7 Steps to Master The Spending Law and Make Money Your Friend

This blog is based on chapter 8 of the book Money is My Friend by Phil Laut, which states that the spending law is – THE VALUE OF MONEY IS IS DETERMINED BY THE BUYER AND SELLER IN EVERY TRANSACTION

I’m writing this as a review to myself as well.

I read this book the first time on recommendation of a friend of mine who became financially free at 35 years old!

I’ve been re-reading and analyzing it for our mastermind group (click here if you want to get into the BETA group before it closes)

There are so many insights upon re-reading it again over 5 years later, so let’s get right to the spending law shall we?!?

Step #1 – Use And Understand the Spending Law Affirmations

1. My income now exceeds my expenses.
2. The more willing I am to prosper others, the more willing others are to prosper me.
3. Every dollar I spend comes back to me multiplied

The first affirmation allows you to understand that your have more income than expenses, that you have positive cash flow, and that your bills are only agreements…and do not become expenses until you pay them.

The second affirmation introduces generosity, and how that will make you rich. Generosity is not giving to people who need the money (that’s charity). Generosity is giving to people so do not need the money. The practice of this will allow you also to realize that you do not need money, and that it is ok for you to have MORE money than you need.

The third affirmation is about profit, and how to make profit. When you spend money, you help others make a profit, and if you sell what you bought for more than you bought it, then you will make a profit.

Step #2 – Understand Prices

Prices are arbitrary.

Laut explains this by saying if you go to a local business and ask them why they sell their food for the price that they do, they might tell you some formula.

And if you visit another food stand, they will have an entirely different formula, even if they sell the same dishes.

It’s good to understand that prices are arbitrary.

Step #3 – Understand Negotiation

Because prices are arbitrary, everything is negotiable.

It is important to understand that and negotiate so that the buyer and the seller both get what they want.

Laut uses real estate as an example.

You may do all the market research that you want and set a price to sell your house, but if no one offers, then you aren’t getting any money.

You get to a price where there is a buyer willing to negotiate and determine the real market price of your house.

Step #4 – Understand Credit and Use it Only for Self-Liquidating Assets

Credit is for people who don’t need it.

I gradually learned this while working for the bank, and seeing how we always were looking for rich people to lend money to, who were already good with business and making a profit.

The bank did not lend money to people with just an idea, and no business success or experience.

Even if they had business success, then still didn’t lend money for new businesses based on an idea, the did it based on the money you had in the bank to pay off the loan.

Credit has been a challenge for me, as you may know I got into a lot of credit card debt in the past.

Now that I’ve paid it all off I will never do that again.

Now I understand that to use credit in your favor, you can only use it to buy assets that will pay for the credit.

For example, we bought an AirBnB business where the income from the business is paying the mortgage, and all the other expenses, including a pay check for my mother every month for managing and cleaning it!

That is a self-liquidating asset.

We also have a mortgage on the condo that we are living in.

Our monthly living expense is paid by us, however, we would have to pay this amount regardless if we rented or owned, and we have to live somewhere.

Hence, it can also be considered a self-liquidating asset.

Step #5 – $100 Bill – Always Have Money

Step #5 is to put a $100 bill in your wallet and keep it there at all times.

The reason you do this is so that you can never say again “I don’t have any money”.

Instead, you will always have money.

You can spend the $100 but if you do, you must replenish it by the next business day (go to the bank and get another $100 out).

Step #6 – Our Money Situation is Our Responsibility – not the Government, Economy or the Money System

A lot of people blame the government, the economy or the money system for their problems.

Ever think you would be rich if it weren’t for taxes?

Well, Phil Laut explains that if it were true, then why are there rich people in the same government, same economy and same money system as you?

It’s not the system, it’s you.

So it’s time to take responsibility for our money situation.

Step #7 – Tithing

Tithing is when we pay at least 10% of our income to others…church, community service organizations, etc.