The concept of using past experience or knowledge is the key to many situations in this life. I would say that past experience, whether that be from yourself or from someone else, is very important to becoming financially independent. However, I would like to note that I don’t mean using historical data to predict exact future data.
So let’s talk about lessons or more specifically financial lessons.
“The rich don’t work for money.” – When I read this I am thinking, “But how is that even possible?”. However, if you really start to use your noggin, you begin to realize that instead of the rich don’t work for money; they actually let money work for them. You see, when you go to your day job you are working for your money. You work 40 hours a week and you get a paycheck bi-weekly. The rich though, buy investments and then manage them. As there cashflow starts to stream in they reinvest them back into more assets (will talk more about that topic at a later date). So the main Idea here is to not work for your money but let your money work for you.
“Savers are losers.” – This seems to be the opposite of what I was taught that you work, get paid, pay bills, and try to save as much as possible. In this case saving to me ment putting in a savings account. While this perspective is sound, it also limits your possibilities for financial freedom greatly. After doing some research I have come to find that most “savings” accounts don’t off more than 1.5% interest per month. This is quite shocking and scary to think that most people just put their money away and leave it there until they retire; if they ever retire at that. It seems to me that saving is not the way to be financially independent.
“Your house is not an asset.” – I had a difficult time understanding this one as it seems that a house definitely is an asset. I used to believe that a house meant more money, not less. If you really think about it though – yes a house may acquire more equity but does it really give you a great margin after you take into account all the expenses? That’s where a house does not become an asset – expenses. House are a money pit worth of expenses. Whereas if you own the assets to pay for the expenses then you would be in a great spot.
I will stop here for now as I need to get back to my day job. Come back tomorrow for more!
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