How to take a little and make it even less – Part 2

Rich people would rather be educated than entertained. This is a big one for me. So many of my Facebook friends fill their posts with their latest concert outing, theme park visit, vacation destination, or entertainment purchase. Wealthy people enjoy life, but their primary focus is knowing more not partying more. The average American watches almost 7 hours of television a day. Then they complain how they never get a chance to get ahead. Here’s a hint: Turn the blasted thing off and pick up a book or enroll in a community college class. Wealth is a choice and most of us make the wrong ones.

Poor people surround themselves with like-minded people whose claim to fame is that they have no claim to fame.  Rich people surround themselves with successful people because there is power in the assurances of others that success is every person’s potential. Let me recommend a couple of books that have been out for a long time. You can get them at the library (they’re free to borrow there) or a used book store. I bought my copies on Amazon for under $3 each. The first is Denis Waitley’s “Seeds of Greatness. “ The second is Zig Ziglar’s “See You At The Top.” They will challenge your thinking and shape your behavior. But you will have to read them. Where will you find the time? See number 9.

Saving is one thing, earning is another.  There’s more than one way to save. A friend of mine did well in business, sold his mountain home and lived in a mobile home while he paid off his future retirement home in Lake Havasu, Arizona. Some years later when we visited we learned he was living in a duplex not because his retirement plan went wrong but because his savings were not earning enough in the bank. So, he bought rental property for a greater return on the money.  

The rich believe in skill and take advantage of luck while the poor work with their skills and hope to get a lucky break. There are opportunities out there, even in these times, but they won’t rise up and hit you in the face. Education, knowledge, smarts, prudence, and work all stack the deck in your favor.

What one person can do you can do too. You give up too easily. If others improved their lot, you can too. Resignation is a way to leave one opportunity to embrace another. It should never be an attitude that typifies your outlook on life and living.

Poor people buy liabilities, rich people buy assets. It isn’t as easy as it used to be, but you can still get credit and a new car is not out of reach. But new cars are not assets. They are liabilities. In just a few hours, you will almost certainly owe more on it than it is worth. I am not saying you should not buy one. For some it is the best option. But do not consider it an asset. An asset, for it to meet the definition of asset, must have value in excess of what you owe for it. Unless you buy a Duesenberg from an unsuspecting seller for a hundred dollars, a car is always unclassifiable as an asset. This goes back to the concept that poor people spend, rich people invest.

Rich people did not become rich by being stupid. When Lou received a wrongful death settlement for his late wife, he had $50,000 in windfall, tax-free money. He could have invested in his own business, bought a home, or even put the money in the bank. What did he do? He invested in a penny stock offer with the all too predictable result – he lost it all. This is just dumb but not untypical. I’ve watched a few episodes of the TV show “The Lottery Changed My Life.” Sadly, for most the windfall brought heartache and pain. For too many the result was bankruptcy in just a few years because they were completely unequipped to handle such large amounts of money. There is no other way to put it. They just were stupid with it.

Poor people pay too much in taxes. I want to pay what I owe but not one cent more. My 7th grade home room teacher once taught a valuable lesson using driving. He set up the situation of two drivers on a winding mountain road, one going uphill, the other down.  He asked us what we should do if we had the lane which was nearest the mountain. When the other driver approached, should we stay crowded against the mountain or stay centered in the lane? Most said we should move over and give the other driver space. He reasoned that while we should not crowd the other driver by moving into his lane, we should, for our own safety and prudence, exercise the privileges of our position and maintain our advantage. That lesson applies everywhere. Take advantage of what is yours by position and advantage. Use every legal means at your disposal to pay less taxes. VP Biden is wrong when he says that paying more taxes is patriotic. Paying more taxes is just not smart.

People get richer by using free money.  The company I used to work at gave me a whopping 3% raise at the end of the first year. That amounted to a princely 54 cents an hour. But they had a 401K matching funds plan whereby they would match your contribution up to 3% of your hourly wage. So, I kicked in my raise and the 54 cents an hour became $1.08 an hour. Check the math. At 2080 hours per year (40 hours per week X 52 weeks) that is $2246.40 a year more than I had. Do you know how many people at that place never did that? What do you think they did with their 3% raise? That’s right. They spent it. Sigh!

Even a little is better than nothing and a whole lot more than less. Most people don’t begin any kind of financial planning because they think they need large amounts of capital. You don’t. Where I live, you can buy a Thirstbuster at the convenience store for 74 cents including tax. If you buy one a day for 5 days a week you will have spent only $3.70 but multiply that by 52 and it comes up to $192.40. Now I am going to say something that some will doubtless take offense at. But if you are the type to spend every day on Thirstbusters you are probably inclined to add on a candy bar or snack of some type. So for the sake of this discussion let me double it for an annual expenditure of $384.80. Ok? Now consider that you may not be the only one in your family to do this so multiply it again, add on cd’s, downloaded music, Netflix subscriptions, and other non-vital  expenditures and you find quite a bit of money. Retirement plans can be bought for very small amounts of money but over a lifetime can add up to significant amounts due to compounding. Poor people look for larger amounts. Rich people look for small amounts that they can turn into larger amounts.

Rich people don’t name their cars, they don’t personalize their losses or wins. A business venture is a business venture and must be regarded as such. Business is business not a manifestation of your identity. People who personalize their businesses tend to make decisions to support their ego rather than advance the business.

There you have my list. I assume you have items you could add. Why not leave a comment below and let us know them too?

Miss Part 1? It is here.

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