by Randy Cox

How to make a fortune, step by step:  This is the first post of many to come, all concerned with the single purpose of making enough money to do what you want to do when you want to do it.  This site is not for those looking to get rich quick.  This is for that community of working class folk that have always wanted money but just haven’t found the way.

I’ve been working on my fortune for over half a century and only recently have I discovered the secret.  It was not a hidden secret but so open and obvious that I stumbled past it for the most part of my life. 

I decided to make and have money at a very early age.  While my friends colored skies, grass, and stick figures, I colored crude portraits of presidents and scribbled denominations.  I cut out slips of paper and made my own currency–stacks and stacks of it.  Fortunately, my efforts were so bad and I was so young, no one took my attempt seriously.  I was not arrested.

Other children marvelled at the mysteries of Santa Claus and the Easter Bunny.  I was awed by the  nickel.   How could this coin, larger than the dime,  only be exchanged for half as many pennies?  I was perplexed.

My first business venture was a lemonade stand.  I lost money on that deal and it set a pattern that was to follow me for most of my life.

I made some money selling greeting cards, and I made even more mowing lawns.  That was work, not quite the same as making money by my wits.  I remember once my take from a large lawn owned by a rich lady was twenty dollars.  Forty years ago that was a lot of money.  My friend and business partner, Skipper, and I walked to the Bank and exchanged our twenty dollar bills for twenty singles.  We then went home and ironed our money, stacked it, dropped it over our heads and let it flutter over us, basking in the power of it.

I showed my Dad my fortune and proclaimed that I was rich.  He looked kind of sad and told me something that I didn’t understand that day but would later.  He said I would always be too busy making a living to make a fortune.

How about you?  Are you too busy making a living to make a fortune?

My Dad was exactly right.  He should know.  He was the son of an Oklahoma sharecropper.  He worked hard all his life, made an excellent living, but never saw that fortune for himself.

Today is not the day to get specific about putting that fortune together, but it was my Dad that  revealed the secret of making fortunes. It  took many years to figure out the simplicity of that truth.

When muscles trumped money

I was a skinny twelve year old boy trying hard to compete with larger boys on the football team.  We were poor, so while the other guys had barbells to train with, I had solid steel bars of assorted lengths which my Dad brought home from the oil fields.  I would lift those over and over trying to grow muscles.  My Dad watched and noticed that the more I lifted the thinner I got.

Dad said if I would get myself a baby pig, lift it over my head every morning without fail, in 5 to 7 months I would be able to lift a full grown pig over my head. 

My Dad was a  well built man from a life of hard labor.  I asked if that was how he got so strong.  No, he said, he had tried the pig lifting but never stuck with it long enough for it to work.  Something always distracted him, so he never got super strong, but he was sure it would work if I stuck with it.

I think a pig probably grows faster than a boy’s muscles, but I know the principle works with money.

It takes money to make money, but it doesn’t take that much!  Most of us from sharecropper backgrounds never learned how to use money to make more money.  When we do make investments, we invest too much too fast, and lose it.  Just like my Dad, we get distracted from the slow steady discipline of growing our wealth.  I’m not talking about compound interest here.  I’m talking about getting stronger and stronger each day by making investments that we can easily handle, liking picking up a baby pig, and then growing the size of our deals step by step until we have that fortune that has always slipped from our grasp.

How many steps are we talking about?  153.  That’s right!  If we start with a dollar, buy something at a good price and then sell it for $1.10 or more and then buy the next item for $1.10 looking for a similiar increase, and so on, we will accumulate a fortune in only 153 deals.

It doesn’t take much business accumen to buy something for a dollar and sell it for 10% more.  Actually, at the lower levels of investment, we should be able to keystone (double) our investment or even more.   We can expect to make some bad decisions along the way and lose money.  Remember the lemonade! 

The truth is that cash is very powerful in any amount.  Most investors are leveraging their money.  The cost of borrowed money is expensive.  If we deal in cash only, that gives us a growing advantage at every level.  The advantage of cash, discipline, and determination to never venture into areas of investment beyond our experience is almost magical in its simplicity as well as its power.  It works!

On my next post, I’ll show you how to get started making real money.  There are few rules to follow.  The most important rule is that we don’t spend our capital.  Our objective is to  make two million dollars.  We start small, and try to increase our investments at the 10% level.   Especially in the beginning we should make substantially more than 10% but we won’t pour that money into a larger investment right away.  We will build a surplus of capital, so that when we have a loss, we can learn our lesson, and move on .   We don’t have to re-invent the wheel here.  There is a wealth of information that we can learn along the way.  Those who got filthy rich have tried to share their knowledge with those who have little.  We just seldom listen to the right advice.   If we have too many loses we have to step backwards.  If we spend the money, we step backward.  The objective is to make two million; so stepping backwards is not part of the plan A….it is plan B.  If you do lose control and use your money to pay cash for a house, or pay off all your debts.  You’ll have to start all over.

How bad would it be to lose control, pay off all your debts and have to start over…debt free?

This works, but we can’t jump ahead with an investment that is beyond our threshold of ease.   I was moving steadily towards my fortune when an opportunity popped up.  I was able to buy a house for cash from my surplus.  It took all my cash, but it was a great deal.  I knew I could turn the money fast, so I did it.   Then the bottom dropped out of the housing market.  My investment was still worth twice what I paid for it but I would be leaving so much money on the table that I would be better off to rent it, enjoy that income, and then sell it for a better price when the market returns.

So, this is how I ended up back at the beginning.  I broke my rule and spent the capital.  Yeah, it was  a house, free and clear, worth far more than I paid, but it was a huge step backward.

The truth is I didn’t have to start completely over at the very beginning, but some of the things I did to get that money were  things that required skills that not every sharecropper son has.  I’m a master electrician, a custom picture framer, and a bit of a sculptor.  I decided to start over at the very beginning and find deals that require no specialized skills.  I’m not really poor like I used to be.  I own two houses and I’m debt free.  I’m not really rich; well in a way, I guess I am, but not as rich as I’ll be 153 deals from now.  I hope you will subscribe to my blog, visit my website, and participate in the forum.  You can use any special skill you have to perpetuate your fortune, and you can also liquidate your excess property, converting it to cash.  So of the ways we make deals happen are easier than others.  I hope we can all help each other to make our fortunes.

We do not need to be obsessed with money.  Money is not everything.  It is powerful, however, and since it turns  out easier to make a fortune than to lift up a baby pig every morning for 5 to 7 months, doesn’t it make sense to go ahead and make a fortune and get it over with?

Let’s make something for ourselves!