Transcripts
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.
