I was so happy. In 1995.

I was pre-ambition. I’d get into work at 10 a.m. Sneak out around 4 p.m.

I had a one-room apartment and my only piece of furniture was a foam mattress.

It was summer and I had no air conditioning. I had no sheets for the mattress. So by morning every day all of my sweat would be absorbed into the foam of the mattress.

If I woke up in the middle of the night and went to the bathroom, the roaches would scurry away and I’d hear the klik-klik-klik.

I’d leave work at 4 p.m. and go play backgammon all night with my friends at Steinway Billiards in Astoria.

I had a crush on a waitress and would write notes on $2 bills when I paid for my meals. I was creepy and she never responded.

It was the best time in my life. I never saw any of these people ever again.

I started a business. I started to sell my friendship to the highest bidder. My clients.

Clients don’t care about your product or service. They can’t tell the difference between you or your competitors. So I got every client for my first business by selling my friendship.

And bribery. But that’s another story.

I was scared all the time.

What if I couldn’t make payroll? What if our biggest clients realized I was a total fraud and fired me? What if my key employees quit? What if my partners were talking behind my back?

I had no confidence. I thought I had to fool everyone all of the time in order for them to like me.

I started spending less time on the things I loved in order to spend more time on the things I hated.

That is the worst kind of spending.

And then the second worst: selling my friendship for money.

All my friendships were based on money. All my success came from lack of confidence.

That’s a bad start.

Then I made tens of millions of dollars. Cash. Lost it. Made it again. Lost it. Made it again. Got divorced, lost my home, lost my money. Made it again. Lost it.

Learned a lot. Too much. I wish I hadn’t learned so much.

I spent 20 years going broke over and over again. I hope it doesn’t happen again. I can’t take it anymore.

THE ULTIMATE GUIDE TO GOING BROKE

A) THINKING YOU ARE SMART

Every day I wake up and say, “I am stupid.

Some people call it “beginner’s mind.” As if to fool themselves.

But I know the truth.

Whenever I think I’m smart, I lose money. When I think I’m stupid, I get curious, I get help, I help others, I make money. @jaltucher (Click to Tweet!)

Stupidity is a super power when you use it right.

B) VALUE

Not understanding how to value something. Studying similar deals, similar sales, etc. Everything has a value. Even if it’s intangible. Come up with a formula for valuing things. Even time.

C) VOLATILITY

Not understanding the volatility of income streams. Even a stable salary is not so stable.

But business or investment income is filled with uncertainty.

And friendships and love can be volatile as well.

D) LEAKS 

Bad relationships, alcohol, addictions, need for validation, etc. These will always cost more time and money than one thinks.

Every day, today, I have to be aware of my leaks. Keep them in check.

E) EGO 

The best way to make money, save money, and be a good person is to start off the day saying, “I am stupid. I know nothing.”

E) DELUSION

Not knowing where your money is and where it’s going (setting aside for taxes, etc.).

F) SPENDING

I.e.., if you have $1 million and can make a safe 5% on your money, why spend 10% on a car when you can spend 0.5% on Uber per year?

People spend on big items: houses, college, car, etc. And then they try to save by not going to Starbucks.

Don’t let the myths of society rule your spending.

G) NOT UNDERSTANDING RISK

Every investment and every bet must have an unfair advantage.

Even Buffett refuses to bet $1 on a golf game because, as he says, “I don’t want to break discipline”.

Good investors don’t take risk. They mitigate risk. Good entrepreneurs don’t take risk. They mitigate risk.

Success is about going where others PERCEIVE risk but you learn to reduce it.

H) DIVERSIFICATION

Not just in stocks, but in all investments: stocks, private deals, loans, etc. and even how you invest your time (all work and no play).

I) BEING A DICK

Every day help others make money or achieve their goals.

Even one–two “helps” a day adds up to 730 a year, adds up to a lot of people who want to give you unfair advantages back when you need it.

J) NOT LOOKING AT THE WORST CASE

Divorce. Disease. Depression. Business failure. Economic cycles. A one-year deal might turn into a five-year deal. A trend might not work out. Etc.

80% of the time, the worst case happens. Deal with it.

K) POSITION SIZE

People don’t believe me when I say this. But the less you invest, the more you will make.

Sleeping well, with less anxiety, is the best investment you can make.

For me, the smaller I invest, the less I have to think about an investment. Which means I can let it ride. The key to wealth is letting good investments ride for years.

But you can only do this if you start off very, very small.

L) LONE WOLF

Lone wolves are failures.

Thinking, If I do this deal on my own, without sharing it with others, I’ll win bigger.You ALWAYS want to invest with more people and particularly people smarter than you.

M) WORKING WITH “LOSERS”

It took me 20 years of trial and error to learn the difference.

I’m 90% there but still learning every day.

This is an important rule. “Losers” will NEVER make money or have a good deal.

“Winners” make money over the long run. ONLY stick with the winners. The worst are sore losers.

Show me a sore loser and I’ll show you a loser.

N) LOSERS, PART II

A loser is someone who blames others, is a “victim,” blames the economy, blames a partner, has lots of bad relationships, shows you glimpses of poor integrity (because you will eventually see that aimed at you), gossips about others (because to others they are gossiping about you), doesn’t know how to value risk, thinks entrepreneurship is about risk, has lots of “accidents” (car accidents, getting mugged, late for meetings because of traffic, etc.). Doesn’t return calls.

O) LOSERS, PART III

Can a loser change? Yes.

I’ve always had some elements of “winner” and MANY elements of “loser.” I’ve had to work on each thing and I’m still working on it. But I try to make up for it by helping as many people as possible so I learn how to provide value.

But here’s the thing: Losers can change but you can’t change a loser.

Focus on audience selection and not audience development.

P) FOCUSING ON OUTCOMES IS PATHWAY TO FAILURE

People say, “Make a goal and then go for it.” This is B.S. advice.

As you get better at something, as your process improves, you learn more.

Which means goals and outcomes change.

Focus on getting 1% better each day. Outcomes will then happen.

Q) ENVY

Admire success so you learn its vocabulary.

When you compare, you despair.

I can count 10 people right now who used to be close to me who now hate me.

It bothers me that they hate me. I wonder, I always helped them. Now they hate me.

This anxiety I feel is almost as bad as envy. It’s like reverse envy. I need to stop. I’m working on it. I have too much of a need for everyone to like me.

R) FEAR VS. GROWTH

Making FEAR decisions instead of GROWTH decisions. I.e., saying yes to something you don’t want to do because you are afraid you will lose an opportunity if you say no.

Bonus:

S) NOT BUYING PEACE

People say, “Money buys freedom,” but then they get more stressed the more money they have.

Make sure when you have money to respect it. Take the down time you’ve earned. Look at the sky and take a deep breath. Think about nothing.

If you don’t respect money, it won’t respect you.

I haven’t been happy since 1995. Until now.

It’s 2019. I’m actually happy again. For the most part.

It’s an everyday battle. I’m addicted to being human.


James Altucher is the author of the bestselling book Choose Yourself, editor at The Altucher Report and host of the popular podcast, The James Altucher Show, which takes you beyond business and entrepreneurship by exploring what it means to be human and achieve well-being in a world that is increasingly complicated. Follow him on Facebook and Twitter.


Image courtesy of Pim Chu.