- HEART OF GOLD - as told by.... mwah!
or: There is reason to be optimistic about the 21st Century ...if you are prepared
or: Who told you that a mortgage is an 'asset'?
As we enter the 21st century and the world moves ever further right-ward politically, it is becoming increasingly obvious that things seem to have 'changed'. Working for a living in the traditional sense is becoming increasingly insecure, obsolete and fruitless, while workers tire of paying hefty taxes when corporations pay next to nothing - a situation that seems unlikely to change.
Indeed, soon more and more companies will begin making use of the new generation 'offshore' tax haven, Cyberspace, to further reduce their already minimal liabilities.
When the time comes that China surpasses Japan and the US as the world's largest economy (which it was estimated to do this year, 2005), the price of world labour will fall - and perhaps rather dramatically.
Jack Welch, retired CEO of GE, one of the US's largest companies, was quoted several years ago (on the back of his biography) saying:
"30 percent of what is currently produced in the US will soon be produced in China."
A Chinese factory worker will labour 12 hours a day, 6 days a week, for a 30 US Dollar weekly pay cheque.
As a result of such fierce competition, wages everywhere will drop to prevent manufacturing industries from moving offshore.
When this occurs, if it hasn't started to already, labourers will not have the power to do anything about it, primarily due to their precarious casual-ized employment status, the increased global competitiveness (forget 'local') and the continuing decline of the trade unions.
What such events (corporate down-sizing, the reduction in the size and power of unions, the financial falling-behind of the 'have nots', the Western world's requirement for less manual labour, etc) are really indicative of is, not a sinister conspiracy by rich right-wingers but, merely, the inevitable changes that would come about at the end of the Industrial Age.
That era is now gone, so the emphasis on manual work, unions and high staff numbers simply does not need to exist any longer.
As such, it is now more necessary than ever for each individual to become personally responsible for their own financial security and future. Otherwise, workers will begin to suffer isolation and increasing insecurity - while their governments do little to help.
Westerners who stick with unskilled/manual labour jobs will be stuffed in the 21st Century, and I don't mean in museums - although this may, in fact, pay more than their current occupation.
Those who work the hardest physically will not be the ones most rewarded. It is the shareholders who will get richer as automation gradually eliminates more jobs and the down-sizing increases the value of their shares. The middle class and other investors will effectively be working against the interests of the ordinary worker - even if they are doing so unintentionally.
The casual-izing of staff will then excuse employers from having any loyalty or responsibility towards their workers, and workers will have to be keenly aware of this lest they end up feeling cheated and aggrieved - not to mention locked out of the bargaining process - and deprived of previously taken-for-granted working conditions.
The employees will have to start thinking like business people, because if they don't - or can't - they will be financially screwed and will have to join the ever-swelling ranks of 'future lottery winners'.
The lesson to learn is that the key to avoiding harsh poverty in the 21st Century is to move away from selling your time and labour for your income. The rich already understand this. They know that passive income, not hard work, is where the real money is today: it creates cashflow almost effortlessly. Passive income does not require a person's presence on-the-job, nor any labour.
Rent payments, royalties, share dividends and bank interest payments (if such a thing still exists) are all examples of passive income as they can gain you income but without much effort on your own part. As such, the income is said to be 'passive'. No sweat. The money is working for you, rather than you working for the money.
As a result of their emphasis on passive income, rich people not only have more money, but they also often have more free time than most poor people. In this regard, things will become even more pronounced as the 21st Century gets under way: employees are gradually working longer hours even now.
As the world becomes more right wing, there will be far fewer recessions, but a lot more people getting left behind. The strengthening, power and economic 'clout' of right wing countries, right wing political parties and right wing supporters will create an almost unstoppable momentum.
At the same time, there will be ever-increasing co-operation between government and business because reducing the number of recessions and financial crashes that occur has obvious benefits to both sides.
What next? Given that the above thought-provoking factors are more REALITY than actual theory (the track record is there for all to see and read), now is an ideal time for every person to make a few serious decisions about their future.
Staying unskilled, ignoring the future and simply hoping for the best is not enough in these days of rapid change.
SHAKY BEGINNINGS
Financial planning is a personal thing and the plan that may constitute a 'dream' for one person may not equate with another person's definition of the word 'dream'.
To really get what you want out of life, financially and personally, you may need to find out which of the following categories your current financial persona is best summarized by.
Look through the listings - preferably when no-one else is around - and you are bound to recognize yourself somewhere amongst this list of workaday Johnnies.
Once you've done that, you'll understand quite clearly where you're at.
Then, read the list of suggestions designed to help you improve your financial efficacy that follow the personality round-up - and remember the old maxim to "Know Thyself" - although today that could be re-phrased to simply say "Just know what you're about"!
Some of the listings below are gender-specific, but not all. In any case, there may be members of each sex who, in some way, resemble the characters described.
THE 12 APOSTLES OF THE WORKADAY WORLD - AN UNHOLY ALLIANCE
These people are all characterized by their conformity or lack of it. Some are 'swifties' while others want to be rewarded for playing the game goody-two-shoes style.
In fact, there is 'method to the madness' in all of them. Yet, almost all have chosen their individual roles through necessity, desperation or ignorance and, regardless of which of the 12 we focus on, greater expertise in some area of their life is required.
With a few exceptions, none are really in control of where they are going.
To make matters worse, most people quickly recognize themselves somewhere amongst this esteemed batch of colossal money-spinners.
Ultimately, there is very little by way of imagination or genuine intelligent oversight in most of these people - so let's proceed to bust their arses....
1: Lotto-Man (AKA the "Future Lottery Winner")
Most unsavoury. This type of person has done so little financial planning it isn't funny. Often seen displaying appalling dress-sense at the casino, race track or lottery office awaiting a financial blessing from above.
How many of these clowns actually exist, you ask? Judging by the number of tour buses lining the streets of Vegas, even the most conservative of estimates would have to be that magic number.... MILLIONS.
2: The Crim
This cashflow-desperado is always on the look-out for any possible income boost he can get. Guns, heists, drugs and hot cars are his stock in trade - as are girlfriends 'on the game' - ie, those sophisticated ladies of the night who hawk the fork.
3: The Get-A-Life type
This person works in telephone market research, train station ticket-selling positions and a variety of paper-shuffling clerical jobs. Gets reasonable job security and conditions without having to do much for it. Otherwise useless. Is well-advised to take a quiet look at his or her own personal values to avoid a life that ultimately consists of little more than clock-watching or tea-and-bickies.
4: The Gutless and Talentless Yes-man
Higher on the ladder than the previous types, but not due to any talent or ability on his part.
This character-less identity is a faceless, grey-suited yes-man. Kow-tows unthinkingly, following orders and doing nothing to step out of line or express an opinion.
An insincere character - often has scant regard for those below him when doing whatever his superiors request - because he can blame any resultant problems or ethics questions on those above him while he himself remains untouchable.
Effectively avoids taking any personal responsibility - ever. (No-one is more gutless or spineless than this guy).
Is a 'professional' person, but only ostensibly, and has few, if any, real managerial skills. Has often only gotten where he is by hanging around long enough. His evasiveness and kow-towing are often a form of 'job protection' - he knows he hasn't got much chance anywhere else.
(It's scary to ponder, but these types really do exist. How someone with so little personality, so little to say or offer, can manage to be so pig-snortingly obnoxious at the same time as being a complete non-entity is perplexing.)
5: The Smelly Smoothy
Has been known to camp-out in cemeteries. Lives in run-down places, avoids paying bills and has little by way of a work history - and none of this seems to bother him. Is a bit of a conversationalist on various topics - usually a smattering of politics, alternative social and political theories and the esoteric - primarily because it allows him to pick up a few chicks - mostly Bohemians who, like him, are a mess.
6: The Intelligent Feminist
The New Age androgyne. This tidy woman is single, well-dressed and career-oriented. She's heterosexual and is waiting to meet 'Mr Right'. Unfortunately, she doesn't seem to understand that to find a Great Partner she'll need to develop the attributes that the opposite sex is looking for in a Great Partner - as we all do.
Sadly, she is too busy creating her moneyed new-age independent female persona to recognize that fact -- a pity, considering that she's steadily creeping into her 30's. (Self-sufficiency is dangerous!)
Oh yes, she also has a spare fifteen thousand in the bank, but "So What?" - what is she going to do with it? Spend it on herself to try and make herself feel happy?
7: The Winner -- Lookin' Good...
This guy is still reasonably young - mid-20's to late 30's - and sees himself as a high-roller - in his mind. If he knew as much as he thinks he does, he'd be making a killing in his own business. But he isn't. This pretender needs to learn how to "Walk the Talk"!
Is keenly status-symbol oriented and wears a bottom-of-the-line steel Rolex. May work for an airline - but not as a pilot - or within a large corporation.
Also found working in stores that sell up-market brands which he himself can only barely afford to buy. Is so 'successful' that all of his purchases are on credit - and he has a lot of credit cards - just like all 'winners'.
8: The Loose Cannon
This guy only works because he has to. Often employed as a janitor, general hand or courier. No-one is further from his own persona when working than this unshaven guy. Possible weekend pisshead - and may also dabble in drugs. Not interested in career responsibility or having to deal with people in a professional manner. A very amateur character. Let's face it, he doesn't give a f**k.
9: The Media Trendy
Currently into Political Correctness to the 'nth degree - but in 20 years will be looking back and smirking with scorn at the "pedantry and hyper-sensitivity of the Political Correctness movement and its adherents", just as his or her media co-horts will also be doing then.
Someone should just tell them to start doing so a bit sooner. How about now?
If female, may have very short hair. Dislikes the 'stereo-typing' of women as bikini-clad clothes horses, but wouldn't have such an axe to grind about this if she looked good in one herself.
Supports left wing politics despite being, like young artists, a glaringly obvious product of a comfortable, first world, Western upbringing.
Indeed, the Mark of the Middle Class is on this goon big-time. Often reasonably well-paid - allowing this cultured dilettante to safely enjoy a socially-radical 'alternative' existence from well within the comfy confines of a fashionable middle class suburb.
10: The Dosser
Doesn't work, full stop. Life in the Passenger Lane. Periodically gets bashed by radio announcers rallying against lazy layabouts or by politicians whose desperation for votes spurs them to comment "Vote for me and I'll get all those dossers off the dole" because such election-time gimmicks have been used with varying degrees of success by unimaginative pollies since the early 70's. (You heard him, old-timers - knit for your pension!)
11: The Martyr - parts I and II
Is "doing it for the kids". A fairly uninspired character. Has a desk, does his job and brings home the bacon - along with overnight videos, a boring family car and potential health problems that are usually related to weight.
May be working in the public service or for a bank, where he has a modest superannuation plan and performs the Mr Average role consummately.
Has more warmth than the faceless Yes-man, but is still highly forgettable. Fulfills his half of the bargain while the wife does her bit. Will not be greatly remembered - and nor should he be.
Martyr Part II is a less sophisticated workplace hero, younger than Martyr Part I and often found doing messy blue collar jobs. Possible Ted Nugent fan. Works hard and wears his unpretentious normality (and informality) on his sleeve with pride. Displays his he-man capabilities by getting dirtier than everyone else in the workforce - it's all a part of his 'formidable tough-guy' showmanship.
Martyr Part II should have been a performance artist - today's preponderance of SNAGs has caused the now-overlooked cultural display "Festival of the Yob" to need some extra performers at the moment.
May live out his perceived persona through tough-guy movie stars or sportsmen. Plays no sport himself.
12. The Man of Tomorrow
Bringing up the tail-end of the 12 workplace apostles, this champ has a bit of 'suss' in the way he goes about things. He is reasonably smart with money, being frugal where necessary and flashy where it'll help. Knows the advantage of 'passive cashflow' (as opposed to hard work) and has done a degree of planning.
It is this very guy, the Man of Tomorrow - the last of Mammon's cashflow cronies - who is the best role-model for today's progressive thinking advance-planners.
There are not too many Men of Tomorrow around, but more are gradually coming out of the woodwork, so it is a timely occasion on which to take a closer look at this potential superman:
A master of the unseen and unsaid, the Man of Tomorrow makes money, but you'd be hard-pressed to figure out his occupation. He works, but he works his own hours. "Max Flexibility" could be an apt nickname for this capable player.
In fact, Mr Tomorrow's career spans gambling, share trading, real estate investment, a smidgen of cashflow factoring and a bit of freelance work. He works for himself, basically.
Mr Tomorrow has graciously listed for us his Golden Rules for quick capital growth with minimal effort. And so it is: The Man of Tomorrow licks his lips, unleashes his Golden Tongue and offers his financial insight unto all...
1: Live in the cheapest, most run-down house in your street and associate with NO-ONE.
2: If you do encounter neighbours, keep things to yourself, talk very little about money, career or possessions and maintain a low profile. Do nothing to impress people or make them notice or start watching you. Do not court attention. Remember: you're on your path to financial greatness here - and people who have Serious Money are usually quiet about it.
3: Rent, don't buy, the place you're living in. Keep its rent payments consistently in arrears. Convince the house owner, property manager or real estate agent that there is "something wrong" with you. This will give you even more leeway on your late rent payments because it will help characterize you as an unreliable scatter-brain. (It may even garner you some sympathy, although I wouldn't count on it.) Be willing to periodically sacrifice your deposit bond.
4: Keep burglars away. Make sure your house looks dilapidated from the outside. Keep irregular hours to further perplex any thieves who may be 'casing' the place. Enter and leave while crims are on their coffee-break. Keep a crow-bar by the door for self-defense.
5: Never pay bills on time. Instead, use the money to build your income-producing assets. Let creditors send you a reminder or a final notice before paying up.
6: Avoid mobile (cell) phones. Keep your costs and outgoings as low as possible. Debtors may pester you on the mobile, anyway.
7: Create plenty of confusion. Easily out-manoeuvre everyone in professional and personal life by perplexing them. Entangle them in a web of s**t and then leave them confused and incredulous as you effortlessly stride home to win the lot.
Confidently apply the 'mushroom principle' wherever it'll help: Keep 'em in the Dark and Feed 'em s**t. Perplexed people are too lost to ever take the lead. Leave them floundering in your wake while you cruise effortlessly through every situation.
8: Know an asset from a liability. Owning your own home burns a whole in your pocket big-time. Do not buy your own dwelling until the passive cashflow from your investment properties or (shares) permits this.
An inexpert decision to buy a home will keep you working forever and will also tie up your cashflow mercilessly, preventing you from taking advantage of other financial opportunities (such as share floats) that may come along. You could lose 15 years of your life - and of your income - by deciding to purchase a house because it's an "asset" and an "investment".
9: Be wary of New-Age esoteric teachings. Recognize the Whiplash Smile of the 1960's hippies and their much-vaunted 'Age of Aquarius', which is (apparently) now upon us.
The Thatcher/Reagan "Greed is Good" phenomenon was created by the university student hippies of the 60's who grew into middle-age during the 1980's and found it an ideal time to return to their comfortable middle class roots - and then have some kids to follow in their footsteps - ie, a reasonably privileged up-bringing followed by a rebellious young-adulthood that soon transforms into an eventual return to the mainstream and its goodies. (Materialism Sucks - supposedly.)
Make no mistake - the Drop-Outs have Dropped Back In, Big Time, and their desire for bucks will change the world forever - just not in the way these former long-hairs initially anticipated!
Ironically, their ideal of "social equality" is now even more unlikely to become realized than in previous decades due to their change of heart and eventual recognition of the power of the Almighty Dollar.
Indeed, if anything, the Age of Aquarius (ie, the 21st century) is actually the ushering-in of a period of unrestrained capitalism - not of dope smoking and casual sex.
There were strange, unknown forces at work in (or through) the drugs and spirituality the hippies inexpertly dabbled in. Most of the young long-hairs were simply full of s**t (figuratively and literally) but, either way, they channeled some unknown forces which did, ultimately, spin the world a little off its axis.
10: Guard against treachery and betrayal. Treachery isn't an unknown stranger walking up and punching you. Treachery is a very insidious form of betrayal - and these orchestrated stabs in the back cause a lot more personal suffering (and livid rage or time spent plotting revenge) than a purpose-less punch on the nose.
Know the danger of psychopaths who want to inflict calculated pain. Don't be fooled - they usually get into position by arse-licking. Having 'fans' may be great - but only until they exact their spiteful, jealous revenge by selling you out in the most harmful way they possibly can. They're losers, but they could take you down with them, so look out.
11: Stay away from booze and smack. People caught on the Drugs Roller-Coaster are travelling (downhill) so fast they're Number One with a Bullet. There are entire suburbs that are shrines to the state known as 'non compis', suburbs peopled by wasted heads whose main aim in life is to continue indulging their loose, fiery hedonism.
Drunks and druggies are nothing but selfish, self-absorbed people with scant regard for the outside world as long as they themselves feel good internally.
Do not pity a person who would ransack your house and steal your belongings just so that they can continue to indulge.
Similarly, don't fall into the drugs trap yourself. The message is clear (unless you're on drugs): keep your wits about you.
12: Don't be a mug. A mug is a 'Mathematically Uneducated Gambler'. Avoid dice games and the spin of the roulette wheel. The only casino game worth playing is Baccarat - and only if you know its Ins and Outs - and are a gambler to begin with. If not, avoid the casino entirely.
Carefully played, baccarat (a card game characterized by high stakes) becomes little more than a game of Double or Nothing - but bet on the Player's hand, not the Banker's, as it returns marginally better odds - unless they 'tie', which will pay you odds of 8-to-1.
Ultimately, however, gambling is more Risk than Reward.
If you must live for nervous excitement, try Futures and Derivatives trading or undervalued-company Shares instead. Take risks in Japan - things are going cheaply there at the moment. Under-valued companies in Australia, Europe and the US are also good bets - and a little more promising than Japan at present.
13: Don't become Martyr Part II, ie, some macho man who insists on working harder than everyone else for his rewards. Such people are over-represented in burial grounds.
14: Get a financial planner. Write the expense off to tax. To vet potential planners, call them - but do so after 5pm on a Friday afternoon. If the phone answers, they are still there, working diligently -- or on the p*ss. Watch out.
15: Avoid 'money-pits'. These are unreliable, second-hand cars which will require on-going repairs. Remember that your run-down abode may not have a garage, meaning a quality car, if you choose one, has to be parked in a paid-for space at a local lot or garage-for-hire.
This is okay, though, because you don't want any attention around you or your home. Don't play it dumb, play it useless.
Write all car expenses off to tax, including running costs and any other incidentals. This is easily justified - people should go back to riding horses, anyway.
16. Only buy items that possess liquidity. This aids easier cashing-in. Selling an investment property can take months. Making (and taking) a quick gain is much simpler with shares.
17. Ensure that your possessions are portable. If you decide you want to hang out in Paris or Tahiti for six weeks, you can do so with the utmost simplicity. Ensure your entire belongings all fit into a couple of suitcases. Staying unencumbered is the key. This reinforces the potential trouble a mortgage can present.
It therefore follows that it is immensely preferable to buy investment properties rather than your own house.
Buying a house (ie, a mortgage) means you are paying the house off yourself - often over a considerable length of time.
As such, the house not only becomes a source of considerable outgoings (ie, a liability) but also a bugbear because it can restrict your movements or other financial plans/ventures to a very large degree and for a very long time.
You cannot buy into hot under-valued shares if you do not have the ready cash due to a mortgage bill the size of Harry Belcher's beergut.
An investment place, by comparison, is effectively paid off by its tenants. As long as the house is regularly tenanted, it pays for itself.
The rental return also helps give extra income for the (rented) property you are living in. Why live in a rental place? Because you don't have to cover any of the expense in its upkeep.
Rent a cheap place (ie $80 a week) while the tenant in your investment place pays the hefty $300 a week.
You, meanwhile, are free to come and go from rental places as freely as you please, helpful if you want a lifestyle that involves periodically buzzing off to hang out in Dallas or LA for a while every now and then.
Why live at $80 a week? Because unless you have plenty of investment properties, your passive cashflow simply wont provide enough monthly rental for you to live in anything bigger!
The key is to stay frugal initially because money 'doesn't grow on trees' - especially for those renting your investment joints.
Above All Remember This:
Buying your own house is exactly that - buying it YOURSELF. Unless you are extremely wealthy, it is the biggest financial mistake you could ever make.
Don't do it.
If you must have your own place, don't indulge yourself until your passive cashflow permits it. (If you don't understand this point, go back to the beginning and start reading again.)
Incurring big debts just because you want to 'spoil' yourself is madness. You'll be eternally grateful if you follow the advice herein and avoid the mortgage trap.
The risk of credit card debt is sounded far and wide, yet the problems a mortgage present are far more numerous - and never discussed.
Real estate is not such a hot deal. You may obtain good capital growth on places in Australia over the coming years, but even so, the growth will be greater if those places are investment properties rather than personal dwellings.
Real estate people (and banks - who want your mortgage interest payments - just like they do on your credit cards) are always going to describe real estate in glowing terms - it's inevitable, they've got a product to sell. Don't listen to them.
A house is a liability, not an asset.
Shares don't require much upkeep. They aren't vacant every six months or need new roofs. They're also quickly and easily converted into cash.
Being rich isn't based on how much you earn - it's based on how much of your earnings you retain and use to make a further profit.
Outgoings are the biggest problem in that regard - and they can be massively multiplied if you choose real estate in preference to share market dealings. Learn this lesson here and now - and then never forget it!
An investment property is a much more time and labour-intensive vehicle for capital growth than shares.
Stay unencumbered and do as little work as possible. It may sound lazy, but it is the method used by most wealthy people, whose businesses are staffed by others, whose properties are lived in by others and who recognize that our most precious asset of all - our time - is something we will never have enough of.
The middle class could see their standard of living (their 'quality of life') increase dramatically if they weren't burdened by restrictive debts like cars and houses. Being image-conscious and honest, they are prime targets for financial institutions who lend credit to people who, once they've paid their big monthly house and car payments, then attain their quality of life through credit purchases, personal loans and store cards.
These people then end up further indebted in this way and are even further from being free - which they could be if they only chose to buy houses, etc, through passive cashflow. By purchasing goodies on credit, their debt increases and the cycle begins.
If they had no liabilities or debts they could purchase their holidays and other rewards via cash rather than see a large part of their income spent solely on covering interest payments alone.
If they had avoided the mortgage trap, they could have side-stepped the numerous other 'incidentals' that accompany a house and could've begun building their income-producing assets.
This would not only help provide their passive cashflow, but would also prepare them for becoming self-funded retirees, rather than welfare dependents or the types who will become potentially poverty stricken if, in future years, we cannot afford state-funded old-age pensions due to the decrease in public monies that will result from the low tax policies of future governments.
The idea of a house being an 'investment' is a big ferfie. You can list it as an asset on loan applications, but even once paid for in-full it is not an income-producing asset.
It becomes a potential monetary asset only when you sell it. At that point you hopefully make a capital gain (a large portion of which is lost via capital gains tax) and then discover that your 'gain' was next-to-nothing when offset against the loss from the tax and the expenses and almost-daily 'incidentals' you met in the modernizing or upkeep of the house during the time you waited for it to increase in value.
Realistically, your time could have been used more profitably stacking supermarket shelves.
Nobody 'needs' a mortgage. Buying real estate for personal use is a restrictive, time-wasting exercise more than it could ever be an 'investment' move - especially if you are an employee: Lose your job and you risk losing your mortgage and the roof over your head.
By comparison, if your major source of income is passive cashflow, you have no job to lose. You may not even have to work past a certain point. The rich know this and as a result have more cash and spare time than anyone. There really are people who retire in their early 30's. Forget 9-to-5. The extent to which the financial market dictates, directs and limits the lifestyle of the average person is disconcerting.
There really IS a different way of playing the game and you can learn it right here...
Do not get caught in the cycle of worrying about petty financial concerns that are so trivial that they should never play any great part in your life. Those days are gone - and so it is appropriate that we enter the 21st century - a time in which it will become increasingly easy to be wealthy.
It could also be quite a dark, hard century for many, many people while the rest get closer to attaining the dream lifestyle of prosperity, free time and increased financial security - but only if they know The Rules Of The Game... and if you haven't learnt those Rules after all you've read just here, may I suggest a Nehru straitjacket?
Such as they are