From the desk of Victor Pride
Subj: Minimize debt to maximize income 101
“Bills bills bills! I can’t get rich because I have bills to pay!“.
Well then get rid of the damn bills and stop buying things.
If you want to get rich you have to stop being a consumer or goods and services and start being a provider of goods and services. You will never, ever get rich being a mindless consumer.
What’s that famous saying? “If you will live like no one else, later you can live like no one else.”
If you weren’t born rich you must get rich. To get rich you must give up luxuries you cannot afford. That means no auto payments, no credit cards, no loans, and no expensive mortgages or rentals.
Minimize to maximize. It’s really that simple. Stop spending that dough on things and start spending that dough on assets. Buy things that will make you more money, don’t buy things that won’t make you money. When you become rich then you can buy all the toys you want, but not before you become rich.
But if you buy buy buy things before you have the money (the actual cash money, not credit) then you are digging yourself deeper and deeper into a debt hole. Where I’m from we call these people 30k millionaires. They make 30k per year but they have all the latest cars and phones because they max out their credit cards every month just so they can appear rich.
But how the heck are you ever going to get rich if you are a debt slave?
Trick question. You won’t ever get rich if you’re deep in debt and you especially will never be free with the debt noose around your neck.
Can I be honest with you? I never cared about being rich. I never dreamt of owning a Ferrari or a yacht. I never cared about that stuff, not once.
But what I do care about is having the ability to do what I want, when I want, and how I want. In other words, freedom.
Do you know how you get freedom? You buy it with money. If you have money you can come and go as you please.
“But Victor, money doesn’t buy happiness!”
Irrelevant. Money buys freedom, if you’re happy or not is up to you. I’ll tell you I’m a whole lot happier with money in the bank and zero debt than I was with no money and debt up to my eyeballs working to make someone else a little bit wealthier.
If you don’t have money, and if you don’t have a money maker’s mindset, you are stuck working for someone who does have a money maker’s mindset. I was never too happy working to make someone else rich.
Here is one cold, hard fact of life: If you have a job you are working to make someone else rich(er). That’s a fact.
You are already working to make someone rich, why not flip the script and make yourself rich instead of enriching the owner of the company you work for?
You’re already working, everyone is, so it just takes a little flip of the switch to change your mindset from worker bee to owner.
Heck, you don’t even have to become a multi-billionaire. Anyone can make 80 grand per year working on their own time and if you follow the steps below that 80 grand per year can give you a real nice life.
Step 1) Change your mindset and change your priorities
Poor Poor – Middle Class Poor – Rich
When I was in high school I went to a younger kids house. A friend of a friend type situation. The kid’s house was in the ghetto and the house was disgusting. It was dirty, filthy actually, it was in disrepair and it was basically a shack. It was leftover temporary military housing from WW2 that was supposed to have been torn down after the war.
The kid’s father, or stepfather, was missing teeth and the mother wasn’t fairing much better. They were the epitome of white trash. It was the first time I had ever seen such a disgusting manner in which people actually lived.
Oh, do you know what was in their living room?
In their living room was the biggest TV I had ever seen in my life. The TV was absolutely gigantic. Monstrous. They probably didn’t have a roll of toilet paper in the house but they had the biggest TV ever made. Probably purchased “rent to own”.
These type of people are the poor poor. These are the type of people who prioritize things they want, like big TV’s, over everything else. Pay bills or pay debts vs buying a new TV? New TV always wins with these type of people. These are the type of people who play the lottery (poor people don’t pay taxes, guess what lotteries are? Taxes on the poor.) and if they win a million dollars they’d be filing for bankruptcy in a year or two.
The poor poor have a “woe is me, boo hoo, give me” entitled attitude. Forget about them, they’re are useless and will never learn. The poor prioritize buying things they want (like the newest phone or television) over investing, saving or paying outstanding bills. The poor will buy any way they can, and since they are poor (ergo they have no money) they buy on credit, digging themselves deeper into debt.
But then you’ve got the “middle class poor”. The middle class poor are the worker bees and office drones who put everything on credit to live a life of debt luxury. The middle class poor have a “put it on the credit card, we’ll pay for it later” mindset. But later always comes sooner than it should.
The middle class poor’s priorities are to appear wealthier than they really are. Keeping up with the Joneses they call it. Sour news, friends, but the Joneses are up to their eyeballs in debt too. It’s better to keep away from the Joneses and their poisonous mindset than to keep up with them. Keeping up with the Joneses is a race to the bottom.
The poor poor are just plain stupid, but the middle class poor are ignorant about money and debt. Big difference. The middle class poor have been incorrectly taught about money. They have been taught that loans and mortgages and credit cards and debts are good. Good for the bankers, sure, but not so good for Average Allen who is still paying for his wedding and Hawaii honeymoon 8 years later.
The rich have a different mindset. When the rich want something they don’t hold their hands out and say “give me”, they don’t pull out the credit card to buy now and pay later, they don’t rent to own. Instead, they do one of two things: 1) Pay in cash. Done deal. 2) If the item is out of their price range the rich will increase their income to cover the cost or they will buy a business to cover the cost of the new item they want. See that? Buy assets instead of toys, then use the assets to buy toys.
The rich know the secret to purchasing items they want: 1) They buy in cash or 2) They buy or create a business that will pay for the item they want.
If you want something that is out of your price range you need to put on your thinking cap on and figure out a way to get what you want. Cash only. Get on the problem like a Duck on a Junebug, work like hell, and make the money to buy that toy you want.
Step 2) Get rid of things that are too expensive
It’s tough to get rich if you have bills out the wazoo. The conventional advice is to give up small, piddly items like $1.95 morning coffee’s and save up. Nevermind the 3 grand per month mortgage, just deny yourself a coffee and in 135 years you’ll be debt free!
That’s dumb advice from dumb people, a morning coffee doesn’t mean anything. What matters is the gigantic monthly payments for your housing and your automobile. Those are the two biggest expenses for the average person. Cut those bills down and you can buy all the coffee and donuts you want.
To get rich it is essential to live far below your means. That means giving up the high mortgage/high rent home and the high auto loan payment. Buy a cash car and downgrade into an extremely affordable home. Get rid of luxuries and keep necessities.
Personally, I have only five monthly bills: rent, internet, water, electricity and gym and those bills add up to less than $700 per month. I used to have bills just like everyone else, $1,600 mortgage, auto loan, auto insurance, gasoline, $100 cell phone bill, home security system, lawn care, you name it I had to pay it. I got rid of all of it and it could not have been a better choice. Now I do not have any expensive bills. In fact, my monthly bills to run Bold and Determined are more than my own personal bills.
I can’t repeat this enough, you will never become wealthy if you are in debt or if you have expensive bills every month. Get rid of the bills and get free. If you have high bills and/or heavy debt you are not free to do as you please. You must pay those bills and you must work to pay those bills.
Do you know what people who aren’t free are called? They are called slaves. Going into debt and taking on heavy bills (it’s called living paycheck to paycheck) is self-induced slavery.
How many times have you heard of Doctors or Lawyers of other high-earners who make 100k per year but don’t have a thousand dollars in the bank? I hear about that all the time. Their money goes out as fast as it comes in on bills and debt. A guy who makes 30k per year but is smart with it could be richer than a high-earner making 100k per year but spending it all before it even comes in.
If you insist on using credit cards they must be paid off in full each and every month. To help out with your credit score you can put a tank of gasoline or some grocery shopping on your credit card and pay it all off before the interest kicks in. That’s what I do every month, put a little of this or that on a credit card and pay it off before the end of the month. Last time I checked my credit my total debt was $8. Eight dollars. Of course I paid that $8 off before the end of the month and got my debt back down to zero.
Step 3) Stop buying things you want
To get rich you absolutely must stop buying things. When you buy things you are throwing money away. Just burning it.
Consumerism is a killer and everyone around you is dying from this disease. Not only is the giant television unnecessary it is actively digging you deeper into a hole. It makes you feel nice and rich but its an illusion, especially since most people put big ticket items on their credit card.
This feeling of being rich (by buying items on credit) kills your drive to better yourself. If you already have the item you want, why work hard?
Just keep making those minimum monthly payments and make those bankers richer, right? That’s what idiots do. If you’re smart you stop spending all of your money on pretend riches (new phones, tv’s, cars etc..) and start using the money you have to make more of it and buy yourself some freedom.
I could literally go out and buy anything I want, but I don’t ever buy things. In the last year I bought a cell phone, an iPad and a guitar. That’s an entire year of things I’ve purchased and the total cost of those items was less than $500. Of course I buy necessities (food, medicine, etc.), and I travel all the time, but I never buy things.
When you don’t rush out to buy things you have money accumulating. Some people call this “saving”. You can now easily save money because you aren’t throwing it away on things that don’t matter. When you have money saved up you start to become freer and freer. If you’ve got 20 grand in the bank and your boss fires you you can just laugh in his face. If you’ve got $20 in the bank and your boss fires you what happens? Ouch.
So what do you do with all this extra money you have now that you aren’t buying the latest gadgets and doo-dads and you don’t have heavy monthly bills?
You buy assets. Buy things that will make you more money. You start a business. You invest. The poor buy things, the rich buy assets. With the assets the rich have, they can then go off and buy anything they want with cash in hand. Done deal, baby.
The next edition of The Minimalist’s Guide to Getting Rich coming soon to a computer screen near you. Stay tuned.
Until next time.
PS – The quote above, “If you will live like no one else, later you can live like no one else“, is from a guy named Dave Ramsey. Dave Ramsey has a book called The Total Money Makeover. If you are a debt slave you should read the book immediately.