everything you know about money is wrong

Everything You Know About Money Is Wrong!

Published by Jonah Jones at Smashwords

Copyright © 2012 by Michael Jonah Jones

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by Michael Jones and is used to describe the four ways to make money in America.

“Unfair Edge” is a term trademarked by Michael Jones and represents the methods described in this
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First edition

Disclaimer: This book is published for the purpose of general reference only and is not intended to be
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every effort to ensure that all the information contained in these pages was 100% accurate at the time
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Table Of Contents

What You’ve Been Told About Money That’s Flat-out Wrong!
Debunking the common myths that are passed down from generation to generation as valuable wisdom,
but are really detrimental to becoming rich.
What You Don’t Know Will Cost You
Exposing the secrets of money that conmen and the elites don’t want you to know. Example after
example of how certain things are not how they sound or seem. When it comes to money, ignorance is
anything but bliss.
Avoiding the Five Financial Traps
Step by step guides on how to avoid (or get out of) the five biggest pitfalls that condemn good, hard-
working people to the dreaded rat race.
Debunking Every Myth You’ve Ever Heard About Money
From the most common clichés to supposed “conventional wisdom”, every single one of them is dead
wrong and believing in them will prevent you from ever being rich.
Money is not a Physical or Tangible Thing
When you look at money this certain way, your view on it and feelings toward it will change
dramatically.
The Honorarium Theorem
Exposing the laws of compensation, earnings, rewards and returns.
The Formula of Fortune
Wealth is not a matter of fortune, but formula. After reading this, you’ll never again believe the lie that
getting rich is all about luck or fate.
The Four Ways to Make Money in America
Everyone tells us that in order to make money, you have to get a job. But that’s only 1 of 4 ways to make
money. See the four things that keep the economy moving and how you can capitalize on all of them.
How to Raise Your Earnings
You work hard enough at your job already, and your employer is probably underpaying you. It’s time
you learn how to right that injustice, because your time is too precious to spend it earning far less than

you deserve.
The Most Important Word for Your Wallet
There is one word that sums up the most powerful vehicle of investment. This is one that everyone can
have and benefit from. This is something that the rich have kept secret all to themselves.
Not All Debt is Bad & How to Clean Up Your Credit Report
The secret inside information the credit card companies and the three credit bureaus don’t want you to
know.
Conclusion: Now that You Know the Rules…
About the Author

What You’ve Been Told About Money That’s Flat-out Wrong


Ask your parents, teachers, bankers, financial advisors or just about anyone, “How do you get rich?”
Here’s what they’ll tell you:

“Oh, you have to go to school, get good grades, then go to college and get more good grades. Also, do
lots of unpaid internships in college so you can get a good job, and make sure that job is safe, secure and
loaded with good benefits. Then once you start working it, you need to live below your means, cut back
on the Starbucks, keep a budget, and contribute 20% of your income to a 401k that’s well diversified in
stocks, bonds, and mutual funds. Then when you’re 65, you’ll be rich!”

When they say that, what I hear is “be a slave to some employer for 40 years that has no reason to care
about you and is just using you to make himself rich and never have any freedom or fun until you’re too
old to appreciate freedom and have fun.”

First off, who’s going to stay at the same job for 40 years? What company will even stay in business that
long? And that 401k is not diversified because stocks, bonds and mutual funds are all in the same
market: the paper assets market. If there’s a market meltdown the day before your retirement (we have
market turmoil almost every year in October), you’re screwed. What are you supposed to do then? Live

off of social security? I guarantee you that it won’t still be around in 40 years and it’s not even enough to
be social or secure.

There is an alternative route.

The people getting rich today did not get rich this way. Instead, they do it by selling stock files, eBooks
and info-products, by having monetized blogs and by affiliate marketing.

The fact is, the new rules for riches are very unfair. But there’s not one thing in life that’s fair. Why
would money be any different? Fairness is really just a concept we made up to keep children in line.
There isn’t a solid standard for it. And when it came to money, even Jesus Christ himself was unfair. He
said “Whoever has will be given more, and he will have an abundance. Whoever does not have, even
what he has will be taken from him.” (Matthew 13:12). This series is all about giving you that unfair
edge.
How to Use This Book
One thing I skip past that I probably should read is instruction manuals. Gentlemen, you back me up on
this one; isn’t it easier and more fun to just put stuff where it looks like it belongs and then relax?


But the box said only “Some Assembly Required.”

But bear with me for a moment. When it comes to your money, you want to know everything there is,
because what you don’t know will cost you. There are five things that make up everything when it
comes to money; the five forms of financial aptitude:

Throughout much of the time I spent learning these five forms of financial aptitude, I had an ongoing
argument with myself. The cynical side of me kept saying things like this:

“YOU’LL NEVER BE RICH, EVER! ALL OF THE EXPERT ADVICE IS SO GENERIC, NONE OF IT IS PRACTICAL,
THEY’RE JUST A BUNCH OF CONMEN CAPITALIZING ON YOUR IGNORANCE AND ENVY!”

Perhaps you hear a voice just like that inside of your head. Say hello to your number one obstacle in
your financial life: yourself. Your own cynicism can be your undoing, as it almost was mine. But there are
many ways to combat this inner voice and eventually shut it up. Throughout the book, you’ll see this
voice appear (maybe even at the same time you hear your own cynicism), and I’ll show you how to put it
to rest.

Are you a skeptic? I hope you are. Cynicism is bad, but skepticism is quite good. Firstly, because if you
take anything I’ve written in here as gospel, you’re a knucklehead. Secondly, skepticism is a principle of
wealth.

New Rule for Riches #1:
It is highly appropriate and beneficial to be very skeptical of everything when dealing with the financial
services industry because of possible conflicts of interest.

The reason it is a principle of wealth is because it’s nobody’s job to make you rich but your own. So the
logical conclusion to that is that everyone else is only out to make themselves rich and possibly off of
you.

For example: a guy on CNBC going crazy about a particular stock, encouraging you to buy it, and yelling
that you’re a fool if you don’t. You may think, “It’s not every day somebody goes nuts on TV about a
stock. It must be a good buy,” but what really may be happening is the guy is pulling a little scheme
called “pump & dump.”

The scheme works like this: he buys a lot of shares of a stock that’s cheap, then goes on TV encouraging
others to do so. Others watching him on TV buy the stock, which causes the price of it to go up (pumping
up demand). Then the guy on TV sells all of his shares of the stock (dumping supply) and the price
dramatically goes down, so the poor folks who bought the stupid thing can’t get any gain out of it. This is
what a conflict of interest looks like.

People you should be highly skeptical of are the following:
 A student loan office advising students
 An agent selling a life insurance policy
 A money manager recommending a stock on TV
 A broker suggesting a good mutual fund
 States offering college savings plans

“WHAT ABOUT YOU, MR. JONES! WHY SHOULD WE TRUST YOU? I BET YOU WROTE THIS BOOK JUST
TO MAKE MONEY!”

How much did you pay for this book? Nothing, which is a lot less than the price of stocks getting
pumped and dumped, I bet. However, if you have serious skepticism, now is the time to hit it on the
head. What are some of your doubts?

Can anyone be rich? I don’t think so. If making money were easy, everyone would be doing it. It requires
you to make sacrifices and change your life, but I argue for the better. It forces you to become more
productive, more intuitive, and much friendlier.

Do I have to take great risks? In the old days, yes. In today’s world, no. The risks have been greatly
reduced with advances in information technology. All that is necessary is for you to be able to read,
write and think of things others hadn’t thought of yet.

Do I have to be a single twenty year old? While that is who this book is targeted to, no. This is for
anyone is sick and tired of deferring what they really want to do because they have bills to pay. Do you
want to start living or keep postponing?

Do I have to be smart? Of course not. Many of the people I researched for this book didn’t go to Ivy-
league schools or college in general. All you need is basic math skills and logic. I, for one, truly despised
my college experience as the biggest waste of time in my life. I didn’t fail school, but I feel that in the
long run, school failed me.

Institutions of higher learning, for the most part, give you a piece of paper that supposedly “guarantees”
employment (tell that to the unemployed grads moving back in with mom and dad) for the rest of your
life. I sought out the skills that guaranteed I’d never have to work again. Furthermore, most of the jobs
that college prepares you for are 80 hours a week, 30 years of torturous labor, causing you to grow to
hate the field you were once so passionate about studying. Who wants that?

The rich among us don’t do a good job for themselves as far as public relations goes. You may remember
the Occupy Wall Street protests that occurred world-wide, starting in September of 2011. The genesis of
these protests was simple to understand. The rich may not being lighting their cigars with $100 bills, but
they’re not making themselves very likable or someone that people would aspire to be like. When
there’s a giant gap between the rich and the poor, history shows that trouble arises, such as in Germany
in the 1930s or Greece in the 2010s.

What they say: “You’re just jealous because I made it and you didn’t!”
What You hear: “All complaints about unfairness in the system are just like a high school drama queen
complaining about rumors spread about her.”
What I say: “The system is absolutely unfair. The world is unfair. Life is very, very unfair. But there’s a
way you can even up the odds of success for you. I’ll show you how to have it.”

What they say: “I’m not some lazy bum, rich-for-nothing like Paris Hilton or Kim Kardashian. I work hard
for 80 hours a week to get what I have.”
What You hear: “I make 100x more than you because I work 100x harder than you.”
What I say: “We all work hard. The flow of money doesn’t go to those who work the hardest, but to
those who understand the new rules for riches and can spot an undervalued asset or opportunity the
moment they see it.”

What they say: “If I can get rich, so can you.”
What You hear: “Every one of my golf buddies at the country club got rich. What’s stopping you?”
What I say: “It’s not as simple as doing, but rather knowing what, when and how to do. Specific

attention to detail and hard sacrifices are mandatory. That’s why most don’t make it. And first, you’ve
got to have something to sacrifice. Let me show you.”

What they say: “Don’t punish me for my hard earned success! Stop calling for higher taxes on me!”
What You hear: “Because I didn’t inherit or cheat my way to riches, no one deserves a damn thing from
me. Not even starving kids in poverty.”
What I say: “I want you to be just as rich as me, if not more. Because an increase in your wealth will help
everyone around you. I’ll show you how.”

I don’t believe that the secrets of the rich should be kept and hoarded only for the benefit of the elite. I
believe that when someone gets rich, it benefits everyone around them. Here’s how I come to this
conclusion, if there are more rich people in this country:

1. The government will collect more in tax revenue, be able to provide more helpful programs to
the less fortunate and not need to raise taxes on the fortunate.
2. Home values will go up for everyone.
3. More people will have the ability to create more jobs, thus more people will be able to find jobs.
4. More charities can be started and funded.
5. More expensive medical research can be done, which can lead to saving and improving lives.
6. Expensive technological development can be funded and possibly make our lives easier.
7. Less people will have to rely on government assistance and entitlements to live on when they
can no longer work, thereby ensuring that government help will go to those who truly need it.

Furthermore, if everyone in this country knows how to make big money ethically and legally, why would
anyone ever feel the need to commit crimes and steal?

My message to you is this: if you buy groceries, wear clothes, watch TV, listen to radio, drive a car, or
even just surf the internet, a lot of people are making a lot money off of you. Want to get in on the
action? I’ll show you how.

Information Yields Power. Ignorance Yields Profit.
And that’s profit for someone else, not you.

Is ignorance really bliss? Not for your wallet.

You’ve heard the phrase that when you assume, you make an “ass” out of “u” and “me”. When it comes
to money matters, assuming does worse than that. It can clear out bank accounts and tear up wallets.
The smallest detail or overlooking can make a drastic difference in dollar bills.

New Rule for Riches #2:
What you don’t know will cost you.

Here are just a few examples of how that works:

At First: Credit card companies will try to sell you an insurance policy for a monthly fee in case your card
is stolen so that you’re not legally liable for fraudulent transactions.
But Really Now: Under law, the most you can be liable for is $50 per card, and most credit card
companies will cover that because they want to keep you.5a

At First: You receive a letter from a branch manager that appears to be nothing more than a customer-
relations effort, such as, “Hello. I am the branch manager. If you have any questions, call me.”
But Really Now: It means your broker may be mishandling your account. The branch manager is
required to contact you to legally protect himself. It may seem that he’s just being nice, but really he’s
only covering his butt.5b

At First: Part-time students aren’t eligible for financial aid.
But Really Now: Part-time students do qualify for federal financial aid, but the calculations for this
group look a little different.5c

At First: A dollar saved is a dollar earned.

But Really Now: A dollar saved is taxed on interest earned and eaten up by inflation. Your money is
losing value when it just sits in a savings account.

At First: It’s safe to assume that the car dealership knows your credit score, thus they can properly
determine your interest rate.
But Really Now: If you know your own credit score, you can bargain better and not be at the mercy of a
dealer.

At First: Supposing that when you buy gas with your debit card, the amount it says at the pump is the
exact amount taken from your account.
But Really Now: Some gas stations put holds on your account.5d They’ll at first charge you as high as
$50, even if you only bought $10 worth of gas. Then the charge goes down to $10 when it clears. But
this could cause an overdraft on your account, forcing you to pay a $35 fee! That’s $45 for a mere $10 of
gas!

At First: It’s safe to assume that insurance rates are set in stone.
But Really Now: Rates are constantly changing. In fact, in certain states and for certain policies, rates
have actually dropped significantly since 2011. And, if your record has improved, you may even be
eligible for additional reductions. You can be sure, however, that your insurance company isn’t going to
call you up and let you know their rates have dropped.5e

“STAYING ON TOP OF ALL THIS SOUNDS SO EXHAUSTING!”

Sounds like it is, but it doesn’t have to be. Perhaps you think you’ll feel like a pest, making sure you get
the most bang for your buck. But that’s far from the truth. The way the American economy is set up, the
businesses are the ones pestering you about how they’ll give you the most value for your dollar.

It only takes a little bit of time and research to make sure you’re not spending more than you should,
especially with how easy the internet has made research for consumers. So reverse the roles and make
it so that the businesses are the ones under the pressure to get your almighty dollar bill.

BEAR IN MIND:
Every business has a competitor. If it seems like they’re out to screw you, remember that they’d much
rather screw their competitors. They will bow down to you for your money before they bow down in
defeat to their competitors. Take full advantage of this.

Being thrifty was once a virtue in our society, then somehow it became stigmatized as being cheap. I for
one don’t understand why economizing is looked down upon so much. We call people who do that
penny pinchers, cheapskates, and stingy. But why? Do you not work hard for you money? Do you not
want the effort and fruits of your labor to be respected? Aren’t your earnings worthy of respect
considering what you had to do to get them?

New Rule for Riches #3:
Thrift is demanding respect for your money and how hard you had to work in order to get it.

One of the greatest things about the business world is that businesses are willing to negotiate. Some
stores will match competitors coupons and prices just to make the sale. Consumers on the other hand
rarely negotiate. You just have to remind yourself that you have the money, thus you make the rules.

A WISE MAN ONCE SAID:
“He who has the gold makes the rules.”

A fitting analogy is to liken your life to the life of a business. Individuals have cashflows, expenses and
revenues just like businesses do. Be more like a business with your life and it will operate smoother.
When businesses spend money, the expense is proposed, reviewed, analyzed, weighed and then
approved or rejected. If all of us did this, we might not have the debt problems we have today.

“THERE’S STILL GOING TO BE PEOPLE THAT ARE OUT TO GET YOU! WHAT DO YOU DO ABOUT THOSE?”

Oh, yes. There are crooks out there, make no mistake about that. They set up some ugly traps to rip
your wallet to shreds. So it’s time now to show you how to avoid these miserable bastards’ traps

Avoiding the Five Financial Traps
Many of these traps are ones that people fall into every day without ever even knowing it. It has been
said that “Broke is temporary. Poor is eternal6.” So this chapter is all about how to avoid being poor.


“Zordon didn’t set me up with a Retirement Plan.”

As the picture above suggests, poverty can come upon anyone. Not even all-star NBA players are
safeguarded from poverty. The Chicago Bulls’ Jason Caffey, who made an estimated $29 million during
his eight-year NBA career, was in bankruptcy court seeking protection from his creditors, among them
the seven women with whom he fathered eight children7. Sure he brought that financial trouble on
himself, but he also fell for the traps.

You’d think that $29 million well-managed should cover everything. But the problem was that it wasn’t
well-managed. Thus, being aware of the five financial traps and knowing how to avoid them are two of
your best ways to start your financial education.
Financial Trap #1: Student Loans
The student-loan game has changed dramatically. The cost of college always goes up and loans are
replacing grants, which is a bad idea. Always look for a grant first. Academic institutions are only worth
attending if you can get someone else to pay for it. Some colleges and universities are complete wastes
of time dishing out useless degrees that get you nowhere while sucking out your money like parasites.
So it’s best to try to get your higher learning for free in the form of scholarships and grants before
looking at loans.

MOMENTARY TANGENT:
Option A: $100,000 Ivy League education.
Option B: $5 library card.

Catch: You’ll get access to the same information either way!

Tragically, it has become common practice now for youngsters to get student loans. Like the credit card
sharks, there are student-loan sharks that are aggressive at dropping debt on your shoulders. This debt
is extremely tough to get rid of once it’s amassed and it’s very profitable for the sharks doing the
lending.

Scholarships are always better than loans. Check these websites to see if you qualify for one:
BrokeScholar.com, Educationgrant.com, Fastweb.com, and Fastscholarshipsearch.com.

Just the facts:
 Federal and State regulators are investigating the possibility and frankly the likelihood that
private lenders are buying college financial aid officers much like the way a lobbyist buys a
politician. They buy them gifts and the aid officers then add the lenders to the “preferred
lender” list. Well hello there, Mr. Conflict-of-interest. So nice to see you again… not.
 Consumer advocates have found that some sharks are misleading students into taking out more
expensive private loans when the borrowers are eligible for lower-rate federal loans.
 Studies even show that more than half of these student debtors take out private loans without
even exhausting federal resources and 24% receive no federal aid at all.
 There’s no way out. In 2005, lenders persuaded legislators to make private loans impossible to
shake. You can’t even declare bankruptcy.

Before taking one out, learn the 3 types of loans:
1. Loans directly from the federal government
2. Loans made through private lenders but subsidized and guaranteed by the federal government
3. Private loans made by private lenders with no federal guarantees.

One reason students are turning to private lenders is because the amount of students allowed to receive
the first two kinds of loans has been frozen since 1992. Private loans can be good, but there’s a danger
to them if you’re naïve. You have to make sure that the career you’re majoring for will pay off. There

have actually been graduates with debt in the hundreds of thousands but their degrees (mostly in liberal
arts) only qualify them for jobs that earn less than $50k a year.

The rates of a private loan are around 19% if you have no credit history. Compare that with the fixed
rate of 6.8% for federal loans. And the rates aren’t even disclosed before the student submits an
application13. Thus comparison shopping becomes difficult and time-consuming.

- If you graduate, can’t find work, but still have to pay back a loan,
go here to get a deferment (you don’t have to make payments and the government may cover the
interest during a set period of time). If you don’t qualify, ask about forbearance, which lets you stop
paying temporarily (but interest still accrues). There’s also a list of steps you must take if your loan is in
default.

The bottom line is that if you default on a mortgage, you can give back the house. If you default on a
student loan, you can’t give back your degree.
Financial Trap #2: Credit Cards
When I first got into college, I felt like a little baby seal stuck on a melting ice berg surrounded by great
white sharks. There were so many sharks mailing me letters, calling my cell phone (no idea how they got
my number) and clogging up my email box, wanting me to sign up for credit cards. And they were more
aggressive than any sales person I’ve ever seen. “Come get your credit card. You don’t even need a job!”
Nowadays, there is legislation that keeps these sharks off campuses, but they’ve made a fortune preying
on vulnerable youngsters and are finding new ways to get to their little baby seal victims everyday.

The overwhelming temptation to get a credit card is understandable. They’re convenient. They’re a
good thing to have in case of emergencies. And they’re seemingly indispensable. You’ll hear all this from
the same sharks that make the $5,000 credit limit sound like they’re giving you $5,000 for free.
Whenever something seems too good to be true, it often is. While they push the positives, there are
negatives they don’t tell you about.

Universal Default Penalties: Half of people with these cards don’t even know what those are. Lenders

and credit card companies make their money on people’s failures. When you sign up for one of these,
you’re putting a target on your back because the company will keep a keen eye on your timeliness. If
you have more than one credit card (which is suicide), and you’re late on a payment with one of them,
the interest rates on both of them will go up because the company of the one that you paid for on time
will have reason not to trust you.

MOMENTARY TANGENT:
Speaking of suicide, if I were ever to commit it, I’d sign up for a whole bunch of credit cards, max them
out visiting every awesome theme park in the world, then leave a suicide note citing financial trouble as
the cause. Then my family could sew the credit card companies for emotional damage. I’d be laughing
my ecto-plasmic ass off!

Interest rates are often hidden: One of the tricky things these predators do is heavily boast about their
low introductory rates. It seems like a bargain, but the problem is that over a period of usage, the rates
go up astronomically without cause. And the reason why was hidden in the microscopic fine print that
you may not have read. Most rates are even tied to the prime rate, which is one that can rise suddenly.

Grace periods are more like grace minutes: A grace period is the window of time between the initial
charge and the moment interest is incurred on the charge. Supposedly, it’s 25 days. But for some cards,
the time period is shorter. And some transactions don’t have grace periods, like cash advances and
balance transfers.

Balance transfer fees and inactivity charges: These two are exactly what they sound like, very bad jokes
they play on you.

“Bait-and-switch” offers: Once you have one card, other companies will send you crap in the mail,
advertising low interest, and even if you’re not approved, you’ll be issued another. And that’s the trick.
It’s written in microscopic print. So you sign up and switch, but the card you thought you signed up for,
you weren’t approved for, and you don’t get it. Instead you get another one with higher interest. By the
time the damn thing arrives, they hope you’ve forgotten what rate you were getting into. And most

times people do. Until that first bill arrives.

Two-cycle billings: Most companies will compute your interest and charges monthly, but some do it bi-
monthly. The latter figures your charges by averaging your daily balance over the last two billing cycles.
Never apply for these cards.

“MY PARENTS TOLD ME THIS ALREADY! THEY WOULDN’T LET ME GET A CREDIT CARD! WHY WOULD
ANYONE WANT THESE LITTLE WALLET TERMITES?”

Two reasons: one is instant gratification and the other is that it is a good way to build up credit. But only
if you do it right. One last thing, credit cards from stores like Sears, JC Penny, Home Depot, Lowes, or
other department stores are the absolute worst. Don’t ever get those.

NerdWallet.com – When you are ready to get one and want to be sure you’re not getting conned, this
website compares credit card rates and rewards to find the perfect card to fit your personal or business
needs. And using this site is free.
Financial Trap #3: Early Marriage
It’s important to know the fiscal situation of the person you’re marrying. I don’t mean just bad credit
spouses or gold diggers. But marrying early in general could be a financial disaster for you as well.

By marrying early, I’m talking about under the age of 25, because 25’s when everyone is likely to be all
done with college and set on their chosen career.


They’re happy, aren’t they?

Let’s look at the emotional aspect of this first. Psychotherapist Tina B. Tessina believes that romance has
been blown out of proportion. “Many college students’ brains haven’t finished maturing yet,” she
explains. “Unfortunately, many couples part because they feel as though they’ve grown apart.” The
spouses might even start to say to each other “You’re not the person I married anymore.” This happens

because the reasons you fell for them in the beginning (intelligence, sense of humor, sexiness) don’t
measure up to trash not being taken out or a stack of dirty dishes. And anything to do with physical
attraction doesn’t last for long.

Problems you didn’t expect arise from nowhere. Household responsibilities, missing out on the fun of
being young, sacrificing educational endeavors, and then not being able to get good jobs because of that
limited education will certainly spark fights. And don’t even think about kids.

Now for the financial effects of early marriage, it follows a cycle similar to this:

Step 1: The couple marries and moves in together.
Step 2: The combination of all their stuff creates a scarcity of space.
Step 3: Couple decides a bigger place is needed.
Step 4: Couple takes out a mortgage on a house.
Step 5: More space means they need more stuff to fill the emptiness. So they buy more furniture on
credit cards.
Step 6: Couple starts reproducing.
Step 7: They finance a minivan.
Step 8: They end up struggling for the rest of their lives with all the bills and stashing savings away for
their children’s college fund and end up with nothing in retirement.

This is how their bank accounts go from green to red. They move in together in a one bedroom
apartment, think that two can live as cheaply as one because there are two incomes paying for a one
bedroom unit. But the couple either has the dilemma of cramming all of their possessions into a tiny
unit and realizes the need a bigger place, or they have too much space (which rarely happens) and they
go out and buy more stuff on their credit cards.

Once they realize they have too little space, they decide to look for a house. Perhaps they’ve moved up
in their careers and are making more. Maybe they’ve even paid off most of their debt. So they take out a
mortgage and buy a house. Now they have the problem of too much space again and buy more stuff on

their credit cards, because you have to furnish a home. They may even decide to have kids. They start
reproducing, but they realize that their sedan or sports car isn’t big enough to carry them all. They
finance a minivan.

Now they are in the rat race. They’ve bought two liabilities (a house and a car) thinking they’re assets.
Combining the mortgage, car payments, credit cards, electricity bills, water bills, maintenance (perhaps
the only house they could afford was a money pit) and possibly left over student loans, they barely have
enough to save for their children’s college, let alone for themselves.

This is why the right age is often estimated to be 25. Early marriage is a key predictor of later divorce.
Nearly half of people who marry under that end up divorced. It’s only 24 percent for people who marry
after age 25. Figures released last year from the National Center for Health Statistics found nearly half of
marriages in which the bride is under 25 ends in separation or divorce within 10 years. For brides 25 and
older, half as many marriages break up.

And I don’t think I even need to go into what a financial mess divorce can be.

MOMENTARY TANGENT:
I’m not saying don’t ever get married or go on dates (even expensive ones). But while we’re on the
subject of couples, I suppose I could show you a few ways couples can save money together. After all, a
financial mistake when you’re single doesn’t hurt anyone but you. However, when you’re married or
seriously dating, it hurts others can cause more problems than just money problems. And if you’ve
started a family already, there’s more complications with that.

1. You can have fun without spending money, can’t you? Spending money on your significant
other seems like a requisite in today’s culture. You may exchange little gifts back and forth, or
constantly eating out and seeing movies. How about instead of going out and spending, you stay
in, cook a meal together and watch TV? Maybe play some board games or video games, because
I don’t think you bought them just to collect dust on a shelf. Feeling cooped up and need to get
out of the house? Take a bike ride to the park or go to a community pool. Check out events that

are going on in your local community. Churches are always having events like potlucks and
Barbeques and some apartment complexes do movie nights.
2. Be honest with each other. That probably goes without saying when it comes to relationships,
but when it concerns money, there may be something that you absolutely love to do, a hobby or
interest, and costs a little bit. This becomes a problem with your other if you weren’t up front
about it from the beginning. If you’re honest about this hobby or habit that costs a bit and you
can’t give it up, you will avoid bigger problems down the road.
3. Agree on a Budget. Remember the analogy on how your life is like a business with revenues and
expenses? Well a marriage or a serious relationship is like two businesses merging together and
forming a partnership. When businesses merge, they work very closely together on a budget.
We go into greater detail on budgeting later on.
4. Keep gifts reasonable. Does she really need a Godzilla-sized teddy bear on Valentine’s Day? It’s
probably just going to get stuffed into a corner or closet a week later. Does she really need to
buy him a gift at all? There’s one gift all men like from women that’s free, if you know what I
mean.
5. Screw the Jones’. One of the worst things you can do is try to keep up with the Joneses’. While
they may appear to be happy with their little gadgets and awesome toys, the truth behind the
showing off is that the Joneses’ are going broke. Believe me, I know because I am a Jones.

MOMENTARY TANGENT:
“Keeping up with the Joneses” is one expression I was confused by during my childhood and
adolescence. Because I’m a Jones, and my family was cheap. We used to water the lawn with the suds
water in the sink after washing the dishes.

6. Understand that your debt hurts you both. In a marriage, when you go into debt and your
credit score starts to slip, it also hurts your spouse’s credit score too, especially if you have them
as an “Authorized User” of your account.
7. Keep separate checking accounts. Opening up a joint-checking account together sounds like the
ultimate gesture of trust and so romantic. Watch the movie Original Sin and see where this can
all go wrong. I’m not saying never have one. It might be a good idea to have a joint account that

you both use to pay the bills and each contribute to. But it’s also a good idea for the both of you
to keep separate ones for yourself so that you have the freedom to purchase some small items
for yourself without dipping into each other’s money.
8. Can you afford to start a family? The financial impact of a child is far greater than just another
mouth to feed. You have to take into consideration if she will be able to take paid-maternity
leave and if not, can she afford the time off to give birth? Will one of you have to quit working to
stay home and raise the kids? Then there’s the cost of clothing, school, insurance and don’t
forget the demolition crew a kid can be.
Financial Trap #4: Diversifying*

“BUT EVERY FINANCIAL ADVISOR TELLS YOU TO DIVERSIFY! ARE THEY ALL LYING?”

Did you notice the asterisk right next to the word? The question isn’t “are financial planners lying to
you”, the question is “are you really diversified?” You buy a thing called a mutual fund, which your
broker says is well diversified. And that’s a bad joke.

Even though I’m saying you’re better off staying away from mutual funds all together, it’s important to
know what one is in order to avoid things similar. A mutual fund is a professionally managed investment
that’s diversified in paper assets. It works like this, you give about 5 to 10 thousand dollars to a
professional investor, and they put it work in a variety of different investments like stocks, bonds, and
money markets and they manage it as well as they possibly can to keep the fund healthy and earning
something in return. The idea sounds great. You may not know what stocks or bonds to pick, so you hire
someone else to do that for you. But the problem is that if that someone else wasn’t making a killing in
doing it, they wouldn’t be doing it. And the killing they make is at your expense.

MOMENTARY TANGENT:
You buy these mutual funds from a broker. A more appropriate name for them would be Joker. They
care as much about your money as the Joker cared about the mob’s money in The Dark Knight.

“Don’t put all of your eggs in one basket” they often say. When a broker or manager tells you to

diversify, it’s because they don’t know which investments will be successful and which ones to pick. It’s a
security measure they take. Diversifying is nothing more than admitting ignorance and playing it safe.
They tell you it’s safe because if one stock goes down, you’re invested in another that could go up and
balance out.

But what about a full system crash? Your 401(k) is invested all in paper assets. That’s not really
diversifying. And legendary investor Warren Buffet does not diversify. He says that “Diversificiation is a
protection against ingnorance. It makes very little sense for those who know what they are doing.”

Did you know that there are more mutual funds than stocks? So investing in multiple mutual funds is
investing a lot in the same stocks, so if one goes bad, that hurts all the mutual funds. Consider this
analogy: investing in multiple mutual funds could be just like drinking a variety of drinks that all contain
alcohol. Too much of that and you know what happens.

Each vehicle you invest in must be different on both the inside and outside (by that I mean it must be in
a different asset class). The vast majority of financial planners sell only paper assets because that’s all
they’re licensed to sell you. They don’t sell Real Estate, businesses or commodities. So it’s not true
diversification.

The great thing about stocks and paper assets in general is that they are all very high in liquidity. So why
would you ever want to invest for the long term? High liquidity also means high volatility, which makes
things risky. Liquidity and volatility are tied together because when something is so easy to buy and sell
that anyone can do it, then anyone and almost anything can influence the price. There are 3 problems
with investments in volatile markets, like the stock market:

1. The wider the swings in an investment's price, the harder it is emotionally to not worry,
2. When certain cash flows from selling a security are needed at a specific future date, higher
volatility means a greater chance of falling short, and
3. Higher volatility of returns while saving for retirement results in greater chances of the
investment’s final value disintegrating.

FINANCIAL JARGON TRANSLATED:
Liquidity- the ability to sell an investment quickly and convert it to cash. Your savings account has high
liquidity. Real Estate however is not so liquid because it takes time to get money out of it and sell.
Volatility- a measure for variation of the price of a financial instrument over time. In a volatile market,
prices go up and down dramatically, making the charts look crazy.

The reason so many people think the stock market is risky is because they do as their financial planner
tells them to do¬: invest for the long term. By doing that, you expose yourself to more volatility than you
would by investing for the short term with focus. While investing for the long term, you are at the mercy
of this:


How can you predict and plan your way in and out of this?

This is why I say that the 401(k) is the gun used in the mugging of America. Financial planners tell you to
stash away 15% of your income into it. That 15% can be quite a lot and when combined with your other
expenses, such as necessities and bills for the cost of living, you’re not left with much.

It’s almost as if you spend your whole working life poor for the promise of being well off in retirement.
But your 15% of earnings is exposed to the volatility of the stock market for 40 years. There are going to
be many crashes and downturns in those years, thus your savings could be easily wiped out. Even if
there is a substantial amount left when retirement time comes, it is taxed as earned or active income,
which is a high rate. What are you left with? Social Security? If you’re my age, you can forget about it.

New Rule for Riches #4:
Don’t diversify. Instead, focus.

The people getting rich today did not get rich by investing in mutual funds and by being well-diversified
in paper assets. Stocks, bonds and mutual funds are vehicles for preserving wealth, not for creating

wealth. Instead, the people getting rich today focused on things they knew that could make money
from, like eBooks and info-products, monetized blogs and affiliate marketing.
Financial Trap #5: Saving
This final trap that I write of will probably anger many. But saving in today’s world with today’s money is
losing in the long term. You know the rationale behind saving, that it’s best to prepare for a rainy day.
There are two problems with that kind of thinking. First, if you prepare for rainy days, guess what you’ll
have a lot of? Rainy days. Second, the Federal Reserve Bank is out to get you, sort of.



If you are familiar with economics, you know that the Federal Reserve Bank, aka the Fed, is the
institution that controls the money supply. They are the ones that print the physical dollar bills on
cotton and pass it out to the banks which then pass it out to businesses, home buyers, and perhaps even
you in the form of loans. The problem this creates for you if you’re a saver is that the value of your
money is going down. As the Fed prints more and more dollar bills, the purchasing power of the dollar
bill goes down, provided that the economy hasn’t expanded enough to absorb those new dollar bills.

They measure the expansion of the economy through the M1, M2, and M3 counts. If this sounds like
complex financial jargon, making no sense to you, don’t worry. This will all be explained and illustrated
in vivid detail for you. But remember, when new money is printed and the economy hasn’t expanded
enough to absorb it, what we have is inflation, and inflation is what turns savers into losers.

Figuratively, this is what inflation does to your savings.

Your bank doesn’t pay you very generously in interest on your savings. At best, you can get about 2.5%.
And you can take this fact to the bank with you, no savings account interest rate will ever be higher than
the rate of inflation. Furthermore, you’ll have to pay taxes on whatever money you make in interest on
your savings. Here is one of the many areas where the government really screws you.

The people getting rich today are not doing it by saving either!

BEAR IN MIND:
Inflation is an unavoidable fact of economic life. The economy will always expand in the long run, thus
more money must be printed to absorb that growth. And even in contracting economies, the Fed tends
to print more money to keep the economy afloat during a recession. They call it quantitative easing (a
very dumb idea). Bottom line, you can’t change the Federal Reserve or monetary policy. But you can
change yourself.

Your dollar bills are depreciating. And the government penalizes you for saving with taxes on what little
interest you earn19. Furthermore, the businesses that want you to spend realize you are trying to save,
so they have found ways to turn savers into suckers. I’ve listed them here:

Free-falling. The “for Free” thing is one good trap. I don’t mean legitimate promos like Ben & Jerry’s free
cone day on April 12. I mean things like buy-one-get-one-free deals or “free shipping with a $100
purchase.” These are just tricky gimmicks they use to get us to spend more than we should. When
something is free, we falsely assume that there is no downside. It’s a dirty trick on your mind.

Bulk-crap. It’s conventional wisdom that buying in bulk is cheaper. The cost per-unit of an item at Sam’s
Club or Costco isn’t marked up as high as it is at the grocery store. Here’s the catch, though. Let’s say
you’re buying food in bulk, with more food around you, you’ll tend to overeat. Just like the financial
thermostat analogy, there’s one when it comes to food. You’ll adjust to eat however much is in your
fridge. The reason these stores exist is to serve the convenience store owners who will then mark up the
price and charge you. The same goes for coupons. Yeah, their often not a problem, but you could end up
with too much of something. And don’t drive out of your way to use one. 50% off of something may not
be worth driving 15 miles, burning up gas.

Warranty rip-off. When it comes to electronics, retail stores don’t make very much money from them,
because in order to compete with online retailers, the prices have been greatly reduced. The big
retailers make their big money on warranties, service plans, and other protections. And the profit from

those plans can reach at least 50%, largely because the consumer has little chance to make a claim on
them. Andrew Eisner of Retrevo.com says “Electronics tend to fail either in the first 30 days or not at
all.” And the first 30 days is covered by the manufacturer’s warranty. So there’s really no need for extra
protection from the retailer. However if you want extended protection, go through the manufacturer
directly. They give you 30 days from the purchase date to buy extended coverage that you can actually
make a claim on.

New Rule for Riches #5:
Don’t save your money. Leverage your money.

Leverage simply means to do more with less, but not by being cheap. Remember Jesus’ parable of the
talents? That was leveraging money. Leveraging money is taking $100 and turning it into $150. A good
idea that almost anyone can do is become a lender.


BEAR IN MIND:
Don’t be stupid though! DO NOT just give your money out to anyone. Have you ever taken out a payday
advance from places like AMSCOT? Do everything that they do. Use contracts and get as much personal
information from the borrower as possible, as well as ID. For large sums, you might want to get
collateral too.

In the UK, there’s a peer-to-peer lending network website, Zopa, that has this set up already. For the US,
there currently isn’t one that I’m 100% sure about. I’m not saying that peer-to-peer lending is bad, I just
don’t trust it yet. The default rates on the loans are still high and there’s hardly any recourse that can
take place. In February 2007, 45% of the loans went bad23. But this eBay style approach to lending, I do
believe, will be the way of the future as trust in banks is eroding. The market simply hasn’t adjusted to
this new fad, so I suggest staying away for now. It’s better to make loans in person and get collateral.

This is a way you can legally print your own money like the Fed. The difference is you’re figuratively
printing, and actually backing it up with something if you get collateral.

MOMENTARY TANGENT:
There is one form of saving that is good for you: getting the most you can out of a depreciating item.
Instead of buying a new car every five years, keep the same car for 15 years until it falls apart. According
to Consumer Reports, if you are willing to drive your car past 225,000 instead of buying a new Honda
Civic EX (their example car) every five years for that same span, you could save yourself $20,500 in costs.
That’s not chump change.

Debunking Every Myth You Ever Heard About Money

“Money itself isn’t lost or made, it’s simply transferred,” – Gordon Gecko from the Movie Wall Street.

This statement spread the common myth that “when the rich get richer, the poor get poorer.” If you
believe that, you believe that creating wealth causes poverty. By that logic, you would also have to
believe that shining a flashlight spreads darkness, and you’re an imbecile. Money is not a finite resource
anymore than man’s ability to work, invent new things, and come up with new ideas. Ever since we left
the gold standard in 1971, money has just become a certificate for something of value, an I-O-U. Is there
a limit to the amount of value in the world? Do we need to gather up all the value on the planet, make it
into one big pie and slice it up for everyone proportionately? Even if we could, that would just make us
all equally miserable.

Why is it that when a third world country becomes a first world country, a first world country does not
become a third world one? When the United States (or Singapore is a better example) gets richer, the
poor nations now have someone they can borrow from and catch up on their economic development.
When one gets rich, it helps everyone.

Do I even need to mention that millions of new dollar bills are printed every day? There is no set amount
of money in the world.

That is just one of the popular beliefs about money out there these days. There are many others that are

totally wrong. The following are the most widely held beliefs about money and all of them are false:

MONEY IS THE ROOT OF ALL EVIL! If you are a religious person, you’ve probably heard this. But the
actual phrase is “the love of money is the root of all evil.” The problem with this is that money is merely
a means to a result, whereas evil itself is a result. Money is neither good nor evil. It only is what you do
with it. Cars kill a lot of people, but in the end the car is not responsible, only the person driving it.
Money is also the root of all charity. No church, charity, or hospital could exist without money.

MOST RICH PEOPLE PROBABLY DID SOMETHING BAD OR DISHONEST TO GET RICH! If being bad or
deceitful was all that it required to get rich, wouldn’t most people be rich? Because we all know how to
be bad and deceitful. This belief is widely held because of media. Most rich people on TV and in movies
are portrayed as evil, but the reason why that is isn’t because that’s true to life. It’s just a more exciting
story when the villain has a greater advantage over the hero and money is one hell of an advantage. But
the only good guy I can think of on TV that was rich was Bruce Wayne/Batman.

GETTING RICH TAKES TOO MUCH WORK AND STRUGGLE! Whoever says this obviously hasn’t heard of
passive income. The paycheck you get from your job is earned income because you have to work for
that. But passive income is money that you do little work for or none at all. It just keeps coming in each