Don’t Work Too Hard -Work for Yourself

The mentality of considering home as investment and seeing wage growth as a resource to buy a larger house or spend more is the foundation of today’s debt-based society. Most people move up to higher positions in their jobs over time and receive regular salary increases. However, due to the increase in expenses, many families are under greater debt day by day and face more financial uncertainties.

If you are an employee,

  1. You work for someone: Most wage earners enrich the boss or shareholder. Your efforts and success contribute to the success and retirement of the boss.
  2. You work for the state: The state gets its share before you get your salary. By working harder, you increase the amount of tax charged by the state. Most government officials work from January to May only for enriching the state.
  3. You work for the bank: After taxes, your biggest expense is deductions and credit card debt.

The problem with hard work is that each of these three stages gets their share thanks to your increased efforts. What needs to be learned is how to translate increased efforts directly for the benefit of you and your family.

Most people have to rely on their salary to pursue their profession and receive income-generating active funds. So how do they measure the extent of their success as their actives grow? How does one realize that he or she is rich or has wealth? In this regard, besides the definition of active and passive, the definition of wealth is also important. Let’s look at what R. Buckminster Fuller said. Although what he says seems quite complicated, it begins to make sense after reading it thoroughly:

“Wealth is a person’s ability to survive so many numbers of days forward … or if I stopped working today, how long could I survive.”

R. Buckminster Fuller

Wealth is the measure of cash flow from comparing the expenditure column to the asset column. If it sounds a bit complicated, let’s explain it with an example:

Let’s say you have $ 1000 a month of cash flow from the active column. Your monthly expense is 2000 thousand dollars. How much is your wealth?

Let’s return to Buckminster Fuller’s definition. How many more days of financial power do you have according to Fuller? Only half a month’s cash flow.

If the cash flow from your assets reaches $ 2000 a month, then you are rich.

So, you are not rich yet, but you are wealthy. Every month, you have income generated by active funds that fully cover their monthly expenses. If you want to increase your spending, you must first increase the cash from your assets to maintain this level of wealth. Remember that you are no longer dependent on your salary. You are successful in building your active columns that gives you financial independence. Even if you quit your job today, you can meet your monthly expenses with net income from your assets.

The next target will be to transfer the surplus cash flow from active funds back to the active column. The more coins enter the active column, the larger the column gets. The larger your active funds, the greater your cash flow and net income. As long as you keep your expenses less than the cash flow from your assets, you will get richer, you will have income other than resources from your physical effort.

As this reinvestment process continues, you take firm steps towards getting rich.

Few people have enough money to survive today. There are even people who do not have enough money to live for a month. Many Americans have less than $ 400 in savings. A more shocking statistic in 2016, the GOBankingRates found that 34% of Americans had no savings at all. Few people can survive for a long time without a paycheck or government aid.

Lastly, let’s keep in that in mind:

The rich buy the active funds. The poor have only expenses. The middle class buys passives that they think are active.

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Taxes and Credit Debts

All over the world, taxes are rising steadily. Because the social demands in return for the tax charge require an increase in the value of wealth, income and sales taxes. Higher incomes cause taxpayers to enter even higher tax brackets. Thus, tax rates increase gradually to meet social services. Today, governments face serious problems with social service programs such as Social Security and State Health Insurance for the elderly. As a result, they cannot pay their debts.

For most people, taxes are the biggest expense item. Most people consider these taxes are income taxes. However, for most developed countries like America, the highest tax is the premium paid to social security. Employees pay roughly 7-8% tax on social security contributions and health care. However, this rate is actually 15% since the employer pays the social insurances to complement this rate. This is the amount that the employer cannot pay the worker. Moreover, the employee also pays the income tax of social security contributions deducted from her salary. In fact, this is an income that she never received since it goes directly to social insurances.

Let’s explain this subject with a simple example. Imagine a newly married couple. This educated young couple rented a small flat. They start making some restrictions to make a living. After a while, they realize that they are spending as little as they did before they got married. So, they save some money.

But one day, the flat they rented starts to seem too small for them.

They want to buy a bigger house to have children. Now, they want to save more money. They start working more.

Their income gradually increases.

As their income increases, so does their expenses.

When they think they have enough money, they buy their dream house. Meanwhile, they learn about a new tax called property tax. Over time, they buy furniture for their new home. They also buy a new car . They suddenly realize that their column of passive funds is now filled with mortgage debt and credit card debt.

They finally have a child. The couple work harder. The same process repeats. The more they earn, the more taxes they pay. They get new credit cards. Their debt increases gradually and becomes equal to the value of their homes.

A company that provide loans to the couple recommends “debt consolidation” while the couple’s credit ratings are high. The company also states that the best thing to do is to pay off their credit card debts and high interest consumer loan debts. Besides, interest on home loan will be deducted from tax. They accept and pay high interest credit card debts. They feel a little relieved. Credit card debts are over. Now they have added their consumer loan debt to the house mortgage debt. Loan installments decreased because they extended the repayment for another 30 years.

Discounts begin in various stores and markets. The couple do not intend to buy anything, they just want to go and walk around. But they also take their credit cards in case they see something necessary…

We often meet this young couple. Their names are different, but their financial dilemmas are the same. They all look for an answer to “How can I make more money?” question.

The real reason for their financial problems is that they don’t know how to spend their money. They don’t have financial knowledge; they do not understand the difference between active and passive funds.

Let me say it again: Earning more money is often not the solution to financial problems. The solution is to act wisely. There is a famous quote for those floating in debt:

“If you find yourself in a hole, stop digging.”

Will Rogers

We must be aware of three powers: The power of the sword, the jewel, and the mirror. The sword symbolizes the power of weapons. America has reached this position by spending millions of dollars on weapons. Jewelry is the power of money. Whoever has money sets the rules. The mirror symbolizes the power of self-knowledge. Self-knowledge is the most valuable of these three, according to Japanese legend.

The lower and middle classes are willing to let the power of money control them. They shoot theirselves in the foot by getting out of bed and working hard, not asking themselves what they are doing. Many who do not understand money, surrender to the power of money. The power of money is used against them…

You can continue reading with THE ROBIN HOOD IDEAL.

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