My financial epiphany.

My financial epiphany

I was raised to follow conventional wisdom. I was educated in conventional schools, took conventional courses, prepared for the convention of a “job” and had 2 kids, a house and a mortgage. I was indistinguishable from the majority of my peers. I was “normal” and blended in well with the crowd. I was also unable to afford private school or college without working overtime and borrowing money. I often marveled at those who were more affluent them myself, and wondered how they did it. I assumed that their job just paid better, their mortgage rate was better, their private schools cheaper...

But I really didn’t know how rich people got rich, what made them different. I had a set of assumptions and platitudes about the rich, like they were born rich, they inherited it, they got lucky, or it took money to make money. I like most people never met or talked to a rich person, until later in life. It was only after befriending someone wealthy and reading several books that I had an epiphany. I was not rich because I was doing the same things with my education, job, family and finances that every other person who was not rich was doing. I think I should repeat that statement, for effect.

I was doing the same things every other non-rich person was doing.

A statement which infers that the rich are doing something’s that I wasn’t doing. In America we often refer to the top 1% of income earners in our country as “the one percenters” and they got to be in the top one percent of income earners by doing things the other 99% aren’t doing. It was an epiphany which struck me like a bright light and suddenly I felt like I had been fumbling into the darkness and now someone had turned on the light switch and I could see.

Albert Einstein, the renowned scientist and mathematical genius once said, “There is nothing new under the sun, only things which we have forgotten.” The “we” here being the collective we referring to our country or world’s population.

I will give you an example, which I found funny and sad at the same time.
In American farm country, we have a saying or euphemism; when we are talking about a farmer who died, we don’t say he died, instead we say “He Bought The Farm”. I always assumed this saying meant that our culture doesn’t like to talk about death, or even used the words death, dead or died. So we used this euphemism. The truly sad thing is that while we remembered that “Bought the Farm” meant that he died, we forgot that it also meant that he literally bought the farm.
In American there is a economic practice which predates the Civil War of 1865, whereby farmers would all buy a Permanent or Whole life insurance policy, which was a policy good for your whole life span, and the amount was enough to payoff the mortgage and equipment, plus a little money to bury you. But the policy wasn’t just about a death benefit, it was a life benefit, as in during the farmers life he could use the money in it. The policy built up cash value, a type of savings account, earning interest, usually compound and the farmer could borrow against the cash value from the insurance company, the loan was secured by this savings account called the cash value. The farmer took out loans, against or secured by the cash value to buy seeds, fertilizer and equipment. And after he harvested and sold his crops, he would payback some or all of the loan, and then use it again another time. The cash value grew every year tax free and was a useful savings account to get loans from quickly with no credit check. After all the loan was secured by his cash value and he paid interest, so the approval was automatic. So the farmer enjoyed this life benefit all his life and when he died, the insurance company paid the death benefit and the remainder of the cash value to his beneficiary. It was then that the farmer literally bought the farm.

This is an example of something we, the collective “we” use to know, but have forgotten. But the wealthy, like banks and certain rich families remember and practice this strategy as a life benefit. In fact, bank owned life insurance is known as BOLI, and is a huge part of the insurance business, so big that a certain American Bank listed 23 billion dollars of cash value in bank owned life insurance as an asset in their quarterly statement in 2016. I didn’t know about this and I didn’t know anyone whole knew this, until I spoke to a friend I consider rich. The 99% don’t do these things, but the 1% do them and in my mind, it’s these thoughts and actions, which make all the difference.

So ask yourself, if you continue to do the things that poor or middle class people do, will it make you rich? Or do you need to start doing the things, which the rich people do? It sounds like a trick question, and it is, because you have to be ready to stop following the crowd and blending in, and start standing out as someone who does things everyone else isn’t doing, because that’s what the successful people are doing. These thoughts and actions are not always comfortable, but it appears that they are profitable.

Knowledge is power, power creates wealth and wealth provides you freedom.
Free yourself.

✍🏼 by Shortsegments.

Picture Credit

Picture originally from www.png.com Royalty Free graphics, but modified by @shortsegments.