Debt Fear: Is it a Motivator?
Do you know how most of the people keep themselves motivated and continue working hard? Well, they do it by increasing the amount of Debt whenever they get a pay rise.
One of my friends keeps buying more and more stuff via credit. And he proudly tells me that this motivates him to work more. He argues that, “The more debt I take, fuels the fear” and this increasing level of debt-based on fear encourages him to work harder and more aggressively.
To him, a big home is a reminder of a big mortgage and need to work hard at his work place to increase his performance.
This is the scenario of many people all around the world. They call it smartness. And they also pass these kinds of “values” to their children. Some people call it daring or ability to take risks.
Now, if you examine the wealth of these people; they own very little assets. And if you count their net worth (Assets minus Liabilities) then most of the time their Net Worth is negative. That’s because every time they get a salary rise, they simply take on more debt.
And one day when they wake up in the morning, they are deep in debt … up to their eyeballs. And from that day, they can’t stop working for the rest of their life. This is because they have to pay those car loan payments, mortgage payments and credit card bills every month.
That being said, the excitement of taking more risk is gone. Now the Fear of Debt doesn’t motivate them to work more. They are tired and they want to escape from the debt trap but they can’t … they are stuck in the rat race.
It is up to you to decide whether you want to experience Debt Fear as a motivator to work more. The choice is yours.
The Ultimate Consumer
Let me tell you a brief story about the ultimate consumer. The story is about Mr. Greene. Mr. Greene is a high Income professional. And he earns $ 250,000 every year from his profession.
Mr. Greene has two boats, 5 Automobiles ( 3 Leased and others purchased via credit), expensive clothes and a branded watch worth of $ 5,000. He is a member of 2 country clubs and has more than a dozen credit cards in his pocket. Among them is his favorite credit card, Diners Club Platinum Credit card.
Mr. Greene is 45 years old and according to his Income and age group, his Net Worth should be well above $ 1.5 Million. But What is his actual Net Worth? Well, it’s just $ 200,000.
Now, Suppose Mr. Greene loses his job, then how many years can he survive on his current wealth (Net Worth)? Probably, no more than 6 months.
Then Why does such an Intelligent person who is making a 6 figure income every year is living a life like this? Due to the lack of Financial Education. He thinks that to look cool and rich, you MUST have expensive cars and watches. Of course, he is absolutely right. Because everyone around him is as financially illiterate as him.
Remember, the people you see around you who are driving luxurious cars, wear expensive clothes and wear expensive watches are not necessarily rich. These are the high income/low net worth groups of people.
If today they were to lose their job, they would not be able to survive but for a few months on their current wealth. However, a wealthy person is one who can survive for the rest of their time being on their current wealth while maintaining the same life style … even if that person stops working today.
Moral: Don’t be impresses or judge anyone’s wealth or financial well being by only their appearance.
How Much You Invest in Financial Advice?
How much money do you allocate for Financial Advice? I mean, Is your accountant’s choice solely based on his fees? I know that most of you will answer that with – “Not Much”
This is a sad truth. People want to achieve financial success but they don’t want to invest their money behind good quality financial advisers. When it comes to buying a car, people will go for higher brand luxurious cars but when it comes to hiring an accountant or a financial planner, people will search for the cheap ones.
While wealthy people always search for high paid financial advisers. This is not because if you pay a high fee, the financial advisor will let you in on some secret tips of wealth. The only thing is that the financial advisor will provide more involvement and take interest in managing your wealth. And this will definitely pay you in the long run.
My advice to you; never go bargain searching for financial advice … this criteria is about quality. Very few intelligent people in this world are experts in giving true financial and money management advises. And of course, they don’t advise you to hire a cheap financial adviser.
If you want good financial advice then you MUST hire a Financial Planner who is an expert in that field. And who can give you the best advice according to your financial goals and needs.
Never go for cheap financial adviser in the market. The market is full of FREE advises. But not all money management advises are trustworthy.
I blog anything humor, entertainment, passive income and so forth. I’m also a fan of crazy, bizarre things found on the internet such as pics, video & more.
