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My slogan for this blog is “The Science of Building Wealth.” This is an allusion to the classic financial book “The Science of Getting Rich” written over 100 years ago. Many of you and probably heard of the self-help book called “The Secret.” I have not read that book myself but from what I’ve heard of it many of its concept are based on The Science of Getting Rich.” When you boil it down, this book says that if you want to become rich, you can through the power of your mind.

Now that may sound like a bunch of baloney, and of course there are a lot of detractors to this unorthadox statement. Based on my experience though, there is a powerful effect caused by focusing your mind on building wealth. Rather that saying that you can simply think your way to riches, a more appropriate way to put it is that your ability to become rich depends greatly upon your outlook, for positive thinking is key. Use your experiences and learn from them. If you make a mistake that sets you back, be sure to learn from your experience and if you do then the mistake will be a blessing to you. Case in point: On the first income property I bought, the building was originally empty but once I made an offer that was accepted there were suddenly tenants in the building. I thought that was great, because I didn’t have worry about renting the places. However, the tenants were a disaster, both had to be evicted and both left big messes for me to clean up. Now I could have simply given up on investment properties as being too much trouble, and left it at that. But instead, I used what I learned from the experience (know your potential future tenants before you buy a building) to become a smarter investor and I’ve had much better luck. From the same situation, two very different outcomes can result, and it’s all about how your outlook that determines your successes.

When you hear these two words, they conjure up very different images, but in reality, these two words aren’t that far apart. The only difference between goals and dreams is that goals are defined while dreams are not. Read over this article from MSN Money and you’ll see a perfect example of dreaming:

Just How Rich is Rich, Really?

Notice the terminology used in this article when people are asked to define “rich”. They say things like “I want a nice house”, “I want a nice car”, “I want stability”, “To just be comfortable”. If that is how you define rich, then you will never become rich. How do you define a “nice house”? Maybe to you right now, a nice house would be $100,000. Then a couple years down the road, a nice house would be $500,000. Then $1 Million. Then $10 Million. You see, “nice” can’t be clearly defined, that’s why owning a “nice” house is just a dream.

If you want to be rich, then you need to set goals for yourself. If you simply say “I want to make more money” then you will never achieve anything, because how would you know when you’ve reached your goal? Now if you said, “I want to be making $100,000 a year by 2010″, then that’s a much more defined goal; now you have something to work with. With that goal laid out, you can construct a plan to achieve your goal. My goal for this year was to acquire 10 rental units. Honestly I wasn’t fully convinced that I could do it, but I always had the goal in my mind and as of today I have acquired 9 units within the first half of the year. My goal is just about reached and I recognize that because I clearly defined a goal. So set some goals for yourself. They don’t have to be crazy, just some modest goals to start with, then work your way up to bigger and better things. If you so you can enjoy the satisfaction of reaching your goals, or if you come up short think about what you can do to achieve those goals in the future.

Here’s an interesting article I found today:

Deepening Debt Crisis Hits Close to Home

Basically it’s discussing the impending problems with certain types of subprime loans, how they’ve been sold, and those who are unknowingly invested in them.

Here’s a couple of points I’d like to bring to your attention, in case you didn’t know: Many of the high risk subprime loans that were approved during the real estate bubble were not sold off singularly to third parties like Fannie Mae or Freddie Mac. Rather, they were packaged together with other, more stable loans, and sold off as a set to third party investors. This practice was banned as of the beginning of March 2007 but of course nearly all of these types of loan sets are still floating around out there. Furthermore, many of these investors in these loans are state pension funds and many mutual funds put together by financial advising institutions. A lot of these loans are now starting to fall apart, and soon the effect will be felt by investors. And if you have a state pension fund or bought into a mutual fund, that could mean YOU. It just goes to show that relying on others to take care of your financial future can put you directly in the line of this type of crisis. Now more than ever it is so important to look after yourself and your finances, because how can you trust anybody else to look after your well being in this day and age?

I guess I always had the entrepreneurial spirit. When I was a kid I lived off a golf course, and I would go into the woods, find lost balls, and walk the opposite direction of the course and sell the balls to golfers. I also lived in an area where there was a lot of construction, and I would go around to the new builds and collect all the aluminum cans in a garbage bag attached to my bicycle, and recycle the cans for cash (back then they paid a lot more for aluminum it seems). By the time I was in high school, I tried various money making schemes, like collecting names, stuffing envelopes, etc. Of course, none of that stuff ever worked and the weight of the world finally got to me and I got a part time job at a grocery store. So I was going to high school and then college all while working in grocery for as many hours as they would give me. While the job really wasn’t that bad I just dreaded going into work every day. I always wanted a way out and finally when I was 21 I figured it out.

This is the story of how I got my start.

Since I was in college I really couldn’t work that much, and my funds were dwindling. I barely had any money and I couldn’t work any more hours because it would have gotten in the way of my studying. I figured there had to be a way to make more than $8 an hour. Working for a wage like that wasn’t going to get me anywhere, and my time (as well as yours) is worth more than that. Way more than that. Anyway, I was a Japanese major in college and I finally gotten to the point where I was poking around on Japanese websites looking for old video games, which I was big into collecting at the time. I found a set that was a really great deal; it was about $600 for nearly 200 games and a system. It seemed like such a steal that I couldn’t pass it up. So with my poor Japanese skills I was able to convince the guy to sell to me. Only problem was, I didn’t have $600 to spare, not to mention the shipping costs which I knew were going to be a ton. Instead of giving up, I contacted a few people and got a game store to buy 120 pieces from me for a total of $1600. The guy fedexed me the check and I used $1000 of that money to wire to the guy in Japan for the 200 games and a system plus shipping. So already I was $600 ahead, and I had 80 games and a system for myself. I eventually sold about half of the games plus the system and I got about $1000 from that alone. And as for the games I sent to the other buyer, he too was very pleased with what he got and the deal we made. So I made about $1600 and kept about 30 games for myself, and my buyer sold his games for a profit in his store. I did all this without a dime of my own money. The secret was offering my financier a great deal that benefitted him greatly. When it comes to money, people take a “what’s in it for me?” stance, which is perfectly understandable. Money is a serious thing and when it comes to investing, people want to be sure that their investment is going to make them money.

The point is, don’t use lack of money as an excuse to not do things. Instead of shutting your mind off, really think and try to figure out how you can raise the funds. The less of your own money you use, the better chance you have of increasing your rate of return, which is quite possibly the most important thing to do if you really want to become rich.