*This article is Part 2 of a series. You can read Part one here.
I wrote yesterday that I wasn’t going to discuss the technicalities on how to become financially independent. If you want serious advice in that regard, I’d suggest spending some time at iwillteachyoutoberich or at the library. Or the bar. You would not believe how much I’ve learned at the bar. But we’ll talk about that, later.
Instead, I’m going to focus on changes to your attitude or perception that will help you along the way. The fact of the matter is that the struggling middle class and the poor dominate the population in this country. Furthermore, they both have similar outlooks on what constitutes as ‘rich.’ Pull aside any average person on the street ask them what they think it means to be rich. Without a doubt, you will hear that rich is Paris Hilton or Michael Jackson. Rich is diamond encrusted cell phones and private jets. Rich is a large house and plastic surgery. They’re wrong, of course. That’s lucky, not rich, and their confusion in that regard is what is keeping them broke.
How would I define rich? Let’s look at two examples:
A friend of mine spent 8 years investing his money. His portfolio yields him around 42 grand a year. In some areas that’s chump change; but in his area that’s comfortable. He works maybe 3 or 4 hours a week balancing his numbers, making bank deposits, phone calls, (that’s sort of thing) poolside with a corona in his hand. If he wants to go skiing in Colorado for a few months, he goes. If he wants a newer car, he pays cash. If he wants to spend his morning loafing around his house in a pair of slippers, he does. He lives his life with minimal time constraints, almost zero stress, and he works as often or as little as he wants. He’s happy, calm, and comfortable. He’s rich.
Another friend of mine has a combined household income with her husband of over 450 thousand a year. They are in debt up to their eyeballs after blowing all their money on obnoxious status symbols. Between their mortgage, private school tuition for the kids, country club memberships, and other living expenses, they are just barely keeping their heads above water. It is not uncommon for them to be dead broke by the end of the month and they’ve even had to borrow money from their parents a couple of times when things got really bad. My friend has to work 60 hours and week and barely ever sees her children. She is being treated for depression and sometimes complains that the stress is so bad that she often has panic attacks. She’s poor.
Do you see where I’m going with this? It’s not the dollar amount that makes you wealthy. It’s the time you have to put forth to make yourself personally comfortable. Personal comfort varies for everyone, but I would say that a person who spends 1 hour a week to be comfortable is richer than the person who spends 70. Whether takes you 25K a year to be comfortable or 200K is moot. Time is the only tangible luxury.
OK, now I’m going to talk about some of the rookies mistakes that people make that force them into a lifetime of indentured servitude:
1. Having Children Before You’re Financially Secure
Notice how the people who say ‘have kids while you’re young! The money issue will work itself out!’ are always poor? I hate to be harsh here, but when you have children, you are basically choosing your life as it is. So if you’re living paycheck to paycheck now, you’ll probably always live paycheck to paycheck. If you’re in a lot of consumer debt now, you’ll likely always be in consumer debt. If you’re working lot of overtime, get used to it because you’ll be doing until it your body literally gives out. Very few families deviate their financial standing after there are kids in the picture.
There are a lot of reasons for this, but the main one is that children make it harder for you to take risks. How can you start a business of your own if you’re worried about losing the health insurance for the kids? How can you put a little extra money into your stocks when your youngest needs braces? How can you move around a lot as your acquire real estate if you have to worry about uprooting the kids? When my husband and I first started out, we rented out both of our spare bedrooms so we’d have extra money to put into our investments. That wouldn’t have been feasible with children living in the house.
I’m not knocking the joys of parenthood. I am merely saying that you should wait until you’re financially secure before bringing them into the picture. Being a ‘young’ mother or father only gets you so far. It is far better to be an older parent who is not constantly gripped by fear because he’s worried about where the money for Christmas is going to come from. Older financially stable parents make better parents.
If you’ve already fucked up and had children too soon, you can still work your way out of the hole. But you’ll have to work 10 times as hard while at the same time having every choice you make come under the scrutiny of your friends and family. Get used to hearing, “I cannot BELIEVE you guys put $1,000 towards precious metals when you could have sent Sally to summer camp!”
I don’t envy you.
2. Attending College Directly Out of High School
I did this and it was the biggest mistake of my life. No teenage kid can be completely certain of what they want to do with the rest of their lives and that’s why over 70% of them change their major 3 times before they graduate. Do you know what that spells? Wasted time and wasted money. Furthermore, big businesses are shipping jobs across the sea quicker than we can specialize in them, so if you don’t choose a major carefully there is a very good chance that you might end up with an expensive piece of paper that will only get you somewhere if you move to India.
The idea that college guarantees financial security is the most detrimental myth we could possibly tell our children. There are so many degrees out there that won’t even get you a management job Kmart, let alone a comfortable existence. General studies? Philosophy? What the hell do you expect to do with that degree? Clean toilets?
I’m not saying that college is terrible for everyone. There are plenty of careers out there that people find emotionally fulfilling that absolutely require a degree: teachers, doctors, lawyers, etc. What I am saying is that until you’ve decided exactly what you want to do with your life, researched your field to make sure it was viable in your area, and determined whether or not it even required a degree, then don’t waste the money. Better to invest that cash into something viable while you wait and decide.
3. Keeping up with the Jones
Your vanity is the number one thing is this world that will keep you poor. Too many people nowadays are letting TV shows like ‘The Fabulous life of’ or ‘MTV’s Cribs’ dictate to them their happiness. If you’re not wearing designer clothes, driving an expensive car, and heading to a party where all the right people are in attendance, then you’re a loser.
If you’ve bought into this pre-packaged bullshit, then practice saying ‘would you like fries with that’ now because that attitude is going to drive you straight into the gutter.
Image is image, but only you can decide what can and will make you happy. If you have to stop to consider what your neighbors/friends/family/coworkers think when making your personal choices, then you are an emotionally stunted retard who should seek therapy.
Your vanity will convince you to put a $500 sweater on your credit card.
Your vanity will prompt you to blow 10K on a boob job instead of securing your retirement.
Your vanity will persuade you to breed designer children who will probably end up being the next generation of janitors.
Your vanity will get you nowhere, people. But if you insist on letting it rule you, be my guest. I can’t wait to buy your house when it goes into foreclosure.
OK, so now you’ve decided that you’re going to actively work to secure your financial future….after Christmas. Or it can be your News Years Resolution! Wait a minute, aren’t you working on a promotion? Fuck, now you’ve got a birthday party to pay for. Dammit, you need a vacation. Bloody hell, the holidays are coming up again! Where did the time go?
How do you escape this trap? When is the right time to start working on your financial future?
The answer is simple: Right now. I don’t care if you’re a fresh faced 18 year old kid who just graduated from high school yesterday. Today is the right day. Putting it off for one week will turn into two. Then a month goes by. A few years disappear. The next thing you know, you’re 65 years old and on a fixed income bitching at a waitress to give you your senior discount because that $0.89 really makes a difference in your finances.
Don’t be that old guy.
*Read Part 3 of the series here.
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