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Thursday, October 23, 2014

How to Escape Wage Slavery

                            Escaping Wage Slavery
     Recently I had a grandson complain to me about a customer who paid him for a pizza all in small change.  He said the person had divided it all into baggies with a dollar in each bag.  We took different things away from the same story.   He was frustrated by the event.  To me it showed why so many people in this country are struggling to survive.  That person did all that work to get “one” pizza.  That same money spent at the grocery store could have bought healthy meals for three or four days for two people.  Of course the person may have had that stuff and just not wanted to cook.

    My grandson should have been happy the person chose to buy a pizza and thereby help him have a job.  The person who bought it may have just been having a short day, but it shows a sign of a management problem.   He could have bought a bag of frozen chicken breasts, a five pound bag of potatoes and several cans of corn and green beans. Maybe he would even have had enough left to buy a head of lettuce to make a healthy salad.  Of course that would have required him to put forth the effort to prepare and cook his own meal.

   The point I am trying to make is that being broke comes from the choices we make in life.  In America the majority of the people are in debt to someone, the bank, the government or some retailer who gave them credit or worse yet a credit card. The word credit implies that you have honor and have a record of paying back that which you borrow.  The problem is that in this day and age to many creditors are more than willing to lend.  They don’t really care if you can pay it back as the system is on their side.  You have placed yourself in bondage to the lender.  That is what Bible calls being in debt.  Another way of saying it is that, “The borrower is slave to the lender.” 

     It is far easier to get into slavery to the lender, than to manage your affairs and stay out of debt.  For every dollar you owe, you have to make two dollars.  You have to make one to pay the creditor and you have to make one for yourself to live on.  This all sounds very simplistic, but every decision you make affects your long term working status.  Being frugal with your money today means you have more left for tomorrow.  Therefore you don’t have to work as hard, just to survive.

    If you practice at being frugal you will have money left to invest.  That does not mean putting it in a bank either.  You may simply have the money to buy, say a piece of furniture.  If you get it cheap enough you can resell it and make a profit.
Or you may simply get the item at a far cheaper price than buying it new.

      Recently I bought a new car, actually a newer car.  The dealer knew I had the money to buy a brand new one if I chose to.  The problem for him is that I didn’t choose to.  When he asked me why I simply explained to him my ego did not require me to buy a brand new car that would lose $5,000 to $6,000 dollars in value the minute I drove it off the lot.  I bought a used one with less than 20,000 miles on it that still had dealers warranty on it.  My goal now is to sell it by 80,000 miles so I can sell it with warranty left on it which will make it sell easier and get me a better price.  The money I get back out of my equity in the car will make the down payment on my next, almost new car.

      If your ego requires you to buy a brand new car go for it.  My goal is simply to have a car that I pay as little as possible for.  Some people I know will not make a payment on a car.  If they can’t pay cash they don’t want it.  As I have a pension I will make the payment and know that the warranty will probably take care of any major maintenance.  That is one thing you do not get when you buy paying cash.  Each of us has to decide which is more important to us.

     So why am I writing this. It may take me a couple paragraphs to explain. Years ago I had a son in law who lived on a $10 and hour salary and took care of my daughter, and three kids.  He managed to save and buy most of the materials at sales to build a new house over a period of years. When he did decide to build it he had instant equity in their new home.  They only had to borrow about $40,000 dollars, he put in the labor himself and they had about $80,000 dollars equity that made them look real good on paper.  Needless to say the payment on the $40,000 was a lot cheaper than it would have been on $120,000.  At the same time I was making seven to eight times what he was and struggling to survive.  It is about managing what you have, not making more.

     Our credit union has a program whereby you can put up you savings as security for a loan.  You can’t spend that money as long as it is securing the loan, but if you have it in savings spending it was not the goal to start with.  The benefit of buying a car this way is that the credit union continues to pay you interest on the money.  So in reality the 3% car loan may really be at only 1%.  That makes for a tremendous savings.  If that car still has dealer warranty on it, it is a win, win situation.

     The key is making your money work for you instead of you working for your money.  That takes time and planning to accomplish, but almost anyone can do it.  If you don’t do it you will continue to be a slave to the lender who is living high on the hog on your dollar by simply practicing what is explained in this post.

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