Do you ever lie to yourself about money? I do.
Do you ever tell yourself, "it will get better one day," but take actions that prove differently?
The Median Household Income Is At The Highest Point Ever was the headline from our president yesterday.
This post will not be political, I promise, nor will it be about the president.
One of the comments on Twitter regarding the quote required a follow-up.
The person quipped, “yes, but two people are working in every household, and it’s still not enough for most families to pay their bills.”
It takes honesty to admit that this person is right.
We Americans are making more money than at any other time in history, yet we can't seem to get ahead.
Most people don’t have enough money to pay their bills.
Median household income went above $61,000 in 2018 and continues to rise.
But here's the problem, you have a house or rent payment, two car payments, utilities, cell phone, internet, childcare, medical expenses, and credit card bills, all before you’ve even purchased a hot dog.
By the time the money is gone, you still have month left.
There is good news. Whether you are young or old, you can be prosperous and build wealth, starting with sixty grand a year in household income.
You can even start with a lot less.
PT Barnum, in his book, The Art of Money Getting, says that true economy consists of always making the income exceed the out-go.
In other words, live inside your means. It's the needs vs. wants mentality.
You don't need two car payments; you want to drive nicer cars even though you can’t afford them.
Why? I can’t answer for you so I will answer for myself.
Because I used to believe I deserved more for my hard work, so it was ok to borrow the money.
Because after all, I could afford the payments.
I sound like a damn credit card commercial. Why wait, when you can have it now.
Banks have been using copywriters since the dawn of banking to make you, and I believe that it's ok to borrow money from them at astronomical rates.
If someone is offering you 0% interest, they are charging you a higher price for the item than if you were paying cash.
Most car companies don’t want you to pay cash because part of their process of “doing the paperwork” is making sure you buy a lot of extra items before you walk out the door.
Have you ever purchased an extended warranty, bed liner, or window tint? I have.
Benjamin Franklin said it this way, "It is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself, I should not care for fine clothes or furniture."
So how do you become prosperous on a small amount of income?
You have to stop the bleeding and get your income to exceed your out-go, and if you can't or won’t increase your revenue, you have to decrease what's going out the door.
Regardless of your age, this is where most people fail because it takes discipline and time.
Freedom begins when you eliminate your debt, namely bad debt.
I'm not going to get deep into good debt vs. bad debt, but if you own an investment property that brings you income every month and you have a mortgage on it, that is good debt.
If you have a car payment, but you don’t make money in your car, its bad debt.
Unless you make money in your vehicle, you should not have a payment.
If you are an Uber driver, you make money in your car. Driving to and from work does not make you money; it gets you to work.
Eliminating debt isn’t easy because you have to stop borrowing while continuing to pay back the money you borrowed for things that are getting old.
My wife drives a 2011 vehicle that we purchased new in 2011, which has been paid off for several years.
I drive a 2015 that we just paid it off.
Both vehicles have over 100,000 miles, and part of me wants to purchase new ones, but I won't because not having car payments is genuinely liberating because I don’t need nearly as much income, and my cars are quite suitable.
I'm still working on the credit card debt, but about another year, and those will be gone.
It takes a strong mindset to stay on track because advertisers, AKA copywriters, are good at making you want to buy now, and this is where the discipline comes in.
It won't be fast, but regardless of your income, when you eliminate all of your bad debt, you will have so much more disposable income to do the things you want to do.
Before long, you will have the ability to pay cash for the things you want, and that is a huge step toward getting ahead in the financial game.
Whatever you do, stop being a slave to the lender.
Their job is to make money off every product you buy for the rest of your life.
The choice is yours.
Do you want to increase your income? Then start a business or a side gig.
It’s easier than you think.
Get a copy of my free book, Start and Run Your Own Business Today, which has over 25 years of my blood sweat and tears of starting, running, and growing businesses.
It’s the blueprint to financial freedom.
Get your copy now for free at DavidMulvaney.com.