a wealth of content, and when the market is dry, you could capitalize on the opportunity to sell your ideas.
I think there are a lot of ways having cash could help you capitalize on opportunities as a writer, you just might have to be more creative in finding them.
Comment by nathanielpark -
Credit cards are a convenience to me, not a way to buy things I can’t afford. I have cards with no fees (except a corporate card my company pays for). I pay them by the due date every month, never paying interest or late fees. I don’t want to carry the large amount of cash to make purchases—like trips to the grocery store or to buy a new appliance, computer, etc. The person who said we tend to spend more buy using plastic might be write—but what is the alternative? A debit card is plastic too. If you’re traveling, places might not accept checks. The credit card is a nice convenience if you’re disciplined with it. I think the people who abuse credit cards and get buried in debut have issues that go beyond being issued the card—-if it wasn’t use of a credit card, they’d have financial difficulties of a different origin.
Comment by dcangelo -
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……then they haven’t studied me. But I do agree, most people buy on impulse and would spend more if they had a card than if they didn’t, just not me. I use my card to buy gas, food, and other necessities. I’m as frugal as I could possibly be (within reason). I stopped buying bottled water, gum, and just about anything else I could get for free or isn’t a necessity. I don’t buy on impulse and anything I want to buy I usually get online to save on gas, get the best deal, and take advantage of my cash rewards program. I am $0 in debt (minus my current balance on my credit card). Everything I own is paid for including my car and tuition. How many college kids can say that?
Comment by kritz007 -
I used tips about saving (literally) ever penny I could and putting it into CDs when I first read this in order to take a huge chunk out of my student debt over the past year. It was really helpful.
The unfortunate part, though, is that the only thing I am good at is writing and that doesn’t really appear to be an industry where I can capitalise on boom/bust periods by having a chunk of money at my disposal.
Comment by dannomack -
kritz007:
There’s no such thing as free money.
You spend more when you use credit cards.
Lots of studies back this up.
Comment by pspmikek -
I do have a credit card which has a very high interest rate with NO FEES. I pay it off in-full every month (or several times a month if I near my limit) so I pay no interest or fees. It is like borrowing for free for a month at a time. I am able to make a little extra money on interest per month than if I didn’t do this. I also have a rewards program that pays me cash on purchases. You must be disciplined and pay it off in-full or you can seriously get hurt with the high interest rate. I do agree with Mark though about not having a credit card but I am still in college and am trying to build credit and save as much as I possibly can to start my own company when the time presents itself.
Comment by kritz007 -
Mark,
I love the part where you said “I don’t broadcast my great deals. I keep them all to myself.”
That’s the main reason why I didn’t respond to your invitation to post business plans on your blog last year…However I do admire you. I saw your Celebrity Basketball Game at the All Stars on TV…You move pretty well up and down the court.
Comment by ceoafbn -
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Once you opt into the overdraft policies, are you stuck? I know it probably varies from bank to bank. But, if you can void or change your status, that would be a great first step!
Comment by w8lftr -
I have a really different motivator to make more money. Instead of saving, I spend more. Of course I don’t advise this strategy for hardly anyone, but when I put myself in a cash crunch I always seem to rise to the occasion.
When I put myself beach front in San Diego with outrageous rent, employees, high maintenance girlfriend, etc, etc, etc and I was forced to perform. And I had the most profitable year of my life. I suck at saving. Thankfully I’m great at earning.
As long as I’m making 5 times what I spend daily, I’m cool with that.
Comment by profitmoffatt -