Master Your Destiny: Perpetually Broke AudioBook Wisdom
Perpetually Broke: Living Beyond Your Income? Get a Financial Makeover in 7 hours, and Achieve Prosperity By 40! By Tom Cromwell
Hear it Here - https://bit.ly/perpetuallybroke
00:00:00 Perpetually broke
00:03:38 Running Out of Money before Next Payday
00:06:33 Not Knowing the Size of Overdraft or Debt
00:16:25 Paying off Debt that Eats a Huge Chunk of Your Income
00:18:34 YOLO Lifestyle .
00:20:33 Looking for “Get Rich Quick” solutions
00:25:13 Understand your behavior and how it is Manipulated
00:26:20 5 Common Problems Sabotaging your Prosperity
00:29:44 7 Debt Myths that are keeping you impoverished
00:40:03 Managing ‘Bad Spending’ Behaviors
00:43:59 Desire - Are You Being Manipulated Into Spending More?
https://www.amazon.com/Perpetually-broke-Makeover-Prosperity-Personal/dp/B08Q6Y7PSD
Do you want to discover devastatingly effective secrets for MONEY MANAGEMENT, basic PERSONAL FINANCE and HOW TO BUDGET? You can laugh at money worries and become DEBT FREE if you follow these simple solutions…
If you find yourself spending more than you earn, struggling to balance debts, cut spending and save. If you want simple, proven, practical advice for YOUR MONEY which doesn’t assume any prior knowledge of personal finances or budgeting, then this book is aimed at YOU.
You are in plenty of company according to CNN Money, 76% of Americans are living paycheck to paycheck. 40% of Americans would have to borrow money to cover a $400 unexpected expense, and more than one-third of adults applied for some form of credit, says a Federal Reserve report in 2019. These problems impact all age ranges and different income brackets. For example, doctors are notorious for living at or beyond their incomes, 51% of them do so according to the Medscape Wealth and Debt report 2019.
If you absorb the contents of this book and follow the straightforward guidance, then you will immediately begin to feel more in control and secure about your finances. I believe you can be ready to begin the rest of your financial life in just 7 hours. If you remain on this path, you will reach a position of financial comfort and prosperity.
I have applied the lessons and principles which in this book throughout my life. They work as well when I earned very little as they work now that I am more secure and enabled me to climb up the wealth ladder from the lowest rung. As I am not Bill Gates or Jeff Bezos, I cannot claim to have ascended to the very highest rung, but I am financially free and prosperous. Ashley financed life essentials by paying with credit cards, never paying them off, on top of student loans. In two short years, she amassed over $70,000 in debt. However, after a financial makeover, she had paid off over $10,000 in debt in just three months.
In this book, you will discover:
The ways others are manipulating your behaviour and secrets to counter them
7 myths about debt that are keeping you impoverished
Why this book works for any budget
5 reasons why your attempts to balance income and spending keep failing
Why you need to change your approach and how to succeed with money and finances
21 makeover techniques for cutting debt and spending
Why the philosophies of ancient Greece can help you control your spending
Why you need to develop a vision
The secret reasons successful people don’t need remarkable willpower
And much more….including access to your bonus FREE personal finance toolkit.
www.personalfinancewizard.com
#Broke #Keywords #RussellNewton #NewtonMG #PerpetuallyBroke #TakeOwnershipOfYourProblemsTomCromwell
Transcript
Perpetually broke, living beyond your income, get a financial makeover in 7 hours, and achieve
Speaker:prosperity by 40, written by Tom Cromwell, narrated by Russell Newton for Hot Ghost Productions.
Speaker:In the high consumption and debt-ridden society that we live in today, living beyond one's
Speaker:means is a familiar phenomenon.
Speaker:The YOLO, You Only Live Once, philosophy that pervades modern society, has normalized
Speaker:excessive spending, usually on things we don't need and can do without.
Speaker:The pressure to acquire the latest gadgets, fit in with popular trends, and keep up with
Speaker:the Joneses has turned many of us into extravagant spenders who hardly ever step back to think
Speaker:about how we're spending our money.
Speaker:Due to the easy credit that is advanced by most financial institutions and other lenders,
Speaker:many people are quick to take on debts in pursuit of instant gratification.
Speaker:These debts are often taken to acquire liability goods and assets that depreciate as soon as
Speaker:they are purchased, leading to an unsustainable cycle of debt.
Speaker:Meanwhile, we aspire to achieve prosperity and retire early on a comfortable income.
Speaker:When we moved to a small village, we had some neighbors who bought a rundown cottage at
Speaker:the same time.
Speaker:They proceeded to knock it down and build a large house without buildings.
Speaker:It was fantastic.
Speaker:I confess, I was envious.
Speaker:They had cars, she went riding, and they had a son the same age as our daughter.
Speaker:So we mixed, as it was a small village.
Speaker:He wasn't working, but they had investments.
Speaker:Their life appeared idyllic from the outside, but then one day, someone turned up to repossess
Speaker:the BMW.
Speaker:The whole house of cards came crashing down.
Speaker:They transpired that they were massively in debt, and everything was mortgaged to the
Speaker:hilt.
Speaker:Their lifestyle was completely unaffordable.
Speaker:Apparently, she had no notion until the repo men turned up, of course.
Speaker:It didn't turn out well for their marriage.
Speaker:This spend-thrift attitude has become so common that many people are never aware of it when
Speaker:they engage in unfettered spending.
Speaker:It's not unusual for even the most financially prudent individuals to be mocked and chided
Speaker:as being miserly.
Speaker:However, despite how normalized it has become, living beyond one's income can have dire
Speaker:effects, not just on individuals, but on organizations and even economies as well.
Speaker:At a macro level, we've all seen the impact of runaway debt on the economies of many countries.
Speaker:Perhaps the best example of the dangers of living beyond one's means on the scale of
Speaker:countries can be seen in Greece, whose economy nearly collapsed in the late 2000s due to
Speaker:poor fiscal policies that led to the ballooning of public debt.
Speaker:The country had to embark on various emergency measures, including debt restructuring and
Speaker:austerity, to survive the economic apocalypse that they were experiencing.
Speaker:Taking charge of one's finances is crucial to effective financial management.
Speaker:Most young adults are beleaguered by a myriad of problems that hamper their ability to control
Speaker:their finances.
Speaker:This usually leads to poor financial decisions that keep them perpetually tethered to a cycle
Speaker:of debt and impedes the achievement of financial freedom.
Speaker:To unshackle yourself from this, it is imperative that you acquire a good understanding of the
Speaker:mishaps that prevent you from developing healthy and sustainable financial behaviors and practices.
Speaker:Let us now look at some of the common problems and scenarios that may be getting in your
Speaker:way as you try to achieve financial independence.
Speaker:Running out of money before next payday
Speaker:According to a survey by the financial services company, salary finance limited more than
Speaker:a third of American workers run out of money before their next paycheck.
Speaker:In the report titled, Inside the Wallets of Working Americans, 42% of American employees
Speaker:cited financial problems as the leading cause of stress.
Speaker:Moreover, workers who earn lower incomes are the most adversely affected by financial
Speaker:related stress, with 50% of employees earning less than $15,000, citing financial problems
Speaker:as the main stress factor in their lives.
Speaker:It was also found that 49% of workers earning between $15,000 and $25,000 experience finance
Speaker:related stress.
Speaker:This is not very surprising considering the rising cost of living and stagnating salaries,
Speaker:which make it difficult for low income earners to have disposable income.
Speaker:One of the biggest factors contributing to financial stress is running out of money before
Speaker:the next paycheck, which happens to over 32% of workers, according to findings by Salary
Speaker:Finance.
Speaker:Very often in the course of my life, I am approached by people who complain that they
Speaker:simply don't understand why their paycheck runs out so fast.
Speaker:This creates a precarious financial situation because it makes it difficult to save money
Speaker:for emergencies.
Speaker:This has become especially apparent in light of the coronavirus pandemic, which has led
Speaker:to massive job losses, leaving many workers in America and around the world in dire financial
Speaker:straits.
Speaker:In a survey conducted by Pew Research Center in April 2020, only 47% of respondents said
Speaker:they have enough emergency funds to cover three months of expenses.
Speaker:This means that a large number of workers will need to take up more debt to cover most
Speaker:of their expenses.
Speaker:While most Americans were already living paycheck to paycheck even before the coronavirus,
Speaker:the emergence of this new health crisis and its attendant economic implications means
Speaker:that the financial security of most workers is now in jeopardy.
Speaker:This is not a problem that is purely experienced by low income earners.
Speaker:Even professionals who earn a quite reasonable salary usually admit that they don't know
Speaker:where their paycheck went.
Speaker:While there are myriads of reasons why most people's wages seem to disappear into thin
Speaker:air as soon as they are paid, I have found that poor budgeting skills are often the root
Speaker:cause of this.
Speaker:Specifically, misunderstanding how much is available as free funds after making debt,
Speaker:loan, mortgage, or rent payments.
Speaker:Individuals who fail to budget for their paycheck in advance usually end up misallocating their
Speaker:finances and incurring unplanned expenses which cause their money to run out faster.
Speaker:Therefore, learning how to budget appropriately and sticking to one's budget can help to
Speaker:mitigate this problem through planned spending.
Speaker:Not knowing the size of overdraft or debt
Speaker:Another common problem that hinders most people from achieving financial freedom is the failure
Speaker:to keep track of debt, which is due to the fact that debt and credit distort our sense
Speaker:of spending.
Speaker:A little while ago, my sister-in-law tragically passed away from a stroke at a relatively
Speaker:young age.
Speaker:A while before, her mother passed away and she and her sister were the beneficiaries
Speaker:of a decent sized estate.
Speaker:The family had always lived a seemingly modest existence commensurate with modest salaries.
Speaker:We would be the beneficiaries of hand-me-down clothes for my nephew, of which were always
Speaker:plenty of good quality brands but we thought nothing of it.
Speaker:After her mother's death, they splashed a bit of money on new cars and a truck but nothing
Speaker:very excessive.
Speaker:However, after her untimely death, not only was there no sign of the inheritance but there
Speaker:were unpaid credit cards and loans.
Speaker:Even the house had been remortgaged for an increased amount through the bank she worked
Speaker:at and without the husband's knowledge.
Speaker:There was nothing to show for all this spending except a few wardrobes full of clothes.
Speaker:Even her son's inheritance from his grandma had gone.
Speaker:We subsequently surmised that she had been running and juggling massive debt for years
Speaker:and the interest had been piling up and piling up.
Speaker:When she came into the money, it was all swallowed up, clearing up the debts.
Speaker:This illustrates the negative snowball effects of debt interest once allowed to reach a critical
Speaker:mass they can ruin your finances forever.
Speaker:If you live on a cash basis, it is psychologically easier to keep track of spending because when
Speaker:you hand over cash during a purchase, you don't get it back.
Speaker:In other words, something physical leaves your possession in exchange for the goods
Speaker:or services.
Speaker:On the other hand, when you charge a credit card, it's handed back to you.
Speaker:It's easy to assume that you have more funds than you do.
Speaker:This can lead to a ballooning of debt which may put a lot of strain on your finances.
Speaker:It is therefore important to develop an awareness of your debt to prevent it from spiraling
Speaker:out of control.
Speaker:There are several warning signs that can help you pick up on a personal debt crisis.
Speaker:These include 1.
Speaker:Minimum Payments While making minimum payments may afford
Speaker:you more flexibility when it comes to servicing your debt, it can also be detrimental to your
Speaker:financial stability.
Speaker:This is because minimum payments keep you in debt for longer.
Speaker:By only chipping on your debt, you may get stuck on a perpetual cycle of making monthly
Speaker:debt payments while interest continues to pile up.
Speaker:Minimum card debt, for example, is easy to rack up since you may end up ignoring it as
Speaker:long as you're making minimum payments now and then.
Speaker:As a result, you'll end up paying a relatively small debt for a very long time, with most
Speaker:of the payments going on interest which will make it more difficult to achieve financial
Speaker:freedom.
Speaker:2.
Speaker:Struggles With Debt Collectors If you have debt collectors or creditors
Speaker:constantly hounding and threatening you with repossession of property or wage garnishments,
Speaker:chances are you're not managing your debt properly.
Speaker:You need to evaluate the debt that you have racked up and begin making payments to ease
Speaker:your debt and prevent creditors from making these threats.
Speaker:Disagreements with your creditors are also tell-tale signs that you need to change your
Speaker:approach and behavior.
Speaker:3.
Speaker:Inability to Secure Loans or Credit Cards Having unmanaged debt can
Speaker:greatly hamper your ability to secure loans from creditors.
Speaker:If you find that you're unable to get loans or credit on favorable terms, it means that
Speaker:your credit worthiness has dwindled.
Speaker:Creditors have little confidence in your ability to repay loans.
Speaker:4.
Speaker:Inability to Grow Your Savings If you find that you have no money to put
Speaker:into savings after covering your bills, there's a strong likelihood that you have a debt problem.
Speaker:You should carefully evaluate whether your savings are increasing or decreasing since
Speaker:this will provide you with clues on how well you're managing your debt.
Speaker:If you notice that you often have to dig into your savings or retirement funds to cover
Speaker:your day-to-day expenses, this is a sign that you have unsustainable debt.
Speaker:5.
Speaker:Impulsive or Compulsive Spending You see it and you want it now.
Speaker:Impulsive spending is undoubtedly a common phenomenon in today's culture of high consumption.
Speaker:Nearly everyone could admit to having purchased a product or service at some point simply
Speaker:because they thought it was attractive.
Speaker:The rise of online stores has made it a lot easier and convenient to shop for products
Speaker:and services without even having to leave the house.
Speaker:However, the convenience that online shopping provides has also made us more prone to spend
Speaker:money on things that we may not necessarily need.
Speaker:According to a recent survey by Finder.com on consumer habits, 88.6% of Americans admit
Speaker:to having engaged in impulsive shopping online, with each individual spending an average of
Speaker:$81.75 per session.
Speaker:While impulsive buying is not necessarily a bad thing when done occasionally, it can
Speaker:lead to serious problems when done regularly.
Speaker:Individuals who engage in frequent impulsive buying tend to overspend, and this can lead
Speaker:to negative feelings of guilt and self-loathing, which can give rise to a cycle of more spending
Speaker:to assuage these feelings.
Speaker:For some people, these problems develop further and become compulsive, a habit that is out
Speaker:of their control, an addiction.
Speaker:This makes compulsive spenders prone to anxiety, low self-esteem, and unhappiness.
Speaker:From Spender's Anonymous, a client will name R, is quoted as saying, I believed at the
Speaker:time that everyone had credit cards and always bought what they wanted.
Speaker:That's what I did.
Speaker:I spent a lot of time window shopping, store shopping, and buying now but paying later.
Speaker:I always thought I would have the money, so I lived with this heavy feeling from debt
Speaker:and also from living in a fantasy world.
Speaker:I bought things because I thought that was where happiness was.
Speaker:So why do a lot of people engage in impulse buying, given how problematic it can be?
Speaker:Well, here are a number of factors that may motivate individuals to spend impulsively.
Speaker:One, the desire to save money.
Speaker:Most times when people engage in impulsive buying, the motive is usually to take advantage
Speaker:of the attractive discounts that are offered on items that are on sale.
Speaker:For instance, you may find that your favorite store has shoes on sale and think it's best
Speaker:to buy a pair or two.
Speaker:This may seem like a prudent financial decision, especially if your shoes are starting to wear
Speaker:out and you were already planning to buy new ones in a month or two.
Speaker:However, despite your very reasonable rationalization, you will still end up spending money that
Speaker:you did not budget.
Speaker:Since you hadn't factored new shoes in your budget, the reality is that you don't have
Speaker:the money to spend on the purchase of shoes.
Speaker:But your desire to save cash causes you to overlook this factor and buy them anyway.
Speaker:Two, a need to feel good.
Speaker:In the consumerist society that we live in today, there's pressure for people to purchase
Speaker:things they don't need to compensate for any insecurities or dissatisfactions that they
Speaker:experience.
Speaker:Companies are constantly conducting aggressive advertising campaigns that are designed to
Speaker:make people believe that they would be happier, more attractive, or successful if they purchase
Speaker:their products.
Speaker:As a result, individuals feel pressured into spending a lot of money on things that don't
Speaker:add tangible value to their lives.
Speaker:When I was younger, my wife and I visited a couple.
Speaker:The husband worked at the same firm as my wife.
Speaker:While we were at their house, I was staggered by the rows and rows of VHS cassettes, hundreds
Speaker:of them, box set after box set after box set.
Speaker:There on the wall were several thousand worths of spending, and this was a young couple with
Speaker:a new mortgage.
Speaker:I couldn't believe anyone could pour so much money into buying stuff they had probably
Speaker:already watched on television or at the cinema.
Speaker:Furthermore, DVDs were just coming in, so they were all about to be rendered obsolete.
Speaker:They split up with massive debts, and he was left paying off the cost of those box sets
Speaker:for years afterwards.
Speaker:Three, made up lists of wants.
Speaker:There's a natural tendency to see things and then to want them.
Speaker:We are surrounded by programs, films, social media, and advertisements that are designed
Speaker:to produce desire for a lifestyle or physical items.
Speaker:We start to add things to an imaginary list of wants that we then fulfill.
Speaker:Even when it is not as extreme as the case of Kirk below, it is mentally damaging as
Speaker:it leads to low-level unhappiness and dissatisfaction.
Speaker:As Kirk from Spenders Anonymous said,
Speaker:My compulsive spending problem is intricately linked with my obsessive compulsive disorder,
Speaker:OCD.
Speaker:I make lists of things to do and buy.
Speaker:When I get going on a list, it can be like an avalanche of activity.
Speaker:Not only will I try to finish buying everything on the list, but inevitably I will end up
Speaker:buying many other things that were not on the list.
Speaker:I've run up credit card bills that I don't know how I would pay off.
Speaker:I recognize when I'm engaged in a spending spree, but I often have felt powerless to
Speaker:stop myself.
Speaker:The compulsion to finish the list and to avoid adding other things to the list by buying
Speaker:them right then has often been much stronger than the recognition that I didn't have the
Speaker:money to pay for what I was buying.
Speaker:Paying off debt that eats a huge chunk of your income
Speaker:While regular payments to creditors can manage small debts, larger debts are usually a lot
Speaker:harder to control.
Speaker:If you allow your debt to spiral out of hand, you may end up in a scenario whereby you are
Speaker:making sizable debt payments which can carve out a huge percentage of your earnings.
Speaker:Taking on debt is essentially the same as spending future income.
Speaker:The money that you earn in the future is spent on repaying the principal as well as the accumulated
Speaker:interest.
Speaker:Many people take on debt in an expectation that their future income will rise.
Speaker:This assumption can often fail to materialize.
Speaker:If you don't manage your debt early, it may eventually get to a point where all your income
Speaker:that is not used in necessities ends up servicing the interest on your debt.
Speaker:When it gets to this point, this is where the house of cards collapses.
Speaker:The following table illustrates the amount of interest you will pay on some example loans.
Speaker:Remember that interest is the amount of your future income that you'll be handing over
Speaker:for the privilege of consuming something today rather than delaying it.
Speaker:You should convert the amount of interest you will pay into the number of hours you
Speaker:would have to work to earn the equivalent amount.
Speaker:This gives you a sense of the real cost of your spending and debt.
Speaker:All loans are assumed to have monthly compounding when interest is paid on unpaid interest except
Speaker:for payday loans which are fortnightly, 14 days.
Speaker:Interest to be paid assumes you make no payments over the term.
Speaker:In the case of the credit card, we've used one year.
Speaker:All fees and charges are excluded.
Speaker:The fees for non-payment or making new loan arrangements are usually exorbitant especially
Speaker:for payday loans and could easily double the actual APR.
Speaker:Credit card companies may also charge a higher penalty rate following non-payment.
Speaker:APR equals annualized percentage rate.
Speaker:This is simple interest expressed in a way that makes a comparison valid for different
Speaker:compounding periods the same way we use miles per hour to compare speed.
Speaker:YOLO LIFESTYLE Many millennials today have embraced a YOLO
Speaker:lifestyle living in the moment with instant gratification without worrying too much about
Speaker:the future.
Speaker:Let's face it, the future seems very far away when you're 20 something.
Speaker:One of the serious dangers of the YOLO mentality is that it promotes overspending.
Speaker:Individuals who subscribe to this philosophy are likely to justify purchasing things they
Speaker:cannot afford by incurring debt.
Speaker:It shouldn't come as a surprise then that the overwhelming majority of individuals who
Speaker:profess this kind of lifestyle are broke most of the time.
Speaker:As harmless as it may seem at face value, however, the YOLO style of spending can be
Speaker:very detrimental to one's long term financial stability.
Speaker:Having to manage immediate financial concerns properly can lead to perpetual financial stress
Speaker:and make it impossible to achieve any kind of prosperity and financial calm.
Speaker:Overlooking the importance of financially responsible behaviors such as saving and budgeting may
Speaker:seem inconsequential now but takes on a different perspective once you arrive in your 40s with
Speaker:half your working life behind you and nothing to show but a pile of debt and a nice Instagram
Speaker:feed.
Speaker:You never have money so when you get it you just spend it.
Speaker:Managing money is a habit which means that when you finally get some it can slip through
Speaker:your fingers like water.
Speaker:If you don't have a regular source of income you're more likely to have a pile up of expenses
Speaker:and as a result end up spending all your money as soon as you earn it.
Speaker:This is what makes it difficult for you to develop a habit of saving and growing your
Speaker:disposable income thus keeping you in a loop of debt and borrowing.
Speaker:Furthermore having an unstable income makes it slightly more complex to manage your finances
Speaker:and plan for the future.
Speaker:We will address the solution to this later.
Speaker:Looking for get rich quick solutions
Speaker:The world today is saturated with countless scam enterprises that can offer unsuspecting
Speaker:victims overinflated promises of fortune that turn out to be fraudulent.
Speaker:And governments have to a great extent abetted this get rich quick mindset through media
Speaker:portrayals of ordinary folks winning astronomical sums of money in lotteries, gaming platforms
Speaker:and pyramid schemes.
Speaker:As a result some people believe that using a lottery win will fund their retirement.
Speaker:Of course the economics of lotteries makes this wholly implausible.
Speaker:The allure of easy money can drive you on a dangerous path of financial and emotional
Speaker:ruin not to mention wastage of time, energy and resources which could have been channeled
Speaker:to better use.
Speaker:There are several reasons why get rich schemes simply do not work and will not help you to
Speaker:make a fortune as some marketers of these enterprises would like you to believe.
Speaker:These include 1.
Speaker:They do not obey the law of equity.
Speaker:In every aspect of life there is a direct correlation between the amount of input that
Speaker:is given and the output that results from it.
Speaker:If you work out physically in the gym for instance you can build muscle and cut down
Speaker:on your weight thereby becoming more healthy.
Speaker:Likewise if you spend a lot of time and effort trying to learn and perfect a particular skill
Speaker:you develop mastery in that field.
Speaker:As a result you will be able to execute your tasks perfectly and with ease.
Speaker:The same thing is true when it comes to building wealth and fortune.
Speaker:To obtain wealth and be able to manage it properly you need to invest a lot of time,
Speaker:money, patience and effort.
Speaker:This allows you to develop the know-how of wealth creation and management which will
Speaker:enable you to sustain your fortune.
Speaker:On the other hand if you acquire wealth without putting in the commensurate effort you may
Speaker:not have the experience that is required to sustain it.
Speaker:2.
Speaker:Easily acquired wealth often disappears just as quickly.
Speaker:Majority of people who suddenly become wealthy due to windfalls such as winning the lottery
Speaker:often end up going broke in a few months or years.
Speaker:The reason for this is that people who suddenly acquire wealth without making an effort tend
Speaker:not to value it enough.
Speaker:As a result they may dish out large sums of money to their family and friends, spend extravagantly
Speaker:on vanity projects and liability goods and fail to monitor their spending.
Speaker:3.
Speaker:Get rich schemes are prone to false advertising.
Speaker:Most enterprises that promise quick riches often deliberately misrepresent their schemes
Speaker:to take advantage of the desperation of unsuspecting individuals.
Speaker:They may for instance advertise themselves as legitimate investment opportunities while
Speaker:offering no tangible benefits or affiliate marketing scams that promise people large
Speaker:sums of income for doing menial tasks.
Speaker:In some cases they may even be rich relative scams which trick their victims into thinking
Speaker:they have won a windfall from a wealthy relation.
Speaker:Instead these enterprises simply rely on unsuspecting individuals and swindle them of their money.
Speaker:Although there is nothing inherently evil about wanting to get as far as possible with
Speaker:minimal effort, resorting to these get rich quick schemes can make you an easy target for
Speaker:would-be scammers who are only looking to leave your pockets dry.
Speaker:The major issues with these schemes are that they divert us into wasting time, energy and
Speaker:money and derail us from the real path to prosperity.
Speaker:So the first step in building healthy financial behavior is to understand that nothing comes
Speaker:easy and you'll have to put in some tangible effort to reap the rewards that you're seeking.
Speaker:Once you become aware of this fact you will develop an appreciation of financial discipline
Speaker:and begin to work on managing your finances more effectively.
Speaker:In summary here are the main takeaways from this chapter.
Speaker:Achieving financial freedom requires you to understand the problems and issues that have
Speaker:delivered you here at this moment in time.
Speaker:That rich quick schemes are not effective ways of creating wealth.
Speaker:Expect to get out what you put in.
Speaker:Make a list for yourself of all the financial problems that you have in your life and for
Speaker:each problem identify the root cause of that problem.
Speaker:This will come in handy later.
Speaker:In this chapter we shall examine and attempt to understand the causes of problem behavior
Speaker:and how it impacts your finances.
Speaker:You'll look at how marketers are manipulating your normal human responses and how you can
Speaker:resist these cynical ploys.
Speaker:You will learn about the five common problems sabotaging your prosperity, seven debt myths
Speaker:that are keeping you impoverished, the difference between good debt and bad debt, five psychological
Speaker:weapons being used to make you overspend, how to protect yourself from influencers.
Speaker:Being financially responsible is one of the most important aspects of being an adult.
Speaker:If you've recently left home and are trying to chart your path in the world it's vital
Speaker:that you learn how to manage your finances properly to sustain your lifestyle and grow
Speaker:your wealth.
Speaker:Nevertheless, there are many habits that we often pick along the way which make it harder
Speaker:to achieve financial freedom.
Speaker:If you find that you tend to be broke most of the time, despite having a source of income
Speaker:here are some of the areas you may be going wrong.
Speaker:Five common problems sabotaging your prosperity.
Speaker:1.
Speaker:You lack the right mindset Having the right mindset is crucial when it
Speaker:comes to developing behaviors that will help you to achieve financial success.
Speaker:This is simply because your thoughts will tend to translate into actions, so before
Speaker:you even embark on the task of effecting financial discipline in your life, you need first to
Speaker:make a conscious decision that you want to create wealth and achieve financial freedom.
Speaker:Once you convince yourself that you are capable of becoming wealthy and make the choice to
Speaker:work towards that goal, you'll have the motivation and drive to implement the necessary changes
Speaker:in your behavior and lifestyle.
Speaker:2.
Speaker:Failure to budget In order to plan your financial life in a sustainable
Speaker:way, you must learn how to budget your money.
Speaker:Making a budget not only allows you to keep your expenses low, but also enables you to
Speaker:make shrewd investments.
Speaker:By cutting down on your expenses, you'll be able to save money, which you can deposit
Speaker:in an emergency fund account to keep you financially secure in case unplanned or unexpected events
Speaker:arise.
Speaker:3.
Speaker:Overspending One of the negative outcomes of failing to
Speaker:budget is that you end up spending more than you can earn.
Speaker:Investors can make it difficult to save money or even have spare funds to channel into wealth-generating
Speaker:assets.
Speaker:Furthermore, overspending also increases the likelihood of excessive borrowing, which
Speaker:can cause you to rake in a lot of debt to fund unaffordable consumption.
Speaker:4.
Speaker:Failing to invest Unless you are the top C levels of a large company,
Speaker:the chances of becoming rich from your salary are very low.
Speaker:To generate real wealth, you need to invest your income in projects that have the potential
Speaker:for high returns.
Speaker:In other words, you need to make your money work for you instead of working for money.
Speaker:4.
Speaker:Failing to prioritize debt repayment One of the common financial mistakes that
Speaker:people often make is to put off paying debt or only paying minimal amounts.
Speaker:This can be very counterproductive since it prolongs the period of repayment, which
Speaker:can result in paying higher interest rates.
Speaker:So to achieve financial freedom, you need to take an aggressive stance when it comes
Speaker:to clearing your debt.
Speaker:By making debt clearance a top priority, you will be able to pull yourself out of the vicious
Speaker:debt cycle a lot faster and eventually have spare cash to redirect to wealth-generating
Speaker:opportunities.
Speaker:We will discuss different approaches to clearing this debt later in the book.
Speaker:5.
Speaker:Fear of failure Many people often get stuck in poor financial
Speaker:situations simply because they are afraid of failing.
Speaker:They may worry that financial management is a complicated and time-consuming process for
Speaker:which they are just not cut out.
Speaker:They may also lack confidence in their ability to make good decisions and wrongly assume
Speaker:they will end up making mistakes.
Speaker:If fear is the only thing holding you back from reaching for financial success, you need
Speaker:to understand that failure is a part of life and your mistakes help you learn.
Speaker:After all, it is impossible to succeed in anything without making an effort to try.
Speaker:7.
Speaker:Debt myths that are keeping you impoverished Having affordable debt is not necessarily
Speaker:a bad thing, but is generally counterproductive except as we will discuss.
Speaker:Most businesses grow and develop as a result of loans acquired from lending institutions
Speaker:such as banks.
Speaker:They do this by using it to generate a higher return than the cost of the debt.
Speaker:However, when you manage debt poorly, it can quickly become a serious financial problem
Speaker:which can lead to brokenness.
Speaker:Therefore, understanding how debt works and how you can control it is very crucial when
Speaker:it comes to managing your finances properly.
Speaker:There are several wrong beliefs about debt that most people tend to hold which affect
Speaker:their finances and decision making strategies.
Speaker:Let us now look at some of these common myths and see whether there is any truth to them.
Speaker:Myth 1.
Speaker:Debt is either good or bad According to a survey conducted by Price Waterhouse
Speaker:Coopers in 2017, debt is one of the main causes of financial stress for American workers.
Speaker:This is not entirely surprising because the average American household owes a total debt
Speaker:of $134,643.
Speaker:Nevertheless, rising debt levels and the strain that they exert on individual incomes have
Speaker:created the general perception that debt is always a bad thing.
Speaker:However, some types of debt can lead to better financial outcomes thus enabling one to improve
Speaker:their future wealth prospects.
Speaker:In general, any kind of debt that is channeled towards investments which can potentially
Speaker:increase your income or use to purchase an appreciating asset you can consider as good
Speaker:debt.
Speaker:Let's look at some examples to understand the difference between good and bad debt.
Speaker:A. Mortgages
Speaker:Most workers are not able to purchase homes in cash due to insufficient income and day-to-day
Speaker:expenses which take up most of their paychecks.
Speaker:For this reason, many home buyers typically end up having to take on some debt in the
Speaker:form of mortgages to buy a property.
Speaker:This can be advantageous because it allows individuals with good credit scores to receive
Speaker:loans at reasonable interest rates to invest in a home which has historically been an appreciating
Speaker:asset.
Speaker:However, a mortgage can very easily become a bad debt if you overextend yourself, purchasing
Speaker:a property that leaves insufficient free income to meet your other needs or even if it just
Speaker:drains your cash flow such that you cannot make proper provisions for investing in retirement.
Speaker:Failure to maintain the payments can lead to foreclosures and repossession of the property
Speaker:by your lender.
Speaker:B. Vehicle loans
Speaker:Taking up debt to procure a vehicle which is beyond your means is undoubtedly a bad
Speaker:idea even though low finance rates appear to make it more palatable.
Speaker:This is especially true because there are other payments to be made, for instance, insurance
Speaker:and maintenance.
Speaker:Cars are fast depreciating assets and the amount of your loan can easily exceed the value.
Speaker:Various types of finance deals are available on vehicles which makes them superficially
Speaker:attractive.
Speaker:For example, a personal contract plan, PCP, that requires a minimum deposit and at the
Speaker:end of the contract you are required to make a final balloon payment or hand the vehicle
Speaker:back.
Speaker:A PCP is designed to keep you coming back every three years for a new vehicle even though
Speaker:the lifespan of a car is now many times that.
Speaker:The average price of new cars and the level of equipment has been rising steadily since
Speaker:these schemes became widespread because the reasonable monthly cost hides the real cost.
Speaker:Having these financial plans could drain your cash flow in interest payments which you could
Speaker:otherwise invest in other projects.
Speaker:Car payments could be taking up the second largest part of your post-tax income after
Speaker:mortgage or rent payments, however they are much more easily controlled by making trade-offs.
Speaker:C. Student loans
Speaker:Student loans are without a doubt one of the most common debts that many people take up
Speaker:in the course of their lives, however with millions of borrowers defaulting on these
Speaker:loans every year it can be difficult to perceive this kind of debt as good.
Speaker:The truth of the matter is that student loans can be good or bad depending on how you leverage
Speaker:them.
Speaker:For instance, if you borrow a small amount to pay for a course in a reasonably priced
Speaker:college or university, this can be considered as a reasonably good loan given that your
Speaker:earnings are likely to increase once you attain higher education.
Speaker:On the other hand, taking up too much debt to finance a college or university education
Speaker:in an expensive institution can be a liability in the event that you fail to secure a high
Speaker:paying career.
Speaker:If you're thinking about securing a loan to pay for college therefore you need to choose
Speaker:an institution and loan amount aligned with your potential future earnings.
Speaker:As a rule of thumb, good debt is one that promises future benefits either in terms of
Speaker:increased earnings or improved quality of life.
Speaker:In contrast, bad debt is one that is likely to cost you more money in the future or leave
Speaker:you worse off than if you hadn't taken the debt in the first place.
Speaker:Any kind of debt that you incur as a result of financing a lifestyle that is beyond your
Speaker:earnings you should consider as bad debt.
Speaker:For instance, if you charge your credit card to pay for things like fancy clothes, entertainment
Speaker:and expensive phones then carry forward the debt every month.
Speaker:You will eventually end up accruing more interest which may sink you into debt even further.
Speaker:Conversely, if you borrow some money from a bank to set up a side hustle to supplement
Speaker:your income you will be able to repay the loan from the profits that your enterprise
Speaker:generates thus improving your financial prospects.
Speaker:Myth 2 You should only start to save once you have
Speaker:finished paying your debt.
Speaker:Many people often wrongly believe that they should save once an individual has completely
Speaker:cleared all their outstanding debt.
Speaker:While this may seem rather logical at face value, channeling all your spare income to
Speaker:debt repayments may not be the ideal way to go, especially if you have large outstanding
Speaker:debts.
Speaker:It is therefore advisable to approach your financial situation from a balanced perspective.
Speaker:Myth 3 You will lose your possessions if you fail
Speaker:to repay your outstanding debt.
Speaker:It's not uncommon for people to worry that creditors will repossess their possessions
Speaker:if they are declared bankrupt.
Speaker:This however should not be a reason for concern.
Speaker:While lenders can repossess homes and vehicles in case owners are unable to repay the debt,
Speaker:financial effects, household goods and furniture are generally exempt from bankruptcy claims.
Speaker:Nevertheless, there are instances where your creditors may ask you to include items of
Speaker:high value such as expensive paintings and luxury cars in a sworn statement of affairs.
Speaker:As long as you make regular payments to your creditors, you are likely to keep all your
Speaker:possessions.
Speaker:Myth 4 You will lose your job if you are unable
Speaker:to pay back your debt.
Speaker:Many people often express concern about getting fired by their employers if they file for
Speaker:bankruptcy.
Speaker:The truth of the matter however is that it is illegal for employers to dismiss their employees
Speaker:from the workplace simply because they have defaulted on their debt payments or filed
Speaker:a bankruptcy claim.
Speaker:Your employer will not even be informed about your bankruptcy unless there is a wage garnishment
Speaker:order.
Speaker:In case this order is granted by a court, your employer may be tasked to withhold a
Speaker:certain amount of your paycheck and send it directly to your creditor until the debt
Speaker:has been cleared.
Speaker:Myth 5 You will be unable to secure credit in the
Speaker:future if you declare bankruptcy.
Speaker:While most people tend to perceive bankruptcy as some kind of punishment for loan defaultors,
Speaker:it is designed to be rehabilitative.
Speaker:It would therefore be unfair for individuals to be punished for the rest of their lives
Speaker:simply for failing to meet their loan obligations.
Speaker:In general, people who declare bankruptcy are listed on credit reports for a maximum
Speaker:of six years before they are dropped off.
Speaker:This essentially means that you can still secure loans and mortgages from lenders in
Speaker:the future once you are discharged from bankruptcy.
Speaker:Myth 6 Bankruptcy is the only option if you have
Speaker:large outstanding debt.
Speaker:While most people often see bankruptcy as the only solution for large debt, there are
Speaker:several measures that you can take to solve a debt problem without having to declare bankruptcy.
Speaker:Bankruptcy should only be considered as a final resort after all other options have
Speaker:been exhausted.
Speaker:One of the main ways in which you can solve a debt problem is through debt management.
Speaker:In this approach, multiple loans are combined into a single loan to lower the interest and
Speaker:make payment a lot easier.
Speaker:Another option that you can consider to deal with large outstanding debts is a settlement.
Speaker:This involves negotiating with your creditors to have a part of your debt erased.
Speaker:As a result, the outstanding debt is reduced, thereby easing the pressure of repayment.
Speaker:Myth 7 Late credit card payments will hurt your
Speaker:credit rating.
Speaker:Granted, late credit card payments are far from ideal.
Speaker:This is because they lead to the accumulation of fees and increased interest charges.
Speaker:However, just because you're late on your payment doesn't mean your credit score will
Speaker:be affected.
Speaker:In general, companies do not report credit card payments unless they are overdue by more
Speaker:than 30 days.
Speaker:So you have no reason to worry about getting listed on credit bureaus as long as you make
Speaker:the payment within the month.
Speaker:Managing Bad Spending Behaviors
Speaker:We live in an increasingly materialistic world that promotes compulsive spending and buying
Speaker:things that we often don't need.
Speaker:Every single day we are bombarded with advertisements which tell us we won't be happy unless we
Speaker:acquire the latest trendy gadget or product that is on sale.
Speaker:It's no surprise then that most people run out of money as soon as they receive their
Speaker:paycheck and end up racking huge debts in a bid to furnish their expensive lifestyles.
Speaker:Compulsive spending is one of the most common addictions in today's society.
Speaker:Unfortunately, most people don't consider it an addiction problem because no physical
Speaker:symptoms are involved.
Speaker:Nevertheless, compulsive spending can be a serious addiction issue not very different
Speaker:from other addictions such as drugs, sex, and gambling.
Speaker:First, people usually engage in impulse buying to feel good about themselves and avoid negative
Speaker:feelings such as anxiety and depression.
Speaker:Compulsive spending is often rooted in feelings of inadequacy and low self-esteem but can be
Speaker:exacerbated by mood disorders.
Speaker:Many believe that by buying all the fancy and expensive things that are marketed by
Speaker:companies they'll be able to fill the void in their lives and achieve happiness.
Speaker:Sure, charging your credit card or any spending can give you a temporary feeling of power
Speaker:and freedom.
Speaker:However, the more you continue to overspend in things you do not need, funding an unsustainable
Speaker:life cycle ultimately fuels the cycle of self-loathing, anxiety, and depression.
Speaker:Just as with other pleasurable activities such as sex and drug use, spending typically
Speaker:activates reward centers in the brain and stimulates the release of the feel-good hormone
Speaker:dopamine.
Speaker:The more you spend money to trigger this good feeling, the higher the surge of dopamine.
Speaker:As a result, you end up getting caught in a cycle of overspending on things that you
Speaker:don't need to chase that dopamine high.
Speaker:The happy feeling that one experiences due to compulsive spending can provide temporary
Speaker:relief from negative feelings such as anxiety and stress.
Speaker:However, when the spending becomes too much, it often results in high debts which can further
Speaker:exacerbate one's mental problems and disrupt their lives.
Speaker:If you want to achieve financial success and freedom, therefore, you need to overcome your
Speaker:bad spending habits and develop good behaviors when it comes to how you manage your money.
Speaker:To do so, it is important to be able to identify the symptoms of compulsive spending addiction.
Speaker:Here are some of the telltale signs that can help you diagnose this problem.
Speaker:Spending a significant amount of your income in arbitrary and unplanned purchases.
Speaker:Accumulating a large amount of consumer debt.
Speaker:To stop spending despite having a desire to do so.
Speaker:Hiding purchase items from close relatives and friends.
Speaker:Being more excited about purchasing things than actually owning them.
Speaker:Purchasing items which you end up not using.
Speaker:Buying a large number of products which you do not need.
Speaker:Having relationship problems due to bad spending habits.
Speaker:Experiencing negative feelings such as shame and guilt from your spending habits.
Speaker:Being excited or uneasy when shopping.
Speaker:Using spending as a coping mechanism to deal with unpleasant emotions such as low self-esteem,
Speaker:anxiety and depression.
Speaker:Like most addictions, compulsive spending disorder can be very challenging to quit, especially
Speaker:if you have spare income most of the time.
Speaker:Nevertheless, cognitive behavioral therapy can help to mitigate this problem by addressing
Speaker:the psychological factors which contribute to needless spending.
Speaker:Overcoming the challenge of compulsive spending also requires a total change in one's mindset.
Speaker:Desire.
Speaker:Are you being manipulated into spending more?
Speaker:It's hard to go through your day without coming across numerous ads, whether on TV,
Speaker:social media or billboards, seeking to draw your attention to all kinds of products in
Speaker:the hope of convincing you to buy whatever it is they are marketing.
Speaker:While there's nothing inherently wrong with advertising, many companies today employ manipulative
Speaker:tactics which are psychologically influencing us into spending money on things that we don't
Speaker:need.
Speaker:These techniques are so effective, relying on our social conditioning, that we will not
Speaker:realize that they manipulated us.
Speaker:In contemporary times, ads have become far more complex and nuanced, often employing eye-catching
Speaker:visuals, sophisticated graphics and carefully choreographed stories which create lasting
Speaker:impressions about the products.
Speaker:The memories that this creates on the mind of consumers through ads can have a profound
Speaker:emotional impact on them and influence their decision on whether or not to buy a certain
Speaker:product.
Speaker:One of the fundamental things to realize about mass consumer advertising is that it doesn't
Speaker:care if you can afford the product as long as you buy it.
Speaker:Adversaries deliberately want you to aspire to their product so they can increase the
Speaker:profit margins.
Speaker:By purchasing the product, you believe that you take on the desirable characters and traits
Speaker:of the people using the product in the advertising.
Speaker:In essence, ads raise the desire for a product so that you perceive the value to be in excess
Speaker:of the cost.
Speaker:If you are struggling with everyday expenses and bills, you probably don't have a lot
Speaker:of money to spare for purchasing the latest expensive phone or other luxury items.
Speaker:But since ads are always designed to appeal to your emotions, you may find yourself taking
Speaker:on debt simply to own a fancy product that is marketed at you which will ultimately mess
Speaker:with your budget and lead to money problems.
Speaker:Advertisements are designed to arouse extrinsic motivation to influence you to purchase things
Speaker:that may not necessarily be useful to you.
Speaker:Extremely motivated people usually have an innate feeling of self-acceptance and will
Speaker:do things because they intuitively believe they are good for them.
Speaker:On the other hand, extrinsically motivated people tend to focus too much on how others
Speaker:perceive them and are more likely to prioritize social acceptance and popularity than personal
Speaker:happiness and fulfillment.
Speaker:Advertisers are very conscious of this fact, which is why they employ messaging tactics
Speaker:to evoke desire in consumers and make them believe that they won't be whole, happy,
Speaker:or accepted unless they own a particular product.
Speaker:Desire is a very powerful emotion that can overrun one's ability to make rational decisions.
Speaker:Therefore, before purchasing any product that is being advertised, you should take the time
Speaker:to think it through carefully to ascertain whether you are buying it because you need
Speaker:it or simply because the advertisers tell you that you do.
Speaker:One useful tactic that you can employ is to enforce a mandatory holding strategy on
Speaker:your spending whereby you wait 72 hours before deciding to purchase a product.
Speaker:This will give you enough time to decide whether you want to proceed with the transaction
Speaker:or not.
Speaker:One of the factors that usually drives people to spend is the perception that whatever they
Speaker:own is not enough.
Speaker:For instance, you may feel like your possessions, such as your phone, car, or house, are not
Speaker:as good as someone else's.
Speaker:This can lead to feelings of inadequacy which, consequently, push you to spend more to try
Speaker:to attain the same status.
Speaker:It is important to realize that every individual's circumstances are unique and so comparing yourself
Speaker:with them, especially fictitious advertising characters, serves no useful purpose other
Speaker:than to dent your self-esteem and confidence.
Speaker:By avoiding the stimuli, which gives you a false perception, you can develop a healthy
Speaker:sense of being and completeness, thus eliminating buying things that you don't really need.
Speaker:Five psychological weapons used to make you overspend.
Speaker:We've talked in general about the power of advertising to change our behavior.
Speaker:Now, we're going to learn about five specific methods or tricks that are used every day
Speaker:to influence us and increase our desire for materialistic things.
Speaker:Contrast Principle When we experience similar things in succession
Speaker:or simultaneously, we evaluate the lesser or greater value of the second through direct
Speaker:comparison with the first.
Speaker:This contrast effect will create an increased or diminished perception of the second thing
Speaker:dependent on how we viewed the first, for example.
Speaker:When you lift a heavy bag and then a lighter one, the second bag will appear lighter than
Speaker:it really is.
Speaker:This contrast effect is because our brain evaluates things based on the comparison that
Speaker:is most easily accessible at that given moment, rather than the most suitable one.
Speaker:Thus, we evaluate, by reference to convenient comparisons, rather than by using absolute
Speaker:values, which are more correct, as these aren't readily available for our brains to utilize.
Speaker:This often leads us to make biased judgments.
Speaker:The contrast effect applies to many judgments we make day to day.
Speaker:For example, if at a cocktail party, you talk to an unattractive person and are then joined
Speaker:by an average-looking person, you'll judge the average-looking person to be more attractive
Speaker:than they really are.
Speaker:Also, more so than you would have perceived them to be had you seen them on their own
Speaker:before you had this unreliable scale of comparison implanted.
Speaker:In this way, the contrast effect can affect our judgments concerning people, products,
Speaker:market values, and the values of many other attributes and characteristics.
Speaker:The contrast principle has many applications in sales and marketing, and is often utilized
Speaker:by brands to influence customers' perceptions of their products.
Speaker:For example, a technique commonly used by salespeople is to offer either low-quality
Speaker:or an overpriced luxury item alongside the one they really want you to buy.
Speaker:They do this to influence your perception of this target product as being a good value
Speaker:deal in comparison to the other items they offered.
Speaker:Reciprocity
Speaker:People are socially obliged to give back to others the form of a behavior, gift, or
Speaker:service that they have received first.
Speaker:If a friend invites you to their party, you feel obligated to ask them to a future party
Speaker:you were hosting.
Speaker:If a colleague does you a favor, then you owe that colleague a favor.
Speaker:In the context of social obligation, people are more likely to say yes to those who they
Speaker:owe.
Speaker:This principle is exploited ruthlessly.
Speaker:Charities know this well, which is why they send a free gift, such as a pen, when they
Speaker:are soliciting donations.
Speaker:Likewise, restaurants exploit this when they give you a mint along with your bill.
Speaker:This simple act will increase tips by 3%.
Speaker:Authority
Speaker:Authority is the idea that people follow the lead of credible, knowledgeable experts.
Speaker:Physiotherapists, for example, can persuade more of their patients to comply with recommended
Speaker:exercise programs if they display their medical diplomas on the walls of their consulting rooms.
Speaker:People are more likely to give change for a parking meter to a stranger if that requester
Speaker:wears a uniform rather than casual clothes.
Speaker:What the science is telling us is that it is important to signal to others what makes
Speaker:you a credible, knowledgeable authority before you make your influence attempt.
Speaker:In the same vein, advertisers will use authority figures like dentists to market their products,
Speaker:such as toothpaste or toothbrushes, as the claims appear more credible.
Speaker:Scarcity
Speaker:People always want more of those things they can have less of.
Speaker:For instance, when British Airways announced in 2003 that they would no longer be operating
Speaker:the twice daily London to New York Concorde flight because it had become uneconomical
Speaker:to run, sales took off, pun intended, the very next day.
Speaker:Since that nothing had changed about Concorde itself, it didn't fly any faster, the service
Speaker:didn't suddenly get better, and the airfare didn't drop.
Speaker:It had simply become a scarce resource, and as a result, people wanted more of it.
Speaker:This is why sales are always ending today or for one day only.
Speaker:They want you to believe that you'll miss out if you don't grab that bargain right now.
Speaker:Consistency
Speaker:Society is an adaptive behavior that has been very beneficial.
Speaker:Doing certain things always in the same way, and making decisions according to the same
Speaker:values help us survive in a complex world.
Speaker:We feel bad if we say we're going to do one thing and then we don't do it.
Speaker:We unconsciously strive for consistency in our commitments.
Speaker:We prefer to follow pre-existing attitudes, values, and actions, so it's much more likely
Speaker:that we end up doing something after having admitted to agreeing with it, verbally or
Speaker:in writing.
Speaker:Not only do we want to be consistent, but we also need to look consistent.
Speaker:The more effort you put into doing something, the more influential the principle of consistency
Speaker:will be.
Speaker:In Childani's research, he found that not only will people go out of their way to behave
Speaker:consistently, they will also feel positive about being consistent with their decisions,
Speaker:even when faced with evidence that their decisions were erroneous.
Speaker:For example, at the racetracks, people are much more confident of their horse's chances
Speaker:of winning just after placing the bet than they are immediately before laying down that
Speaker:bet.
Speaker:Second, we don't know ourselves that well.
Speaker:Sometimes we say something or do something without thinking it through beforehand.
Speaker:Then our mind says, okay, I just bought my third Starbucks in a week.
Speaker:I must really like coffee and Starbucks.
Speaker:Maybe I even can't function properly without them.
Speaker:It's similar to forcing yourself to smile when you feel sad.
Speaker:It makes you less sad because your brain gets the information on your mood from the physiological
Speaker:action you made.
Speaker:Third, sometimes we'll decide on our identity and, hence, our behavior by looking at what
Speaker:others think about us.
Speaker:Housewives from New Haven, Connecticut gave much more money to a charity after hearing
Speaker:that they were considered charitable people.
Speaker:Such automatic decision-making, plus the stubbornness to stick with this decision, is a gift to anyone
Speaker:who'd want to influence your behavior, for better or worse.
Speaker:Poverty is not relative.
Speaker:We just perceive it that way.
Speaker:The rise of social media platforms in the past two decades has undoubtedly revolutionized
Speaker:the way we interact with each other.
Speaker:Such as Facebook, Instagram, and Twitter constantly keep us in touch with our friends,
Speaker:family, and acquaintances, and peek into their lives without being constrained by the barriers
Speaker:of distance or time.
Speaker:While this increased connectedness has produced a transformational effect on our personal
Speaker:relationships, it has also come at considerable cost to our mental health and the way we perceive
Speaker:ourselves.
Speaker:Picture this.
Speaker:You're scrolling through your news feeds on Facebook or Instagram, and suddenly an image
Speaker:of one of your friends having a great time at a posh restaurant pops up on your screen.
Speaker:They seem to be happy and smiling, which makes you envious of them.
Speaker:Immediately, you begin to think about your meager income and the fact that you're not
Speaker:able to afford a meal at such a swish location.
Speaker:This will likely cause you to feel inadequate and inferior, thus feeding into the negative
Speaker:thoughts you have about yourself.
Speaker:Your self-esteem ends up taking a hit, and your self-confidence diminishes.
Speaker:A friend said to me, you're always out and about eating in nice places.
Speaker:As my wife will attest, that is inaccurate, but this is because the only time I post on
Speaker:social media is when we go out.
Speaker:After all, the rest of our life is as mundane as the next person.
Speaker:What he was seeing from his Facebook feed was a complete caricature of our lives.
Speaker:People tend to portray themselves on social media in choreographed ways to appeal to other
Speaker:users.
Speaker:There's a lot of pressure on social media for people to present themselves in glamorous
Speaker:vignettes to achieve popularity and influence on these platforms when, in real life, they
Speaker:may be struggling like everyone else.
Speaker:If you take the flashy images you see on social media as accurate representations of people's
Speaker:real life experiences, you are going to feel poor and inadequate.
Speaker:It is worth remembering, in fact, poverty is not relative.
Speaker:Real poverty is living in a shack without access to running water or proper sanitation,
Speaker:where if you don't work that day, then you won't eat.
Speaker:Billions of people live that type of existence.
Speaker:So although you may feel poor, as compared to some of your friends or acquaintances in
Speaker:social media, there's always someone else who is worse off than you.
Speaker:By appreciating yourself and what you have going for you at the moment, you can eliminate
Speaker:the tendency of comparing yourself with others and the need to show off on social media.
Speaker:How to Arm Yourself Against Manipulation
Speaker:There are a number of steps that we can take to fight back against the barrage of advertising,
Speaker:social media, and other negative influences.
Speaker:Realize that your self-worth is not a function of your possessions or even wealth, and work
Speaker:on reinforcing that.
Speaker:Develop the habits and practices of internal rather than external motivation.
Speaker:Look to your internalized set of values for reference, not what is happening around you
Speaker:at the moment.
Speaker:Use or eliminate your exposure to social media and the news or TV.
Speaker:Replace these stimuli with meaningful hobbies or pastimes that give you purpose and pleasure.
Speaker:I know it sounds trite, but you should spend time each day counting your blessings and looking
Speaker:at positive events in your life because it works to improve your mental strength.
Speaker:Let us refresh some of the main points that we've picked from this chapter.
Speaker:Compulsing and changing one's spending behaviors is absolutely crucial when it comes to developing
Speaker:good financial discipline.
Speaker:Marketers and advertisers take advantage of people's weaknesses and insecurities to promote
Speaker:the sale and purchase of products which they do not need.
Speaker:Compulsive spending can be an addiction which can lead to financial as well as psychosocial
Speaker:problems and you should overcome it to be financially empowered.
Speaker:Compulsing ourselves with others only breeds negative feelings about our own self-worth
Speaker:and drives us to spend copious amounts of money to feel good about ourselves.
Speaker:By practicing self-love, we can develop healthy strategies to cope with difficult emotions
Speaker:and eliminate the tendency of impulsive buying.
Speaker:Develop the habits and behaviors of intrinsic motivation to protect yourself from negative
Speaker:influences.
Speaker:Take a list of all the times over the past few weeks you've compared yourself unfavorably
Speaker:to others and consider the circumstances.
Speaker:Then do an exercise to look at all the positives in your life including your relationships.
Speaker:Consider giving up social media for a week or two and see if you feel better off without
Speaker:it.
Speaker:This has been perpetually broke, living beyond your income.
Speaker:Get a financial makeover in 7 hours and achieve prosperity by 40.
Speaker:Written by Tom Cromwell, narrated by Russell Newton for HotGhost Productions.
