How to Avoid the Spending Trap

Million, wealth, money

Don't be so excited when you start earning a lot of money, plan and weigh before spending and acquiring,


In 2000, my telephone rang with a different type of inquiry. Technology startups called; they wanted to know if I would sell my business. In that year, the dot- com frenzy was in full force. Not a day went by without a tall tale about some dot-com millionaire who struck it rich by selling a tech property. Remember the fameless millionaires? This subset of the rich grew at a staggering rate, and the
wave swelled my way.
So, did I want to sell my company? Hell yes! I had three offers to sell.
Offer 1: $250,000.
Offer 2: $550,000.
Offer 3: $1,200,000.
I accepted offer three and became a millionaire … instantly … well, almost. It didn't last.
At the time, I thought $1.2 million dollars was a lot of money. It wasn't. Taxes. Worthless stock options. I made mistakes and invested poorly. I bought a Corvette, hoping it would make me look rich. I thought I was rich, but I really wasn't. By the time it was over, I had less than $300,000 left. The tech bubble arrived with unforgiving consequences, at least for buyers of my company. Against my recommendations, they made poor decisions, decisions that were good for short term revenue but horrific for long-term growth. They flushed money down the toilet as if there were an endless supply. Do we reallyneed custom-branded water bottles? And logo T-shirts? Are these revenue
generating actions?

Shifting into Millionaire Fastlane  

Decisions were made slowly and by committee. Customers were ignored. Incredulously, most of the company's executive management had Harvard MBAs, proof that the business logic doesn't come with expensive initials after your name. Despite having $12 million in venture capital to buoy the storm, my
Web site slowly started to die.
A few months later, near the cliff of bankruptcy, it was voted that my Web site would be dissolved, even though it was still profitable. Tech buyers dried up and stocks were in the tank. Everyone was on life support, including them.
Unwilling to watch my creation fade into oblivion, I offered to repurchase my Web site at a fire sale price-a mere $250,000, financed by its own profit. The offer was accepted and I regained control of the same company I had just sold a year earlier. Essentially, I'd operate the business, take the profit and pay down the carry-back loan. What was left over I reinvested into the business. With my company back in my control, a new motivation surfaced-to not only survive the dot-com crash, but to thrive.

Source : The Millionaire Fastlane by MJ DeMARCO

source