Your Money: The Rules

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Now that I've made the trip to Debt Freedom (a couple of times!), I can confidently state this:

The struggle is worth it. (Even when you have to do it twice!)

These days, my family is debt-free (except for the mortgage). Believe me when I tell you that life simply is BETTER when your money is working for YOU, as best it can, without creditors and banks lurking behind you at every moment.

It's not that achieving financial strength is complicated, either. In fact, most of what's needed can be summed up in a handful of basic rules. Since I began my Financial Awakening in 2002, I've read more financial books, magazines, and textbooks than I could possibly count. Many were bought, as can attest — and thank goodness for Kindle, because I ran out of bookshelf space pretty early on! Some were borrowed. All were valuable ... if only marginally, in some cases. (Like everything else, there's a lot of fluff, nonsense, and pure rubbish out there in the financial-advice realm.)

What follows are the most elementary, basic rules I've gleaned over the years from all my reading, research, and experience. Grasp these, and you'll have figured out more about money success than most of your neighbors, coworkers, and — dare I say — elected politicians.

The First Rule of Holes:   If you're in one, stop digging.

Simple, right? If you're in debt, and want to get out, then Step One is to STOP TAKING ON MORE DEBT. Put the damn shovel DOWN.

Yet this one single truism, for all its arithmetic power, is also the financial rule that's most likely to be ignored by today's Consumer At Large.

If I could have my way, this "First Rule of Holes" would be a required red-letter heading, legislatively mandated to appear at the top of every single credit-card application and loan statement printed and/or emailed to all households across the country.

But that's not likely to happen. (I'm not Supreme Dictator For Life just yet.) So, in the end, please consider this:

How much good could you accomplish if you just stopped doing something bad?

Hope is not a strategy.

And optimism ain't a retirement plan.

Oh sure — hope carries value. Hope is vital. Hope is your gasoline. Your financial-improvement roadster won't be going anywhere without fuel, but on its own, that fuel won't move you inch one. It takes much more than hope and optimism to improve your financial situation. You're also going to need support, information, tools, motivation, and about 27 other requisite niceties.

In short, positive impact comes only from action. Behaviors must be precisely targeted, discarded, and/or developed. Big changes must be made. And you must initiate them.

Everyone wants your money; only YOU can truly protect it.

If the financial crisis of 2008 and 2009 taught us anything, it was this:

You, the individual, are the ultimate gatekeeper of your own finances.

It's been said that "No one cares about your money more than you," but I've found that slogan to fall a little short. There are lots of people who care greatly about your money — but only because they dearly want to take it from you. And a lot of times, they'll have the government, and taxpayer dollars, at their back as they do it.

Banks. Mortgage brokers. Stock brokers. Credit-repair agencies. Debt-consolidation firms. Financial advisors.

All these guys, and tons more, want a chunk of your money. Depending on their honesty and sense of "fiduciary responsibility" to keep your money safe and in the right places for you is a tremendous roll of the dice. Despite what you're told, their intentions will almost never perfectly align with your goals.

We all have to rely on these financial entities at some time or another. Just because they supposedly come from a position of knowledge doesn't mean we should blindly trust they what they're telling us.

Do your homework. Educate yourself. Be skeptical. Read the fine print. Under no circumstances should you be afraid to hang up the phone or walk out the door.

Remember: Everyone wants your money.

Only you can protect it.

It will not get done unless you do it.

The first step toward financial freedom is recognition — recognition of your current situation, obstacles, and capabilities.

If you've been relying on others to get you where you want to go, then stop. If you think a hefty inheritance or winning lottery stub will come along and bail you out someday, it won't. If you've been blaming others for the negative positions you might find yourself currently in, then stop. No one will execute your personal interests better than you. So take control of your life.

Stomp on the gas. Be the driving force.

When it comes down to reasons to do something versus excuses not to do it, there will always be more excuses.

Humans can be a negatively-charged lot. Consider that society has trained the majority of people out there (myself included) to think in terms of "Well, I can't do this because . . .." Our minds revert to this whenever we're confronted with a task or goal that seems even a little bit uncomfortable.

So, starting now, direct your thought processes into a U-turn. Live with the words, "I will do this because . . .." Write them down. Those five words are how big accomplishments get off the ground.

You cannot save $5000 until you save $1000. You cannot save $1000 until you save $500. You cannot save $500 until you save $10.

Even the greatest accomplishments start out small. If you're looking ahead and getting frustrated because all you can see is how daunting your tasks/goals are, then break them down. Divide your work into steps. Make them smaller, more manageable. But keep them big enough to still be tangible and fulfilling when they're accomplished.

With each completed step, that sense of progress you'll feel is what will keep you going. Anything can be accomplished if it is done a little bit at a time.

Doubt is expensive.

Know who Benjamin Franklin is? Thomas Edison? The Wright brothers? Bill Gates?

Of course you do.

History remembers the "doers," not the doubters.

Be a "doer."

You can't out-earn stupid.

Money problems — when they happen — aren't caused by the money you make. They're also not caused by the money you don't make. They're caused by the way you spend the money you make.

So the next time you hear someone blame their financial situation on "low wages," you'll know better:

They're making excuses.

Responsibility begins with the person. Where it ends is a matter of effort.

Stupidity is a four-letter word:   DEBT.

One absolute truth: Debt is a stranglehold on your family's future. So if you have it — yes, even mortgage debt — do what you can to get it paid off. Do this as fast as you can. You owe it to no one more than yourself.

Lose debt. Gain freedom.

Expenses will rise in proportion to income.

It's the mantra of the Discouraged Consumer, usually heard at bill-paying time: "If only I made more money." But without a change in mindset and a strict financial discipline, the "more money" that occurs every so often via a raise in pay, or an inheritance windfall, or whatever, will always be accompanied by a proportionate rise in expenditures. Thus the saying:   "All I want is to make ends meet — but someone keeps moving the other end."

More money will not solve the problem. Discipline, drive, and financial intelligence will.

Know the difference between assets and liabilities. Acquire assets.

The majority of people go through life without truly understanding the difference between assets and liabilities. In my world, assets make you money. Liabilities cost you money.

(No, that isn't how my economics professors explained it to me. But I've made much more financial progress by following my definitions than by following theirs.)

Remember, always, that the rich got where they are by purchasing assets. Low- and middle-class people got where they are — and WILL stay there — by acquiring liabilities.

Which way will you go?