He did this by investing in what he knew. That is how he built his fortune.
You can do the same to build yours.
I listen to what people have to say, but I always make my own decisions.
I research any industry I want to know and then focus on investing in what I know. I try to put my money where my values are.
I prefer consumer staples such as food, beverage, toothpaste, cleaning supplies, tissue, and other household items.
Companies like Proctor & Gamble, Colgate-Palmolive, Kimberly-Clark. Clorox, and PepsiCo.
You can find many of these companies included in many mutual funds such as any 500 index fund like the Standard & Poor’s 500 Index (S&P 500 index), the Vanguard 500 Index Fund Investor Shares (VFINX), the Fidelity Spartan 500 Index Investor Shares (FUSEX), the Schwab S&P 500 Index Fund (SWPPX) or the T. Rowe Price Equity Index 500 Fund (PREIX).
I figured a good way to start my wealth journey was to learn about those that became wealthy.
Benjamin Franklin also created a list of 13 virtues to develop his character. This lets me know that your character is your destiny.
Here I provide you with his checklist. See which ones you can try to emulate to help you on your road to wealth accumulation.
THE 13 VIRTUES OF BENJAMIN FRANKLIN
In 1758, Benjamin Franklin published his essay The Way to Wealth.
Although, it was written 260 years ago, the advice still is holds up, even to this day.
Below is a copy of his checklist.
SPOTLIGHT ON FRUGALITY
My personal favorite is frugality because it includes all the other virtues.
Frugality is basically the will to spend money on what is important and avoiding spending on what is not.
Frugal is not being merely cheap or miserly like Ebenezer Scrooge. See my post on Money Lessons I Learned from Scrooge McDuck. It is about saving money on things you do not really need.
Saving money allows you to put that money to work for you.
Imagine every dollar is a little soldier. What do soldiers do? They fight.
You have to fight for your money because everyone is trying to part it from you. Don’t let them.
Invest that money and each dollar (soldier) fights for you everyday 365/24/7. Even while you sleep.
FOCUS ON FRUGALITY
In this world, you’re on your own. Benjamin Franklin knew that. So, he set out to start a business in a field he knew. He was a printing apprentice and started a printing shop. He became an expert at that one thing and did it so well that people paid him for it.
He then reinvested the profits back into his business.
That is how he grew rich.
He knew to become wealthy, he had to ignore the charlatans or hype. He had to focus on himself and his spending habits.
And that is what you must do. Ignore the hype. Forget what everyone else says or thinks. Trust your gut.
FORGET THE FANCY SET OF WHEELS
You do not need a fancy car to make you happy. Ride a bike and get some exercise. Better yet, buy an inexpensive, older Chevy where the bumper looks like it will fall off any second.
Then people will be less likely to ask you for money, if they see you riding around in a clunker because they will think your broke, but it couldn’t be further from the truth.
It’s not that you do not like nice cars or can’t necessarily afford one. It’s that you choose not to spend your money on it. Sounds pretty good right?
And watch out for the hangers on. They tend to come around when your last name is followed by an M.D. or Esquire.
FORGET THE BIG HOUSE
You do not need a mansion to live in. You know what that does? It just causes you to spend more money to heat, cool, maintain, and furnish it.
You fill the home up with stuff. No one likes an empty corner. Every inch is piled high with stuff.
How is that stuff paid for? Usually with credit.
What happens if you need that money? For instance, homes need maintenance.
Do you know what the repair bill is for a roof on a mansion? Well, you don’t want to know. One thing we do know for sure is that it costs more than what you would spend on a smaller house.
What about PMI? Private mortgage insurance is what you must pay if you put down less than a 20% down payment. And folks, that money is on top of the insurance and a monthly mortgage payment. We aren’t talking chicken feed here. It can be hundreds of dollars per month!
What about property taxes? It can add hundreds or thousands to a monthly mortgage payment. That’s money that’s not working for you in the bank.
You want to be investment rich, not house poor.
Every dollar that goes toward the house, can’t be working for you in an investment account.
I know they say the value of the home will go up and your equity will increase as you are making the house payments. However, let’s not forget the 2008 housing bubble.
When that bubble burst, so did most folks equity. Foreclosure notices were going out in the mail all over the country. Many lost homes. And many have still not recovered.
FORGET THE DESIGNER CLOTHES
You know those people who say dress to impress. Well, that’s fine and dandy, if you can afford it. However, if you can’t swing it, then walk by the $400 clothing rack and head to the sales rack in the back. Forget sartorial superiority. Who wants to be the best-dressed poor person?
I now see more people walking around with designer purses today than I have seen at any other time I can remember. Who’s paying for it? Mr. credit card, that’s who.
I see people opening up store cards all the time.
They have so many different color credit cards in their wallet it looks like a skittles bag exploded.
Places are handing out applications for credit cards every, single day.
You must resist. Resist the urge to spend. Credit is seductive. The temptation is too great.
So you must decide, what is more important. Buying a designer’s clothing and paying for their summer home or funding your own future.
FORGET THE EXPENSIVE WATCHES AND JEWELRY
I read about an NBA player who had bought dozens of watches. And not just any watches, but Rolexes!
Just because. Well, hey, you know bosses got to be on time.
Do you know what those things retail for? Well, last time I checked, it could be anywhere from $2500 to $40,000 and up.
The guy could have started a college fund. He could have funded an entire small city of kids $1k college scholarships.
Who needs 30 watches? Someone who wants to know the exact moment they went bankrupt I guess.
FORGET THE EXOTIC VACATIONS
So you want to travel. That’s great. But unless you can afford it or do it on someone else’s dime (like for work).
You may just have to watch the latest episodes of House Hunter or any show on the travel channel.
I once read it is a great thing to go travel and see the world as it is a great education, it will only cost you: $25,000.
I think I’ll just read a good book on world travels instead and invest that money until it earns enough interest that I can pay for the trip with cash.
Here are some of my suggestions on traveling when your travel budget is on life support.
You want to see the northern lights in Iceland? See it on a YouTube video.
You want to go skiing in Switzerland, Aspen, France or Vail? Watch a travel show until you can afford it.
You want shopping sprees in Milan, Paris, Rome, New York’s Fifth Ave, or Rodeo Drive? Focus on buying things that will appreciate in value. Clothes, once purchased, is money that’s burnt.
I know you watch the television shows and see all the families going to Disneyland or Hawaii. However, what they don’t tell you is how much it costs to go to these places. Lots of times the studio or the network is picking up the tab.
They do it for ratings. Because who wants to watch a show about people sitting on couches all day. They want to see the lifestyles of the rich not the broke and unknown. I say just stop watching those shows.
Focus your attention on earning and working. If your head is down working, you never can look up and notice what everyone else around you are doing.
FORGET FOMO (fear of missing out). It’s a myth.
I know plenty of people that go out, spend money, buy nice cars, big homes, fly to the islands, and go to lots of parties.
However, they are not the boss. They work a 9-to-5 just like everybody else. One missed check could cause havoc on their already precarious finances.
Many people are one paycheck away from being on the sidewalk.
Don’t be like them.
Practice the 13 virtues. Be frugal. Then you can live like no one else because you will actually be rich instead of acting like you are.
FORGET PRETENDING TO HAVE MONEY
Forget pretending to be rich. The only time bluffing works when it comes to money is at the poker table.
And you know what happens when the hand is over, the bluffing stops there.
So leave the bluffing at the table and check it at the door.
Remember that scene in the comedy movie Back to School with Rodney Dangerfield. He was a wealthy guy named Thornton Melon, but always said to his son: A man without an education is nothing.
There was one scene in the film where he was talking in class about being in business and all the things a businessman is doing to make it in the real-world.
The teacher disagrees with his assessment, even though he was coming from a place of information.
When the professor asks where to build the business after scolding Melon he replies, “How about fantasyland.”
When it comes to your money you cannot afford to live in a fantasy. You have to keep your feet planted firmly on the ground and your actions based in reality.
Earn money, save it, invest it, and get rich slow.
“Think of giving not as a duty but as a privilege.” John D. Rockefeller
“I believe that it is my duty to make money and use it for the benefit of my neighbors. This is what my conscience tells me.” John D. Rockefeller
“No one is useless in this world who lightens the burdens of another.” Charles Dickens
Every now and then I read stories that just lifts my heart. Recently there have been articles of heroes saving lives and people donating to charitable causes close to their heart. It reminded me of a story I heard about many years ago, but is still very inspiring today.
This article was reported on the front page of the New York Times in 1995:
She may be gone, but her act of charity is remembered. This tweet is from 2017. Ms. McCarty passed away in 1999. Therefore, the good you do is still remembered long after you are gone.
Oseola McCarty, a Washerwoman Who Gave All She Had to Help Others, Dies at 91 https://t.co/M8tYhMnUaw
Her name was Oseola McCarty. And here is her story.
MEET OSEOLA MCCARTY
Oseola McCarty was born on March 7, 1908 in Mississippi. As a young child, she had to quit school in order to tend to a sick family member. Quitting school in the sixth grade, she went straight to work as a laundress like her grandmother before her. She would go on to do this for about 75 years. Leaving school was one of her biggest regrets. She wanted to go back, but all the kids in her class had moved on ahead and so she didn’t go back because she wanted to be with her class. She decided to just keep working.
HOW SHE SAVED $150,000
She was never idle. She was working since she was a young child until she retired in 1994. She worked for many years and just put almost every dollar she made into the bank. She learned to save from her mother and kept the habit for life.
The following is what she did over 70 years:
She took one short vacation to Niagara Falls
She did not travel
She did not fly on planes
She did not stay in hotels
She never owned a car (she walked everywhere)
All her immediate family passed away and she never married or had children
She had lived alone since 1967
She lived in a family home her uncle gave her in 1947 for the rest of her life
Money she received from the passing of her mother and aunt went into savings
She spent almost nothing and lived very frugally
Repaired instead of replaced items for brand new ones
Covered her old bible in Scotch tape to keep Corinthians from falling out
Cut wholes in her shoes if they did not fit
Bought her first air-conditioner in 1992 and only uses it when company comes over
Owns one tiny black and white television (that only gets one channel) but she rarely watches
She did not retire until she was around 85 years old
Keeps her utility bills low
Never subscribed to a newspaper because it cost too much (an extravagance)
She would pay her bills and deposit the rest of her money (even coins) into savings
Over time this grew into $280,000
How she donated her life savings
One day she decided she would gift her money to a local university. Not as a bequest, but immediately as she wanted to be alive to see a recipient graduate from college as he one wish. In July 1995, she would go on to start a scholarship fund to help finance college tuition for students, preferably of African-American descent, who would be unable to attend college due to financial hardship. at the University of Mississippi. When asked why she chose that school, she simply said, because it was close.
A banker at one of her financial institutions assisted her. In 1995, he wanted to help an 87-year-old Ms. McCarty, but was unsure how to assist a woman with a fifth-grade education through estate planning. He came up with the novel idea of giving her 10 dimes, each representing 10 percent of her assets. He gave her five slips of paper to write down the names of the beneficiaries and divide up the coins. She deposited one dime to her church, one for each of her cousins and the last six for a scholarship fund, after setting aside enough money to live on.
She signed an irrevocable living trust and the bank managed her funds while she received a regular check for her living expenses.
WHY SHE DONATED
She decided to give because she knew the importance of education. She had struggled all her life doing manual labor (scrubbing laundry by hand on a scrub board). She did not want that for the younger generation coming up so she gifted them money to help them not have to do what she did and get a degree she was never able to get herself.
Oseola McCarty (1908-1999), an 88 yr old woman set up a $100k scholarship fund on an income of $10 an hr washing clothes.
The news hit the media and overnight she went from obscurity to a celebrity. She wanted no monuments or other recognition’s of her selflessness, but they came to her.
Once word spread of what she had done, it spread far and fast. Accolades and recognition for her act of charity in anticipation of her death was almost immediate. Goodness and kindness tend to spread. There was a chain reaction to her charitable action that had people wanting to reciprocate what she had done by also donating. This is what happened over four years:
She was honored by the United Nations
She received more than 300 awards
Contributions poured in from other donations adding almost $330,000 to her gift
Ted Turner donated a billion dollars to charity after hearing her act of philanthropy
She received the Presidential Citizen’s Medal, the nation’s second-highest civilian award
She received an honorary doctorate from Harvard University
She carried the Olympic torch through part of Mississippi in 1996
In December 1996, hers was the hand on the switch that dropped the ball in Times Square in New York’s New Year’s Eve celebration (also the first time she stayed up past midnight, rode an airplane, and stayed in a hotel)
McCarty received the Award for Greatest Public Service Benefiting the Disadvantaged, an award given out annually by Jefferson Awards
She was awarded an honorary degree from USM, the first such degree awarded by the university in 1998
McCarty was also recognized with an Essence Award and Patti LaBelle sang tribute to her during the ceremony at Madison Square Garden in New York.
Ms. McCarty gave out pearls of wisdom, if people wanted to listen, but mostly it was common decency and sense she had said. She also said you should know the difference between a need and a want. Just because something is free does not mean you need it. It is okay to turn down something that is free, if you really do not need it. ”There’s a lot of talk about self-esteem these days,” she once said. ”It seems pretty basic to me. If you want to feel proud of yourself, you’ve got to do things you can be proud of. Feelings follow actions.”
It was reported that her home will be turned into a museum.
When asked what she wanted to do with her money right before she donated it, Ms. McCarty replied: “I want to help some child go to college.”
And just in case you were wondering, the recipient of the very first Oseola McCarty award not only met Ms. McCarty in person to say thank you, but she also went to the University of Mississippi and graduated. Ms. Oseola McCarty also lived long enough to get her wish: to live to see a recipient graduate.
You read that number right. That’s access to a quarter of a million in emergency funding. Here’s how.
An emergency fund is just money that is sitting around until something happens. It’s a just in case fund.
However, you can have funds outside of your own by using other people’s money (OPM). Then your own funds are not under lock and key.
Instead your money can be used to pay off debt (i.e., mortgage, credit cards, student loans, auto loans). Or better yet, your money can be invested to earn compound interest over time.
If you invest $368 a month at an 8% rate of return, over a 35-year career this could net you $1 million for retirement.
You can use a Home Equity Line of Credit (HELOC) and credit cards as your emergency fund.
I am not saying not to have cash ever or that this will entirely replace cash. A HELOC and credit cards are just added options on top of your cash.
Credit cards are self-explanatory. They are revolving accounts where you pay back what you owe, but as long as you have available credit then you can still keep spending. HELOC’s are another story.
How a HELOC works is similar, but with higher limits. Say you have a $400,000 home with a balance of $150,000 on your first mortgage and your lender is allowing you to access up to 95% of your home’s equity: $400,000 x 95% = $380,000. $380,000 – $150,000 = $230,000, your maximum line of credit limit.
What makes a HELOC different is that it allows you to borrow against your home equity, where your credit limit is based on how much equity you have in your home.
The HELOC is also not considered by the FICO score, this is in stark contrast from a credit card. The credit bureaus do consider how much you owe versus what’s available on your credit cards in factoring your credit score.
Basically, the biggest differences between a credit card and a HELOC is the underwriting standards, collateral, refinancing options, interest rates and tax deductions.
With a HELOC, you must document your income and employment. However, with a credit card, you need only provide the information.
In addition, a credit card is different because it is unsecured. Whereas, with a home, your HELOC is secured by your home equity and if you do not repay it, then your home can be foreclosed.
You can also refinance higher rate debt with the HELOC better than you could a credit card because the interest rates are lower on the HELOC because it is secured with your property. Meaning you are highly motivated to repay this debt back.
Lastly, the interest you pay on a credit card is gone with the wind. HELOC’s allow you to deduct the amount of interest you pay on your taxes. Therefore, if you pay 4.49% in interest that is tax-deductible versus 15.99% or more on a credit card that isn’t deductible, you see why a HELOC is so attractive.
Why not have access to these funds? Then, if your car breaks down, you chip a tooth, and your furnace goes out all in the same week, your covered. Oh, it can happen.
You can also have various funds that can make up your emergency money that you can pool together. For instance, a combination of $5,000 cash, $65,000 HELOC, and $30,000 credit card limits still equal $100,000 in access to funds in case of an emergency.
Funds Access
Credit Limit
Borrowed Funds
Access
Interest Rate
HELOC
$230,000.00
$ –
Instant
4.49%
Credit Card
$20,000.00
$ –
Instant
6.99%
Total
$250,000.00
$ –
Bottom-line: You can have access to hundreds of thousands of dollars without using a drop if your own money. You just have to have the means, discipline, good credit score, and high enough credit limits to have this as a plan to access credit for use in emergencies.
“A budget is telling your money where to go instead of wondering where it went.” ― Dave Ramsey
Most people out there have probably heard of the saying “champagne taste on a beer budget,” and that is exactly the kind of behavior I have been seeing more and more of lately.
It is not that I have a problem with nice things.
Quite the opposite.
In fact, I like to buy high quality and first-class items. This can include anything from airline tickets to a nice vacation. However, you have to be able to afford it.
You must therefore follow this advice: “Act your wage.” ― Dave Ramsey
Therefore, if you can only afford Bud Light instead of Rosé, then go for the beer.
If you are familiar with the Suze Orman show, she had a segment called “Can you afford it?”
Basically, people would call in and ask if they could afford to buy whatever item was the hot new thing that year.
Suze Orman would require certain criteria like a six plus month emergency fund, a job, income, and a realistic way to pay for the item either outright or over a reasonable period of time.
It was very engaging. By far, the most popular part of the show.
Let’s see if this post can bring back some of those feelings tonight.
If you can’t afford champagne, then it is perfectly acceptable to buy sparkling wine. Just make sure when you pay for it, that you use cash and not plastic or it will not matter how much you think you are saving, if you are paying interest on it. Then beer can turn into the price of champagne.
Interest over time makes any purchase more expensive.
For example, buying a pair of jeans that cost $50 on plastic at a 25% interest rate could turn into a $500 pair if you pay the minimum payment over 5 years. That wasn’t on the price tag!
It seems that if you pay cash you are protected against this type of price inflation. Especially, if you get a 0% deal (teaser rate) and then do not pay it off and are charged interest retroactively from the date of purchase.
So, be very wary when it comes to credit cards. They will give one to anybody with a pulse.
In Elizabeth Warren’s books, The Two-Income Trap and All Your Worth, she discusses how even with two-income earners Americans are still struggling with debt, filing for bankruptcy in record numbers, and still unable to afford housing and higher education for their families.
In the book Maxed Out, author James Scurlock talks about how having access to easy credit at young ages (college kids) is ruining people’s financial future before it even begins.
Starting out in a hole due to student loans and credit card debt means playing a constant game of catch up and struggling to get by.
Curtailing spending and only buying what you need and can afford are the only ways to stop this phenomenon of being maxed out.
Therefore, we budget.
However, “A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” – William Feather.
Below I will provide some fictitious examples of how it all goes down similar to the show.
So, let’s go back to the infamous Suze Orman question of “Can you afford it?”
What do you want to buy?
So, let’s say I get some tweets from followers asking if they should make a purchase. Let’s go.
Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?
FOLLOWER: I would like to purchase a brand new Lexus RC 300 priced at $43,305. My birthday is coming up and I have never had a new car only used. Growing up, my parents said buy new. Why inherit someone else’s problems? I have always wanted one.
GBM: Ok. Show me the money.
FOLLOWER: I have $15,000 in savings, no credit card debt, $10,000 in student loans, no mortgage, no auto or personal loans and $55,000 in my retirement accounts. My after-tax income is $4,150 monthly. My expenses are $3,300 per month.
GBM Email reply: It’s great that your expenses are lower than your income by $850 so that you are able to save, but you could knock out the student loans and then have no debt. You have a 4 month emergency fund. I prefer to see 9 months ($29,700) as that is how long it takes the average person to find a new job (including me). Check out out my post How to build an emergency fund.
A car at that price of $43,305 will cost $676 per month at a 3.9% interest rate over six years. That will bring your monthly expenses up to $3,976 and decrease your net saving from a respectable $850 to $174. That is too close to the financial edge.
I want you to start putting more money toward retirement such as $200 more per month or whatever gets you to 20%. A car is not going to feed or house you it will only get you from Point A to B. You should also consider setting aside enough for a 20% down payment on a home as I know you are not going to want to rent forever.
Setting aside 4% of the purchase price of a home for 5 years will net you the 20% down payment. If you can beef up the 401k by $200 per month, pay off the $10,000 in student loans, start setting aside 4% for a home down payment, and get a 9 month emergency fund then you can get your car, but not before. Until then, keep taking Lyft.
Next follower. Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?
FOLLOWER: I would like to buy a Sony PlayStation 4 at $300. I am 20 years old and currently a college student, but I am working part-time. I have a game system, but the PS4 has more of the games I want to play and is cheaper than a new Xbox One X.
GBM: Ok. Show me the money.
FOLLOWER: I have $1,200 in savings, no student loans as I go to college online which is cheaper than traditional and stay at home, no credit cards, no 401(k) and a car note of $150 per month. My after-tax income is $600 monthly and my expenses are $350 per month.
GBM tweet: It’s awesome that your expenses are lower than your income by $250 so that you are able to save, always a plus, but I would like to see you open a Roth IRA. You are so young that this money could compound for like 40 years! Your future self will thank you.
GBM 2nd tweet: You can contribute $50 per month just to start in a Roth IRA. I do prefer to see a 9 month rainy day savings ($3,150). Since you have so few expenses, and live at home with virtually no debt other than a car note you could simply take the money from savings. Have fun!
Next follower. Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?
FOLLOWER: My name is Lucy and I am 13 years old. I would like to buy an Apple watch for $219. I like it because it’s so cool and fun. A lot of my friends have it and I want one of my own.
GBM: Ok. Show me the money.
FOLLOWER: I have no debt. I have savings of $5oo from birthday money and saving my allowance. I get an allowance of $80 a month. I have no expenses.
GBM: Well, it is nice to see you saving. You could just take the money from savings as you have no expenses. I just want you to continue the habit of saving. You can afford it.
Less stress with a budget
You can see from the examples above that saving makes all the difference.
The more control you have over your money; the more control you have over your life.
Hope you enjoyed this walk down memory lane with me.
Now remember this: People first, then money, then things – Suze Orman
My motto is this: Always remember that cash is the best option. Cash is king. – Miriam Joy, author of financial freedom blog Greenbacks Magnet
“A penny saved is a penny earned.” – Benjamin Franklin
Car mania is in the water.
It feels like every time I turn around someone is buying not a used car, but a brand spanking new car.
What happened to the days when people bought a beater and made due until they could afford a nice ride. As we know, it’s not the ride, it’s the rider.
Owning an expensive car on an unrealistic salary is starting to become the norm. At least it is where I live.
I live near the nation’s capital: Washington DC.
When the spring comes, I can almost set my watch to the time when someone is going to say I just bought a new BMW.
Now a BMW is an impressive machine, but it comes at a price. A hefty price tag, that can be more than some folks make in a year.
The average American income is reportedly around $50,000. However, many folks are spending a huge chunk of their income to finance a car that can’t take them back in time or to the future when the speedometer hits 88 mph, fly, self-clean, or self-drive itself.
Nope. None of that. However, people are spending upwards of 50% of their income on their ride.
Well, they better be prepared to live in it should something go horribly wrong. That percentage is way too high!
I have read that 50% of your income should go toward all your living expenses. This includes housing, utilities, and transportation. People are actually spending this amount on one item!
And a car of all things is one of the worst wastes of money you can possibly have.
Let’s do the math. (I used an online calculator)
Summary
Vehicle Price$50,000
Tax, Title & Fees (est.) $3,400
APR3.50%
Term Length72 MOS
Down Payment$2,500
Monthly Payment$785
So, for a $50,000 vehicle, even if you factor in the interest rate, fees, and down payment, then you are still paying an incredibly high car note at $785 per month.
Edmunds.com says the average car payment is a whopping $479 a month! You haven’t eaten, taken grandma out to bingo, or even put gas in your tank.
If you just save that amount instead, you will have $56,520 in the bank. That’s no joke.
You could start a business or put a down payment down on a home.
It makes no sense to pay this type of money for a car when you really can’t afford it.
What if you needed that money for medical expenses, a new roof, or dental work? Worst yet, what if you lose your job? Dealerships are not exactly known for working out long term refinancing options.
Even if you can agree to new repayment terms, if you miss a payment, they can repossess the car.
Here’s some food for thought: If you pay on your vehicle for 71 of the 72 required months, then are unable to pay the last payment, they can still repossess the car.
Stop making payments for a few months or more and this is a very real possibility.
That means you would have paid well over $50,000 including interest and they can still take the car because you do not own it.
Same rules apply with a home. Until you pay it off the bank owes it. If you pay on the home for 29 years, then can’t make the last year of payments, they can take your home. Pretty scary stuff.
Therefore, it makes no sense to have high fixed expenses like buying a $50,000 car on a $25,000 salary with a fixed payment of $785 a month.
Instead, go for a more affordable car and home. A car note should be around 8% of your income not 50% and should be for no more than three to four years. For a home, you should try to keep the mortgage payment to less than 30% of your income and go for a 15 year mortgage instead of 30 years.
If those tasks sound daunting, then it probably means you cannot afford to buy that $50,000 car or $500,000 home.
If you are approved for those amounts, then deduct 25% from these amounts to make the purchase more affordable so there are no signs of struggling to pay the bills when they come due.
For instance, 25% of $50,000 equals $12,500. Deduct that from $50,000 and that means you would purchase a car for $37,500 instead.
You can do this for any purchase. Find what you want. Get the price. See if you can get it for 25% less.
If so, you could save yourself thousands of dollars a year.
They say you miss 100% of every shot you don’t take. We’ll guess what, let’s flip this saying and instead of doing more you just do less when it comes to spending money and you do the opposite and save.
Then, instead the saying would go like this: You get to keep 100% of every penny you don’t spend.
“No man is poor who can do what he likes to do once in a while.” -“Uncle” Scrooge McDuck
I am a huge Disney fan and one of my favorite characters is Scrooge McDuck. He was a Scottish Pekin duck that lived in a huge mansion in a city named Duckburg and had a money bin the size of a skyscraper. For those of you not familiar with this cartoon character I will give some background information.
Scrooge McDuck was created in the 1940’s by Carl Barks for the Walt Disney Company. He was modeled after Ebenezer Scrooge, the main character in Charles Dickens’ 1843 classic, “A Christmas Carol.” Like Ebenezer, McDuck is a tightwad and whose miserly behavior made him a fortune through frugality and hard work. In addition, he has strong similarities to the wealthy American industrialist Andrew Carnegie, who was also a Scottish immigrant, that made his fortune through work and ingenuity. Scrooge also shows similar traits of John D. Rockefeller.
Rockefeller was at one point the world’s richest man and first ever American billionaire. Considering he was a billionaire in the early 1900’s he is still considered as the richest person in modern history. When a reporter asked him, “How much money is enough?” He responded, “Just a little bit more.”
Scrooge’s penny-pinching ways are a constant theme throughout his life, but his belief in thrift, square business dealings through honesty and ingenuity are the reasons for his success. He is often criticized for being tight-fisted and cheap, but admired for his values and work ethic. Even though he is immensely wealthy, he does not shy away from an opportunity, no matter how arduous, to earn more. He often laments that the young want to start in at the top instead of working up from the bottom like he did. The lessons Scrooge teaches his nephews Huey, Dewey, and Louie in the series are always to be smart, have morals, values, good work ethic and to play totally aboveboard meaning fair and square. A short biography is provided below.
Bio
Name: Scrooge McDuck
Birth year: 1867
Nationality: Scottish
Gender: Male
Nickname: Uncle Scrooge
Occupation: Entrepreneur and Business Magnate “Adventure Capitalist”
Education: Informal (school of hard knocks)
Known for: Swimming in his money bin
Amount of wealth: unknown but estimated in the billions
Hobbies: Treasure hunter and adventurer
Relatives: Donald Duck (nephew) Huey, Dewey, and Louie (grandnephews)
Life Lessons from Uncle Scrooge
Humble beginnings. Scrooge truly started from the bottom. He was not born into wealth and started without a dime. He was born to poor farmers and started working as a young boy to earn money. A true Dickensian existence he lived, as he and his family were poor. Regardless, no matter how poor you are, you still have worth. Therefore, know your worth and do not accept anything less. Remember this: “I believe that virtue shows quite as well in rags and patches as she does in purple and fine linen. – Charles Dickens. His first job was as a shoeshine boy in Scotland. This is where he earned his first dime, which he never spent, but would save as a reminder of the importance of hard work. This is the start of his thriftiness and the secret of his wealth.
Scrooge also worked as a cabin boy on a ship to America. He left Glasgow, Scotland as he decided he would be able to make his fortune in America and was inspired to do so after earning his first dime, which was an American coin. He learned from a young age that life is full of tough jobs, but he wasn’t afraid to get his hands dirty. He prospected for gold in the Klondike and that is how he made his first million. His past is not so rosy as not all of his business dealings are done legally, but he learns from these experiences and changes his ways to only doing business fairly.
Education. School of hard knocks. McDuck had no formal education because he went to work at an early age, but became a self-taught and lifelong learner by reading. His extensive travels and business dealings to seek out opportunities allowed him to learn numerous languages where he is able to cut out the middleman as he states he has outsmarted the smarties. There is no one job or niche that secured his wealth. He would go on to diversify his mining money into as many opportunities and investments that he could use to grow his money.
He teaches his nephews the principles of economics, including the history of money, and inflation. Scrooge always does his due diligence and researches any investment before investing because knowledge, discipline, and understanding are the foundation to building a profitable wealth portfolio. Note this witty adage: Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway. – Warren Buffett
Invest in yourself. Scrooge knew that investing in a good education pays the best dividends. He became an avid reader and linguist. This allowed him to do business with people all over the world. Thus, increasing his fortune as there is plenty of money to be made internationally. Scrooge would often say that “knowledge is power.” Due to his research in looking for investment opportunities he built a huge personal library. The secret of wealth is not complicated, but it does require you learn how money works by becoming financially literate. Therefore, your home should look like a Barnes & Noble if you want to build and keep a fortune.
Work ethic. Scrooge believes in hard work and not being a spendthrift are the first steps toward success, he understands that real success comes in working smarter and not harder. Generating multiple streams of passive income, such as ownership of a business or other enterprises are the keys to building lasting wealth. Staying away from get rich quick schemes and knowing that time is your ally not your enemy.
Investments. Scrooge McDuck was shrewd and close-fisted when it came to spending money, but was big on saving. He preferred to have his money work as hard for him as he worked for it through investing in a diversified portfolio of holdings such as art, gold, diamonds, farms, newspapers, rubber, real estate, and other assets. Buy assets that go up in value. Cars and clothes do not. However, rare coins, stamps, books, and art do. He believes in “trickle back economics” in where he gets a piece of the profit from every investment he makes such as from customers buying products from a company he invests in or owns. He limits and cut costs to the bone and only spent when ready or necessary and always would seek to gain a profit.
Inflation. Scrooge teaches his nephews about inflation in the animated short entitled Scrooge McDuck and Money (1967). Basically, as the price of good and services rise the value of currency falls. Meaning that the money in the bank today will be worth less tomorrow. He wanted to teach his nephews that without something solid and secure behind the money, then you get inflation where money becomes worth less and less. A dollar would not be worth the paper it’s printed on. He says “it’s what you can buy with what you have got that counts.”
From worker to owner. Scrooge was bright and not afraid of hard work. He listened to the sound advice of his father and decided he would work smarter not harder. It took him mere months to save enough money to go to overseas to America instead of years through his ingenuity. Businessman was his goal through ownership of numerous commodities. Put money to work for you. Money does not sleep. He even owed the very banks that housed his money! The money is in ownership. He had a simple business motto: Keep it simple so he could run the business himself.
Find your passion. Scrooge always did what he enjoyed which was earning a living and gaining vast sums of money through investing and treasure seeking. Passion means you go the extra mile and continue working even after the clock strikes five. You don’t need vacations or breaks when you’re having fun and doing what you love. When it starts being more work than fun, it’s time do something else.
Treasure hunter. Scrooge likes a challenge. When he learned about the value of artifacts he started to seek out treasures from all over the globe. He works well under pressure and in tight situations that arise from these excursions as he knows pressure makes diamonds; not only in jewelry, but in character.
The infamous Money Bin. Scrooge used to keep his money under his mattress, but when it got too high he decided to build a money bin to keep it more safe and secure, which is why we use banks. It was a three-cubic-acre building and the vault housed the very first coin he ever made called his Number One Dime. He placed it placed on a velvet pillow in glass enclosed case. The Dime’s origins are described in the story called Getting That Heathy, Wealthy Feeling (1964). The bin housed only some of his money that he earned by himself from his personal dealings as he is once heard telling his nephews that the money stored here is “petty cash.” He would often swim in it. It was constantly under attack from his enemies, but he always thwarted them in the end.
Emergency Fund. Scrooge knew that, if something can go wrong it will. He believed in keeping savings and liquid assets just in case. At one point, he hid assets as startup capital should he ever need to start over.
Morality. Scrooge is aggressive when it comes to life and his pursuits, but exhibits strong amounts of self-control. He also has a temper just like his maternal nephew Donald Duck. He does not however use lethal force as he does not want to deal with feelings of guilt, anger, or despair. When helping others, he does not wait or request a thank you. He simply does what he is going to do. He does not believe in burning bridges, but understands that an enemy can be made and is not to be underestimated. He has said that only in fairy tales do bad people turn good, and that he is too old for them and old enough to not believe in fairy tales. “You have enemies? Good. That means you’ve stood up for something, sometime in your life.” – Winston Churchill
He does not believe in cheating and dishonesty as those traits are not prosperous. He also believes in keeping his promises once his word is given. He has once said “Scrooge McDuck’s word is as good as gold.” He practiced what he preached: thrift and integrity. He constantly preached budgeting and being square. If you live your life like you are being followed around all day by a reporter, and everything is on the record, then you may do things differently. Scrooge also believes in the golden rule: treat others as you would want to be treated.
Attitude. Scrooge is very optimistic. There is always another rainbow. Plenty to go around. More than enough for all. The glass is always half-full. Opportunities are always just around the corner.
Resilience. Scrooge is never one to walk away from a challenge or money making opportunity. Regardless of how difficult the terrain or objective may be, Scrooge McDuck can grind it out with the best of them. He has also shown great physical fitness through beating bigger characters, swimming, running and the like. Meaning he still continues to exercise and maintain a stamina that allows him to be mobile and agile well into older age. He has learned to quickly adapt to his surroundings and thrive in any environment and come out on top. He credits his success, which is due to his determination, grit, and will power, on the fact that he is “tougher than the toughies and smarter than the smarties.” Do not give up so easily. When times get tough, get tougher. Work harder, but also smarter.
Persistence. Scrooge is generous and kind in his older years to his nephews, but in his younger days the slaps of life hardened his character. Failure is not an option. He has learned to endure the difficulties of life with a tough exterior and personality to match. Do not be too soft or you will be taken advantage of by others. A great quote by Churchill: “If you’re going through hell, keep going.”
Charity. When Scrooge left for America his mother asked him to write to them and he promised his mother that he would send money home. There are times when he has donated to the poor or given money to the Salvation Army as well as gifting those who have helped him and have less than him. One of the best lessons in life is that you can help others including family. In life, you can’t get something for nothing. You have to give to get.
Family. Although Scrooge has no family of his own, he does have his nephew Donald and his great-nephews Huey, Dewey, and Louie. These are his greatest and most prized possessions: his kin. In one episode of the animated television show Ducktales (1987), episode twenty-two entitled Down and Out in Duckburg which aired on October 13, 1987, the family ends up in the poorhouse. They decide to stick together in the tough times even as people mock and mistreat them. They all even end up washing dishes together to eke out a living. In the end, they stick together as a family, tough it out and regain his fortune. The lesson here is to not ever take for granted or underestimate the importance of family.
Value of money. Scrooge always knew the value of a dollar. He would teach his nephews this through his actions and his words. He was a skinflint who only parted with money when absolutely necessary.
In another episode of the show, the boys asked for a raise in their allowance. Their Uncle Scrooge denies their request as he told them if he raised their allowance they would “grow up to have no respect for money, learn to live a wasteful life and end up out in the street begging for a few measly coins.” If the government just creates money, it loses its value. If everybody had lots of money, prices would go up, and then everyone has to have more money which leads to chaos.
This episode entitled “Dough Ray Me” aired on November 3, 1989 and was the 82nd episode of the series. The boys are able to duplicate money and the self-duplicating coins spread through Duckburg. The town is drowned “funny money” and buried in a “cash avalanche” causing sky high inflation. The episode provides a very funny narrative through its series of events that show how inflation works.
The most notable theme is that money’s only value lies in how hard it is to obtain; “easy or funny money” loses value and leads to inflation. In this story, the boys learn a life lesson in everything that glitters is not gold. There is a price to be paid for everything and the bill always comes due. For example, future inflation grows to gargantuan proportions and money becomes worthless in this episode.
During the “cash avalanche” a newspaper is selling for “only” $200.
A lollipop costs a little girl $5,000; she hauls up a wagon full of money, saying in that case, she’ll take two.
A bus fare costs one poor guy an astounding $10,000 in exact change, which he heaves aboard in a huge sack.
At the dentist’s office, one man is told fillings for his two cavities will cost $40,000 per filling for a total of $80,000. He remarks by saying “Well, at least some prices haven’t gone up…”
Even the nephews complain at one point that it will cost them $30 just to use a gumball machine.
Money is so abundant that the Beagle Boys (series villains) try to rob a bank that has now become a money landfill to the cheers and applause of the bank employees.
In a twist of fate, the “funny money” implodes and everything goes back to normal proving that you really cannot make or get something for nothing and the coins are essentially worthless.
Many revelations are shown throughout the episode. For instance, even the show’s villains think the townspeople are acting unusual and overly generous. The triplets realize spending all their money on the first day of summer was unwise. They start to gain a respect for money in understanding that you need to know more than the price of everything or you will know the value of nothing. Like the Marshmallow experiment or test, that it is often called, of 40 years ago done at Stanford, the boys learn patience is a virtue and delayed gratification and self-control are important characteristics to have in life if one is to be successful.
Profit even in bad times. Profit also can come from unexpected events and misfortune. In one of the comics, a classic tale published in 1951 called “A Financial Fable,” where all of Scrooge’s money is lost in a cyclone blasting all the money to citizens in town is a great example. One day his money bin just explodes and all of his wealth ended up in the hands of the townspeople of Duckburg. He lost all his possessions and wealth, but looked for a way to make it all back. Instead of getting angry or wallowing in despair, Scrooge kept his head down and worked by growing crops on a farm he owned outside the town.
The newly minted rich townspeople stopped working to enjoy their new money and the trappings that go along with wealth. They did not believe in saving for the future, spending wisely, investing or delayed gratification. They spent with reckless and wild abandon. Scrooge’s crops just so happened to reach harvest exactly when the town was running out of food and, since the other farmers had quit growing crops, Scrooge had an effective monopoly on a vital good of commodities. He sold eggs for the price of one million dollars! Of course, Scrooge quickly recouped his fortune from selling his crops to the town at the sky-high prices (millions of dollars) that he was able to set due to the lack of competition. He was able to name his price for his goods and he made them high. This is how fortunes are made.
A monopoly. Like the game with the guy in the top hat, monopoly is all about collecting the most properties, cash, utilities and other holdings to win. A monopoly is a business or industry that is dominated by one corporation, firm or entity. Basically, you cannot buy products or services from virtually anywhere else other than this one place. Monopolies are the extreme result of capitalism. Without any restraints, and absent any regulations, the enterprise becomes so big that it owns all or nearly all of the market (assets, commodities, and supplies).
Anti-Trust laws. Laws were put in place to stop this practice of being a monopoly to ensure the marketplace stays open and competitive. This started in 1890 with the Sherman Anti-Trust Act that was used to break up John D. Rockefeller’s Standard Oil company. Monopolies are illegal because businesses can become discriminate and hurt the public because customers will be at the businesses mercy. Although Scrooge is the richest duck in the world, he believes in healthy competition and obeying the law.
Budgets and Bargain hunting. Scrooge finds deals galore, sticks to a strict budget, and likes anything for free or at a discount. He even teaches economics and inflation to his nephews in how you must manage the household finances through budgeting which is financial discipline. He says proper budgeting should leave a profit. Then you invest the profit. Money should not be idle and should be put to work. He allows the boys to invest in his company and become shareholders to grow their own money into wealth. After consulting his nephews, he requests a small fee and tells them that good things are never free. Remember this: When your good at something never do it for free. – The Joker, DC Comics
In life you make mistakes, but the key is to learn from them. The key to building wealth is to stay out of debt and pay cash for large purchases like cars and appliance. Credit is no replacement for cash. Cash is king.
Bottom Line. Fictional characters can teach valuable lessons in life, such as morale character and finances. The only place that success comes before work is in the dictionary. Working, saving, and investing is the true path to wealth and success.
