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Why we dont have a lower, middle, and upper class system
Get a free $50 to start investing! Use this link to open an investing account with SoFi!. Don't allow inaction to jeopardize your future. Start earning compound interest today!
Personal Finance Topics
My Foundations of Personal Finance
Follow these three simple rules to build the foundation for financial freedom.
Pay Yourself First (Reverse Budget).
Stay out of Debt and Get out of Debt.
Spend less than you make.
The secret to following the road less traveled is to start small, and to be consistent. My goal in writing articles for this blog is to help you on your journey at no cost to you, just your time and attention. We can all achieve our individual financial goals through straightforward and proven ways by thinking and acting like investors not consumers.
Investor Class Mindset
No matter how far you are in your walk of life it is important for you to properly define wealth. We should not let popular news outlets, social media channels, or even some teachers, misguide us.
A rich or wealthy person is not someone who makes a 250k yearly salary.
Driving the fancy BMW or living in the nicest house on the block doesn't make you rich. Just like the high paying c-suite job, this often just creates an illusion of wealth.
Assets-Liabilities=Financial Wealth. Being honest to ourselves can help us better understand and become aware of our surroundings. The truth is a large number of people making 50k are wealthier than doctors and lawyers. Having loans (liabilities) and taking out more loans is a sure way to not be rich.
There are many people that choose to live for today and who treat themselves to the finer things before they've earned them. Before long they are bankrupt and can't even enjoy the lifestyle of a 50k salary.
True wealth is usually not seen. The real wealthy or rich person is a lender not a borrower, pays themself first, and understands how money works. They understand that it is not income but their behavior that has created their wealth.
They have the freedom to work for an employer or to make their investments provide the income they need. A doctor or lawyer with a Jumbo loan is bound to work for their boss (the bank, and their employer).
Consumer Class Mindset
How would you define the working class and middle class? These two groups of people usually have a very similar thought process and may even behave in a very similar manner.
People often get stuck here not because of fate or working too little. Yes, intergenerational poverty is real but social mobility is definitely a thing in America.
They are chasing the American Dream and not ever living it. You should not let others tell you how to live that don't have your best interests at heart. The American dream should not be built like a foundation on sand (debt), the American Dream should be having freedom to do what you want on your own terms.
Learning simple principles and applying them will make you rich. Acquire assets not liabilities. Usually, your personal house is not an investment when you run the numbers. Don't let the media, your real estate agent, or your parents tell you otherwise.
There are rare instances where people bought a home and the value skyrocketed, but this happens after decades of waiting, and this is the exception not the rule. Often times the working and middle class believe blindly that their home is an investment.
The middle class spends 30 years working for a bank to pay for their home. Is this the American Dream? Certainly not. The working class is one paycheck away from being homeless. People from these two classes work to make the bank rich, and to make the rich richer.
They don't understand that money is something to keep and multiply. They give away the money they make consistently, like a habit, to the rich. This is done without any force, and with a big smile, while buying the bigger TV or the shiny new car. The worst part is that often these items are acquired through debt (credit card, car loan, personal loan, etc.).
The acquisition of stuff, which is often done on credit (liabilities), is short term gratification that quickly fades. At old age the poor have nothing to show for their work and must depend on the government to not go hungry. The middle class often only has a paid off home, and if they did an ok job, a small savings. They too certainly never lived the American Dream that was advertised and sold to them.
The working and middle class want the better paying job to make more money to buy nicer things. This keeps them spending more even when they make more.
Its important to not get stuck in the mentality of consumerism. The gratification that comes from buying the new shiny car is short lived. And when it becomes a habit, it will lead to financial ruin in the long run for the group of people that doesn't change their behavior.
Get a free $50 to start investing! Use this link to open an investing account with SoFi!. Don't allow inaction to jeopardize your future. Start earning compound interest today!