A Quick Guide to Getting Rich Slowly

As year 2 of my international adventure on planet Earth unfolds in the cultural heart of Russia, a clear vision of what I’m doing has begun to unfold.

At the outset, travel was an escape. Though my body had largely healed – enough to talk and type, my mind hadn’t. A carefree tour of our sparking orb helped rectify that.

As a minimalist backpacker with nothing to lose, my travel strategies were often extremely aggressive, at least in a financial sense. Take Paris on 2 Euros a day, Spain’s party island of Ibiza for $75 a week, or Malaysia’s capital – Kuala Lumpur, for $150 a month (and all without CouchSurfing).

So it may seem somewhat surprising to hear that I love money.

Furthermore, I find it an fascinating topic, and a more fascinating challenge.

In particular, because it’s such a big challenge for so many people. And one that has the potential to make such a monumental impact on one’s quality of life.

So in addition to seeing the world, and my polyglot challenge – to learn at least 12 languages and complete various mini-missions in each, I’ve also decided to master money.

I can’t exactly say “get rich”, because so far as I can tell, that target was hit long ago.

However, mastering money is another thing entirely, as most of us – myself included – go through life without ever receiving any meaningful form of financial education.

The school systems across the world are build to, more or less, produce literate and job-ready members of society. This is, of course, vitally important – but it leaves some gaping holes.

You’d think that something that is such an integral part of our daily lives would receive more attention during our 12 years+ of preperation for the adult world. However, out of neglect (more likely than malice), we receive an education that will hopefully make us ready to earn money without ever learning how the damn stuf works.

That’s kind of like giving every toddler the keys to high power sports cars, construction equipment, and an unlimited supply of either Red Bull or cough syrup.

No surprise that we find ourselves in a financial car wreck that would make even the most rabit Monster Truck Ralley fan blush – with the averange credit card debt of American citizens tallying a whopping $15,608 in 2014, according to NerdWallet.

So today we’re going to answer a question that burns in the minds and hearts of so many – how can we become rich?

The answer doesn’t lie in lottery tickets, scams, or prayers. There is a reliable, scientificly proven methodology we can follow. It’s slow, but it works every time. As J.D. Roth from GetRichSlowly.org says, slow and steady wins the race.

Money – The Magician

The first challenge we encounter with money has nothing to do with math.

In fact, you don’t have to know much of anything about math to be good with money – how’s that for great news?

The vast majority of money problems are purely psychological. When we spend more than we can afford, it’s a result of some psychological blind spot or error in judgment.

But because it’s all around us and we interact with it every day, we have the illusion that we know what we’re doing.

This is similar to the way in which gambling is addictive – namely, we can interact with machines, cards, or other instruments, make decisions, and are rewarded at unpredictable intervals – all leading people to believe that they have control over the outcomes.

Most of us go through life with a similar working aptitude with money. We can play the game, therefore we assume we also know how to win.

Which very few people actually do.

That’s about to change…

Assets and Liabilities

We’ve all heard the terms assets and liabilities thrown around at some point. Credits and debits. Accounts receivable and accounts payable.

In these two misunderstood terms lies the key to wealth. Because when it comes to self-defeating errors in judgment, we’re looking at the inability to tell the difference between assets and liabilities.

Often stemming from a misunderstanding of what they really are.

The best explanation of these terms I’ve heard is that: if we stopped working, our assets would be the things that put money into our wallets, and our liabilities those things that take it out.

The goal, in any case, is simple. Accumulate more assets than liabilities.

That’s it. The entire game. The “secret.” The holy grail of wealth creation.

Or to put it another way:

Rich people invest in assets, and poor people invest in liabilities.

Sounds so damn easy, right? So what’s the problem?

The problem is that most people invest in liabilities when they think they’re investing in assets. Wolves in the clothing of golden sheep.

This is the reason the rich become richer, and the poor – poorer.

The rich reinvest in assets that put ever more money in their wallets, while the poor invest ever greater amounts in liabilities that takes it out.

Furthermore, rich people use their assets to pay for their liabilities, whereas the poor trade their time.

For example, a rich person who wants to go on an expensive vacation every year might invest in an apartment that can be rented out for income, and use this money to pay for their vacation. A poor person, on the other hand, will work longer hours and save harder.

It’s important to note that rich and poor in this sense have very little to do with how much money a person makes, and more to do with their approach to accumulating and using money.

Just look at the difference between someone renting out an apartment for $1,000 a month versus someone working 100 hours at $10/hr. Even someone working at a relatively high wage – say $40/hr, is going to have to trade 25 hours in order to make $1,000.

All this not taking into account taxes and expenses for either side to clearly show the principles at work here – the particular numbers are not the key to focus on right now.

So, it’s time to learn to tell the difference between real assets, and seductive liabilities that in the luxurious velvet robes of assets, only to pounce on our wallets while we’re take a bathroom break.

Is My x An Asset?

We need to get abundantly clear about what an asset is and what a liability is.

And for that, we have to throw out what the bank, or government, or accountants say, and look solely at the impact on you.

Let’s take a look at an example: A new car.

Most people would call this an asset. Your accountant or your banker would. But this perception is generally incorrect.

First of all, the car loses about 30% of it’s value the second it’s off the lot. Then, there’s gas, maintenance, and insurance expenses, on top of continuing depreciation of value over time.

The bank calls this an asset because it can be sold for money. True enough. But the best we could hope for by selling our car is to recoup a small part of the initial cost – minimizing our losses.

Throw in the active cost of ownership, and it should be abundantly clear that in the average, every day case, our car is a liability of the highest order. If we were to lose our job or other income sources, this “asset” would rapidly and mercilessly lay waste to our savings account.

Now, is a car useful? Absolutely. In the sense of function, a car may rightly be considered an asset. But in financial terms, if it’s taking money out of our wallet every month, it’s a liability.

It’s hard to get used to this sense of asset vs liability, because our banks and accountants both would put it in the asset column of our balance sheet.

But think of it this way, how many cars could you buy before going bankrupt? What kind of asset would do that to a person?

Which brings me to the big one, often literally: The house.

A house is often the biggest liability on a long list. Yes, the thing that most people consider their biggest asset is in fact their biggest liability. Mortgage payments often take up about 30-35% of an individual’s income, and that’s if they’re being “financially responsible.”

I know the argument – “but houses go up in value.” It’s a solid long term investment.

It’s been drilled into us since birth. Common wisdom.

Well it also used to be “common wisdom” in parts of the world that sitting on a chair that was previously occupied by a menstruating woman would make us unclean for 7 days.

In other words, instead of just blindly following whatever advice we happened to hear slash internalize from our environment, we owe it to ourselves to test the idea. Our opinions may differ, but the numbers won’t lie.

Every month, in order to own our house, we have to pay our mortgage, utilities, insurance, any maintenance costs, and taxes. Even if we don’t have a mortgage, the other costs apply.

So unless we’re renting out our space and earning an income from it, our home is impoverishing us every month. Again, strictly in a financial sense, as the utility of a house is undeniable.

How many hours of your time must you sell each month in order to pay these costs?

Even if it’s tempting to cling to the idea that the house is an asset because it’s value will rise over time (which is, by the way – not necessarily true when we consider things like inflation and the ratio between housing values and the value of other goods), most individuals who aren’t professional real estate investors would be better not to consider this as an axiomatic truth. Again, we have to check the numbers.

Here’s another way we can look at it:

If we have a true asset, more of that asset will make us more wealthy. A $100 a month in poetry royalties may jump to $1,000 when our book of limericks hits the Amazon best-sellers list. This is unequivocally a good thing, and the more of this asset we get, the richer we become.

Now think of a house or a car. More house or more car (either bigger & more expensive, or a 2nd, 3rd etc.) will put a larger and larger financial burden on us until it’s too much. Eventually, we won’t be able to work enough to afford all that house.

If our house was an asset, such a scenario would be impossible. Assets don’t take money out of our wallets and leave our credit cards sad and lonely.

Real estate tycoons typify the flip side. Their properties generate an income greater than there expenses. In this case, more house would mean more money, and this would then be a true asset.

This is, then, why the rich become richer. A person with a bunch of assets bringing in wheelbarrows full of cash every month can buy more assets, and more wheelbarrows to bring in yet more cash, whereas a poor person tends to do the equivalent of hiring an ever increasing number of thieves to rob them every day.

And that’s why this understanding is the key to becoming financially rich.

All we have to do is invest our time and money into buying, developing, managing, or creating assets and minimize our liabilities, and we must – by virtue of mathematical infallibility – become richer.

But I want a house! And a car!

I don’t mean to say for a second that we can’t or shouldn’t have houses or cars. From a financial standpoint, buying food is a liability, but it would be mad to suggest fasting as the path to wealth.

The key is to understand exactly what we’re doing when we make such purchases, by looking at the numbers ourselves, and not listening to the sweet whispers of soapbox gurus – even those with financial training.

Remember, the bank considers our homes as assets because to them – it is one. First, most homeowners are paying the bank every month in the form of a mortgage, and second – if these people don’t pay, the bank gets to sell the house.

That’s a most delicious asset to feast on.

So the literal million dollar question then, is how can we invest in assets?

It’s easy to see that we want assets, but if we don’t have a million bucks already in the bank, how do we get our hands on some.


  1. Investment income: Income generated from stocks, bonds, or other financial instruments

  2. Business income: Starting, running, and systematizing a business whereby we earn an income

  3. Real estate income: Income from renters.

  4. Royalties: Music, books, patents or any other works to which we own the rights to.

  5. Other/miscellaneous: Collectibles, art, and other items with intrinsic, historical or sentimental value, which experts may reliably be able to predict will rise in value

The Asset Multiplier: Knowledge & Experience: Not exactly an asset, but just as important, as this increases our ability to earn an income from any asset class which we take an interest in. For example, a writing class may improve our ability to write children’s books, which we may then sell more of and receive more royalties for.

How to choose:

Instead of having a fruitless argument about what the “best” asset to invest in is (besides yourself), we can make this simple and relevant.

The best assets are the ones you find engaging and exciting. These are the things that will be the easiest to spend time in and on as you learn – especially in that crucial first stage where you’re a beginner and don’t yet excel at what you do.

Historically speaking, a “diversified portfolio” is the safest: Usually this idea is applied specifically to the stock markets. Owning stocks and bonds across many market sectors, types of companies, levels of risk etc tend to make for more successful portfolios than stocks chosen in a single market sector.

For our purposes, having a portfolio of stocks, owning real estate, running your own business, and creating some work which can bring in royalties makes for a combo that will likely weather even the stormiest market conditions.

And at the same time, by investing in our own education, we can improve our working income while we begin acquiring our first assets.

Remember, this is not a sprint, but an ultra-marathon. The assets we acquire at the start are both the most difficult and the most important.

For example, having assets start to pay for 10% of our lifestyle (that is, not having to trade our time for money for 10% of our expenses) will have more impact than the next 10%.

For one, we’ll see it’s possible and have our hopes and dreams affirmed. Secondly, in order to get this far, we’ll have already developed a formula that works for us.

And that’s a key point. Only you can create your plan. It won’t be mine, your accountant’s, or your best friend’s.

For instance, I’m developing this website as a business of sorts. It also doubles as a way to promote and validate my “resume” and command higher freelancing fees. It also has the opportunity to decreases my travel expenses as people and businesses around the globe get to know me.

My web content will eventually be expanded into books or courses which can earn royalties (stay tuned)

Then, I own a business through which I can earn an income even as I live in almost any country on Earth (Gotta be careful though, for example in Thailand receiving an income from my Canadian business while in Thailand would be considered as working there illegally. Do your homework!).

To top all that off, by owning a business and having a savvy accountant that used to work for Canada’s tax agency, I’m able to use a ton of my expenses as business expenses, offsetting income tax.

And finally, with the decline of the Ruble, some smart-savings, and currency arbitrage, Katia and I will likely be purchasing our first piece of real estate in the first quarter of 2015.

Does that sound like a repeatable plan for most people? Heck no. But it shouldn’t be. I couldn’t execute your plan either.

The important thing is to get started.

The Final Word: Income vs Savings

You now have the basic blueprint for getting rich slowly. You know that you need assets to outweigh liabilities, and how to identify if something is an asset or not.

But there’s one last item we need to remember.

There is no point even thinking bout earning more if we can’t ever create a gap between what we earn and what we spend. The normal state of affairs is, sadly, that as an individual’s income rises, their expenses rise right along with it. This is a result of this “investing in liabilities” razzmataz we looked at earlier.

The funny thing is, the reason a lot of people want to earn more is not to buy a bunch of fancy nonsense, but to achieve financial piece of mind. This generally translates into “not having to think about money.” The result: We keep doing what we have trained ourselves to do from the start – investing in liabilities that make us poorer.

The only thing a higher income does in such a scenario is make it easier to invest in huge liabilities that require a ton of money to maintain.

That’s why we need to start building the habit of saving and investing right now. Even if we make a dollar a day, even if we save a penny a day, this is progress.

And no, not because we’re going to be able to invest in Google with such a meager sum, because we won’t – but because when we do earn more, we’ll already have the habit of not immediately turning around and stress spending it on somehing whatever feels good at that particular moment.

Money is not good or evil. All it does is empower us to be more of what we already are – we can invest in bigger and better assets, or bigger and better liabilities.

It’s never too late to start filling up the assets clumn on our balance sheet. And as one clever financial mind has said – the best time to start is 10 years ago. The second best time is now.

Start now.

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AJ Walton

AJ Walton will show you how to travel the world on your budget, how to make money on the road, and why you don't have to live the way others expect. Get the free guide: 101 Ways To Make Money While Traveling

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Currently in Saint Petersburg , Russia

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