How to Be Poor: A Five-Step Program
How to Be Poor: A Five-Step Program
Armstrong Williams
August 9, 2005
Step 1: Live on Credit
More and more Americans are abusing their ability to access credit easily as well as flexible credit terms. According to recent studies, consumer debt in the U.S. 2006 rose $7 billion, for a rough average of about $12,440 per household. That means that this year alone, hundreds of thousands of families will spend almost as much on credit card interest as they do on food, while never managing to pay down their credit card balances. A vicious cycle results where Americans perpetually pay on finance charges and interest but never pay off their credit cards. Too often this results in late payments or defaults.
Sadly, many Americans don’t realize how bad credit will affect their ability to qualify for a mortgage, car loan, or other financing. Few in this culture ever think that far ahead. Why? Part of the problem is that our entire culture is predicated on buying things on credit. We are a consumption oriented society.
Thomas Stanley and William Danko wrote a great book called “The Millionaire Next Door.” The book doesn’t profile movie stars. It’s not about software engineers with PhD’s. It’s about the average American who earns a modest income and retired rich. How did they do it? Real simple. They didn’t take extravagant vacations. They lived within their means. And most of all, they didn’t use their credit cards to try to keep up with Bill Gates. They avoided debt and impulse spending. And these very middle class families had millions to retire on.
Step 2: Never Develop a Good Work Ethic
There are dreamers and there are doers. Dreamers sit back and watch life pass them by while the doers are the ones who put in the effort – without excuses – and get their job done. When it comes to building wealth, learn from the doers and follow these steps to enjoy true financial freedom. The first thing you have to do is have a vision for yourself and believe that you can achieve more than the ordinary. Next, you have to be willing to put your nose to the grindstone and forge ahead regardless of the obstacles.
The greatest job I ever had was working on my family farm. Each morning my father would come into my bedroom around 4:30 am and command me to get up and work the fields – no excuses. I would spend the next two hours before school slopping pigs and cropping tobacco. Was it fun? Not even close. But these early lessons in physical striving taught me discipline, work ethic, routine, and responsibility and instilled an attitude of achievement that would, later in life, propel me past the lethargic “others.”
My point is if you want to achieve anything in life, it is not enough to merely wish for it. Nor is it enough to purchase a lavish lifestyle on credit. Too many are tempted by the ease of using credit to substitute for working hard for their money. The result is that they develop extraordinarily bad habits and fall into a cycle of accumulating debt that prevents them from ever building real wealth. One thing is certain, if you want success or money, you must develop that kind of 4:30 AM discipline that distinguishes you from others.
Step 3: Don’t Set Goals
Ok, so you say you’re ready to work hard and build wealth. Great. But do you know what your end game is? Do you even know what your first step should be? First, you need a plan with a laser focus. It’s too easy to drift from one whim to another or to be tempted by taking the path of least resistance. However, unless you set your sights on a specific target, your effort will be dispersed in too many different directions, and ultimately wasted. Motivational speaker Zig Zigler tells a great story to make this point. He observes that the greatest archer in the history of the world can’t hit a target if you blind fold him and spin him around before he shoots. In other words, if you don’t set your sights on definite goals, you’ll be misfiring all over the place.
Step 4: Give Up On Yourself and Your Family
The disintegration of the traditional family unit is as destructive as anything that’s happened in our time. More and more children are dropping out of school and having babies well before they are prepared to assume that responsibility.
You want to know how to blow your future savings, income potential, and ability to build wealth? Have a child before you’re ready. Yet, this is what kids are doing nowadays. Babies are having babies. These children lack the means to provide material support for their family. Abuse and neglect follow. Many children in abusive households go on to become violent abusers themselves. Countless others will simply never learn how to be responsible, loving parents. The cycle of abuse and neglect will sew child welfare and self esteem issues into an entire generation of Americans. We cannot pretend this is not happening. You must take responsibility for yourself.
Education is the single greatest instrument of personal empowerment. Do not have kids while you are in high school. Do not drop out. If you do, then more than likely you will be ruining your life, as well as that of your child.
Step 5: Fail to Plan Ahead
"When you fail to plan, you plan to fail."
The biggest mistake people make in terms of financial management is that they live only in the here and now, and discount their future needs. What a bad move when it comes to your finances. Now is the time to become financially responsible because it will not only impact your life today and tomorrow, but it will dramatically affect you and your family’s life 10, 20, 30-years from now.
Sadly, many people postpone planning for retirement. Either they don’t want to take time and effort away from their present activities, or they assume that they lack the financial abilities or resources to be truly successful. Neither reason is valid. Really, it comes down to daily financial management. You have to prioritize your life so you can identify what is really important to you and why. When you do this your personal finances will follow suit and you will find yourself living well below your means. Of course, you’ll never see that common sense bit of advice on Lifestyles of the Rich and Famous. But it is the best way to enjoy better lives down the road.
