INTRODUCTION

The book The Millionaire Fastlane presents what can come across as a controversial approach towards personal finance, financial independence and building wealth before retirement. Without sugarcoating anything, author MJ DeMarco shares his philosophy on choosing the fastlane to getting to the point in life when you can exclude the word “budget” from your vocabulary and experience everything life has to offer.

DeMarco breaks down what he believes you need to change in your mindset to switch thinking from a typical, long-time oriented strategy of being an employee, saving and investing chunks of your disposable income and waiting for the magic of compounding to happen, to becoming hands on with entrepreneurship and kicking off your own business right away. He is against normalcy, which in his opinion is the rat race.

Everyone is naturally predisposed toward a specific roadmap due to the environment, education, values and beliefs you developed throughout your childhood and adult life. The true essence of each roadmap are the actions you take everyday based on patterns and mindsets common to people living by similar roadmaps. You should be able to examine and identify which of the current financial roadmaps you’re taking and what the alternatives you could choose are.

The Sidewalk-Poverty Roadmap

The Sidewalk mindset consists of the perception that wealth can happen overnight with one of these big hits we hear on the news. It is not something a person believes that can be completed with persistence and commitment.

A sidewalker’s mindset means when having a choice, you look for quick pleasure and you make decisions to feel good right away, regardless of consequences. MJ calls such attitude towards life a Lifestyle Servitude, a false promise of feel-good instant gratification. It is very common to live off debt, spend money you don’t even have or spend big chunks of your income on artificial goods which you can’t even afford, just to show off a new car you are leasing, a new house purchased with a mortgage, or trendy designer shoes you put on your credit card.

The trap of the sidewalk is following the pattern of being normal as prescribed by societies. DeMarco claims that feeling held hostage to your debt, loan, budget and clothes is not anywhere near genuine wealth. Because of our obligations to “stuff” we strive for the latest and greatest things, reaching quick gratification regardless of consequences and our imprisonment for buying what we cannot afford. Moreover, DeMarco notices the importance of our choices and that they can cause poverty. Often we tend to blame others or anything but ourselves, because sometimes we feel more comfortable acting like a victim of inconvenient circumstances, than to take the bull by the horns and break the vicious cycle.

 

The Slowlane-Mediocrity

The slowlane means you trade one of your most precious values for money – your time. MJ states society repeats its doctrine like the mantra that you should manage your life in a certain order, where at the end a Slowlaner becomes a life-long employee and awaits the weekends to come to enjoy their life.

So you go to college to get higher education, get a job, maybe even a satisfactory one, you pay off your debt and then avoid it at all costs. Then, you remember to save as much as possible each month, and then invest 10 to 2 0% of your paycheck in the stock market. It sounds like a safe life that slowly leads its way towards compounding wealth. And it’s correct, however MJ points out that this is a perfect recipe to become rich slowly.

Maybe if you’re lucky, you will become rich when you retire. His controversial observation is that even when you’re educated, have a well-paid job, save and invest money, you can still easily fall into the trap of losing time. You may be stuck for years waiting for something to happen eventually, like “Someday I’m going to get a promotion” or “I’m waiting to get a better job to be able to afford a vacation abroad.” These breakthrough moments may or may not ever happen.

When you work for someone else’s business you can still be fired, the company can go bankrupt or you can lose your job due to unexpected medical concerns.

Unfortunately, regardless of how much you save or invest in index-funds, if you depend primarily on your job and put tons of hours into becoming the best employee possible, you never have control over the business because you don’t own it. You can lose work if the odds are not in your favor and the unexpected happens, which would mean losing many years of the time you invested in this. 

 

The Fastlane-Wealth

The Fastlane road is about taking the driver’s seat and starting to act like an entrepreneur and business owner. DeMarco claims you can make decent or good money in both Sidewalk and Slowlane, but they will never provide financial freedom. Great or legendary money can be made when you run a business.

DeMarco points out that the journey of creating wealth isn’t easy because it takes persistence, commitment and discipline. Being dedicated to doing what you love is good, but love to a service or a product does not fuel the Fastlane and endangers love if the business turns out to fail. If your company doesn’t make a profit and you feel it could have been a bad idea to become an entrepreneur, your love will fade away and become pure hate and disappointment.

On the other hand, what is key when operating a business is passion. You need to be passionate for the purpose of your business and passionate for your personal growth. Having a purpose makes you put effort into learning each day both by making mistakes and completing business milestones. It makes you appreciate the whole journey you experience when you step into the Fastlane, because your passion about it makes it more natural for you to become eager to improve, learn more, grow faster and enjoy the journey that brings you exciting possibilities and challenges.

In order to take the Fastlane , first you need to ignite your passion for a good reason, areas which bring the idea of shifting your mindset and making an impact on the quality of your life. It could be anything from wanting to be able to afford a mansion, waking up without an alarm clock ever again or paying off your mortgage. Any reason is solid to start a new personal and professional path. Passion for an end goal and a “why” drives Fastlane success.

As we just established, the first step to changing your roadmap and life situation is to change your mindset. And as the author points out: “The biggest asset in the world is your mindset.”

So, how to change your mindset and begin your entrepreneurial journey? You need to stop thinking like a consumer and start thinking like a producer.

We just learned that our ultimate goal to get rich quicker should be starting a business and becoming an entrepreneur. We should create what MJ calls “fruit-bearing money trees.”

A money tree is a business that does not require you trading your time for money to bring high earnings each hour throughout the year. 24 hours, 7 days a week, weekends and holidays – the money can roll in, without you working proportionally harder. You could work smarter, not harder. You could own a business, but not any business.

Often we quit our job and seek our opportunity in leaving the rat race behind by starting a business, but we choose the wrong one. MJ points out that doing what you love is not enough. Many businesses are fueled by the love of the product or service of the business owner which is valuable, but the business itself should check some boxes to actually become a money growing tree.

MJ shares a tip, that the easiest passive income is money itself. Instead of being a saver, become a lender, owner and producer. And just like the middle-class Slowlaners use compound interest to get wealthy. The rich Fastlaners use it to create income, liquidity, and passive income sources. 

MJ relates this example to public figures and politicians as well, where the rich increase their existing wealth with leveraged business assets. It means their wealth comes from business interests, while liquid cash reserves are tied into fixed-income securities like bonds, treasuries and other highly liquid investments.

You should ask yourself how you can get a business to operate independently of your time so it is not a job.

If you want to become wealthy, you should be familiar with The Law of Effection which states that the more lives you affect in scale or magnitude, in an entity you control, the richer you will become. It basically means “affect millions and make millions.”

The more lives you have impact on, and the more lives benefit from your actions, the more problems you solve, and the more money you make. 

Net Profit = Units Sold (scale) x Unit Profit (magnitude)

Let’s take a look at examples provided by MJ to prove that either you make a giant impact a few times or make a small impact millions of times to make your business successful. 

 

Example of scale

Joe Scale writes a book detailing a celebrity diet. He sells 800,000 copies, which is scale, and earns $7 per copy which is magnitude. He earns 5.6 million dollars. This means having an impact on scale, not magnitude. 

 

Example of magnitude

On the other hand, Joe Magnitude owns a company that develops commercial real estate. He develops 14 office complexes and splits the offices into condos. Each fully sold complex profits him 400,000 dollars, which is magnitude times 14 which is scale, equals the same amount of 5.6 million dollars. 

To serve millions is to make millions and when you think big you earn big. If you combine both scale and magnitude, your business hits the jackpot!

You need to know the top 5 key commandments called CENTS. The more boxes your business ticks, the more likely it is to become successful.

 

The Commandment of Control

You need to be in total control of your financial plan and decisions. If you take the driver’s seat and own up to whatever choice you make, you are the one learning from your mistakes or popping champagne when you celebrate success. What you don’t want to do is to be a hitchhiker with no power, no control and no say over your business vision and financial plan.

 

The Commandment of Entry

When you want to open a new business you should look for ideas with higher entry-level businesses, because they tend to involve less competition and need for exceptionality. Low entry-level businesses create high competition and high traffic, where it’s more difficult to have a piece of the same pie.

 

The Commandment of Need

MJ shares some numbers about the fact that 90% of new businesses fail within 5 years because they don’t fulfill the need for the business to exist. The highest chances of you making money is when you do not think about the money itself, but focus on fulfilling people’s needs. You could make them feel better, help them solve a problem, educate them, provide security or make them look better. 

 

The Commandment of Time

For you to actually start making loads of money for your business, you need to disconnect from your time. You should set the business up, to wait until it operates exclusively of your time, regardless of you actually working, sleeping or traveling. This is why you need to delegate work to specialists and seek automation of processes.

 

The Commandment of Scale

It comes in handy to scale up! Though it can be difficult when you run a local beauty salon, it can work wonders when a business is introduced on the Internet. If you make an online app, create content or innovate a product, you have a greater potential to reach more customers.