Building Wealth - Cutting Costs

These are the guiding tenants by which I run my investments, my life, my businesses and this blog. These are the keys to my wealth and have been adapted from my successes, my failures and the wisdom of others. When you read posts on my blog these are the underlying principals behind my advice and recommendations.

Much of this you may have heard before from your Grandmother, the rest is that wisdom applied to the modern age.

1. Debt sucks! - Stay out of it as much as you can. Most people can’t buy a car or a house with cash and it makes sense to finance large purchases at times. If you borrow money to make money (mortgage a house and rent it for a profit over the expenses) that makes sense but consumer debt is cancer, treat it that way. An abused credit card is worse then no filter cigarettes!

2. When you mortgage a house you have four choices - 15 year fixed rate, 20 year fixed rate, 30 year fixed rate or don’t buy the house. ARMs (adjustable rate mortgage) are also cancer and you will be able to thank a lot of ARM carriers for the recession we are about to have, though they certainly do not get all of the blame.

3. Don’t confuse “thrifty” or “financially responsible behavior” with being “cheap”. - Don’t buy the cheapest, buy the things that best fill the need or want you have for the best price you can pay. When you are cheap you almost always pay more in the long term or end up being unhappy with your results.

4. Everyone should have some type of “second income” or “side business”. - The internet has made making money from home easy to do. Not everyone can make 10,000 dollars a day or even a month but anyone can make 500 dollars a month. That is enough to prevent over 95% of individuals and families from going bankrupt. You need secondary income because it changes your life and helps to insure against “live events”.

5. No matter what you do for a job or who employs you, you must see yourself as “self employed” or as an “independent contractor”. - On one hand be first loyal to yourself, your career and your family. Never see your job as secure, it isn’t someone in India or Mexico may be doing it for half your rate tomorrow. On the other hand as a self employed individual see your employer as you customer, work hard to retain that customer, bring more value then is expected. Such employees are very hard to ever replace.

6. Educate yourself every day. - Never let a day go by with out learning a new skill, concept or idea. Put these into practice and become “highly educated” in the real world. I hire people all the time and the letters after your name don’t mean much to me. More and more employers are looking for people that can adapt, learn on the fly and implement solutions before problems are even a real issue.

7. The IRS and every other government taxing body are thieves! - They steal your money and force us to pay and then they spend our money on many things no one wants. Washington, Jefferson and Adams would go to Capitol Hill if they came back and kick some real ass. Now you have to pay taxes or loose what you have and or go to jail. Yet you should create and take advantage of every tax deduction that is possible. Stay legal but use every and all opportunities to keep your own money in your own hands. Paying taxes is not your civic duty it is an indentured servitude that many non producers have forced you into. Remember there was no income tax until 1912, we did just fine between 1776 and 1911 with out it.

8. Despite what the movie, “Wall Street” taught you, greed is NOT good. - Greed is evil and should not be confused with ambition, determination and having goals that others think are to big. Be generous with what you have, always give to charity and good causes. In the end you will end up having more.

9. Assets and cash are meant to be leveraged. - Do not keep your money under a mattress or in “safe” low yield bank accounts. Sure a savings account is a good place to keep some money you can access quickly if you need it but that should be the small portion of your money. Don’t go high risk with your life savings but invest your money in a diversified manner into good solid investments.

10. Do not believe that money is scarce or difficult to acquire. - There is wisdom in not “pissing away money” or “knowing the value of a dollar” like your grandparents taught you but poverty consciousness will keep you poor. Don’t fall for it, money is easy to generate and anyone can learn how. As the old saying goes, “there is always money only the pockets change“.