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March 2, 2012 / Dale Melchin

Thoughts about Money

“Money! Money! Money!…. Muuuuhnaaaaay!”


The three things you aren’t supposed to talk about at a party are politics, money and religion, at least in America.  Well, guess what?  This is my party, and we’re gonna talk about what I wanna talk about and what I wanna talk about is money.


Ah, Money.  Scratch, Jack, Moolah, Greenbacks, Benjamins, and of course, Dolla, Dolla Bills.  Regardless of what you call it, it is the medium of exchange in this country and throughout the world its value is based upon a collective perceived worth.  The more valued the dollar is the more rich everyone becomes.


Now, I didn’t get up this morning with the intent to discuss economics on any scale.  My default position is that of Capitalism, because any other system is Un-American.  Oh, there goes politics (along with Jingoism).  But again, I digress.


What I want to discuss is the pursuit, and accumulation of wealth, and how it is right and proper for everyone in America to engage in this pursuit and how not engaging in this pursuit is both insipid and irresponsible and if you are not actively engaged in this pursuit you are hurting not only yourself, but the collective good of your community, state and nation.  (Oh, politics agaaaain!”)


There are three main sources that I derive my “philosophy of wealth” from.  The first source is Dave Ramsey.  His primary premise is to get rid of your debt by following a simple approach to money.  Spend less than you make, pay off your debt, and accumulate wealth.  He offers a variety of tools to accomplish this end.  The secondary premise of his system is that being as proactive as possible about this pursuit will ultimately result in success.  In other words, the amount of effort you put into earning money, controlling your resources, paying off debt and saving, and eventually investing you will be successful within two to five years, and after that fifth year you will be well on your way to wealth.  (Did I miss anything Dave? 😉 ).


The second source is Robert Kyosoki, or Rich Dad.  Many of he and Ramsey’s premises are similar, however, he advocates a much ballsier approach.  Where they differ is in their attitudes toward debt and the means.  Dave hates debt, and propounds that you can achieve success regardless of the job you are in as long as it isn’t a stupid entry level (burger flipping) job.  In fact I remember a Debt Free Friday where a lady called in and they accomplished the system on a 30k a year budget with 5 years.  Dave applauded their water cutting rock approach.


Robert on the other hand advocates that debt can and should be used because you can achieve the results faster if you can create the cash flow quickly.  Robert also advocates that the fastest way to wealth is to be a business owner or an investor, not a company man (or woman) because in that system you are working for someone else’s wealth, and not necessarily, your own.


My third influence is Jim Cramer, the “Mad Man of Wall Street.”  He primarily emphasizes investing in the stock market and making investments based on the fundamentals of a business.  He and Kyosaki agree with this approach.  Dave differs with them because of the instability of straight stocks.


I buy into all of these men’s approaches because for the most part they are based on sound financial and accounting principles.  All of them emphasize the principles of work, proactivity and applied knowledge when it comes to accumulating wealth.


Alright, so, why am I bringing this up so early in the course of this blog?  For this reason:  Within the last 2 to five years I have ran into individuals who have either given up on or become frustrated with the pursuit of wealth as a focus in their life.  They will say things like, “Money doesn’t ultimately matter.”  Or “The Lord will take care of those things.” Or “Things will never be perfect, so don’t bother to try to pursue wealth, just push ahead with your other goals and let finances take care of themselves.”


Personally, this approach infuriates me for three reasons.  I personally tried the hands off approach and it doesn’t work, it only gets you into more trouble.  The other reason is there is a segment of the population that is growing at an alarming rate that seems to advocate a hands-off approach, not just to finances, but to life itself.  The reason why they are growing is because they haven’t been taught Natural Law or the Law of Reaping and Sowing.  The third reason is that God has given you the resources to make wealth, He blesses the increase, but He doesn’t just hand it to you.  He knows human nature too well!


Finance is a relatively simple matter.  It can be reduced to the following formula.


Revenue – Expenses = Growth


That is working with the assumption you are spending less than you make.  You can extrapolate this simple formula over the course of 12 months and create a system of cash flow where you can predict where you will be a year from now financially.


You can increase your growth in a combination of two ways.  You can reduce your expenses giving you more cash to work with or you can increase your income and keep expenses constant, or you can simultaneously increase revenue and lower expenses.  Increasing your revenue, albeit is a challenging task, but it is not impossible.


Reducing expenses is by far the easiest approach because that gives you cash to work within your current system without altering your Revenue.  You may have to do things differently,  like take leftovers to work for lunch, or change your own oil, or do minor repairs to your vehicles yourself.  Yes, it requires more effort and the use of your time in order to do this.  But it is the easier approach.


According to Dr. Stephen Covey, the best way to increase your revenue is to increase your applied knowledge and your capacity to produce.  Learn new proficiencies, and make them marketable and use them.  When this is done a little bit at a time over time will increase revenue as well as your value in the marketplace. Ramsey as well as Kyosoki and even Benjiamin Franklin advocate this approach it you want to increase your wealth.  Sometimes it takes a substantial investment of money to do this, but not always but it will bring about long term returns.


How what was the point of my crash course in finance?  Well, simple.  You can pursue wealth.  You should pursue wealth.  You should pursue it with an eye to giving value to the marketplace that will make them want to work with you, and pay you for it.  That is how you will solve your financial problems, and grow in more economic freedom.


I also say this because over the last 9 years I have heard people complaining about jobs and the economy and how bad things are.  The reason why things are so bad is that the traditional job market is shrinking.  According to Dan Miller less than 50% of the opportunities for work come from traditional jobs.  Manufacturing in this country is going the way of the do-do as well as the opportunities in other sectors because big businesses do not want to pay for wage and benefits where they can get the labor cheaper in other countries.  I’m not saying its right, it just is.  I mean, seriously, if you can get the same thing done, with the same quality, for less, would you not go for the “better” deal?  I know I would.


Now according to the same Dan Miller, opportunities for contingent, contract labor, self owned, and small businesses has increased exponentially.  These opportunities make up the other 50% of the job economy.  If you have professional skills or a variety of transferable skills, you could be in business for yourself.


This trend is the way things are moving and whether you like it or not, there is no way of stopping it.  The best thing to do is to adapt, and learn to get people to like you and learn to market yourself.  The problem is that so many people are resistant to change.  They like their regular jobs, they don’t want to change.  In short, they have abdicated their role as the master of their own destiny and are externally reliant on others, those who really don’t care about them, to provide for their future.  This “jobs” problem is an individual problem with every single person in the United States.  Everyone must take ownership of their own lot and move forward.


So what is the take away from this particularly long entry?  If you want to stay in the traditional job market, that’s fine, just understand you are going to need to keep your skills up to date to stay in that market, and that is going to require a very, very high degree of proactivity and willingness to be responsible for your life.  It is also highly competitive. If you are tired of being thrown around by the traditional job market, the opportunities are plentiful in other areas.  I would advise you that after you read this you check out both of Miller’s books, as well as his website for more resources.  I’m not the source of this good knowledge; I would consider myself akin to St. John the Baptist pointing the way minus getting my head lopped off by a tyrant.


In closing, I just want to say this.  I’m not trying to be mean or insensitive to those who are struggling.  We are all struggling.  I’m just trying to point you to the means of success so that way we can all be happy together.




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