| A person can be highly educated, professionally successful and financially illiterateThese people often work harder than they need to because they learned how to work hard, but not how to have their money work for them
The story of bow the quest for a Financial Dream turns into a financial nightmareThe moving-picture show of hard-working people has a set patternRecently married, the happy, highly educated young couple move in together, in one of their cramped rented apartments Immediately, they realize that they are saving money because two can live as cheaply as
one
The problem is, the apartment is cramped They decide to save money to buy their dream home so they can have kidsThey now have two incomes, and they begin to focus on their careers
Their incomes begin to increase
As their incomes go upheir expenses go up as well1 expense for most people is taxesMany people think it's income tax, but for most Americans their highest tax is Social SecurityAs an employee, it appears as if the Social Security tax combined with the Medicare tax rate is roughly 7 percent, but it's really 15 percent since the employer must match the Social Security amountIn essence, it is money the employer white chanel bag cannot pay you On top of that, you still have to pay income tax on the amount deducted from your wages for Social Security tax, income you never receive because it went directly to Social Security through withholding Then, their liabilities go up
This is best demonstrated by going back to the young coupleAs a result of their incomes going up, they decide to go out and buy the house of their dreams Once in their house, they have a new tax, called property taxThen, they buy a new car, new furniture and new appliances to match [heir new houseAil of a sudden, they wake up and their liabilities column is full of mortgage debt and credit-card debt
They're now trapped in the rat race The process repeats itself More money and higher taxes, also called bracket creep, A credit card comes in the mail A loan company calls and says their greatest "asset," their home, has appreciated in valueThe company offers a "bill consolidation" loan, because their credit is so good, and tells them the intelligent thing to do is clear off the high-interest consumer debt by paying off their credit cardAnd besides, interest on their home is a tax deductionThey go for it, and pay off those high-interest credit cardsThey rolex daytona cosmograph breathe a sigh of reliefTheir credit cards are paid offThey've now folded their consumer debt into their home mortgage Their payments go down because they extend their debt over 30 years It is the smart thing to do
Their neighbor calls to invite them to go shopping-the Memorial Day sale is onA chance to save some moneyThey say to themselves, "I won't buy anything But just in case they find something, they tuck that clean credit card inside their wallet
I run into this young couple all the timeTheir names change, but their financial dilemma is the sameThey come to one of my talks to hear what I have to sayThey ask me, "Can you tell us how to make more money?" Their spending habits have caused them to seek more income
They don't even know that the trouble is really how they choose to spend the money they do have, and that is the real cause of their financial struggleIt is caused by financial illiteracy and not understanding the difference between an asset and a liability
More money seldom solves someone's money problems Intelligence solves problems, There is a saying a friend of mine says over and over to people in debt
"If you find you have dug yourself into a hole
As a child, my dad louis vuitton multicolor speedy often told us that the Japanese were aware of three powers; "The power of the sword, the jewel and the mirror
The sword symbolizes the power of weaponsAmerica has spent trillions of dollars on weapons and, because of this, is the supreme military presence in the world
The jewel symbolizes the power of moneyThere is some degree of truth to the saying, "Remember the golden ruleHe who has the gold makes the rules
The mirror symbolizes the power of self-knowledgeThis self-knowledge, according to Japanese legend, was the most treasured of the three
The poor and middle class all loo often allow the power of money to control themBy simply getting up and working harder, failing to ask themselves if what they do makes sense, they shoot themselves in the foot as they leave for work every morningBy not fully understanding nioney, the vast majority of people allow the awesome power of money to control themThe power of money is used against them
If they used the power of the mirror, they would have asked themselves, "Does this make sense?" All too often, instead of trusting their inner wisdom, that genius inside of them, most people go along with the crowdThey do things because everybody else does coco chanel hobo bag itThey conform rather than question Often, they mindlessly repeat what they have been toldIdeas such as "diversify" or "your home is an asset "Your home is your biggest investment "You get a tax break for going into greater debt "Don't make mistakes
It is said that the fear of public speaking is a fear greater than death for most peopleAccording to psychiatrists, the fear of public speaking is caused by the fear of ostracism, the fear of standing out, the fear of criticism, the fear of ridicule, the fear of being an outcastThe fear of being different prevents most people from seeking new ways to solve their problems
That is why my educated dad said the Japanese valued the power of the mirror the most, for it is only when we as humans look into the mirror do we find truthAnd the main reason that most people say "Play it safe1' is out of fearThat goes for anything, be it sports, relationships, career, money
It is that same fear, the fear of ostracism that causes people to conform and not question commonly accepted opinions or popular trends "Your home is an asset "Get a bill consolidation loan and get out of debt "Someday I'll be a vice president "When ! get a raise, I'll buy us a bigger balenciaga fashion bag ho |
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