7 Habits of the Rich

Habit is defined as behavior repeated so often it becomes almost automatic. I am in awe of the power of habit. It’s a force to change your life, and it is available to anyone no matter your situation, no matter your circumstances.

For five years, author Tom Corley observed the daily habits of the rich and the poor and documented his findings in his book, Rich Habits: The Daily Success Habits of Wealthy Individuals. Corley defines the rich as those earning at least $160,000 per year, with a minimum of $3.2 million in assets. Individuals with an annual income of less than $30,000 and fewer than $5,000 in assets are defined as poor.

Remarkably, Corley discovered that rich folks have a lot more in common than only income. They share the same habits and daily behaviors, which for the most part he did not find among the poor. Corley presents a compelling argument that becoming rich is not about how lucky you are. It may have more to do with how you spend your day, beginning with the hour you wake up.

Credit Cards in the Hands of Financially Immature Students

Our kids are fortunate to be growing up in the most progressive and exciting time in history. Sadly, the very culture that offers them the world is also perpetrating this lie:

You are entitled to have everything you want even if you don’t have the money to pay for it. It’s not a problem. You deserve it. Buy it now and you can pay for it later!

 

There’s a huge consumer-credit industry out there planning to give your kids their very own credit cards—personal passports into the abyss of consumer debt.  This is not going to require your permission or approval, something that one reader is experiencing first hand.

DEAR MARY: My daughter who is in college got a credit card and now she is in over her head, unable to pay what she owes.

She works part-time and makes a very small salary. With the high interest and late fees, the balance is now over $2,500. I will have to step in and handle the account.

How can I negotiate with the credit-card company to settle for less? I don’t know how she got this card on her salary but she kept quiet about not being able to make the payments until we started getting collection calls for her. I appreciate your thoughts and expertise. Millie

A Couple’s Guide to Common Money Myths

The wedding was complicated and expensive. But it’s over and you are ready to settle back and enjoy your new life together.

Lucky for you I’m here to warn you about some common money myths that newlyweds have been known to bring with them into their marriages.

 

Myth: Double the income, half the expenses. 

This is what I call newlywed fuzzy math: Merging your lives and incomes into one household is the equivalent of getting a raise. Don’t believe that, not for a second.

Counter: Start out living on only one income and save the rest. This will require going against everything the culture insists you deserve, but it will allow you to move seamlessly into parenthood. When that day comes you’ll have an impressive savings account and options. And a gallery of envious friends. 

Myth: There’s stuff we can’t live without. 

No there isn’t. But it will be easy to convince yourselves that you absolutely must have matching furniture, new cars, and all kinds of gadgets and services to make your lives easier and to keep up with your expectations, to say nothing of your friends.

Counter: Make a pact that you will never go into debt for “stuff.” Period. 

Please Don’t Touch the Retirement Account

I know it’s hard. I know you’re desperate. You’re stressed and losing sleep. Things are tough. You have to do something, and soon.

But whatever you do, don’t touch your retirement account. Don’t borrow against it. Don’t withdraw from it. Leave it alone.

What’s so bad about liquidating a retirement account?

Momentum. Your retirement account, even if it’s currently losing value, is money you are going to need after you reach retirement age. And I can guarantee you are going to need it much worse then than you do now. If you bleed it dry now, you stop the momentum—the pace at which it is growing. Think of your retirement account as completely out of your reach for now.

The High Cost of Being Hopeless with Math

“I don’t do math—numbers give me a rash.” That’s a line I’ve used a lot, mostly because it’s true, but also because it gets me a laugh.

Truth be told, most of us stink when it comes to doing the math on the fly. That’s a problem because being hopeless with math makes us putty in the hands of retailers.

Why is it socially acceptable to say that we’re bad at math, but not to say we’re bad at reading? The truth is that it’s not okay to be hopeless with numbers. Here are three ways that our aversion to math costs us money:

The number 9. Amazingly, 65 percent of all retail prices end in the number 9. Unconsciously, we’re charmed into believing the item is a bargain.

Whenever you see a product priced at $29.99 or $9.99, the retailer is attempting to “charm” your brain by marking prices just below a round number. Because our brains are trained to read from left to right, the first digit is the one that sticks in our head and the number we use to decide if the “price is right.”

Both Steve Jobs, who came up with the 99-cent app, and the guy in California who founded the 99-Cents Only stores have made millions off this human quirk. Retailers use 9 on purpose to lure us into buying something because they know we’ll assume it’s been discounted.

This phenomenon is known as the left-digit effect and studies have shown that it absolutely works and has a big impact on our buying decisions. So whenever you see a price ending with a .99, get in the habit of rounding up, then decide if it’s a good deal.

Lessons from a Two-Year Old

I gave my son and daughter-in-law lots of gifts when their son Elijah was born. But none has come back to bless me more than the Gift of Friday. Since he was six weeks old, I’ve closed the door to work on Fridays to care for and learn from my grandson, Eli.

In these two years, Eli and I have explored our neighborhood looking for cats, dogs, bugs and birds. We’ve met neighbors we didn’t know and found the skunk we knew existed but had never seen. We’ve played at the park, counted planes and listened for fire engines.

 

Last week, we took a walk to the 99 Cents Only store to see if we could find anything from the movie “Toy Story.” I was fully prepared to shell out a buck or two if indeed we could find anything. I figured it was doubtful, given the kind of store it is. But the most amazing thing happened.

Before we could even get through the door, Eli locked eyeballs with Buzz and Woody on a gift bag. I was surprised and reacted with great drama, which made him laugh hysterically. As we walked up and down the aisles, Eli made one “Toy Story” discovery after another.

I would have never noticed the things he found, from photo albums to stickers, books, pencils, gift bags, cups, plates, cards, key chains and other “Toy Story”-branded trinkets. The more things he found, the more I reacted, which only spurred him on.

Here is where Eli and I are not at all the same: He didn’t want any of these things. He just loved finding them. The fun of discovery became its own reward. I, on the other hand, have some kind of automatic response mechanism that insists that if I love it, I must then buy it.

I learned a couple of important lessons from Eli that Friday.

First, I don’t have to own things to enjoy them. Isn’t that an amazing thought? And it goes the other way, as well. Just because I don’t own it doesn’t mean I cannot enjoy it from afar. Second, often there’s greater value in doing things together, than in owning things.

Creating this little game, and then beating me at it over and over, provided Eli with so much fun and enjoyment, the thought of actually buying all that stuff didn’t seem to cross his mind. He loved doing more than getting.

After a half-hour of treasure hunting, Eli took a ride on the 50-cent mechanical horse, and we walked home. On the way, between taking in the wonders of bugs on the sidewalk and trying to decide if it might rain, he said, “Ahma, that was a fun store. Go again next week?”

You bet we will, Eli. And next week we’ll look for cars, trucks and anything green. And we’ll count the cracks in the sidewalk and look for caterpillars.

We’ll laugh and run and count to 20. We’ll enjoy every minute and make memories for a lifetime without having to buy a thing.

Update: I wrote the foregoing in my journal more than six years ago. In what seems like a blink of an eye, Eli is now 8. Since then, little brother Sam has joined our Fun Friday adventures. While it has little resemblance to the 99 Cents Only store, Costco is the place Sam, age 2, and I look for hidden treasure. He prefers Mickey Mouse to Toy Story, and sure enough, without fail, he discovers that mouse over and again on merchandise, posters and displays that I would never notice in a million years!

Saving by Choice, Not by Chance

A reader question I answered some time ago brought a small avalanche of mail, mostly from readers who were aghast that I would suggest they save such a significant portion of their paychecks for retirement. It was money they just didn’t think they could afford to save.

I can only imagine that for a person who saves nothing, suggesting they should be saving thousands every year is shocking. Or more like impossible! Here’s just one of those messages:

How to Get Your Perspective Back on Track

These days, it’s easy to fall into the muck and mire of worry and defeat. Personal crises like a financial emergency, the loss of a job—or worse, your home—punctuated by the daily news can ruin your perspective and dump you into a pit of despair.

What you need to know today is that even when things seem completely hopeless, there’s always a way out. That’s not to say that you should slip into denial when bad things happen. But good things also happen.

By learning how to control your thoughts and stepping back to see the bigger picture, you can climb out of that pit and into the sunshine of a new day. It’s all about learning how to get your perspective back on track.

1. Feelings are fickle. They can’t be trusted. Our feelings send messages to our brains that are not always reliable. Your emotions may be all over of the map. Instead of allowing your feelings to run the show, take control by writing things down in clear, simple sentences. Acknowledge the facts. It is what it is—no better, but no worse, either.

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