Missed the other posts in this series? Check it out here.
So we’ve talked about my two favorite books Rich Dad Poor Dad and The Automatic Millionaire so far in this series. Today I want to prove a point: MORE MONEY WON’T SOLVE YOUR PROBLEMS!!! I remember hearing this all the time when I was young, but it never really sunk in until I found out the hard way that this really is the truth.
Learn From Our Experiences: If you’ve read my guest post at Money Saving Mom, then you already know that when I got married the “extra” money we got from two incomes actually increased our troubles rather than made them better. Having 2 people who didn’t really know much about how to manage finances and didn’t have a clue about how to budget meant that we constantly found ourselves without money more often than we did when we were single. If we knew then what we know now we would have made wiser choices with our money. Hind sight is 20/20, right?
I hope you can learn from our lessons and not let this happen to you too.
Learn From The “Fallen” Rich: Several years ago I watched an episode of The Dr. Phill show with a man who had lost his $500k job and now had nothing but a small hotel room to live out of with barely a penny to his name.
Previously he had a million dollar home, several high dollar cars, and many other lovely things he could afford at the time. So how did he manage to lose everything even though he had made $500k per year??? He was thinking too much like the poor and middle class rather than the rich by working for money rather than making his money work for him.
Instead of buying his home out right he took on a rather pricey mortgage. Instead of paying for his cars in full he took on some car loans. Instead of paying for his furniture with cash he used credit cards. I think you see where I’m going here. Most of us in this society have the same kinds of loans this man had, the difference is his loans were much higher than the average Joe because he could afford a higher minimum payment. All of his money was going in the bank and coming right back out.
The result was catastrophic and he lost everything, just like everyone else out there who work for money in the same way.
Making more money is NOT a bad thing! It only becomes “bad” if you use that money on things that become a liability. What’s a liability?? It is something that takes money out of your pockets rather than putting money back in to your wallet. Your car would be an example of a liability (especially if you’re still paying on a loan): at the end of each month it costs you money.
If you are constantly increasing your spending on volatile things with every bonus and increase in pay you get you will never make it ahead.
In the coming weeks we will be talking about how to steward your finances wisely so you can prevent yourself from ending up with nothing somewhere down the road. For now, let it sink in that more money truly will not solve your problems. It’s what you do with your money that will help you get out of debt and exit the rat race.
Have you learned the hard way like me that more money doesn’t make things better? Let us know in the comments bellow.
Next up in this series: Treat It Like A Process