Excuses are Like, Well…. Are Excuses Keeping You in Poverty?


Every so often I write a post about the type of sacrifices one needs to make to stay out of debt and become wealthy.  I then get a comment back saying that the advise is unrealistic.  No one could buy a house and have payments of less than 25% of their take-home pay.  No one could wait ten years after college to buy a house while they are paying off student loans.  No one could do without a cell phone, or a car, or a vacation.

Excuses are what keep people in poverty and keep people in debt.  “If I get a job, I’ll be earning less than I am on welfare.”  “If I don’t have a cell phone, how can I stay in touch with people?”  “There are no houses in my area safe to live in that cost that little.”  “I can’t move to find a job because all of my family and friends are here.”

Such excuses are signs of enabling.  This may be enabling from the government – people don’t improve themselves and get out of poverty because the government gives them just enough to pay for food and shelter, so they live a miserable existence of bitterness and jealousy.  This may be enabling from a friend or family member who pays your rent or lets you live at home so you can keep living like a teenager, spending any money you do earn on alcohol and pleasure rather than starting to build your life.  This may be enabling from yourself, telling yourself there is no other way but to stay in the job you have and never move up and that there is no way you could save the money needed to invest and increase your income.

In America, there are many stories of people who came from desperate poverty that were able to pull themselves up.  One example is Herman Cain who did it not once, but twice.  First he worked his way up and became a vice president at Pillsbury.  Seeing no way to progress further and become a CEO, as was his goal, he decided to start again at one of Pillsbury’s divisions, Burger King.  He went back and became a manager of one of the restaurants along with several other people who were just out of high school.  He then worked his way up and became the CEO of Godfather’s Pizza when it was acquired by Pillsbury.  He then took that franchise from the brink of bankruptcy and built it into what it is today.

There are many other examples.  Clarence Thomas.  Mike Huckabee.  There are also people who went bankrupt but them came back and became extremely wealthy.  One example is Dave Ramsey.  The reason they got where they were was because they didn’t accept government hand-outs or fall into a comfortable life of living off of others.  They accepted that they would live in poverty for a period but they never allowed themselves to be poor.  They were looking for the opportunities rather than thinking that the wealthy, or circumstances, or anything else was keeping them down.

The truth is, poverty is a good motivator to better your life.  If you are living in a moderate three-bedroom apartment with your family of four, paid for by the government, you might be happy to stay that way and never look to make your situation better.  If instead you were living in a run-down one bedroom, you might be motivated to take on an extra job (or a job at all) and look for education and experience that will allow you to buy a house.  There is usually a large gap and a lot of uncomfortable conditions between living on welfare and living on-your-own.  Your total income will often drop when you start earning more money since your welfare benefits will be cut, but in the end you’ll end up with more money.  More than that, you’ll end up actually providing for yourself rather than taking from others.

So, stop making excuses.  If there are no good jobs in your area, move to where there are more opportunities or start your own business.  If there are no homes that you could buy and pay no more than 25% of your take-home pay on the mortgage, live in a small apartment and save up until you have a big enough down-payment to bring the payments in line or move to a different area with cheaper housing.  If making more income will cut your welfare payments such that you’ll be making less, go without a cell phone, ride a bike, take a second job, and go to a beans and rice diet until you can earn your way through the gap.

And get away from the people who tell you that you can’t do it.  You need people in your life that will encourage you to make your life better rather than those who will pull you back into the slop with them.  If you live your whole life and do nothing but suck off others, what is your purpose for living?  You need to contribute and make society better to live up to your full potential as a human being.

Much as I enjoy writing about investing, it doesn’t make sense unless people are reading. If you’d like to keep the articles coming, please return often and refer a friendhttps://smallivy.wordpress.com. Comments are also greatly appreciated, as is lively and friendly debate. Also feel free to link to or reference posts – all I ask for is fair credit.

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing

The SmallIvy Book of Investing More than 30% Off


 

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The SmallIvy Book of Investing, Book 1: Investing to Grow Wealthy is on sale for more than 30% off the original price of $14.99.  In this book I cover all of the information a new investor would need to know, including the different types of investment options and the risks involved.  This is much more than just a book on stock trading, however.  It provides a plan for money management throughout your life to allow anyone with a middle-class income to become financially independent well before retirement age if starting early.  This book is ideal for someone in their early twenties just starting out in a career.  It also offers information on how to make your money last through retirement.

This book will give anyone the financial literacy needed to go from being a slave to a job to a free, financially independent individual who has the financial security to weather any financial storm.  Click the “Buy a Copy” link under the picture of the book to go to Amazon’s site where you can read portions of the book and buy a copy directly.

Want to Start Investing? Change Your Mindset from Saving


Investing requires you think differently than you did when you were saving money.  With saving you can predict exactly how much money you will have in the future.  When investing, your account value will be up one day and down the next.  There is no short-term predictability.  All you know is that if you keep investing, some of your investments will work out and pay off handsomely enough to make up for the investments that don’t do well.

Perhaps the greatest obstacle we have when investing is our own mindset. Our psychology acts against us, preventing us from doing the right things at the right time, and actually driving us to do exactly the wrong things. A skilled investor will work to develop the correct mindset to avoid making these mistakes.

The two psychological factors that affect our investing decisions are fear and greed. Fear prevents us from taking enough risk and tends to make us want to stay out of the markets when we should be buying, for example when the market has fallen in price rapidly and securities are selling at a discount. Greed causes us to take too much risk and to be putting more money into the market when we should be moving money out. Greed’s cousin emotion, arrogance, causes us to think we are better at investing than we are, leading to large risks and truly humbling experiences.

To combat fear, we must step back and look at the market from a broad perspective. Looking at the long-term history of the market (see, for example, http://bigpicture.typepad.com/comments/2005/12/100_year_bull_b.html), virtually all of the time, for any ten-year period, if an investor had purchased “the market,” or a sufficiently diversified index fund that roughly tracked the behavior of the market, one would have made money. This even includes buying at market peaks just before major events like the crash in 1987 (in which stocks recovered just one year later) and periods in the dismal era of the 1970’s. The only notable exception is would be buying in 1928 just before the stock market crash that preceded the Great Depression.

If one were to invest regularly – buying shares every year rather than just putting money in one time and then waiting – one would make money at the end of every ten-year period, including during the Great Depression. The reason is that stocks do not tend to stay down for long. Sometimes the best thing to do when there is a significant downturn is to simply stop looking at statements for a while. Remember that time is on one’s side when it comes to investing.

Perhaps more damaging that fear is greed and arrogance. Greed causes us to buy when prices are much too high to be justified. Greed is what causes us to buy during obvious bubbles, and unfortunately bubbles tend to reinforce this behavior by continuing well beyond the time when they become obvious, making us think that they are not bubbles after all. Arrogance makes us take risks and makes us think that even though many others have lost money doing things like day trading, somehow we are different and will succeed.

The best way to fight greed is to make a personal committment before starting to invest that one will not keep more in a single position than one is willing to lose. If a stock is going straight up, even though it is tempting to wait for a few extra dollars before selling some shares, one should always ask the question, “would I buy the this many shares of this stock at this price today?” If the answer is “no,” sell some shares. Some of the best investors have said they’ve made their money “buying too late and selling too soon.”

Unfortunately, the only cure for arrogance is experience. When I make a mistake and relearn some rule that I should have believed from the start, I call it “paying tuition to the market.” All one can do is to make sure not the pay the tuition for the same mistake twice.

Much as I enjoy writing about investing, it doesn’t make sense unless people are reading. If you’d like to keep the articles coming, please return often and refer a friendhttps://smallivy.wordpress.com. Comments are also greatly appreciated, as is lively and friendly debate. Also feel free to link to or reference posts – all I ask for is fair credit.

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing