| Many successful people have mentors to guide them | | | | checkbook and paying bills is not high in your priorities. |
| in learning the skills that lead to achievement, and I'll | | | | Unfortunately, tiny amounts of debt grow with |
| do my best to offer you some critical personal | | | | interest and penalties into seemingly insurmountable |
| finance perspectives. They say that life is a school | | | | mountains of debt; leaving you with loathsome |
| where you learn the lesson after the test. The same | | | | options such as bankruptcy, poor credit, declining |
| thing applies to money, but you can't go back in time | | | | lifestyle spending, and added stress that you bring to |
| to fix catastrophic financial mistakes that you have | | | | relationships and work. |
| made over time. As long as you are alive, you are a | | | | Rule #3 Pay attention to the finances of the people |
| player on the field of the money-game, and you | | | | with whom you spend the most time. Whether they |
| need to know the basic rules before you get tagged | | | | are relatives, friends, or co-workers, these people |
| by the experienced players. | | | | have the most impact on your financial life. Do they |
| Rule #1: To earn money from money. The only way | | | | consistently follow the first two rules of the money |
| to escape becoming a wage slave for the rest of | | | | game? Do they earn about the same money as you? |
| your life is to set aside savings. The profit on your | | | | If the answer to either of those is "no", then I |
| savings can be used to increase your lifestyle | | | | recommend that you start spending a little less time |
| spending, reduce the number of years until you retire, | | | | with them; and this is why. If they don't consistently |
| or allow you to actually have any retirement at all. | | | | follow the first two rules, it is unlikely that you will |
| How are you doing so far toward saving and getting | | | | either. You unconsciously model the people around |
| it to earn money for you? | | | | you, and the more people you are exposed to that |
| Every dollar that you spend eliminates its ability to | | | | don't follow the first two rules, the more likely that |
| earn money for you in the future. I am not | | | | you will unwittingly follow them. No one thinks they |
| recommending that you stop eating at restaurants | | | | are 'trying to keep up with the Joneses', but we all |
| and going to movies, I am recommending that you | | | | do it to some extent, and this is the mechanism. On |
| use some common sense, like looking at your four | | | | the other hand, if they earn a lot more money than |
| biggest expenses over the last few months and | | | | you, you may rack up a lot of debt trying to keep |
| aggressively finding a way to reduce them. | | | | up with them (meeting them at their favorite |
| The biggest obstacle for the first rule is personal | | | | expensive restaurant, joining them for another |
| debt of any kind (other than a mortgage for your | | | | expensive vacation, buying a new car because yours |
| home) or a lease of any kind. Every personal debt | | | | is the junker among all of your friends, etc.) On the |
| that you incur reduces your net worth which could | | | | other hand, if most of your friends earn a lot less |
| have been working for you over your life time. | | | | than you, you will turn into the group's banker. For |
| Acquiring personal debt is exactly like putting a large | | | | example, you'll find yourself in the pattern of putting |
| hole in your wallet. In the money-game, a huge | | | | your credit card down to pay for dinner and they'll all |
| transfer of wealth occurs between the 'Haves' and | | | | say they'll pay you back later, but 50% of them |
| the 'Have-Nots' over the words, "I can afford that | | | | never do; and they don't mind taking advantage of |
| monthly payment." Here is a hint: the "Have-Nots" are | | | | you because, after all, you earn a lot more than they |
| the ones who make that statement. So please don't | | | | do. Or, you and your friends need to pay a deposit |
| ever look at whether you can afford a monthly | | | | for renting a house and they expect you to write |
| payment to make a purchase; pay in cash after | | | | the checks because you have the money available |
| you've saved for the item. [Everything that you buy | | | | and they do not. |
| with a 0%-interest payment plan must be | | | | The neighborhood that you live in also creates |
| over-priced. Behind the scenes, your payment | | | | financial pressure to violate the first two financial |
| contract is sold to a lender with an interest rate, and | | | | goals. Your neighbors are likely to become friends |
| retailers don't do this without building-in an acceptable | | | | (and I've already gone over this), but they also |
| profit for themselves. Ask retailers how much the | | | | influence the size of your home, extent of your |
| item will cost if you pay in full, and you could get a | | | | landscaping, price of furniture, and the size of your |
| lower price.] | | | | TV. So pay very close attention to the finances of |
| Rule #2 Always keep your finances under control. | | | | your neighbors - if you don't like how they are |
| The first step in losing financial control and spiraling | | | | measuring up for first two rules, move somewhere |
| into debt and money problems is simply not dealing | | | | more in alignment with your financial goals. If your |
| with personal finances. Prepare for catastrophic | | | | family and friends, don't measure up financially, find |
| financial accidents with health, life, disability, and auto | | | | some additional people to spend time with that have |
| insurance. Plan and save before you buy something. | | | | financial habits that you'd like to emulate and learn |
| Create a balance sheet for yourself at least once a | | | | from. I have friends with a wide range of income, |
| year to see how you are progressing. Pay every bill | | | | but it is much more difficult to follow the first two |
| on time, or contact the creditor to tell them what is | | | | money rules when I am with the extremes from my |
| going on and make a partial payment. If you are | | | | own income. You'll just find it easier to reach the |
| temporarily unable to handle any of this, ask for | | | | next rule when the peer group that you hang out |
| some help immediately and find someone | | | | with aligns closer to your economic level. |
| trustworthy who will do this for you. | | | | Rule #4 Accelerate the other three rules: |
| The most common source of financial trouble is a | | | | Add to your savings by increasing your income |
| trauma in your life. This can be a health problem | | | | through advancing your career. It doesn't matter |
| (large expenses or unable to work), an emotional | | | | whether you enjoy it; it is a means to an end - with |
| problem (divorce or loss of loved one), or a financial | | | | the end being progress toward the fulfillment of rule |
| problem (losing a job, cut in pay, relocation, | | | | #1. Increase the amount that you save by |
| unexpected expenses). Whichever the source may | | | | aggressively lowering four of your highest expenses. |
| be, it leads to three emotional problems: the first is | | | | Start spending time with people that talk about |
| denial, the second is being overwhelmed, and the | | | | investing money and are systematically building their |
| third is hopelessness. Denial causes people to not | | | | wealth the fastest. The combination of all four of |
| open their mail and continue spending as usual, and | | | | these rules will hopefully offer a next-step for you to |
| being overwhelmed paralyzes people from getting | | | | take today to start getting more 'wins' in the |
| assistance and dealing with the situation. For example, | | | | money-game. |
| if you just lost a loved one, balancing your | | | | |