The Power of Infinite Leverage
I am going to introduce you today to a concept that if you understand and implement, will be the deciding factor of your financial success in your life. Like all great knowledge, this one is also dangerously simple, and that’s why most people don’t get it! But before I get to that, let me share with you a great quotation that I read recently:
“…there are people who put their dreams in a little box and say, "Yes, I've got dreams, of course, I've got dreams." Then they put the box away and bring it out once in a while to look in it, and yep, they're still there. These are great dreams, but they never even get out of the box. It takes an uncommon amount of guts to put your dreams on the line, to hold them up and say, "How good or how bad am I?" That's where courage comes in.” ~ Erma Bombeck
Now here is something to follow that up with:
According to the Social Security Administration in USA, if you take any random group of 100 people, by the time they are in their retirement age:
So that is 5% successful, 95% unsuccessful.
Now what makes this 5% different from the rest of the 95%? Or more importantly what makes that 1% people in the wealthy group different from the other 99%? Well here is what its NOT:
Ofcourse great education helps, and great childhood helps and a wonderful beginning helps (however typical hard work doesn’t quite help, not directly at least). But these are NOT what make wealthy people. What separates this 1% from the rest of the 99% is a very interesting concept. And that is called LEVERAGE!
This is one thing that only about 1% people in any society understand that other people don’t! This is what separates the rich, from the poor and the middle class. This is what separates the true entrepreneurs from the struggling business owners (with an entrepreneurial fever). This is what will determine which percentile YOU are going to end up in when YOU are in your retirement age…
Do you know what that word really means?
Here is the simplest definition of leverage that I could find for you:
Leverage: To do more and more with less and less.
Please take note of this and print it out for yourself so you can see it every once in a while:
If you are selling your TIME to earn MONEY, you can only sell about 14-15 hours a day and earn only so much (and you are literally selling your life). But if you can LEVERAGE time and have “systems” set up that run on its own, there is no limit to how much you can earn. Therefore, the true secret to an abundant life is not to get a great job (so you can sell time and energy) but to learn how to leverage your life.
Once again please read the definition of Leverage: To do more and more with less and less.
Less of what? Less time, less effort, less energy, less worry, less investment.
More of what? More income, more results, more value.
So the secret to abundance is once again, to learn how to produce more and more results / income / money with less and less effort and time.
This next part is taken from a chapter from my book Redefine Your Reality, please read very carefully if you want to understand Leverage…
The Power of Leverage:
Leverage is doing more and more with less and less.
In my experience, this is one of the most powerful concepts you can learn when you are setting out towards financial freedom, success, and a passionate livelihood. This is the concept that separates the poor and the middle class from the rich.
The poor will learn how to use enough leverage just to get by. The middle class will wait until they can look at their life and say “gee I’m comfortable” and then stop adding leverage to their lives. But the rich will keep adding more and more leverage throughout their lives to get richer and richer. And that’s why they have a lot of poor and middle class working for them. You know why? Because these people ARE the leverage!
Leverage is all around us, however it is an art to identify them and use them to your own benefit. In school we are mostly taught how to use the leverage of two things:
a. The leverage of reading and writing and
b. The leverage of physical work. That’s it.
There are, however, numerous forms of other leverages that we use in our everyday lives. The car is an excellent form of leverage, so are trains, planes, ships, elevators, cell phones computers etc. They all help us achieve one primary thing, to do more (work) with less (time).
However these are all basic forms of leverage that all of us know of. Although, I have to add, because we don’t even recognize these as leverages, we waste a lot of their efficiency by using them in the wrong way. Just a little example would be how we leverage our time. Time can be one of the greatest leverage of all. Ask the global currency traders, they know. Anyway in our case, we waste a lot of time using a less leveraged tool, just to save some money. Instead of taking the plane going somewhere we often take the bus. Why? Because it’s cheaper. However we fail to recognize that in the process we have wasted our most valuable leverage: time. Now a good question would be, what would I do when I have saved up the time? Honestly, I don’t know. But what I do know is that when you learn to view time as leverage, you will find ways of using it. But if you view time as something to pass by, you will never see the possibilities. Remember if you are asking the wrong question, you will never get the right answer.
Now there are other forms of leverage that most people have absolutely no understanding about. These are only used by select few people of every society who use it to get richer and richer. Interestingly, the ones that don’t know about these leverages are taught to believe that these things are “too risky”! Ironically, that is precisely why they never get rich.
Some forms of leverage typically we view as too risky are debt, manpower, your own business and other financial tools. Ironically, what we don’t realize is that by viewing these as “too risky” and closing our minds, we are all serving other people, who are using us for their own leverage! Sounds weird? Well here is some information for you…
Let’s take debt for starters. Typically the poor and the middle class view debt to build businesses or money making assets as a risky proposition. They believe in savings and they buy what they need with their saved money. Unfortunately, they never figure out that borrowing a $100,000 is much more time efficient than saving the same amount. Anyway, the irony lies in the fact, that they are more than happy to take the same risk when buying a liability, such as a new car, or a diamond jewelry, or to get married, to finance their bigger house, to finance the new plasma TV, to finance the newer car (which just offered such a sweet deal that you couldn’t refuse), the fancy sound system… and the list goes on and on… Sounds familiar? You know what happened? You got into debt. It has another name though, sometimes it’s also known as a credit card. Now because of the closed minded ideas about debt, we constantly finance liabilities instead of assets. You know why? Because buying assets would mean we have to go around look for it, find someone to finance it, understand the technicalities, and there are no pretty sales executives explaining what a sweet deal it is. You know why again? Because the pretty executives are working for someone who has some liabilities to sell to YOU. So he hires all the pretty ones to make it a sweet deal.
A little disclaimer at this point: I am not saying you should get into a lot of debt right away, what I am saying is getting debt to buy assets is not any more risky than getting debt to buy trash. Before you get into any kind of debt, make sure you have a working financial knowledge.
Secondly, let’s take manpower. Most of us don’t want to hire other people to work for us, especially if they can make money for us. Why? I don’t know. It’s probably again the great wisdom of the poor and middle class that somehow imply that hiring people to make money for you is risky. Unfortunately that is precisely why we spend our life time working for others who hire us to make money for them. And that’s fine. As long as WE are NOT making money it’s all good! Make sense? No? Well that is how it works for majority of the population. We view starting a business being too risky! Employing people to make money for us, too risky! Leveraging debt to our benefit, too risky! Matter of fact the only leverage we don’t view as too risky is physical leverage, which is also known as hard work. And hence we are taught “life is hard so learn to work hard”.
Similarly we view other financial tools such as investing in stocks, money market, real estate, your own business etc all as being too risky. However what most people don’t realize is that by being blissfully unaware of how different financial tools work, they are all part of it but only on the loosing part. While some people will say investing in real estate is too risky, they are more than happy to be paying a monthly rent in someone else’s real estate. Stocks, currency, bonds, businesses all are also too risky, but we are affected everyday by the market fluctuation, currency movements, price up and down etc. Only we “feel” we are not affected by any of it when in reality, we are ALL affected by ALL of it. These are all simply leverages that are used for own benefit by some and participated knowingly or unknowingly by all. Now whether or not you want to know the truth is your choice, but as a student of redefinition, you need to know what exactly is going on all around you.
So what exactly is asset and liability?
Robert Kiyosaki, the bestseller author of “Rich Dad, Poor Dad” says, asset is anything that makes you money without you having to directly work for it. Some examples of assets are stocks, real estate, savings account, royalty on books, businesses etc. And liability is anything that takes away money from you. For example car loans, credit card bills, club memberships, mortgages etc.
Once you understand the difference between these two, a real shift in perception of reality happens. See because we have a very shoddily formed understanding of financial knowledge, our money is constantly getting sucked up by advertisements and marketing. Most of the things that we believe that we need, are really things we want because somebody convinced us it was a good idea to own it. Because of our lack of understanding regarding assets and liabilities and our incapacity of understanding the future of a decision, we constantly decide on buying liabilities that add absolutely no value.
Sometimes we rationalize by saying “what’s the point of earning money if I can’t spend on what I want?” That’s a good question except that it is responsible for us forever being stuck in the cycle of working hard – financing liabilities with our hard earned money – then working hard to pay off the debt of the financing scheme. I call this the “Hard Life Cycle”. As you can see, for most people, life will always be hard because they get into this “Hard Life Cycle” very early in life and never get out it.
There is an alternate way. The alternate way is to work for building assets first and then make the assets pay for whatever you want to buy. The beauty of creating assets are that they not only create positive cash flow for you, most of them also appreciate in value and not to mention once they are created, you don’t have to directly work for it anymore. However, it might not give you some fast cash to go and buy an expensive cell phone right away and you might have to be a little patient in the beginning. But in the long run, if you get into the habit of building assets and creating cash flow, it will take you out of the “Hard Life Cycle” and give you enormous amount of freedom.
So… now that you understand Leverage, Assets and Liabilities, how do you create “systems” that will help you leverage your time, money and energy? Well, there are many ways, one would be to set up your own business that is able to run on its own (which of course may take a few years to set up and will require enough experience or luck or acumen to make it successful).
Another would be to buy your own franchise (systems) that has been proven to work (like McDonalds or Starbucks or 7-Eleven etc), if you have enough cash to buy a franchise that is.
Yet another would be to setup some other online business that runs on its own (which is a cheaper option but you’d need the necessary know-how and business acumen).
And finally another would be to set up proven systems like the ENET-FRANCHISE© I shall mention towards the end of this article.
Now here is something a little more advance:
How To Achieve “INFINITE” Leverage?
Before I can explain to you how to achieve infinite leverage, I have to explain two things first:
Okay, let’s take couple of different forms of leverage again:
Manpower Leverage: Let’s say you are a baker who makes great cakes. Before you used to be able to make only 20 cakes a day and sell it. How much leverage did you have back then? ZERO! Why? Because you are using your time to bake cakes and sell it. So basically you are selling time which is the least leveraged method.
Now let’s say you decide to employ 3 people in your little bakery and they make 20 cakes each everyday following your instructions and recipes. You personally don’t bake anymore, you just coordinate the 3 people who work for you. Now how much leverage do you have? Well there are exact mathematical equations to calculate that but to keep things simple let’s just say you now have leverage level 3 (since you are producing 3 times as much). Later on you employ 10 people and they all produce 20 cakes each and now you have leverage level 10.
Downside of this? Well, people aren’t exactly robots and they lose motivation, become sick, steal your money, come to work late, become old and so on and so forth. So you have to ensure that your system is able to buffer all that and perform optimally. Top Fortune 500 companies are examples of finely tuned business machineries which have the whole system running optimally.
Money Leverage: Let’s say you earn $5000 a month, spend $4500 and save $500. You put this surplus in your savings account and you get 2-5% per year (or as the bank would say per annum). How much leverage do you have? Well, while it’s not Zero, let’s just say it’s pretty close (after factoring in inflation, 5% per year on $500 savings per month is… to put it mildly: peanuts!).
However, if you could invest the same accumulated amount on stocks or real estate or some small business and manage to get a return of 20-50%, that would be something much higher on the leverage scale.
Downside of this? You could lose all your money on stocks, small business, real estate etc if you don’t know what you are doing.
If you want to see the concept of leveraging money in its truest form, take a look at how banks operate: they take your money(and give you 2-5% return) and invest in projects/loans/letter of credit etc which yields them 12-15% or more in return. What do you get? A lousy, but safe, return on investment. Understand the concept?
Now that you understand a little more about how leverage works, let’s take a look at what infinity is.
The equation of infinity is: Anything divided by Zero.
Example: 5/0=Infinity or 23/0=Infinity or even 0.00025/0=Infinity. Why? Because 0 is so small, if you divide anything by zero, it equals infinity. Got that? Great. Now let’s take a look at Infinite Leverage.
Imagine if you could produce earn $100 per month with NO manual input (no work), NO investment, NO time spent. What level of leverage would that be??? INFINITE LEVERAGE right? Why? Well you are making $100 / Zero Work (or investment) = Infinity
So where is that magic Infinite Leverage System?
Here it is: the online business world! DON’T GET SCARED, it’s far simpler than you think.
Here is a real life example:
A year back I wrote the book called Redefine Your Reality from which you just read a chapter above (you can see it here: http://www.redefineyourreality.com/detail.htm ). It took me a few months to write it. Once it was finished, I registered a website that cost me $30 or something like that. Then I got myself an autoresponder (kind of like a software robot that sends you a pre-saved email marketing campaign automatically), and I prepared two pages on that website (a welcome page that asks for your email to sign up for the ecourse and a sales page that sells the website). It cost me $50 or so for the robot. Now my marketing campaign is designed in such a way that even if I don’t do any paid advertising, people still visit my website because other people tell them about it. When people buy the book, they automatically receive the package, a thank you mail from me, and the money is transferred to my account!
Now my website has reached a point where, even if I don’t do any advertising, even if I don’t take a look at it ever again, even if I don’t do any other free marketing efforts again (like writing articles or posting free ads etc), it will still sell a few hundred dollars worth of books every month just through the automatic systems that have been setup. Technically speaking, I could be dead and I would still get paid for a considerable amount of time in future.
That is called Infinite Leverage! Zero effort or time investment per month and $300-$400 in sales.
$400 divided by Zero = Infinity!
Add auto advertisement campaigns through Google, auto billing and auto sales, and you have profit jumping up to few thousand dollars a month. If Google, Paypal and Aweber are in existence, this system can run forever on its own!
And how much investment did I have to make to get this system up and running? A few months of time and a few hundred dollars. Not so bad huh for a system with infinite leverage?
Now I know, you might be going “yeah but… I don’t know how to write a book OR I don’t know how to create a website OR I don’t have time to create systems like that” and that’s alright. The reason I was giving you that example is just to show you that this is something that’s possible and affordable and very much in existence. You don’t have to do what I do but you could if you want to.
Matter of fact, there are much more profitable (turn key and pre-designed) systems which require no website, no product, no (personal) marketing, no (personal) advertising and yet produce tens of thousands of dollars in a very short period of time! These are based on a concept which is a blend of network marketing + franchising + ecommerce. I named this concept ENET-FRANCHISE©, some very powerful systems that leverages the exact same techniques that I mentioned above and combines it with electronic network marketing.
One of my favorite ENET-FRANCHISE© type models that I recommend to everyone is viewable here:
(You will find the link to the movie in the ENET-Franchise site. Don’t be mislead by the fluffy marketing message, these things are designed for the mass market and these guys know exactly what sells. These are multi million dollar businesses that are generating huge incomes for a lot of people. Take a look at how the whole thing is structured, the simplicity of it, the level of leverage that can be attained, and if it all sounds like something that you can make a profit out of, by all means go for it.). These powerful systems don’t require you to make a huge investment, or quit your job, or setup complicated websites or anything of the sort, yet if you make a little effort, you can have a cash generating machine for life. All you need is an open mind and be willing to learn new things.
So in conclusion, let me get back to the basics once again:
The simple definition of Leverage: To do more and more with less and less!
In the end, I hope this article will open up some windows in your mind and help you leverage your time, energy and money so you have a much better chance of being in that 1% of the population anywhere.
Here is an excellent audio file from Robert Kiyosaki that talks about this 1%:
You see people who have reached financial freedom will always tell you that the most valuable resource in life is not money, not health, but time. You might argue, that if you don’t have health, what to do with time? True… but think about it, if you don’t have time, you’ll eventually lose your health as well! So the sooner you realize the value of time and how to leverage it, the faster you are on your way to a better life.
And before you give yourself the excuses…
So before you go about giving all those excuses to yourself, here is the only thing that I can tell you… All you need to do is make a DECISION! A decision that you will do WHATEVER IT TAKES to make your life better NO MATTER WHAT!
Urgency has the power to move mountains of logic, reasoning and resistance!
Create an urgency, take action TODAY before your mind goes back into the state of doubt, reasoning, resistance. Make a decision NOW!
The reason I am writing this article and I wrote the book is because YOU wanted me to tell you ALL THIS. YOU wanted me to PUSH YOU towards a better future. YOU wanted me to show you a different way. And I will keep trying as much as I can. But I hope that you will take some responsibility also and make yourself take some action to move yourself to a better future for yourself, for your loved ones, for your community, for everyone in this world...
Time is slipping away… RIGHT NOW!
Shafin de Zane, CHT,
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