Generation X is the current “Squeeze” generation.
You may have children in or about to go into college. You may have parents who need or will soon need your physical and perhaps financial help.
And, oh yeah, you have your own hopes and dreams.
All these demands will take money…your money. And, if that wasn’t challenging enough, there are formidable forces arrayed against you, quietly sucking the financial life out of you.
We call them the “Coalition of Four,” and they’re subtly seducing you into 5 behaviors that move large chunks of the money you generate over your lifetime into their vaults instead of yours.
They are the Advertising industry, the Media, the Merchants, and the Banks; and here’s why you must STOP or dramatically reduce these 5 self-destructive activities if you ever hope to enjoy a debt-free and secure future.
1 – Stop being a “Good Consumer”!
You’ve probably been a good little consumer, following all the buying instructions on TV, radio, and the Web. Instructions that have led you to where you are today…debts and all.
After all, you have kids and they need stuff, right?
And you, let’s not forget you. You work hard…and you need stuff too, right?
So, you consume. That’s what consumers do.
And that’s the problem.
It starts with the word consume. Look it up in the dictionary:
Verb (used with object), consumed, consuming.
- to destroy or expend by use; use up.
- to eat or drink up; devour.
- to destroy, as by decomposition or burning: Fire consumed the forest.
- to spend (money, time, etc.) wastefully.
Only 1 of these 4 definitions refers to eating. The others are all about destruction, especially #4, which defines destroying your wealth.
You can’t both consume your income now and build wealth to live on in the future.
“Good consumers” are “Good Wealth Destroyers.” Is that your plan?
Most consumers destroy their wealth monthly
Our consumption-driven culture has trained us to think chiefly in terms of monthly cash coming in and monthly payments going out. When we go to buy a TV or a car or even a home, we think in terms of how big a monthly payment we can afford, not how much the purchase is actually going to cost us over time.
This thinking pattern gets us into deep, deep trouble.
We don’t ask ourselves even the most basic consumer questions:
- Is the purchase good for me?
- Am I being ripped off?
- Is it absurd to pay 21% interest on a TV?
- Is it beneficial to pay nearly twice for my home over the course of a 30-year mortgage?
We just say, “I want it. I want it now. It fits into my monthly income.”
The only two numbers we consider are our monthly income and the total of our monthly expenses. This tells us how much remaining income is available for new or additional monthly payments.
Or we look at a specific credit card to see how much room there is before we go over our credit limit. Whatever room there is between our current balance and our credit limit is spendable credit!
It’s almost as if it’s our patriotic duty to keep our monthly payments equal to our income.
2 – Stop emulating the financial behaviors of family and friends!
You know why we never think beyond the monthly payment?
Because our consumer-indoctrinated mind tells us, “Everyone’s buying with monthly payments, so it must be the right thing to do.
“Dad bought his cars and the house I grew up in this way, so it must be right. Shucks, everyone pays 30 years for a house. How else could you afford one?”
I had a friend once tell me that if they had offered him 10-year financing on a new car, he probably would’ve taken it, because it would’ve given him lower monthly payments.
So, what’s so bad about being like everyone else?
According to the National Institute on Retirement Security study, Americans are:
- $6.8 trillion shy of what they’ll need to ever stop working.
- Ages 50 to 64 have just $12,000 saved.
- Ages 25 to 64 have only $3,000 saved.
- 45% have nothing saved – zero!
- 92% are short of what they’ll need by frightening margins.
According to the Employee Benefits Research Institute:
- 64% of 65-year-olds have less than $50,000 saved.
- Yet, 65-year-old men can expect to live an average of 17 years beyond 65, and women an average of 19 years.
- A 65-year-old couple has a 50% chance of needing $450,000 above Medicare coverage for medical expenses.
If most 65-year-olds don’t even have $50,000 saved, how do they expect to pay their living expenses for nearly 2 decades after retirement age? That would break down to only $4,000 a year to live on, in addition to whatever they’ll get from Social Security and perhaps a pension.
And, if they can’t afford a robust Medicare supplement insurance policy, they’ll be broke as soon as any big medical bills hit. They’ll have to liquidate all their assets, fall into poverty, and apply for Medicaid.
3 – Stop sending cash flow into yesterday!
When you use debt, like credit cards, car loans and other financing, you’re committing part of today’s and tomorrow’s cash flow to pay for yesterday’s unprepared-for cash flow events.
Today’s cash is flowing into yesterday.
How can you ever expect to slow down or stop working in the future, if the money that should be building what we call your future Job-Optional Income is being wasted on paying for yesterday?
Unless you make LOTS of money, it’s impossible, which is why the Employee Benefits Research Institute reports that 92% of Americans are not on a financial trajectory to ever stop working and live anything like their working lifestyle.
4 – Stop spending with your emotions rather than your brain!
Financial success comes within reach when you start spending with your brain turned on and your emotions turned off.
An old Japanese proverb says, “He who buys what he needs not, sells what he needs.”
That used to be my experience. I bought a lot of stuff I didn’t really need, because I thought my income stream could indefinitely support that level of “consuming.” The result – I ended up selling two cars and an airplane just to save my house.
In retrospect, I realize that I had been a freeform spender. I had little idea where random chunks of my monthly income went…they just went. I was enjoying a typically-consumptive lifestyle, but the expenditures required to sustain that enjoyment were frequent and impulsive.
I wasn’t directing the spending of my income, it was like I was watching it happen on a big TV…a TV on which I was making payments. Then one day I put my hand in my pocket and it was empty.
As my financial house of credit cards came crashing down I realized the necessity of knowing where every dollar was going…and why it was going there.
I suddenly had to plan my spending, instead of just letting the dollars fall where they may.
To this day I plan my spending rather than just letting it happen as my impulses dictate, and that’s why I’m still debt-free and doing fine.
Planned spending means you buy what you can really afford – on purpose, not just because you saw it on TV or found out your brother-in-law just bought one.
It’s about managing your spending with a longer-term mindset.
This means you’ll make intelligent choices about where you’ll spend your money…but you will spend. That’s what they print money for.
The important point is that – as you spend – you’ll keep your long-term interests in mind. You won’t sacrifice your future for a quick “feel good” today. And that means you’ll have to accept the reality of your income.
You’re only going to bring home so much money each month. You must decide what to spend that income on, and you must continually recommit yourself to the reality that you cannot spend more than you bring home.
5 – Stop “Saving” for the future in the stock market!
Saving and Investing used to mean different things. People saved for retirement, and if they had some mad money beyond that, they’d do a little “speculating” in the markets.
Stock market investing was largely a game for the rich, but in the 1970’s, the government blurred the distinction by creating qualified “retirement” accounts, like the 401(k).
These accounts were almost exclusively vehicles for investing in the stock market, a game most working people had no experience in. However, the accounts were promoted like retirement savings accounts, so a lot of people bought in…and put their future in the hands of the Wall Street gamblers.
Putting money into paper securities is like laying it down on a Las Vegas green felt tabletop
You should only use money you can afford to let the spinning wheel or cards take away from you, without damaging your life.You should NOT use money that you’ll NEED to be there at some point in the future, because with the stock market, it may or may not be there when you need it.
Just ask people who thought they were going to retire in 2008.
The key to a successful wealth-building strategy is a predictable, dependable accumulation and growth system. Such a system must include both a secure place to keep your wealth and a dependable, safe system to grow your wealth.
The stock market is not such a place or system.
The 2000 and 2008 crashes cut typical investment portfolios (like in a 401k) in HALF! Could you afford to have your retirement savings cut in half right when you plan to retire? Or how about even a decade after you retire?
I call this “Timing Risk.” There is NO GOOD TIME for you to endure a 30%, 40%, or 50% drop in your retirement savings.
“But wait!” you might shout. “Isn’t the market’s upside worth the risk?”
Dalbar Inc. is a company that studies investor behavior and analyzes investor market returns. The results of their research show that the average equity mutual fund investor – for the last 20 years – earned a market return of only 5.19%. And that’s before taxes.
That number may have you scratching your head.
If it sounds low to you, that could be because the market may have been stronger recently. We tend to evaluate most things in our lives by our most recent experiences. But our short-term market view is deceptive when compared to a longer window of 10-20 years.
We can show you a system that will get you about the same return – tax free – with NO RISK of it ever going down. Your savings ONLY and ALWAYS go up.
Why is the average investor’s return on investment so low?
The typical investor gets nervous when the market declines, yet they try to hang on. If it turns out to be a serious correction or bear market, their patience runs out near the bottom and they sell at a much lower price than they bought in at (sell low).
They conclude it’s better to be out of the market than to endure such losses.
When the market starts recovering, this inexperienced and now-burned investor doesn’t trust it. So, he or she sits on the sidelines watching institutions and experienced individual investors jump in.
Finally, after the market has proven to them that it really is going up, they get back in somewhere near the top (buy high), just before the next correction or downturn.
Most people are not experienced enough, nor do they have the temperament, to successfully manage market swings, so they lose. They feed their money to brokers, mutual funds, and more savvy investors.
I’m actually a little surprised they end up averaging a positive 5.19%.
The stock market has proven lethal to millions of would-be retirees
Yet most financial advisers and teachers continue telling their followers to, “Max out your retirement accounts, dollar cost average, and stay in the market.”
However, you don’t have to be a victim of this risky advice.
There is a better, safer way to pay off debts AND build wealth with the SAME DOLLARS at the SAME TIME, in an account where your money ONLY GROWS at a market-competitive rate and never has a correction.
A good place to learn about this little-known system is in my book, The Banker’s Secret to Permanent Family Wealth. Give it a read, and then contact us if you have any questions.
So, there you have it, X’er
Every generation comes with its challenges.
While these 5 prosperity threats are not exclusively affecting your generation, you are at the vortex of their lifetime impact.
However, that means your generation has the most leverage to change course and plot a new direction to a much better financial outcome.
We’d like to help. email@example.com