Building Wealth - Cutting Costs

I know a lot of adults that are doing what they can to teach kids about investing and saving money. The most common way is the good old fashioned piggy bank.  There is something to be said especially with younger children to putting some change in a piggy bank.  It is a good start but it is also quite limited.  With the good old pig you always can open him up and raid the savings and the savings lack any type of leverage.  You earn no interest and little Johnny’s or little Dorothy’s pennies end up worth less ever day, unless they are solid copper that is.

My view is it is important to have kids open their first bank account as soon as they are old enough to grasp the concept.  A Roth IRA with some monthly contributions should be set up by age 12 and money should be discussed from a positive outlook.  Don’t teach your children things like, “money is the root of all evil” as that is not the proverb anyway.

People that do well with money come from homes that discuss and value money.  Now of course you must teach ethics, family values and over all life lessons as well.  Your kids shouldn’t worry about money or believe it is the end all be all.  Yet they should understand it and its power, both good and bad and you should teach them the Building Wealth Philosophy as early as possible.

One of my favorite books for parents helping kids learn to invest is Rich Dad Poor Dad for Teens The Secrets About Money–That You Don’t Learn in School!  To me this book is an absolute must read.

One way or another make sure you are making things like money, avoiding toxic debt, savings and investing positive topics of discussion with your kids.  I am not saying your kiddos first words should be leverage and interest over mamma and dada but you get the point.

Ok well this is a website I was asked to take a look at that I now can truly endorse as a very cool resource for “cutting costs” which of course is 50% of our wealth building formula here at CutThatBill.com. So what is this Great Discovery: www.ZenniOptical.com? It is a website called ZenniOptical and they offer a full single vision pair of eyeglasses as low as 8 dollars.

Now I have been to stores advertising lost cost glasses in the past and found that they low priced ones were what we called BCGs or “birth control glasses” back in the army. In other words they made you look so bad that no one would be interested in you. This is not the case with ZenniOptical. They have a huge selection and I even found memory titanium frame for between 10-30 dollars with lenses. If you wear glasses then you realize how good these prices really are.

I have decided to get a pair of these just to have as a back up for if something happens to my glasses or if I just briefly misplace them, I have been known misplace things a time or two.

I am going to be brief on this post and just tell you how I feel and what I think about it along with what the Constitution and its authors actually said.

First you have to understand what the “Bill of Rights” is all about. Many of the authors of the Constitution did not want a “Bill of Rights” as they were afraid any right not included might be infringed upon.   Believing that such a list could become justification for future restriction upon right. As in “it isn’t in the Constitution so it isn’t protected”.   You see you and I are not granted rights by the Constitution, no it simply protects what is seen as a “God given right” to all humans including those around the world, not just Americans.   Such is the nature of being a “shining light on the hill”.

In other words our founders believed all men had the right to arms and did not grant anything, they only sought to preserve that right from tyranny.   Next I am tired of the crap about how the 2nd Amendment applies to the “national guard” or other such nonsense.   While the “militia” is mentioned in the Amendment the “right” is bestowed upon “the people”.   No one doubts what the clear words of “the people” means in the other amendments so why would we doubt it as it is used yet again in the second Amendment.

Further one of the very authors of the Constitution, George Mason stated, “”I ask, sir, what is the militia? It is the whole people, except for a few public officials.”   Yes the only people the founders did not see as protected by this amendment were “a few public officials” in other words the government is excluded in favor of “the people”.   Understand in this Republic we are not “granted rights” or even “granted privilege” by the government, we grant privilege and power to the government at will and at will we are empowered to remove it.   Sound like “revolutionary language”, hell it should the authors were all revolutionaries and considered traitors by the British because they sought and were willing to die for liberty.

My point is you and every other American has an absolute right to keep and bare arms and more I believe the founders saw it as a civic duty to do so.   Think about how you were told in school you should vote simply because you are fortunate to have that right protected and due to that fact you should vote in order to protect that right.   Well, how is gun ownership different?   If you don’t own a gun the thought of someone taking guns away may not bother you.   Go buy one, get trained on it, be safe and understand the empowerment of not waiting 10-30 minutes while your home is being invaded and the lives of your loved ones is in jeopardy.   Do that and then think about a law taking that gun away from you. It will change the equation.

So do I think everyone should be able to own a gun?   Not exactly I think that anyone who has not taken an action to warrant giving up that right should retain it. Just like jail, you have a right to freedom, steal from someone, violate their right and you loose your right and go to jail.   So prohibiting felons, the criminally insane and clearly nuts individuals from getting guns makes sense.   Anyone else should be permitted to quickly establish their identity and buy any gun of their choosing.

I also believe it is your civic duty as a healthy adult American to own a gun of some type.   If you have no experience first take a course and learn safety and proper use. Then spend time once in a while at the range and know how to use your gun effectively.   The more of us that do that, the harder to take away our right it will be for our government. Further let me ask you what would happen to our crime rates if say 80% of home owners had guns, knew how to use them and were willing to do so?

I am a big believer in concealed carry too but that is another post.   So what does this all have to do with building wealth, cutting costs, etc. It has everything to do with it. Proper planning involves “protecting your assets” and let me ask what greater assets you have then,

• Your Home
• Your Family
• Your Health
• Your Possessions

It is a sad state that there are vermin that will take these things away from good people but there are many such scum in our world.   In your home a gun in the hand of a properly trained adult can protect those things. Either that or dial 911 and wait!   That option isn’t good enough for me, I worked hard for what we have, I love my wife, I love my son and anyone that threatens them by entering my home unwanted has a very good chance of leaving in a horizontal position.   I make no apologies for that and neither should you.

I just thought it was a good time to point some of these things out.   I am amazed how many people think we are “granted rights by our constitution” or by the government.   No one is “granted” a right, a right by its’ very nature is inherited and should not ever be taken away from any man unless he violates the rights of others.

Just remember the law that a right left unused is often lost doesn’t just apply to voting.

Don’t worry this isn’t one of my “get your financial butt in line” posts, well mostly not. I am just wondering what everyone is up to in general, like what you are watching on TV, etc. Personally I have been enjoying Celebrity Apprentice quite a bit. Check out this video showing what a snake that Omarosa is. Got to be one of the biggest sleezes known to man in my book. To me this is why so many people are looking to build a business of their own, to buy a business or just to find some way to be independently employed. I mean who really wants to deal with a corporate environment that has far more then its’ fare share of Omarosas.

I have also started out on a diet. Last year I elected to not go Elk hunting because honestly I was afraid I might die somewhere alone on the mountain. The last time I went I had a great but tough time. I came home with blistered and even bloody feet and was sore for a week. Back then old CostCutter was in much better shape. This year going out into the unforgiving wilderness alone seemed like a big risk. Since I am way to young to give up that type of life I am getting back in shape. Who knows, perhaps when I loose my weight I will come clean and say who I am.

Additionally I am breathing some new life into a few of my businesses with some creative ideas and looking to hire a few new creative and talented people. The search for talent is really tough right now, I just listened to this podcast on the shortage of talent in the market today and I have to really agree with the guest speaker. While real estate investing today seems to be a buyers market there is no question that in the talented and skilled employee market it is a sellers market. If you are good, have a proven track record and can deliver then today you call the shots. If you are in the market for a new position and are not finding a lot of opportunities I recommend you get in touch with a good executive recruiting firm.

On another note all together I really think the 2008 presidential race is off to an interesting spin. Ron Paul still seems to be shunned by the media despite basicly finishing in a three way tie with 10% of the vote while Rudy was at only 4%. Typical!

Today we focus on New Hampshire, I predict the following for the republicans.

1. Rudy does aweful and everyone says it doesn’t matter.

2. John McCain wins and his national numbers rock because people are lemmings.

3. Mitt Romney does OK and comes in second and they say it is over for him.

4. Ron Paul does far better then the 8% the polls say he can expect. Comes in third and gets ignored again.

Such is the stupidity of our media and the political process.

Moving on the the Democrats - Hillary has had a break down practically coming to tears because she was asked how her day was mostly because Barock Obama is now surging in New Hampshire and she is on track to loose again. Of course the news is making a huge deal of Barock’s massive support. His followers indeed love him, they laud his speeches and vision yet the news people can’t seem to find a single supporter that actually knows his position on any of the big issues. America, please wake up, support who you want but for the love of God know why you support them.

My personal view I think Hillary is a disaster for this country as our President, her health care plan, tax hikes and some other policies will only serve to make worse a recession that is flat out coming to hit us hard over the next few years.   That said Barock is worse, he want to tax more, spend more and make government even bigger and more intrusive then Hillary.  However he can speak very well, avoids the issues and is very likable.  This is why Hillary is in trouble, even her supporters realize Barock is going to be harder for any Republican to beat and are picking the best candidate to win in November.

I personally think Hillary is unelectable and if she looses the primary (which I predict) Barock is probably a 2 to 1 favorite just in odds to win the presidency.  In other words a Hillary loss in the primaries is bad for the republicans while her victory would be very good indeed for them.

My predictions for the Democrats in New Hampshire are as follows.

1. Barock wins by at least 10% of the vote and we hear all the liberal papers cheer how it is finally time, “for an African American president”. When the country has been “ready” for a long time and we are all really tired of being called racists in subversive ways by the communists running our press.

2. Hillary gets slammed, perhaps even damn near ties with Edwards. This is spun as the “end of Hillary by the right” and some how a “right wing conspiracy” or “anti women” thing by the left. The left leaning media will hold out all hope for Hillary and talk about how New Hampshire and Iowa “don’t really matter”. Of course they really don’t it is just that the media just spent the last 30 days convincing us how much they do indeed matter.

3. Edwards does ok in 3rd but the media talks about how that is “hope for his campaign” even though there are only four Democrats in the race. Idiots.

4. Bill Richards gets a clue and drops out.

So what are you up to in 2008? What do you think of our coming elections?

Ok, hold on, don’t get to excited. Indeed I am going to tell you exactly how to get an almost immediate 2 fold return on your money. I am also going to show you how to do it with out spending any money, hiring a broker or even with out doing any paperwork. However, I have to tell you right up front you are not going to get rich with this technique.

In fact this technique is first and foremost fun to do, second it is designed again to program you mind in how you think about words like “money” and “value” and finally last it is about actually making/investing money.

Now that big lump to the left is a chunk of raw copper. Copper has skyrocketed in both price and demand over the last ten years. Copper is used in countless industrial activities and as countries like China, Indonesia and India continue to modernize the demand will continue to grow and often to out pace production capacity. This issue will be compounded by the boom in coal, gold and silver. Consider that you are a mining company and you are choosing where to go and what to do next. You can either mine coal which is far easier then any metal or you can mine silver or gold which is worth far more then copper. Or last you can mine copper which is profitable but if you had the option what would you mine?

Great! So how does this help you double your money with out spending it? The answer is in the humble penny. Currently and since mid 1982 all U.S. pennies are made from mostly zinc with a copper cladding, basically a zinc coin with a very thin layer of copper on the outside. Such pennies are worth damn near nothing from a metal stand point. However, any penny that is older then 1982 is 95% copper and 5% zinc alloy. What does this mean? Let’s do some math.

Step one - When you look at pennies that are made from 1981 back they are heavier then today’s. In fact there are 146 pennies to a pound. Yet we must consider that such pennies are only 95% copper so 1.05 x 146 = 154 pennies make one pound of pure copper.

Step Two - 154 pennies even those from 1981 back are “worth” in currency a whopping $1.54

Step Three - Copper is currently trading at the time of this writing for $2.84 per pound. Hence 154 pennies are “worth” $2.84 in raw copper and copper is a commodity you can actually sell it for very close to the current spot price.

Step Four - Calculation of our return by simply dropping an 1981 or earlier penny into a “special” jar or container is as follows. $2.84 - $1.54 = $1.30 of “profit”. Now take you profit of $1.30 and devide it by your “initial investment” of $1.54 and you have a “instant return of investment” of 84%. Not quite double but as soon as copper goes back over 3 dollars a pound (which analysts believe will be quite soon) and you are at a full 100% return.

We should also consider that copper was trading for about 60-70 cents just 20 years ago and you start to realize just how high your “return” can be if you just start tossing all you pre 82 pennies into a jar for the next twenty years.

This is a great project for adults and kids alike. The bad news is again you are never going to get rich with this and in fact copper will have to go up to say 6 bucks a pound before you will really be able to “cash in” pennies in any real volume. The good news though is there is no doubt that over the years that will happen and because we are talking pennies not many people are making an effort to store away copper pennies.

In 1959 the U.S. stopped making the “wheat cent” and while most of those have been horded away by collectors from 1959 to 1981 100% of pennies produced in the US are 95% copper and virtually no one have really collectively valued them at anything more then one cent. That is 22 years worth of pennies still traveling around in circulation which means their are hundreds of millions of these pennies out there being spent every day. I always drop my pre 82 pennies in a jar and about 1 out of 5 tend to be pre 81’s. Over the years that is a lot of pennies.

So why do this? I mean save 4 dollars a month this way and you make about 4 in return and you have another 400 fricken pennies to deal with right? Short sighted my friend, the key is you don’t do very much to earn that return and most people are making less on their interest bearing savings accounts a month in America. All you do is follow my advice and “spend cash” and each day go through your pennies and drop any 81 or earlier examples into some special container. How much easier can “investing” be?

Just consider if in 10 years you had 15,400 pennies or $154 bucks. Those pennies if copper is at 6 bucks by then will be worth about get this, 600 dollars. Retirement money? Heck no! Just another little store house of money. Additionally while I never get to concerned with numismatic value because of how highly subjective it is there is another opportunity here.

See first let me warn you if you are currently thinking of buying 200,000 or so pennies from a bank, sorting them out and melting the older ones don’t do it! The U.S. Government will frown on that and possibly make you wear some silver bracelets and break a few rocks for a few years. Such activity is illegal for now anyway. Yet as copper keeps going up (and it will) sooner or later the mint will begin to “retire” the old copper. That is a nice way to say they will take the pennies out of circulation and harvest the copper for use. Of course the government is free to do that. This will make a lot of these 60s ad 70s pennies harder to come buy and add some numasmatic value to them as well.

That is many years into the future but let me ask you this. How cool would it have been if say your grandfather started collecting 1964 and earlier silver dimes for you when we stopped making them in 65? For about 10 good years it was easy to pluck silver quarters, dimes and half dollars from circulation. Today it is very rare to find one. I happen to own a huge pile of such coins put away for me by a very smart grandparent. This led to my love of silver in the first place. Today we have the opportunity to start doing something like that for our children, their children and possibly their children’s children. What would 100,000 Indian head pennies be worth today?

There is more at work here though tied to the production of pennies and the metal price. Do you know why 1982 was the year that the penny changed to a zinc core? In the early 80s all metal prices spiked for a while and even then a penny was worth more as copper then as a penny! So zinc was a cheap alternative and coating it in copper kept the penny looking like well, “a penny”.

Today though even zinc is rising in price and it costs about 8/10ths of a cent in raw metal to make a penny. That is before production costs, etc. This means the US Mint is Loosing Money to make pennies. Additionaly so long as people spend cash we can’t get rid of the penny we have to have something in order to make change of a dollar with. I predict therefore that the days of the humble Lincoln cent are numbered! The easy solution is to come up with coin made of something perhaps even cheaper then zinc and make it smaller too.

Since no vending machines take pennies there is no problem with changing the size of the penny. Don’t think it can’t happen either, they did it with the dollar coin. When sooner or later this change occurs it will be another numismatic bump in the value of all pennies and even more so to the all copper variety. So I encourage you to take the phrase, “save your pennies” with a new vision. Start plucking the little copper disks from circulation today and just put them away.

I have already written a bit about my affinity in my post, What I Blow Money On, but today as a follow up to my article on investing in gold it seems like a good time to talk a bit more about precious metals before we move on. In addition I am going to provide you some of my own rules on buying silver coins.

First let me lay out my case for why silver is a good investment. Simply put all metal commodities are doing very well right now and will continue to do so. Heck even copper is getting rather expensive. Back in the 80s I remember copper going for about 70 cents a pound. Today it is hovering in the range of 2.80-3.00!

Many people see silver as a “poor man’s gold” and I think that is rather short sighted. First I don’t care if silver is ounce for ounce far cheaper then gold if you have 1000 dollars worth of gold or 1000 dollars worth of silver you are holding the same value. Now silver and gold are true brothers in my opinion and the price of one is indeed tied to the price of the other. While they are not completely pinned to one another and the Hunt Brothers debacle will skew numbers from the 80s and early 90s there is a strong correlation (precentage wise) to movements between the two. To get an idea of the correlation look at the two graphs below which cover 1997-2007…

As you can see again while not lock step with each other the two metals perform very closely to each other on the open market.

So why not just buy gold? Understand I am not saying to not buy gold it is just that I truly “invest in gold” I buy through my broker and I buy both actual gold, gold funds and stock in gold companies. I have nothing against doing the same with silver but I prefer to actually buy, hold, touch and own my silver mostly in the form of coins.

Why? Two answers….

First, because I love silver coins, they are history, they are beautiful and they are something material to me that I can look at and appreciate. In this way Silver Coins offer me something that 95% of my other investments can’t. Sure I can look at my stock certificates but there isn’t much fun in that. Most of my other investments are just numbers on paper then don’t have the feel, look and glitter of my coins.

Second, because investing in many different things and in many different methods creates diversity. The beauty of silver coins (at least of the type I purchase) have most of their value in the silver basis price. I can “cash in” anytime I want and do so with no paper work or government red tape. I can literally walk into a shop, sell my coins and walk out. Holding silver coins is like holding cash money with out the cancer of inflation upon it.

So what rules to I have for investing in silver? Here they are but understand these are no ones rules but my own. A few you really should follow but others are more about your risk tolerance and your personal view about numismatic values.

1. I do not belong to nor do I buy my silver in any kind of “club” or any highly advertised coin supplier. In particular Littleton Coins is among the worse places of all to buy coins. Their prices are generally 40-90% higher then local coin shops in my area. I buy from local merchants or only via mail order if the price is as good or better then local pricing.

2. Directly related to the above, I am not on any type of auto shipping or monthly arranged purchases. I buy what I want as I find it and as I want it. My silver investments are truely incremental investments outside of my conventional portfolio.

3. I never buy “junk silver coins” which are large unknown lots of mostly 1960s and older dimes and quarters. Most are worn so badly you can scarcely read the dates.

4. While I don’t buy junk coins I also don’t buy highly numismatic valued coins. In other words I never buy a coin where the bulk of the coins value is based on how “collectible” or “rare” it is. Such values are highly subjective and only represent a “real value” if you can find a buyer. Try buying a 200 dollar silver dollar this week and see what the same shop will pay you for it (with out a big jump in price) the following week. This is the one rule that I understand when others break, this is my personal preference but I have my reasons.

5. What I do buy are Silver American eagles as they are priced right about bullion prices. I also buy high quality but common Franklin, Kennedy and Walking Liberty Half dollars which are still quite affordable and made of 90% pure silver. My other big favorites are the more common Morgan and Peace dollars. These coins to me represent a nice mix and all are very affordable and most importantly highly tied in value to the silver basis.

So what is my advice? Well I think it makes a lot of sense to buy some silver over the years and just have it as a hedge against inflation not to mention an investment that remain liquid in both the best and worst of times. The beauty is you can buy say a 10-20 dollar coin just once or twice a month if you don’t have a lot of extra money to invest. Even that over the years can build a nice collection and a lot of real value. I personally buy between 20-150 dollars a month of silver and have been doing so since 1995. As you can see by the graphs in this article that has been a very good move.

This post is an extension of my post on, not resenting people doing better then you from a few days ago because that is also part of a “poverty consciousness” but today I am going to go deeper into this concept that I call financial cancer. So what is a poverty consciousness? In short it is the belief that money and wealth are scarce. That you have to be lucky or crooked to become rich and that cheaper is always better.

Now given my blog URL is CutThatBill.com you would think I would be all over the “cheaper is better” philosophy but I am not. There is a place for it,

• When it comes to a mortgage get the lowest rate
• When it comes to phone service pay the least
• When you buy a car negotiate the lowest sales price you can

In essence when you buy a specific item of a given quality there is no reason not to pay less if you can. Unfortunately this is not how most of the psychologically broke thinks.

I remember the first time I went back to the little coal town I grew up in after having built a successful career and life. I was going to go off on my own and do some fishing and stopped by a local donut shop for a coffee and a couple of old fashioned donuts. I was going to grab them and go but decided to sit down and enjoy my breakfast because I was on vacation and had all day.

Being alone and just browsing at a paper I heard quite clearly all the conversations around me. One word was used over and over by the mostly elderly crowd in their chit chat. That word was “cheaper”, this was “cheaper” here, that was “cheaper” there, Joe was a crook because his gas was two cents higher a gallon that at Tony’s where it was “cheaper”.

I got up and left, I just couldn’t listen any longer. Cheaper, cheaper, cheaper it was like being subjected meat grinder. While I fished that morning for small mouth bass with the sun on my back enjoying life though I realized that I used to be exactly the same way. When I lived in this town I remembered driving to Tony’s Gas Station to save the 2 cents, (5 mile drive in a car that got 10 miles to the gallon). I remembered all of it and I realized it wasn’t success that shed this constant “cheaper” search from me it was getting away from a culture married to it.

I can’t blame the people of that town, specifically the elderly on “fixed incomes” it is a poor place that never really recovered from the depression back in the 1930s. In fact my Grandfather used to say, “the Great Depression came, then it went, we never noticed.” Yet what I realized is this mentality of poverty is a big reason why my town is still poor to this day. The people all think they are poor, they expect to be poor and so they are.

After that day I realized much of this mentality was still in my head. I had shaken some of it off but not enough. I was still limiting my vision of success, of retirement of what I could expect to gain in life. I was still driving exta miles for pennies off a gallon of gas. Today I use the gas station on the side of the road that is best for when I need to pull out back into traffic.

I was still standing in supermarkets evaluating which package would have me pay less per ounce, today I buy the size that best fits my needs. Indeed even though I had money, even though I had started to build a second business and even though I was saving for retirement and paying off debt I was still on some level the poor kid from that coal town.

I believe most Americans today are still carrying their own “coal town” poverty mentality with them. It is what makes you limit your dreams one day then the very next day be stupid about how much you spend the next. Believe it or not this poverty consciousness is why people buy 50K dollar cars when one half the price is much better suited to their needs and budget. The expensive do dad makes them feel rich even though they are cash poor it helps them run from the fear or poverty.

On the other side they do things just to be cheap! They buy a 9 dollar garden hose that is kinked and useless in a year. They buy the cheapest refrigerator and it wastes electricity. They think a guy that makes 20K more a year is “rich” until they get there too and then they think the next guy 20K further up the food chain is rich.

This all stems from “poverty consciousness” if you see yourself as poor you will figure out a way to keep yourself poor. If you always look for cheaper, cheaper, cheaper then you will always have the poorest and cheapest things in your life. You will cheapen joy, you will cheapen your personal value and you will cheapen your dreams. Try not to use the word “cheap” as a positive thing.

Save cheap to describe junk. Save cheap to describe bad service. Save cheap to describe a stingy miser. Save cheap for negatives and use terms like “good value” and “excellent price” when you find a lower cost on a good item. This is just one step to removing the poverty demons from your subconscious but it is a good start.

I know this seems so obvious, never take advice on money, investing and business from the broke. The problem is it is not always easy to recognize the “broke”, when I refer to people that are broke I am not saying they live in a “poor house”, make very little money and eat mealy porridge. I simply mean they are broke as in more money goes out that comes in.

Broke people live next door to you, they live in neighborhoods that are both two steps down and two steps up from yours. Broke people are everywhere, most of the people in America are broke by my definition. They are the people in huge 50K dollar SUVs that they justify as being needed “to cart the kids around in”. Jeez, how big are these kids? They have beautiful homes, nice furniture and perhaps even lawn care service. Many have vacation homes or time shares or other true luxuries. How can I call these people broke?

Easy they are broke, they have very little to no surplus cash flow, they save next to nothing other then what perhaps goes automatically into a 401K (Thank God for that at least). They have TVs on credit, cars on credit, pools on credit, some have charged the very paint on their walls and the sofa they sit on. Cut off their income for 30 days and most would loose every thing they have. They are broke because they have no “wealth” only things, stuff and the appearance of wealth.

Such people are always big talkers. They tell you “now is the time to buy” or that “that business deal seems risky” and other wonderful nuggets of advice. They tell you how great that new SUV is, how wonderful owning a plasma TV is and they always have investment advice for you.

My advice is, don’t take their advice. If you follow the advice given by most people it will lead you down the same path they are on. In other words take advice from your uncle who has that beautiful house, nice cars and kids in top schools and you may just get their yourself. Yet you will probably do it “his way” (the normal way) and be in debt up to your eyeballs and working into extended retirement years just to pay the interest on all of it.

So where do you go for advice? To the successful, to the millionaires next door. Look for the guy that pays cash for everything, the woman that has a 6 figure job and a 150,000 dollar house and a sensible car along with a nice savings account, a good team of advisers and a very fat and growing Roth IRA. These people are not “broke” they could go with out work 6 months to a year with just a bit of sacrifice if they had to.

How do you find them? There are many of us, just talk to people and you will know right away.

• The broke talk about how expensive gas is and the wealthy talk about how efficient their cars are.
• The broke think rich people are “over paid” and “thieves” and the wealthy think the rich are “generous” and “admirable”
• The broke shop for “deals” on consumer goods, the wealthy look for “deals” on real estate and investments
• The broke think cars are status symbols and the wealthy think cars are a “necessary expense”
• The broke talk about “saving money” by spending it, the wealth talk about budgeting and investing the savings

Just realize it is not income that separates the broke from the wealthy. In my town I can show you people with a household income of 100K or more that are “broke” and I can show you some with a household income of say 70K that are very “wealthy”.

Just remember this and consider it when anyone advises you how to spend your money, what to buy, how to invest and on what is important or what is safe vs risky. Now I am not saying that no broke person ever gives any decent advice. Sure many times they do, just don’t let the broke counter your instincts or justify what you know to be a mistake for short term gratification.