Choose to live like a millionaire

For those of us who are not millionaires we are likely to have a lot of wrong ideas about how millionaires live. We imagine they live in absolute luxury with the freedom to do anything they please. No doubt wealth does give them opportunities that many of us may never experience, but many of us would be surprised at how many millionaires truly live. There have been some interesting books written about the millionaire lifestyle such as The Millionaire Next Door: The Surprising Secrets of America's Wealthy and Stop Acting Rich: ...And Start Living Like A Real Millionaire by Thomas Stanley. Those books, and similar ones, find that most millionaires live well below their means and are much more interested in financial independence than they are in impressing other people.

For instance, they spend far less for clothing, watches, homes and cars that the average person thinks they do. Living on credit and spending more than you make guarantees you will never be wealthy. One does not enjoy financial independence by paying on credit cards every month. Besides, that makes the individual a slave to his or her paycheck which eliminates other opportunities to build wealth. When one lives below their means it gives them margin in their lives so they can make career moves such as starting a new business.

A second characteristic of millionaires is that many of them find side hustles. They may have a hobby that can become income-producing. Some, while working their regular job, begin investing in rental income buying first one property and later adding to that as opportunities present themselves. That can't be done if you are already spending more than you are making. Others find other side jobs that can earn them money that can be invested and benefit from the magic of compound interest.

It is a fact that many millionaires are self-employed with some researchers claiming that over 40 percent of millionaires fall into that category. One researcher found that self-employed millionaires had over 1.5 times the median income that those who work for other people.

Another common trait of millionaires is that they like to read. They do not read much fiction, but instead they focus on reading books that will help them become more successful in their chosen fields. One of the wealthiest men in the world, billionaire Warren Buffett, said when he was starting out he would read 600-1,000 pages a day. Even now he spends as much as 80 percent of his day reading. He advises anyone who wants to be successful to read at least 500 pages a day of books that will help you achieve the goals you want to achieve.

Perhaps you have no interest in being a millionaire. But, I bet you do want financial security in your life. Today, few people approach retirement with enough money to comfortably retire, but that does not have to be you. Follow the examples of those who achieved financial security, and one day you'll be enjoying the benefits of that same security.

Do you prefer healing or helplessness?

There is an interesting story in the Bible about a man who had lived with some infirmity for 38 years. He spent time at the Pool of Bethesda which, according to Jewish legend, would heal the first person who stepped into it when an Angel stirred the water. Jesus met this man there one day and asked what appears to be a rather foolish question: Do you want to be made well?

Why would he not want to be made well? Why else did Jesus think he spent time at this pool? Anyone in their right mind would prefer well-being over illness, wouldn't they? What is really interesting is that the man never answered the question. Rather, he offered an excuse. He didn't have anyone to help him into the pool and someone always got in the water first. He was depending on someone else to help him become well. Frankly, it sounds like a lot of people today.

We live in a land of unbelievable opportunity. We have freedoms that people living in other country will never know. We have opportunities that do not exist anywhere else for people to do amazing things with their lives. But, we have a significant percentage of our population waiting on someone else to take care of them. They depend on a government check to provide them with the bare necessities of life instead of taking advantage of the opportunities available to them to rise about that.

The government is discussing another providing another check to Americans due to so many out of work while at the same time companies are trying hard to hire new workers. People are demanding that additional money be added to unemployment checks which, in many cases, provide more income than they were making when they were working. Exactly how does that provide any incentive for someone to look for a job when they can sit home and make more than they would working. Others are demanding that minimum wage be raised. Why does anyone want to remain in a minimum-wage job anyway? Minimum wage jobs are there to help people get work experience so they can go out and find better employment.

As a senior in high school I started a minimum wage job at .75 an hour. Before graduating I had asked for and received pay raises that increased my salary to 1.25 an hour. Just a few weeks before graduating I requested another .25 an hour which was refused, so I quit and went to work for another business the next week for 1.50 an hour. As soon as I turned 18 I went to work for another company at almost twice that salary. No one needs the government to guarantee them a living wage if they are willing to advance themselves and do what it takes to deserve a higher salary. To break the chains of helplessness one must break his dependence on others to provide for him. Becoming mature occurs when we begin to take responsibility for ourselves.

While many people are dependent on the government for their income, many more are dependent upon credit to maintain their lifestyle. There is a reason it's called Mastercard. As long as one is dependent on credit it will be your master. Talk about helplessness! Look how long it took for the pandemic to cost people their jobs before they began to scream that they couldn't pay their bills, they couldn't pay their mortgage or rent, they couldn't buy groceries. We were in the greatest economic boom in decades, and yet millions of people were living paycheck to paycheck with nothing in reserve. Why? I imagine it was because many of them had more money going out each month than they had coming, and they made up the difference with plastic.

Do you want to be made well? If financial distress is making you feel helpless maybe it's time for plastic surgery. Like a lot of physical healing that occurs, there might be some temporary discomfort, but it will be worth it when you begin to heal financially. If you need help getting out of debt and achieving financial security, check out the plan Dave Ramsey promotes in his best-selling book
The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness. This plan works.

You can go through life feeling helpless or you can find healing for every aspect of your life. The choice is yours, but remember, choices have consequences.

Our financial choices

One of the things I learned many years ago in Economics 101 was the importance of knowing the opportunity costs of our choices. The opportunity cost is the price of the next best thing you could have done had you not made your first choice. If you have a thousand dollars and you choose to buy a new cell phone with that money you have also chosen not to spend that thousand dollars to purchase something else. What you could not buy with that thousand dollars is the opportunity cost of your decision. It's an important concept to keep in mind when you are making financial decisions.

Many today seek immediate gratification. They see something they want and they buy it without thinking about the opportunity cost of that decision. There are people who will buy the latest phone as soon as it comes out and then not be able to pay their rent. They want a new car so they finance it for seven years without ever considering what that car will actually cost them when the interest on their car loan is added in and without thinking about the things they won't be able to do because they have to make a car payment.

This desire for immediate gratification is going to be costly. According to one study three out of five Americans have less than $10,000 in retirement savings, and one-third have nothing saved for retirement. Contrary to what some people think, retirement will come one day for most of us, and without adequate savings it will be a difficult time.

Dave Ramsey recommends that people put 15 percent of their income into a retirement savings account. Others recommend 10 percent. I'm no financial expert, but I would think somewhere between those numbers would be pretty good if it was done consistently and invested well. Right now some of you are arguing that it's not possible for you to put 15 percent of your income into a retirement account. Here's where that opportunity cost thinking comes into play. If you choose to spend more than you make each week, you are exactly right. You can't put 15 percent into retirement. In fact, you can't put anything into retirement because you've already spent more than you've made.

However, what if you put 15 percent into retirement before you did anything else with your money? Let's try this formula. Our of each paycheck you pay yourself 15 percent of your income and put it into a retirement account, you take another 10 percent and pay your tithe to your church or synagogue, and you are left with 75 percent of your income to live on.

I realize that many cannot do that because of the debt they carry. You chose to go into debt. Now is the time to choose to get out of debt and get serious about saving for retirement. I can tell you from experience it's a lot easier to get in debt than it is to get out. To go into debt all you have to do is sign on the dotted line. To get out of debt you have to become an adult, sacrifice, be disciplined and follow a process. The best process I found for getting out of debt, and the one I used, is found in Dave Ramsey's book The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness. It gives you a step-by-step plan for getting out of debt and saving for the future. It works.

The thing to remember is that every financial decision we make has an opportunity cost. If you spend money on this, you cannot spend that same money on that. If you spend more than you make, you can't save for retirement or do other things you might want to do with that money. Make good financial choices and you'll find you can enjoy life much more.

Financial choices

One thing the coronavirus has taught us is that many people didn't learn from the 2008 recession about personal financial management. Before you think I'm being insensitive or critical you need to know that in 2008 I owned a small business that closed. For about a year prior to 2008 we were losing money, but when everything crashed, so did our business. At the time I felt like we would be bankrupt before it was over. Fortunately, that did not happen.

One thing that did happen was that I was determined to never again be in that position. For much of our lives we lived paycheck-to-paycheck. Sometimes we ran out of money before we ran out of month. Living like that usually leads to deeper debt which means you are digging a deeper hole that is even tougher to escape.

I had a job that required a lot of driving so I began to download podcasts to my I-Pod to listen to while on the road. One of the podcasts I listened to was Dave Ramsey's on financial management. I have listened to thousands of hours of his podcasts since that time. After a while I knew what he was going to tell those who called in to his show with their financial questions before he told them. But, knowledge is of no value unless you put it into practice. We decided to do just that.

Ramsey's management plan follows what he calls Baby Steps. I won't go into detail about what each of the steps are due to space limitations. If finances are a problem for you I highly recommend his book The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness. This book takes the reader through his steps for getting out of debt, building an emergency fund, paying for children's college and saving for retirement. I can tell you it works.

When this pandemic hit, businesses shut down and millions of people were out of work overnight. Immediately, the news was filled with people who didn't know how they were going to pay their bills, put food on the table and meet their basic financial needs. This told me that none of these people had any kind of emergency fund set aside for times like this.  One study earlier this year, before the pandemic hit, found that 70% of the people surveyed couldn't pay their bills if they missed one paycheck, and 44% reported that if they missed one paycheck they could not afford their housing. Again, I am not being critical. I've been there.

We choose how we are going to handle our personal finances. Some of us may have more or less finances to handle, but we still choose how we will handle what we have. When we go into debt to buy something, it is a choice we've made. When we spend all our money to have the latest phone it's because we chose to. When we take out a seven-year loan to buy a car we can't afford it's because we chose to do that. When we spend more than we bring in and have nothing in savings or retirement, again it was a choice we made. Then when something like this pandemic or a market crash happens we panic because we have nothing saved.

I've been writing about the consequences of our choices. This pandemic has shown us once again the consequences of living beyond our means and not saving anything. Many of us really need to look at the financial choices we've been making and decide if we need to start doing something different.