It’s Not What You Think

It’s all about how we think about money and moving beyond our limiting beliefs.  Most of us have a HUGE disconnect with finances, and our beliefs about money end up becoming part of our financial reality. Make no mistake, this is the same comfort zone mentality as anyone who binge eats or stays in a job they don’t like.  It’s not about comfort.  It’s about familiarity.

“The problem in America isn’t so much what people don’t know,
the problem is what people think they know that just ain’t so.” ~Will Rogers 

If there is even a single area of our life that makes us want to trade places with another person, then we’ve fallen victim to familiarity.  It’s time to drop the stories like “I can’t have it” or “It’s not going to work” or “I don’t know what to do.”  When you step out of your comfort zone, magic starts to happen.  All you need is the willingness to start thinking in a different way and the courage to take action based on this new way of thinking. The truth is, the problem isn’t money.  The problem is how we approach money … how we think about money … and, how we handle money.

Here’s The Problem

Saving and investing our money for various life events (tuition to retirement) while accumulating cash reserves and compounding interest  … without taxation … without risk of loss … without asset allocation … without brokerage accounts … and without investment fees or management expenses.  Saving money and earning compound interest is the foundation of financial security – it always has been, and it always will be.  But, saving money isn’t easy, and investing it can be risky … expensive … and complicated.

What’s The Solution? 

A contractually guaranteed lifetime savings plan under Internal Revenue Code sections 101 and 7702 which enable us to deposit money … earn money … and borrow money – ALL without any taxation or reporting to the IRS, and without investment risk … management fees … brokerage accounts … or any asset allocation and diversification.

It’s Time to Think Differently About Your Money

You can’t win the game if you don’t know the rules.  Bankers teach us one thing, but practice another.  They teach us to accumulate our money in their accounts.   Simply, they’re teaching us not to use our money, so they can.

“Knowledge is power, but execution trumps knowledge,
so it’s what you do from here that will matter.”  ~Anthony Robbins

You see, bankers understand!  The faster and more often money moves, the more profits they make.  It’s called “velocity.”  This is the principle that all bankers use to create wealth.  They practice the multiplier effect – they have each dollar do as many “jobs” as possible.  Here’s where knowledge is power – we can emulate the way banks act and make money.  We do this by establishing a “conceptual bank” so that we own and control our money at all times and use velocity to our advantage.  Like the banks, it is possible to earn a return on the same money in two places at the same time without taking on more risk.

The OPM principle.  Banks DO NOT lend their money, they follow the OPM principle and use “Other People’s Money.”  Banks need our money to lend money.  Basically, a bank holds OPM at low interest rates from depositors and lends these deposits in the form of loans to others at a higher interest rates.

“Those who understand interest earn it, while those who don’t, pay it!” ~Albert Einstein

Compounding our money is the secret to getting ahead much faster.   For the savvy investor, the principles of compound interest can be used to make a substantial amount of money over time!   But, for those of us who regularly carry hefty debt, compounding interest is compounding our debt.  Remember, it costs money to borrow money.

We invest in ourselves (because if we don’t, who will?)   Most of us are notoriously bad at saving money, which explains why we live paycheck to paycheck and why only 60% of American adults have the funds to cover a $400 emergency.  If you’re lacking in savings in a really big way (for many of us, we save less than 5%), it’s time to step up and make some changes.

“Every time you borrow money, you’re robbing your future self.” ~Nathan W. Morris

Just to show you what’s possible, let’s assume all debts are paid!   And, let’s assume this frees up $500 a month.  Now, let’s invest it!  Say we get a 4% return.  Guess what?  We’re becoming a millionaire in 51 years.  Now, imagine if we freed up $1,000 a month.  We’ll become a millionaire in 37 years.  In our success stories, Mark and Joyce freed up $2,177 a month when they became debt free in less than 8 years.  Imagine their returns!  There is no magic involved for becoming a millionaire.  We don’t need a get-rich-quick scheme to make this happen.  It’s more a matter of becoming a diligent saver and investor.  The earlier we start, the easier it is, but a late start does not mean we have to give up our hopes and dreams!

I know, it’s hard to believe 401(k) fees can be expensive!  BUT … and, this is a big “but” … investing in a 401(k) is NOT always the best option. For one reason, we’re limited to the funds our employer chooses.  Has your employer chosen funds that have very high fees or tend to be mismanaged?  It’s in our hands to figure this out.