Living Rich

How Money Works For Everyone Else

            Most people don’t know how money works, how to make it, how to spend it, and how to grow it. Once you understand these things, you will develop your own superpowers.

How you make money now:

            Let’s first look at how money works to see how we can make the most of this precious commodity. As I always say, and most millionaires say, we have to pay ourselves first. Wow, what a new concept! You know we actually pay ourselves last. Did you know that? Most everyone has a three-letter word tattooed on their foreheads; it’s like a hidden electronic collar, and it’s called a J.O.B., or “JUST OVER BROKE,” as the saying goes. Realize this, Uncle Sam takes his cut FIRST, then you get your net salary, you then pay off all your monthly debt, (rent, etc.), then what is left over goes to you. Remember, a job can be good or bad. A definition of a bad job for our reader would be one that just pays you to survive and doesn’t teach you any other investment skills and where you only make one type of income…your salary. A good job is one that not only pays you a salary but includes bonuses for exceeding expectations as well as introducing you to different and new concepts of building wealth in real estate. In our company, it is our mission to encourage a staff person who is renting to actually be a homeowner by the anniversary date of their second year. An example would be Laiza.  She started with the company last year.  She saw what we did for our clients and wanted to buy a property in two years.  I asked, “why two years” and she responded, “I have to save up for the down payment.”.  I told her that I wanted her to buy sooner than that and we helped coach her.  Within two months she closed on her very own condo…believe that one! 

We strive to help our associates amass wealth for themselves, allowing them to have multiple streams of income. In our opinion, most people who have a job as their only source of revenue, put themselves at such a greater risk. What happens if the company goes under? What happens if they have to downsize? Could you really survive one or two months without a paycheck? And you have to wait till you retire to access Social Security, which has its own issues now as well. Since most people with a J.O.B. pay themselves last, it’s safe to say that most people don’t know how to make money.

How you spend money now:

            D.E.B.T.  Most people see this as a bad, four-letter word and, frankly, for those who haven’t mastered this, it is a bad thing. It could stand for Don’t Even Buy That, or Debt Enslaves Borrowers Over Time. Did you know that if you only made minimum payments on your credit cards, depending on the interest rate which could top 22% or more, it would take you anywhere from ten to eighteen years or even longer to pay it off? Worse of all, it’s really bad debt, because there is no tax benefit for the interest that you pay and what you buy usually depreciates in value or becomes worthless over time. For example, you pay for dinner with a credit card. After you eat, you are full. You just get that instant gratification. There is no economic benefit for the following days to come. But guess what? You keep paying on your meal for the next ten years or so by just making the minimum payments.

            Conversely, what is good debt? Well, good debt would be a mortgage debt that would be associated with an asset that appreciates in value over time. In addition, the interest you pay is tax deductible for a primary residence and for investment properties, too. Remember, everyone has a different financial fingerprint, so you will have to consult a tax expert on what deductions you will be able to take.