5 Percent Mentality

While in law school I took a job in a call center in a basement of a building with no windows. I had just declared bankruptcy, was about to get married, stressed about keeping my grades up, and needed money badly. Having no money and trying to finish law school while moving forward with my life, I must say, was very difficult. It was very humbling and I had to rely on a lot of people, including my girlfriend and soon-to-be wife at the time.

Working in a call center in a dark basement of a turn-of-the-century old building that used to manufacture shoes seemed like a step back in life. I had started a business—the juice pops—that I believed was going to be huge, but ultimately didn't work, and I was in law school but now working in a call center with people who, quite frankly, were not the most respected members of society. Many of them had dependency issues, some were in and out of jail, others were actually on the ankle bracelet. Yet here I was, a soon-to-be law school graduate in the same call center as drug addicts and people on a work-release program. It was not very good for my ego. However, it was a great opportunity to make money and be successful, and that's exactly what I did.

Initially, I was just a call center agent who made sales and got paid a commission. As someone who had sales experience and training, plus my motivation to make money, I rose to the top very fast. I wasn't always the best as there were a few guys and gals there who had better sales skills than me, but I was in the top 5 or 10 percent every week. I worked week in and week out a legitimate seventy hours a week. We had to actually punch in and out every week, and I remember seeing 70 to 72 hours every week on the punch card. But that effort paid off as well. I was pacing about $75,000 a year working in a call center that also gave me the flexibility to finish law school and then study for the bar exam.

The company announced an opportunity to interview for and become a team leader on the sales floor. As a team leader, I would be responsible for roughly a dozen or so other sales agents and I would be compensated by receiving a small override on my team commission. The catch was, if I wasn't on the phones making my own sales I wouldn't be making money for myself. There were roughly 10 other team leaders on the sales floor. Many of them were very nervous about losing their own commissions while having to improve their teams. I thought differently from all of them. I looked at this opportunity as a way to increase my personal net worth and my net worth to the company. Meaning, if I was able to show that I could improve my team's numbers week in and week out, I would not only receive my override but I would also become an asset to the company. But what it took was a mentality that said I wasn't going to give just 5 Percent More of my time or my effort. I was already doing that. But I had to agree to give 5 Percent More of something different, something that I wasn't necessarily ready to give. I had to be open to giving 5 Percent More in a way that at first seemed contrary to what I wanted to achieve. I had to be open to opening my mind 5 Percent More. And it led to me making a whole lot more money.

Each week, I spent just a small amount of time with my team. I used the limited tools we had, from spreadsheets to e-mail, to help keep my team motivated and accountable. We had brief meetings and goal-setting sessions each week and we went over the previous week's numbers. I sent daily motivating quotes and updated the team periodically on where they were at hitting their goals. Here is the interesting thing. My personal commissions were never affected and my team was consistently the top team generating more revenue for the company week in and week out. I just spent a little bit of time, but quality time, with my team that made me more money as a whole and increased my net worth to the company.

All of the other team leaders resented me and thought I was somehow gaming the system and cheating. Some of the smarter ones would come to me and ask what I was doing and I would show them how a simple system that took relatively little time paid out significant dividends. I spent maybe an hour a week, roughly 1 percent of the working hours each week—not 5 percent, just 1 percent—and it changed my life.

Rather than worrying about how this was going to be just a responsibility or a burden that was going to be negative, like most of my colleagues, I took this opportunity; spent a little bit of time and increased my net worth significantly. This small amount of time that I spent is what, ultimately, led me to making millions of dollars.

According to the U.S. Census Bureau, a family of four in 2014 with a yearly income at or under $24,091 is considered to be at the poverty level.¹ According to the United States Department of Agriculture in that same year, the cost to feed that family ranges from $150 to $298 per week.² Without adjusting for taxes, the food alone is roughly half of a family's weekly check. How can anyone live this way? Well, I lived that way when I was a kid. So, what people are left to do is improvise and adapt, and many times the improvisation is cheaper, less nutritious food, or resort to crime. I did both as a kid. Now, I haven't even discussed rent, food, travel expenses, and other basic necessities. What if that same family found a way to make just 5 Percent More income? That would be another $1,200 a year. What would that do for them? Well, for starters it would give them the ability to save that money. What if they found a way to make 5 Percent More each year? How would that impact their lives? What if they allotted 5 Percent More of their time to finding ways to make money? Well, I've seen how it works firsthand. The most my mother made at her full time job was about $19,000 a year, raising me and my brother. We were at the poverty level. What did she do to help get more for us? On the weekends, early morning, she delivered newspapers. She dragged me and my little brother out of bed at 5 AM on Saturday every week so she could make another hundred a week. This was a small effort. Was it hard? Sure. Did it hurt her ego? Sure it did. But that small effort for a few hours a week increased her total income by close to 30 percent. Look, we were poor, not the poorest of poor, but I never felt like I was going without because of the small efforts that my mom made. When I look at some of the other kids living at the poverty level like me, we had a much better life. All because of a little more effort my mom put in. So, if this is you, if you are at that level, you can find a way to make more money. It doesn't matter what the job is or, really, how much money you make. Make just a little bit more and grow it. It will take time, but you will get out of it. You really will! As I type these words it is difficult to articulate my emotional state because I was at or below the poverty level for just under half of my life and now I'm a millionaire. I've seen it, lived it, and know it can be done.

There are research and data out there that discuss why the majority of poor people will remain poor. But when you dig through all the research and data, one thing the data don't provide is any substantive solution. The real answer is that poor people lack the skills to break through. Not skills as in a trade, but the knowledge and know-how to pull themselves out. Not even the drive. Just the “where do I start” part or “how do I start.” How do I know this? Well, the scientific community agrees, but no one really provides the answers. You see, growing up poor, when we got a “windfall”—which was usually our tax returns—my mom and the other people in our neighborhood didn't save this money. We went out and bought new furniture or a bigger television or some other material item to make us feel better. But what was really happening is that we were just digging a deeper hole and becoming more “comfortable” being poor. It is extremely difficult if you are who I am describing right now to believe that little baby steps, microsuccesses, are the answer to poverty, but it is really that simple. It is such a huge problem that no one really knows how to address. I am not suggesting that if you do something 5 Percent More every day you are going to eradicate poverty, but what I am saying is that by doing 5 Percent More each and every day you will eradicate your poverty. When you get going, give them a copy of this book. Then we can start to make real change.

This will blow your mind if you haven't already seen this: Did you know that saving a penny a day and doubling it each day for 30 days, you will end up with more than $5 million? I said this to my assistant and she responded, “You'd better check your math.” So I did and it's below:

Now, even though this is so simple, the average person, especially those at or below the poverty level, will not be able to get past the second week. Why? Well, you are doubling the amount every day, increasing by 100 percent. Now if you did the same with a penny and increased by 5 percent every day and compounded each and every day for 30 days, or even 60 days, you wouldn't have much. But what if you upped the stakes and started with $100.00? What if you increased that amount by just 5 percent every day, then what would you have? Well, below is the answer:

You would certainly have a lot more than 5 Percent More; 60 days later, you will actually have 1,678 percent more than what you started with. Think you could figure out a way to just save 5 Percent More of the amount of the previous day, every day? If you tried, I bet almost everyone could.

What about your retirement? What will 5 percent do for you long term? I asked my Human Resources manager to project what it would look like if a person who is making $40,000 a year contributed just 5 percent of their weekly pay into a 401(k), and this is what it looks like:

According to Paychex calculators (our payroll company), assuming an 8 percent return, a person (single with 0 allowances) who has 5 percent deducted from their pay for 401(k) with no employer contribution:

1. Weekly Gross Pay $769.23
2. Federal Withholding $94.11
3. Social Security $47.69
4. Medicare $11.15
5. Massachusetts $34.60
6. 401(k) Plan $38.46
7. Net Pay $543.22

Over the 10 years, you would invest $20,000. At 8 percent growth, you would end up with $30,108.57 at the end of 10 years. All this assumes that laws don't change and that the person doesn't receive raises. However, usually over 10 years a person would see some salary increase, and if the contribution stayed at 5 percent, you would save more and have more. Now, it is debatable as to what the stock market has returned over the years, but it is more than 8 percent and some even argue it's more like 12 percent. If you could contribute just $38 a week, you will have, conservatively, $30,000 in 10 years. That $30,000, if left untouched and if you continued to add, would grow and would enable you to have a better life in the future. Just 5 percent. I know the economy still isn't perfect and I know what it is like to struggle, because most of my life I have struggled financially, and I have watched my family members struggle and continue to work without a penny saved. Not one penny! If you are 20, 30, 40, 50 years of age, it doesn't matter, ask yourself what your life will look like in 10 years and then think about not having any savings, and stop and think how that feels deep down inside. Then think about how you would feel if you had some money saved, and how that feels. I know how it feels because in my twenties and early thirties I had zero and it didn't feel good. Even though I own my company and we also do a match, I contribute every week and encourage all of my employees who qualify to contribute. Just 5 percent into your 401(k) will not only make you feel better and relieve stress in the future, but it will enable you to do some of the things you want to in the future.

Ultimately, using the 5 Percent More concept to make more money starts with giving a little bit more effort, a little more dedication, and a little bit more sweat. But finally, it's about changing your mind. Making more money is a mind-set of more. And it begins with believing that just a little bit more money can become a lot more down the road, instead of just trying to get rich quick.

That's how the wealthiest people in the world think. And once you start thinking like that you will be on your way. Growing up poor, I did not think like this. Most poor people do not think like this. Most of us dream about the day when we retire, but we aren't even properly preparing for it. Take a look around you and see if others are properly preparing.

When my daughter was born, my then-wife and I wanted to do the responsible thing and start a college fund. We had a financial services company come to the house. They put together this giant three-ring binder and presentation that said in no uncertain terms no matter how much I made, we were never going to be able to save enough. They basically told us we had already lost. They were creating fear in us like I have never seen before. Almost as bad was the home security guy who ingrained the image of my infant daughter being snatched from her room in the middle of the night if I didn't buy his system. The financial services approach must work, but it made me want to just say, “Fuck it, I will deal with it later.” Well, I am halfway there to later (my daughter is 10). That day, we started contributing a modest amount of money into a 529 plan and a savings account for my daughter. Is it going to be enough? Absolutely not; they were right. But it is something, it will most likely be more than half of what she will need, and it is tax deductible.

The point of this is that you have to start somewhere. There is value in momentum and consistency. The modest amount we put in every month has gradually gone up as my income has gone up, and it is just a part of our expenses. Don't think small things can't have a huge impact, because they can.