Part Two continues by laying responsibility and authority to enhance one’s financial situation squarely on the individual, starting with one’s mindset. Focus on things you can effect; first change your room, before trying to change the town. With hard work and luck, the sky is the limit. The harder and smarter one works the luckier one becomes. Success is often grounded in passionate work ethics which translates what one’s mind has conceived into vivid reality. The results may not all manifest overnight but when they do, one will certainly reap what one has sown.
“The same principles that farmers have been using regarding sowing and reaping to provide food for thousands of years hold fast for money. Each dollar that comes in to your hand has the potentials to be planted, grow[n], and expand[ed] into far more money. It’s no different than a farmer growing corn. You can either eat your seed, or plant your seed. One gives you satisfaction today; the other can feed your family for generations”, according to functional writer Joshua Kennon of About.com
Mr. Kennon drove home his point by stating how a $10K invested in Walmart in the 1970s (when some of us arrived in America in search of knowledge with about $10K in pocket) is now worth $10 million with $210,000 yearly dividend yield. Even with reinvested dividends, the Walmart returns are truly spectacular. Beware, this example easily could have been failed investment in Enron or Lehman or AIG stocks or in some university degrees in deed.
Education is important. So earn your degrees while you can but understand college degrees do not make a person, passion and hard work do! Some of our parents’ and our own investments in college degrees have not paid off any where near the Walmart amazing returns. That is truly unfortunate and too painful to acknowledge. Some continue to pay dearly for their sojourn without much to show for the enomous sacrifices: personally, financially, spiritually, emotionally, professionally, or otherwise. As the Igbos of Nigeria would say, “Kwo aka tira okuku aki” . Or some have thoroughly washed their hands only to feed the pig.
There is a global revolution stealthily going on. It is not out-sourcing or technological. It is neither operational nor educational. It is wise use of resources: striving to make more money while (more importantly) saving more. No one overspends himself or herself to lasting wealth. Weather you earn $1,000 or $50 million yearly, the same principle applies: you have to spend less than you make and invest the difference to generate additional income. Every penny is important in that pursuit. There is no room for waste. You will need every penny for your own use, retirement, and/or to put your child in better position to move ahead in life. The revolution is to raise offspring with the headstart they need to succeed in the global economy.
Making Your Money Work For You: To achieve sustainable financial success, it is important to have your money working for you as opposed to you just working for your money all the time. Passive income via equities are taxed at (15%) less than one-half the rate of active income (35%) on average. So if you want to cut your taxes and increase your net-worth, you need to skew more of your income towards passive income stream. The wealth accumulator (not the spenders) are not going to let go these lucrative tax breaks without epic fight. Already, you’ve seen the “line in the sand” in the budget and deficit battles. The super rich always win because of this other Golden Rule which states, he or she who has the gold makes the rule. Your best bet is to join them since you will never be able to beat them. I hope to write an article about passive income generation some day.
Cool $1 Million In Savings May Still Keep You Below Poverty Line: While the current low interest rate environment is great for those smart enough to buy homes they can afford (on mortgages) while home prices are depressed, retired savers are having a tough go at living on their savings alone. Scott Burns writes, “according to Bankrate.com, for instance, the highest yield in America on a one-year jumbo certificate deposit is about 1.25 percent from E-loan, an online bank. That would get you $12,500 a year in interest on your million [dollars], so your income would be safely under the $14,710 poverty limit.” Ouch!
Get Your Credit Card To Pay You: Ask for monetary incentive before you agree to sign up for a credit card. There are up to $500 in special incentives out there for those with great credit score. Visit creditbonuses.com for information on how credit card companies can pay you up to $125 in signing bonus and 0% APR on promotion purchases plus no annual fees. Be careful with credit cards as they are double edge swords. Charge as much as you can fully pay off when the bill arrives each month.
If you don’t already have one, obtain a credit card that gives you instant discount on fuel and rebate on other purchases. Some of them give 5 cents per gallon discount at the time of purchase. Depending on your driving habits, husband and wife can save $100 every year. Keep your teenage drivers on a driving quota. The less they drive the more fuel and maintenance costs you save. More importantly, your teenagers will have lower chances of getting into wrecks or accidents. Discourage leisure night time driving for your teenager as well. Make it a habit (for every driver in your family) to fill up the fuel tank before it gets to a quarter tank. This removes the anxiety and inherent danger of running out of fuel and buying higher priced fuel in desperation. Also, this is a critical safety concern for the female driver in particular and everyone in general.
Stay tuned for Part Three.