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Financial Ebola, AKA, Financial Suckiness

Now that you have some facts about saving, and some numbers from earlier which should pave the way to financial freedom, let's talk some specific areas where I feel the biggest financial mistakes are made in our society--in other words, the "financial ebola" epicenters of society.

My sundry posts on this site are replete with examples I observe in everyday life about how people stupidly waste their finite store of cash, which they should be growing to help make them free. I’m a human being, and I haven’t always been the blackbelt superhero of money makeovers that I am now (apply sarc font here), so I’ve made some of the same mistakes I’m constantly ranting on… from youth and upward.

But I’m a big boy now. I’ve been a lot of places and seen lots of things.... so many that I'm utterly flabbergasted when I see “adults” like me in this village, who should know better, making choices that are so dumb.

It sickens me. They make these dumb choices over and over, and yet expect to get ahead… it’s what Einstein refers to as insanity—making the same mistakes over and over and expecting different results each time.

This is the crux of my next few rants … the “poor,” the middle class, and even the upper class, those who make a lot of money but don’t keep any of it, keep living the same life, making the same financial mistakes, but expect things to work out differently for them each time. They suck down these vicious strains every day, and expect to have better health tomorrow.

What am I talking about? Since I’m an avid people observer, well-read, well-informed, and well educated, I feel like I’m in a good position to lay out some of the things I believe are the biggest money-related mistakes people make in the world today. So I’ve started the below to outline a few “whoppers” of financial stupidity you need to avoid at all costs. And when I say they are “whoppers,” I really mean it… It’s these things that keep many people in the poorhouse their entire lives, never able (or is it willing?) to get ahead or retire.

Let’s bust this out… bear with me while I get philosophical again.

Ebola #1: Having a full-time job means I deserve to spend my free time and money doing what I want

My philosophy? Wasted Free Time = Delayed Freedom = Financial Ebola

Leisure makes you poor... yes, it's true.

I like to have fun just as much as anyone. Still, I’m regularly accused by my better half of being unable to have fun. Why? I’m almost always doing something. Around the house, in the yard, in the garage… you name it. I like projects. Plus, I have this blog thing going on.

What my wife’s referring to is leisure activities—things to unwind or have fun. I’ll occasionally sit down late in the evening and enjoy an episode of one of my TV shows. But I won’t do it if I think there are better things to do. I’m constantly on the move, trying to make the best use I can of my limited time.

The few leisure activities I do engage in are cheap. Walks in the neighborhood, art, reading, streaming TV, playing with the kids, and going to the park. I have tons of friends who do other, more expensive stuff. Skiing, snowboarding, jetskiing, wakeboarding, expensive dinners with a spouse, drinking, big vacations, hunting expeditions, RV-ing…. You get the picture.

Honestly, I used to wonder how my friends could afford these things. After all, I’m living a modest lifestyle, keeping my debt down, and don’t go out that often. And my friends have the same income level as I do. Are they financial magicians? Where does this money materialize from? They aren’t that stupid with their money to be honest, at least outwardly.

Then I realized it. It’s all done either on credit cards (yes, stupid), home equity loans (yes, even more stupid), or they dispense with things I do that are making me more rich long term (need I say it again?)… let me elaborate.

I put good portions of my income into savings, investments, and paying down smart debt (is there such a thing?). I have a student loan I pay on, make extra house payments so less interest is wasted each month, and never run up credit cards. All of my friends try to pretend these things don’t exist for them. I just don’t get it how they sleep at night. They must be blissfully downing bottles of blue financial freedom pills on a daily basis.

One premise of my theories is that every penny you can spare to save and invest brings you one small step closer to freedom. The basis of the Village’s early retirement theory is that once you have a stash of cash that is making money equal or greater to your current expenses, you can retire. The lower your expenses, therefore, the less money you need to save in order to quit the rat race.

Basically, every dollar you save buys you a little freedom in the future. The more you buy, the better your future becomes. It’s like a gift you’re giving to your future self… if you give enough gifts, one day you’ll pull a Marty McFly, wake up in the morning to Huey Lewis, and find out that your future present is completely different, and much less sucky than it was in the past. Got it?

That being said… you must agree that endless free time (freedom) is essentially bought with money—a pile of it. If you have tons of free time now, but not a lot of money, you have a choice to make. Will you use your free time in fruitless pursuits (TV and other leisure)? Or will you use it to better yourself, your life, and your financial future? The more time you dedicate to devising ways of making more money and adding it to your pile, the better your future starts to look, and the shorter your time to freedom becomes.

Do you see this relationship, and how central it is to what we’re trying to achieve? Think about the correlation. If you’re rich with time, but not with income, you need to spend some of that free time devising ways to increase the income in order to secure freedom. If you’re poor in time, but rich in income, you need to spend time thinking of how to reduce expenses, in order to speed up the time to freedom. Finally, if you are poor on income and poor on time… you have some serious (but not insurmountable) obstacles to overcome in your quest for freedom.

To conclude, it's not "leisure time" per se that keeps people poor... it's expensive things they spend their time doing in free time, and important things, like financial planning, which they fail to do.

Ebola #2: Higher Education is Always A Great Investment

Education these days is EXPENSIVE. The cost is a veritable ebola outbreak on your financial future. And yet, most people don't give a second thought about going to the best university possible, and racking up tons of debt right when they are in the prime of their lives.

It’s a fact that many Americans today are under-employed… in other words, they have more education than they need to hold the job they have. I’ve actually found myself in that boat, and it’s frustrating as hell. It’s frustrating for America because young people, after spending the prime four years of their lives at college, suddenly fund themselves out of college and unable to get a job in the field they studied, but they have high loads of debt to pay for, and it’s unaffordable for them.

Part of the problem is choosing career that is not employable, or not in high demand. We are always encouraged to get an education in something we enjoy, but what we enjoy doesn’t always pay the bills. I've known tons of people that "majored" in dance or similar subjects in college... and now work as tellers in a bank somewhere. Clearly, they didn't think this one through.

Or consider some friends I have that studied music because it's what they love... but they're barely making ends meet teaching middle school, and don't actually like teaching music that much.

Or closer to home... consider my case... I studied political science. I loved it, and it still fascinates me... but as a career choice? What a joke. I realized by the time I was done with four years of it that I didn't want to work for government, be in politics, keep my wife barefoot and pregnant working for a non-governmental organization, live overseas my whole life, or to be working in some bureaucracy somewhere with no growth prospects for the duration of my short life.

Since the primary purpose of having a job is to provide necessities of life, the priority scale for choosing a college career should not be "level of enjoyment." Trust me. Consider instead, the below, in this order:

A) Will your job choice pay the bills?
B) Do you have to take on a ton of debt to get an education for this job?
C) Is there a market for your choice, and does the market have good growth prospects
D) Can you stand doing it for a couple decades, worst case scenario (until you have saved enough to retire?)

If you can make all of these things apply successfully to your dream job, you’ve got a winner. Go for the education--but shop around. Find the best value possible. Most jobs don't care about which school you went to.... rather, they care about the skills you end have or ended up with.

Unless you've given it a lot of thought, you might not realize that education in the U.S. has become overrated. Everyone is encouraged to go to college—but it seems like more and more of these college-required jobs are becoming crowded. The white collar world is flooded ten times over what it was forty years ago.

These are not the jobs that are plentiful in American today, nor the types of jobs that often pay the best. The fact that education expenses are getting ever prohibitively expensive serves to prove the point that perhaps the “college” route is not the best route, since that is the route “everyone else” is taking these days.

More people in this country need to consider some sort of trade school or technical training. Carpentry, welding, plumbing, electrical work, and other hands-on jobs. These types of things are ALWAYS in demand, require much less time and money investment in training. Thus, they tend to have a higher return on investment.

You can be a plumber and make more per hour than lawyers these days. This was a lecture my dad, a lawyer, always gave me. And yet I went to college.

Seriously consider this fact if you need to increase your income or change career paths in order to live a better life, avoid financial ebola, and achieve freedom. There are genuinely affordable opportunities out there that don't require a decade of schooling.

Ebola #3: Aspiration Spending

There’s a funny phrase I heard recently called “aspiration spending.” It’s something we all go along with, without even giving it a second thought. And it’s bankrupting us.

Most crap we buy is expensive. TV’s, nice furniture, live professional sports events, music concerts, sweet horticulture, and many other leisure pursuits. Most of it is not only expensive, it is prohibitively expensive—meaning, it is so expensive, we should be physically and morally prohibited from spending money on it.

We buy this crap because society tells us it’s what we should be doing once we get a little money saved up. Even politicians and central bankers tell us to do it, to “stimulate” the economy.

We spend because society tells us it’s what other people do. That’s what the “rich” do, right? We gotta measure up. We spend money to aspire to live the lifestyle we see others supposedly living. If we don’t live the same way, we’ll be sleighted, shunned, and gossiped about. Our neighbors will think we are hermits, weirdos, or worse—Amish, or even Mormons!

Yes, spending is always the answer to the economic and financial problems in our lives.

You know what I say to that?

"Spend 'this' Obama!" Now, mentally picture me extending a lonely middle finger to a picture of his face while I say that. This is what we all should be doing when we are told to spend "for the sake of the economy." In fact, whenever Obama or a central banker gives you financial advice, you’re best off doing exactly the opposite of what they tell you. Case in point.

Aspiration Spending tells us that if we’ve worked a little, we’re entitled to spend whatever’s left over after our bills in order to divert us from the realities and suckiness of life. It’s all a lie, a big, effing, enslaving, expensive one. This lie is stealing our retirement.

We’ve got to shun this lifestyle. It follows that this particular strain of ebola will cause ensuing financial hardship. We must stop spending money that should be working for us, money that is going to make us free. Don’t buy crap that’s going to break, get lost, or get stolen, in the process pissing away cash that’s going to give you independence.

Ebola #4: The Get Rich Quick Mentality

Only time, patience, consistency, and discipline will give you more money.

Our society today is obsessed with the get-rich-overnight mentality. This is what drives people to buy lottery tickets, spend time in Vegas, and even (most of the time) actively trade in the stock market.

We all know the average circumstances for people that get rich overnight. They’re mostly poor at first, then inherit or win a ton of money, and their life sucks within a relatively short time because they’ve wasted their substance on drugs, expensive stuff that breaks, partners that don’t love them, and loads of other things that don’t bring true happiness.

Here’s the truth about real wealth: It won’t come overnight. If it does, nothing good will come of it. The temptations to do dumb things with the money is too great. You’ve experienced this yourself, only to a smaller degree.

Example? Your tax return. The second you find out from your accountant what your return will be, you begin mentally spending the money before it’s even in your hands.

The reality is, people that become truly wealthy have done so because they have dedicated much time, patience, consistency, and discipline to the plan they used to get there.

This site talks all about psychology. That’s all success with money is: training your mind to resists things you don’t need, developing a plan to permanently remove these things from your life, even when you are rich, and sticking to the plan no matter what.

An example plan is our savings strategy. The plan to become wealthy includes permanently reducing expenses, increasing income where possible, locking in as high a savings rate as you can, putting any extra money away at the end of the month, and doing this year after year. If you do it, you WILL be rich, there is no doubt in my mind. And by the time you have enough to become free, you will have trained yourself to never look back, to never waste money, and to live a truly good life of discipline, consistency, wisdom, and satisfaction.

It’s the only way to really live.

Ready to hear about some more suckiness? Read on.

Fixing Sucky Spenders, Part 1

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