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									                Special Report for Spark Plug PLUS Members

             The Top 12s
               Abstracted from the 12-CD Audio Album
     True Wealth – Your Values and Your Money
                                  by Joe Tye

True Wealth – Your Values and Your Money is a 12+ hour audio CD program
on values-based strategies for money management and wealth creation. The
impetus for creating this program was my observation that money troubles are
a significant barrier between many people and the fulfillment of their dreams
and living of their values. One CD in this album is entitled The Top 12s. This
is essentially a summary of some of the salient points included in the entire
album. These 48 points include:

       The Top 12 blunders that people make with their money.
       The Top 12 best ideas for values-based cash management.
       The Top 12 best ideas for values-based investment strategies.
       The Top 12 innovative concepts from 12 great books on money

This special report, published exclusively for Spark Plug PLUS members,
features a more in-depth profile of these 48 key points (plus several bonus
items). The information in this special report is drawn primarily from: library
research (including many of the books in the bibliography at the end); study of
online and print financial publications; interviews with a variety of professional
in the financial field (including several Spark Plug PLUS members); as well as
my own personal experience. This is a presentation of information, ideas, and
inspiration. It should in no way be construed as being specific financial advice,
for which you are encouraged to consult with an appropriate financial

Note: While this special report will be a very helpful stand-alone item for most
readers, I hope that it will also encourage you to purchase the True Wealth
audio CD program, which covers a much broader waterfront. Since about 80%
of your financial success is determined by perspective, attitude, and behaviors
rather than specific knowledge, the audio format is far more effective at
bringing about desirable changes. The retail price is $89; for Spark Plug PLUS
members we are holding open the introductory rate of $49 (plus $3 shipping;
$5 international shipping) for the balance of 2004.

Important Assumption: This report is not tailored to the “sophisticated
investor” who needs complicated financial strategies, high-risk investment
          The Top-12s from True Wealth – Your Values and Your Money
                                 Page 2 of 18

options, tax sheltering techniques, or other complex financial vehicles. Rather,
it is for the average citizen who is struggling to get ahead financially, probably
worrying about retirement and other upcoming financial burdens, and quite
possibly struggling to get out of debt and stay out of debt.

                  The Top 12 Money Blunders
Money Blunder #1: Not taking money matters seriously, and exhibiting
symptoms of learned helplessness when it comes to budgets, taxes,
investments, debt, and other aspects of one’s financial life.
This includes abdicating financial affairs to investment advisors, tax
preparation experts, knowledgeable relatives, or in the worst case, nobody.
Several years ago, The Wall Street Journal ranked this as number one on their
list of money mistakes that people make, and it commonly shows up on
virtually every other list.
Part of the problem is that people are intimidated by numbers and
calculations, and might have an acute sense of their own inadequacy in this
realm. Another part of the problem is that, while money is the quintessential
left-brain (rational and linear) subject, most people deal with it on the right
side (emotional and non-linear) of the brain. This accounts for a great deal of
self-sabotaging financial behavior, including on the part of otherwise mature
and sophisticated adults. This topic is addressed in much greater length on
CDs 1-3 of True Wealth.

Money Blunder #2: Excessive spending relative to income.
This is a serious problem, as reflected by the fact that the national savings rate
has plummeted from near 10% to approximately zero over the past decade,
while over the same time consumer debt has skyrocketed. In other words, not
only are we spending everything we earn, we are borrowing in order to spend
even more. At a personal level, this often results from people confusing their
debt capacity with their spending capacity. Since lenders are willing to loan
money that borrowers would be foolish to borrow, this is an easy trap to fall
Another reason for this syndrome is that our definition of “essential”
consumption is increasing at a faster rate than income (including such
“essentials” as cable or satellite TV, microwave ovens, CD/DVD players, GPS
equipped autos, cell phones, internet connections, etc.). Beyond this, the
average American home is now 1/3 larger than it was a quarter century ago.
Because income growth has not kept up, these “essentials” have been funded
first at the expense of saving, and then through borrowing, often with
expensive credit card debt. This syndrome is what I refer to in the audio
program as “Maslow’s Mistake.”

Money Blunder #3: Carrying credit card balances.
Credit card debt (and the tactics of collection agencies going after that debt) is
the number one cited cause of bankruptcy in America. The average American
         The Top-12s from True Wealth – Your Values and Your Money
                                Page 3 of 18

family carries nearly $9,000 in credit card debt spread out across ten different
cards. Assuming an interest rate of 18.9 percent with minimum monthly
payments being made, it will take more than 27 years to pay off that debt, and
approximately $12,000 in interest would have been paid. This assumes, of
course, that no additional charges are made during this period, and that no
late finance charges are incurred (both very fragile assumptions!).
The human consequences of what Robert D. Manning in his book Credit Card
Nation calls “the consequences of America’s addiction to credit” are appalling. I
wish I could share with you some of the emails I’ve received in scholarship
requests for the True Wealth program; many of them would break your heart.
What is perhaps most frightening about credit card debt is how quickly
someone can get in over their heads, and how terribly difficult it is to get out.
People can use credit cards responsibly for years – paying in full every month,
and perhaps even earning frequent flyers miles in the process. Then after loss
of a job or medical emergency, the credit card becomes their safety net and
debt spirals out of control. It becomes a burden that is dreadfully difficult to
escape because it must be paid off with after tax dollars, and interest and
finance charges can actually increase the balance faster than it can be paid off.
Additional facts on America’s credit card debt are included as Appendix 1.

Money Blunder #4: “Shoot the moon” expenditures.
The average family that goes to Disney World has saved for 2 ½ years to make
the trip (and will probably run up additional credit card debt on top of the
savings). A trip to the Rocky Mountains can be far more rewarding than a trip
to Space Mountain, and much less expensive. The typical new car depreciates
20% in the first four days, and 60% in the first four years. That is why Thomas
Stanley, co-author of The Millionaire Next Door, says that most self-made
millionaires don’t waste their money on new cars, choosing instead to purchase
reliably used cars. These constantly inflating expectations are further fueled
by the “lifestyles of the rich and famous” media (e.g. the MasterCard TV as
promoting the “priceless” wedding event that will leave the father of the bride
penny-less). Harvard economist Juliet Schor calculates that every 15 hours
per week spent watching television (about half the national average) results in
an additional $3,000 in consumer expenditures.

Money Blunder #5: Not starting soon enough.
In his book Straight Talk on Investing, Jack Brennan (CEO of the Vanguard
Mutual Fund company) shows that a person who invests $1,000 per year at 8%
between ages of 30 and 39 and then never invests another penny will end up
with $127,000 at age 65. A second person who begins investing $1,000 per
month at age 40 and does so through age 65 will have put in $25,000, but will
have only $78,000 at age 65. The essential message here is that it is never too
early to start, but also that it is never to late to start. With saving and
investment, time works for you in the form of compound interest and capital
gains; with spending and debt, time works against you in the form of
compounding interest and lost opportunities.
         The Top-12s from True Wealth – Your Values and Your Money
                                Page 4 of 18

Money Blunder #6: Not being patient.
Warren Buffet is one of the most successful investors of all time. He says that
his investing strategy is about as exciting as watching paint dry. In our instant
gratification society, we want outsized returns, quick and easy riches, and
insider strategies. For most of us, however, the surest way to build wealth is to
patiently adhere to reasonably low-risk and low-cost strategies such as those
described later in this report.

Money Blunder #7: Not having a rational conception of risk.
One of the many sad stories I read about in my research for True Wealth was
about a physician who, through many years of careful and deliberate investing,
accumulated a nest egg of nearly $2 million. After attending a seminar
promoting “high return” investments strategies, he put his entire life’s savings
to work in pursuit of those high returns. Within a year, he was wiped out, and
facing the prospect of never being able to retire. As a general rule, the higher
the desired return, the greater the risk will be.
Because people tend to be irrational about risk, however, even low return
strategies can carry excessively high risk. For example, keeping money in a
coffee can during a period of high inflation probably has much greater risk
than investing that money in a stock market mutual fund. As another
example, because people fear risk more than they desire gain, they tend to buy
stocks when the market is nearing a peak, and to not sell until it is reaching a
trough. Any third grader knows that "buy high, sell low” is not a very smart
investment strategy, but because they inappropriately deal with risk, millions
of American’s follow precisely this strategy.

Money Blunder #8: Trying to time the market.
You don’t have to be sucked into a sophisticated market-timing scam in order
to be a market timer; almost everybody is, in fact. Anyone who does not invest
in a disciplined, consistent manner is in effect timing the market. This is why
the recommendations below for such strategies for dollar-cost averaging are so
important. To highlight this, one study showed that between 1991 and 2002, a
$10,000 investment in the stock market would have grown to over $27,000, for
an increase of 10.65%. However, had the investor missed out on the ten best
market days (one per year) the return would have dropped to $17,800, or 5.9%.
Had the investor not been in the market the best 30 days during that period (3
per year) he or she actually would have lost money. Inadvertent market timing
can be very costly.

Money Blunder #9: Not taking care of yourself physically.
This is important for two reasons. First, it takes energy, strength, and stamina
to do the sort of excellent work that results in optimal income. Furthermore,
because regular exercise, reasonable nutrition, adequate sleep, and other
factors of good physical health also promote emotional stability, which is
essential for making effective investment decisions. On a longer term basis,
such behaviors as smoking, overeating, and sedentary lifestyle can result in
significant healthcare costs, wiping out the savings that were intended for
“golden years” retirement.
         The Top-12s from True Wealth – Your Values and Your Money
                                Page 5 of 18

Money Blunder #10: Having the wrong vocation.
For his book The Millionaire Mind, Thomas J. Stanley interviewed nearly 1,000
self-made millionaires. He states that the single-most important determinant
of their financial success was “vocation, vocation, vocation.” People who find
work that they can love to do, and then do that work with great passion and
commitment, are far more likely to prosper financially than those who simply
slug away at a job, hoping to hang on until they can cash out their retirement.

Money Blunder #11: Not appreciating what you have.
A fundamental premise of the True Wealth program is that mere financial
riches do not make one wealthy. Quite to the contrary. One excellent
definition of true wealth is having enough money to be able to spend your time
doing work that is meaningful and rewarding, while having sufficient time to
appreciate the things that really matter in life, including family, nature, and
the blessing of good health.

Money Blunder #12: Retiring before you retire.
Millions of Americans have retired while still on the job. Their bodies show up
everyday to do the same work they have done everyday in the past, but they
have stopped learning, stopped growing, and stopped dreaming. A leitmotif of
the True Wealth program is that people should not look forward to retirement
(re-tire: to get tired again). Rather, they should think in terms of re-treading.
One of the best ways to do this is to start long before actual retirement by
developing a hobby into a business.

           The Top 12 Cash Management Ideas
Cash Management Idea #1: Do not confuse debt capacity with spending
Of all the applications I received for scholarships for receiving the audio
program True Wealth – Your Values and Your Money, this one was an almost
constant theme. One of two things (and sometimes both) typically happened.
First, the individual used a credit card for shopping therapy or used other
consumer debt for a big ticket item, then was unable to keep up with
payments, so debt continued to escalate (often in consort with continued
spending), always with the expectation of some future windfall somehow
coming through to pay it off.
Second, some unfortunate outside event such as loss of a job, divorce, or
medical problem caused a sudden reduction in income. Rather than
immediately cut back on standard of living so as to live within the reduced
income level, the individual used debt – including especially credit cards but
also home equity loans and other debt – to maintain things, again with the
expectation of quickly paying it off when things turned around, an expectation
that at least in these cases has not yet panned out.
          The Top-12s from True Wealth – Your Values and Your Money
                                 Page 6 of 18

Since few of us know ahead of time when such events might turn our lives
upside down, it is wise to prospectively analyze your debt capacity versus your
spending capacity at various income levels. Banks and (especially) credit card
companies will often loan people more money than they can truly afford to

Cash Management Idea #2: Cut up and cancel all credit cards.
Read Appendix 1 for all the gruesome details. Today, debit cards and check
cards allow you to do virtually everything you can do with a credit card – so
long as there is sufficient money in the underlying account. As one financial
expert put it, a credit card in the wallet is like a loaded gun: liable to be used in
a crime of passion (a spending binge) or a crime of desperation (running up
credit cards in order to maintain a lifestyle after being laid off).

Cash Management Idea #3: Calculate real cost and use DDQs.
Any time you purchase something, there is likely to be more than one type of
cost. Direct cost is the sticker price; indirect cost includes sales tax, credit
card interest charges, etc.; operating costs include cable hook-up for a TV,
maintenance for an automobile, etc.; opportunity cost includes the loss
incurred by not making alternative expenditures (for example investing in a
mutual fund instead of a television set); time cost includes the time required to
obtain, use, maintain, and perhaps dispose of the item (e.g. watching
television); and emotional cost which includes the very real burden of buyer’s
remorse, anxiety, depression, and other emotions associated with the
consequences of unwise spending.
Appendix 2 includes a worksheet showing how, over a complete life cycle, the
real cost of a $1,000 television set could actually exceed $100,000. One
excellent way to control spending is to calculate the real cost, and then to ask a
Direction Deflection Question such as: “If the sticker price reflected the real
cost, would I still buy it?” Or, “Is spending this money now going to help me
achieve an important long-term goal?”

Cash Management Idea #4: Don’t buy big-ticket items new.
I’ve already mentioned the lack of wisdom in buying a brand new car, but the
emergence of eBay and other online auction services makes it possible to save
money purchasing everything from pickup trucks to paperback books. As just
one small example, I can often obtain a used book that looks almost like new
for a small fraction of the retail price.

Cash Management Idea #5: Employ the 3-Bs of Beg, Borrow, and Barter.
This is classic bootstrapping, but can be taken to much greater lengths. As
just one example, virtually every home in a suburban neighborhood has its
own lawn mower, which sits idle for 99 percent of the year. A cooperative
approach could both reduce collective expenses and increase the sense of
          The Top-12s from True Wealth – Your Values and Your Money
                                 Page 7 of 18

Cash Management Idea #6: Substitute your way to solvency.
Replace home-delivery pizza with the frozen variety; check out movies from the
library instead of Blockbuster; go to the Rocky Mountain instead of Space
Mountain for vacation. If you really must go out and buy something, do it at
the local Goodwill or Salvation Army store. You can get your “shopping
therapy” fix, it won’t cost very much, and you’ll be helping the people who work
there help each other and help themselves.
      Before you go, be sure to make a sweep through your house or
apartment for things that you really don’t need or use so you can make a
donation on your way in. And while you’re there, take an extra moment or so
to have a conversation with the person behind the counter – that is, if they’re
not too busy helping all the other people in line.

Cash Management Idea #7: Cancel you way to solvency.
Cancel magazine subscriptions, book and record club memberships, cable or
satellite television, and other routine and habitual expenses that you can live
without. See Appendix 3 for an exhibit showing how a small daily reduction in
expense can add up to significant amounts of money at retirement.

Cash Management Idea #8: Be a status contrarian.
Sam Walton drove a battered old pickup truck, and Warren Buffet lives in the
same house in Omaha that he’s always lived in. Read about the difference
between “income statement millionaires” and “balance sheet millionaires” below
for further understanding of this point.

Cash Management Idea #9: Turn time into money.
This is the subject of several 80-minute CDs in the True Wealth program, but
briefly almost everyone can find a way to make a little extra money doing
something they enjoy doing. Referring again to Appendix 3, if through a
combination of reduced spending and enhanced income you can invest $20 per
day earning 8% (both very reasonable and conservative assumptions) beginning
at age 40, by age 65 you will have more than half a million dollars in your
retirement account.

Cash Management Idea #10: No shopping therapy.
Going shopping because you are depressed or bored is every bit as stupid as
going to the grocery store when you’re ravenously hungry (if you can’t live
without shopping therapy, see #6 above).

Cash Management Idea #11: Do not confuse frugality with poverty.
As the poet McZen said, “broke is a state of wallet; poverty is a state of mind.”
I’m not taking about taking all of the fun and joy out of your life, but rather
advising that you make choices consciously with full understanding of the
long-term implications of each one.
          The Top-12s from True Wealth – Your Values and Your Money
                                 Page 8 of 18

Cash Management Idea #12: Increase your giving.
This is one of the great cosmic paradoxes which has been proven out time and
again, that as you increase your giving, it eventually comes back to you greatly

   The Top 12 Values-based Investing Strategies
Investment Strategy #1: Use dollar cost averaging with automatic
This means that on a regular basis (say every month) you invest the same
amount of money in an appropriate investment vehicle, such as a mutual fund.
Let’s say it’s $100 a month: when the market’s up, you invest $100; when the
market’s down, you invest $100. Over time, you will make more money this
way than investing $1,200, even if it’s done at the beginning of the year. Using
automatic withdrawal so that you never see the money removes the temptation
to skip a month (and perhaps miss one or more of those top days mentioned

Investment Strategy #2: Use no load index mutual funds.
These are funds that do not charge a sales commission, and are not
aggressively managed to try to beat the market, but rather simply try to match
the market. Since three quarters of all managed funds actually do worse than
the market, this turns out to be the most reasonable approach for the average
person who is not a sophisticated investor. Based on endorsements from
people as diverse as Warren Buffet and Geoffrey Colvin (senior editor at large
for Fortune magazine), the only specific investment advice in True Wealth is
that the Vanguard corporation has the highest reputation for integrity in the
mutual fund industry – and it is among the lowest cost.

Investment Strategy #3: Be patient and don’t panic.
I’ve already mentioned that watching Warren Buffet invest is like watching
paint dry. Study after study has shown the financial payback of long-term
investing. Likewise, the ability to not panic is essential to investing success.
In Ric Edelman’s book mentioned in the bibliography, for example, he shows
how several days after most traumatic world events the stock market is
substantially down, yet one year later it is substantially up even before pre-
event levels. In other words, people who sold out in a panic lost big time.

Investment Strategy #4: Invest in what you know, and know in what you
are investing.
People in Dallas are disproportionately likely to invest in Dell, while in
Minneapolis they invest in Medtronic. This is the Peter Lynch factor I discuss
in CD #1 of True Wealth – that anyone can make money in the stock market by
paying attention and investing in what they know. Likewise, it is important to
know what you are invested in. For example, if you own shares in a mutual
fund you could be at higher risk than you know if the mutual fund manager is
investing in high risk stocks.
         The Top-12s from True Wealth – Your Values and Your Money
                                Page 9 of 18

Investment Strategy #5: Be clear on your own risk profile and
The greater the expected return, the more likely it is that there will be more
risk. One of the biggest mistakes investors make is not being clear in their own
minds how much risk they are willing to take. This results in the classic self-
sabotaging behavior such as that of the doctor who saved prudently for
decades, only to be wiped out by investing in a high-risk “sure thing.”

Investment Strategy #6: Get help.
You can find an incredible array of financial advice, ranging from the excellent
to the dreadful. This includes hundreds of books and magazines, information
on the internet, and professional financial planners, advisors, and brokers.
Two important first steps when selecting an advisor are to check references and
to be clear upfront about potential conflicts of interest (such as advisors who
earn commissions by selling you products – not necessarily a bad thing, but
certainly something to have a clear mutual understanding about from the very

Investment Strategy #7: Never take a flyer.
If it sounds too good to be true, assume that it’s too good to be true. For more
on this, listen to the track about avoiding scams and rip-offs on CD #4. This
includes an interesting after-the-fact analysis of an internet promotional scam.

Investment Strategy #8: Reinvest everything.
Reinvest all interest, dividends, and distributions, and beyond this any other
windfall such as inheritance, year-end bonus, or other unexpected income.

Investment Strategy #9: Once you have the basics taken care of …
credit card and other consumer debt paid off, an emergency cash fund for 3-6
months of living expenses, and other expenses under control, consider using
an appropriate percentage of your investment funds (perhaps 5-10%) to
purchase individual stocks. For example, if you think that will be
the Wal-Mart of the online world, you might invest in this. NOTE: This is not
specific investment advice! However, if you want to invest in individual stock,
the Fortune magazine article referenced in the bibliography with Ten Questions
for Investors is a good place to start.

Investment Strategy #10: Invest in a small business.
There are thousands of possibilities for low-cost, low-risk part-time businesses
that could yield very attractive returns, both emotionally and financially. These
include internet business, self-publishing, multi-level marketing, consulting,
and many others.

Investment Strategy #11: Invest in yourself.
Instead of watching TV, take night classes, read the Wall Street Journal, listen
to the True Wealth CDs, and anything else you can do to enhance your
financial literacy.
          The Top-12s from True Wealth – Your Values and Your Money
                                Page 10 of 18

Investment Strategy #12: Plan on living a long time.
Spark Plug PLUS member Jim Seifert is a financial planner and wealth
manager. He advises his clients to plan on living to the age of 102.

     The Top 12 Concepts from 12 Great Books
Being in business is not about money, it’s a way to become who you are. (Paul
Hawken: Growing a Business.)
Money is something you trade your life’s energy for. (Joe Dominquez and
Vickie Robin: Your Money or Your Life.)
A dream moves closer to reality when you put numbers on it. (Bob Proctor:
You Were Born Rich.)
Treat money with respect and it’s more likely to flow into your life. (Suze
Orman: Nine Steps to Financial Freedom.)
Put together a ‘master mind group’ to brainstorm about important business,
career, and financial issues. (Napoleon Hill: Think and Grow Rich – NOT Grow
Rich and Think!)
Pay yourself first – invest 10% of everything you make, which can be readily
done by reducing your expenses by that amount. (George S. Clason: The
Richest Man in Babylon.)
Track every dime that comes into or goes out of your life for at least a month,
because not having a handle on money flow can be an incredible source of fear
and cause self-sabotaging behaviors. (Jacob Needleman: Money and the
Meaning of Life.)
Income statement millionaires are people who make a lot of money and spend
it on big houses and flashy cars, but live paycheck to paycheck; balance sheet
millionaires are people who might make less money, but invest in real assets
instead of rapidly depreciating status symbols. (Thomas J. Stanley: The
Millionaire Mind.)
Rethink your definition of an asset: your home is not an asset until you sell it,
before which it is a source of expense. An asset is something that generates
cash flow. (Robert Kiyosaki: Rich Dad, Poor Dad.)
Get the biggest home loan you can afford over the longest time period possible,
and invest the money you’re not spending on paying off that mortgage more
quickly into more liquid mutual funds, stocks, or bonds. This will give you the
greatest flexibility in the event of a downturn, such as economic recession or
you loosing a job. (Ric Edelman: Financial Security in Troubled Times.)
Worry is a money repellant; an abundance mindset always precedes affluence,,
not the other way around. (Richard Carlson: Don’t’ Worry Make Money.)
The reason to increase your standard of living is so that you can increase you
standard if giving. (Charles Ross: God’s Plan for Your Financial Success.)
         The Top-12s from True Wealth – Your Values and Your Money
                               Page 11 of 18

                                Appendix 1
Facts on America’s Credit Card Debt
I am seriously alarmed…
… by the implications of what Robert Manning, in the subtitle to his book
Credit Card Nation, calls “America’s Addiction to Credit.” Here are some
sobering facts:
      The typical American household has nearly $9,000 in credit card debt
      spread across an average of ten different cards. This typical family pays
      over $1,000 per year in interest and finance charges on that debt. As
      one financial expert put it, “people are spending money they don’t have
      to buy things they don’t need to impress people they don’t know.”
      Adjusted for inflation, the average family’s total debt increased by 46%
      between 1990 and 2003. Much of this new debt is in the form of home
      equity loans taken out to pay off high interest credit card debt.
      Unfortunately, many of these people are running up their credit card
      debt back up to the previous levels, and are now at increased risk of
      losing their homes (for example, should a job fall through).
      Our national savings rate has dropped to near zero (lowest in the
      developed world). So not only are we spending everything we make, we
      are borrowing to spend even more – to the tune of $1.7 trillion (yes, that
      is a “t,” not an “m” or a “b” in front of the “rillion”). The great tragedy is
      that compound interest – which we should have working FOR us – is now
      working AGAINST us.
      Financial planning experts tell us that 9 of every 10 baby boomers are
      not saving adequately to fund anywhere near the type of retirement to
      which they aspire. And as a nation of spenders and borrowers, we are
      creating an enormous collective debt that is likely to become a hideous
      problem for our children’s generation – who will be called upon to pay
      that debt.
      One of the main culprits is that our definition of “essential” is expanding
      faster than our income is growing, and we are financing the gap with
      “plastic surgery.” Things that didn’t even exist within recent memory –
      microwave ovens, CD and DVD players, cable television, cell phones,
      internet connections, bottled water, low-fat lattes, family nights in Las
      Vegas – these thousand little things are being purchased “on credit,”
      adding a continuous infusion of new plastic straws (credit card charges)
      to the backs of our already overburdened financial camels.
      People can use credit cards responsibly for years, paying off their
      balances every month and even getting rebates or frequent flyer miles,
      but when a misfortune such as losing a job or serious medical problem
      comes up, end up using credit cards as their “safety net.” As a
      consequence, they accrue debt that grows at 20% or more every year.
      I’ve worked with people who are paying all they can pay every month,
   The Top-12s from True Wealth – Your Values and Your Money
                         Page 12 of 18

and are still seeing their total debt increase each month because finance
charges are being added at an even faster rate.
For every “success story” of a start-up business that was bootstrapped
on credit card debt, there are dozens of horror stories of businesses that
are saddled with crippling high-interest debt that precludes investment
in product development and marketing. The business owners are
typically on the hook personally for these credit card debts, and many
have lost everything as a result.
We have become a nation of suckers for what appears to be a free lunch,
but is in fact is a very expensive room service dessert. As just one
example, for years General Motors has been offering “zero percent” auto
financing, yet nearly 100% of that company’s profits come from finance
charges on new car sales. One study showed that fully 88% of people
who buy things “90 days same as cash” end up converting to debt
payments at 25%-35% interest rates.
We are raising a generation which lacks any genuine understanding of
the link between working for something and getting it. Several years ago,
Sony promoted its Citibank card with an ad asking the question, “Who
says hard work never killed anyone?” The answer was: “Some dead guy.”
The ad went on to position the Sony card as “the official currency of
Credit card ads play on our basest desires and guilt feelings. As just one
example, the ads encouraging fathers to charge an expensive wedding for
their daughters on a high-interest credit card by calling it “priceless”
neglect to point out that it could also leave you penniless (and in many
cases, has).
Today’s number one target market of credit card companies is children,
and these dreadful campaigns are working. The average college student
has nearly $2,000 in credit card debt – on top of his or her school loans.
I’ve seen too many horror stories of students who begin post-college life
with a level of debt from which they have no realistic hope of escaping in
anything like real time.
Credit card debt (and threatening tactics of collection agencies that go
after credit card holders when they fall behind on payments) is the #1
factor cited in personal bankruptcies, which last year exceeded 1.5 U.S.
million households. Americans today declare bankruptcy at ten times
the rate during the worst year of the Great Depression.
The credit card industry (where executives refer to people who pay their
bills on-time without running up finance charges as “deadbeats”) has
pushed legislation to make it even more difficult for people to escape
credit card debt through bankruptcy. The fastest-growing segment of the
population to declare bankruptcy, however, is not real deadbeats; it’s
single woman struggling just to get by. The median annual income of
people filing for bankruptcy protection in 1998 was just $22,000.
          The Top-12s from True Wealth – Your Values and Your Money
                                Page 13 of 18

      Credit card debt is a major factor in many divorces (and in making many
      of those divorces so bitterly contentious).
      Although we have an unprecedented standard of living (for example, the
      average home of today is more than one-third larger than those of the
      previous generation), surveys show that the gap between what we have
      and what we think we want is actually increasing. So the problem of
      credit card over-extension is probably going to get worse before it gets
      better (assuming the financial roof doesn’t cave in first).
      The most terrible influence of credit card debt is its baleful impact on our
      values and moral character. This effect is so insidious that we’re often
      not even conscious of it. We are participants in the most grossly
      materialistic and self-centered culture since the late Roman Empire, but
      we rarely stop to think about the overarching moral questions when we
      slap our plastic down to buy the latest of life’s “priceless” necessities with
      money that as a result is not available to invest for retirement – or to
      contribute to helping others who are lacking the genuine basic
I have recently started asking my speaking audiences for a show of hands by
people who have a problem with credit card debt. Especially considering the
fact that some are too embarrassed to publicly admit it, I’m appalled by the
number of hands that go up (well over half in every case). The first step to
overcoming an out-of-control addiction is to acknowledge the problem in the
first place.
I fear that at some point in the not-too-distant future there will be a reckoning.
You and I might not be able to prevent that reckoning from occurring at a
global level, but we can each take effective action to protect ourselves and our
families from its worst impact. There’s a classic old song that says, “tomorrow
never comes.” Well, tomorrow will come. I hope you will be ready for it.
      “Millions of Americans today are in serious financial jeopardy because
      they have confused, and continue to confuse, borrowing capacity with
      spending capacity.”
                                                                       -- Joe Tye

My immediate advice to you is to…
1. Cut up your credit cards. All of them. Right now. Instead, use a bank
   debit card, which will not allow you to borrow from tomorrow to pay for
   yesterday. I have not had a credit card for over three years (and never will
   again). I travel extensively for my business, and have virtually no problems
   checking into hotels, reserving airline tickets, or renting cars (through
   Budget Fast Break) using my bank debit card – so long as there is money in
   the underlying account.
2. Stand in front of a mirror and forcefully repeat the following: “Read my lips:
   No New Debt! If you need to buy a car, save enough to pay cash for an old
   clunker if you can’t afford to buy a good used one outright. Remember, zero
   percent is not zero percent, and there is no free lunch.
         The Top-12s from True Wealth – Your Values and Your Money
                               Page 14 of 18

3. Be a status contrarian and stop spending money on things you really don’t
   need. Thomas J. Stanley, author of The Millionaire Mind, has studied
   thousands of self-made millionaires, and found that they buy used cars,
   knowing that spending good money on a new car that will depreciate 20-
   30% when you drive it off the showroom floor is financial idiocy.
4. Teach your children the virtues of frugality and saving. Above all, pound
   into their little heads that they are the number one target of what Dave
   Ramsey calls “immoral” marketing programs of credit card companies; that
   the only reason they might need a credit rating is so they can borrow even
   more money; and that “stupid” is far too kind a word to describe someone
   who borrows money at 18.9% to pay for clothes and computer games.
            The Top-12s from True Wealth – Your Values and Your Money
                                  Page 15 of 18

                                Appendix 2
               The Real Cost of a TV Set
Retail Price                                     $ 1,000

Sales Tax                                        $    50

Credit Card Interest                             $   433

Actual Cash Outlay                               $ 1,483

Additional Earnings Required to
Replace Cash Outlay                              $   742

Cable/Satellite Connection                       $ 2,400

Incremental Consumer Spending                    $12,000

Foregone Investment Income, 4 years              $ 4,051

Total Cost, Four Year Life Cycle                 $20,676

Monetized Value of Time Spent Watching TV        $24,585

Total Cash, Opportunity, and Time Cost           $45,261

      Television versus Mutual Fund
      as Investment for Retirement
      (excluding additional consumer
      spending and time cost)

               Television      Mutual Fund
1              $600            $ 1,846
2               400                2,318
3               200                3,151
4                50                4,051

20                 0            25,863
          The Top-12s from True Wealth – Your Values and Your Money
                                Page 16 of 18

                               Appendix 3
         How Much for a Coffee Break?

                        $5 a day           $10 a day         $20 a day

Year 1                  $ 1,898            $ 3,796           $ 7,592

Year 2                  $ 3,948            $ 7,895           $ 15,791

Year 5                  $ 11,135           $ 22,682          $ 44,539

Year 10                 $ 27,495           $ 55,597          $109,981

Year 15                 $ 51,535           $103,961          $206,138

Year 20                 $ 86,856           $175,022          $347,424

Year 25                 $127,611           $279,435          $555,019

Assumes 8% annual interest earnings. Since historical stock market returns
average 12%, this is conservative.
Assumes that the daily amount saved was foregone cash expenses; if credit
card interest is involved, savings would accrue even faster.
Financial advisor Jim Seifert advises his clients that for retirement planning
purposes, they should assume a life expectancy of 102 years, so it is never too
early to start and it is never too late to start.

Things I can do to save ($5, $10, $20) per day:
          The Top-12s from True Wealth – Your Values and Your Money
                                Page 17 of 18

                                Appendix 4
    Recommended Books on Personal
    Finance and Money Management
Andy Mayer: Where Does All the Money Go? – a helpful little handbook (costs
$3.95) for tracking expenses.
Jerrold Mundis: How to Get Out of Debt, Stay Out of Debt & Live Prosperously –
uses the principles and techniques of Debtors Anonymous to help you manage
overwhelming debt.
Joe Dominquez and Vicki Robin: Your Money or Your Life – a very human and
spiritual approach to gaining a new perspective on money and its role in your
Ric Edelman: Financial Security in Troubled Times – written in the wake of
9/11, offers eight specific action steps for insulating your finances against the
turbulence of the world.
Thomas J. Stanley: The Millionaire Mind – whether or not you are a millionaire,
or even aspire to being one, this book outlines the habits of self-made
millionaires that can help anyone do a better job of managing their money.
Eric Tyson: Personal Finance for Dummies – an excellent overview of basic
personal finance, and despite the title, there is nothing dumb about this book.
Tyson is also author of Investing for Dummies, also highly recommended.
David and Tom Gardner: The Motley Fool Personal Finance Workbook – more
than just a workbook, a real guide to getting a handle on your money.
Dave Ramsey: The Total Money Makeover – Ramsey is also author of More Than
Enough, and has a down-to-earth philosophy that the world needs more of
David Bach: Smart Couples Finish Rich – this can be a great book to help head
off one of the leading causes of divorce – money troubles . Back is more
recently author of The Automatic Millionaire.
Suze Orman: The 9 Steps to Financial Freedom – this book can really help you
think about money in a more responsible and realistic way. Orman has a
number of other books and a financial planning kit in bookstores.
Richard Carlson: Don’t Worry, Make Money – despite the rather tacky title, this
book does have some good suggestions on how to reduce expenses and
increase income (by the author of Don’t Sweat the Small Stuff).
Charles Ross: God’s Plan for Your Financial Success – a Biblically-based
approach to money management, though much of the advice is comparable to
that in secular books on the topic.
Robert T. Kiyosaki: Retire Young, Retire Rich – this book (by the author of Rich
Dad, Poor Dad) is definitely not for everyone, and contains very aggressive
         The Top-12s from True Wealth – Your Values and Your Money
                               Page 18 of 18

advice concerning debt leverage that is appropriate for very few people, but this
book can help you identify mental blocks to your own prosperity. Also good in
this regard are Bob Proctor: You Were Born Rich and Mark Victor Hansen: The
One Minute Millionaire.
George Kinder: Seven Stages of Money Maturity – a more philosophical treatise
on the role of money in life, which includes strong reliance on Zen wisdom.
Janice Revell: “Ten Questions Every Investor Should Ask Before Buying a
Stock,” Fortune, December 22, 2003.
Katrina Brooker: “Just One Word: Plastic,” Fortune, February 23, 2004.

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