Really, Really Poor

So, a few weeks back, an e-mail came over the transom…that “over the transom” bit is some old publisher’s jargon that refers to receiving an unsolicited manuscript.

A transom, as it is used in the jargon referred to above, is the glass slats that sometimes adorn a space just over a door; it could be opened for ventilation and you don’t see them as much these day. The manuscript would be pushed between the slats by whomever, usually surreptitiously and at night, where there it would lay on the floor until discovered by another whomever on entering the office in the morning.

The phrase is actually incorrect; the correct term would be “transom light”. A transom is actually the beam above the door; a window in the space above a door, sometimes comprised of a few horizontal glass slats, like louvers, is a transom light… 

…but I digress…

So, as I was saying, I get this e-mail from a woman in Mexico. She does not read English but found my e-mail address on my author’s page on amazom.com, which she had translated using Google translator. 

Based on my last name, she thought I might be able to speak Spanish and asked me, since my books are about managing money, what I would do in her position, which she went on to detail for me in her e-mail: 

Thirty years of age, single mother, daughter nine years of age. She went on…no education beyond high school, and no particular skill of value in the marketplace (I am paraphrasing here). And, she told me, she was currently employed as a clerical worker. Her income is approximately $100 a week and she works six days a week, Monday through Saturday. 

She and her daughter live in a rented house; the rent is just about $100 a month. Bottom-line? She is barely making it and sometimes ends don’t meet. Last week she pawned her computer and now goes to a nearby internet café and pays $10 pesos an hour to get online. 

She then asked me what I would do or advise her to do to make some financial progress because all she could see in front of her was the same struggle day after day after day for the rest of her life. She is poor. I do not know if it is grammatically correct to modify the word poor, to say, for example, “really, really poor,” or if it is even appropriate to do so, but she is really, really poor! 

I told her, I would think about it and get back in touch. So, that is what I am doing now…I am thinking about it. I do not open this blog for comments but if anyone reading this has any ideas for her, please e-mail.

The Unexamined Ice Cream Cone

Let’s say you want to save $100 in 100 days. Now, let’s say on Day 10, you decide you want an ice cream cone…the cost? $1. Buying that ice cream will mean that you will be unable to save the $1 that day, since you are spending it to buy that ice cream cone, instead.

So, what can you do? Well, the easy answer is to change your goal…move it out to 101 days to accommodate the buying of the ice cream cone. 

Or…on the other hand…you can forego the ice cream and stay on track to meet your original goal. As simple as that analogy is, it is exactly how we sabotage our best financial intentions. Our wants undermine our ability to achieve our goals. 

For example, we all know we should have an emergency fund of cash that we can readily access in case of an emergency that will require some extra money. Do you have such a fund? If you don’t, and you accept the premise that having such a fund is necessary, why don’t you have one? 

Usually, the reason is that, day in and day out, we chose to use our money otherwise; that is, to spend it rather than use it to build an emergency fund. 

This is one symptom among many of the lack of financial self-discipline. What are the others? The most common is spending more than you earn as evidenced by a growing credit card debt. When you spend more than you earn, you are forced to make up the difference. The way most of us who do that, do that, make up the difference, I mean, is to put the amount we spend  that is over the amount we earn in any given month on a credit card.

In other words, we borrow. 

Your goals are actually a reflection of your values. And it is by articulating your goals, and putting them in writing, that you articulate your values. And unless you do that, unless and until you have articulated your values, your life is, basically, unexamined. 

Socrates, the philosopher who lived during the time of ancient Greece, said this: The unexamined life is not worth living.

 

I would not go that far but I do think that an examined life is better in most respects. And, so, it follows that if you do not have written goals, your life could be better.

The Lottery Winner

If you were born in the USA, you have already won the lottery. The US is a ticket to wealth but… 

Just like many lottery winners squander their wealth, so do many Americans squander the opportunity that is their birthright. 

We watch the evening news and see stories about lottery winners who collected millions of dollars only to lose it all and we think to ourselves….that would never happen to me! I’d be smart with my money….yea, right!

World-wide, millionaires and, even, billionaires are being created at a record pace. You see that reported on the evening news, as well, and wonder…why not me?

And, then, you think, “I have a good life.” Sure I am in debt up to my ass and the level is rising but…I have a big-screen TV, a computer and internet access, a nice car…although I owe more than it’s worth…and I may never be able to afford to retire but…with any luck maybe I’ll die young. 

Opportunity is lost to sloth and apathy. If you want more you will need to get off your ass and give up your bad habits. All the opportunity you will need is waiting for you, but it takes work, focus, and self-discipline.

Most of us are up to the work part of the equation, it’s the focus and self-discipline were most of us are lacking. 

Financial success is incumbent on the accumulation of capital to the end of the leverage of that capital to create an increase of the pace at which you accumulate more capital. 

Those are the only moving parts. It is not rocket science. 

In October of 2012 I had $200,000 in the bank. The bank was paying me 0.003 percent annual interest. In other words, that money was earning me about $600 a year…a measly $50 a month!. Think about that for a minute…I was earning a third of one-percent on my money! 

I took that money and purchased seven rental units for cash and spent about $5,000 doing some needed repairs and improvements. My net rental income four months later is $2,500 a month—fifty times as much!

Look…I was financially independent before I bought my rental properties. But I still work…I get my hands dirty on a regular basis. Yesterday I spent the day painting and installing baseboards in the house I am renovating. I have a net worth well over a million dollars and, yet, there I was…down on my hands and knees, hammer and nails, building sweat-equity.

Today, however, I will read and write all day. And sometime around noon take a long walk along the Colorado River. That is what true wealth looks like—I do, pretty much, only and exactly what I want to do every day—day in and day out:

No boss, no deadlines, no meetings, no commute, no traffic. I am still in the clothes I slept in as I write this. That freedom is the interest earned on the hard work I put in starting a long time ago.

I went broke when I was 33. I had some fifty thousand in debt and was unemployed. I had worked hard to get to that point. The cause of my failure was that I had not yet identified my goals. That being the case, I did not have, could not possibly have had, a plan to achieve the goals I had not yet established. 

No wind, it has been said, favors a ship without direction. And then I decided that I wanted to become financially independent and, all of the sudden, the winds began to blow in my favor.

Somethin’s Gotta Give!

The truth is, none of us have as much money as we have wants. If we are fortunate, lucky, blessed…however you want to look at it, we will have enough money to keep a roof over our heads and food on our tables…job one, right?

And, as we all know, some of us can’t even manage job one. Back in 1985 I went to work for the Veteran’s Administration in Washington, DC. The VA building where I worked was just a couple of blocks from Peace Park, which is directly across the street from the White House.

I would often eat lunch setting on a bench in the park and people watch. It was something I enjoyed doing quite a bit but had to give it up after a couple of years. Why? There were no empty benches to sit on any more; every one of them had been taken over by a homeless person.

I have thought long and hard about the causes of homelessness and poverty but they are both tough nuts to crack. Most of the homeless I came into contact with were not all there; mentally, I mean. It has been my experience that you can tell a substantial amount about a person by their appearance; the state of one’s personal hygiene tends to reflect the state of one’s mental hygiene. 

Same thing in this regard as it applies to the state of ones’ home and car—their spaces. A cluttered space is almost always a sign of a cluttered mind. I tend to be a neat freak…occasionally something of a fallen neat freak…but I do try and stay on top of it…cleanliness might not, in fact, be next to Godliness, but it beats a stack of dirty dishes turning into a science project in your sink! 

Sometimes clutter in your finances can lead to a paralysis of sorts. There seems like there are so many things that need to get done, need to be planned for, and, for which, money must be set aside…that you give up. Spend it all, die broke…what the hell?

The secret in any situation where this can happen is to keep your eyes on the prize; that is, to establish a few financial goals that will provide the necessary context to how you spend and save money. I figured this out after I went broke. Then it took me another couple of years to figure out how to make it happen. 

My prize? Or, rather, my primary financial goal was to achieve total financial independence. Once I figured out that that is what I wanted to accomplish, I was able to figure out how to make it happen. I achieved that goal a long time ago now. 

But, as I wrote, something has got to give. I did not have the money to finance all my goals but I was able to finance the goal that was most important to me. What had to give? A whole lot of frivolous, and thoughtless spending.

To reach my goal within the time-frame I had established to do so, I had to make every dollar count…but that is a good thing! I didn’t pinch pennies exactly, it is more like I weighed the relative merit of each spending decision and how that spending would affect my ability to reach my goal. As I said, the goal gave my spending context.

 

And what is context? It is meaning. It is your goals that give your life meaning.