The middle class is not where you want to be.
I’ll tell you why—but first, I want to tell you a quick story to give you a better picture of what the middle class actually is.
I was once delivering a live stream to almost 20,000 people on mistakes I made that cost me millions of dollars when my then 6-year-old daughter Sabrina walked in and asked a question about the middle class.
She had heard me say the word “middle class” as I was talking and she interrupted saying that she had no idea what that word even meant.
Do you know what the middle class really is?
You’ve heard the term probably thousands of times.
Can You Define the Middle Class by Income?
Depending on the size of your household, you could be making anywhere between $40,000 to $115,000 in many areas and be considered right in the middle of the middle class. Different websites will tell you different numbers for what can be defined as the “middle class”, but let’s keep things simple. It’s not rocket science.
If you make more than whom you consider poor yet you’re far behind those you consider rich, then you are self-described middle class.
Can You Define the Middle Class by Lifestyle?
Those that have a house are widely considered middle class—ideally with a white picket fence. You are able to take one vacation a year (staying at the Holiday Inn — not the Ritz) and have a car, health insurance, and just enough left over for groceries.
In short, you have just enough to be “comfortable”.
This may even include providing a college education for the kids and a 401K!
Let’s continue to keep this easy — if you don’t live in the ghetto, yet your house sits far from the gates of Beverly Hills, then you likely are middle class.
Can You Define the Middle Class by How You Think?
Not concentrating on what you make, or what you have, the middle class can really be defined as the idea that you only need enough to be “comfortable” or “adequately satisfied”.
It’s a state of mind that convinces you to settle instead of strive for abundance.
There are millionaires who have been brainwashed into the middle-class way of thinking and goal setting. If you have any thought that getting rich is unnecessary, that you just want to be happy, that money won’t make you happy—then you have a middle-class mindset.
Whether you want to define the middle class by income, lifestyle, or mindset—or all 3—my daughter Sabrina came to me with a better definition.
It is easy to remember and captures both income, lifestyle, and mindset together.
Sabrina: “Dad, what does the middle class mean?”
Me: “It means right in the middle of things. There are people over here that are poor, other people over here that are rich, and then people who are in the middle.”
Sabrina: “Rich people that are poor?”
Me: “Yes, exactly right!”
What are people in the middle?
They aren’t poor, but they aren’t rich either. My daughter’s definition of the middle class needs to be in all the textbooks:
The Middle Class—Rich people that are poor.
The middle-class concept is failing millions of people because it is based on myths and formulas that worked for our parents but will no longer prove successful today.
The supposed culprits blamed for the middle class “squeeze” have been everything from jobs shipped overseas, the financial crisis of 2008, the housing bubble, income disparity and even an alleged conspiracy of the “top 1%.”
Is it possible that the middle-class formula just does not work in the 21st century?
For most, the middle class is something defined by another era: a time when people tried to get into the middle class as their ultimate goal.
During the 1950’s, people had the same job and lived in the same home most of their lives. The GDP was expanding, not contracting.
The middle class is not just an income level, it is a way of life that is based on fantasy. The “American Dream” has been to get an education, a good job, average salary, health benefits, a retirement plan, a nice house, two cars, and two weeks off a year.
To achieve that means everything is going to be fine!
But it hasn’t been fine, right?
The Middle-Class Concept is Based on Myths and Formulas that Worked for Our Parents but No Longer Proves Successful Today
It is failing millions of people because it doesn’t take into consideration trends, inflation, changing economics, the global economic pressures on jobs and wages, housing bubbles, technological advancements nor unpredictable possible world events that no one plans.
The idea that you will have one “good” job and keep it for life, buy a home and pay it off after living in it for 30 years, operate with barely 3 months of savings, and then live on that for 25 years into retirement is just a formula set for failure.
Let’s examine each of these middle-class myths in detail.
First Myth: The Job
Millions of people assume the job market will never change. What are they thinking? All things change, even jobs.
Jobs are being shipped overseas and technology is taking over previously-available jobs. A job is like a product, its shelf life is not infinite and it will undergo change.
Millions of people are depending and planning on “yesterdays” jobs for tomorrow’s security.
Don’t be one of them!
Second Myth: Savings
The middle class that has a savings rate of under 5% has been told to keep 3 months of savings for emergencies.
The Great Recession starting in 2008 caused millions of people being out of work for an average of 40 months. When something bad happens, millions of middle-class people get out of work much longer than the savings last.
Third Myth: Homes
Calculating homes into any formula for wealth, equity creation or retirement planning is ridiculous. Your home nor the equity in it should ever be considered in wealth calculations or for retirement purposes.
Homes are expensive, ties up lots of capital and require lots of maintenance. If you ever get equity you still need a place to live.
The only solution for the middle class is to get above middle-class wages, savings and investment.
The Bottom Line on the Middle Class
The middle class is failing because it didn’t save enough, didn’t make enough, and didn’t invest enough. Instead, it did just enough to get by.
Just enough is the failing formula.
- “I want to be comfortable”
- “Money isn’t everything”
- “I just want to enjoy life”
These are the mantras of the middle class.
The middle class is associated with some socially acceptable “middle” thing, not rich and not poor, but what is it really?
The wealthy don’t seek comfort they seek wealth, solvency and survival without economic pressure.
I once told Adam Corolla on his podcast, “50 years ago the middle class was a desirable group to aspire to, today, it is just a risky, painful, economic condition failing millions of people.”
The Comfortable Middle-Class Guy
I’m here to tell you that you want adventure, prosperity, and freedom — not comfort.
Before you say to yourself for the millionth time, “I would be happy if I just had . . .” or “I don’t want to be rich — just comfortable”, you must understand one vital point:
Limiting the amount of success you desire makes you the “Comfortable Middle-Class Guy” (or lady).
When you start limiting the amount of success you desire, I assure you that you will also limit what will be required of you in order to achieve success and will fail miserably at doing what it takes to keep it.
You can earn $1 million a year and still be the Comfortable Middle-Class Guy or Gal.
No matter how much money you make, you can still adopt middle-class thinking and actions. It is more of a mindset that creates the trap that will fail you.
The middle class is, in large part, a goal that will not provide you with what you truly want.
The idea that one would only need enough to be “comfortable” or “adequately satisfied” is a concept that has been sold—by the educational system, the media, and politicians—to convince an entire population of people to settle instead of strive for abundance.
The whole country has been brainwashed into the Comfortable Middle-Class Guy way of thinking and goal setting.
If you don’t have any concerns in life right now, it’s a signal that you are only doing what’s comfortable for you—and that will only get you more of what you have right now.
Those who succeed were, at one point or another in their lives, willing to put themselves in situations that were uncomfortable, whereas the unsuccessful seek comfort from all their decisions.
I promise you the most important things I have done in my life were not the things I was comfortable doing; in fact, many of them made me very uneasy.
That doesn’t mean that I’m always changing just for the sake of changing; however, I know that getting too comfortable, too relaxed, and too familiar causes me to become soft and lose my creativity and hunger to stay out front.
What is the cost of being the Comfortable Middle-Class Guy?
Well, what is the cost of living paycheck to paycheck?
What is the cost of having “just enough” only to realize one day, when it’s too late, that just enough just isn’t enough?
I’ve lived it, and it’s not worth it.
The 4 Horsemen of the Middle Class
Many people are familiar with the Four Horsemen of the Apocalypse described in the Bible, often seen as symbolic of judgments to planet Earth in the end time. I want to let you know about 4 other Horsemen that you may not be familiar with—but will bring you financial apocalypse.
These 4 Horsemen may be surprising to you, like someone telling you planet Earth is flat, but don’t disregard this information without researching this more and coming to your own conclusions.
Don’t be part of the masses who financially imprison themselves.
The 4 horsemen that keep the middle class trapped are as followed:
#1 The 401K
People gleefully stuff their income into a place where they don’t know where it goes and they can’t touch it for 30 years.
Someone on Wall Street can mismanage or blow your dollars. Things can go poof in the night by incompetent executives without ethics—see Enron scandal.
If you don’t want to be responsible for your retirement dollars, then the 401K is for you.
I personally refuse to have someone else handle my retirement dollars. I also want to get leverage with my retirement dollars and immediately multiply my retirement dollars.
You don’t get any leverage with traditional 401K investing and you don’t have control. The way I invest in real estate is much safer and gives a better return.
#2 Credit Cards
There are over 1 billion Visa, Mastercard, and Amex cards in circulation just in the US. Many people let credit card companies use them, rather than using the credit card companies as a convenient accounting device.
It is unnecessary for anyone to ever find themselves the victim of their credit cards, but people are paying late fees, penalties, and high-interest rates because they have no discipline.
The problem is most Americans don’t make enough income so they can’t pay off their expenditures.
Spending $4 on a cup of coffee is a problem if you make $12 an hour—that’s not a savings problem but an income problem.
You do want some debt in your life because not all debt is bad—but nobody needs credit card debt.
I wish I would have gone to Harvard—for the connections, not for the education. I also wish I would have paid more attention when I was going to college.
Unfortunately for me, and so many others, I had no direction on why I was there and had no purpose for what I was learning, so I left my university with a piece of paper, debt and no idea about my future and very few skills.
You don’t need college to get rich.
The problem is not in education, but the approach. When you approach an education you must think about skills, not just information or knowledge.
Only 27% of college graduates are even working in the field they studied. One of the reasons you should study is to gain skills. The only things you can use every day to bring more value to the marketplace are your skills.
#4 The House
A home is not an investment because it doesn’t pay you every month. In fact, you have to pay it every month. That’s why a house is not an asset, it’s a liability.
Nothing is a good deal if you have to feed it constantly.
How can a house be an investment? It produces no money. Investments produce money.
People have a dream of getting a doormat that says “The Johnsons” and owning a home for 30 years.
When you buy a home you pay for the following:
• Property taxes
• Property insurance
• HOA Fees
The expenses are funded by the owner, not the income.
Over the past 50 years, a home has returned 1% when adjusting for the rate of inflation.
Again, get involved in multi-family real estate if you want to own a real asset.
There you have it—the four Horsemen ready to bring financial apocalypse to the middle class: 401Ks, credit cards, college, and houses.
Which of the horsemen are you involved with?
Climb Out of the Middle Class or You’ll Fall Out
Look at this chart courtesy of the Pew Center:
Look above and notice how the middle class is getting squeezed.
More people are getting rich and more people are becoming poor—the middle is getting hammered.
The share of American adults in middle-income households shrank from 61% in 1971 to 50% in 2015.
It’s happening everywhere.
Here’s a chart that shows the decline in metropolitan areas.
The share of adults living in middle-income households has fallen in 203 of the 229 metropolitan areas in the US.
Remember though, the middle class is not just a rigid set of financial parameters that puts you into a box based on what you earn—the middle class is a mindset. The reason you are in the middle class is not because of the economy, it’s because of your thinking.
Most advice you will receive says you need to save more money. Let’s say you try and cut out a dinner or two, Direct TV, and maybe your morning coffee. What are you going to save, $300 a month?
That’s $3,000 a year, and after 10 years you will have a whopping $30,000. With inflation, you’re going backward.
I want to help people who desire to create freedom for themselves and their families. How would you like independence, to be released from the trappings of the Middle Class, and have no more constraints on your choices?
The middle class is diminishing quickly and if you’re in that income bracket, better find some strategic ways to get out immediately or drown with the rest of them. Don’t worry about cutting your Direct TV or that cup of coffee.
This is what I want you to do, go get my FREE Millionaire Booklet that is going to teach you step-by-step how to become a millionaire just as I did it. All you pay is shipping, is that fair?
Try raising a family on $53K a year paying a mortgage, a couple of car payments, food, health insurance, and other basic living expenses and you have nothing left to save and invest.
People live paycheck to paycheck and when the unexpected happens they have no way of recovering.
A recent Pew report says that most Americans say the Government doesn’t do enough to help the Middle Class. The middle class is being sucked dry.
I’m here to tell you that the government can’t help you even if they attempted to. Governments don’t create economies, individuals do. It’s up to you to pull yourself out.
While four decades ago middle-income Americans were clearly in the majority, that is no longer the case today.
As I’ve said, you don’t have a spending problem, you have an income problem. If you don’t have any idea how to pull yourself out, it’s because there is something you don’t KNOW. I’ve advised people to get their income up to at least $120K, but in reality, you need to become a millionaire.
I don’t care what your parents, your teachers or the media told you while you were growing up. I’m going to give it to you straight: The middle class is no longer a safe haven or the desired destination it once was.
The middle class of the 21st century should be avoided like a death sentence.
If politicians, the media, and your educators told you the truth about the middle class there would be a revolt in the streets.
Every week, I get calls, tweets, and emails from people who are concerned about their financial futures. People tell me, “I did everything they told me to do; I went to college, invested in my 401(k), bought a home and I can still barely make ends meet.”
Millions graduate from college with huge debts, unable to land the jobs they studied to get, and some are forced to move back in with their parents.
The middle class is failing in this country because its basic premise is a lie.
You are basically broke, but you are still considered middle class. How crazy is that?!
The middle class is basically an acknowledgment that you have made it when you haven’t at all.
Most can’t handle the truth, but here it is:
1. You are either rich or you are poor.
2. A 40-hour workweek is for slaves.
3. Life isn’t fair and economies are even less so.
4. Success will not depend on your education but on your actions.
5. The world doesn’t care if you succeed or fail.
6. You’re owed nothing, deserve nothing and are entitled to nothing.
7. You will have to learn how to sell, no matter how much you hate it.
8. You won’t get what you deserve. You’ll get what you negotiate.
9. You don’t get paid to do what you love; you get paid to do what others won’t.
10. You will be underpaid for most of your career until you aren’t, and then you will be paid so much you’ll know it was all worth it.
The first step to claiming financial freedom is to understand the truth: You need money and you need a lot of it.
Again, if you think “money isn’t everything,” or “not everything is about money,” you are under the spell of the middle class.
Poor people don’t talk about money as though it’s not important—the middle class does. Regardless of your purpose or mission in life, you need money, and the more philanthropic your mission, the more money you will need.
To make real progress in any area of life, you have to know the truth about where you are.
Don’t get seduced into settling for some classification when the reality is the middle class earns too little, saves almost nothing and will live longer than their money.
The truth will set you free and lies keep you trapped. This is why the middle class is failing. It is based on lies, not truths.
Take any situation, and when you correctly label it for what it really is, you will start to see solutions.
At some point in your career, you need to invest. You need your Benjamin’s that you’ve worked so hard to earn and save to start having babies; because when the babies start multiplying that’s how you create wealth.
You can’t just create wealth on the back of hard work.
10 Important Changes the Middle Class Must Make to its Mindset:
1) There is No Shortage of Money
The reality is money is plentiful, and even when there are shortages, we print more. The very wealthy think in abundance. Change your mindset to think in terms of money being abundant and plentiful. This isn’t some esoteric new age concept, but reality.
2) Track EVERY Expenditure
Make a list of all your spending and don’t use cash. Either put everything on a credit card or write a check so you have a complete record of every expenditure.
3 )Prioritizing Expenditures
Take the last 60 days and rate all your spending on a scale of 1-5, with 5 being the most important. Anything not rated a 3 or higher should be stopped immediately.
4) Budget vs Financial Plan
People spend most of their time budgeting the money they have rather than concentrating on a plan to create finances. I spend 95% of my time looking for ways to create income and how to invest and grow money and only 5% of my time on how I am spending it.
A budget suggests what I am “allowed” to spend each month and a financial plan is a road map to creating wealth.
5) Not All Debt is Bad Debt
Not all debt is created equal. Some debt is good, contrary to what financial pundits like Dave Ramsey and Suze Orman suggest. Debt that is paid off by others or debt that actually generates income is good debt; assume all other debt to be bad. Solution: get rid of ALL debt that can not be funded by others.
6) Have Emergency Accounts
As many economic events have shown us, the unexpected can happen. In order to bullet-proof yourself against these types of catastrophes, you should set up emergency accounts that are never touched except in urgent situations. Also, your goal should be emergency reserves of at least 12 months of your income, not the popular 3 months and I would prefer 30 months.
7) Paying Yourself First
Pay yourself first. You are taught not to be self-centered but when it comes to money, be self-centered—pay yourself first and bill collectors next.
This seems impossible when you first start, but it works like magic once you commit and you will actually see yourself cutting unnecessary expenses and creating more income to meet your REAL requirements.
8) Future Investment Accounts
Set up three investment accounts beyond emergency reserves that you start funding every month for future investments.
I started doing this when I was 25 years old and didn’t invest in anything until years later. I had a Real Estate Investment account but no Real Estate; a Business Account but no business and a Stock Investment account but no stock portfolio. When it was time to do these things I had the money set aside to do so.
Here are 3 Incredibly Real Signs You Need to Get Out the Middle Class:
#1 You make $70,000 a year but you’re living paycheck to paycheck.
A 40-hour workweek with a set salary leads to complacency and a paycheck to paycheck life.
#2 You’re broke, but people always tell you how much “better” you have it than others.
Why do you compare yourself with people in Africa or Vietnam? I understood growing up that I may have had it better than someone in India, but that never did me any good. You can always find someone worse off than you. Start looking at your potential, not comparing yourself to people less fortunate.
#3 You live in a nice house in the suburbs but have virtually have no savings.
I make the money I do because I spent years investing. I invested first in myself, second in my company, and thirdly in real estate to ensure my money is growing regardless of the economy.
The thing is, you can’t invest if you have nothing saved.
It’s hard to save much if you’re making less than $100,000 a year.
Do the math, what’s left over to save after housing, transportation, insurance, healthcare, entertainment, etc.—there is nothing left to save!
Maybe you can save $10,000, but the fact is, that’s not enough to invest in anything that will change your life.
Getting Out of the Middle Class
I remember it like it was yesterday. I was sitting in the wooden pews in the 6th row of the Catholic church. The priest had just done incense and my dad got up to do the ushering service.
Between all the Latin and hearing about money and hell, I knew I didn’t understand something. The priest told us some things we can never know and that we have to wait until we die, but I knew I didn’t want to wait until I die.
32 years later, I lived in an 8-million-dollar house in Hollywood Hills. It was a long way from Lake Charles, Lousiana where that Catholic church sat.
My mom came to visit and we went to Ralph’s (the local supermarket), and she saw beans were $1.69.
“I can get these for a quarter in Lake Charles,” she would say.
She also complained about the cost of artichokes, which were maybe $6. By that time I had made so much money I couldn’t screw it all up on beans and artichokes.
I grew up in a home that clipped coupons and my mom could never escape that scarcity mentality.
She didn’t know about abundance, she just knew how to contract and save money.
I grew up in my teen years in a brick house with one small window. There was no view.
Today, I’m on the 33rd floor of the Regalia in Miami that has 200 window panels giving me a panoramic 360-degree view from my place.
How did I go from the middle class to where I am today?
They say knowledge is power—and it’s true. Everything you ever want, you are just a piece of knowledge away from obtaining.
Do you want to do better in some area of life?
You want MORE—and that’s normal. Wanting more money, more success just means you have the right mindset to make it happen.
There are difficulties in the way though, believe me I know.
- You don’t know how to make more sales than you already are making
- You’re not sure how to invest the savings you do have
- Starting—or growing—a business just seems too risky
These things STOP many people from creating the massive success they secretly long for. I’ve experienced all the delays and pitfalls that keep people in the middle class, but I was able to push beyond them to become wealthy—and I can teach you to do the same.
Getting out of middle class requires:
- Making yourself so valuable that the marketplace will pay you over $125,000 a year.
- Doing more than just your job so that you are valuable regardless of the job market.
- Saving as much as 30% of your gross income for investing with 30 months for emergencies. Increase your income targets so that you can pay yourself first and act like your future depends on this because it does.
- Making long-term investments back into your business, and then into other companies or income-producing real estate so that you have multiple ways of increasing income and wealth.
I have many training materials to help you achieve these things.
Believe me, I want to help you get OUT of the middle-class trap!
Be great, because nothing else pays (much),
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