Steps for the First Truth Concepts Meeting with a Client

Bold italics are the client’s answers

I’m glad we get some time together today.  We are going to be using software to numerically prove the truth about how money works as it grows and to discover the most efficient way to get your money to work as hard as it can.  Before we begin I have a few questions.

If we were meeting here 3 years from today, what has to have happened for you to feel pleased with your progress?

I’d like to have my money working harder for me, feel like I have financial options

Ok, what is the biggest danger for you now?

The loss of my 401k value, don’t know where to invest

I understand, what is your best opportunity right now?

My business is decent, and  I enjoy my work,

That is great and something to be grateful about for sure!  Are you conceptual or analytical?

Both actually…I know that’s an  unusual combo but its helpful

So, what do you think builds more wealth, increasing the rate of return

or decreasing the costs to build that wealth?

increasing the rate of return …that’s what I’ve always been told by the media and my other financial advisors

Response: well let’s take a look, I’ll pull up a Maximum Potential Calculator and we’ll figure it out.  This is from a suite of calculators known as Truth Concepts.  It enables us to be very transparent in our work with you by showing the gains as well as the costs.  You can actually buy the software yourself if you so choose at .

We use it to analyze all sorts of things about your finances as you can see here on this list of calculators, but for now lets look at the issue of returns versus costs.


We’ll look at a Period of 35 years and you said your Income as $100,000.  It should Increase at least 4% a year if not more and for starters we’ll set an after tax Earnings rate of 5%.  You can see on the right hand side that if you didn’t have to eat or pay taxes or spend money in any way, your Maximum Potential would be 16 million.

Now, watch what happens as we add Truth to the situation.  Right here in the middle we have Total Taxes at 40%, that’s everything, fed/state/sale tax/property tax you name it.  Notice how 2.9 million of taxes dropped the savings down to 9.8 million.  That is opportunity cost in action which we’ll talk about in a few minutes.  For now lets stay focused on this issue of increasing returns or decreasing costs being the better way to build wealth.

So, we’ll set Debt Service at 34% as statistics show the average American family spends about 34% of their income in debt service.  Now were down to 4.2 million.  And we’ll set Life Style at 23%.  Ouch, now we’re down to 494,000.  Lets change Other to Gifts at just 1% and here in the middle we have what most people are doing, which is saving 2% of their income.  Now I see you are saving more like 10 or 15% and I commend you for that! But if this picture were true, there would be 329,000 and you can see that is not even one years worth of income  (which is 379,000)  So, on the right we’ll stay focused on that 329,000 figure.

Again, lets stay focused on our question here:  Can we build wealth more effectively by changing the 5% net annual earnings rate on the left or by decreasing costs in the middle?

Again, right now I’m not including inflation to keep this simple.  On the left hand side, lets try changing our 5% to say 10%.  I know it might mean increasing risk, but lets try it.  Before I do, you watch the 329,000 on the far right.  Going from 5 to 10% did what?

Brought it up to only 885,000. That’s horrible! At least it’s two years of income, but that won’t cut it.

 You are right, so lets go back to 5%.  What if we reduced costs.  Now when I say that, are you thinking I’m going to ask you to eat out less?


Well, lets see if we can find ways to reduce costs that don’t reduce lifestyle.  What if we shifted our assets around a bit and were able to reduce taxes to 35%?  What did that do?

It changed 329 to 1.1!

And what if we reduced debt down to 24%? 


Yes and look how much we are saving? 17%.  So reducing costs which allowed us to save more, enabled us to build wealth much more effectively than increasing returns.

This is a good example of that first Prosperity Principle we spoke of last meeting.  We called it THINK and reminded you that prosperity thinking is often opposite of what most people do in the economic world.  Here most people think chasing high returns is the way to wealth.  Now you know that reducing costs is the way.  And you are clear that  its not lifestyle costs we are wanting to reduce, but taxes and debt costs.  Reducing taxes and debt costs which enables us to increase savings will build wealth more effectively.

Next question for you:  Do you remember the third Prosperity Principle of MEASURE as it is related to opportunity costs?

Ahh, NO

 That’s not surprising, again, its because most people (including the media and most financial advisors) never take opportunity costs into consideration when making economic decisions.  Lets take a look at how people buy cars.  We’ll pull up this Automobile Calculator that shows the true cost of paying cash.  What do you think of the statement that you finance everything you buy?

I’m not sure I understand it.

I didn’t used to either.  So let's figure out if it's true.  If you finance everything you buy, then you either pay someone else interest or you give up interest you could have earned.

A good friend of mine says you pay up or you pass up.   Let's take a look


I’m going to say you had an account with $200,000 in it that you designated your “car buying account” and it was earning a net 5%.  We’ll look at a 20 year time frame and say you bought a car every 4 years for $30,000.  No increases or sales tax yet, we’ll keep it simple.  Over on the right, your account of $200,000 would have grown to $530,000 if you hadn’t bought any cars.  And we know that 5 cars at $30,000 each would be $150,000.  Yet you can see on the right the account is not $530,000, its $250,910.  That is a $279,750 difference.  Why did $150,000 worth of cars cost you $279,750?

I’m not sure

Ok, lets work through it.  Going back to the statement “you pay up or you pass up interest”  in this case, didn’t you pass up interest, the 5% that the account was earning, on the $150,000 you took out of it to buy the cars.  Over that 20 year period of time, that $150,000 could have turned into $279,000.  That is opportunity cost.  We must measure it so we know what we are dealing with and then we can do something about it.


Q. So now, tell me what is your least favorite money spot right now? Your 401k,  your mortgage, your life insurance, your stock account, anything?  Lets take a look at what is really going on there.   What is working about that investment? What is not working about that investment?

Q. So now, tell me, is there an economic decision you are getting ready to make?  Let's take it through a calculator so you have the whole truth about the matter.