Taking Steps to Reach our Heart’s Desires

Let’s review what we’ve covered so far.

Putting more money into a wedding doesn’t make the marriage better.  It is not a bad thing for your daughter (or son) to struggle at the beginning as it brings people closer together.  It is not your responsibility for their happiness and success, you’ve already shown them how it’s done.  They have to try it for themselves and grow into the amazing adults you know they can be.  They may also fail epically, and that is not your responsibility either.  The wedding will neither make nor break this marriage.  Focus on the main thing…the commitment to each other, and if it has nothing to do with the ceremony of commitment, it isn’t important.

Getting a BMW car to elicit respect or even envy from the people around you is not as important as living a significant life where respect is earned and kept.  The outward signs of success do not reflect the inward growth and it is this growth that will make you remembered and revered as a vital cog in the big machine that is the society around you.

Now, the fun stuff.  I say that facetiously because no one wants to talk about money.  “The love of money is the root of all evil,” and all, but it’s not the money.  Money has no meaning…it is used to represent goods and services provided in trade for other goods and services.  I can hear you dropping off to sleep already.  WAKE UP!  Let’s explore this concept with a story.

Peter has a nice house, but one day a storm comes in and ruins the roof.  He now has water leaking into his kitchen.  He calls John the roofer and asks if John can fix his roof.  John’s wife wants a new refrigerator.  John tells Peter that he will fix his roof in exchange for a new refrigerator and food to put in it.  Peter has a new refrigerator.  Does Peter accept the trade?  NO!  Peter wants to keep his refrigerator, and he’s pretty sure John and his house hold are not vegan so they would not like the food in his refrigerator either.  But Peter knows a guy who has an extra new refrigerator that he keeps stocked with beer and beef.  Peter offers to fix the guy’s plumbing in return for the refrigerator and then trades the refrigerator for the new roof.  This sounds quite complicated.  Why doesn’t Peter just pay John enough money to buy a new refrigerator?  So you see that the money is not as important as the stuff it can be exchanged for.  The random amount mentioned in our 1st scenario was $200,000 per year.  It’s not $200,000, it is what that money buys, namely utilities, car payments, house payments, food, vacations, gas, college, freedom, flexibility and peace of mind in retirement to keep the standard of life intact.

You have to think of this resource in three different ways:  what do you need now?  what do you need soon?  what do you need long term?  Then look at what your current situation is.  How much do you have saved up in case you die early?  Think of the ramifications of your or your spouse’s early demise.  Going in reverse order, there is the funeral expense, the long term hospital expenses and doctor expenses, the prescription drugs, the unpaid debts accrued before death, the immediate needs–house, utilities, vehicle.  If you don’t currently have an account that has enough money to cover these debts and expenses, you need insurance.  I will cover insurance in a separate topic.  Suffice it to say, you have insurance on your house and your car.  What are the chances that your house will burn down? or that your car will be totaled?  Yet you carry this insurance anyway because it might.  What is your biggest asset then?  It’s actually your ability to provide consistent income.  It is vital you protect this asset.

Next, what financial needs do you have to cover in the next 5 years?  New car?  Education for the kids?  Your new and improved wedding plans for your daughter or son?  Your next vacation?  How do you prepare for that?  You need a short term savings vehicle that will allow you to pay those in cash.  Why cash?  A credit account, whether a loan or a credit card, just extends the payments out over time.  Why not spread the costs out over time yourself and figure out how much things would cost then SAVE the money and make interest on it.  Who would you rather get the interest on your money–you or some lending institution?  Have you seen people using credit cards to go through McDonald’s?  Does anyone really want to pay interest for a month for that $6 meal?  Do you suppose that is why people don’t have money to save?  They’re spending the extra money on interest to pay off a month’s worth of hamburgers, and it takes two months to do that.  In addition, they rack up another month’s worth of meals while they’re still paying off the previous month’s.They are now three months in debt to a fast food restaurant.  This will not move anybody to financial independence, which is the freedom and flexibility to do what you want when you want and not worry about the cost.

In my next installment, we will cover short term vehicles to help you reach your short term needs.

Books to read:  It’s Your Money (George Boelke), Rich Dad Poor Dad, Unfair Advantage (both by Robert Kiyosake)

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