Practically Speaking: A Book Review

While I found some nuggets of inspiration and thought-provoking ideas in Loral Langemeier's The Millionaire Maker, overall, I was under whelmed.  I'm glad I read it, mind you.  Just about everybody wants to be rich.  I do.  I'm sure you do.  And Loral has some unconventional ideas that she feels just might get us all right there along side her and her team.  It's just that too much was left unsaid to make the ideas actionable. 

The book really caught my attention in Chapter 2 when Loral writes:

"In the United States there are two tax systems.  One for the poor and uneducated:

            Make money  -->  pay taxes   -->  spend money

And one for the wealthy and educated:

            Make money  -->   spend money   -->   pay taxes" (p. 24)

I was thinking "Bingo!  Right one the money!  It's a simple concept that communicates a mountain of information".

I was still a fan in chapter 3 with quotes like "Retirement literally means ‘to retreat from' or ‘go to sleep' and that just can't be a good goal" (p.40) and "Traditional financial planning ensures that you'll continue to derive 80 percent of your earning capacity after you stop working.  I find that very unsatisfying. I have no desire to limit my income and be poorer as I get older" (p.41).  Loral's recommendation to structure your personal finances as a business is great advice.  There are indeed a good deal of tax benefits to be had and more cash to be found for the entrepreneur hiding in anyone.

Then I started to feel empty inside.  I was getting teased with interesting concepts without the information to bring it home.  Loral is a fantastic marketer.  This book is a great tool to get people to her seminars.  A prime example of just what she is talking about when she tells her readers that marketing your new business is an imperative for success.  She doesn't give much away here, so prospects will need to fuel her Cash Machine attending a Living Out Loud seminar.  I admire her ability be an example of what she's teaching her students.  Heck, she's even making money on her marketing campaign - book sales!  Clearly, she knows what she is doing.

Other concerns I had were around casual mentions of investing leveraging OPM (other people's money) and OPC (other people's credit) (p.88) and the simple math she litters in the examples of how people can make money starting their own businesses.  For example, Loral writes this about one of her clients:

"You'll use the $10,000 in cash you have to pay for setting up the business and finding clients.  Let's give it two months to ramp up.  And let's see if we can make you a $250,000 business in the first year.  That would mean six clients, each of whom needs 20 hours of marketing assistance a month.  If you charge $200 an hour for those 20 hours, that's $4,000 per client per month, which gets us to $24,000 a month gross revenue.  If you pay your contractors half, that's $12,000 a month in pretax income to you." (p.95)

Sounds lucrative enough until the pretax part sinks in and you read two pages away how this client needed a coach, a mentor, a CPA, a bookkeeper, and a good lawyer.   Unless they do pro bono work, the profits are getting pretty slim.

I was also disturbed that there was no mention of possible failure.  I know that that's not a fun pump you up kind of topic, but even in basic business planning you should determine an exit strategy for the ‘just in case' scenario.  In addition, these non-traditional investment approaches carry a good deal of risk to the Average Joe when you consider that she's recommending people leverage all of their cash savings into their new business concept.  What about the fact that most businesses fail in their first year of operation?  And what will these people do if that business fails and all their savings is gone.  I do believe Loral will have a good answer for this, by the way.  I'm guessing she'd mention that her clients would have some amount of safety net in other passive sources of income or something to that effect.  I would have liked to see that issue addressed in her book, however, as it would have given me more confidence that her students are being kept safe during their new adventures.  I also think this would give those people who are more risk adverse more comfort with her edgy approach to wealth building.

Again, I'm glad I read The Millionaire Maker because I think it presents a concept that many people can grab onto but I'm recommending that the rest of you read her on-line articles instead.  She provides much of the same information here on Gather and on her blog page - http://www.liveoutloud.com/blog/ .  Invest that $24.95 in your own Wealth Account or put it toward the seminar - it sounds like that's where you'll get the detail you need to implement her ideas anyway.

Heather Montanaro: Money Correspondent:

Heather's column, Practically Speaking, published 3 times a month to Gather Essentials: Money presents practical advice for everyday living and provides insight on how to pair lifestyle choices with financial realities.

Heather Montanaro holds an Executive MBA from Northeastern University and has held senior positions with local technology and service companies.  Now she enjoys staying at home with her 2 young children.  She's made the adjustment from 2 to 1 incomes and enjoys helping others reach their personal goals as a Budget Coach.

You can find all of Heather's Practically Speaking columns at tag: budget coach

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