Seven Cures for a Lean Purse Part 3

“The HOLE in our pocket/purse is usually larger than the money we are putting in – there is a cure for HEALING this HOLE – the medicine however, may hard to swallow and a bit bitter to the taste…” — Rick Cox

“But the result is worth the inconvenience of having to put up with the taste and taking the time to swallow…”

Rick Cox

Part 3

Learning the discipline of saving is only the first step in the process of curing a lean purse. This means you have begun to live with a new philosophical outlook on what to do with your money. Stated another way, you have set the trim & sail of your life or changed your paradigm if you will, which will now head you in the direction of building wealth. This however, will not get you all the way there. In order to get there you must:

Cure #3: Make YOUR money grow & multiply… The Richest Man in Babylon

Unfortunately, the growing of wealth often goes no further, at least with most people, than the first level. The reason for this is simple: people look at the fact they are saving ten percent of let’s say, twenty thousand, which would be two thousand dollars for the year. They then look at the fact it will take ten years to save enough to match their salary for one year and they get discouraged. Another ten years and they will have saved two full years of salary – whoopee doo! At this point the only ones who will continue to save will be those spend-thrifts that would have saved anyway, but the majority of these spend-thrifts will not be investing or planting their money in order for it to grow. They will keep it in a can, a drawer, a safe deposit box or even at the very lowest of interest bearing bank savings accounts, which by the way although is better than nothing, but not by much.

Most people make real money through the process of compound interest. They make this however at levels, which can and will make a difference to the bottom line. As an example, if you were to save five thousand dollars a year for thirty years having invested it at an interest rate of ten percent you would have just over one million dollars by the end of that period. That is only five thousand dollars per year! In many of you there is a voice screaming in your brain telling you that five thousand dollars is impossible to save in a one year period, BUT IT ISN’T IF YOU WANT THE END RESULT BAD ENOUGH! For instance, if you started at twenty years of age you could be a millionaire by age fifty. If you were to leave that money alone to grow until the age of sixty thereby, letting it earn for an additional ten years, the original amount of money, which would have been, $1,048,905.88, would then be, $2,925,495.08. Think of this. Just add ten more years and you have picked up an extra ‘EASY’ two million dollars. I think the additional ten years would be worth the wait.

As previously mentioned, I had two teachers in high school that sacrificed, saved and retired from teaching at the age of 42? Their money grew for them through the principle of compound interest. This wasn’t happening by putting their money in a can under the bed or in a low interest bearing account at the bank, but through other avenues. Their money was invested in real estate bringing a twofold return: the first was through the payments being made to them by those to whom they leased and rented; the second was through the increase of property values. Both of these avenues brought an increase to their money thus allowing them to retire.

What you DO NOT WANT TO DO IS LOAN MONEY TO FRIENDS OR ANYONE ELSE UNLESS AND UNTIL YOU HAVE IN PLACE ALL OF THE NECESSARY LEGAL DOCUMENTS TO BIND THEM AND THEIR FAMILIES TO PAYING THE DEBT OR UNLESS YOU ARE WILLING AND ABLE TO GIVE THEM THE MONEY SHOULD THEY NEVER PAY IT BACK. One of the biggest mistakes made by most is loaning money to family or friends for any reason, let alone to make money. If you are not set up to be in the banking business, do not loan money! If you do decide to go ahead and loan the money then know that ninety nine times out of one hundred it will be to your detriment as in almost every case YOU wind up being the bad person while the one borrowing was somehow done wrong?

My wife and I have loaned money to one person who has always paid us back with interest, my youngest brother. He has borrowed at times to do business deals, but always pays back on or before the due date and always with sufficient interest to more than cover what he borrowed. To date, he is the only one who has ever followed through with paying us back for monies borrowed and pay with interest.

My father in law use to say he made a deal with the bank not to go into banking if they didn’t go into his field of endeavor. He recognized he was not in the banking business therefore, he did not and would not loan money to anyone. He did however invest his money through ‘other professionals’ who were proficient in finding better than average returns for their investors. He researched eventually finding good soil for his money/seed to grow and he invested/planted. I often said it seemed as if money just came to him, and it certainly did. His money made money. His money was planted in good soil bringing forth more money, which he invested as well. Eventually, he had several generations of money working for him and each level making its own return.

What does this mean? Through discipline my father in law had developed a stream of income, and income my friend, is what it is all about. One can make a big lump sum of money however; the money will rapidly diminish if it is not soon replaced by more. This is no different than storing corn in your pantry for your own consumption. Every so often you will take out of your pantry another portion of corn to eat; BUT IF YOU ARE EATING ONLY, AND NOT REPLACING OR REPLANTING then before long what you had in store will be gone leaving you with no seed to eat and more importantly no seed to plant. A steady source of income is the key to success. This is done by having your money make money i.e., one hundred dollars will make ten dollars; ten will make a dollar and one dollar will make a dime etc.

The plight of most however, is like those who are taking corn out of their pantry. These would be the ones with the sticker on the back of their car, which says, “I owe, I owe, so off to work I go.” What is up with that? These people obviously do not see that they are the ones in control their own destiny. It is not the president, their senator, their congressman, their boss or the economy. They are responsible for what they make, where they work, what they do and how they feel about it. With the mentality of I owe, I owe, nothing much can happen, outside of owing someone rather than being out of debt. These people are in need of a serious paradigm shift in order to get them out of the debt mentality. This is a grave problem in our country today.

Where are you in the realm of money? Is your money making money for you or is your money sitting in a checking account waiting to be spent on that which will depreciate thereby, bringing no return? You will have to learn about money just like you had to learn about your job if you want to get ahead. You will have to learn what good soil is for your money. This might mean you will not have time to watch TV, or lay around over the weekend, or read another fiction novel, or hang out at the tavern or club with your friends, all of which provide no help in learning about money, how money works, or the cure for a lean purse.

Finally, hard as this might sound, making the sacrifice will be more than worth the effort down the road. Ten years from now you will be in a much better place than most of your friends who have not made the sacrifices. Twenty years from now, not that you would be looking for this, but you will be the envy of most. They however, will have continued down the same old path to ‘nowheresville’ and as time goes by this is exactly where they will stay while you are enjoying a life of paradise. The choice however, is up to YOU!

Best of LUCK as you
Labor Under Correct Knowledge…


Rick Cox