This one belief is probably keeping you from being rich

Do you find it hard to save $$?  

Why is that?  Well on the surface the answer is pretty easy “I don’t have enough money left after my expenses”.  I hear you.  However, I think deep down your subconscious beliefs are what really keeps you from saving.

So here you are staring at that nice new golf club/TV/killer purse/Wii/etc and $500 are just burning a hole in your pocket.  You know you should save that money but your subconscious is telling you that if you stash away that $500 they will just go in a black hole never to be seen again.  

You then talk yourself into it by thinking “pleasure now, or pleasure later when you retire and are too old to enjoy it anyway…”    Sound familiar?

Most of us have been conditioned to think that saving means stashing away money and never seeing it again.  I think most of you know it by the name of 401k. We know our savings are growing (hopefully) but somehow it just doesn’t feel like real money.

Here’s an idea: Invest in vehicles that pay you now.   Huh?

If you had a $25,000 investment making you a 10% dividend you’d be pocketing $2,500 a year, every year.  Think about that.  It’s like getting a $2,500 bonus check year after year for not doing anything.

If you know that every $500 you invest will pay you $50 back every year would you be more inclined to invest?  That golf club doesn’t look that attractive any more does it?

Your Business Plan Sucks!

Whether consciously or unconsciously you have been sold on a life/business plan all along. You have been getting subliminal messages the whole time and you might not have even noticed. My friend, you were giving a life/business plan and it sucks!

Don't believe me? If you are like the vast majority then you subscribe to the following life/business plan:

1. Get a job and start working as soon as you graduate college (or high school)
2. Keep working every day of life (except for two to three weeks vacation) until you are 65/67.5 years old or until you die, whichever comes first.
3. Once you reach that magical age you "retire" and finally start enjoying life

Sound familiar? It should because that's what your plan is and that's how you live your life and manage your finances. If you're like the vast majority every major financial decision is based on that life plan and the thought process goes something like this:

Can I afford it? That is, if I break this purchase into monthly payments and add it to all my other monthly bills will my salary be able to cover it? After all, I'll be working everyday of my life until I'm 65/67.5 so why not treat myself. I "deserve it".

Have you ever even considered the possibility of not working? We live our lives assuming we are a perpetual cash flow producing machine. That's why we redline our finances to the max because there will always be another check next month.

Try this plan on for change: "I will only continue to work for the next five years and I plan to live well beyond that". Will this assumption change any of your financial decisions? Will it cause you to reconsider your career decisions? If you were only allowed to work for the next five years what would you do?

I know it sounds crazy that you could just stop working after five more years. That's because you bought into the perpetual work life plan a long time ago. You cannot yet conceive it but consider that it can be done for a moment. Entertain the idea in your head that you will only allow yourself to work for another five more years and after that the cash flow somehow will still keep going. Now sit back and relax and pay attention to the ideas that will start coming up in your head as to how this would be possible.

I will go more in depth on this subject in further posts but for now just let your subconcious bounce around that idea for a while. Consider the possibility and let your mind freely explore how you could pull this off.

Redlining your Home Finances

Have you ever revved up your car in first gear (or 1 on automatic) until the rpm gauge went all the way to the red? It was fun wasn't it? You probably experienced great acceleration and the thrill of the engine noise, even though you weren't really going that fast. Revving your car all the way to the red produces tremendous acceleration and it is at that point that your engine produces its maximum horsepower. However, you can't hold that for long because the engine will wear out and it will overheat or blow up.

Well I bet that you're probably doing the same thing to your finances. If we call your take home pay 100% then your financial gauge is probably all the way in the red at 90, 95 or even 105%! If you were saving 50 to 60% of your take home pay then your financial gauge would be running at a nice and sustainable 40 to 50%. But you're not aren't you?

My friend you are probably overheating your financial engine. When you were single you had one income and you managed fine. Then you got a married and became DINKs (dual income no kids). Your financial engine got about twice its horsepower over night. However, within a few months you revved your lifestyle from 50% to probably 80%. Then came the kids and now you really put the pedal to the metal at 90+. The last time you got a raise you just stepped on the accelerator to maintain your neckbreaking 90+% pace.

If you save 50% of your income every year or even 15% you would have no choice but to be wealthy. Lets assume on average you make $60,000 a year and you save 15% or $9,000 a year, $750 a month. In 10 years you should have at least $90,000 in the bank. Actually with compound interest assuming a 10% return you should really have close to $154,000. Did you do it? Do you have it? I don't want to give you the 20 years figure because I'll depress you.

You'll come up with a thousand excuses of why your situation is different and why you have no choice. Think again. It took you many years to get up to your current lifestyle speed so don't expect to brake on a dime. However you can slow down considerably and not notice much of a difference. That 3,000 sq. ft. house might seem like a necesity but many families manage to get by on 1,200 sq. ft.. Some families with two kids can actually fit inside of a Toyota Corolla so don't think that huge $40,000 SUV in your driveway is a necessity either.

If you have saved at least 15% and your rate of return is at least 10% annually congratulations, you are the very small minority. The rest of us have been driving an overheated financial car.