I’m truly sorry that I vanished these past couple of months but they have been great on many levels. Late last year, I finally read a book that has been around for some time and recommended to me more than once: “Rich Dad, Poor Dad” by Robert T. Kiyosaki. Although it was first published in 2000, it may have more meaning today than ever before. To make a relatively short book even shorter, it can be summed up in three words: “Pay Yourself First.”
What does “Pay Yourself First” mean? Well, the Rich Dad in the book firmly believes you have to look out for Number One. Not necessarily in a selfish, “screw your neighbor” sort of way but definitely not the other extreme where you would find Mother Theresa helping the poor to her own detriment and never thinking of herself.
For example, if you run a business, you must carve out a reasonable salary for your own position before worrying about staff and paying back vendors and debt. Otherwise, what’s the point of running your own business? This is the main lesson I learned from the book and it came at a time when I was seriously considering drastic changes to my business.
As a consumer bankruptcy attorney coming up on 19 years (16 of them as the managing partner of my own law firm), I think I’m very good at dispensing advice but not always the best at practicing what I preach. Thanks to my clear-headed, direct approach to handling creditors and debt, I have counseled well over 2,000 people over the years on what to do about their financial problems. I wish I had read the book ten years ago because my consultations would have been much easier. I could have started with “Pay Yourself First” and expanded from there.
First, let me tell you what I did with my practice. Next week, I will explain how “Pay Yourself First” applies to debt. Not too long ago, my firm had four attorneys including myself along with roughly eight assistants in three office locations yet I did not find myself earning more than I did when I was by myself. You might think that this is crazy but many business owners will tell you that expanding your staff and increasing your business does not always translate into more profit. Yes, revenue increased dramatically but profits didn’t due to the increased expenses of running a larger firm. Personally, I have always had conflicting goals: I wanted a simple life but I also wanted to build one of South Florida’s largest consumer bankruptcy firms. You simply can’t do both.
For years, I found that I was keeping employees around out of guilt and compassion for them as opposed to what was right for me. You can say that I am now being selfish but I never set out to create jobs. That is not anyone’s responsibility contrary to what you read in the papers. Not even the government’s. The billions spent on the recent stimulus programs didn’t create jobs. They simply maintained the jobs that would have been lost otherwise due to the horrific downturn. Find me a job that was “created” and I’ll bet you it was actually there before the economic downturn and simply brought back at the taxpayer’s expense. Sorry about the political diatribe but it is foolish to think the tens of thousands of jobs held by mortgage and real estate brokers, for example, will come roaring back to levels seen in 2004-2006 when mediocre brokers were pulling down six figures. Sorry, but that is not going to ever happen again in our lifetime nor should it.
If an employee is not adding anything to my bottom line, they simply don’t belong there. For more than a year, I was threatening to “blow up” my law firm and start over. It’s like what an orthopedic surgeon sometimes has to do. There are times when the doctor has to intentionally break the bone so that it heals properly. I have done the same thing to my law firm. I have hired a new employee, am in the process of moving offices and will actually make more money as a result. By design, no one from the current firm is coming with me.
How? That’s the easy part. First, I am taking space inside a friend’s law office suite where I will have a shared receptionist (savings of $35,000 per year) and use of three conference rooms. Second, my rent will go down more than $2,000 per month (savings of roughly $25,000). These two cost savings alone will reduce my overhead by close to $60,000 per year. Third, I still have my good will and all that I’m doing in marketing and advertising. In other words, I will still have new clients knocking on my door. That doesn’t mean I will make that much more in 2010 but it does mean I won’t have to work as hard just to keep pace. That’s where the Work-Life balance comes in. If I want to do the same amount of work, I will probably make more but I could also more easily start working a four-day week as I have been planning for some time. Time will tell.
I’m also making great progress working out and losing weight. At 221, I have lost a healthy ten pounds in three months or so. I could have done better but I learned how to make my favorite dessert, Banana’s Foster. That alone has probably added back a few pounds but a life without dessert is a life not worth living. Congratulations should go to New Orleans. Not for the Saints’ recent Super Bowl victory but for its great food and Brennan’s Restaurant, the birthplace of Banana’s Foster.
As promised, here is my latest status report: [221 lbs, -$11,000, 7]. The second entry is my unsecured debt. I’ve made great progress over three months and will explain more next week. The last entry is the mood I’m in on a scale of 1-10. It went down from 8 the last time simply because of my pending move to a new office and the stress that involves. Otherwise, all is well. Don’t forget: Pay Yourself First!