Rich Box vs. Broke Box

In his 1989 bestseller, “Life Strategies. Doing What Works, Doing What Matters” Phillip McGraw, aka Dr. Phil, lists as his first life law and strategy:

Life Law #1: You Either Get It; or You Don’t

Your Strategy: Become one of those who get it.

When it comes to wealth creation, most people don’t get it!

In the 1990's I attended a real estate presentation by Raymond Aaron called "Buy Low, Sell High" where he introduced the concept of rich box; broke box. This is where I "got it". I am not going to do it justice, but I will try and share with you the concept.

First, he defined broke as "if you didn't get your next 5 pay cheques, you'd notice".

Then he asked a coupe of questions:

“Have you ever noticed that when a broke person wins the lottery, within a year, they are broke again?”

“Have you ever noticed that when a rich person declares bankruptcy, within a year, they are rich again?”

Now I don’t think anyone believes that this is the case 100% of the time, but it happens enough for there to be some substance in what he was saying.

He taught about the two boxes

1. The Stay Broke Box

2. The Stay Rich Box

The reason that broke people are broke is not that they don't have money, it's they have all the ideas they need to go out and create broke. They live in the broke box.

And if they win the lottery or inherit a lot of money, they still end up broke because they have all those ideas needed to create broke. It may take them a year, but they will do it.

And on the other side of the coin is the people who live in the rich box with all their ideas to create rich. So even if they lose everything, they'll be rich again because of their ideas. Might take them a year or two, though.

One of the big takeaways was that when someone who lives in the broke box hears an idea from the rich box, it doesn't make any sense to them. And they reject it. Or shoot it down with their broke logic.

And the easiest way to find out if an investment is any good is ask your broke friends about it. If they say it's good; it's not. And vice-versa. If you really want wealth, you need to stop your broke-box thinking and replace it with some rich box thinking.

It's hard. It's unnatural. It's very uncomfortable.

It's also what's preventing you from becoming wealthy. Fortunately intelligence and logic can overcome the unpleasantness, and allow us to change our beliefs and move into the rich box.

Tony Robbins famous saying "Success leaves clues". So for the rest of this post, I'm going to compare ideas from the rich and broke boxes. Some of them come from Raymond Aaron and some of them come from other wealthy people I've met since I first heard the buy low sell high presentation.

Rich Box	Broke Box
Buys low and sells high. Recognizes that in order to buy low, you need to buy when most others (usually from the broke box) are saying "sell".	Buys high and hopes it goes higher. Listens to mainstream media and broke friends about the latest hot tip. Gets in too late.
Buys time-tested investments with a good chance of a high return over a reasonable period of time.	Buys investments with a (small) chance of making lots of money overnight. Get rich quick.
Invests in real estate.	Buys lottery tickets.
Use debt to buy assets.	Use debt to buy vacations.
Use money to make even more money.	Use time to make money.
Recognizes that money can help a lot of things and gives to charities, etc.	Posts on social media "Money can't buy you happiness".
Takes a long term view and predicts where we will be in the future. Acts accordingly.	Talks about the one that got away. "I could have bough Amazon at $30 a share..."
Takes cues from the experts and rich friends.	Has deep investment conversations with broke friends.
Spends money on experiences.	Spends money on stuff.
Checks on their investment periodically.	Checks their investments constantly.

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