Lourens Oberholzer — How To Win At The Game Of Money

It's a Monday night, eight minutes after six, as we do each and every Monday at this time. It's time for what's involved. And once a month, on a regular monthly basis, 'cause it's once a month, so it makes it regular, we have the CEO of Retire Rich and Happy Lawrence Oberholzer in the studio with us. Hi, Lawrence. - Hi, good in you, Dave. - Good, man, always nice to see you. You're looking, we were chatting off here, and you were saying you're running around, and you are frazzled, because lots of people want to retire rich and happy, which is a good thing for you. - Yes, of course. - But you were saying you're running around like a headless chicken, but you're looking good for it. - Well, thank you, yeah, I've been dieting a little bit, lost a little of excess weight, so yeah, looking good. - Well, there we go. All right, so it is, as we do each and every month, I said at this time on a Monday night, time for us to talk how to retire rich and happy. You've got an interesting topic tonight, how to win at the game of money. - Yes, so we need to chat about money, and money is actually a game. - There are those people who would say no, they would say no, money is not a game, you take it very, very seriously.

- Seriously, yeah, and I think that's part of the problem, is that we take it so seriously. We should start looking at it and having a little bit more fun with it, but if you want to win at the game of money, you need to have a few of the rules, you need to understand a few of the rules, and I think that is part of our mission, is to teach people these rules, so that they actually have a guideline to say, well, this is what I need to get to, to win at the game. And that's what I want to share tonight, is a little bit of those ideas. - It is, and you know, when you say the game of money, and it is an idea, because often I've heard it's, you know, it's not necessarily, success is not about the money, money is just a way of keeping score, of how well you're doing. Which is great if you have it. - Live the money, hell, if you don't. - But if you don't, it's a bit of, so let's, where do we kick off then? I mean, if we want to learn about this game of money. - Yes, okay, so the first thing we teach people is that there's two pillars that you build this whole money game on, and we call it the power cow system. And it's something that can be remembered, well, power cow. So if you can remember power cow, and what power cow stands for is the protection of wealth first, and the cow stands for the creation of wealth, and those are the two legs that your whole financial stability lies on top of.

And you need to build on both of these legs. It's like, which one of your legs are the most important one? - Yeah. - Both of them are equally important. So we need to look at both of those legs, and that's the power cow system, protection of wealth, creation of wealth. - I was still stuck on my own definition of that. (laughing) It's like, I used to have power, and then the cow took it away. (laughing) And, you know, there we go. We're not allowed to speak about pasts and ex-wives like that, so we won't. (laughing) Okay, so protection of wealth. - And then creation of wealth. So under the protection of wealth, there's three things that, or three strategies that we need to talk about. And what I'm gonna do is I'm gonna touch on each of those. The three on the power side, or the protection of wealth side, is minimizing your risk, taking control of your cash flow, and getting rid of bad debt. So those are the three main components on the power side, the protection of wealth side. On the cow side, you've got two main components, which is creating a personalized investment strategy for yourself, and secondly, building assets. And we'll talk a little bit about the three types of assets that you wanna build through your lifetime.

- Now, the one thing that you've said, and you've said it a couple of times, and it's something that really resonated with me, is people often overestimate what they can do in a year, but underestimate what they can do in 10 years. And I was actually, I was chatting to my fiance about that just the other day, and I was like, yep, remember when we went into this year, by this time, we were going to be making a killing. There were so many things that was gonna happen, and it looked like everything was lined up for that to happen. - And then life happens, business happens. - And life, yeah, and then everything changes, and suddenly we go, wow, and my first thought was, hands up in the air, oh, well, we've done bloody nothing. - Let's start from scratch, let's just throw everything out. - But actually, when you sit and you do, so it's a very, very sound piece of advice. You overestimate what you can do in a year, but 10 years, 10 years, it suddenly makes the stuff look a lot more doable. - Achievable, yes. I mean, I always say, if you look at the most well-known billionaires in the world, you look at how long it took them to become billionaires. Most of them, it took about 10 years. There's that saying that say, it usually takes about 10 years to become an overnight success, because people don't see the work, that 10 years of work that went in, they just see the success.

So if somebody can go from nothing to become a billionaire in 10 years, you can sort out your finances and get to retirement in 10 years. There's no reason why you couldn't, you just need the right strategies. - Yes, I would absolutely agree with you. Last week, I interviewed a guy from the States. He has just written a book called Confessions of a Persuasion Hitman, and he writes copy. He's a copywriter, that's what he does for a living. And his copy that he's written has sold over a hundred million dollars. He regularly takes home 50,000. That's kind of his, if he's having a lazy month. And he works a couple of hours a day. Guy's name's Ian Stanley, if you haven't listened to that podcast, go and listen to it. Because he's also, you look at this guy and it seems as though he suddenly burst onto the scene. But when he talks about the hours and hours of practice that he had to put in, then suddenly you go, okay, yeah, but you deserve what you've got, 'cause you certainly have paid your dues. Okay, so we're talking about this game of money, protection, creation, the biggest thing, and you speak about this, is this to me is, we call it bad debt, and there are people who would say, you know, you get different kinds of debt.

In my mind, it's all bad. But how, where do we start? I mean, if we're going to start being a power cow, - And do the win at this game. - Yes. - So the first thing we need to do is we need to minimize risk. You need to make sure that something unforeseen that happens, doesn't take all your playing cards off the table. And that's what happens, is we start these plans, you've seen it this year as well, you start with the best laid plans, but unforeseen things happen. Now we can't plan for everything, but we have to plan for what we can plan for. So minimizing your risk, and here's what I feel is a mistake that most people in our industry and the financial services industry make is, they focus on building a plan around what the person have, and then try and beat what they've got. So for example, the person has life cover, so they're going to give him a little bit more life cover for the same premium. Instead of trying to build a risk management plan around what you need, you always have to look at what is it that I need? And to do that, you have to look at certain eventualities and ask the perspective of, if this should happen to me, what would I need to continue in the same way I'm used to?

For example, let's take a typical example of a disability, for example. - Well, let's use me as an example, because I'm a very good and a very bad example at the same time, because I had none of this stuff. - Yes, so a typical question would be, so Dave, if something happens to you tomorrow, you get into a car accident or whatever happens, and you absolutely lose your ability to generate an income for yourself or your family. How much income would you need to maintain the same standard of living that you're used to at the moment? And then you answer that question, you look at your budget, you look at firstly making sure that all the debts are paid. And then you look at that and you say, well, I would need X amount a month. And only once you have that goal, you then look at your risk cover and say, but this, this actually do that. Or did I just have 30,000 and a month's worth of income protection because it sounded better than the 25 that I had before. We need to look at what is it that you need first and then take something and build that for you. - And also, I mean, everybody in that sense, everybody is different because-- - Everybody has their own thing. - To me, and I'm saying this now literally in all sincerity, if you are in your 20s or 30s listening to the show tonight, even your 40s, and you haven't got anything done, or you've got something and it's kind of, do yourself a favor, get hold of somebody like Lawrence and speak to them.

Because my situation, I'm going on 52 now, and because of life, I had no life cover, no medical aid, nothing, nothing. And I'm diabetic. When we went through this whole process, number one, I think it's a human thing for you to kind of go, oh yes, I need this and I need this and I need to make sure about this and this and this and this and this, and then you get this big list, and you go, okay, and off you go, and you see what the various companies will give you. And it comes back being a lot of money. And obviously, the older you are, the higher the premium is gonna be. And if you're somebody like me that has got an illness or really a preexisting condition, insurance companies not just gonna hand out stuff. - They're not the Salvation Army. They're not there to give you cover for things that you already have. - No, no, it's a business, you know what I'm saying? So they're there to make money and they're hedging their bets on the fact that you're not gonna drop down dead. That's essentially what they're doing. - How I explain it just while we're at that point. At the forum, I always talk about the gambling arrangements. So basically what you're doing is, in the beginning of the month, you're going to the insurance company and saying, listen, I think I'm gonna die this month.

And they say, oh really? And you say, yes, I'm gonna bet 500 rand that I'm gonna die and if I die, you're gonna give me three million. And the insurance company says, no, okay, we're looking at your health, we'll take that bet. And then you put your 500 on the table, they put their three million down and then that month you don't die. And then they go, okay, great, that's our 500. We keep our three million. Would you like that to take that bet again, Mr. Watts? You go, yep, next month I'm gonna die. - Convinced there's a very strong possibility. - Yes, and then it keeps going. And every month they take the premium and they win. That money's gone. This whole thing about they're gonna give you money back and it's all marketing spiel. That money is what we call what if money. It's money you pay a third party for in case. So you wanna make sure that you spend that money exactly for just what you need. No more than that, just what you need. And the problem is we are being sold things around what if money that we don't actually need because we haven't looked at it from the perspective of what we need. We've looked at it from the perspective of what we've got. And then they beat what we've got and we go, oh, that sounds fantastic.

Let's take out this one. It's only another 300 rand a month, it's fine. Instead of saying, what do I need? And doing just that. - And then saying, well, now I've got the extra 300 rand. - Yes, and what can I do with that? Because that goes further into the game of money. - We're gonna come back and we'll talk more about the game of money with my special guest, Lawrence, who we're all into just a bit. You have to laugh because very often people, listen, and I have no idea. We get research and it says how many people are listening, et cetera, et cetera, no Facebook file. But my, and this is gonna sound weird, adopted goddaughter because I'm actually godfather to her brother, but she decided her parents made a mistake and she should have been my godfather. So she's just messaged me now and she's going, I cannot believe you admitted to being 52 on air. 'Cause her dad was his birthday yesterday. And when I phoned him, he reminded me he was turning 30 again. - Yes. - So we are actually 30. Okay Cass, so yeah, we're 30 with a bit of interest. There you go. My special guest in studio is Lawrence O'Rolza from Retire Rich and Happy. We're talking how to win at the game of money. So right now, one of the things that is a huge challenge to people.

And it's those sneaky things and that's your cash flow. - Yes. - Because very often you end up, and I think for a lot of people, my situation is slightly different. I have to examine my cash flow or as I like to call it, the current cash trickle. I have to examine it very, very carefully. - Yes. - But when you, you know, you've got a job and you're doing a lot of stuff slips by. - Yes, yeah. So the second part, so we said minimize your risk on the protection of wealth side, then we need to control cash flow. And what we always teach people is you need to start looking at your personal cash flow as if you're a business. 'Cause what's the purpose of a business? To make a profit. What's the purpose of your personal cash flow? To create a positive cash flow. 'Cause if you have no positive cash flow, you cannot start building assets. You cannot move over to the cow side, the creation of wealth side. So the whole purpose of your cash flow, controlling your cash flow, is to create a positive cash flow. So we've done some research and the average middle to upper middle class family, as the listeners are sitting there, the average middle to upper middle class family overspends by at least 10%.

That means if your budget is 40,000 in a month, you have 4,000 in a month that you cannot account for. And I promise you, I've done this for years. I will sit with you and we will go into your budget and you will have 4,000 and 10% that you wouldn't believe that you're spending this money. You won't believe why you're spending it. You'll go, "I never thought I'm spending money on this." - Where it goes to, et cetera, et cetera, yes. We've been at home over the last while, we've been investing rather heavily in tomatoes for some reason. Which is also, it's a cash flow thing. - So here's the thing. Most people don't have a proper budget. People don't know how to budget. So as part of the tools we have and we give away and we will talk about that now, we have what we call a strategic expense planning tool, which is a budgeting tool. The difference between it is between other budgeting tools is it doesn't just look forward. Most people wanna look at a budget as a projection of the future. But a budget is 80% looking backwards. So what we teach people is to at every month, at the end of the month, look at your budget, where your money has actually gone. Because 80% of taking control of your cash flow is to really understand what you've done with your money.

Instead of just trying to project what you are going to do with your money. - And that's what you do. If you do a budget, and I think a lot of it is to do with what we've been taught going up. I mean, you do your budget, expenses, income, or income and expenses. - For the month that's coming. - And then you go, "Okay, I've gotta pay this, "I've gotta pay this, woo-hoo. "I've got a couple of grand left. "I am going to go and blow that money up." And at the end of the month, you run short, and then you go, "Oh gee, this happened, "and this happened, so it wasn't a great month, "but next month, this is gonna be my budget, "and I'm gonna be fine." Instead of looking backwards and saying, "But where did my money go? "This month, why did I have to use my credit card "and push it up from 10 to 20,000 rand? "Why, why did it happen?" So taking control of your cash flow, the budgeting process is very important. Secondly, if you look at creating a positive cash flow, there's always two ways to do that. You either increase your income, or you decrease your expenses. We teach that you have to do both. But it's pointless to just increase expense, increase income, if you haven't taken control of the flow of your cash.

- Because then it's just gonna stay the same, situation normal. You're gonna turn around and go, "But hang on now, I'm bringing in an extra 10 grand a month, "what on earth is happening to it?" - Now, these tools that you talk of, and we often talk about these tools, they have been, for us specifically, some of the best and some of the scariest things that we've gotten hold of. Because just the way it's set out, your budgeting tool, all of those things, it's absolutely brilliant. What is included in those tools? - So the tools, the package if you buy all of those tools, you get a budgeting calculator or your strategic expense planning calculator. - That's the budgeting. - That's definitely worth the price of admission. - The second one we do is the debt settlement calculator, which is brilliant. You just put in your debt, you say what extra you can put into your debt and it calculates everything. How much, how long it's gonna take, how much interest you save, the whole thing. - I like that because it kind of makes me feel a bit better doing that particular exercise. - It actually makes you feel like you're moving forward. Then we have a bond settlement calculator, which shows you the effect of four strategies that you can do to get rid of your bond in half the time.

So you can put in the different strategies and see the effect of that. And then we have an investment calculator that you get as well, which just shows you the effect of cost, et cetera, on your investments moving forward. - Now, what do those sell for? I mean, can people can't just buy those themselves, can they? - They can on our website, retirerichandhappy.co.za. The whole package of those tools is 749 rand. And then they can download it from the website. - Okay, but you know, we like to twist your arm when you're on air here and say, "Come on, what are you gonna do for the listeners?" So are you gonna do a giveaway for us? - Yes, so we spoke about it. We're gonna give away three of those tools, three sets of those tools. So you'll get the SEP tool, the debt settlement calculator, the bond settlement calculator, as well as the investment calculator. Plus you'll get a 45 minute consultation with one of our coaches. - Wow, okay, that's not bad. We have a personal financial coach. They will come out, they'll show you how these tools work so that you have a good idea. And then you have the opportunity for 45 minutes to chat to them on how do we help you implement these rules so that you can win at the game of money?

It's like saying, "Listen, I'm gonna start playing better golf." So what do you do? You get a coach to teach you how to improve your swing. What our coaches do is they teach you how to improve your money management. - Alrighty, so we've given away three sets of tools plus those 45 minute consultations. If you'd like to SMS, now remember this is not the MixFM SMS line and it's not the MixFM WhatsApp line. This is the retire rich and happy numbers. So you need to make a note of these numbers. You can SMS your name and RRH. So let's do RRH and your name to 45509. That's the SMS line. Those SMS is charged at 150. Otherwise, you can WhatsApp, RRH and your name to 082641355, is that right? - Yeah. - So 082641355 is the WhatsApp number. RRH and your name, 082641355.

Numbers what? - Seven, 12, and 22. - Seven, let's just make a note, seven, 12, and 22. There we go, so you're giving the guys, you might be a bit late sometimes to get in there. - Yes. - Okay, seven, 12, and 22, you can win those things. Okay, so let's talk about this. I know using those tools, you are then, you start to get in control of your cash flow. - So you become more reactive, proactive instead of reactive. We tend to be very reactive. So we first look at where is the money going, and then we have a system that we teach people called variable cost segregation, where we teach you how to split your variable expenses from your fixed expenses and manage those variable expenses better so that we can save money there and have more money in your, and it's difficult to explain if I don't have the bucket system and people can't see the bucket system. - You have to learn about the bucket system. Take it from me. If you win one of these things, ask about the bucket system. So how you keep more money in your fixed cost account, which then moves into your debt settlement account. So the bucket system helps you to take control of your cash flow after you've realized where your money's actually going.

- So then once you've done this, then you go, okay, look, I've got a bit of extra money over. So now this is where I'm now going to start playing with that debt settlement tool, and I'm gonna have a look at what order I should pay my debt in, because when you do see the amount of debt that you have per month, when you actually see it in black and white, it is a scary thing. But once you've worked through it, at least you know, because for me, I think that was, it's been one of the biggest problems is to acknowledge where you are financially. It's much easier to stick your head in the sand and make hope it goes away. - I'll be okay. And it is, it's part of our responsibility is to make people face the demons and face the monster, because that is very difficult for us. We don't want to face that monster. Because we don't face it, the shadowy thing that it becomes is much worse than just looking at it and saying this is the actual situation. - And you do feel better once you kind of figure out there is a way out of this. And yeah, it might not happen. It might not happen in the first three months. Some people have a great response. Others, it's gonna take some time. - I'll give you an example.

I sat with a client the other day, students of ours. And when we initially looked at their debt, it would have taken them about 61 months to get rid of their debt. The normal payments. - Just about five. - Just over five years. - Five years, yeah. - And we did the strategic expense planning. We created positive cashflow. We implemented that debt settlement and we brought it down from 61 months to 16 months. So it's still 16 months. But gee, that's like four times less, almost. Three times less than what they would have paid. And the amount of interest that we're going to save is massive. - And also then, now you're building something. - And they have control. They now have, I could see how their whole approach to their money changes. When we walked in and I started working with them, they were like despondent, not like, I have no help. I don't know what I'm gonna do. And when we walked out, they were like, okay, we have a plan. We know where we're going. We know what we can achieve. And we're not expecting miracles. It's not like nothing is ever gonna go wrong again because now you have a plan. But at least you now have a strategy. So if things go wrong, you can adapt instead of just, oh, it's another thing that's gone wrong.

- Okay, but getting rid of debt is one of the primary things. - Yes. - Is there a way that, a sort of priority? - Yeah. - A prioritization way of getting rid of your debt. - So what we do is, firstly, people need to understand the difference between secured and unsecured debt. You don't wanna get rid of your secured debt initially. That's not the killer. Secured debt is any debt that is underlined by an asset, like your house. The house is the asset for the bond. Therefore, your interest rate is quite low. - Yes, this is the big thing, is this interest rate. - Yes, so unsecured debt is the debt that is not underlined by an asset. Like for example, your credit card, your personal loan, your overdraft, your revolving credit, those kind of things. - What about things like clothing accounts? - Clothing accounts also is an unsecured debt because the company can't come and take the clothes back. So it's not like the clothes or the assets. So the interest rate on those after the first six months are usually quite high or normal, like a personal loan interest. And why that is the debt that you wanna get rid of, sorry, is because it's the highest cashflow. It eats up your cashflow very quickly because you pay the highest interest.

So everybody wants to invest, but nobody wants to do the groundwork first. And the groundwork is to get rid of these cashflow eaters and this terrible interest that you're paying. 'Cause it's pointless to pay 22% interest on a personal loan, but you're getting 7% on your retirement annuity. We first have to get rid of this 22% before we can start building asset on the other side. - And then this tool of yours you can put in. So where do you start? I mean, do you start with I've got my large clothing

and food retailer account and I've got this, and then I've got my three credit cards. Where do you start? - So what the tool does is it gives you the option to put in all your unsecured debt. So you'll put in everything. What it asks you is what it's for, what is the interest rate, what is the minimum payment you are allowed to make on that. And then it calculates how long you're still gonna pay for it on minimum payments. And then it tells you, you can put in how much you can afford extra and then you have different options. So you have the option of paying the one with the highest interest first. And you can change it on the tool and it will show you the how long it's gonna take and how much interest you're gonna save. Then it will show you, what if I do the one with the lowest balance first so that I can pay off one very quickly. And then it will show you. So you can play around with it and it will show you which one is the best option. Most of the time, sorry I'm interrupting, but most of the time, the one with the highest interest you wanna pay off first. But there are times when it's better to pay the one with the lowest balance first. - I think it is because then you get the- - You feel success.

- You feel better about it. - Yes. - And then obviously as you start ticking these things off, you start to get more and more disposable income. So it is a snowball effect of sorts. And that's what we teach people is, if you have 1,000 rand a month extra to put towards your debt because you've now taken control of your cashflow, you don't take 100 rand and put into each of your debt. You take the 1,000 rand, choose one, get rid of it. Then you take whatever you were paying on that plus the 1,000 rand, take the next one, put money in there and get rid of that one. And so you start building that momentum, that snowball. So you get to a point where you start paying off two, three of these debts in one month. And that's exciting. - And then of course, I mean, it stands to reason. Common sense would say once you've paid it off, don't get into it again. - And that's one of the things I made a note here as I was preparing. I said, be careful of debt consolidation because the problem with debt consolidation is people see it as a way out of a debt problem, but they don't address the underlying reason for that problem. If you haven't taken control of your cash flow, if you don't know exactly where your money's coming from, how much you're spending and how much you have left, and you do debt consolidation, chances are in six months, you're gonna have the debt consolidation loan plus the credit card again, plus a personal loan again.

- And then you just start further and further down that slippery, slippery slope. - So if you ever consider debt consolidation, you never consider it before you haven't taken complete control of your cash flow and made sure you have positive cash flow available. And you need that discipline. - You need the discipline. - You know, there's an argument for and against credit cards, for example. Credit cards are great, and I know I used to always use that excuses for just in case, if there's an emergency. And I managed to have emergencies every single month. - It's funny how emergencies pop up once you have the ability to solve the emergency. - That needed that, and then you think stuff, it's okay, it's not too bad though, 'cause I'll just put it on budget. - Yeah. - And there, those words, put it on budget, man. - And it's just 100 grand here and 200 grand there. - That. - A month. - That kick my butt, that putting it on budget, because somehow in your brain, you make these amounts smaller and smaller and smaller, and then at the end of the month, when you get this massive bill, you're shocked. But it is. - Because people don't get into debt one shot. It usually happens a thousand around here, three thousand there, five year, two thousand there, and before they know it, they have 100,000 rounds worth of unsecured debt.

It's not once of, now you take out a personal loan for 100,000 and now you're in unsecured debt. It slowly happens, because we don't have that control of our cash flow. - Alrighty, well we are chatting to the CEO of a Ty Rich and Happy Lawrence herb rolls. Remember, if you want to stand a chance to win one of those sets of tools and that 45 minute consultation, SMS RRH and your name to 400509, RRH and your name, 400509. Otherwise, WhatsApp, RRH and your name to 082-641-355.

That's Lawrence and his team. That's their own private numbers. They will then get hold of you and let you know. Tomorrow, I'm guessing you'll get hold of people. Let them know how they have done there. We'll be back with Lawrence. - It is what's involved on this Monday night. My guest in studio with me, CEO of Retire Rich and Happy. It is Lawrence herb rolls. So we've been talking about the pillars of wealth, those two pillars of wealth. And you use the acronym POW-COW. Protection of wealth, creation of wealth. We're onto the cow side of things. So let's talk a little bit about creating wealth, 'cause it's one of my favorite subjects. So what happens is as you take control of your cashflow, you get rid of unsecured debt. You will create more and more positive cashflow. So because you've taken control, that positive cashflow will not just flow back into your budget due to cover expenses, because you are now in control of your expenses. So that positive cashflow, once we've gotten rid of unsecured debt, needs to then go into an investment strategy. The biggest challenge that people have is they don't really know what to do. So they sort of have a thousand rand and then they decide on that thousand rand what to do.

Instead of having an overall strategy of saying, this is going to be my strategy moving forward. So they go, well, I got a raise. I've got an extra thousand rand a month. Where do I invest it? And then we just look at that thousand rand and we say, well, put it in a retirement annuity. But that retirement annuity might not be the right thing in the bigger scheme of your strategy. So we need to then create an investment strategy that has two components. The first one is what we call your reserve account. You need a place where you have money available for emergencies. And we call it, you plan for your capital expenditure for the next 12 months. So that holiday that you want to go for, the emergencies that might happen, the birthday present for the children. You plan it ahead of time instead of reacting when these things happen. - So what you're saying is, before I start creating my wealth, I'm going to make, which I'm assuming is another bucket. I'm going to have an account. - A reserve account. - Which I'm going to put money in to do X, Y and Z. - And a lot of people have these accounts. They have a little money market account. I get it so many times. I sit with clients and they have a 50,000 rand in a money market account.

I say, okay, so what's the purpose of this? No, this is for rainy day. I say, but you are paying 3,000 rand a month on your credit card where you're paying 18, 19%. You're getting 6% on your money market account for a rainy day. - Take that money and- - Exactly. First take control of the cashflow so that we don't go back into the credit card. Take that money, get rid of the credit card. Take the 2,000 rand a month and start building your reserve account. But you can't just indefinitely, because I asked them, so you have 50,000 in the money market account. How much do you want? Why, how much do you need in that account? And people can't say. So they have this indefinite amount that they want as savings. So what we teach people is, you need to get an emergency fund, which is three times your monthly expenses, so that if something goes wrong, you have money available for emergencies. - Interestingly enough, one of my friends used to call it an FU fund. - Yes, yeah. - And I always used to- - And we won't say that. - I always used to smile about that. And I was like, why do you do it? He goes, because if my boss, or if whatever I'm doing or whatever happens pisses me off enough, I can say FU and I can leave.

And I thought, yeah, it's maybe not the most ideal way of doing it. - Otherwise every time you get upset, you just leave. - It's a great way of looking at it. It's buying you a bit more security. - Because what's happening is, you are becoming your own bank. You are now financing your own annual expenses, your own emergencies. 'Cause we so used to be dependent on the bank. If there's emergency, we quickly take out a loan or we put it on our credit card or put it on budget. We wanna create a system where you first move your zero back to zero, which we've had this discussion. And then you wanna move it forward so that you start financing your own emergencies because there will be emergencies. The question is, there has to be a limit. Otherwise you just keep putting money into this and it never goes anywhere. So we set what we call your reserve level, your minimum and maximum reserve level. And once you hit that, we then move to building your capital asset. - Again, thinking about those buckets. And it was the one analogy that you've used that made it so much clearer for me. Because now that that bucket fills up to a certain level, it starts to trickle over into another bucket. And that bucket is where, and that's where you can really start making your money grow.

- Yes, so what we do is when we coach people, we say, we take you and create financial stability first. Then we create financial security. Then we create financial gain. And then we create financial abundance. But everybody wants to jump to financial abundance first. They wanna invest in the next best thing. Instead of going through the steps and first creating the stability, then the security, then the gain, and then the abundance. So the first kind of asset, and that's our next thing. So once you've created your investment strategy, and I always say to people, that strategy of yours needs to be as automated as possible. 'Cause this is what happens. You get a windfall. You get a bonus at work. You get a tax refund. So what happens typically is we put it in our check account and we say, I don't know what to do with it. I'll have to make a decision, but I don't wanna spend it. And we leave it in our check account. And three months later, that money's gone, or it's half. And we don't know where it's gone. - Yeah, no, that's never a good idea. - Yeah, so what we wanna do is your automated system must tell you exactly what to do with it next. Money comes in. If it's left in your account at the end of the month, it needs to move because it's currency, it needs to flow.

So it flows into reserve account. If it reaches maximum reserve, it flows over to your free bucks account. So it's an automated thing. You don't have to think. It just moves to the next level. If that reaches investment level, you need to find an investment. Do we put it into a structured investment? Do we put it into an asset that generates income? And that's how that automated system starts flowing money. Instead of you having to decide and react to whatever's happening the whole time. So that's the next one. Once it's flown in your investment plan, you have to start building assets. And we've been taught that there's one asset, and that is capital assets. You put money in an RA, you put money in an endowment, put money in a unit trust, and you use those capital assets to build income. - Yeah. - The problem is capital assets are limited because the amount of capital you need to generate a specific amount of income is so huge to sustainably give you that income. And we've had this discussion about the rule of 300. That we can't save enough money through just capital assets. So we teach people that you need to look at all three assets. So you've got capital assets. You want capital assets is cash.

You've got business assets, where you want to create leverage, where you earn income from other people's efforts. And then you want to create fixed assets, which gives you passive income, where the asset itself generates income. Not what you do in the asset. - This could be like buying yourself another house. - A property that you rent out. - A property, a flat, something. - Impact forming, for example. - It's just one of the things. - Yes, there's new ones. - Because from there, there's many, many things. You always just buy your house, pay off your house, you'll be okay, but this is not necessarily the case. So this is any asset that will generate an income as a result of the asset, not what you do in the asset. And there's numerous ones out there. Even with property alone, there's probably 30 ways of investing in property and generating income. So you want to move it into from capital to business to fixed assets. - I think this is where a lot of people, you know, they kind of are not, they don't know enough. And to me, this is the thing, it's education. That's why we do the coaching. - Speak to Lawrence and his team, because these guys do this stuff every single day. I've never had an occasion where I've tried to get hold of you and you've turned around and gone, come on, speak to you, you're not important enough, I'm too busy, et cetera, et cetera.

And sometimes, yeah, sometimes, and it must be frustrating to you, but people like me and your other clients, we're gonna ask dumb questions, but that is the way to learn. - Exactly. You have to, I always say the only stupid question is the one that's not asked. Because then it's stupid because you don't still know the answer. - Exactly. - I promise you there are hundreds of other people that have exactly the same questions. - All right, so it's about time for us to say goodbye. We're gonna wrap up now, just to remind you, RRH and your name to 45509 SMS is charged 150. Three sets of those tools and a 45-minute consultation Lawrence has given away. You can also WhatsApp your RRH and your name to 0826413555 and Lawrence will make that selection. We've given away a total of three of those packages tonight. In conclusion, Lawrence, until next month, what piece of advice would you like to give us? - So the first thing is everything starts with cash flow. Before you think about the best next best investment like cryptocurrency or gold or whatever you wanna invest in, first look at your cash flow and first make sure that you have money left over at the end of the month. So that's the first thing.

And then you lay the groundwork. The goal, and how do we know we win at the game of money? And what we teach people is the goal for you to serve one is to reach breakout point. And what is breakout point? Breakout point is where the income from your assets are equal or more than the income that you get from your job or your career. Because that is the breakout point. Because that is where freedom lies. On top of that is freedom. Because now you can work because you want to. Not because you have to anymore. That's the ultimate goal we wanna reach with people is breakout point. Not stop working. Get to a point where you work because you want to, not because you have to anymore. - And this can be done in 10 years. So there we go. Otherwise, retirerich.co.za. - Retirerich and happy. - Retirerich and happy. .co.za. If you're not one of the winners, listen, 750 bucks, you could do way worse. You know, that's a price of a meal out. - Yes. - Maybe even at like a drive through these days with the way things are going. But get those tools. They are brilliant. They make an absolute, absolute difference in your life. Lawrence, until next time. Thank you so much for coming in. And we'll see you then.

And hopefully you're gonna have news for me on when the next forum is 'cause we need to talk about this. - That's 9th of November. - 9th of November. Awesome stuff.