Secret To Financial Independence: Discipline!
Much has been written and said about the concept of financial independence. There are media pundits who are earning millions of dollars spewing excessively poor financial information, add to this many financial institutions who earn billions by promulgating financial myths which keep the middle class indebted for their lifetimes. This needs to be exposed and the public needs to understand how to reach true financial independence.
Incredibly when you make the effort to rummage through the avalanche of white noise along with the intentional communication of mis-information you can attain the necessary awareness of how to become financially independent. Proper information along with personal discipline can make ANYONE financially independent. While getting proper information is certainly a challenge, the real difference between those who are financially independent and those who are not is PERSONAL DISCIPLINE.
Financial victimization continues to be the most prevalent financial risk due to both a lack of proper information along with a distinct lack of personal discipline. This combination exposes one to the ravages of financial victimization.
Let’s do some brief revisionist history. Prior to the stock market collapse in 1927 people held mortgages on their homes, yet unlike today’s mortgages these notes were immediate recourse notes, thus they could be called by the bank at any time. When the market collapsed the major problem was the leverage we today know as margin accounts. Unlike today people were able to have massive leverage in the 1920’s which helped promote great prosperity, it was the “roaring” 20’s. So when the margin calls started investors needed to flood the banks to pay their calls and the banks needed the cash to pay their depositors and thus called in the mortgages to get the cash from the depositors, can you see where this is going? Thus the result was a decade or so of depression. It was purely a velocity of money issue.
If we fast forward today, we find a mortgage market which almost imploded and caused the same type of event but there were certain checks and balances put in place to hopefully stopped any similar event from happening. One of those changes included the 30 yr mortgage with no recourse except for default. Not only banks are able to play in this market however and thus there exists a network of “mortgage banking” operations to play this game. In the end the victim of this game is you the mortgagee. You unfortunately don’t know what you don’t know. The pain of unawareness costs you and your family 100’s of thousands of dollars or a working lifetime.
The factor that separates the wealthy from the financially dependent is the use of leverage, credit and the massive tool of compound interest. Sadly the misunderstanding or total lack of awareness about compound interest is the #1 reason for financial failure. When you understand fully the magic of compound interest and use it for your benefit you have no choice but to become financially independent. You are either paying banks and creditors interest or you are paying yourself. When you are paying the interest over the full course of the time contracted for you are losing the use of that money and the growth of that money. Besides paying 2-3x more for whatever you are financing you are also losing the future value of the money which in most cases is a lifetime of earnings. Most people work for money and never gain the next level of money working for money. its this level that creates financial independence.
Financial literacy will provide you the proper information and personal discipline will take you to the next level. That personal discipline doesn’t immediately require you to make sacrifices, it does require that you redistribute your present income in ways that will save interest and allow you to put those savings into interest growth for yourself. We have the answers which don’t require you increasing your present spending but simply directs how you distribute your present funds. Let’s discuss how to help you avoid financial victimization, gain financial literacy and become financially independent.
YOUR Best Interest IS OUR ONLY Concern!