The Principles of Wealth

Having debt isn’t necessarily a bad thing as long as you have a way to manage it and control it and reduce it to nothing. This principle can be applied, when you buy a house, start a business, etc.

Just because you don’t have 300k doesn’t mean you are not gonna get a house. Because chances are, long term, (well not sure about the US real estate market now) but if you were to purchase a house chances are you are borrowing from the bank, but once you have cleared this debt, it is still considered an asset.

And unless you are really unlucky, most of the time, over a long period of time, owning a home will pay off assuming property values increase and you might end up making more money than you would by working and saving simply by owning this asset.

Business’ works the same. The initial costs always leave you in debt at first but eventually they pay for themselves so long as they are profitable.

Leasing a car isn’t a bad thing. Especially if you can claim the taxes back from a professional corporation. Most cars depreciate in value anyways. If you plan to switch cars every now and then it might actually be more feasible to lease.

It frees up cash flow that can be used on investments that pay for the lease itself. It’s all about how you manipulate numbers. Not one system is better than the other so long as you come up ahead.

A lot of SMART people borrow money (does not work for everyone) from the bank to invest since the rate of return they get may actually be higher than the interest rate itself. How many ppl do that? Not sure. I think it is best to do if you actually know you can pay for it in the event of a loss.

I’ve borrow lots of money from the bank before to cover costs, coz I had so much money in investments that it would actually cost me more to take it out than the interest rate I was getting.

But when I do the math, overall it worked it that I was making money still. So I don’t buy into that whole having to save money thing and having to struggle etc.

Long story short, I didn’t end up having to remove my money from investments…still got my HDTV, fancy car, etc. and it took me like working a few months to pay off the bank loan and it still did not affect the gains I made from my investments so in fact I actually made more money than if I didn’t borrow money.

And it doesn’t only apply to me either. A lot of my classmates and colleagues once graduated out of dental school were like over 100,000 in debt. They didn’t suffer and had to eat ramen noodles, they paid off everything in a year or so of working.

Some were like $500000 in debt when they bought their practices but once their practices started making money, that amount were cleared no time.

Sometimes you have to take risks to make wealth. Just be smart.

[quote]thekrown wrote:
I would like to add buying electronics 2-5 years old will increase the gap you speak of.

Need a house phone? Get the old cheapy phone your parents had when you were a kid. It works and probly costs 10% of the wireless phones you see in stores now.

TV? Same thing, as if HDTV is a requirement…

Car? Same thing, get one 3-6 years old.

Snowboard? What? The boards they made 3 years ago weren’t cutting edge back then?

Do this to everything except for your true passion. If you’re obsessed about cooking get the best damn cooking shit, but everything else get it from the past and profit![/quote]

Those are some good ideas. Get the least expensive, previous year model things you can stand using. Sometimes the older models of equipment, vehicles, etc. are better than the latest versions anyway.

Every dollar you can shave off your expenses and expenditure is a dollar earned - because it widens the gap between what you produce and what you consume.

Since this is a good place to think tank, what are some other ways people can think of to follow the principle described in this thread, and produce more than you consume?


Here’s one: Servicing your own car. This is one way to save big bucks. What do mechanics charge for a major or minor service on your vehicle? It can be anywhere from $160-$300 or more!

Your mechanic doesn’t do anything really special during a service – all they do is do a basic inspection, change the oil & oil filter, spark plugs, and top up fluids as needed.
(plus maybe also change the fuel filter and air filter depending on the level of service you pay for).

IMO, any man who can’t change his own oil and spark plugs is a pussy!

All it will cost you is the price of the parts plus a few minutes of your own time.

You can get the inspection done on its own if you don’t know what to look for, and this will only cost a small fraction of the cost of a full service anyway.

I must add, NEVER get under a car that is supported only by a jack. Follow safe jacking principles and always use chocks, wheel stands, car ramps, of course load safety rated to suit the weight of your vehicle.

So there’s one avenue by which I’m saving my money from now on…

[quote]MikeyHDDS wrote:
Having debt isn’t necessarily a bad thing as long as you have a way to manage it and control it and reduce it to nothing. This principle can be applied, when you buy a house, start a business, etc.
[/quote]

Yes, there is a difference between good debt and bad debt.

I’ll have to look it up because I can’t recall exactly what the difference was.

Some excellent advice here.

I have a few things to contribute. Like most wisdom, it seems self evident yet people don’t like to follow it because it isn’t always easy.

1.) Watch the pennies and the dollars take care of themselves. Take a tally of the “change” you drop everyday on bottled water, coffee, snacks, or whatever else. Multiply it by 30 and its usually substantial. This is not to say you shouldn’t enjoy the odd java, just that you shouldn’t treat change like “change”.

2.) Make 3 lists: Needs, Reasonable Wants, Frivolous shit. Set aside money for needs first, obviously…right after you get paid. Rent, food, utils, etc.

For everything on your reasonable wants list (eating out, clothes, etc) ask yourself “Do I really, really want this or should I put aside the money?”. Frivolous shit (cases of Belgian beer, automatic paintball guns, Chasey Lain pocket pussies) should be used to reward yourself, occasionally, if you’ve managed to save continuously for a good period of time.

3.) Watch your fucking credit card. I personally HATE mine, but you more or less have to use it to establish a good credit rating. Sure, use it when you NEED it or when you’re in a hurry (gas station, etc) but with every purchase you make ask yourself “if I got fired tomorrow could I manage this charge?”.

4.) Greed, despite what Gordon Gecko says, is not good. Greed forces you to develop attachments and yearning for a bunch of shit you DO NOT NEED. Don’t keep up with the Joneses…fuck the Joneses…right in the ear!

When you keep desiring bigger and better “stuff” you enter on a course with only one possible outcome: dissatisfaction.
You upgrade to the newest model, enjoy the new car smell for a month, until your greed kicks in and you covet an even newer and shinier one.

Money helps facilitate comfort, which can HELP facilitate a satisfied life. Money, in itself, does not equal happiness.

[quote]AssOnGrass wrote:
It would be great if colleges had a mandatory “creating wealth” class during the last semester you are in school.

But that might not be commie enough for a university.[/quote]

I personally think that college or even high school is too late for this type of class. Besides, if your parents aren’t good examples than the odds are against you.

I hate saying no to my daughter when she wants money to go to the mall but she hasn’t earned it doing chores but I hope in the long run that she realizes she doesn’t get money until she does the work.

[quote]JohnnyBlaze wrote:
MikeyHDDS wrote:
Having debt isn’t necessarily a bad thing as long as you have a way to manage it and control it and reduce it to nothing. This principle can be applied, when you buy a house, start a business, etc.

True true, there is a difference between good debt and bad debt.

I’ll have to look it up because I can’t recall exactly what the difference was.[/quote]

Generally speaking, bad debt is like a car loan, or credit card, store loans. Depreciating assets, material things.

Good debt can be loans for investment properties, margin loans or money that you borrow to earn an income or build assets with.

Material things are not assets.

yeah i was being a douche.

Credit card debt is the worse because nothing ruins your credit faster than that. Not to mention the crazy interest.

For those on a line of credit and can actually pay it off, you are better off borrowing from that to pay for your credit cards if you can’t pay off the credit card right away with “real” money.

I’ve always used this principle:

  1. Pay yourself first (ie. take out a portion of your salary and place into retirement savings or some sort of untouchable fund with a good steady rate of return that don’t get taxed)

  2. Pay off credit card bills

  3. Whatever left over you use for your needs (food, housing)

  4. Whatever is left you go spoil yourself

[quote]Lohryx5 wrote:
GhorigTheBeefy wrote:
I’m just in school atm but if I wasn’t and was just working I could cut my expenses down to $450(rent) + $100(food) + $100(utilities) = $650 per month.

Do you have a car? What about gas? And $100 for food…a month? Are you eating Ramen noodles every meal or what?[/quote]

I would sell my car or at least not use it that much and I already have insurance paid for the year. I spend more than $100 on food a month but if I had to cut back it would be easy to only spend $25 a week on quality food.

I’d be eating a lot more frozen turkey burgers and not steak but it wouldn’t be ramen and other crap. Seriously, after reading what a lot of you guys spend a month on food I think you need to learn how to fucking shop.

In my Aviation Applied to Industry class we are broken up into groups and have to run an airline. It is a pretty in depth simulation that has a computer program that calculates everything after we enter our decisions for the quarter.

My group is the only one that is making any money atm. Main reason is due to us going into debt to buy planes whereas everyone else is going into debt leasing. Their stock is in the crapper because they have no assets yet ours rises every quarter.

I guess the key message would be to slowly acquire income producing assets over time and barring a catastrophe you should do alright.

Some people may find spiritualism korny,but I believe you can only find true wealth there. If you look for your identity in material things you will only find disappointment. Definitely accumulate wealth but learn to honor material things in a different manner. I have helped clean out closets of people that have passed away and it’s amazing at the stuff we collect over a lifetime.

My recommendation for a young person is index stock funds in a ira account-no it’s not sexy but effective. And the credit cards are a no brainer. So you have a 30yr mortgage how soon can you refinance to a 15 or 10 year mortgage-at perhaps a lower rate.
Operate your financial life as a business.

[quote]AssOnGrass wrote:
I think too many people get out of school and get this cushy job making 60k to 80k per year.

While this is great pay for an entry level B.S. [/quote]

I know CPA’s who start at 50k. Who starts at 60k-80k?

I understand your point about not spending more than you have, but do you actually know graduates who start off at this much?

[quote]PimpBot5000 wrote:
Some excellent advice here.

I have a few things to contribute. Like most wisdom, it seems self evident yet people don’t like to follow it because it isn’t always easy.

1.) Watch the pennies and the dollars take care of themselves. Take a tally of the “change” you drop everyday on bottled water, coffee, snacks, or whatever else. Multiply it by 30 and its usually substantial. This is not to say you shouldn’t enjoy the odd java, just that you shouldn’t treat change like “change”.

2.) Make 3 lists: Needs, Reasonable Wants, Frivolous shit. Set aside money for needs first, obviously…right after you get paid. Rent, food, utils, etc.

For everything on your reasonable wants list (eating out, clothes, etc) ask yourself “Do I really, really want this or should I put aside the money?”.

Frivolous shit (cases of Belgian beer, automatic paintball guns, Chasey Lain pocket pussies) should be used to reward yourself, occasionally, if you’ve managed to save continuously for a good period of time.

3.) Watch your fucking credit card. I personally HATE mine, but you more or less have to use it to establish a good credit rating. Sure, use it when you NEED it or when you’re in a hurry (gas station, etc) but with every purchase you make ask yourself “if I got fired tomorrow could I manage this charge?”.

4.) Greed, despite what Gordon Gecko says, is not good. Greed forces you to develop attachments and yearning for a bunch of shit you DO NOT NEED. Don’t keep up with the Joneses…fuck the Joneses…right in the ear!

When you keep desiring bigger and better “stuff” you enter on a course with only one possible outcome: dissatisfaction.
You upgrade to the newest model, enjoy the new car smell for a month, until your greed kicks in and you covet an even newer and shinier one.

Money helps facilitate comfort, which can HELP facilitate a satisfied life. Money, in itself, does not equal happiness. [/quote]

Great post.

It’s a good idea to watch your change - every $2 or $5 you drop on those little snacks and coffees can add up to a large amount! How much is a cup of coffee from Starbucks or cafe these days? About $4.90?

So make your own coffee and you’ll be saving a substantial amount each week. Same thing with buying snacks at service (gas) stations. Try and forgo the chocolate bars and ice creams if you have the self control - not only will you be doing your health a favour, but also your wallet.

I find myself spending far too much on frivolous shit.

It really is a matter of self control and changing one’s habits. It takes steering to do these things.

And yes, fuck the Joneses! Who gives a damn who’s got a bigger TV or a later model car, or the latest whiz bang cell phone that can do everything - the next cell phone will probably even take your dick out for you when you’re hanging a piss, give it a shake, put it back in and zip up your pants.

“I’ve got a 42” LCD" “Oh yeah?, I’ve got a 50” HDTV plasma" “Well I’ve got a fucking TV that covers my entire lounge room wall!”

[quote]Artem wrote:
I’m 16 so I can’t add shit, but my sister knows what she’s doing and I’ll add the one piece of advice that she gave me that I think is particularly good and often overlooked:

Always come through. In the business world, people are always being let down. Always do what you promise. People will think that you’re going above and beyond if you’re reliable when you’re really just doing exactly that your job is.

I don’t know if that’s relevant, but it makes sense to me.[/quote]

Very true. That’s a principle to live by.

[quote]Kreal7 wrote:
AssOnGrass wrote:
I think too many people get out of school and get this cushy job making 60k to 80k per year.

While this is great pay for an entry level B.S.

I know CPA’s who start at 50k. Who starts at 60k-80k?

I understand your point about not spending more than you have, but do you actually know graduates who start off at this much?[/quote]

Actually yeah a number of friends of mine. Not me unfortunately.

I know a lot of people here have read Dave Ramsey’s stuff. Where do you recommend I start? He has quite a bit out there.

[quote]JohnnyBlaze wrote:
PimpBot5000 wrote:
Some excellent advice here.

I have a few things to contribute. Like most wisdom, it seems self evident yet people don’t like to follow it because it isn’t always easy.

1.) Watch the pennies and the dollars take care of themselves. Take a tally of the “change” you drop everyday on bottled water, coffee, snacks, or whatever else. Multiply it by 30 and its usually substantial. This is not to say you shouldn’t enjoy the odd java, just that you shouldn’t treat change like “change”.

2.) Make 3 lists: Needs, Reasonable Wants, Frivolous shit. Set aside money for needs first, obviously…right after you get paid. Rent, food, utils, etc.

For everything on your reasonable wants list (eating out, clothes, etc) ask yourself “Do I really, really want this or should I put aside the money?”.

Frivolous shit (cases of Belgian beer, automatic paintball guns, Chasey Lain pocket pussies) should be used to reward yourself, occasionally, if you’ve managed to save continuously for a good period of time.

3.) Watch your fucking credit card. I personally HATE mine, but you more or less have to use it to establish a good credit rating. Sure, use it when you NEED it or when you’re in a hurry (gas station, etc) but with every purchase you make ask yourself “if I got fired tomorrow could I manage this charge?”.

4.) Greed, despite what Gordon Gecko says, is not good. Greed forces you to develop attachments and yearning for a bunch of shit you DO NOT NEED. Don’t keep up with the Joneses…fuck the Joneses…right in the ear!

When you keep desiring bigger and better “stuff” you enter on a course with only one possible outcome: dissatisfaction.
You upgrade to the newest model, enjoy the new car smell for a month, until your greed kicks in and you covet an even newer and shinier one.

Money helps facilitate comfort, which can HELP facilitate a satisfied life. Money, in itself, does not equal happiness.

Great post.

It’s a good idea to watch your change - every $2 or $5 you drop on those little snacks and coffees can add up to a large amount! How much is a cup of coffee from Starbucks or cafe these days? About $4.90?

So make your own coffee and you’ll be saving a substantial amount each week. Same thing with buying snacks at service (gas) stations. Try and forgo the chocolate bars and ice creams if you have the self control - not only will you be doing your health a favour, but also your wallet.

I find myself spending far too much on frivolous shit.

It really is a matter of self control and changing one’s habits. It takes steering to do these things.

And yes, fuck the Joneses! Who gives a damn who’s got a bigger TV or a later model car, or the latest whiz bang cell phone that can do everything - the next cell phone will probably even take your dick out for you when you’re hanging a piss, give it a shake, put it back in and zip up your pants.

“I’ve got a 42” LCD" “Oh yeah?, I’ve got a 50” HDTV plasma" “Well I’ve got a fucking TV that covers my entire lounge room wall!”[/quote]

I know plenty of such people. They all rent.

[quote]Kreal7 wrote:
AssOnGrass wrote:
I think too many people get out of school and get this cushy job making 60k to 80k per year.

While this is great pay for an entry level B.S.

I know CPA’s who start at 50k. Who starts at 60k-80k?

I understand your point about not spending more than you have, but do you actually know graduates who start off at this much?[/quote]

Pretty much every engineer I know.

[quote]Kreal7 wrote:
AssOnGrass wrote:
I think too many people get out of school and get this cushy job making 60k to 80k per year.

While this is great pay for an entry level B.S.

I know CPA’s who start at 50k. Who starts at 60k-80k?

I understand your point about not spending more than you have, but do you actually know graduates who start off at this much?[/quote]

if he got out in the late 90’s, that may have not been the starting salary for EVERYBODY but there were a healthy amount of grads starting at that salary.

Also many graduate students with technical, or finance degrees start there. At least in the north NJ/nyc area, unfornutely rent is starts at $1500 too.

[quote]Airtruth wrote:
Also many graduate students with technical, or finance degrees start there. At least in the north NJ/nyc area, unfornutely rent is starts at $1500 too.[/quote]

Exactly! When you live in places like NY and Southern Cali they have to pay people a shitload of money just to live. In the late 90’s and early 2000’s secretaries were making 80k a year.

If you lived in those areas for a long time then you think it’s average but you have to understand the national average is maybe 1/2 that.

Good luck finding those entry level jobs now with this craptastic economy.

Do you guys want to live life clipping coupons and living in your parents basement? The key to building wealth is to make more money.

Has anyone read Wealth of Nations? If you’re unaware of what that book is it’s the blueprint for modern economics … To just say “the key to building wealth is to make more money” is a bit of a simplistic view of a very complex endeavor. How do you make more money? What do you do with the money once you make it? If you keep it in a low interest savings account you’re actually going to be losing money rather than making it.

There’s a lot of impressionable people on here who might be inclined to take that golden piece of advice (…make more money) as gospel because you have over a thousand posts and know what you’re talking about. Let’s expand on that idea … ps there’s nothing wrong with clipping coupons.

I think the op brought the hot fire personally. (Production>consumption)x time = accumulation of wealth

Polo’s avatar makes me believe hypnotism might actually work on me.