Wealth Preservation Wealth Creation

I began writing and publishing articles on the internet in 2007.  I remember writing that first article.  My home had flooded, drying fans were blaring in the background.  My dining room table had minimal water damage and had been moved the the area of my home I called my living room.  There was really no living going on there, but my bed had been moved to my dining area.  I began writing because there were so many things about which I was woefully ignorant.  Ignorant, but learning.  And learning, I wanted to share.

One of the first things I wanted to shout to the world was about the miracle of stainless steel water hoses.  A ruptured rubber washing machine hose dumped 300 gallons and four inches of water througout my home.

I also wanted to talk about gaining empowering financial knowledge, business sense and personal development.

Finally I wanted to talk about growth as a health care professional, the disappointments in and triumphs of medicine.

My Hub is a Personal Finance Hub.  The articles on the last topic will be few, but very personal

Philosophy is defined as the most general beliefs, concepts and attitudes of an individual or group.  A financial philosophy, therefore, is the development of general beliefs and attitudes as they relate to money and business transactions.

I began to think about this article months ago when it dawned upon me that I simply wasn’t getting the level of enjoyment out of my money that I ought to be. Each new purchase has become a cause of fear and anxiety rather than a cause of joy at having the resources to make the purchase.  I poured over consumer reports for months looking for the perfect purchase until I realized that I hadn’t had a salad in weeks, produce freezing without end in my old refrigerator. I picked up a copy of Rich Brother, Rich Sister by Robert and Barbara Kiyosaki thinking that the Buddhist teachings of Barbara Kiyosaki would inform my spiritual thoughts about money.  It didn’t.  I have watched affluent friends research purchases until the joy of the purchase has long passed and finally, today, I read an article on a widely-read financial blog, The Simple Dollar, about haggling.  The article was a about a reader who had proudly written in that they had haggled successfully at a dollar store!

I am reminded of Dr. Depek Chopra’s audio, Creating Affluence. To paraphrase:  If you are constantly thinking about money, spending it, how to get more of it, then regardless of the dollar amount in your bank account, you are really poor.  The antidotes to psychological poverty?  Carefreeness and charity.

I was not brought up in poverty, the popular claim of so many financial authors, my upbringing was solidly middle class.  My father always had a wad of cash on his person or nearby.  When he passed on, I came to believe that his wad of cash was the only tangible asset that my father had.  My grand parents were business people who thrived even in the segregated South.  When my grandfather died, my grandmother managed the assets that he left her for almost 40 years.  I always heard that my grandmother was cheap.  I preferred to think of her as frugal.  She had the funds to do what she needed to do and, in many cases, what she wanted to do.  When she became ill in her later years, it was her resources, not the resources of her children, that paid her medical bills and assisted living expenses.  My mother, like my father, is highly educated.  She always earned a good living. “He is going to die and go to hell” was the mantra that I often heard in childhood when an unexpectedly high utility bill came due and my mother was afraid to show it to my father.

In the 1970’s, when I grew up, the dollar was worth something.  Food and energy were expensive, iceberg lettuce was in, salmon came in a can, steak was a treat, and I thought the best cakes were made by Duncan Hines.

I was the kid who had a wad of cash hidden away in a coffee can.
I was afraid to spend it and afraid someone would ask me for it.  Wanting only to accumulate, and afraid to spend, I was afraid to make decisions about money.

My mother and I had a fight about money when I was in college.  She wanted me to move some money to a different account and needed me to get some paperwork notarized.  I resented the request and didn’t do what she asked.  I didn’t feel trustworthy in the area of money and was angry that my mother had told me to do something I wasn’t comfortable doing.

My solution trustworthiness around money was to depersonalize money and to think of it as a tool, something to help me move from point A to point B.  Since money was just a tool, it did not matter to me who owned the tool as long as I got to use it.  I was therefore content to rent the tool. My mother tried to teach me financial lessons by sharing a credit card with me while I was in college.  She had to take the card back because tool ownership was not a concept that I had learned to embrace.  When I went to graduate school, I got a credit card of my own.  Seemed a great deal that I could charge a lot and pay a little.  Citibank and I became business partners, a relationship that would last almost 16 years.  By the time I left graduate school I owed a manageable amount to Citibank.  By the time I left professional training, I owed double the amount.  By my second year in practice, I owed 12 times the amount plus a car, plus student loans, plus a mortgage and open lines of credit at other retail outlets.  Yes, my philosophy was that money was a tool, but because I was only renting and didn’t own the tool, I found myself in bondage to Citibank, forever focused on the next pay raise as the solution to my problems.

My financial philosophy of buying what I want, using someone else’s money at a high rate of interest was not working. My nights were sleepless.  I felt enslaved as much to my own habits as I was to Citibank.  I read the Millionaire Next Door and my philosophies began to change.  Robert Kiyosaki came into my life and I learned that income is not wealth and that my home is not an asset.  Kim D. H. Butler, of Partners 4 Prosperity, came into my life and I realized that I have to have each dollar do as many jobs for me as it can, that one of my major responsibilities is to generate as much income as I can and that to the extent possible I have to retain control of my money, remain as liquid as possible and shun situations in which access to my money is restricted by law or the economic climate.

My key money philosophy shifted from one of renting the tool to owning or having clear control of the tool.

My clearest thought and philosophy about money is that it is to bring joy.  Not that money buys happiness.  It does not, but it does facilitate ease.  It is the unexpected, but necessary, trip home to see family, the trip overseas, the gifts to charity, the new kitchen, the new car, the flower garden, the work of art. I developed some clear money rules about how and under what circumstances money could leave my account.   But on the road to money acquisition new philosophies can clash with old money rules and the old dissonances can occur anew.  That is certainly what has happened at times for me.

Save for a major purchase and forestall buying even if it means missing a major sale and saving money.  Does that make sense?

Understand the time value of money, but does that mean that every minute not spent in revenue generation is a minute wasted?

Understand what it costs in work, sweat, and time to earn the money to buy a car and we understand the true cost of the car.

Developing a financial philosophy that serves and empowers rather than imprisons us is a personal development activity that never ends.  Our relationship to money is defined anew as the complexity of each transaction increases and our thoughts about ourselves in the market place evolve.

Without evolving philosophies we risk slavery to poverty and sacrifice carefreeness and charity even as we gain material wealth.  This is one of the greatest ironies of our time that differentiates the cheapskate, from the person driven by value and the haggler from the person living in abundance.

So much for rags to riches stories of overnight riches.  Gladwell lays out succinctly and convincingly why success depends on more than simply hard work.  Hard work is a requirement, of course, but success may also depend on a myriad of factors well beyond the control of one seeking success.  Gladwell's book, Outliers, is an essential read.

On March 17th 2008 I wrote: Home Ownership, The Biggest Financial Scam of the 20th Century. I said that home ownership is a terrible way to build wealth and that in fact it won't build wealth for the majority of people who own a home. I said home ownership as a way to build wealth is a scam because all of the participants in the housing bubble knew that long term home owners would in fact lose money on their homes. My article was controversial. I quoted financial planners, the comments that I received from the many sites the article was published were largely skeptical. In December, Dennis Cauchon of USA Today wrote: Why Home Values May take Decades to Recover. Yale Economist, Robert Schiller wrote about the long-term appreciation of home values. It is about as dismal as the long term appreciation of stocks that I outlined in The Great 401K Experiment.

Why Home Values May Take Decades to Recover:

Dennis Couchon, USA Today

Rick Wallick moved into a new, three-bedroom $200,000 home in Maricopa, Ariz., in October 2005. Today, the home is worth $80,000. The disabled software engineer stopped making mortgage payments this month. His $70,000 down payment is now worthless. His dream house will be foreclosed on next year. "We're so far underwater it's not funny," says Wallick, 57, who had to return to his original home in Oregon to care for a sick family member and tend to his own medical problems. Wallick, one of the hardest-hit victims in one of the states hit hardest by the housing crisis, lost 60% of his home's value in three years. His story is an extreme example, but home values have fallen so sharply since hitting a historic peak in the spring of 2006 that many Americans are wondering how much more prices can sink...click for the rest of the article.