Wednesday, February 17, 2016

What Have We Learned?

I concluded the original "Why You're Poor" series with the television article at the end of January. While at times we might be a little in your face with the way situations are presented it's all just a little tough love.

Because sometimes being nice gets you nothing.

The same is true for your finances. You can't play nice and just say "Oh it's only $30 a month, no biggie."  You must fight everyday to make sure you don't give into silly temptations like driving 3 blocks down the street in your financed pickup to buy a gallon of milk when you should be biking or walking.  Or wasting hard earned cash on a cup of liquid caffeine so you can sit in front of a TV for 3 hours every night. An individual needs to fight on a larger scale the urge to use every penny a bank will lend them to buy a monstrous home while stuffing it full of designer furniture and high end finishes.  That decision in particular could saddle you with enormous amounts of debt and financial stress*. Remember that in general houses are cost centers, not profit centers.

The great thing is we can control all these decisions. The problem is no one takes the time to think about everything they do.  We are all to busy doing the things that actually make us poorer. Sometimes seemingly small decisions such as $10 steaks from the grocery store, or ordering a $20 pizza don't even sound an alarm in your head. Yet we now know in the long run these decisions have a big impact on your financial well being. Just as rich people buy cars differently than average people do because they understand the true costs of car ownership. Self made rich people seek to optimize every transaction in their life.

If an ambitious individual decided to make changes to their lifestyle choices and personal purchasing habits they could reap some serious financial rewards over the coming decade. Just from taking cues in this blog that I write for people to read for FREE. In total the average household has been robbing themselves of $882,188 from the 7 areas(just scratching the surface here) that I CHOSE to highlight. That money could be saved in less than 20 years and I didn't include grocery savings which would likely put us over $1 million if I wanted to calculate it. In other words you could come real close to being a millionaire in less than 20 years.  If you try even harder you can cut the number down to 15, 10, or even 5 years depending on your situation. There are literally limitless areas where a person can save money and figure out how to increase their income simultaneously. All of this if you are just an AVERAGE person.

Ever wonder why this isn't taught in schools? Me too. I only wish I had figured it all out for everyone sooner.

*If you can't put down 20% on a home you need to re-evaluate your ability to buy one in the first place. Think that's crazy? China just recently eased the requirements for a first time buyer to put 20% down instead of 25%.  Yes that means you could not buy a home at all until you reach that level of savings.  MAD Consulting can help you create guidelines to how much you SHOULD be spending on a home, it's real value, and help you analyze where the home should be as it has a big impact on other costs. 

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