Do you really value yourself – Part 1
Do you really value yourself – Part 1
When you watch a film and it moves your heart and soul, there is the step towards action that makes your head spin. When I talk about money, it is never about the crinkly pieces of paper or the numbers on a bank statement. It is about the freedom, the power and the wonder of the ability to have something that transcends all borders and religions and languages and bias. In our modern world the ability to be free from slavery or help your fellow man can all be achieved by the accumulation of wealth.
I am from an age when I remember my own father working both a full time job in a factory and a bar job in the evenings to make ends meet. Despite his advanced skills as a toolmaker, the wages for him full time were not enough to have the basic of needs. My mother worked part time whilst my brother, sister and I were at school in order to have the extras that meant we could have a week or two holidays each year. I even remember my mum and dad buying me a calculator costing £12.99 when I was 12 years old in 1972. It was one of those red number displays. That was a lot of money then. I loved that calculator. I have no idea what happened to it in the end but it changed the way I thought about the future.
You see being broke is tough to handle. It does motivate in many ways but often not for the good. When you can feel the good coming through the money you accumulate, you get to achieve more and gather more. Money is not evil; it’s the heart behind its use and gathering that determines its power and validity.
We all get chewed up in many ways over almost everything but money is something you can count, allocate, account for, give, reduce fear with, bring joy with, see things you would never otherwise have been able to and above all bring safety and massive pleasure using. How you read this sentence will determine your heart. That in turn will determine your outcomes, drive and joy from it. It is never about the money. Money is just the tool by which we can measure what we can do.
Getting knock backs is par for any course. Given the nature of money and peoples thirst for it, you are in for some tricky times when trying to accumulate any decent sizeable amounts of it. A fool and his money are easily parted as the saying goes. It burns a hole in your pocket. Take the lottery winners. It is not a surprise that so few genuinely have the character to handle it. When my wife and I talk about winning 10 million, it takes 10 minutes of deciding what to do with it before the cracks of disagreement begin to show themselves. It is like getting to the top floor too quickly. You will get dizzy and will hanker to get down again. You do have to take the stairs and acclimatise. Zig Ziglars book ‘See You At The Top’, talks about the journey and the eventual acceptance.
To me it is more than that. It is what you will become if you make the type of decisions that let you feel you deserve to be there. That’s why I think accumulation of effort and time are the best teachers of not only how to handle money, but to enjoy it and use it for good. The word character is derived from the action to chisel. A sculptor takes a piece of wood and sees the finished product and chisels away all the bits that are not needed. All the rubbish and the waste get thrown away, leaving the carved finished and displayable piece.
Some of us live in a society today that can do almost anything we want. We can be on the other side of the world in less than 24 hours, let alone around the world in eighty days! What makes life so wonderful is the opportunity to do as we wish with it. Yes we can screw it up easily. Yes we can get a curved ball thrown at us on too regular a basis. But what we do each time is still down to us. Many people in the world, do not have this type of freedom and for those of us that do, I believe we have a duty to share that fought for freedom and bring joy to as many corners of the world that we can. I do not suggest to impose my way of life, I mean to help people be free of tyranny, persecution, dictators and harsh regimes that stop people being happy and safe, to allow them to have a basic education or even a good one. To allow medical help be given to those that truly need it. That should be our goal as humans. To be able to do this and sustain the planet without damaging it, would be wonderful. Money can help us work towards that.
I remember the feeling of being heartbroken over not having enough money to buy something of any importance. That only buy what’s needed feeling. That if only I had enough to buy that feeling. We are surrounded by wealth in this world yet 70% are still poor. Is it because they just keep making the wrong choices? Well in some cases yes. Is it because some people are in a society that makes the wrong choices for them? Well in some cases yes also. Is it because we are lazy, lack the drive or balls? Again sometimes yes. But overall it is not because the opportunities are not around us.
It takes guts and determination to achieve things. It takes sometimes so much motivation that it feels like it will break our spirit. However, one thing is for sure. The capacity humans have is enormous. Money brings out the basic instincts for survival separate from the street fight or the defending yourself from being beaten. Money brings out the desire to have more food on the table than you need to eat. Money can make you betray a friend or cheat a loved one.
It is with great emotion that I desire to bring out the right motivation with a follow through plan to make the honest person in you shine with confidence and pride in knowing that you not only achieved great things, you eased the burden of others along the way and left a legacy that will help others do the same. Not an overweight lonely person who got great wealth but no one left to love within their life. You can’t buy experiences as a good friend said to me once.
In terms of what makes money, let us look at some of the things that do and have, Property, Saving, Generating income from your skills, creating a business that makes money whether you work in it or not, winning it, gambling, stealing, being given or even finding. Let’s rule out the ones that just don’t really help in practical terms. Gambling is mostly a mugs game, stealing is always a mugs game, finding it is just silly and being given it will be lucky but not help you much. So looking at the ways you can make money, let’s cover one of the big ones.
If you bought a 3 bed semi in central England in 1975 it would have cost you about £3,500. In 2005 that same property would be worth £175,000. That’s 5000% growth over 30 years.
Is that a good deal? Well £3,500 invested in a bank account with an average deposit return of say 7% would have achieved £26,642.88, a mere 15% of the same result with a house. However, along the way if you factor in mortgage payments, maintenance costs, insurance costs, heating costs, etc, As well as the benefit of having somewhere to live all that time, the edges of what’s a good investment get very blurred. Now if you had bought two houses and rented one out that covered all those extra costs, it gets easier to see why it was a good thing to do. However, again there are still different issues such as taxation. When you do finally realise that asset into cash, the government want paying capital gains tax. This can be a huge dent in your profits. However again if you had ten houses, you may not give a fig that you made nearly two million pounds and then had to pay £250,000 of it in tax. So therein lays the dilemma with property. Can it make money over the long term? Well usually yes. Can it be a pain in the neck over that time? Well usually yes too. Tenants are not always as polite and cooperative as all landlords would like them to be. They don’t always pay on time and there could be down sides like them not paying you at all or too many properties for rent and you have no tenants for a while.
To me property is a must in any portfolio of investment. It does need to be given a very hard look in the eye though. Get too emotive about it and it can cause you big worries. Get very factual about it and it can be a blessing.
A large proportion of the money made on property is made during the first 6 months. You just have to buy at the right price. Sounds easy, but isn’t. Going to see 50 properties before buying your first one is not a discipline that most investors would be willing to do. It is the best thing you could do though. Only then will you know your market place. Only then will you know what makes the difference between a distressed seller and a smart estate agent getting you to buy at full market price. Not being the type to haggle and walk away when the dealing gets tough will hinder your accumulation of wealth for years. A poor decision can cost you 5 to 10 years of not having £500,000 for instance. That’s a big cost but if you look at the decisions you make today and role them forward by 30 years, it is frightening how much is affected by so little. Let’s take an example. Each time you go to the petrol station, whilst in the queue you decide to buy a chocolate bar for say 60 pence. You do this three times a week. £1.80 a week is not a lot now. But the accumulated effects are huge. One, your body weight will increase by about 3 pounds a year on that basis. That’s 90 lbs. Your savings will be lighter by about £2808, but not just that, the interest you would have earned on it could be as much as £15,000 easily.
Now assume that during that time you had used say £3000 of that money to buy a house in 1970, at 5000% it would have been £150,000. Now that could be used today to buy ten houses with £15,000 deposit on each and then the money would be building at a nice rate. I know this is an exaggeration but it isn’t that far from the truth is it? What slips through our fingers on a daily basis is enough to make us wealthy in it’s own right. Cigarettes are the classic one and one I use often as an example. They are £8.00 a packet now and some people buy one packet a day. The cost in money terms alone is ridiculous.
Money can give you freedom of time that nothing else can do. We all know that those with loads of time on their hands and no money are usually the unemployed or the state benefit reliant retired. Those with lots of money and no time on their hands are usually the management or directors or CEO’s.
Those with no money and no time are the lowly paid skill less employed.
Those with time and money are the people with cash, or assets that produce cash, whether they get involved or not. They choose what to do with their time.
Now when you consider the options you can chose to be in one or the other of these by applying a few basic disciplines. We all only have 24 hours per day, unless we die that day. We never know really when our number is up and no one gets to buy extra time above anyone else. So time is a luxury and should be given the scarcity respect that it deserves. Unless you want to spend all your time making money and none enjoying it then you have to plan and use time as efficiently as possible to make it so you can use it to help you.
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