SAVING MONEY can make you poor!

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Originally posted by tristan22
I also have two relatives with millions of dollars (through inheriting and saving every dime) who live like bag people!

Then they would be better off not having it.


If they were to lose that money, they could never get it back, and they know this and are paralyzed with fear because of it. B/c of it, they live like misers and live genuinely wretched lives, and their money does them absolutely no good but they are too consumed with fear to realize this. They never learned financial literacy or investing and have no way of replenishing that money, so they act as if that stockpile of money has to last them for the rest of their lives, and in a way, it does b/c they can't add to it. I know all this just based on their attitude. People like this are not truly wealthy, they just got lucky and inherited a bunch of money yet inherited no financial knowledge to go along with it.


At the other end of the spectrum, you have millionaires that are reckless with their money and buy liability items like cars and boats far too often, but have no real assets to pay for it. Often these people are celebrites, and their cashflow is driven by their talent. Once their talent goes away or their career washes up, their wealth goes away with it and all they have left is the consumer debt that they incurred. Like the miser, they got money without learning financial literacy, so they have no way to get that money back. In a way they are no different than the miser millionaries--- when its all said and done, they both end up the same way.


Self-made millionaires are never like this. They enjoy their wealth (to a reasonable extent) and this is because their investments are always bringing in a positive cashflow. That is not to say that self-made millionares are not frugal-- they do know the imporantance of being financially conservative, and this leads them to buy only as many liability items as their positive cashflow can offset.

 

[STR8UP]

Originally posted by Page
Then they would be better off not having it.

I couldn't have said it better myself.

I couldn't imagine living my life worried about conserving every cent. You DO have to have disciple, especially in the beginning. But REAL money is made by learning how to make money with borrowed money, not through exhausting yourself mentally and physically trying to reduce your expenses to nothing.

And the worst part about it is that people who are like this are so poorly educated about the way money works that trying to save a penny ends up costing them a dollar.

In the financial world according to me (take my advice for what it's worth to you), the first step is to make sure you are living WITHIN your means. The second step is to learn how to create wealth through the proper use of leverage. "Pennypinching" is nowhere in the equation because pennypinching will get you nowhere fast.

 

[thissucks003]

Hey Str8up,


I know we talked in the past and I can't remember if this was discussed. I am very curious if you invest 1/3 to real estate, 1/3 to stocks, and 1/3 to your current job/company? Do you try to keep everything in balance? Are you more weighted to real estate and not stocks?

Right now, I am more invested in stocks because I am in that field. I haven't gone the real estate route. I am curious about investing in rental property, but have held back to the higher prices in my area. I believe there will be some great bargins going forward and I hope to take advantage when that arrives.

Take Care,

TS

 

[bbestar]

I kinda disagree with you about saving money.

I know anyone can save $5 dollars there, $10 dollars over there...

and with that 10 dollars either put it in a account or put it to your bills

That way your saving and getting less in debt or more richer

 

[STR8UP]

Originally posted by thissucks003
I am very curious if you invest 1/3 to real estate, 1/3 to stocks, and 1/3 to your current job/company? Do you try to keep everything in balance? Are you more weighted to real estate and not stocks?

Depends on how you look at it. Maybe 90% real estate, 10% business??

By far the bulk of my net worth is in RE. I have a business that generates cashflow, but for the most part it isn't worth much more than it cost me to set it up in the first place. It HAS provided me with a semi-passive income for the last few years, but I don't really consider it an investment, per se.

I might change my strategy in the future, but for the moment I am not doing anything with stocks. Knowing my gung-ho personality if I did decide to go that route I would probably end up in options and such...things that provide maximum return. I doubt I will ever own mutual funds and bonds and such...but who knows.

 

[STR8UP]

Originally posted by bbestar
I kinda disagree with you about saving money.

I know anyone can save $5 dollars there, $10 dollars over there...

and with that 10 dollars either put it in a account or put it to your bills

That way your saving and getting less in debt or more richer

Remember, the key to getting richer, faster is NOT getting rid of your debt, it's using debt to buy the right kinds of things (income producing assets).

Again, the point of this post is not that saving is bad, it just isn't the fastest and most effective way to increase your net worth.

Here's an example- Lets say both of us start off in exactly the same financial situation. You concentrate on paying off your debt and saving money to eventually invest, I incur MORE debt and buy assets. Over the course of a few years I owe WAY more money than you do, but my net worth is substantially higher. Get it?

If this doesn't make sense, then you should be studying how to use leverage to create wealth.

 

[dakota]

some disagreements here.
First saving is not getting a lower price on an item.. that is still spending, simply at a lower rate.
Saving is a good thing because it allows you to invest in venture capitalism.
Saving ( ie not spending- not spending at a lower rate) provides cash to fund ventures for other people. Right now I have 40,000$ loaned out to people in this way. While I make about $45,000 a year.. my actual monthy expenditures are maybe at best 500$ a month , Easily I add 20,000$ a year thar I can fund more ventures with long term high rate returns.

 

[RaWBLooD]

wow great post, msg me if u want to learn how to increase your networth instead of decreasing it, cant be lazy tho, so dont bother if u are
thx.

 

[SELF-MASTERY]

It apears that the road to real estate riches is a long one.

What do you suggest buying rental property and holding it or flipping properties?

 

[RaWBLooD]

and this is where i can help people
anyone ambitious give me a shout on personal message.

 

[BlackJackal]

I get what you're trying to say STR8TUP. You're basically trying to tell us to learn how to use money as a tool, instead of a life reserver based on nonsolid security. Thats basically what I'm trying to do, and I do want to be my own boss. I want a bussiness thats involved with music and videogames.
But I just need a chance to really get a hands on idea in getting started at least where cash flow is concerned. Most importantly, to learn how to control my money and not let it control me.

 

[jiza101]

ATM i have around 11k total, made up of shares, and an ING 4.5% per annum account. Now i'm 18 atm, and attend university 5 days a week. I worked since i was 15 at a supermarket. What avenue would you suggest i take, i just want to be financially well of, and not have to worry to much about things... BTW im from Australia, so things might be different, i would love to hear everyones opinions for me

 

[RaWBLooD]

read my post above.

 

[cave dweller]

ok........

jiza101,

Want to have some big bucks someday?

1...Save 10% to 20% of everything you earn.
2...Invest it in:

Stocks
Bonds
Bank cd's
Real Estate
Mutual Funds

cave dweller

 

[jiza101]

Re: ok........

Originally posted by cave dweller
jiza101,

Want to have some big bucks someday?

1...Save 10% to 20% of everything you earn.
2...Invest it in:

Stocks
Bonds
Bank cd's
Real Estate
Mutual Funds

cave dweller

Thanks, i need to start learning what bond's and stuff are. Whats a Bank cd ??

 

[tyciol]

It's not so much saving money, as not wasting it.

You need money saved for capital on investment projects and to buy larger purchases instead of wasting it on pop or whatever.

Also, GIVE ME MONEY.

 

[Page]

Originally posted by tyciol


You need money saved for capital on investment projects

It depends on the type of investment. for stocks, you pretty much have to front your own money (as no lender in his right mind would give you money for something as volatile as stock) , but for things like real estate investments, you should borrow money instead.

 

[Oxide]

Well i finally got my head back to normal after my 21st Bday. Time to think of the future.

Say, i have around $500-$800 to invest and i want to open a Roth IRA. Now, since i am young im thinking 100% stocks. I hear Vanguard has something like that, so im gonna give them a call.

Any insights on this, let me know what you think.

 

[cave dweller]

house??

Oxide,

Do you own your own home?

If not, then I would suggest that-- that is the first investment that you make.

What should you buy?---a small 'fixer-upper'.

ie:

You can buy a 'fixer' with owner finance and very little down.

(p.s.--owners give fixers away, they just want get rid of them)

cave dweller

 

[cave dweller]

bank CD

jiza101,

A bank CD is a 'certificate of deposit' backed by the FDIC.

You can call any local bank, for the current rates, and to answer any questions that you may have.

It is just another investment tool.

Check it out.

cave dweller