By: Stefan Aarnio
Freedomway.ca
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In North America, for the past 100 years, we’ve had an astounding progression of wealth. Every generation from 1900 has enjoyed a better life with more opportunity and more amenities than the last. Our grandparents (the war generation) who lived on the farm gave their children a better life by moving to the city. The children (the baby boomers) grew up and got manufacturing jobs, then the next generation grew up, went to university and got middle management or intellectual careers (Generation X) and today we are at the next step in the progression: Generation Y.

Unfortunately, where other generations had an “easier” time claiming a better life than their parents, I can see that Generation Y will be the first generation to be poorer than their parents.

The poorest person today in North America has far more amenities than a wealthy man 200 years ago ie: flushing toilets, heated water, refrigerators etc. Even in the poorest households in Canada, first world amenities are available. We live in a very wealthy time, but unfortunately, like musical chairs – the music cannot go on forever and eventually someone is left without a chair. In the game of inter-generational musical chairs, generation Y will be the generation “without a chair”.

I know first hand how difficult it is for Generation Y to fit into the ever-changing economy. I’m born in 1986, graduated from high school in 2004, university in 2008 and hit the job market later in the same year. I did everything conventionally ie: go to school, get good grades, get a degree, get a good job and instead of landing a promising career, I wound up with post grad depression and lay on the couch for months while trying to find something that matched my talents, skills and useless degree.

The sad part is, in 2004 after high school, I took a summer job painting houses for $10 per hour and I worked that summer job every year until I graduated university in 2008. In 2004, minimum wage was $6.50 per hour, so $10 per hour was a great deal. By the time I finished school in 2008, minimum wage had inflated to almost $10 per hour. My first job out of school was a dead end, telephone sales, straight commission, middle of the night job that earned $10 per hour even after hitting my sales targets and ranking in the top 5 sales people. I felt like I had sold out and was sold a fraud. I was better off skipping school and opening up a house painting business. I remember seeing that skilled painters could make around $30 per hour and I was now making $10.

Today in 2013, in Winnipeg, Manitoba where I live, minimum wage is now $10.45 and it will be increasing again next year – along with the price of every single commodity in the economy.

But forget my first hand experience, why is it that Generation Y will be poorer and have a more difficult life than their parents, the baby boomers?

Here are 15 reasons why:

1)    Faster changing job market

a.     Generation Y will statistically change jobs every 4 years. It is no longer feasible to get into a career or company and stay for life – the world is changing too rapidly and labor is always in flux. There is a high probability for Generation Y to learn and relearn skills many times throughout their lives and they will not be able to stay in one place very long.

2)    Highly skilled knowledge workers are needed and formal education does not offer young people what is required.

a.     We live in a primarily knowledge based economy today where the skills to survive are not readily available. For myself, I am an entrepreneur and the knowledge and skills required are unavailable from traditional education institutions like universities and colleges. Apprenticeships and internships are coming back so that young people can actually learn practical skills needed for a successful career. For the last 10,000 years, humanity has acquired skills through apprenticeships. Universities, as trade schools are a relatively new idea, and an idea that fails to deliver what it promises.

3)    Too many options

a.     Having no options can be a luxury, in today’s world, too many options is certainly a burden. Making a choice to commit to a career is more difficult nowadays because young people are bombarded with hundreds of options. In reality, we only need one path to become successful, but the illusion of too many options creates doubt and inaction.

4)    No mentors/parents

a.     Where the baby boomers enjoyed a nuclear family ie: Mom, Dad and a collection of brothers and sisters. Most of the Echo boomers or Gen-Y families are divorced. Many young people don’t have access to the guidance or mentorship that other generations had access too. In the old days, if your father was a blacksmith, you were a blacksmith and he mentored you. Today, you barely know your father, hardly see him and when you do see him, he has nothing valuable to say.

5)    Increasing inflation ie food/clothing/shelter

a.     The economy is inflating at a rapid pace. Items like food, clothing and shelter get increasingly expensive every year while wages stay the same. A rising minimum wage doesn’t help because when the bottom rises, so does everything else in relation to the bottom. Buying a house was once a necessity for the baby boomers and for the echo boomers it may become a luxury or impossibility.

6)    Increasing education costs and education fraud/deception

a.     Education is increasingly expensive year after year in both Canada and the United States. In Canada, we have a much easier time financing education, but sadly, many students leave school with a mortgage of student debt (minus the house). In contrast, our parents could finance education with a few months of work at a summer job at the end of the school year.

7)    Fewer workers are required

a.     Businesses require fewer and fewer workers to do the same tasks. Between my laptop and cell phone, I do not need to hire a secretary because the technology can handle the work of many people. Other technologies wipe out entire classes of workers like 1) ATM’s replacing bank tellers and 2) automated factories have mostly replaced human assembly lines ie: the decline of Detroit in the last 60 years.

8)    Manufacturing has moved overseas – global competition, not local

a.     Generation Y not only has to compete with the local boys and girls for jobs, they also have to compete with their peers in India, China and around the world. I can hire a graphic designer for $300 in Toronto, or get a similar product for $30 from Pakistan. Sadly, $30 goes a long way in Pakistan and the designer in Toronto can’t even make the rent on $300.

9)    Increasing household debt

a.     Not only does Generation Y have more debt through student loans, the entire household that they come from has more debt than ever. Low interest rates has made debt affordable and not only is Generation Y loaded with credit card debt, The boomers (their parents) have remortgaged their home with a Home Equity Line of credit, have multiple auto loans, and maxed out credit cards.

10) Parents who cannot retire and will become a burden

a.     We are sold a fantasy of retirement in North America that at age 55 (or 65) you will get to golf and lie on a beach all day. The reality is that the vast majority of baby boomers will never retire and shortly after the “kids” move out (generation Y), the “parents” (baby boomers) will be moving back in with the kids (to their small home or apartment that is unaffordable). However, this isn’t too terrible, around the world in Europe, Japan, China, India, and even North America 100 years ago, it was normal for inter generational families to live together. Unfortunately, the dream of the retirement that the “war” generation had is smashed forever for the sweeping majority.

11) The deception that 30 is the new 20, lost time

a.     Somehow, generation Y is one of the most “babied” generations in history. Adulthood is now pushed towards 30 because of overbearing parents and over sheltered kids. It also takes more resources and more time to do things that were once normal like 1) Moving out of Mom and Dad’s basement and 2) Starting a career that can provide a living. Losing an extra decade to school or “finding yourself” will severely affect your long-term wealth and ability to invest for your future. An extra 10 years for your money to grow can in theory allow you to have twice as much principle in the future.

12)  Less work ethic

a.     Along with an over sheltered generation Y is a poor work ethic. Generation Y is more interested in Facebook and Twitter than they are with putting in the time and getting ahead. Bill gates used to say “Your grandparents had a word for flipping burgers, they called it opportunity”. It amazes me to see how little interest there is in “getting your hands dirty” or “starting from the bottom”. Gen Y wants to be handed the corner office on a silver platter.

13)  More materialistic

a.     Because Mom and Dad were “keeping up with the Jonses”, their children, Generation Y, are much more materialistic than their parents were. Their parents had to slave away and save for years to afford the house in the suburbs and two brand new cars (purchased on credit). Without ever working to earn, young people want to keep up with the illusion of success and have financed their glamorous lifestyles on 1) student loans 2) credit cards or 3) hand outs from mom and dad. Sadly, all of the resources above will eventually run out and when they do, the over spending youngers will be hit harder than a heroin addict going cold turkey.

14)  The attitude that “we should have it better” than our parents, when in fact, we will have it worse.

a.     Many young people do not even try to enter the job market or start at the bottom and work their way up. They remain underemployed working at Starbucks while trying to become an actress, artist, musician, writer or some other esoteric dream without facing reality. The truth is, generation Y will have a much more difficult time growing up and raising a family than the boomers did and we will have to work much harder than our parents ever did to achieve the same lifestyle.

15) Technology changes the game every 5 years or less

a.     The last threat to Generation Y is that technology is changing every 5 years (or less). New jobs are being created and old jobs are being deleted just as fast. We can never predict which technologies are coming next and which industries will be forever changed or wiped out. Think of Blockbuster getting annihilated by Netflix or the traditional record labels becoming wiped out by Napster and online music. There are always young and hungry entrepreneurs looking to wipe out the dinosaur businesses of the past.

I don’t want to appear to be overly pessimistic in light of all of the facts above. There is more opportunity in the world than ever; new jobs, new markets, new technologies and new businesses can be created in record speed and magnitude. However, it will take a smarter, harder working, and more creative generation to capture such opportunities and that is what Generation Y must focus on becoming.

Thanks for reading,
Stefan Aarnio
Freedomway.ca
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https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio

Get Stefan Aarnio's book "Money People Deal: The Fastest Way to Real Estate Wealth" at MoneyPeopleDeal.com!

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By: Stefan Aarnio
Freedomway.ca
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In North America, the middle class is quickly becoming an endangered species.

In many ways, opportunity for middle income jobs is disappearing quickly as the jobs migrate overseas to India, China, Brazil and other up and coming economies.

In both Canada and the USA, we are quickly becoming a third world country.

The best definition can find for a third world country is: A country where there is no middle class – only rich and poor.

There are many factors that threaten and endanger the middle class, some of which are:

1)   Unions and inflated labor prices in North America that keep the USA and Canada from competing on the world market

2)   North American consumer demand for the lowest possible prices of consumer goods aka: Wal-mart. North American consumers will not pay premiums for locally produced goods.

3)   The death of American manufacturing

4)   The Federal Reserve, Quantitative easing and inflated money supply

5)   Rising oil, food and real estate prices as a result of Quantitative easing.

6)   Rising minimum wage while middle income earners have stagnant earnings

7)   Technology that eliminates certain jobs every year, ie: Clerical jobs replaced by automation.

8)   Rising taxes and fiscally irresponsible governments

All of the above factors are a threat to the shrinking middle class and as the world becomes more global, many more middle-income jobs will disappear.

Why hire an assistant in Winnipeg for $12-$15 per hour when you can hire a virtual assistant who speaks perfect English with better education in the Philippines for $1.50-$4 per hour?

An MBA graduate in the USA costs a company $300,000 a year while the same MBA graduate from India costs $30,000 a year.

The world is changing rapidly and, for many, it is time to make a decision between joining the ranks of the rich or poor.

Eventually, there will be no middle ground in the North American economy. If a person wants to keep living a middle class lifestyle, he or she may have to move to Brazil.

If given the choice between living rich or poor, everyone always says they would choose to be rich. However, when you survey the actions of the average person, it is quickly evident that most people choose  a life of poverty over a life of wealth.

The top 5 reasons why “Poverty Sucks” and why you need to be Rich in the next 10 years.

1)   You don’t get what you want in life: People who choose a poverty mindset over a wealth mindset ask themselves “what is the cheapest thing I can afford?” For these people, life is controlled and dictated by prices – not value. When you go to a restaurant for dinner, do you order the cheapest thing on the menu? Or do you order what you actually want to eat?

2)   Lack of Freedom: When you have a poverty mindset, other people make critical decisions for you. Most people are 100% controlled by their government and their employer. If you want the freedom to make your own decisions, it may be time to build a wealth mindset. Every great experience in life has a price of admission, if you want the experience, you have to pay for it. America’s jails are filled with people who have absolutely no freedom. Most American prisoners made less than $10,000 per year before entering the prison system. When you are impoverished, you are stuck in survival mode and cannot get into “creation mode” where you can freely create wealth and the life you want.

3)   Lack of confidence and health: Lack of funds creates stress. Everything in life is difficult if you cannot pay the price of admission. Stress is a major threat to health and wealth. Lack of funds also creates a lack of confidence, which can be a vicious cycle. No funds equals no confidence and no confidence equals no funds. If you are in this cycle, break it immediately.

4)   Broken Homes: The #1 cause of broken homes and divorce is financial stress. Financial infidelity aka: hiding bank accounts, secret spending and secret credit cards ruins trust and relationships. Divorced families are much more likely to be faced with poverty and financial problems.

5)   Debt: Nearly 50% of the families in the USA are 1 paycheque away from bankruptcy. We live in a paycheque to paycheque society where overspending and money mis-management makes debt a necessity for survival. Today with credit cards, it’s easier than ever to get into debt. Although debt is a convenient way to take care of immediate problems, it is a double-edged sword. Debt will let you do the things you want today while robbing you of the things you want in the future.

All of the above reasons can create cycles of poverty that are very difficult to break.

Unfortunately, in the future, there will only be rich and poor in North America unless some major changes are made. I have heard many experts say that next 10 years will be the biggest wealth transfer in history and best time in history to become very rich... or very poor.

The USA is in a recession that may turn into a depression and this means that businesses, real estate and other assets will be on sale. There will be more opportunity than ever to become wealthy.

The best part of living in a free country like the USA or Canada is that each of us has the ability to choose between becoming Rich or Poor.

Thanks for reading,

Stefan Aarnio

Freedomway.ca
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By: Stefan Aarnio
Freedomway.ca
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https://twitter.com/stefanaarnio
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Retirement for many North Americans is a dream that many people wish to have. The first wave of baby boomers is starting to retire in the next few years, however, many of them are not prepared to stop working.

The definition of retirement is “to take out of useful service” and what happens to so many hard working people is that they die shortly after being “taken out of useful service”.

Working at a job is a a social pursuit that can add purpose and meaning to a person’s life and so many people highly value the social aspect of working.

If a person decides to retire and loses the social environment that they have been in for the last 10, 20 or 30 years, they can suffer a serious blow to their happiness and life can become very difficult.

If you look at human history, there are virtually no examples of societies that have a “retirement” with golf courses, meal plans and retirement homes.

Life spans have been short throughout history and people generally worked until they died. In some cultures, the elderly would live with their children and help out around the home, but they still did a considerable amount of domestic chores and kept “working” without retirement.

Many baby boomers have the vision of retiring on a golf course like their parents did and sadly, I don’t think this will be a reality for most of them. My opinion of the “golf course” retirement is that it has been an anomaly that only one generation in human history has been able to enjoy.

Unfortunately, the “golf course” retirement has been artificially created by the WWII generation before the baby boomers.

The WWII generation financed their “retirement” on debt and fiat currency. Like most debts, they have been able to pass the bag onto their children (the boomers).

Historically speaking, the “golf course” retirement was created early in the industrial age and it was mathematically engineered by highly skill actuaries. They calculated that for every year a person worked after age 55, the worker’s lifespan decreased by a proportionate amount of years.

“67” is the magic year because it the shortest amount of retirement that the company would have to pay. Age 67 is the year that the average worker would statistically die after working until age 65.

What this means was that many retirement plans were designed around a worker working from age 18 to 65 with a 2-year retirement followed by a quick death at 67.

“Retirement” plans were never designed to support people and their families into their 80’s, 90’s and 100’s. These retirements span 20, 30, 40 or even 50 years and they were fundamentally designed to support 2 years.

Most companies with defined benefit plans were betting on their employees dying 2 years after 65. Statistically today in North America, both men and women live to be nearly 80 years of age and the number is climbing as healthcare improves.

I saw a statistic the other day that said that between Obamacare, social security and medicare, the United States has 80 Trillion dollars of unfunded liabilities. The amazing thing is, 80 Trillion dollars is more money than the entire world’s money supply.

No one can pay this liability, not even the USA with it’s unprecedented money printing abilities.

The USA could print their way out of the problem, but would completely devalue their currency into oblivion in the process.

Many of the pension funds, retirement funds and mutual funds that the Boomers are relying on for retirement are all invested in the paper assets that are extremely vulnerable to market fluctuations.

Furthermore, these assets are all timed to liquidate at the same time. The baby boomers are the largest demographic in North America and in other parts of the world as well. These people will be selling their large family homes at the same time (in specific suburban sub-markets), liquidating their stock portfolios and will begin systematically withdrawing from the markets in 2016.

What happens when everyone reaches his hand into the cookie jar? Although there should be, there are not enough cookies in the jar for everyone and some of us won’t get a cookie. The stock market works like this and when everyone wants to sell, values deflate and many people will not get their full (inflated) value on their assets.

When the baby boomer garage-sale begins, who will be in line to absorb these large suburban family homes, stock portfolios and other assets?

My prediction is that the younger generations, namely the echo boomers, will not have the purchasing power to absorb their parents’ assets. There has been a large shift in the middle class and the entire middle class workforce has migrated from North America to Asia.

As well, the purchasing power of the echo boomers has been damaged by long term no-value university programs and many do not enter the work force until mid twenties or later.



Furthermore, many echo boomers are loaded down with student debt racking up into the hundreds of thousands.

It is common for students nowadays to leave school with a houseless “mortgage of student debt”.

What is most unfortunate is that these students cannot go bankrupt to get out of their debt obligation.

I don’t have a crystal ball to predict how these demographics, fundamentals and laws will pan out, but there will be chaos and chaos brings opportunity.


If you are a savvy investor, you will be able to find some serious bargains on assets in both Canada and the USA.

However, if you are on the other side of the equation and expecting to retire in the next few years, you may need a back up plan to hedge against your current investment portfolio.

I don’t want to preach doom and gloom; I prefer to be optimistic about the future. However, we are set up for a perfect storm in the next few years and I truly believe that we will see a major transfer of wealth.

It’s up to you to get educated on the things I have written about in this article and do your best to prepare for the perfect storm… Otherwise, it may be better to die at 67.

Thanks for reading,

Stefan Aarnio

Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio

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By Stefan Aarnio
Freedomway.ca

Remember: 
Please share this article if you found it insightful.

"The grass is always greener on the other side, until we get to the other side and realize that the other side requires watering and maintenance too" - Dr. Nido Qubein

Focus brings clarity to the mind.

Focus brings success.

Focus brings happiness.

Happiness in life is determined by what we focus on and choose to think about. If we are focused on our passions, obsess over them and think about them all day long, we live very happy and productive lives.

However, the enemy of focus is options.

Have you ever noticed that some of the least happy people are the ones with the most options?

The media is littered with rich and famous celebrities who have all of the options in the world: They can live where they want, spend their time how they want, eat what they want, drive what they want, have the house that they want, and have the means to completely design a perfect life and yet, many people who "have it all" are miserable and pursue hard drugs to escape reality at all costs.

These people have too many options and when the mind has too many options, focus erodes along with sanity and happiness.

In my own life, I have had periods where I had "too many options" and was on top of the world. Surprisingly, too many options also bred discontent, unhappiness and even mild depression and anxiety.

When we think we have too many options, we always ask "what if I had gone the other direction?", "what if had chosen differently", "what if I had dated that other girl"...

Eventually the mind tears itself apart, focus decays and we are left in a sea of "what if's" with no commitment or focus to any one thing.

On the flip side, there are people in the world who have the "luxury of no options".

We see people in marriages who have "no option" to get divorced and they work on their problems until they find happiness in the relationship.

We see people in businesses who have "no option" to quit  and these people always reach success because failure is not an option.

We see people in life who have "no option" of an alternate path and they become the most wildly successful people in their fields because they have the "luxury of no options".

All of these people have the highest levels of focus and absolutely zero chance of defeat.

When Julius Caesar landed on the shores of Britain to wage war with the British Tribes, he ordered his men to "burn the boats". His troops would either be victorious in battle, or they would all die in battle - no one goes home through failure. Caesar gave his men "the luxury of no options" and he was victorious in his campaign.

The Spartan warriors of ancient Greece had a similar mentality. Death before dishonour was a mantra that accurately describes the Spartan war machine and they are known throughout history as the most battle hardened, persistent, fearsome, victorious, disciplined warriors of all time. The Spartans created a culture based around "the luxury of no options" and this culture created a brand of warrior that is still studied in modern military schools and will continue to be famous for ages to come.

When we look at the most successful business people, a common element for Entrepreneurs is that they find themselves in a "no options" situation early in life. Usually successful Entrepreneurs have parents who are either dead or incompetent and they have to take over the family business at a very young age. This was true for Fred Trump (Donald Trump's father), Robert Kiyosaki's "Rich Dad" and a modern examples would be Curtis Jackson (50 Cent).

Other entrepreneurs who find "the luxury of no options" choose a path in life at a young age and give themselves no way to retreat.

I was reviewing the "30 richest drummers in the world" list and two names that stuck out at me were Tre Cool of Greenday with a net worth of $45 million dollars and Dave Grohl of Nirvana/Foo Fighters with a net worth of $225 million.

Both Dave Grohl and Tre Cool dropped out of school at age 16 to play punk music. They had "the luxury of no options", burned the boats and had no way of reversing their choice.

The "luxury of no options" brings clarity and focus to the mind which is an extremely powerful tool because the mind will always find a way to achieve any vision that it is focused upon. 

Where most high school drop-outs are perceived as derelict losers who wander through life, three of the greatest entrepreneurs of the information age were all drop outs: Steve Jobs (Co-Founder of Apple), Bill Gates (Founder of Microsoft) and Mark Zuckerburg (Facebook Founder).

These men all made a choice in university to burn the boats and choose the "luxury of no options".

In my own life, the happiest, most exciting, most relevant moments of my life have all been moments where I had put myself into a "no options" situation.

I was forced to leave the corporate world (something that many people struggle with) because if I didn't quit my job, then I would be bankrupt in 3 months. Even while earning a nice comfortable salary at my job, I would still be bankrupt if I stayed. With "the luxury of no options", I quit my job, woke up every day with the intentions of finishing my failing real estate development. I was 110% focused on finishing the development at all costs and did not leave the job site daily until it was too dark to work. 

Life becomes very simple and fulfilling when there are no options. Every morning, the only thing I thought about was finishing the development. Every afternoon, the only thing I thought about was the development and every evening, the only thing i thought about was the development.

I had become immersed in my work, my focus became crystal clear, failure was not an option and I was happier than ever before. What is more interesting is that my chance of failure dramatically dropped to zero. There was literally no chance for the project to fail once I had found "the luxury of no options".

My contractor's truck was broken, so we couldn't haul materials. I loaded up my small 4 door sedan with doors, toilets and vanities (none of which fit in a small car) and drove around town to 6 different suppliers to get the necessary supplies to the job site. My general contractor, who had mentally given up on finishing the project, was amazed that I was hauling large building supplies in a small sedan and not a truck. I drove my small car with doors, lumber and vanities sticking out the passenger windows and the trunk. I had to take back roads so that the police wouldn't pull me over. My general contractor had given up, but I had "the luxury of no options."

We had no labour to paint the building, so I put on my painter clothes and painted every day myself while also hiring  anyone I could find on Kijiji to paint. I also attracted friends and family help with the labour because I had found "the luxury of no options" and everyone could see the high stakes and the importance of my success.

Somehow, the project was completed and successful within 45 days of quitting my job (I had 90 days to complete it). With the experience, I had learned some of the most valuable lessons of my life so far: 

• When a person has their back to the wall and has no options, the failure rate for that person dramatically drops (almost to zero) and the success rate dramatically increases (almost to 100%).
  
• When a person has no options their focus level sky-rockets. They become obsessed with succeeding. All distractions and procrastination are silenced.
• Every obstacle becomes a non-issue because the motivation level of a person with no options is inhumanly strong.
• A person with no options can achieve super-human feats that the average person with "options" will marvel at.

As a real estate investor, I frequently see part time corporate people who want to make a "smooth" transition into full-time real estate investing. For many people, quitting the corporate world and taking full control of one's time is major desire. However, this desire is often not strong enough to actually put together a concrete plan and stick to it.

For myself, my passion and desire was so strong that I put myself in a situation where I found "the luxury of no options" by accident and became successful by default. Failure was not an option for me because I literally had no options - it was live or die.

I feel the pain of the people who badly desire full control of their time and want to leave the corporate world in a "smooth" way. But after studying success, I'm not sure if there really is a possibility of a fast and smooth transition.

I'm fully convinced that there is a slow and smooth way, but I'm not sure if that method will satisfy the soul's hunger for freedom.

To paraphrase the words of Robert Kiyosaki; We can only choose one of two things in life; security or freedom. Those who choose security, end up with maximum security which is maximum security prison. Those of us who choose freedom, end up with maximum freedom, which is zero security.

For the men and women who find themselves with "the luxury of no options", they only have one choice and that is freedom at all costs. Any security they once had has been obliterated and there is only one chance for survival. 

Freedom is the only choice for these people and they pursue it with a life or death vigour that is absolutely unstoppable.

What would you give up to have "the luxury of no options"?

Have you ever found yourself in a "No options" situation? What was the outcome?

Do you value security or freedom? Which are you currently pursuing?

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Please share this article if you found it insightful.

By Stefan Aarnio
Freedomway.ca

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Photo: The iconic, Slash from Guns and Roses.

"A rock star is the intersection between who you are and who you want to become" -Slash, Guns and Roses.

Years ago between the ages of 16 and 22 I focused heavily on my dream of becoming a "rock star". I wrote songs, put a band together, promoted local rock shows, created websites, sold merchandise and focused on the dream of "rockstardom."

Looking back on the things that I loved about the concept of  becoming a "rock star" was:

1. To be recognized
2. To perform at a high level in front of an audience
3. To have my own business
4. To be in control of my own future
5. To have creative control of my art-form
6. To travel the world
7. To have passive income
8. To build a collection/portfolio of work
9. To earn a nice living
10. To be free from answering to a boss or a J.O.B.

When I look at my life today, at age 26, I have achieved all of the above and I no longer have a band.

I have a theory that we never really love music, art, dance, poetry, fine food, travelling or anything else that we are passionate about...

Instead we love the FEELINGS that we get from experiencing music, art, dance, poetry, fine food, travelling etc.

Rock music doesn't matter, what matters is the feelings we get from the music.

Although I "quit" pursuing the "rockstar" dream at age 22, I have achieved all 10 of the things I wanted in Music from Real Estate instead.

The work doesn't matter, what matters is the feelings that come from the work.

You don't need a band to be a rock star: you do, however, need a BRAND.

The concept of a rockstar really is a concept from the 1970's. Bands/musicians like Led Zepplin, The Rolling Stones, The Who, Jimi Hendrix, Jim Morrison etc. embody the glory of rockstardom.

When we translate the 1970's concept of a Rockstar into today's market of 2012, there are virtually zero universally recognized modern rock stars.

A list that I was reading for fun the other day was the "30 richest drummers in the world" when measured by net worth.

What interesting about the bands/drummers on the list was that NONE of them started after the year 2000. Most of the bands/musicians on the list are from the glory days of rock'n'roll in the 1970's and the rest are scattered throughout rock history. A select few became famous in the 1990's at best.

Many people have said throughout history that "rock is dead" and I would agree; especially when we examine a list like the one above. 

Although "rock is dead", living life as a rockstar has never been more alive.

The only difference between the rockstars of today and the rockstars of the 1970's is that the rockstars from the 70's all had bands. 

The rock stars of the new millennium have BRANDS instead of bands.

I believe that it is much more important to build a brand than a band/business because a successful brand can be attached to a business very easily ie: Gene Simmons of KISS has attached his brand to 100's, if not 1000's of products and is able to spawn dozens of businesses and licensing deals. KISS is a brand that has made more money than The Beatles and will likely continue to do well after all of the KISS members are dead.

Elvis, Marilyn Monroe, and Jimi Hendrix are all examples of excellent brands that make approximately $50 Million dollars per brand annually, even though the "rockstar" behind the brand has been dead for years.

A modern example of a "rockstar" would be Mike "The Situation" from MTV's Jersey Shore.

All of the reality TV stars on Jersey shore are devoid of talent, however, they are highly visible and have a well defined brand with broad appeal. In 2010 alone, Mike "The Situation" made $5 million dollars just off of endorsements and other deals.

The formula is simple, create a great brand, attach a business, rinse and repeat.

Up and coming musical rockstars have lost most of their power, especially rock'n'roll musicians because there is no longer any centralized distribution for music: Traditional radio is fragmented and listenership is down, Satellite radio is highly fragmented, online music is highly fragmented and no one has really figured out how to properly monetize and control the internet. Television is more fragmented than ever and channels like MTV do not feature music or music videos anymore.

Creating a rock star brand is not as easy as showing up on American Band Stand or the BBC as it once was because of all of the fragmented channels.

Modern musicians (especially rap musicians) are focusing more on building great brands and attaching satellite businesses to their back-end. Some examples I can think of immediately are:

1. Lady Gaga,
2. Jay-Z
3. Kanye West
4. Beyonce
5. 50 Cent

The brand is greater than the band.

Both music and business are trending towards brands in the modern economy.

All of this information may be great if you are in the music/entertainment industry, but what does this mean for you and your business?

All of this information means the following:

1. Brand value is more important than ever, focus on creating a visible, high quality brand at all costs. Brands can be monetized later if they are built properly.
2. Visibility is more important than ever. Find a niche, become visible and become the leading expert in the niche.
3. You don't need talent or a band to have a great brand. Consider Mike "The Situation".
4. Focus on monetizing the "back end" of your brand and not the front end. Modern musicians like Kanye West look at their music as a "commercial" for themselves and make money on the back end NOT the front.
5. Build a great brand and diversify your back end as much as possible. No one has a crystal ball and we never know what the next trend is going to be. Have a mother brand with a diverse portfolio of back-end businesses (think of Virgin, Richard Branson's brand with 400 companies under it).

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Please share if you found this article helpful!

By Stefan Aarnio
Freedomway.ca

Remember: Please share this article if you find it educational!

Photo: Soldiers in the Afrika Korps with an 88mm gun.

A wise man once said "wars are won by legs, not by arms".

One interpretation of this quote is: battles are won by distance covered, not by physical strength exerted in one battle.

By covering more distance, smaller armies throughout history have been able to wear down massive opponents and take victory over large distances.

Atilla the Hun was able to wreak havoc on the much larger roman legions by having a fast, small, elite, mobile force. 

Erwin Rommel and his Afrika Korps were able to beat the british into the submission in World War II with a small elite, mobile force.

Lawrence of Arabia employed similar tactics in the pre World War II era that have evolved into modern day guerrilla warfare.

There are two commonalities between Atilla the Hun, Erwin Rommel and Lawrence of Arabia. All 3 men employed the following into their strategy and tactics:

1. Speed
2. Distance

In the days of the Roman empire, business and war were synonymous - there was no separation between business and war. Business was war and war was business. Men in Roman society became wealthy through the spoils of war and later in life would venture into real estate, trade or politics. This is why books like  "The Art of War" by Sun Tzu are found in the Business section of the book store and not the War section. The same principles that apply in warfare also apply in business.

Speed and Distance are just as powerful on the battlefield as they are in the boardroom and let me elaborate on why.

In business, speed wins. First mover advantage, speed of implementation, and velocity of money are all concepts that revolve around speed. In business if you have a chance to be fast or slow, most of the time it is better to be fast.

In business and warfare, distance is just as important as speed. Strategically, we need to have a short position, a medium position and a long position. Whether we are building a company or managing an investment portfolio.

Our ability to win over distances whether short, medium or long is imperative to success.

Strategies that are effective in short positions may not be effective in medium positions and medium positions will not offer the same advantages as long positions.

In business, we need to have an effective mix of 3 types of strategies to be effective over distances and become a leader in the market.

In my past businesses, I focused too much on "long" positions and neglected my short and medium positions.

I would load up my real estate portfolio with long position buy-and-hold cash flow real estate. In my music business, I would pour my time, effort and energy into producing a long term brand strategy and forget my short term strategy. In my debt buying business, again, I had a long term cash-flow strategy but no short or medium position.

These businesses were aggravating, painful and hard to grow because there was no short or medium strategies to generate the cash needed to properly grow and expand.

This summer I began to study JT Foxx. JT Foxx is a very successful real estate investor who has transacted over 500 deals in five years, partnered with some very large money partners and currently owns a huge speaking and coaching business.

JT has very good business acumen and I noticed that he has weighted his business transactions around short positions and the "shortest ways to make money".

The 4 Shortest Ways to Profit

1)   Flipping real estate - Flipping real estate has always been one of the fastest ways to make money in history. Real estate allows an investor to make huge leveraged gains with little or no work and if you do your homework, real estate can be turned in 30-90 days with little to no effort. If you're in real estate, this should be a strategy used often as part of your portfolio and overall strategy.

2)   Local marketing/branding other people - Selling marketing and branding services to local businesses is a very fast way to make large profits. Most business people have no clue about marketing and branding and will pay large sums of money to learn marketing and branding techniques. This is especially apparent in Real Estate Investing and Internet Marketing. Where there is pain, there is profit and branding/marketing is place where many entrepreneurs feel lots of pain. Many companies make large fast profits by relieving this pain.

3)   Public speaking - Donald trump charges $250,000 an hour to speak in public. Raymond Aaron and Tony Robbins have both made over $1,000,000 in an hour giving speeches. Most people would rather be dead than to be speaking in front of an audience. However, this is one of the fastest, most lucrative endeavours for an individual if executed properly. There is enormous leverage in public speaking and tons of branding opportunity. Consider the value of this avenue for a short term strategy in your business. This strategy can be offered for free (just for branding value and lead generation) or it can be monetized - who doesn't love options?

4)   Joint ventures - This year I built my company from the ground up using none of my own money because I used joint ventures to build it. Joint ventures are the fastest, highest leverage business tool available. Only 2% of entrepreneurs know how to use Joint Ventures and this gives savvy entrepreneurs an advantage. Credit Card companies and fortune 500 companies derive major profits from Joint Ventures while small entrepreneurs try to do everything themselves. Whenever I am missing a resource, I will source a JV partner; "why try to own everything?" I have become a specialist in Joint Ventures and I am never low on resources because I know how to create favourable deals for everyone. Some greedy entrepreneurs don't like Joint Ventures because they have to give up a percentage of their business for access to extra resources. In the words of Mark Cuban; "Would you rather have half a watermelon or a whole grape?"

After learning the 4 "shortest ways to profit", I began to re-think my business. I have began restructuring it and adding short and medium positions to my long positions and have begun to find balance. Today my business is healthier than ever and my strategy going forward is more sound. I recommend you review the "4 shortest ways to profit" and plan to implement at least one of the 4 strategies into your business in the next 60 days.

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Remember to share this article if you found it useful!

Stefan Aarnio
Freedomway.ca

Remember: Please share this article if you found it educational!

There is a moment in my life I will never forget...

I was watching 50 Cent, the famous rapper, on an interview on TV. He was wearing a suit and dressed like a businessman - not a rapper or a drug dealer (contrary to his brand). The interviewer was marvelling at 50's business acumen and his successes outside of music. There are two parts of the interview that will stay with me forever:

1. 50 Cent made a huge profit selling "Vitamin Water". From what I understood in the interview, he was a Venture Capitalist on the deal and sold the company for around $300 Million dollars to Coca Cola. 50-cent chose Vitamin water because it had the same mark-up as crack cocaine (his first business as a child)
2. When the interviewer asked about the economic recession, 50 cent replied "recession? what recession? Where I come from, there is always a recession... The recession is a middle class problem, not one for the rich or the poor."

When 50 cent said those words, they had a striking effect on me that changed the way I thought about business.

I had always known that there were only two places you wanted to be in the market if you want to be successful and sustainable.

1. Be at the top, the luxury level, have the highest margins. OR
2. Be at the bottom, have the lowest price and win on volume.

Any market is an assortment of prices, values and products. What I look for as an entrepreneur is MARKET PRESSURE.

I want to know where the pressure points are in the market.

For example, I live in Winnipeg right now and we have a shortage of rental units. This shortage is caused by the government who has put such strict regulations on land lords that developers and investors have taken their money elsewhere. Consequently, we have 500 vacant rental units in the whole city with a population between 750,000 and 800,000 people. The average household income is slightly lower than other cities and the purchasing power is usually around $30,000-$50,000 for most renters.

This means that if you have a rental unit under $1,000, you will have a line up of people applying to rent it because there is far too many people at bottom of the market. These people have no purchasing power and are fighting to get in. There are limited options at the bottom and it's EASY to make a sale.

This same principal is why slum lords make so much money. Slum lords set their rents so low that there is always a line of renters and they never repair anything because they know they will always have customers. Their customers are on social assistance or another form of welfare and the revenue comes directly from the government, who is the most stable customer around. This is what it is like to be at the bottom of the market, there is NO SUCH THING AS A RECESSION. Slum lords are at one of the most stable pressure points in the market because they are the bottom. The bottom always has lots of customers because many customers are cheap and just want the basic, bare minimum product. Other examples of recession proof "bottom market" businesses are McDonalds and Wal-Mart. Many customers only go to those two establishments because of the price.

In contrast to the bottom of the market, is the top of the market. The top of the market is often called "luxury" and reserved for those who can pay. Donald Trump, when he built Trump Tower decades ago, chose to build the most luxurious amazing apartments in Manhattan. These units were so stunning that the most wealthy luxury clients in the world would compete just to live in the iconic Trump Tower. In Real Estate, Donald Trump caters to the global elite who do not care what they pay for goods and services as long as they have the best in the world. For Entrepreneurs who sell to the top of the market, money is not an issue for their customers because luxury clients will pay any price just to be the best.

When I used to work at an internet company that sold Luxury Hotel rooms in 2008, we would always have middle class tire-kickers phoning in "trying to get a bargain because there was a recession". I had to remind these people daily that "in luxury products, there is never a recession and that luxury products only ever offer modest discounts (if at all). Customers will pay full price because they want the best. When you are at the top in the market THERE IS NO RECESSION. Luxury clients will always pay premiums to have the best, money is not an issue for these people, as long as the product is the best.

But between the TOP of the market and the BOTTOM of the market is "no man's land"... also known as the MIDDLE.

I absolutely hate being in the middle of the market because this is where recessions destroy businesses and entrepreneurs.

Consumers at the middle of the market are usually middle class people, who have jobs, bills to pay, credit card debts, car loans, mortgages, piano lessons, hockey for the kids, ballet, once a year vacation, savings for retirement, rainy day funds and still like to eat lunch at a restaurant 3-5 times a week.

These people are usually loaded down with so much debt and liability that they are walking a tight rope. If they make a mistake in their budget or lose $100 to an emergency, they suddenly have to cancel their trip to mexico...

If you are the mexican hoping to sell the vacation your middle class friend, you are out of luck and have just lost a price sensitive customer who can no longer afford your product.

The middle market people are extremely price sensitive, every single sway in the economy shakes them and they drop like flies when things get really bad. 

What's worse about selling to them is that they have enough purchasing power to be choosey, but not enough to be luxury. It's hard to determine what they want and they are mobile enough to be fickle with you as a customer.

There is lots of loyalty at the top, as long as you are the best.

There is lots of loyalty at the bottom, as long as you are the cheapest.

There is NO loyalty in "no man's land" and it is a savage place to be.

Whenever I look at a business, design one or analyze one, I always want it to be at the TOP or the BOTTOM of the market. The middle is the scariest place to be.

Recessions can wipe out the middle in a heartbeat, especially since the middle class are an endangered species. If your customers are wiped out, so are you.

It's my policy to avoid marketing to the middle, because that is where all the problems are for two reasons:

1. They are price sensitive enough to be fickle with the bottom
2. Do not have the purchasing power to have luxury at the top

They float between the top and the bottom and land wherever they feel like.

The top of the bottom operates on the emotion of WANT... The bottom of the market operates on the emotion of NEED...

I always want my customer to either NEED or WANT me. In the middle, your clients neither NEED or WANT you and this is a huge threat to your business.

In my mind, there is no such thing as a recession because I always focus on the top or the bottom of the market and let other people take the risk of the middle.

Although I may look like a "risk taking" entrepreneur, I am actually extremely risk adverse and like to bet on "sure things". By focusing on the right pressure points in the market, and executing your businesses properly with attention to detail, there is no reason why your business cannot become recession proof.

Where do you usually choose to play in the market?

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Please share if you found this article educational!

By Stefan Aarnio
Freedomway.ca

Remember: Please share this article if you found it educational.

Speed is a virtue that has been coveted throughout the ages.

In the jungle, animals with speed would dominate the terrain over bigger slower animals. In evolution, animals that developed to be large with heavy armour always died out to animals that were lighter, faster and with sharp teeth and claws.

In warfare, throughout the ages, the faster more mobile armies were always able to wipe out  slower, heavily armoured forces. Whether we are referring to Atilla the Hun with his mounted archers vs the slow, heavily armoured  Roman Legion; or Hitler in WW2 with his Blitzkrieg forces that dominated the sedentary french and polish troops. 

Speed is a virtue in all arenas and is a key to victory.

Today in technology, companies that can embrace change and implement with great speed are the ones that survive. In the past, a company like Apple was able to innovate with products like the iPod, take the market by surprise and implement new ideas before any competitors could react. Apple would take over and dominate a market long before a competitor could think of stepping in.

Think of iPods... Small children call all music players iPods. A little girl will point to an analogue record player and say "look daddy, that's a big iPod!" - that is the power of speed.

In real estate investing, or investing in general, speed (in my opinion) is the difference between a novice, intermediate and advanced investor.

I was having dinner with a friend of mine tonight and we were talking about our goals for the upcoming year 2013. Every real estate investor, regardless of skill level, always wants to add more transactions and doors to their portfolio.

I mentioned to my friend that I was setting the goal of doing 100 transactions this year. This was way out of my friend's context and he couldn't comprehend that kind of volume or speed. He asked me how many transactions I have completed in 2012: "12-16 by the end of the year" was my estimate. He was impressed with my ambition and wanted to know how I was going to have an 800% increase in my business.

The answer is speed, some experts would say "velocity of money".

The general classifications for Real estate investors can be defined as follows:

1. Novice investors do less than 5-6 transactions per year
2. Intermediate investors do 1 transaction per month or 12+ transactions per year.
3. Advanced investors do 100+ transactions per year

The only difference between these three investors is speed. 

NOTE: There is likely little difference in the quality of transactions between skill levels. There are many astute and careful, slow, novice investors who can earn the same or better returns then an experienced advanced investor. However, the difference between the novice and advanced is that the advanced investor does more deals, executes them faster and utilizes opportunities to compound results. 

The advanced investor is a cheetah in the jungle and the novice is the turtle.

There is nothing wrong with being the turtle, however, the cheetah will be dominant in the market and will have access to the best opportunities and more capital due to visibility.

A problem I have had in my past businesses has been velocity. In the past, I gravitated towards slow "residual" type businesses.

1. One of my first businesses was a self-employed guitar practice where I traded my time for money. This was extremely slow because, although I had lots of clients and low over head, it was very difficult to compound or grow this business. The residual "cash-flow only business model" made it very hard to grow because there was never an injection of cash or credit. Every month I would take 22-25 little cheques into the bank and cash them. There was never a big cheque that could instigate growth.
2. Another business I started in my early twenties was my Debt buying business. Debt buying is a very simple concept. Debt buyers buy charged off, non performing credit cards (or other debt products) for pennies on the dollar and outsource them to collection agencies for residual income. However, this business is also a residual, cash flow business and it was very hard to grow this business without taking on large debt and long term risk as well.
3. My third business was my buy-and-hold Joint Venture real estate portfolio. This business was great because I could Joint Venture with many money partners and have growth every month, but the growth and speed was linear, and again, I was seduced by the cash flow of the business and was not looking at the speed of the business. A deal would take me 1 whole month to find, get under contract, find a JV partner, deal with the financing, deal with the legal, take over the property, fix the problems on acquisition, show the suite to tenants, lease up and then repeat. I became trapped in my own labour and the velocity of this strategy kept me small. I was a turtle.

All of these businesses are functional: However, the businesses above are slow, cannot grow on their own cash, cannot expand easily, cannot gain any market share and have a disproportionate amount of risk and liability when compared to the upside.

The debt buying business and the buy-and-hold JV's also are big and clunky because they rely on debt financing and bureaucratic approval from banks etc. to grow.

These models are the slow and heavily armoured roman legions that were destroyed by the fast moving mounted cavalry of Atilla the Hun. The Huns were fast, mobile, light, hit the battle field by surprise and cherry picked the best opportunities on the field.

My new strategy does not focus on buy and hold, instead it focuses on three FAST strategies:
 

1. Wholesaling
2. Lease options
3. Buy-fix-sell

Because my goal is to have 100 TRANSACTIONS and not hold 100 DOORS at the end of the year, I must focus on fast strategies. Speed is key and I don't want to get weighed down in a slow, long renovation or a long term buy and hold (although these are good models).

Three of the fastest Real Estate strategies (in my opinion) are wholesaling, lease options and buy-fix-sell.

However, to see the effects of choosing fast strategies, lets see the following strategies in terms of TIME so that we can compare them to the slower strategies I used to use.

1. Wholesaling has a time frame of less than 30 days, usually 7-14. It is a fast, no debt, "no buy" strategy that creates fast cash and fast transactions.
2. Lease options have a time frame of less than 30 days to fill or set up. They are fast, can have no debt, are a "no buy" strategy that creates fast cash and fast transactions.
3. Buy-fix-sell has a time frame of less than 90 days (I have completed some buy-fix-sells in 30 days, but that isn't every deal). These deals are fast, carry debt (sometimes hard money), require capital for acquisition but create more profits with slightly more work.

Every single strategy I am using can be executed within a 30 day time frame. Time is the real currency in the market, not money. Money can be manipulated and recreated after it is lost... Time is lost forever when wasted and it is the REAL limiting factor in any business.

Since I have chosen 3 fast, "light on debt and cash" strategies, I am confident that with the right team and systems, I can achieve my goal of 100 transactions and earn the rights to the title of "advanced investor".

If you are interested in working together on a deal for a share of the profits, please contact me on the freedomway.ca contact page and we will see if we have a fit.

In the meantime,

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Please share this article if you found it educational.