I pulled down my copy of Napoleon Hill’s Think and Grow Rich off the shelf this evening. The inscription inside the cover indicates that my mother gave it to me in June of 2005-“Jim and Katie, Please accept this book as a means to help you become all that you desire to be. Love, Mom”. In June of 2005 I was finishing my PGY2 year as an emergency medicine resident. My net worth spreadsheet tells me that our net worth at the beginning of 2005 was $431.98. Yes, a three figure net worth. By the end of that year, in which the two of us made less than $40,000, we had a five figure net worth- $17,084.38. I read the book. I thought it was dumb and full of a bunch of hocus pocus self-improvement crap. (I didn’t tell her that, but I suspect she’ll read it here after somebody rats me out.) However, the richer I get and the more people I meet, both those who become financially successful and those who do not, the more wisdom I realize that book contains.

Get Your Mindset Right

The book is primarily about developing a mindset. Hill was hired in 1908 by a magazine to write success stories about famous men. He went to interview Andrew Carnegie who was so impressed with Hill’s perceptive mind that he told him that he believed any person could achieve greatness if they understood the philosophy of success and the steps required to achieve it. Carnegie explained his theory that this knowledge could be gained by interviewing those who had achieved greatness and then compiling the information and research into a comprehensive set of principles. He offered to make the introductions and cover travel expenses if Hill would do the leg work. Hill reportedly accepted the challenge within 29 seconds, which was good, because Carnegie planned to withdraw the offer at 60 seconds. That was the origin of the book.

Hill alludes to the “secret to success” in the book but never really spells it out. However, the astute reader, (who according to Hill must be ready for it) will readily pick it up during the reading of the book. It basically comes down to “you gotta want it.” And I don’t mean wish for it or kind of want it. I mean it is a deep burning desire you are willing to make real sacrifices for in order to succeed. I mean it is something you spend large percentages of time thinking about. Something you have a well-thought out written plan to achieve. If you really, truly want to grow rich (or anything else,) you will “think” your way there and no one will stop you because you cannot be stopped. It may not happen quickly, but it is virtually a certainty that it will happen eventually.

At the end of the book, Hill warns that

Life is a checkerboard and the player opposite you is time. If you hesitate before moving, or neglect to move promptly, your men will be wiped off the board by Time. You are playing against a partner who will not tolerate indecision! Previously you may have had a logical excuse for not having forced life to come through with whatever you asked. That alibi is now obsolete because you are in possession of the Master Key that unlocks the door to life’s riches.

The Master Key is intangible, but it is powerful. It is the privilege of creating, in your own mind, a burning desire for a definite form of riches. There is no penalty for the use of this key, but there is a price you must pay if you do not use it. The price is failure. There is a reward of stupendous proportions if you put the key to use. It is the satisfaction that will come to you when you conquer self and force life to pay whatever is asked.

SOFI mobile

Gold Level Scholarship Sponsor

Both Personal and Finance

Personal Finance is both personal and finance, but what no one ever tells you, and what you, if you are like I was, probably assume, is that it’s mostly about finance, i.e. the knowledge of how the financial world works. You know, Roth IRAs and interest rates and SPIAs and standard deviations. However, the truth is that personal finance is 80% personal and only 20% finance. What do I mean by personal? I mean who you are and what you want and what you spend your time doing and what you value. That’s going to determine 80% of your success. Sure, you probably ought to pick up some knowledge along the way, but I estimate who you are is four times as important as what you know.

Make a Plan

Let’s return back to 2005. I wasn’t worth much on a balance sheet, although some would argue I was already ahead of most docs, but those folks forget that at that point in my life I owed a great deal of time to an employer who doesn’t pay particularly well. In reality, I had more debt (time, not money but they’re really the same thing) than most physicians of my era. In 2005 I wrote down a plan. My wife and I took that plan very seriously. It was 3 or 4 typewritten pages and we signed and dated it. What was the plan? It was a plan to reach financial independence in less than 20 years. It was no get-rich-quick scheme, but it had an extremely high likelihood of success given our strengths and assets. We would get rich eventually, it was just a matter of time. As Napoleon Hill said,

Create a definite plan for carrying out your desire and begin at once, whether you are ready or not, to put this plan into action. Now write it out. Write a clear, concise statement of the amount of money you intend to acquire, name the time limit for its acquisition, state what you intend to give in return for the money, and describe clearly the plan through which you intend to accumulate it.

He then goes on into more hocus pocus crap that turns me off from books like this.

Read your written statement aloud, twice daily….As you read, see and feel and believe yourself already in possession of the money.

A Hobby That Pays

I didn’t read our statement aloud. In fact, I might not have read it even once a year. However, what I did do was spend a great deal of time thinking about that plan. As The Millionaire Next Door suggests, I got a hobby that would pay me. That hobby was personal finance and investing. While I was still a busy resident, that period of life was soon to be over and I was going to be living in a place where my old hobbies (climbing, mountain biking etc) were simply dramatically less available than anywhere else I had ever lived. I spent ridiculous amounts of time reading on the internet, participating in forums, and devouring all kinds of financial books. I wasn’t seeking personal transformation. I didn’t like that gobbledygook crap and despised books that were full of it (such as Rich Dad Poor Dad.) I was looking for the how-to information, which was fine, since I already had the 80% that mattered, I just didn’t know it yet. Those few years were when I was acquiring the 20%.

Eventually, that idea ripped from The Millionaire Next Door took root in another way when I started The White Coat Investor blog. As long-time readers know, this was a for-profit enterprise from the very beginning. Why? Because I wanted a hobby, something I really enjoyed, that also paid me. And thus it has. In 2016, it is highly likely that this hobby will pay me more than I will make seeing patients as a physician.

So, while I never sat in front of my mirror chanting affirmations, I definitely thought about my plan to become wealthy at least twice a day, every day. Does that make me greedy or a miser? I hope not. We now give away more money every year than we made in 2005. But what it did do was make me financially successful.

These kids have a huge head start in life- their parents teach them about money

Modeling at Arches National Park- tax-free and straight to their Roth IRAs.

The Entrepreneurial Nurse

I was having a chat at 3 am with a nurse in the ED the other night. He spent a few years in the Army and then left for the civilian world. He was working night shifts in the ED to support his young family, but as I got to know him, it became quite clear to me that he would be wealthy some day. He will soon be going back to school to become a PA, which will improve his earning potential significantly. But that wasn’t what impressed me so much. He is also a serial entrepreneur, having already owned two businesses on the side. Neither was particularly successful, and the latest, a shaved ice trailer in Texas, ended when a drunk plowed into the trailer and the truck used to pull it. He was smart enough to be insured, and since he was moving shortly, took the money and put it in the bank for the next opportunity. I have no doubt that opportunity will come and that he will recognize it. I also have no doubt he will carve out 20-30% of his income as a PA and put it toward building wealth, such that he will be successful even if none of his business ideas ever take off.

Debbie Downers

I contrast this with a recent thread on the Bogleheads Forum. The original poster in the thread asked for what advice you would give to your child about an employment path. My advice was simple and true to what I tell my kids- Become a professional of some type but also an entrepreneur. It seemed fairly straightforward, reasonable advice to me. It has worked well for me but what I really like about it is that it is almost 100% certain to succeed. Even if the business never works out, carving out a big chunk of your professional income will eventually make you wealthy too. However, the response from several posters about entrepreneurial work was rather revealing. Let me quote:

I always feel like this is the worst advice for the general public. Most people have no idea how to just open a successful business and work for themselves, and it usually takes a lot of time and money to get there. If I wanted to own my own business, I would have no idea what to start up tomorrow, where to put it, etc. Even if I did start a business, I’m sure the percentage of businesses that don’t make it is higher than the percentage of businesses that do.

and

There is no way around the fact that most small businesses fail. A lot of people are far better off working for somebody else; up to you to figure out if that is the case in your situation.

and my favorite after I sarcastically agreed with a poster that “Yes, it’s so hard you shouldn’t even try [to start a business]”

Ok, here’s some advice. Be a state Senator. Good luck.

Larry Keller Insurance Page

Platinum Level Scholarship Sponsor

The best part about that last quip is that I have actually seriously considered running against my state senator, the president of the Utah senate who lives down the street from me. Of course, that was mostly because he came up with a cock-eyed plan to raise my physician license fee from $200 to $5000. I’ve even gone to the trouble to look at the Senate district map and noted that it quite conveniently covers the area I live and the two areas where I practice. At any rate, Senator Niederhauser better hope I don’t get sick of WCI any time soon.

But really, the sad thing was the attitude toward taking any kind of a risk in life:

“It’s too hard.”

“Most people will fail.”

“I can’t do it. I don’t even know where to start.”

You Will Be Successful

However, here is the good news for almost every person who has read this far. You are going to be successful. You are going to be rich. Why? Because you’re here. It isn’t because of the 20% of personal finance that is finance, although you will find that information on this site since that’s 95% of what this site is. It is because your being here is evidence that you have the 80% of personal finance that is personal. That desire, those goals, those qualities, and that discipline are going to drive you to become more and more knowledgeable each year, to increase your income, to increase your savings rate, to drive down your investing expenses, to create a reasonable investing plan, and to stick with it through the hard times. Congratulations! If you’re not rich yet, you will be soon.

What do you think? Are you wealthy already? Do you believe that you will be financially independent eventually? How important do you think mindset is compared to financial knowledge? Comment below!