Inspiration
I have been amazed at how rip off artists are able to swindle otherwise intelligent folks into handingover their hard earned money. We all know to beware of things that are “too good to be true”, and then you read about the scams, the swindles, and the hoaxes and wonder “didn’t they see this coming”? Bernie Madoff, Jordan Belfort (the Wolf of Wall Street), and Allen Stanford are great examples of confidence and inspiration. They were able to convince wealthy (and sometimes not so wealthy) investors to trust them with their money with promises of excellent returns. Of course, they were all schemes and most of the investors lost huge and the masterminds went to jail. Because of them, I am inspired. If Madoff, Belfort, and Stanford can get suckers excited enough to part with big sums of money, all while lying, I should be able to get a few interested prospects excited enough to listen to some proven opinions. My goal is to give back a little good to those in need. How much easier is it to listen to advice from someone who refuses to take your nest egg? Time will tell.
Turn Debt into Wealth! Does this sound reasonable? One company advertises “the more you owe, the wealthier you will become”. Sorry for the bad news, but money does not work that way. The good news is money is less mysterious, so clarity can come easily. It may not be nice, but it is clear and simple. If you currently have debt, you have been living above your means. I told you it was simple. If you disagree with this statement, you are wrong. Until you accept this statement, you cannot be helped. Moving on, you need to separate out what you want from what you need. Food, water, and shelter are needs. A new dress, better cell phone, or a video game are wants. Love, safety (lack of safety could be abuse, bullying in addition to war and tornadoes) and security are needs (and financial security can be placed in this category). Date night at a fancy restaurant, diamond rings, guns, or a car with side airbags are wants. Notice in the categories above, only the basic needs have a financial cost associated with them. Love, safety, and a sense of community are free. They say the best things in life are free, and after food and shelter, I agree! So how do you transform debt into wealth? You don’t, you get out of debt, and move towards wealth and financial security. The only thing that transforms is you, and your financial (spending and saving) behavior. Start by writing down your income. Then record all of your expenses. For most of us, a monthly time frame works well. Income (salary, overtime, part time job) Housing Groceries Utilities Transportation Clothing Dining out Internet Cable TV Home phone Cell phone Childcare This is a short generic list. (There will be a list posted on the website.) Now comes the hard part. Go through the list and mark each item “need” or “want”. Housing and groceries are obvious needs … or are they? Somehow, when I grew up, we all shared bedrooms, and for a period of time a bathroom (family of 5, one bathroom). Today the norm for many is that every child needs his/her own bedroom, and a house has 2.5 bathrooms. The reality is that no child needs their own bedroom, it is a want. Whether it is based on the neighborhood expectations, or “every other child I know has their own room” doesn’t matter, it is a want. Groceries equal food, so that is a need, right? What about all the processed and convenience foods that are offered at the grocery store? Organic produce, premium coffee, and soda? Much of what is sold in the grocery store falls into the wants category. To stay with the needs, keep to the outside of the store, and do the preparation at home. Many of the other items on the list are either pure wants (cable TV, internet) or a mixture. Transportation for most Americans means a car, and this usually is an enormous expense. Much of that expense has to do with “my car says who I am”. If the car is nice, or financed, then the insurance is expensive. In addition, there are repairs, gas, and maintenance. What about public transportation, carpooling, or moving closer to the workplace/school? If a car is mandatory, an older car with high mileage can provide excellent service with low insurance rates. Now that you know what your income and expenses are, and what your needs are, you can create a plan to live below your means. This is the first step in becoming wealthy. You cannot become wealthy unless you live below your means. Simple. This is how you become wealthy. There may be a lot of wants that are cut out, or maybe a new job (or overtime, or part time work) is needed, but at this point you should know the score. Simply stated, income – expenses = your financial status (deficit or surplus). It may not be pretty, but it is simple.