Business Economics Finance

Conventional wisdom about the best ways to earn, spend, save and invest money maintains a firm grip on the minds of millions even as it fails to deliver. Mainstream media reinforces the dominant view of money via “Live Richly” (Citibank) and “Live Life: Life takes Visa” etc. Viewers, in turn, model their financial lives after advertisement messages. “What’s in your wallet?”

However, just because mega-financial industry companies also have mega-sized advertising budgets that allow them to shout the loudest and the longest, it certainly does not mean they have the best offer! That said, in the real world, the ability to dominate with one’s message trumps potentially useful information from the “little guy”. Rarely does anyone question the gospel according to conventional wisdom about money. No one bats an eye as financial professionals direct average Americans down the path of paper net worth and debt leveraging.

The fact that all aspects of the global economic system, from its macro-complexity to personal finance guidelines are man-made seems to be lost on most people. Instead, the financial world is often considered akin to natural phenomena like the air we breathe. Such tacit acceptance makes discerning the risks inherent to the economic system itself, unlikely. But as any financial professional would advise, a thorough risk assessment is essential for effective decision-making.

With data citing that in 2006 Americans are attempting to live on 1967 inflation-adjusted median wages (The Chicago Tribune, January 22, 2006) and that in 2005 the very same Americans spend 39 billion more than they spent (The Wall Street Journal, January 3, 2006), something is very wrong with this picture. Anyone who is paying attention would agree. Yet. the powers to be say we have a strong economy. The question is: For who is the economy strong?

According to MSN Money, November 8, 2005, if you make less than $57,343 annually, you are either already or soon to be behind the “financial eight ball”. A whopping 75% of Americans fall into this category according to 2003 IRS statistics and are increasingly at risk of losing their purchasing power due to exponentially rising basic costs. That means it’s the top 25% of income earners who receive the greatest benefit from the way the economy is structured.

As for the 75% majority, getting out from behind the eight ball may well take an innovative approach. Here’s why doing more or better of what you’ve been told are the best ways to earn, spend, save and invest may not get you where you want to go.

1. Millions who are doing all the right stuff when it comes to how they earn, spend, save and invest are still dealing with financial and personal hardships brought on by increased stress. The trend is towards becoming cash-poor with ever increasing debt loads, no matter how much money you make.

2. Incomes are not keeping up with the cost of living.

3. Americans are collectively spending billions more than they earn. Spending outpacing earning has not happened since the Great Depression of 1933.

4. The official rate of annual inflation (CPI) falls short of reality when skyrocketing costs of energy, housing, health insurance premiums and higher education are taken into consideration.

5. Retirement a la company pensions is going from being the rule to becoming the exception.

6. One of the fastest growing categories of homeless is the working poor.

7. Remedies to the money crunch offered by most financial experts rarely go to the root cause of the problem. No problem in life can be effectively solved without first uncovering its root cause.

8. Some financial advisors warn of the dangers of the “saturation point”. As regards personal finances, the saturation point is when a person MUST stop using credit because the debt-service they are already paying is the maximum they can afford given their other expenses and after-tax income. Then what?

9. Personal finance strategies have not changed with the economic times. They remain static: Find a job with full benefits, save a nest egg and purchase a home and invest as soon as you can is still the standard. We’re driving Nash Ramblers in a Hybrid world.

10. The financial industry is self-serving and works to maximize profit like any other for-profit enterprise. So who benefits if you lack a more informed understanding of money? Are their products really in your best interest?

Susan Boskey is author of the book, The Quality Life Plan: 7 Steps to Uncommon Financial Security available at TheQualityLifePlan.com TheQualityLifePlan.com or AlternativeFinancialNow.com AlternativeFinancialNow.com where you can also sign up for the free e-course to learn more. Her book presents a unique personal finance formula to help everyday people create and sustain a debt-free lifestyle.

Well, different people may interpret the idea of financial freedom differently. Whatever it may be, rest assured that we all want it badly. Most working people dream of it, but have they ever given it an in-depth thought? Perhaps not. It will do you good to give some time to figure out what it really is, because it is difficult to pursue something unless you know what it really is.

Consider this - you may pay someone to do a work for you. It may be mowing a lawn or doing a research. In any case you would be saving time for yourself. So that means money can buy time and vice versa. So time and money are inversely related to each other.

So if the above case may be true, then financial freedom in the real sense would mean an end of trading money for time. You would not have to exchange the value of money for your time anymore. That implies you would have the freedom to do anything under the sun. Sounds Utopian? But it’s true - real financial freedom will enable you with the power of doing whatever you want.

However, some people may choose to work even after they have reached a stage of financial freedom. A person may continue to work if he doesn’t need to or may even switch over to a better job. A man may have adequate money but he may want to continue with his own business. Now that’s a matter of individual choice. For these people it isn’t essential to be free from trading their time for money.

Financial freedom is also dependent on the level of a person’s ambition. Someone may be happy with a modest standard of living while someone else may want to live a lavish life and continuously upgrade his present status. For the first kind of people, it is easier to find financial freedom.

However, financial freedom isn’t attained unless you are capable of making money without giving your time to it. You may reach a certain level of income to gain financial freedom. It may be through a business or an investment or both. If you can make money even without trading your time for it, you’ve reached the goal of financial freedom.

And lastly, financial freedom is a lot about one’s personal choice. It is about how much you can control yourself into accepting things. Learn to make your own choices and don’t be bogged down by situational pressures. The day you would be able to do that, you would have achieved complete financial freedom.

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Do you want to be broke? Or rather, do you like being broke? I’ve never met anyone yet who does. How many people do you know who are in the same situation? You don’t have to look beyond your own community to see that personal debt is ballooning and bankruptcies are on the rise. Yet at the same time there are more millionaires being made per year than existed before this century.

There are all kinds of factors that help poor and middle-income people stay there. It is not the lack of income that is the cause of most financial hardships. I have known several people that managed to retire very comfortable but only earned a modest salary their whole working careers. I know people now in there 30’s that retired on $300,000 and live a comfortable life. Now how did a thirty year old get $300K and what are they doing to live on that is a topic for a future article. A hint is they do what’s in this article.

Lets agree for the moment that the amount of money we make is not the biggest factor to our future wealth. Then what is, race, color, creed? Nope, the number one thing you will need to do if you want to be wealthy is, control how advertising affects you. That’s it! You only have to master your emotions and feelings and grow immune to your buddy’s teasing you about not having the latest gizmo.

You see, advertising works. If you say it does not then go look around your basement. Do you have any workout equipment you haven’t used in a couple of years? Or how about in the kitchen, do you have the ‘ultra nonstick pot’ guaranteed to never burn your food, have you used it in a year? Go to your garage and see what things you got on sale at the hardware store, it seemed like such a good idea at the time. Trust me advertising works.

What can advertising get us to do? There is more money spent today on keeping a child entertained than was spent educating the parents. Hmmm, it is something I have noticed, most teens seem to be a walking electronics store. I saw a commercial for back to school and it was for parents to learn all the hi-tech gizmo’s the kids ‘had to have’.

What does this have to do with wealth accumulation, everything. Most of you are up to your eyeballs in debt, where did you get that debt? The shopping mall, getting your kid a cell phone, Ipod, laptop, blue tooth, and a thumb drive. Because they really need that, are you kidding me? Did Einstein, Bell, Edison, Mozart, Gandhi have that stuff. The advertising executives will say, imagine what they could have done if they did have that stuff. Most school children could not do math without a calculator and without that basic understanding of how numbers work you are not going to go far compared to an Einstein.

Life is better now and these modern conveniences are nice to have if you can afford them. Here is a way to get those things and retire wealthy. It is the simple savings plan, when I was a kid if I wanted something ‘I just had to have’ my mom would set up a sheet of paper and I would earn points towards the purchase of the item. After I got enough points we all went down to the store and I got to purchase my new gizmo. Then we would go out for supper to celebrate my accomplishment.

Another way is you take a percentage of your paycheck each month and when there is enough money in it to buy whatever, you go get it. The temptation to buy now is huge, there is so much pressure from TV, radio, friends, heck it is everywhere you look. I could write several books on the evils of most advertising and what it does to the financial destruction of many families’ financial stability. If you watch any kind of media you are being subjected to advertisements and their sole purpose is to get you to give them something, likely money. Be on guard of your emotions to go and buy something. Think about it, do you really need it. If not leave it in the store and know you are one step closer to financial freedom. Be smart, be wealthy.

Larry, Alan & Ward are the Three Amigos who developed simple strategies for winthedebtgame.com debt elimination. Learn their strategies at winthedebtgame.com www.winthedebtgame.com.