Tag Archives: interest

Do you respect your money?

concepts, Entrepreneurship, Government, how to, Inspiration, Money, , , , ,

The other day Adrian posted a great blog entry that really got me thinking.  His idea is that the number one most important lesson to be learned by people who want to be rich or be better off is not delayed gratification, not saving, and not any of those other things that all the books tell you.  Instead it is the concept of actually respecting your money.

moneyPlease read his blog, it is good, but I want to take it even farther.  I think that you respect for money is based mostly on what you learned from your parents.  When I say respect I mean that you value money, you value the stuff that you own that you bought with your money.  I have found that most rich people I know have a deep respect for money.  Some of the richest people I know watch where they spend.  They almost never throw anything away, they will have a sale first.  This is not being frugal, these people will invest in very expensive quality items that will give them long term enjoyment and even have a residual value.  They will buy things, but when they do they make sure that they get the best value.  They also think long term, and they look at the total cost of something, including the financing cost.

For years I have been in retail sales, owning my own computer company.  I have always had the hardest negotiation with those that were rich.  They would fight for every dollar to get the best deal, and I would give it to them.  But the people who could barely afford my services would never ask for a discount.  I have had friends who are always out of money, but they would ask me to go out to a restaurant with me and they would spend 2-3 times as much as I did.  I value my money, so I look for the best value when I spend it, at a restaurant that means usually having a coupon and usually I order one large item that will fill me up.  But most people order a smaller item, then the add on the salad, an appetizer and then if that is still not enough they add on dessert.  This same guy also had his car break down, it was going to be 400 to fix it, so he decided that it was time to get a newer car.  He found a car that was worth about $7000 and he bought it from a dealership that caters to people like him, he paid over $11,000 after he traded in his old one, and he agreed to 24% interest.  He did not need this car now, and I had connections he could had used to get it much cheaper BUT he needed it THAT DAY, he could not wait, and he paid the price for it.

Needing gratification now is the KEY that keeps most poor people poor.  Companies know this.  Car dealerships are told to get people to fall in love with the car then tell them that they need to buy it now to get that one.  One of the most profitable segments in our economy right now are the rent to own stores, just pay a bit now and you can take these new items home.  The typical price is about 350% the price you would pay if you just bought it at walmart today.

But the other most common trend among these people is that they never would think of starting their own business.  They usually don’t think about selling their old stuff, they simply give it away.  A friend of mine is in charge of cleaning up houses after they give their keys to the bank, and it is astounding how much stuff of great value they leave behind.  They leave furniture, toys, TV’s, computers, clothes lighting, and boxes and boxes of stuff.  Why did they not sell this stuff, and pay their mortgage…we will never know.

People that respect and value their money are able to live much much longer with out money.  A lot of people who own businesses now are also hurting, they have lost their business, they have lost their credit, yet almost all of them that I know are doing quite well, they manage to find money to pay the bills each month, they sell things, they dabble in freelancing for other companies, they do consulting, but the bottom line is that they do what they need to to keep afloat.  Then I know other people, who have never had that drive, and they sit at home all day playing video games, and they do nothing other than look for handouts.

This fundimental view of money does a lot more than effect our personal lives, it also shapes our nation.  Because the rich and poor spend money so differently they often scratch their head when they look at eachother.  When I had a lot of money, yet I would still buy things on sale, and I drove a modest SUV and such, many people wondered why I did not spend more, why I was also so “cheap”, it was not logical to them.  And then I look at them, and how much they spend when they have nothing and I can’t understand it, it is not logical to me.

To me and others the most frustrating part of people not respecting money is when it is your money that they are not respecting.  At this time our governments are spending money at record levels, our money, and they are doing it with very little respect.  They give money away, they waste money all over the place.  Right now they are spending our kids money, but soon they will start spending ours.  The plan to start taxing energy soon, and many other things.

So think about how much you respect you money.  I would love to hear what you think, please leave a comment.

Share this Post

Very interesting article from a counterpoint. The Lottery Class

Business, concepts, Government, Money, , , , , , , , , , , , , , , , , , ,

I have always believed in counterpoint, or whatever the proper name is. I define it as reading from someone or something that is totally opposite of what I believe in. I do this for a few reasons, first to see where their point has logic so that I don’t become completely one sides. Also to see what is in the mind of the person I may one day debate.

This year, as you know, is a presidential election. I am a republican, I have always voted republican, and I plan to do so. I simply don’t believe that the government should be in our personal lives as much as they are. And every democrat I have ever heard wants the government to have more control, more rules, more of my money, and do more things that I disagree with.

Now that all of this has been said democrats OFTEN come up with interesting points. I have been a subscriber to the MoveOn.org newsletter for over 4 years now, but recently I have have been reading and writing blogs, one that I found early on, and is full of good info is one by Jon Taplin. I will say that most of the time I totally disagree with him. But when he is just stating facts, his facts are very interesting. Today he posted an article about ‘The Lottery Class” You will notice something VERY interesting. The poorest people spend over 5% of their money on the lottery. These people also spend at least 5% of their income on transaction costs that the rest of us usually get for free. I mean, they pay to cash checks, then they pay to buy cashiers checks. Also many of them pay a huge amount of their income to very high, and often abusive fees for borrowing very small amounts of money.

I have never been able to understand the logic that many of these people have. I had a good friend that was like this. Was always borrowing at 20% per month interest rates and such, he never had money and over 10% of his income was going to these things.

About a week ago YouTube featured a video that was made by and about this subject. It was crazy, but so real in the subject matter. Please watch this video. It helped me understand this underbelly of our economy a bit more.

[youtube=http://www.youtube.com/watch?v=iAKJKBCyPUY]

Now what should be done about this. Well first off even if rates were lower these money loaning companies would be still highly profitable. Here in Arizona they are getting ready to regulate these much more. I am PRO government regulation that protects people, I am against government regulation that makes the burden on all of us higher, such as having to file a Tax Return.

Lottery’s are almost always ran by the government and the profits go to the government at the expense of the poor. State and local government have gotten very used to the money they receive from this. (Not to mention the 8% or so that the place selling the ticket gets) Now you should not totally get rid of the lottery because a certain amount of our society will resort to illegal betting to get their fix, but you CAN have the government stop promoting it. They can stop all forms of advertising, they can stop listing the numbers on the news broadcasts. You could also limit the number of places sell it, to say only places that have a liquor license. That would remove the kiosks in the malls. And of course they should remove the automated vending machines that people under 18 use to buy the tickets.

I have not played the lottery in a decade or so, and in my whole life I have spent under $50 on tickets. But the lottery is such a rip off, they only pay back 45% or so of the money to the winners. And even when they do that the government takes 40% of the winnings of major winners in taxes. Basically half of all money spent on lottery tickets is a donation to the government, and comming from the people who can least afford it.

That being said I am not so strict on gambling. Games of skill such as poker are much more fair, you can have a positive expected return based on your skill. And games that payback almost all of what they take in are better, they are more like entertainment. For example craps, if you play the passline, pays back about 98%. So if you bet $10, and do it 100 times (Which would take HOURS), on average you will only lose $20. Sounds like a lot of fun for a small cost. Black jack is about the same if you play correctly. Even slots are MANY times better than the lottery, though MUCH more boring.

In the end people need to think a lot more, keep their eyes and mind open. Too many people walk around, close minded, they do things in the old ways and get the old results. Poverty and being out of control of their life.