Today’s post comes from Chris at Eat the Financial Elephant.
Mark and I first started sharing e-mails about exchanging guest posts after I linked his post about tithing 10% of their family’s income. I used his post to help refute some of the many myths in mainstream thinking about why it is difficult to retire early.
We have never tithed 10% of our income. In fact, after both being raised catholic and then leaving the catholic church about 10 years ago, we’ve both struggled with our faith. For most of our adult lives we didn’t even have a church, let alone give 10% of our income to one.
You may then think that it is odd that I was drawn to Mark’s message and inspired to share his post. What is it that made me want to share and still has me thinking and writing about it?
As I dug in and learned more, I found that the advice we received was actually pretty standard fair available to any low net worth individual. I started talking to family, friends, and coworkers who like us were trying to better ourselves.
We all had different variations of the same story. We all had overly complex portfolios, fee laden products and unnecessarily large tax bills every year. Salesmen, posing as advisors, sold us half-truths.
I was onto something here. I would share how we took control and were doing things differently. Everyone would see it and follow. We could help our friends. Hey, we could change the system!
But it hasn’t worked that way. As we’ve shared our story and early retirement plans with family and friends, the feedback has overwhelmingly been, “Good for you guys, but we couldn’t do that”.
Personal finance is exceedingly simple. Spend less than you earn. Invest the savings wisely. Grow rich.
My wife and I needed to figure out a few technical issues about investing and tax planning. However, those issues are far down the list as to why most people don’t achieve financial independence.
Since we’ve started sharing our message, we’ve discovered that many people get hung up in self-destructive thoughts and sabotage their ability to build wealth. One example that I write about is being trapped in the “Poverty Mentality”.
How Do You View Wealth?
People have many (generally wrong) misconceptions about wealth.
Many people with money look down on those without money. They view others’ lack of money as a personal shortcoming. In their minds, these people are unsuccessful, lazy or dumb.
In recent years, I’ve observed the opposite way of thinking become very pervasive in our society. This became very apparent with the popularity of the “Occupy Wall Street” movement. Being a “one percenter” has become a negative thing associated not with success but with some combination of evil and greed.
This warped way of thinking is pervasive in our political system as well.
When Hillary Clinton announced her presidential candidacy there was much talk of her leaving the White House deeply in debt. My original thought was that this was an exaggeration by her Republican opponents to make her look fiscally irresponsible. To the contrary, there were accusations that she was exaggerating her debt. Even though she had been married to the leader of the free world and wanted to become president herself, it was better to be seen as unable to balance her own check book. She can relate to our problems! She is one of us!
On the other side, in our home state of Pennsylvania we had to sit through ad after ad by Republicans attacking the Democratic nominee for governor in the most recent election. The phrase that was stuck in my head was “Millionaire Tom Wolfe” repeated over and over in these ads. The tone implied that being a millionaire was a sign that he was somehow evil or at least out of touch with the people. And remember, this was an attack by the Republicans, the “party of the rich”!
Net Worth Is Not Self Worth
Mark recently wrote an excellent article about what net worth is and some of the reasons that people track it and share it.
My take on net worth is that it is an excellent indicator of where you are at any particular point in time. It is like the number you see on the scale when you weigh yourself. We may not always like them, but these numbers are the truth of WHERE we are at any point in time.
Fortunately, net worth does not define WHO we are. How much money we have does not make us good or bad. Money is merely a tool that can allow us to do more good (or unfortunately bad).
I would challenge you to really think about how you perceive money. Ask yourself why you hold the views that you do.
The next time you read a post like Mark’s tithing post, get rid of your preconceived notions. Don’t get caught up on whether 10% is more than you think you could afford. Don’t judge that you think he could actually afford to give more. Don’t worry about whether you share his religious views on tithing.
Instead, step back and try to take in the deeper message. Realize that money is a tool that can be used for good. Realize that giving away money empowers you to look at it as a renewable resource, rather than something scarce that must be hoarded. Realize that when a gift is given, the giver often receives just as much or even more benefit than the receiver.
Likewise when we write about saving at least 50% of our income every year, don’t automatically assume that we make a ton of money, we’re cheap misers, or we’re suffering and sacrificing. Get rid of your preconceived notions.
Instead try asking why and how we are able to do it. Think about how you could apply these lessons to better your financial situation.
Ask what we could possibly be using that money for that brings us more value than the next shiny object, fast car or newest electronic device. Realize that your money could be used to buy financial freedom.
Get Out of Your Way
As stated above, personal finance is simple. Despite this for most it is not easy. There are many obstacles that get in your way along the path to financial independence.
For many people, the biggest obstacle stares at them every time they look in the mirror. Are you one of those people?
Try to get out of your own way and you may find that without all of the baggage that people place on money, personal finance can be pretty simple and pretty easy!
Are you in your own way? How do you judge others or perceive others judging you? What thoughts or emotions are holding you back from building a better life for yourself? Share your thoughts.
Thanks to Chris for an awesome post and for freeing up some time for me as I work through some life transitions that I’ll give an update on soon.
And congrats to Jodi from Indiana on winning my free tax giveaway!! If you still don’t have a plan for your taxes and want to save money, email me.