they just are all hung up on the idea that a site named "getpoor.com" just absolutely must have some sort of instructions about how to get poor. (Your are kidding, right?) I guess all the cool videos, and all the weblogs, and even me singing to you... I guess that just isn't enough for you people. Fine. So... due to popular demand... I decided to whip something up about how to get poor. Here we go:
#1 - YOU ARE WEALTHY.
Whether or not you know it, you are rich. Recently, this point was made to me when I saw a show on the History Channel which pointed out that a typical American has a lifestyle that would require over 200 slaves in the ancient world. The point here is... rich and poor are relative terms. Just because you feel poor, does not mean you really are poor.
#2 - YOUR PERSONAL DEFINITION OF POOR.
It is actually possible to "get poor" without changing anything about your finances. Don't believe me? Go shop at the most stuck up, snobby store you can think of. Tiffany's, or whatever. This will make most people feel poor INSTANTLY. If you have a bigger wealth problem to deal with, try looking at boats. A million dollars is barely a down payment on a decent yacht, these days. So, the point is that "rich" and "poor" are relative terms. You need to decide on what YOUR personal definitions are for these words. Give it some thought, sometime, you might surprise yourself.
MY PERSONAL DEFINITION of wealth is "having more than you need." So, unless I'm on an airplane that crashes on top of an isolated mountaintop and I have finished eating all the other people... As long that doesn't happen, basically I consider myself to be wealthy. But, that is just by my definition. It is different for each of us. Like I said, give it some thought, sometime, you might surprise yourself and realize that you are FAR from being poor and have a lot of work to do, before you can get poor.
#3 - THE ONLY WAY TO GET POOR.
Philosophical arguments aside, there really is only one way to get poor.
Spend more than you make.
Its that simple. A better way to say it is... CREATE NEGATIVE CASH FLOW. If you work at it, over time you can set your life up so that each and every month you get poorer, by simply spending more than you make each month. Its actually very easy.
Millions of people are doing it, everyday!
#4 - THE GAZINN AND THE GAZZOUT.
The bottom line to managing your cash flow is the "Gazinn" (Goes in) and the "Gazzout" (Goes out). --This is really simple. If you make $1,000 per month, and you are only spending $800... well... you are never going to get poor that way, are you? Quick! Go sign up for something that costs at least $200 more each month. Let's say, you "buy" a new car. Even if you could pay cash, don't. After all, your goal is to create NEGATIVE cash flow each month. Buying a car you can afford outright won't help you get poor. Get yourself one of those real expensive rides... preferably one that burns a lot of gasoline, too. Be sure to research your insurance costs and select a model with really high monthly insurance, as well. So, as you can see, adjusting the "gazzout" is simple, and can help you on your way to getting poor, faster than you might think. The real key to managing the "gazzout" so you can get poor is to sign up for all kinds of completely useless stuff that costs money every month.
By increasing your financial obligations, you are forced towards your goal of getting poor, each and every month, just by making all those payments.
#5 - THE FOUR WAYS TO MAKE MONEY.
Dealing with the "Gazinn."
Basically, there are four ways to make money.
(1) Have a job for somebody else.
(2) Be self employed.
(3) Own a business.
(4) Be an investor.
Of these four types of income, the best one to help you get poor is a job. The reason for this is that a job gives you almost no control over your taxes. Your friendly local, state and national governments will help you get poor AUTOMATICALLY through the magic of payroll deduction of your taxes. By far the easiest way to reduce the "gazinn" part of your monthly budget is taxes. In fact, taxes are the NUMBER ONE expense for most Americans and will cost more than their houses, cars or even their children's educations.
If for some reason you are not able to get a job to help you get poor, self employment is the second best option. Thanks to the Tax Reform Act of 1986, the US federal government now taxes self employed people ALMOST as much as people with jobs. Plus, in some cases, they even let you prepay your taxes each quarter. This helps you avoid any pesky interest your might have earned with your money, during that three months. See? Your government has set things up to help you get poor.
However, if you own a business, meaning you are not an employee as much as you are an owner, you will find that its is more difficult to pay taxes. By the time you make all the standard deductions for the costs of doing business, you may find that your government won't let you pay much in taxes, at all. Well, heck, there goes your number one way to get poor right out the window. PLUS, as a business owner, you operate all year, with pretax dollars, then after a little accounting you pay the tax. This means you are stuck holding all that money for 12 months, and may have to deal with all that pesky interest it earns, as well.
Investing. Forget it. It is almost impossible as an investor to pay any taxes. Here's why: Most investments that pay high interest returns are taxed, but most investors have losses to offset those taxable earnings. Now, if you invest in lower return investments, like municipal bonds, well... they tend to be tax free, so you don't get to blow your money on taxes that way either. Basically, no matter how you look at it, investing just is not going to make you poor. You are far more likely to get poor working 60+ hours per week on your job, than sitting on your butt owning a collection of investments. Wanna be poor? Stick with the job.
#6 - ASSETS AND LIABILITIES
Seems like the one part of this that people just can't get through their thick skulls is the concept of "Cash flow assets" and "cash flow liabilities." The best way to explain it is that Cash flow assets FEED you and cash flow liabilities BLEED you, each and every month. If you want to get poor, sign up for the biggest home mortgage payment you can possibly qualify for. That money coming out of your pocket every month will speed you on your way to getting poor. NOW-- I know what you are thinking... "A house is an asset" so its making you money. Wrong! We are talking about CASH FLOW assets and liabilities. A house only increases your monthly cash flow the ONE month that you sell it. The other few thousand months it costs you money. Some of the poorest people I know own big houses. A really long mortgage contract will help you down the road to poverty.
Hence, the term "Poor House."
#7 - MAKE THE COMMITMENT.
In America, it is very difficult to dodge getting rich. It takes effort to avoid making money. Even if you manage to get fired from your job, for example, you will get unemployment. When that runs out, you get welfare and food stamps. And, even on food stamps, you could make the mistake of buying some sugar and lemons and having your kid open a lemonade stand. Never know, your kid might make some money and there goes your whole get poor plan, out the window, again. But, stick with it. You can do it. If you manage to consistently pay lots and lots of taxes, spend all your time working that job and avoid starting your own business or making any type of investment you will be poor. There's simply no way to avoid it. You might not LOOK poor, because to keep that monthly cash flow in negative territory, you may have to drive a big fancy car and live in a gigantic house. But, as long as the "gazzout" is more than the "gazinn" you will be making progress towards getting poor.
Its that simple.
Spend more than you make, each and every month.
Give all your money away to The Rich and don't forget to pay your taxes.
Simple enough.
This is CABL.com posting #217541. Tiny Link: cabl.co/m4KT
