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5 Financial Decisions That Keep You Broke (or Why My Friend Will Always Be Poor)

Poor financial decisions will keep you broke

My friend  will never read this, but that’s not why he’ll always be poor. He (real guy by the way, we’ll call him Steve) will always be poor because he consistently sabotages his future by making poor financial decisions today.

Let’s jump right in.

5 Financial Decisions That Keep You Broke

1. Choosing to finance rather than pay cash.

I still can’t believe he said this…

During a recent conversation about car payments and credit cards Steve made the comment that “It’s not really debt if you can make the payments every month.” So I guess when Beth and I owed $119,000 to several different companies we weren’t really in debt since we were able to make the payments. That makes sense…not.

Here’s the deal. We all know debt is bad. Even “good” debt sucks. So hey, let’s just call it something different. Let’s call it “payments.” So I can get the new car now, because it’s not debt you see, it’s just “payments.” It makes zero sense and bottom line it’s rationalizing poor financial decisions by calling it something else.

2. Buying a new vehicle instead of used.

Steve just bought a brand new SUV (rather spontaneously I may add) 3 years ago. Just two weeks ago he said he was looking at getting a brand new truck, to the tune of $40,000. He would end up paying at least $5,000 more than the sticker price due to the interest, not even counting the instant devaluation of the vehicle the second he buys it. That’s what gymnasts call “upside-down.”

Dave Ramsey says the depreciation of a new vehicle is the equivalent of throwing a $100 bill out the window every week for the first four years. That’s completely wasted money my friends. I have no problem with buying a new car. But you have to know the numbers including the real cost of the vehicle, including the opportunity costs of the things you won’t be able to do with that money.

3. Defining Wealth in Terms of Income Instead of Time

Part of Steve’s blindness is that he doesn’t realize he’s poor because he has a decent income. But wealth isn’t necessarily measured in dollars.

According to Robert Kiyosaki (Rich Dad, Poor Dad), wealth is measured in time. If you were to lose your job today, how long could you afford to live at your current standard of living? If it’s 3 months, then you are “3 months wealthy.” Your income becomes largely irrelevant.

Let me give you another example. I feel almost funny saying this, but Beth & I live in a very nice suburb of Orlando. We live in a condo, but a few blocks from us are very nice million-dollar homes. Ironically, we’ll occasionally find a foreclosure on our morning walks. What’s my point?

It requires a great income to qualify for a mortgage on a 7 million dollar home. Add in the BMW X5 and the private school and you can see how my “rich” neighbors may have less cash at the end of the month than you and I do. Your income can be your greatest wealth-building tool, but if you’re spending your money before you even make it you’re going to end up broke.

Back to Steve.

If he lost his job, he would have about two weeks before he started defaulting on bills and debts (excuse me…”payments”). Actually, he could probably eke out a month by using his credit cards, but that’s not really his money is it?

Here’s where it gets real scary.

4. Increasing Your Standard of Living (and debt) in-line with Your Income

We’re all aware of the danger to increase our standard of living whenever our income increases. But did you know that the opposite is also true? There is a tendency to increase your level of debt whenever your income increases. I didn’t mention this before, but can you guess what the event was that triggered Steve’s sudden desire to go buy a new truck? You guessed it….he had a slight increase in income. Now all of a sudden he has “I-can-afford-it-itis.

I experienced this correlation with debt. I moved to Waco without a job and about $9000 in debt in 2004. My income went up every year after that, but ironically, so did my level of debt. It was like the more money I made, the more I thought I could afford (at least in payments). And since income is such a large factor for banks, they were more than happy to offer me more debt with my increased income. Interesting how that works…

5. Using your Future to Pay For Your Past

Steve will always be poor because he doesn’t understand the power of delayed gratification. He doesn’t understand how interest works and he makes dangerous assumptions about his future income which may or may not come to pass. He is spending his money several years before he has earned it.

Think about how ridiculous and ultimately tragic this is…

30 year-old Steve is making decisions today based on his wants that is going to make it very difficult for 35 year-old Steve just to pay for his needs.

Never count on your future to pay for your past. Never!

Hmmm….how do you wrap up a generally depressing post? I’m tempted to just say “don’t be like Steve!” and end it. But we need more closure than that.

So here you go:

The Joneses are broke. They have financed their futures to look good in the present. Steve is trying to keep up with them…and I have very serious concerns not just for his financial well-being, but for his marriage as well because of the stress that debt puts on a relationship. This is real folks. Your decisions matter, so resist the urge to go out and buy things you cannot afford. The price is often higher than you can imagine.

-Wesley

Comments: Have you made any of Steve’s mistakes? How so?

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Book Review: Secrets of the Millionaire Mind

Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth

I’m super excited! This is our first video post and our first book review. It’s a review of T. Harv Ekers excellent book “Secrets of the Millionaire Mind.” Enjoy!

Here’s a link to Amazon if you’d like to check out the book reviews or order a copy. It’s an affiliate link, so I’ll make about 20 cents if you order it from here! :)

Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth
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Make Excuses Or Make A Fortune: Your Choice (Pt.2)

Welcome back to DTL. If you missed part one, click here.

In part one, we shared why you can’t despise the rich and be rich, and we explained how making excuses is essentially handing over control of your life to someone else.

We’ll wrap this conversation up today by sharing how to respond to negative mindsets about wealth and how to kill your excuses.

How Do You Respond To Wealth?

How you view wealthy people will determine in part your level of wealth. I used to believe having wealth was wrong, at least for me. There was something pious about being poor. I was part of a culture that placed high honor on people who gave up wealth in order to serve the poor, and because of that I had a tendency to resist wealth, and I would feel guilty or unworthy when money did come my way. If you can relate, I highly recommend reading the T. Harv Eker book mentioned in part one. He get’s a little new agey for my taste, but overall it’s a great book all about our mindsets towards wealth.

One exercise in the book really exposed my inner beliefs. He was writing about how the way we view rich people will determine our ability to become rich. He ends the chapter by asking the reader to make the following declarations “I admire rich people! I bless rich people! I love rich people!” To be honest I couldn’t do it the first time. It just felt wrong to “bless rich people.”

But why? Why is it easy to bless poor people but not rich people? Does God love them less? It revealed an inner belief I had that equated wealth with something wrong. Not only is this thought not found in scripture, it is also not good for my personal economy. If wealth is bad I will resist having any.

How Do You Respond To Excuses?

The second issue in this post is that of excuses. Here’s my challenge to you: keep a small moleskin or notebook (that can easily fit in your pocket). Every time you catch yourself even thinking a negative thought write it down and replace it with truth.

For example, I did this a couple of years ago and at that time I read about a young girl (in her teens) who had created a website for teenage girls which someone had offered to buy for several million dollars. Her parents had helped her immensely through financial support and encouragement.

My first thought was “I would be successful too if my parents had loaned me that much and helped me start it.” Once I caught myself making the excuse, I wrote it in my journal. I then wrote “TRUTH: I have everything I need to be successful right now.”

It’s amazing how empowering it is to recognize your excuses and replace them with truth. The truth really will set you free. I challenge you to try this for just 7 days and you’ll be amazed at the results.

Committed to your success,

-Wesley

Please let us know what you think! We love to dialogue with our readers!

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Make Excuses Or Make A Fortune: Your Choice (Pt.1)

Never start your day by watching the news.

I learned that lesson this morning. Thanks to the upcoming election, everything was negative about the candidates. However, what got me fired up was when they started talking about taxes (my point is financial, not politics, so I’m leaving names & political parties out).

They showed clips of one of the candidates who is proposing higher taxes on the rich in order to help the middle and lower classes. I was fine until he used the word “selfish” referring to wealthy people. Of course, if you want an applause, go in front of a crowd of low income voters and talk about how the rich are “selfish” (nevermind the fact that the guy calling rich people selfish is a millionaire). To their own demise the crowd gave their applause. Let me explain.

Don’t Be Your Own Victim

This bothers me immensely because it promotes a victim mentality. It says, “I’m poor because you’re rich.” It’s a mentality that is common among people who do not have money. It’s just easier to blame others for our problems than it is to take responsibility for them ourselves.

In his best-selling book “Secrets of the Millionaire Mind” T. Harv Eker makes this statement: “You have to realize that if you view rich people as bad in any way, shape or form, and you want to be a good person, then you can never be rich. It’s impossible. How can you be something you despise?” He goes on to say that “resenting the rich is one of the surest ways to stay broke.”

If you ever want to become wealthy, you have to develop a healthy relationship with money and with those who have it. The bottom line is that when you blame others for your problems, you are giving control of your life away to someone else. Do you really want to do that?

Success is a Personal Issue

If you really want to be successful, you have to stop making excuses, even if they are legitimate.  The minute you let something external determine your level of success is the minute you won’t have any. I’m serious. You’d be amazed at how much we limit ourselves by making excuses. Let me give you a personal example that just happened to me.

On Sunday night Beth & I were watching ABC’s Extreme Makeover Weight Loss Edition. In one year this wonderful lady lost over 160 pounds, and overcame incredible odds to reach her goal, including a very dysfunctional family. I’ve been carrying around an extra 30 pounds for several years now, so I knew immediately that if she could do it, then I no longer had any excuse. So here I am on Sunday night all motivated to lose weight, and BAM! On Monday while playing with Macey I broke my toe! (I wish I was making this up).

Is a broken toe a legitimate reason to not exercise? Of course it is!

But, if I allow myself to be the victim, then I’m giving control of my life over to a negative circumstance that happened to me. In reality, a broken toe will limit me but it cannot stop me. It may make it difficult, but it does not make it impossible! With a little creativity (such as swimming instead of running, only doing upper body workouts for a while, etc) it doesn’t even need to slow down my progress.

So how do YOU view the wealthy? What is your response to excuses? Stay tuned for our next post where I share two powerful exercises which will set you free from excuses.

Committed to your success,

-Wesley

P.S. Please leave us a comment! What are some excuses you’ve been tempted to make recently?

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Confidence: The Key to Accomplishment

Helen Keller said, “Nothing can be done without hope and confidence.”

If you think getting out of debt is difficult, try earning a college degree, writing several books, and being a political activist, all while being deaf and blind.  The 2003 edition of the Alabama quarter has Helen’s image on it with the words “Spirit of Courage.” Undoubtedly, there’s a huge connection between confidence and accomplishment.

If you’re deeply in debt, you have surely faced those moments where giving up feels like the only option. I can remember in 2004 going to the local Bank of America branch to ask them if they could cancel several overdraft fees I had received (you have not because you ask not…I had 9 overdraft fees over one weekend, and I was able to get 8 of them cancelled).

After stating how stressed I was about my debt (only $8,000 at the time, mostly school loans), the bank associate reassured me that it really wasn’t that bad and that I was going to make it. It’s amazing how words like that can help you keep going. I still remembered what she said even after Beth & I had accumulated over six figures of unsecured debt.

Confidence = Accomplishment

 I’m convinced that no great accomplishments in life have been achieved without an equal amount of confidence. Your level of confidence literally affects everything you do, from huge decisions like getting married, changing careers, and starting a family, to negotiating a purchase or simply choosing what to wear today. Confidence affects everything.

Confidence equates to emotional stability. Studies have shown that people out-of-whack emotionally spend way more than people who are emotionally on-center (aka, retail therapy).

When you lack confidence in a certain area, it means that you don’t believe in yourself in that area (could be due to lack of experience, fear, past failure in that area, etc). So if you set a goal to be debt free but lack confidence in the area of finances, you will not have the self-discipline needed to reach your goal. You’ll either sabotage yourself somehow or find a way to quit.

So how are YOU doing? On a scale of 1 to 10, what’s your confidence level? If it’s low, here’s how to improve it.

Confidence is an Inside Job

The Bible teaches that transformation takes place when you renew your mind. (Romans 12:2). If you want to grow in confidence, you have to start with your thinking. Here’s three ways of doing this:

1. Guard Your Thoughts:  Do you just let yourself think on whatever thoughts enter your brain? Paul stated that “we take our thoughts captive and make them obedient to Christ” (2 Corinthians 10:5). In Philippians 4, Paul lists several worthy values and then admonishes us to “think on these things.” God would not command this if it were impossible. Clearly we have control over our thoughts and need to take captive negative and defeating thoughts and replace them with truth.

2. Speak Life: If my daughter walked around all day saying “I’m ugly, worthless, and have no future” do you think as a loving father that I would let her continue to say those things? Of course not! Yet how often do we do that to ourselves? At a recent conference I attended, John Maxwell made the statement “the most important person you ever listen to is yourself.” If that’s true, what are you hearing yourself say? Is it uplifting or does it tear you down? If you want to change your life, change the words you say.

“The tongue has the power of life and death, and those who love it will eat its fruit.” Proverbs 18:21

3. Control Your Input: Zig Ziglar says “when you change your input, you change your outlook.” So let me ask you, what are you reading? What are you watching? Who are you spending time with? If you want to grow in confidence in any area, read everything you can on that topic. Spend time with people who are uplifting and positive. Turn off the TV for a while. Read biographies of people who have overcome tremendous odds in life; it will build you up to realize that if they can do it, so can you.

“You are the same today that you’ll be five years from now except for two things: the people you meet and the books you read.” Mac McMillan

If you want to make your life count, you have to get serious about this stuff. It matters, and it will make a difference in your life. You were born with a purpose. Don’t waste your life watching sitcoms.

On a surface level this post is about confidence, but to be honest, it’s really about identity, about how you see yourself and who you really believe that you are. 1st John 3:1 says “See what great love the Father has lavished on us, that we should be called children of God! And that is what we are!” You are a child of God. Stop playing small and insignificant and become who you already are.

Committed to your success,

-Wesley

Comments: We respond to 100% of our comments. Which of the three points listed above do you need to focus on right now?

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Want To Be Wealthy? Think Like An Immigrant

Today is July 4th, 2012.

In just a few hours those of us in the states will be watching fireworks, celebrating our freedom and the things that make our country wonderful. To be honest though, most of us take our country for granted.

I’ve been blessed to have been a part of numerous church and humanitarian trips to places such as India, Sri Lanka, South Africa, Bolivia, Panama, Spain, Dominican Republic, and Peru. While I’m nervous about the level of immorality in our country, I can say from firsthand experience that the land we live in is incredible.

Simply being American means you automatically have more opportunity than most of the world. Yet it’s so easy to take it for granted. So on a day where we celebrate America, I want to do something a little different and focus on a small segmant of our society that recognize the opportunities this country offers: Immigrants.

The Immigrant Advantage

Did you know that immigrants are 3-4 times more likely to become millionaires than native-born citizens? Were you aware that immigrants comprise 41% of the student population of Ivy League schools, yet only comprise 11% of the population in the U.S?

I read an excellent article by Neil Patel on the mindsets and behaviors of immigrants entitled “Why Immigrants are More Successful Than You.” Neil said it better than I can so I recommend you jump over to his site and give it a read.

What I want to highlight in this post is the issue of Purpose.

Why Are You Here?

If the average immigrant has less connections, less education, less understanding of the culture, and may not even speak the language, but can take the opportunity provided in this country and go from nothing to millions at four times the rate of a native citizen, what is their advantage?

PURPOSE.

If you ask the average native-born American “why are you here (in America)” you’ll get a blank stare. My assumption is that the common response would be “because I was born here” or “where else would I go?”

But if you ask the average first or even second generation immigrant why they are here they will always have a crystal clear reason. Vince Lombardi (who’s grandparents were immigrants) said that “Success demands singleness of purpose.” Many immigrants are here for a specific purpose and that is what fuels their success.

I believe as Americans we’re numb to the opportunity around us. We’ve taken for granted the freedom we have simply to be able to choose where we work or go to school. We need to learn a lesson from the immigrants among us who have come here to make better lives for themselves.

Somewhere between the apple pie and the fireworks, take a moment today to open your eyes anew to the opportunities we have in America. If needed, recommit yourself to discovering and fulfilling your purpose. You have everything you need right in front of you. Let freedom ring.

Committed to your success,

-Wesley

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Are You Worthy Of Financial Freedom?

Your financial future depends on how you answer this question.

I had the opportunity yesterday morning to attend a Dream Builder’s breakfast here in Orlando. The subject of grace came up, and a very intuitive woman at my table made the comment that people who don’t allow themselves to receive or experience grace often do so because they don’t feel worthy of receiving grace.

Grace isn’t a word that comes up much when talking about finances. We throw out words like discipline, diligence, desires, delayed gratification, etc., but not so much “grace.” Why is it that grace is THE word to use when talking about sin, overcoming addictions, loving difficult people, enduring trials, but not when it comes to our finances?

Too often, we have this mentality that says “I dug myself into this hole and I’m going to dig myself out.” We may even throw the phrase “by God’s grace” in there somewhere, yet it still carries the tone of “I screwed up and created this mess. It’s my job now to fix this.”

What’s the point?

If in the core of who you are you see yourself as a failure, as someone who can never measure up, as someone unworthy of success, then debt can actually become your excuse for never stepping out and at least trying to fulfill your potential. It’s a lot safer to be in debt and be “trapped” in a routine job that you need to make your minimum payments every month than it is to be free. This may not make sense at first, but in some way’s it’s risky to be debt-free. Like the photo above, the lion is safer in the cage than in the wild. But lions weren’t meant to be caged, and neither are you!!!

“Am I worthy of financial freedom?” It’s the same question as “am I worthy of love?” or “am I worthy of success?” It speaks of how you see yourself. It’s a funny question because (let’s be honest) in many ways the answer is “no.” Yet if you can’t answer this question with a resounding “YES!” you’re always going to struggle financially. The only way to confidently answer this question is when you realize this truth:

You’re not the one answering the question.

If I create a beautiful painting, the painting itself doesn’t have the right to determine if it is worthy to be displayed at the Louvre or  sold at a garage sale. It would be ridiculous to ask the painting if it is worthy or not. It’s a stupid question. You would ask the artist. Only the creator has the right to determine the worth of His creation. And this is why it’s called “good news.”

Despite our failures, our sinfulness, our inadequacies, and yes even our financial blunders, our creator looks at us and shouts “Worthy!!! Worthy of my love! Worthy of my blessing! Worthy of my Son.” Romans 8:32: “He who did not spare his own Son, but gave him up for us all–how will he not also, along with him, graciously give us all things?”

“Am I worthy of financial freedom?” is the wrong question. What we need to be asking is “Do I freely receive His grace in all areas of my life?” As you journey from debt to life always remember He is on your side.

Committed to your success,

-Wesley

We respond to 100% of our comments. Let’s dialogue: Do you believe that God is on your side in paying off debt? Have you considered the need for grace when it comes to your finances?

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