In a previous Nugget I wrote about what separates the “99.9%-ers” from the super-wealthy “0.1%-ers”. That Nugget was all about “wrong thinking”. In this Nugget we add another piece to that elusive puzzle of acquiring wealth.
The majority of people in America are suffering financially, though they have a source of income. Why is that? Setting aside sudden crises, such as major medical costs or environmental disasters, as you will see in a moment it’s most often because of BAD CHOICES of the MOMENT, wrong choices, selfish choices, even stupid choices. Though not everyone can be wrapped in the blanket of bad choices, the majority of people can be. This may not apply to 100% of the people wrestling with financial problems, but it applies to the vast majority.
Fewer than 5% have the discipline to make the right financial choices. Instead, they choose instant gratification to satisfy an urge to fuel self-importance and pleasure rather than their bank accounts.
Why this Nugget? It is prompted by discussions with some of my friends and by the shows on TV about people trying to make ends meet.
- Bad choice. A little spending, a little drain on cash, is not going to hurt. YES IT WILL! I like to use the analogy of building a brick wall on the Empire State Building. The brick walls on that building are massive. It is a globally-recognized landmark because it was so tall for its time. Yet, that wall was built ONE BRICK at a time. One penny, one dime, one dollar, spent on anything, repeted often enough over a long enough period of time, can add up to a massive fortune. It is a very bad choice to minimize any decision to spend any money no matter how little the amount. All spending can cause future problems to one’s cash flow or savings. Any spending of any amount will critically impact your wealth in due time.
- Bad choice. Blaming circumstance, environment, one’s upbringing, instead of taking responsibility for our decisions and choices that can help to reshape those elements of our life. Whatever it is that you call your “problem” by directing time and energy, you can fix it or go a long way to mitigating impact from it. To think otherwise is to abdicate your responsibility as a person and as an adult and to leave it to others to fix your problem.
- Bad choice. Buying or rescuing 3 dogs or 3 cats or pets of any kind while you are strapped for money. Fine, if you have lots of spare cash. Clearly a bad choice if you are struggling to make ends meet. The decision to acquire 3 pets, even 1 pet, is prompted by many emotions of the moment. The longer-term financial drain comes from food for the dogs, veterinarian bills and medicines, and time and effort that could more profitably be directed elsewhere. Even just one dog, cat or other pet will be a drain on cash, time, and effort.
- Bad choice. Owning motor toys. Having a motorcycle that is for pleasure only typically is a waste of money: keeping it protected and safe when not in use, insurance, operating costs, and the high risk to life and limb when the motorcycle is involved in an accident among cars and trucks.
- Bad choice. Owning recreational vehicles such as a motor home, RV trailer, sail boat, motor boat, and any other recreational craft that may require money to be redirected away from the most critical needs and your other expenses, debts and loans.
- Bad choice. Believe it or not, I include FOOD in this one! People struggling to make ends meet often overlook the money they spend on food and treat all food as a necessity. From a nutrition viewpoint, some of those food purchases can be damaging to your long-term health. Rethink the long-term consequences of eating much of the food advertised on TV, some of which you are told is “nutritious”. Maybe in the short term, yes. But what of the long-term consequences? There is NO NEED TO EAT OTHER ANIMALS or DRINK FROM THEM. Doing so can costly to YOUR WALLET in a number of ways:
- Animal and dairy protein is expensive and largely not necessary for healthy nutrition.
- The fats in animal dairy protein taste wonderful when cooked or when we drink it and can be a source of food addiction. Book are written about fats, salt, and sugar creating food addictions. Read:
Salt Sugar Fat and also read Breaking the Food Seduction: The Hidden Reasons Behind Food Cravings.
- Far less expensive meals with high-scores in nutrition value can be discovered by reading, THE STARCH SOLUTION. By failing to explore this preferential and healthier and LESS EXPENSIVE and more pleasurable way of eating, one may spend more money than necessary on animal sources of protein.
- Bad choice. Buying too much or too many items. You need one pair of shoes until those shoes are worn out. Not 100s of shoes. You need a few pairs of pants or a few dresses, not hundreds. Anything beyond your basic needs is money wasted. I wince when I occasionally watch those house buying TV shows during which one of the potential house buyers takes delight at the sight of a huge walk-in closet because of, “enough room for all my shoes and clothes”. That merely advertises a lack of financial discipline. No need for so much.
- Bad choice. You need only 1 car unless you need 2 cars. In the latter instance it may be because money earners in your household are not able to enjoy common travel schedules or decent, safe public transportation. Otherwise, seldom will you need more than one vehicle. Vehicles are ALWAYS BAD CHOICES. You buy them new and almost immediately suffer approximately a 30% loss in value when the ink dries on the ownership documents. They are a constant drain on money: insurance, tires, gas, maintenance, and cleaning. They rust. They result in law suits and medical expenses when they are involved in accidents for which there is high probabilities.
- Bad choice. Buying packaged foods instead of eating fresh. Packaged foods are costly. You pay for the labor at the manufacturing end to cut, cook, package. You pay for the team of people required to market, advertise, etc. Then you eat the contents which are often spiked with additives intended to turn you into a food addict so you will eat it more often and in larger quantities. To learn more about how the food industry turns you into a food addict, read, Salt Sugar Fat and Breaking the Food Seduction: The Hidden Reasons Behind Food Cravings. Did you even know that it’s you doing belly-to-belly combat with the highly secretive world of the processed food giants which spend billions on research scientists to cause you to crave their packaged food?
- Bad choice. Failing to continuously learn. With the plethora of online courses, many of which are no-cost, there is almost no excuse for avoiding or delaying the process of acquiring whatever information you may need to help improve your finances and your income-earning potentials. From improving your grade-school arithmetic to acquiring any knowledge that will produce marketable skills.
- Bad choice. Failing to think of money on a before-deductions basis. How much must one earn on the job in order to afford to buy the item in question in the store?
- Bad choice. Failing to treat a source of income as something of great value to be nurtured and protected. You’ve heard the expression, “Money slipped through my fingers like water”? When money is seemingly plentiful, people often take it on a joy ride rather than carefully planting it so it can be nurtured, watered, and grown into something much bigger for some rainy day. Then when retirement age does come, the bank account is almost empty. Reality sets in.
- Bad choice. In retirement, failing to change one’s standard of living. Failing to adopt a healthier lifestyle. Too many people mired in financial problems after retirement have approached retirement as if the outflow of money must be maintained at the same levels as prior to retirement. Retirement ought to mean doing with much less of everything. You will likely no longer need an expensive, extensive wardrobe. You will likely no longer need two cars in your household.
- Bad choices. Trying to solve all of one’s financial problems in one go. Instead, it is better to focus on the top-most financial problem and work at resolving that debt first, while minimally servicing the other debts and the other financial obligations.
- Bad choice. Thinking of yourself as a unit rather than your spouse and children as part of your financial plan. Think of the entire INFLOW of money into the household and carefully scrutinize each OUTFLOW for yourself, your spouse, your children and your pets, as one overall collective.
- Bad choices. Knowing you or someone in your family needs to get a job, but failing to take the steps necessary to do so. Job hunting is itself a full-time job. You need to have a resume that is the best it can be. (This website has lots of tips about kick-ass resumes…use the search box.) You need to practice being interviewed or at a minimum prepare for questions that may arise during the interview. (Lots of interview tips on this website, too.)
- Bad choices. Complaining that you are passed over for promotions instead of working to understand the hidden rules or even making yourself more valuable so the company will pull you up by your bootstraps, so to say. (This website has lots of tips. Search “hidden rules“. Search “28 Tips“.)
- Bad choices. Keeping money problems a secret from your spouse and family. Everyone in the household must be shown the numbers…write them down and discuss each incoming and each outgoing dollar amount.
- Bad choices. Assuming you do not need to write a budget and assuming it does not need to be POSTED WHERE IT IS HIGHLY VISIBLE to each member of your family where they can be regularly reminded of it.
- Bad choice. Maintaining a large, ego-satisfying, costly, property when something less will suffice.
- Bad choice. Making purchases, buying ANYTHING, because buying makes you feel happier. Shopping and buying can be every bit an addiction as alcohol, food, and heroine. Maybe not as powerful. Nonetheless, damaging.
- Bad choices. Failing to get help for your addictions: alcohol, drugs, food, sex, shopping, etc.
- Bade choices. Using credit cards. They often have usury rates, climbing as high as 28% or more, after you missed a monthly payment or two. Even preferential rates of around 10% ought to be considered sinful and usury since big banks are given money for near-zero rates.
- Bad choices. Buying stuff you really don’t need. Learn to buy only what you absolutely need and can’t do without. Don’t buy anything else. And, wherever you can, whenever you can, PAY IN CASH rather than using your debt or credit cards. Cash is more immediate and keeps the true cost burden visible. Plastic makes it too easy to feel as if you are in control of an endless source of wealth.
- Bad choices. Rolling short-term debt into long-term debt. An example of this would be to consolidate your credit cards into your home mortgage instead of paying off your credit cards as fast as you can while paying down your mortgage principle. The problem with rolling, (folding), one debt into another is you lose sight of it and are encouraged to begin the sequence over again.
- Bad choices. Running up your debts to maintain a good credit score rather than paying off your debts. You’ve likely been told that, to have credit cards and debt is healthy for your credit score. Get yourself out of debt and stay out of debt…at least try working hard in that direction.
- Bad choices. Taking on ANY NEW DEBT or loans or financial obligations while mired in financial troubles. Work a plan to get yourself out of debt, not further into debt.
- Bad choices. Holding a valuable asset, (physical item), which you seldom use and definitely do not need. Do you have an excessively vast collection of shoes, clothing, cards, comic books, collector items, or anything else like tools, furniture, bikes, etc? If so, consider the merits of selling them and using that money to pay down your debt principle.
- Bad choices. When you do have money to pay down a debt or a loan are you paying the wrong ones first? ALWAYS pay down the highest-interest, the most-costly debt or loan FIRST or with the most amount of money you can muster. As you go lower on your list of debts and loans, and, yes, you should make a list, pay minimum amounts on everything else until the highest burden is paid off. Then move down your list and repeat for the next highest burden.
- Bad choices. Reading useless websites and Watching too much TV instead of turning your idle time into constructive, focused, smart-choices, learning and money-making time. You can make more money either by improving your knowledge and skills or by taking on a part-time job, instead of wasting your life crawling the net or watching TV.
- Bad choices. Failing to examine every opportunity to earn more money. Maybe by working harder and smarter at work, you can win a promotion. (Lots of tips on this website if you search, “Work smarter”.)
- Bad choices. Using those quick cash sources of loans come pay day. Do everything in your power to avoid high-cost conversions of your pay checks despite the fancy TV ads telling you to take your pay check to the nearest cash service for a quick loan. They would not be in business if they could not make a ton of money from people who fail to think about the cost of handing their pay check to a quick loan place as collateral for quick cash.
- Bad choices. Buying anything merely to reward yourself or because others buy those things or because you are depressed and want to reward yourself out of depression.