When your caretaker, parent, or provider says this is the
way, that is the way. Period. The good news is that as an
adult, you get to change your mind and your life.
Let’s agree that we live in a nation that has immense
abundance in wealth and opportunity all while unequally
distributed or acquired. In life, poor begets poor and
wealth attracts more wealth. The reality is that the rules
to acquiring more wealth appear to be kept under cover mired
in secrecy, lock, and key while poverty is open and
advertised to all.
The problem is there are existing confluences
of forces in life that work against us. Considering that 50
percent of working families have less than $500.00 in
savings, they are only an emergency away from a significant
crisis. Nowadays, solving personal financial
problems begins with borrowing against future income or
taking money on credit.
The enemy has surfaced and he owns a payday loan company. On
average, payday loans charge 15 percent per advance and the
spiral death trap usually occurs on multiple checks for
unending months. If used for a 12-month period, the total
expense can be over 360 percent of the amount borrowed.
The other foe, charge cards, traps 38 percent of families to
the tune of $16,000
per balance carrying household. Borrowers are often left
paying three or four times the price of any purchase due to
the high interest charged and the inability to pay the
balance in full at the end of the month. Lenders are doing
everything they can to increase access to credit because low
credit scores prevent consumers from qualifying for credit
loans.
Recently, FICO, the Fair Isaac Credit Organization announced
FICO Score XD (XD stands for extra data) which will help
consumers increase and obtain better credit scores. The
changes include adding utility payments, cable bills and
other widely used expenses to potentially increase currently
lower credit scores.
On the surface this sounds wonderful and is a great way to
feel better as a citizen with a good credit score. You are
now eligible to be in the game. The reality is that without
a change in habits, education, and mindset, there will
simply be more people in debt.
Another major force in motion that blinds the senses and
alters buying patterns is the BILLIONS of marketing dollars
poured into our subconscious mind. Advertising is designed
to target specific individuals into deciding to purchase an
item that fills a suggested need. This is done by
associating a product with love and sex, peoples’ most basic
desires. Advertisers also use fear and personal messages.
Ever see the commercial where the guy is half man half horse
with no shirt on while glistening in the sun? He tells
ladies to look at their mate and then look at him. This goes
on several times and believe it or not, it is a deodorant
commercial. Have your guy use this deodorant and he will
magically be gorgeous and you will love and keep him
To sum up the problem would simply be to say that we have
been inundated into becoming and living as consumers not
investors. Poverty is a choice because we choose with our
dollars to consume instead of investing. Renting instead of
owning. Following instead of leading. Consumer Mentality
equals poverty. Remember, poverty is the state of being
inferior in quality or insufficient in amount.
Rising out of poverty begins with the recognition that
living pay-to-pay is unacceptable and no longer tolerable.
The first ingredient is deciding that the consumer mindset
has worn out its welcome while replacing that with an
investor mentality. A mentality that demands that every
dollar possible will be allocated to maintain lifestyle
needs or increase assets.
The process of developing an investor mindset includes
budgeting, education, aggressive action, and most of all,
consistency. In most situations, budgets are a reminder that
we are likely living over our means and by how much is not
of interest. It is the mirror to our money and we are afraid
of what we might see.
What most fail to realize is that if you do not look in the
mirror, you cannot see what you need to change or fix to
look better. Looking better makes us feel better and feeling
better leads to more confidence. Confidence produces greater
results. Society pays for results.
Depending on your consumer mindset, solutions are just a
Google away. Investing in education can begin in a classroom
or with a computer click. The variety of access to solutions
is vast and available to anyone who truly seeks to learn.
Reducing your $100.00 cable bill and investing those dollars
in a money management or a carpentry course is an investor’s
mindset. If you are going to spend money to watch something,
make it something that improves your life.
It takes relentless fortitude to pick and remain on the
right path. If it were easy, the average savings balance
would be well over $10,000. Sounds like a lot of money! Did
you know that according to the IRS, the average annual tax
refund is $3,120.00.
This means that if you lived on your actual bring home
paycheck and saved your annual refund, you could have
$10,000 in approximately three years. Poverty is a choice.
While investing sounds exciting, it takes a long boring path
to acquire enough money to get out of danger. Building
wealth is sort of like watching paint dry, you like the new
color but can’t stand waiting to hang pictures and return
the furniture to its rightful place. Part of investing is
creating momentum over many years and consistently making
wise monetary decisions. Create the habit of asking if the
next dollar spent is an asset or liability. Increasing
assets means financial freedom while adding to liabilities
keeps you in bondage. Live Free.
Sources:
Loans typically cost 400% annual interest (APR) or more. The
finance charge ranges from $15 to $30 to borrow $100.
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http://www.paydayloaninfo.org/facts
Average American Household Debt: $5,700. Average for
balance-carrying households: $16,048 and 38.1% of all
households carry some sort of credit card debt.
-https://www.valuepenguin.com/average-credit-card-debt
-http://www.census.gov/people/wealth/data/debttables.html
-http://www.federalreserve.gov/releases/g19/default.htm%20
-http://www.federalreserve.gov/econresdata/scf/scfindex.htm
- Robert Harrow- updated on March 29, 2017
Almost half of Americans would not be able to cover an unexpected
expense of $500 or less. About 25% of America would not be
able to cover even $100. 23% of America says that they don't
have at least $100 in their emergency fund.
-https://www.creditdonkey.com/average-american-savings-statistics.html
-Rebecca Lake- Updated on May 18, 2017
Contact Derick Gant at
dg@derickgant.com
or 866-500-7717
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