The rich get richer and the poor get poorer—because of the four letter word: D-E-B-T.
Throughout recorded history, people who pay out money on interest get poorer, and people who collect the interest get richer.
Which side of the interest equation do you want to be on? Do you want money going out of your pocket, making you poorer, or money coming into your pocket, making you richer? (This is not a trick question.)
The Two Spirals
There are two financial spirals. A hopeful, upward spiral and a hopeless, downward spiral.
One is like a curving staircase where you go up step by step. The other is a whirlpool where you get dragged down lower and lower, faster and faster, until you can no longer keep your head above water and you sink.
Which one is where you want to be?
It’s not normal
Contrary to what advertisements try to tell you, consumer debt is not a normal part of life.
You have to decide if you want to stand up for yourself or just be another sheep being led down the path to be fleeced.
“I am indeed rich, since my income is superior to my expense,
and my expense is equal to my wishes”
~Edward Gibbon
Debt Reduction Pays the Best Return
Your best investment is often to pay off your debts before you buy investments. What is the point of trying to find an investment that will earn 10% (before taxes) when your debts are draining away your after-tax money at 10% or 18% or more? If you put $1,000 into a mutual fund and earn 10% you must pay taxes on your $100 earnings. If your taxes are 30%, you are now ahead by only $70.
If you invest the $1,000 to pay off a debt that is costing you 21% (like some credit cards), you are ahead $210 instead of $70. You are ahead 3 times as much! Plus, you are free from worry and strain. You have real financial freedom and peace of mind.
The Only True Financial Freedom
Let’s face the facts of life here. The only true financial freedom is freedom from debt. If you are in debt you are not free. It is as simple as that. If you are deep in consumer debt, we want you to imagine for a moment how it would feel to be free.
Imagine
Imagine if you had no car payment.
Imagine if you had no credit card payments.
Imagine if you had no department store payments.
Imagine if you had no mortgage payment.
Imagine if you had no loan payments of any kind at all.
Imagine if your only bills were for utilities, telephone, internet, etc.
This is the way to live. It’s not just a dream. You can live free from debt if you are willing to change your thinking about debt and then follow a plan to erase debt and completely avoid it from now on.
“Let no debt remain outstanding,
except the continuing debt to love one another. ”
~Jesus
Brainwashed to Spend
The “spend it now mentality” is happily helped out by advertisers and salespeople. They encourage you to spend your way into consumer debt because they make money from you. Your loss is their gain.
The $ 100 Billion Brainwash
In a recent year the major corporations in the U.S. and the Madison Avenue advertising agencies together spent well over $100 BILLION, that is $100,000,000,000.00 and some change, to brainwash you and me into spending our income away as fast as possible. We’re told the cigarette companies alone spend $700,000 an hour.
It’s working too. According to government figures, last year most Americans spent just about 95 cents out of every dollar they made. Some folks spent more than every dollar they made; they actually spent $1.10 or more. How? It was thanks to that scourge from the black lagoon of debt, the dreaded credit card.
If you work from age 25 until age 65 and during those 40 years you average $25,000 a year in pay, you will honestly earn a cool $1 MILLION dollars. Where does your million dollars go? lt goes to others who have carefully planned how to get it out of your hands and into theirs; unless you more carefully plan how to hang onto it.
While amounts of income and years worked are unique to each individual (for example, someone may work from age 18 to age 68 and average $20,000 a year in pay over 50 years), the fact remains that the average American working person really does earn a cool $1 million during his or her life! And almost every penny of it ends up in the handle of others. lt doesn’t have to be that way. Not for you. Not any more. Your million dollars doesn’t all have to go to others. Instead, you can hang onto a good portion of it and make it grow into a fortune.
The Missing Link in Our Education
Yes, we love ideas and education. We’d just like the schools to teach the subjects of personal finance and money management in addition to the other courses. Why is that so much to ask? It baffles the mind. Over two hundred years ago John Quincy Adams wrote, “All the perplexities, confusion and distress in America arise, not from defects in their constitution or confederation… as from downright ignorance of the nature of coin, credit and circulation.”
When it comes to finances, you are right now on a hopeless, downward spiral into deepening debt and financial struggle, or on a hopeful, upward spiral into increasing financial freedom and peace of mind. It’s time to face facts. Which direction are you currently going? Is it time to change course?
Rich or poor-The difference Is not in how much you make- It is in how you use what you make. ~ Jim Rohn
In our work we’ve talked to hundreds of people from all walks of life and all income levels. One thing almost everyone has in common is money worries. The more people make, the more they spend, on homes and cars and everything else. People usually think if they just made a little more, as much as “the Joneses,” they’d finally have some financial peace of mind.
Meanwhile, the Joneses are going bankrupt, having their home foreclosed upon, and getting a divorce due to fighting over money. Always wanting more, more, more is a state of mind fostered by advertising and by our consumer culture. To gain financial peace of mind, we need to shake off the consumer mentality.
Consumption is not the goal in life. Shopping is not a religious experience.
Don’t get me wrong. If your goal is making more money, fine, go right ahead. If you have an opportunity to earn more, by all means earn as much as you like. Just remember that managing what you earn is the real key. It’s not only what you have, it’s what you do with what you have.
“Unusual” Concept Part One
Here is a powerful secret for staying out of debt forever. If you can’t afford a purchase right now-don’t buy it right now. Wow! That is some shocking advice you never read anywhere else these days. Why does that sound so unusual? Because you are being fed thousands of messages every day to “spend now.” When that little voice inside your head says “save your money,” it is drowned out by all the noise.
Unusual Concept-Part Two
The second half of this secret is to live just a little bit below your means. Most everyone lives beyond their means so this will seem like an odd idea at first.
And keep track of your money. Keep a simple journal of what you spend every day. Do it for one month. You will be shocked at where it goes.
“More people should learn to tell their dollars where to go instead of asking them where they went.” -Roger Babson
Money talks, mine says “goodbye.”
Ask most people where their money goes so fast and they will just shake their heads and tell you they don’t know. They have no idea. We’ve personally asked many hundreds of people from all walks of life and all income levels and they all say the same thing. The money just disappears. They don’t know where it goes.
lf you don’t plan what to do with a dollar, hundreds of others each have a great idea and have plenty of skill at getting you to go along with their plan for your dollar.
Soon your money is gone and you owe a variety of debts, pledged with future money you haven’t even earned yet.
Financial Bondage
They “own” you. Ouch! You “owe your soul to the company store.” Not a way to financial freedom but a way to financial bondage. And, worst of all, they are laughing all the way to the bank-laughing at you and all of us.
Does that make you angry? Good, it should. Let’s do something positive to change all of that. A written plan will help you get out of debt, and when you stick to the plan you can avoid going into debt ever again. You’ll prosper and you’ll be financially FREE! Then you will have the last laugh.
We want to pay off ALL debts first, before we worry about red hot investment ideas. If we are losing 21% on debt and an investment earns us 6%, we are still losing 15%. The best way to earn 21 % risk free and tax free is to pay off debt and put that wasted money back in your pocket.
I know many people who are deep in debt on credit cards at 21% interest, yet they are always looking at investments that could earn 10% or 20%. Wow they would still be better off paying down the debt that is costing them 21%.This may seem easy and obvious but hardly anyone actually does it. When some people say, “I already knew that,” we can’t help but reply, “Why don’t you do it then?”
A wise person once said, “Given the choice of doing a task or making up an excuse, most people get right to work on the excuse.”
Our hats are off to those individuals who work at making progress instead of making excuses.
The thing that I should wish to obtain from money
would be leisure with security. ~Bertrand Russell
How to Become a “Lunch Money Millionaire”
All you need do is find a way to save $5.56 a day.
Multiply that $5.56 a day by 30 days and you have $166.80. Multiply that by
12 months and you have $2,001.60-two thousand dollars for your IRA and a buck sixty left over in change.
One man we know stopped spending over $5 for lunch every day, and now that $5.56 a day multiplied by 30 days a month gives him $166.80 a month to put in his IRA. He is becoming a “lunch money millionaire.”
What about you? Would you “brown bag” it at lunch, to become a millionaire?
There are other ways to save five dollars a day besides lunches. The man’s wife quit smoking cigarettes and gave up buying a “double decaf mocha latte” coffee drink every morning on her way to work.
Now the two of them each have $5.56 a day available which adds up to the $2,000 each per year for both of their IRAs.
Just by putting this $4,000 combined into their tax free retirement plan guarantees they will have plenty of gold in their golden years.
Here is a look at how it can grow:
$4,000 Annual Contribution To a Tax-Free IRA
10 years at 10% = $6,374
10 years at 15% = $81,212
20 years at 10% = $229,100
20 years at 15% =$409,774
30 years at 10% = $657,976
30 years at 15% = $1,738,980
40 years at 10% = $1,770,372
40 years at 15% = $7,116,360
Amazing, isn’t it?
Think about that the next time you spend five or ten dollars on something silly.