Money and Personal Finance

Are you an "Ant" or a "Grasshoppah?"

I'm not selling anything here, so don't look for a hook line. Why this page then?

Take control of your own circumstances and Stop Being Afraid of Money! Having it is not a function of "luck" - or of anyone else's actions but your own. According to ground-breaking new scientific research, my friends, there appears to be a direct relationship between your life choices and your circumstances.

First Things First: You can't do anything with your money if you spend it. That's where people get tripped up in our "have-everything-right-now-for-only-twice-as-much-but-financed-into-54-easy-payments" culture

Americans weren't always addicted to credit, nor did they always feel that they had to "have it all" before they started a family. Your grandparents are far more likely to have started small and grown their finances and possessions slowly by "saving for a rainy day." Credit addiction started in the 60's and became epidemic within a decade or two. As a result of the modern day "have it now" mentality that drives people to seek out debt, many people are mortgaged and "debt-leveraged" up to their eyeballs. This is not freedom. It's the kind of thing that will keep you up nights. But there are average people all over the world who are waking up to this and kicking the debt habit. I mean credit cards, student loan debt, even car and house payments. And the average time it is taking most of these people to be debt free is a mere 18-24 months. That's less than two years to a lifetime of peace of mind. How are they doing it? Not by buying into gimmicks or sending off for expensive products....but by getting back to the common sense basics. I'm about to point you that way on this page. It's not all my thinking. Most of it's not, in fact. this info comes from others smarter than me on this stuff who are helping people, and whom I have learned from myself. Again, for clarity and reassurance, I will not once try to sell you anything from this page.

So Let's Get Started!

Money grows when you save AND invest it. If that doesn't sound fun, let me point out that it is fun to see your money grow and to stop fretting about it every day. It's fun to have a plan so that life doesn't just "happen to you." It's fun to know that you'll never have to worry about working at Wal-Mart when you're 60, or about being a burden to your kids. Most of all, it's fun to be freed up to give to others, as only people with money can do.

Saving money alone won't cut it, because the inflation rate outpaces what you would get from a savings account's interest rate. Bury your money in a jar? Well, you'd lose 6% a year that way because that's the average inflation rate. That's why you have to take the the money that you save and send it to work for you.

The same compound interest that morphs your credit card debt way beyond what you actually spent can be your best friend when you invest it. Even modest amounts of investment turn into real money when it's put into good places.

Financial CalculatorClick Here for an Investment Growth Calculator: This is fun to just play with, and just might help you decide to start changing your spending habits yesterday! (but please get out of all debt first). Input an amount into the calculator that you plan to invest and see how it grows! Know that a 12-15% return is a reasonable expectation for a well thought out set of investments (a.k.a. "portfolio") in every ten year period in stock market history - even during the Depression. Heck, try 10% if you want to be conservative. You'll still be amazed. This calculator is a good illustration of how

Keeping our free market unfettered by government is the most compassionate thing you can do for the poor, or for anyone else who's trying to provide for their family

There are plenty of rich school teachers in the world. My grandfather, too, retired as a blue collar foreman from Amoco Oil company in the 70's and never made "real money" in his life. Yet, with the exception of his first several years spent paying his dues, he ALWAYS had money, raised four children while his wife worked at home, paid cash for cars, retired VERY well, and set my grandmother up for life. How? Because having money is not about how much you make....it's about wise, tried-and-true habits; a little delayed gratification; and knowing what winners know about where to put money. Again, it's about knowing how money works, and anyone is capable of getting control of their money / circumstances with just a little knowledge on the subject. Sadly, most people don't get those lessons from parents or anywhere else in our credit crazy culture.

 The Fannie Mac Attack!

The main reason that we've had a mortgage crisis in this country is  because people don't ask "how much does it cost" and they don't read the fine print. All they want to know is "how much per month, and how much down?"

To make matters worse...

Many policy-makers and talking heads don't have a high enough opinion of immigrants, minorities, single moms, women in the workplace, etc to think that they can learn financial wisdom. They talk about these people as if they have a genetic need to get a "helping hand" as if they lack what it takes to make it on their own. To think this of them is true racism, sexism, and lots of other bad "ism"s. To know that these people are fully capable of taking care of themselves is to truly see them as equals

Many people who think this way become politicians who have a vested interest in keeping the poor "down and out" ... because they want to keep them dependent on them and buy their vote with "gimmies" come election day. You already know which political party in America is built upon this class envy tactic that's borrowed directly from socialism, but the other party is also learning that hand outs are a good way to stay in DC, but that's another article. Found here, actually.

The Social (in)Security model as an alternative? Please, my friends...don't get me started. You want your retirement (or anything else) managed by the people who can't run the in house Congressional Bank - or their own Cafeteria - at a profit? Just save your money and go invest wisely. Don't know where to start? See below...   

The simplest explanation is that you must get your money working FOR YOU, by sending it places where it will make a good living. In a nutshell, you need it to earn compound interest. The stock market is where you find these places. Only the uneducated see the stock market as risky - a perception reinforced in pop culture by self-interested politicians and a media that goes out of it's way to help one party win elections. But played with wisdom, the stock market is by far the most reliable place to put your money.

Do you know anyone with money who doesn't own stock? Yes, it goes up and down, but in every ten year period since there's been stock market history it has outperformed every other investment - even during the Not-So-Great Depression! That's why you have to play it over longer periods and not watch it from day-to-day looking for "easy money." It doesn't work that way, but our culture thinks that way....well, not rich people, actually. Those people know that...

Compound interest is the same thing that makes your credit card bills skyrocket beyond what you actually "spent." That kind of growth can work FOR you instead of against you if you'll take control of your wallet and stop letting your creditors and their commercials tell you how you should be spending your money. They will always steer you to spend it ON THEM. There's nothing diabolical about that. It's just bidness, as they say. If you are willing to hand it over to them, then why should they refuse your willingness to do so?

Ever wonder why banks own all the big buildings? or how your wise grandmother who never earned much in her life was able to travel at will, help her grandchildren buy cars with her cash, retire well, and leave you an inheritance? Both examples are due to compound interest. The former because they are in the credit (card) business, and the latter because she had old-fashioned, wise, delayed-gratification habits when she invested her money "for a rainy day" into compound interest earning places...the way her generation learned to do.

Dave Ramsey's Financial Peace University:

Your job required training. So does money management. It's not innate knowledge, but it's not hard to grasp if you can track down a trustworthy and knowledgeable money coach, who has a teacher's heart like Dave has. Most people don't get financial training from parents or anywhere else. Dave "is not the messiah" (with a little "m" and said with Monty Python accent) but he's the best single source out there for explaining how money works ... in simple, fun! - but very thorough - ways. Most "financial gurus" are working hard to confuse you with fancy terms that they use...maybe to justify their education and certificates to themselves; or to impress you enough that you might overlook why

If they know so much about investments, then why are they still working as a broker?

By contrast, Dave's clear explanations are one reason why he's a nationally-syndicated radio host and best-selling author endorsed by all the best people in personal finance. You can find those people on his reading list too, btw, in order to get other expert opinions.

As I've already said too, Dave's personal style of teaching even makes money lessons a lot of fun, so you won't mind missing an episode of American Idol to watch him. My wife and I have been to Dave's $35 one day seminar, read his book, and done his in-depth training that lasted for months. I also plan to do his business-owners course for my business. But on day one at his seminar, we were like most of the people who were there...in that our tickets were bought for us by family who had done Dave Ramsey classes already and lived the principles to great success. We've bought his books and DVDs more to give to other folks we cared about than for ourselves at this point, because he helped us and so many other people change their financial lives.

Why did I put this page on My Website?

Financial Peace has a neat way of bringing Peace to the rest of your life, and it frees you up to give more to others as you build your own wealth. So I wanted a place to which I could send people I cared about when they asked me about money. Money Matters are second only to Faith on the list of common sense, simple things that I wish everyone in the world understood and wouldn't over-complicate into confusion and conflict. If this would happen, the world would be a better place.

Unfortunately though, as with anything, there are a minority of people who are wise enough to apply good habits to their life. After all, if wisdom were commonplace, we'd have to call it something less remarkable-sounding. Because of this, I realize that the majority of people who read this page will somehow come away from it feeling "preached to" or feel that I am somehow "showing off" if I were to point out the things I've learned or come across in my own life and used to good effect...very often through costly trial-and-error. So be it, I accept that this resistance is human nature, and resign myself to writing for the small percentage of people who will benefit from what's here. None of this is about me or my words anyway, and I don't get anything from your success. Again, I'm selling nothing here. I just want to see others prosper, for two main reasons

• First, because I care about your prosperity

• Second, because if you are prosperous then you are not likely to use your vote to elect people to go to Washington to plunder me. What do I mean? See below...

Money and Politics - Can't have either without the other

The word that politicians use for their "benefits" programs is "entitlements." And it's a farce. They call them that to make you feel that you deserve something; or to make you feel better about being plundered for the people who think that way. The entitlements politicians campaign on are offered to you and yours...if you will just vote them into office (see cartoon right). But you are not entitled to anything - especially if it involves someone else's money. Yes, you have needs, but those needs are to be met with your labor - not by a government whose only resources come from what's taxed out of your neighbor's pocket. Aside from being lazy, seeking anything from government only empowers politicians, who have a lousy track record of abuse and oppression all through history when they gain influence and power over citizens

"In general the art of government consists in taking as much money as possible from one class of citizens to give to the other." [Voltaire]
 

Money is powerful

Most divorces are a direct result of money stress; and nations have most of their conflict over internal and international tensions about resources (money). Even the Bible mentions money far more than any other topic - even Heaven - because it has so much power ... both to create and to destroy.

Money can be used for GREAT good, (like peace / security, charity, giving, freedom from worry, personal property, and your family's prosperity); or it can be very destructive. Thus, like any other tool, it is not - in itself - good or evil.

The common misquote says that "money is the root of all evil." But those who have actually read the original passage from whence we get that quote know that "greed" or "the love of" money is the root of all evil. Greed comes from inside of us...not from a green piece of paper with a Franklin on it.

How do you keep from crossing that line into greed? I don't think that's so hard to figure out. If you haven't lied or cheated to get it then I wish on you all the money you can earn, and God bless you for it! Furthermore, according to the research conducted by the author of The Millionaire Next Door, the 100% every- time, common denominator of people with lots of wealth is great integrity, so don't be too quick to embrace Hollywood-inspired caricatures of "blue-bloods" with monocles; or mean old JR's with cowboy hats, and cee-gars as big as their avarice. This envy is not just immature, it is destructive to society.

Class Envy, The Luxury Tax, and the Road to Ruin

We must exercise maturity in in the face of our natural tendency to resent people who have - or who can do - more than ourselves; lest we bankrupt our economy by looting the productive people

Take a look at this guy with the Ferrari. How many of you reacted negatively to him? Did you resent him? Did you sneer something about how he's "compensating." Or were you among the small minority of people who have the inner security and maturity to look at such a person and think "good for him! I wonder what I could learn from him?" Further, many people in  society assume that such people have made their money in some selfish, cheating, ENRON sort of way. But consider how much of that is driven by natural class envy and the media...and on that note, consider how often you'd hear about such malfeasance if it happened often. The fact that those stories are rare should tell you that so is the abuse.

Another question: if you were jogging in a park and a competitive runner zoomed past you on your left, would you resent him or allow yourself to be inspired by him in your own efforts? Why do I ask these questions? Because the resentment of successful people is natural, but like many natural things it's a flaw in our nature. Worked into policy, this victim-like mentality leads to a welfare-state attempt to loot successful people through taxation in the name of "Fairness." You hear it constantly in our media.

Have you ever heard of the "Luxury Tax?"

Google it to get the details...I wouldn't want to be accused of leading you anywhere you couldn't verify on your own. Basically it was written into law as a higher tax rate on items deemed to be "too luxurious" in nature...things like yachts, Ferraris, homes that were "too big" to be "fair" in some .

Maybe you're sitting there thinking "good! they don't need those things." Careful with that. Here's why

1. Who should draw the line on what anyone really "needs" in a free society? Should a government institution have that power? Have you really considered what it would look like to have a government system that limits how well you allowed to provide for your loved ones?

2. We don't technically need much more than food and shelter. A cave and a garden would almost suffice. So are you willing to be told that you should limit yourself to that? We are not put here to just "survive," are we? Where do you draw the line? And where do you get off trying to tell anyone where to draw the line on how successfully they will be allowed to provide for their own family?

3. Have you considered who would buy the things that support everyone else if there were no rich people?

4. I'll point out the obvious and say that anything that lives must consume to continue living. Modern culture acts as if the only living things that should be free to do this without feeling guilt are squirrels and caribou...as if humans are some kind of global trespasser.

5. The next time that someone tries to tell you that you or someone else is "consuming" more than "their fair share" (there are those buzzwords again) consider the following...

   • There was once a large movement that talked this way too...but have you ever wondered where all the socialist demonstrators went? They didn't just "un-invent" themselves. They have been given carte blanche refuge in one of our political parties. Let me explain..

   • To say "anti-consumptionism" is the same as saying "anti-capitalist." That's why you will always see a correlation between what extreme environmentalists say about who should pay a larger share of what I call "environment-reparations" and "indulgences" for their consumption sins. People with a "big carbon footprint" are, said another way... people with a lot of resources, thus...

   • It's no stretch to say that the modern environmentalist movement - taken too far - is the same old anti-capitalism with a different face, repackaged into something that they think will be seem harder to argue against. After all, what kind of selfish meanie would be against Mother Earth? It's a pretty clever tactic that has even co-opted the mainstream of America. All because people only see it at face value, without digging enough to see what the motives of these people are.

   • In other countries many political parties openly call themselves "socialist." And we do have a party in America that - while they try to avoid the label - transparently espouse the same ideals. The fact that you already know which one I mean is proof enough. But they don't say it outright because we still have too many hard-working, roll-up-your-sleeves-and-stop-whining people in America's heartland to tolerate openly socialist rhetoric. But that doesn't stop some politicians and their supporters from trying to enact legislation that have the same goals of punishing and plundering the prosperous among us, only justifying it with other rhetoric. The most fashionable justification right now is environmental in tone, but watch, it'll change again like it always does once people catch on. Even "global warming" hysteria is now being re-commissioned as "abrupt climate change" because of the decade-long global cooling trend that's been observed as we enter 2009.

"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary." [H. L. Mencken]
 

On that note, let's get back to the Luxury Tax, because it was a policy that targeted the prosperous just like we're talking about...and it's an easy to study example of the destructive effects of class envy. It was repealed a few years after it was made law. Know why? Well, what had happened was, as these items became more heavily taxed, rich people chose to do without them. I realize that the media paint such people as having insatiable appetites for luxury and that they can't help themselves from just consuming like the financial equivalent of a food glutton...but if you know anything about being wealthy and who gets that way you know that they are typically people who can delay gratification and "do without" - and not give it another thought if they deem an item to be superfluous. Which is how it looked to them once envious people elected politicians who plundered them through the Luxury Tax.

But then something happened as a result of the Luxury Tax that the plunderers - amazingly - didn't foresee. People started getting laid off. People who build houses, as well as electricians, fiberglass and metal workers, skilled welders, plumbers, etc. were losing their jobs. Why? Because you need all those people to build and sell luxury items. oddly enough, some people even built businesses around doing just that. And then the next wave hit as the sales of washing machines, and other things that the first wave of laid off people would have bought if they'd had jobs, sank into decline. That led to still more layoffs, of course, and then more in wave after wave of exponential impact on the economy. It was a good example of what happens when you raise taxes, as a similar thing would happen at all levels of income with any tax hike. Turn it around if you need to see it another way...what happens to sales on the rare "tax holidays" that politicians sometimes okay in order to stimulate the economy? They go through the roof! If it works on those days, wouldn't we all be better off if we had a society less burdened by taxes? But the main people with a voracious financial appetite are the tax collectors who finance a big, welfare state government.

The Luxury Tax fiasco also served as a good illustration of how the wealthy drive the economy, as they directly and indirectly create the jobs for the rest of us. And what good would it do anyone for those  who live with the fruits of success to deprive themselves? Yet this is what seems to be expected of them by what you hear in the media and from many politicians daily. Would it not be better for those in les developed societies to learn from us and raise their own standards? Why does it always seem to "fair-minded people" that the thing to do to bring others down instead of raise others up in their quest for the ever-elusive playing field?

The playing field will never be level. This is less a function of unfairness than the fact that everyone has different levels of ability, motivation, talent, ambition, drive, intelligence, wisdom, etc. Most of these character traits are subject to change, and are interrelated....especially in the case of motivation.

"Those who are capable of making something of an opportunity do not wait to be given one"    - Marc Heileman

Even a dog learns to not bite the hand that feeds him. Yet, societies typically fail to learn the same lesson. The pattern was best expressed by Alexander Tyler over 100 years ago. It goes like this:

"A democracy cannot exist as a permanent form of government, because of class envy. It can only exist until the voters discover that they can vote themselves money from the public treasure [through the taxation of the wealthy producers and then "redistributed" by elected officials to those who haven't earned the money but envy those who did]. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's great civilizations has been two hundred years [How old are we?]. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, [We're at least somewhere about here right now] from apathy to dependency, from dependency back to bondage."

My Parting Thought: A Thank You Note to The High Achievers

• I thank you for the jobs you've created by growing your personal business, or managing that of others; because I know that one Bill Gates does FAR more to eradicate poverty, disease, and malnutrition than all the social workers and Mother Teresas in world history combined

• I thank you for the charity that is driven solely by you; because I'm logical enough to realize that no charitable giving could be done by poor people (no, statistically and logistically, the philanthropy industry cannot be supported by millions of "regular people" who send in $5 bills)

• I thank you for enduring the tax burden by yourself; because I have gone beyond politically-motivated, class warfare reporting and know that despite the rhetoric about the rich needing to step up and "pay their share" that, according to the IRS's own website at www.irs.gov :

  • 97% of all taxes are paid by the top 50% of earners

  • 50% are paid by the top 1%

  • and the bottom 40% of earners pay no INCOME taxes. They actually get refund checks funded by their more successful neighbors

• And, lastly but most importantly, I thank you for all the innovation that your companies have brought to the world to keep us out of the Stone Age; because I know what happens when Atlas Shrugs

I only hope I will always learn from you how to contribute to the world...rather than whine with natural but immature envy about your enjoyment of the fruits of your labor.

"America's abundance was created not by public sacrifices to 'the common good,' but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. They did not starve the people to pay for America's industrialization. They gave the people better jobs, higher wages and cheaper goods with every new machine they invented, with every scientific discovery or technological advance -- and thus the whole country was moving forward and profiting, not suffering, every step of the way." [Ayn Rand]

John Galt in 2012