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Build Wealth Like Crazy: Arnold Schwarzedollar, Mr. Universe of Money

You have reached that perfect number, Baby Step Seven. By reaching the last step of your Total Money Makeover, you have entered the top 2 percent of Americans. You are totally debt-free—no house payment, no car payment. You are not Mastered by a Card, you have not Discovered bondage, American Excess has left your life, and you are free. You live on a monthly written plan and agree on it with your spouse, if you’re married. You have a retirement destiny that looks considerably better than Alpo and Social Insecurity. If you have children, they will be students without a student loan. You have lived like no one else, so now you will be able to live like no one else. Through sweat and sacrifice, you have reclaimed control of your life and your most powerful wealth-building tool, your income.

Baby Step Seven: Build Wealth

What was the purpose of your having a Total Money Makeover? Why did you do it? Why all the sacrifice and work? To be in debt and out of control doesn’t take nearly as much effort. Why go to all this trouble? Why do you want to have wealth? If you think wealth will answer all life’s questions and make you trouble-free, you are delusional. Wealth is not an escape mechanism. It is instead a tremendous responsibility. So what would you do if you had $18 million that it took you forty years to acquire?

After years of studying, teaching, and even preaching on this subject across America, I can find only three good uses for money. Money is good for FUN. Money is good to INVEST. And money is good to GIVE. Most anything else you find to do with it doesn’t represent good mental and spiritual health on your part. So if you one day have $18 million, you should do all three of these things. In fact, while you are working the steps to wealth, you should be doing all three of these things. At this stage in The Total Money Makeover, you are Arnold Schwarzedollar, Mr. Universe of Money, with serious abs, pecs, and quads. You have all this financial muscle, so now you should do something intentional with it. We built this financial superbody for a reason. To have FUN, INVEST, and GIVE.

Yes, We Get to Have Fun

The kid in us likes the FUN part of this equation, and since we have made this kid behave for a long time, with promises of ice cream if he does so, he should get some ice cream. Should anyone wear a $30,000 watch? Should anyone drive a brand-new $50,000 car? Should anyone live in a $700,000 home? Absolutely, they should. The problem with people is, they buy those things when they can’t afford them.

We talked about new cars and what a bad investment they are. Roughly 70 percent of the people I assist in a Total Money Makeover have to make the difficult decision to sell their car. So some days my talk radio show becomes the “sell the car” show. Some days it seems my answer to every question is, “Sell the car.”

Make sure you understand that one reason to have a Total Money Makeover is to build wealth that allows you to have fun. So have some fun! Taking your family, even the extended ones, on a seven-day cruise, buying large diamonds, or even buying a new car are things you can afford to do when you have millions of dollars. You can afford to do these things because when you do them, your money position is hardly even affected. That guilt-free enjoyment is one of the three reasons to have a Total Money Makeover.

The grown-up inside us likes the INVESTING of money because that is part of what makes you wealthy. Also, the growing dollars are a way of keeping score in our Total Money Makeover game. Are we winning? It truly becomes a game. Sometimes I meet people who arrive at this step and are scared because just as they reach retirement age, their investments are heading down. Never fear; if you have quality investments, they will come back. Besides, you don’t need all the nest egg at once to retire on; you just need some of the income from it. Be patient with the market while living off the income the nest egg produces.

You can choose to be a little more sophisticated, but until you have over $10 million, I would keep your investing very simple. You can clutter your life with a bunch of unnecessary stress by getting into extremely complex investments. I use simple mutual funds and debt-free real estate as my investment mix—very clean, simple investments with some basic tax advantages.

Always manage your own money. You should surround yourself with a team of people smarter than you, but you make the decisions. God did not give them the responsibility over this money. He gave that to you. Celebrities and pro athletes often lose their entire fortunes because they give up the responsibility of managing their own money. The Bible states, “In the multitude of counselors there is safety”

Within Baby Step Seven: Build Wealth, there is a Subsection B, another milestone. The second milestone within becoming wealthy is the “Pinnacle Point.”

Growing up in the suburbs in Tennessee, I grew accustomed to riding a bike and facing hills. To a seven-year-old with one gear, a huge hill looked like Mount Everest. I don’t know which kid in history did it first, but the technique for small-guy bike hill climbing has been passed down for generations—the switchback. Instead of pedaling straight up, we would painfully go side to side, taking a small bite at a time of our Tennessee mountain. The unpopular players’ baseball cards made a slow click, click, click through the spokes as we made our ascent. The heat seemed ovenlike, and the beads of sweat turned to rivers. You pull on the handlebars with all the power your arm muscles will produce to push your legs down on the pedals one more time. Push, push, breathe, breathe—until you finally reach the top.

What do you find at the top? Those of us who have pushed up some unbelievable hills know what I found that Tennessee summer day at the top of the hill. I found that perfect moment. The perfect moment when you push the pedal the last time before going down a huge hill on the other side. The perfect moment when you hang in the balance, after all the sweat, the work, and the agony, and a smile breaks across your face. That moment just before you take the glorious ride down is the “Pinnacle Point.”

And the ride down is glorious. The wind blows through your hair, and your feet are not on the pedals anymore but on the handlebars. The click, click, click of the baseball cards becomes a chattering with a sound like thousands of crickets. You are now enjoying the ride; the coasting is the fruit of your labors. Memories of strain, sweat, and repeated near failure fade as the wind tickles your ears, whispering, “You are the king! You did it! You climbed the hill! You didn’t quit! You paid the price to win!” The smile in your soul says, “Accomplishment.”

This Baby Step takes us to the point at which your money works harder than you do, the “Pinnacle Point.” It is the instant in time where focused gazelle intensity has reached critical mass, and your money takes on a life of its own.

This point is not that you are going to quit life when you get there; you will still manage and direct, but the money thing will have its feet up, and you will be coasting downhill. Wealth will find its way to you. Mistakes on your tax return will be in your favor; the IRS will discover them and send you the money back with interest. Well, that’s probably an impossible dream, but you get the idea.

When your money makes more than you do, you are officially wealthy. When you can comfortably live on your investment income, you are financially secure. Money is a hard worker, harder than you. Money never gets sick, never gets pregnant, and is never disabled. Money works twenty-four hours a day, seven days a week.

You have reached the Pinnacle Point when you can live off 8 percent of your nest egg. Go ahead, multiply your nest egg by .08, and if you can live on that number or that number is more than you make, you are coasting downhill. Congratulations! Your money makes more than you do! Enjoy the ride.

The most mature part of who you are will meet the kid inside as you learn to involve yourself in the last use of money, which is to GIVE it away. Giving is possibly the most fun you will ever have with money. FUN is good, but you will tire of golf and travel, and if you eat enough, lobster starts tasting like soap. INVESTING is good, but going around and around that Monopoly board eventually loses its appeal—especially after you reach the Pinnacle Point. Every mentally and spiritually healthy person I’ve met has been turned on by giving. I can promise you from meeting with literally thousands of millionaires that the thing the healthy ones share in common is a love of GIVING.

Only the strong can help the weak, and that is true of money too. The Bible states that pure religion is actually helping the poor, not theorizing over why they are poor (see James 1:27). Margaret Thatcher said, “No one would remember the good Samaritan if he hadn’t had money.” The good Samaritan had a good heart and a heavy enough purse to pay an innkeeper to help take care of the injured man. Money was at its best that day. Money gives power to good intentions. That’s why I’m unashamedly in favor of building wealth.

Sadly, I meet people who try to avoid this third use of money, mistakenly thinking they will end up with more. Eric Butterworth tells of an interesting system used to capture monkeys in the jungle. The captors use heavy glass bottles with long necks. Into each bottle they deposit some sweet-smelling nuts. The aroma of the nuts attracts a monkey to the bottle. When the monkey puts its hand into the bottle to get the nuts, the neck of the bottle is too small for its fist to come back out. The monkey can’t take his hand out of the bottle without dropping the nuts, which he is unwilling to do. The bottles are too heavy to carry away, so the monkey becomes trapped by nothing more than greed. We may smile at these foolish monkeys, but how many times has our freedom been taken away by nothing more than our greed?

When you have your Total Money Makeover, you can do some things with scale. I have one friend who buys seventy-five brand-new bikes for an inner-city ministry every year. He gets these bikes at Christmas, and gives them out one at a time to kids in a subsidized housing project.

Another pastor friend of mine is involved in a project called Seeds of Kindness. An anonymous member of his congregation gave $50,000 to the congregation members to give away, one $100 bill at a time. These $100 bills are given human to human across the city with fabulous results. People who had completely lost faith in God and in the human race are shaken to the core by a simple $100 gift. The givers often report having more fun than the receivers.

There are only three uses for money: FUN, INVESTING, and GIVING. You cannot claim Total Money Makeover status until you do all three. As I said earlier, you should begin doing some of each as you go through the steps. And if you are married, let your spouse have some slack as soon as there is some. After you get past the emergency-fund step, let each other function in the areas you like best. My wife, Sharon, is a natural saver, so she always cheats toward investing. I am a natural spender, so I make sure she has fun. We both enjoy giving.

Please push that pedal one more time. Switchback if you have to; failure is not an option. Push, push! I promise, and the tens of thousands who have reached their Pinnacle Point in their Total Money Makeover promise, at the top of the hill is a glorious ride down. Take that ride with us!