B2 – Live Poor Be Rich

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Live Poor, Be Rich

A strange chapter, but does tie into planning.
I want you to understand how I, on an “fairly middle class” income have been able to plan so well.  I’m not a “rich man” but over the past two years have been able to “REALIGN” my finances and lifestyle to help.  It really starts as a mindset, then a lifestyle, then some realizations.  I HOPE at some point you hit this milestone in your life, and do it before you get too old.

The “Joneses” are Bankrupt!
You’ve heard the term, “Keeping up with the Joneses.”, I’m sure.  Your lifestyle, your car, your home, your clothes, your “toys”, are not as nice as the Joneses.  Therefore you need BIGGER and better.
Well, guess what? The Joneses just filed chapter 7. They lost their jobs, couldn’t afford their huge home and fancy cars.  Now they have to pack up and move. Happens to the best of us and trust me, when it does it is a HUMBLING moment.
A few years back I hit the point that many do. All this “STUFF” really didn’t as much. I wanted to stop working all those hours, and sometimes 7 days a week. I wanted to SEE my kids grow up and have their Dad be part of their lives.
We sold out DREAM home, got rid of the fancy cars, paid off all the credit cards, and got our personal debt wiped out.  Our credit scores went from pretty good, to WOW. (800+)  It was an amazing feeling. Now that I am here, I DO NOT want to return and will not.
Maybe it is just “LUCK”….  could it be PLANNING and being prepared?

How my monthly budget changed?
Here’s a breakdown of before and after.
I’m only using the big THREE lines.
We did this over a period of 18 months.

Old Mortgage: $2200 a month
Cars: $900 a month
Credit Cards: $700 a month
Total Before: $3800 a month

Now…
New Mortgage: $750 a month (House we are preparing to buy)
Cars:  $0 (Paid off one, sold the other and bought an older car.)
Credit Cards: $0
New Total: $750 a month

Pretty much, I can go cut lawns for a living and survive.
You have to make some MAJOR changes, but be prepared.

I knew what was coming…
Stop hitting me in the head with that BAT!!!
How many times do you have to hear it?
Come on people, let’s face it. The next few years are going to, or have a GOOD chance of, being tough for most people.  If you throw in a gas crisis, dollar bubble pop, whatever it might be, it could get really bad.  Even if it doesn’t get REALLY bad, the next few years will not change much for the “average person”.  So, we have to live BELOW our means and BANK the rest. As talk show host and author Dave Ramsey says, “It’s beans and rice, rice and beans for dinner.” We do this until we are debt free, and have ALL our finances in order.
Finance adviser Suze Orman has a new book out. It deals exactly with this topic.  She states, “The whole purpose of this book is to learn how to create a new American dream, a dream that is based in reality, not fantasy.” She is saying the EXACT same thing I am. We all wanted bigger, better, more expensive. Now that dream is changing. Living below our means is the new American Dream. Her book is HERE
if you want it.  If you want Dave’s book it is HERE

For the next few years until we pay off ALL our debt, reduce our living expenses and become “poor” so that we can feel rich. Trust me, it’s a GREAT feeling.

Great example that happen to me LAST NIGHT, yes, last night…
I went to one of my son’s games.  While I was there I met a guy that actually looked at our “dream home” when we were selling it a few years back.  After a long talk he told me that they bought one down the road. Big 4000 square foot home for around $450,000.
He then went on and admitted, that he wished he hadn’t of bought it. It is a great home, beautiful inside and out. However, his business dropped off and now they are struggling.  He said that he “Longed for the days, when he had that small, older home, with the $600 a month mortgage.”
Get it…
The appearance of “looking rich” from material things actually makes you feel POOR when times get tough.  Those that act POOR, when times are OK feel RICH when things turn down. It is now becoming “cool” to be “poor”, even though sometimes the kids might not agree.  You have to get past those emotions, I know.  However, a GOOD parent plans for the worst.  A BAD parent gambles away their future.

This comes from a “humble man” (me) that has been through tough times in his life. A long time ago I was at the TOP and taken down to being poor again.  Trust me, if you can avoid that experience, do it.  I’m glad it happened to me because I learned from it.  I can only hope that you will learn from me without having to experience it yourself.

The richest man I ever knew…
The richest man I ever personally knew was man named Dwight. He invested about 3/4 of a  million in one of my businesses without blinking an eye.  I know that his personal wealth was over $30 million.  When we first met, I thought it was a joke.  He pulled up in an old Ford truck that sounded like a vacuum cleaner. Faded paint, dents, etc. Worth about $800 on a good day. He got out and he had the same clothes on I saw him in all the time, from then on. Old flannel shirt and old blue jeans.  If you saw him on the street, you would probably put a $1 in his Starbucks Cup.  The man was a genius…
When I had my “enlightenment” several years ago, I saw that picture of Dwight in my mind.  It then made sense to me.  He didn’t have a care in the world. HE KNEW that he was secure and had worked for it. HE KNEW that his family’s future was VERY safe. He DIDN’T care what OTHERS thought, or how they viewed him.

Live poor, be rich. (Just don’t wear those old clothes please.)

Sell Your “COLLECTIBLES”…
This is great advice you might not hear elsewhere. It is mentioned in Aftershock.
Many people have “things” that they consider “collectibles”, or have value due to being “rare”.  Guess what? In times of horrible economies, they lose ALL their value. While they might not fetch a “top price” right now, sell them anyway. Look around and see ALL the STUFF. There usually is a ton of it around.  Holding onto that “rare coin” that is worth $5000? When the economy trashes, it will be worth a few dollars. Dump it now.
What should you do with that money? I really don’t like to give specific advice, but it is “found money” at this point. Personally, that is money I would simply “bank”or pay off debt.  If you have that covered, I would put in fund stocks that play against the market. (see stock market page)
Trust me, I understand some things have “emotional value”. Get over it and over it now.

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