A SavvyInterview – Michael

Interview - Michael MunseyI met Michael through social media and was intrigued by not only the title of his book,  An Average Joe’s Pursuit for Financial Freedom, but also the suggestion on the cover to change your perception of money.

I’m glad he has taken some time to sit for a SavvyInterview and share some of his thoughts on personal finance.

RS: What was the catalyst that started you on the road to fiscal fitness?

Michael: In the Spring of 2009, my company’s management announced that they were going to restructure their assets. For those of you that have never gone through a company restructuring, it is another way of saying “possible layoffs.” At that time I was in the process of reading Robert Kiyosaki’s Rich Dad, Poor Dad book. The problem of my financial security became very clear while reading this book. I worked for a paycheck rather than having my money work for me.

The next question was how long could I live without a paycheck before going bankrupt. The answer was not very long. It was the Spring of 2009 when I changed my definition of “success.” It took me 12 years into my professional career to decide exactly what a “successful career” meant to me. I began setting goals that would help me to be free from a paycheck rather than climbing the corporate ladder to be a high paid employee.

RS: What is the one personal finance concept you believe someone seeking financial freedom should understand and practice?

Michael: In order to increase our success rate of achieving financial freedom, we must be able to identify ways to generate passive income. We must develop a habit of spending earned money on assets that create passive income and spending less of our money on liabilities that take money out of our bank account.

RS: Tell us about your book, “An Average Joe’s Pursuit for Financial Freedom.”

Average Joe's Book CoverMichael: An Average Joe’s Pursuit for Financial Freedom offers a different perspective on money than what is traditionally taught by our parents and in our school systems. The reason there is such a discrepancy between the wealthy and the poor is due to the difference in the way money is perceived. We are not born with the ability to maintain wealth; it is something that is learned.

The knowledge of knowing how to make money work to generate passive income is something that anyone can learn as long as they are disciplined. Average Joe’s Pursuit for Financial Freedom is based on practical concepts and discusses the problems that the majority of us face with our personal finance. The concepts in this book are based on theory by an author that practices what he writes about.

RS: What was the best financial advice you ever received?

Michael: The best financial advice I ever received was not to be afraid of the power of leveraging the money I have available. The quickest way to become financially free is to use borrowed capital for an investment using the cash flow to be greater than the interest payable.

RS: The worst?

Michael: The worst financial advice we are all taught as children, is a penny saved is a penny earned. I am not a fan of using 401(k) retirement plans and the stock market as a vehicle to obtain financial freedom. These types of financial vehicles require investing 100% of our equity. We are not able to borrow capital from banks to leverage our money in the stock market because stocks are too risky for a bank to loan money for investing. If the stock market is viewed by a bank to be too risky for a bank to loan money for investing, why would we invest the majority of our hard-earned money in a 401k retirement plan that invests in the stock market?

RS: How do you define wealth?

Michael: Being financially free or wealthy is using income that you do not have to work for to pay your daily expenses: housing, food, medical expenses, travel and entertainment. This income is generated from investments that create passive income rather than depleting your savings or your 401(k) retirement plan you worked so hard to set aside.

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8 comments on “A SavvyInterview – Michael
  1. SavvyJames says:

    A Twitter reader notes…

    “Good interview. Interested in reading Michael’s book.”

  2. Gage says:

    The “worst financial advice” is a 401(k)? Let’s see, I get a 6% match from my company and my wife gets a 5% match (free money) and we lower our taxable income by $46,000 per year ($23,000 each as we’re both over 50 years old). These dollars grow tax free until we begin withdrawing them, most likely when you’re in retirement and therefore in a lower tax bracket. All this for an annual expense of less than 1% and a broad spectrum of investment choices.

    I hardly think that “The Average Joe” is either astute enough or has the resources to “leverage borrowed capital!”

    • SavvyJames says:

      Great to hear from you, Gage. I was wondering if any readers would comment on that particular response. Like you, I am a huge fan of 401(k)s (or in the case of the wife and I, the TSP, the 401(k) equivalent for federal employees). In fact, I have discussed them before in numerous blog posts including Maximize 401(k) Contributions, Has the 401(k) Been a Failure, and Wealth Accumulation among others.

      One of the great things about providing a forum for guest contributors and/or interviews, is the diversity of opinion. Hopefully, Michael will check in on the blog post & comments and expand on his thinking/approach.

    • Gage – Thank you for pointing out the positive aspects of a 401k retirement plan. As an “employee” I participated in my company’s 401k in order to get my company’s match, but a very small amount of my equity is tied up in a 401K retirement plan. When choosing employment, the percent of the company match is a benefit that everyone must consider when choosing an employer.

      A 401k retirement plan is the financial vehicle of choice for the vast majority of us. I do not agree that an employer’s benefit such as matching a percentage of an employee’s annual salary or deferred taxes automatically categorizes the 401k retirement plan as my preferred vehicle for retirement.

      I know several individuals that have lost a tremendous amount of equity as they approached retirement eligibility due to the market fluctuations which directly affect a 401k retirement plan. I also know individuals that timed the market just right and were able to retire comfortably.

      I prefer investing in assets where I have control of the direction of the investment, such as quality of service or product and ones that I can leverage borrowed capital. This is not to say someone cannot achieve financial freedom by investing 100% of their equity in a 401K retirement plan, but it most likely will take longer for those that use 100% of their own money. I choose not to invest the majority of my earned money in financial vehicles that are too risky for a bank to loan money against.

      There are many ways to get from point A to point B and each one of us has to find the financial vehicle that works best for us. Many people receive the same investment advice and follow the crowd. If an individual does not want to be another average investor, they must think differently than the majority. I wish you the best in your journey to becoming financially free and I hope that you are able to obtain each one of your goals. Michael

      • SavvyJames says:

        Thanks for taking the time to stop by, Michael and expand on your thoughts regarding 401(k)s. No doubt that there are a number of ways to get from point A to point B.

  3. Gage says:

    Thanks very much for clarifying Michael as I’m always looking at others who are taking a different path towards the same objective. My wife and I have discretionary income available in addition to our 401(k) contributions. I’ll look to downloading your book (is it avalable via Kindle?) this evening and see if we (wife and I)can “broaden our horizons”!

    • SavvyJames says:

      The image of the book is linked to Michael’s website where the book is available via Amazon (Kindle) and other sources.

    • Gage – Thanks for taking the time to look at this book. You can find An Average Joe’s Pursuit For Financial Freedom on Amazon for your Kindle. The most rewarding aspect of writing this book is connecting with the ones that read it. I hope you and your wife can find something in the book that you both can relate too. Michael

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