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A Review of The Millionaire Maker by Loral Langemeier
By JLP | January 17, 2006
Loral Langemeier’s new book, The Millionaire Maker
For the most part I thought the book was pretty good. I liked her discussion of the “Lifestyle Cycle vs. the Wealth Cycle.” Loral believes (and I agree) that wealth can never be built in the Lifestyle Cycle because whatever income comes in goes right back out to support a consumption lifestyle. With the Wealth Cycle, income (at least the part you don’t need to live on) goes into other income-producing assets, which in turn produces more income, thereby building wealth.
Loral also details what she believes are the twelve building blocks of wealth:
|
Gap |
Financial |
Freedom |
|
Debt |
Entities |
Cash |
|
Wealth |
Forcasting |
Assets |
|
Leadership |
Team- |
Conditioning |
Here’s what each of the twelve blocks mean:
1. Gap Analysis - the difference between where you are and where you want to be.
2. Financial Baseline - a look at your current financial situation using personal financial statements like net worth and cashflow.
3. Freedom Day - The realization of each goal.
4. Debt Management - Getting rid of consumer debt.
5. Entities - Using trusts, partnerships, and corporations to effectively manage wealth and to take advantage of tax breaks.
6. Cash Machine - What fuels your wealth cycle.
7. Wealth Account - The pay-yourself-first account. Once accumulated, this account is used to purchase income-producing assets.
8. Forecasting - A projection of your revenues, expenditures, assets, liabilities.
9. Assets - Direct and diversified asset allocation.
10. Leadership - You must “lead” your wealth.
11. Teamwork - Loral believes in the team approach to building wealth. You should work with a team of professionals in order to properly execute your strategies.
12. Conditioning - The way you think about money.
The three blocks along the top and bottom always stay the same. The six blocks in the middle are arranged in an order based on your current financial status.
Loral believes in using all resources in building wealth. One of those resources is home equity. She has no problem in recommending people to use their existing home equity to buy income producing assets like real estate. I’m not so sure I agree with this since we are in the midst of a real estate bubble in a good portion of the country. However, Loral believes that there are places where one can buy real estate and do fine. All I can say is BUYER BEWARE.
That’s not the only thing that bothers me about her book. In some of her examples she repositions her clients assets into vague ideas like: “$70,000 into a start-up company, 48% return.” Yep, you read that right! I’m not saying you can’t find something that can give you a 48% return but it does seem unlikely.
I don’t think this book is a lost cause by any means. However, I do think you need to read it with caution. There’s some great stuff in this book (like her debt elimination plan which I will highlight in another post). Just be sure you exercise good judgment when executing her advice.
Topics: Books |