Dead End Job or Dead End Attitude

"I won't get out of bed for less than $20 an hour" or why would I take a minimum wage job, they are a waste of time?"

Are you guilty of saying this or have you heard someone else say this? That is a clear sign of a Dead End Attitude. The amazing thing about people who defiantly state they won't work for less than $30 an hour or they should be making at least $50 per hour is that they usually have NEVER earned that kind of money. I have had people tell me that they believe a sales clerk in a convenience store or service station should be paid more than the going rate because that is what most decent jobs pay. These people have somehow missed the reality bus.

With a few exceptions I won't mention, most people are paid according to the difficulty of their positions. It is simple supply and demand. You would pay an engineer much more money than a gas attendant. There are far fewer people who can handle the responsibilities of an engineer than there are people who can pump gas. Naturally, when something is rare we are willing to pay more for it. So if you want to be paid $30 per hour, then develop skills that are worth $30 per hour.

As for a job being a dead end, that is often a matter of perception. A pub and nightclub owner told me of a young man who came to work for him about ten years ago. He was 17 and looked desperate. The young man asked for a job busing tables or washing dishes. The business owner told him that he would give him the opportunity but under one condition - that he stayed clean and sober at all times. He warned him that if he caught him using drugs or coming to work drunk, he would be fired immediately. The young man eagerly accepted the terms.

Nine years later, the young man treated the businessman and his family to a meal and drinks at the pub he now owned. He used this opportunity to thank the businessman for giving him the job and teaching him enough about the industry so that he was able to purchase his own pub.

Don't just look at what the job pays or what initial duties are. Focus on where this opportunity could take you and how it could be a steppingstone. It is only a dead end job if you decide it is.

Choose Your Ms Wisely

I could be wrong but I think a lot of our debt problems can be traced back to the fairy tales we were read as children. Story after story had someone becoming wealthy and successful without any real effort. This brings me to the first of the two Ms I want to talk about; Magic. The stories made heroes out of people like Jack of Jack and the Beanstalk or Ali of Ali Baba and the Forty Thieves who were poor but became wealthy by taking what didn’t belong to them. There were scarcely any bedtime stories that focused on someone working hard and living within their means. Why, because it involves work and discipline. There are a whole slew of modern day fairy tales written and disguised as non-fiction books that encourage us to think that if we think the right thoughts and send out the right vibes that our financial problems will be taken care of by magical forces. The only ones improving their financial situations are the authors of those books. If you ever read one of the best books on personal and wealth development “Think and Grow Rich” you’ll see that everything comes back to taking some kind of action. The title of the book wasn’t “Think, Sit Back and Do Nothing to Grow Rich!”

The other, wiser of the Ms to focus your attention on is Meaningful as in meaningful effort in paying down your debt. The first step in taking meaningful effort in lowering your debt is to first establish what your net worth is and how much debt you have. Most people will resist this because they are afraid of what the results will be. As Susan Jeffers said in her book, “Feel the fear and do it anyway.” Keep in mind that it is only a number but we do need it as a starting point. Once you have come to as close to an exact figure as you can, make a chart. The chart doesn’t have to be elaborate. You can even convert a child’s growth chart to a Net Worth chart. Mark on the chart the amount of your current net worth. Your next step is to decide if you’re going to take your next net worth assessment daily, weekly, bi-weekly or monthly. I recommend that shorter intervals are more beneficial than longer gaps.

You will see movement in either direction- increased net worth or increased debt load. If your net worth has increased during that interval, congratulations you are making meaningful movement towards financial freedom and should continue with the new practices you’ve adopted. If your net worth has shrunk then you know you’re still focusing on the wrong M. There isn’t any kind of magic that will change your fortune. Stop clicking your heels together, rubbing strange looking lamps or racing to the other end of a rainbow and experience the real magic of meaningful effort.

Cheating the Taxman

Go on admit it, you’ve often contemplated what it would be like to keep most if not all of your paycheck instead of being fleeced by the Taxman. It doesn’t have to be just a daydream because there are many strategies and shelters for your hard earned money. Before you get sweaty palms and start looking over your shoulder to see if Big Brother was watching you read an article called Cheating the Taxman, understand it is only a figure of speech. I do NOT want you to cheat the Taxman. That is against the law and it is called Tax Evasion. What I’m talking about here is Tax Avoidance or Tax Deferment.

I know people who think that they are being better citizens by paying their full portion of their taxes. In my opinion this is both naïve and stupid. I’ve yet to meet anyone who has received a commendation from the government for sending them more than he or she had to. There are lots of tax shelters available to the public and our government put them there. It isn’t cheating the Taxman if you take advantage of a policy that was developed for your benefit. The wealthy in our country pay only what they’re required to pay and not a penny more. The poor or uninformed are constantly giving thousands of dollars in what amounts to be a donation to the Taxman.

If you have a home based business you can legitimately claim against your earnings from your regular job. By having a dedicated area for an office in your home you can claim a portion of the expenses that would go for such an office. This could include utilities, computer, internet, property taxes, mortgage or rent payments. If you use your vehicle you may be able to claim the portion of costs involved for your business. This could include loan or lease payments. By all means check with your accountant for all possible tax deductions.

Your children can also be useful in helping you hold on to your money. If you have the home-based business you can hire them as employees and claim against their wages. Obviously they have to be able to do work that is considered valuable to the business. You can also consider Registered Educational Savings Programs.

There are the good old stand-bys like Registered Retirement Savings Programs and contributing to a 401K to siphon off money before taxes. If you are an American citizen then you’ll want to check out the IRS Publication 502 for a full list of items that allow you to save on your taxes. These categories are designed for self-improvement and include things like prescribed weight-loss programs, stop-smoking classes, acupuncture, chiropractic care, therapy, braces, and eyeglasses just to name a few.

Not taking advantage of these strategies guarantees that someone will be cheated and that someone will be you.

Borrowing Your Way Out of Debt

Taking out a loan to pay off your debts makes as much sense as finding yourself in a deep hole and asking someone to throw down a bigger shovel. For many people this is the most appealing and most destructive course of action. But for a select group of the population taking out a debt loan can turn out to be a very wise strategy.

Most of the people I’ve met who are constantly up against the debt beast have tried the borrow until I’m out of debt strategy only to find themselves deeper in debt every time. Why does this not work for them? On the surface it made some sense. Take all your debts such as credit cards, department store cards and outstanding loans and role them all into one loan with a smaller monthly payment. For a moment and it is an extremely brief moment they can breath financially again and they even have a little cash flow happening in their lives. What do they do with the extra cash flow? They spend it. And typically on stuff that they don’t need, has no resale value or can’t afford. Now they are back to scraping by between paychecks, only with a debt load that has been stretched for a longer period of time resulting in a much higher payout for their creditors. It is the old story of short-term gain – long-term pain.

When does it make sense to take out a debt loan to get out of debt? When you can use it to build wealth as you are chipping away at your debt load. If a person took out a Registered Retirement Savings Plan (RRSP) loan of $50,000 he/she could gain in a couple of different areas. First they would create a sizeable tax benefit and they’d also get the long-term growth potential. They could take their larger tax refund and put towards their debt. Another benefit is that the RRSP will probably earn a lot more in today’s market than the low rate of interest charged on the loan.

Another plus for the smart borrower is the boost to their self-confidence when they see their net worth actually growing instead of always being in the negative. This can spur him/her on to take other positive steps to reducing debt and building wealth.

Avoid the TEMPTATION

Why do you see so many advertisements for “debt consolidation” loans? They are a cash cow for the financial institutions. Their lure is almost intoxicating. They create an image of being able to reduce all your loans into one much more manageable payment that may even leave you with extra funds left over to continue living the life that got you into trouble in the first place. What a perfect solution to a nagging debt load!

What should attract your attention is that it typically finance companies and not the banks that are offering this seemingly generous solution. Its not that the banks don’t want to reap the rewards of these kinds of loans but they are likely the ones that hold your existing loans.

Typically the prime targets for “debt consolidation” loans are people carrying thousands of dollars in credit card debt, plus have substantial balances on department or big box store cards. These are the people who actually try to pay their Mastercard with their Visa.

On the surface the idea of combining all your payments into one smaller would seem like a great solution to their current debt problem, but it a recipe for disaster. Some instances will have the borrower having their monthly payments cut by as much as 50%. The finance companies count on the borrower’s short term thinking and desire to have their spending money back to blind them from the obvious drawbacks to this arrangement.

Yes, the borrower will experience the relief of seeing all his or her balances owed to the credit card companies or big box stores, wiped clean leaving only the one payment to the finance company. Unfortunately, the borrower will have likely signed a contract that could stretch for several years. You can be sure that the interest charged by the finance company will be much higher than the other lenders. Even if the rate is the same as the other financial institution, the addition of several years of payments will mean you are paying much more in the long run.

If it wasn’t bad enough that the borrower has just signed on to longer term debt, he or she now finds themselves with credit cards with no balances. Often, in record speed, they find themselves buried under a new layer of debt. One criteria for getting a “debt consolidation” loan should be that your credit cards are destroyed and any new purchases be paid for in cash!

A Slap in the Face

Do you remember in the old movies when a man would say something “fresh” or suggestive to a woman and she’d get angry and slap his face? These days she either doesn’t blink at the suggestion or takes much more severe action. Regardless of what actions the woman takes it is all considered feedback. What does this have to do with reducing or eliminating your debt? Your bank statement, credit card statement, credit ratings are forms of feedback in regards to how you handle or think about money. For some of us it would be better if when you opened the envelope the statements come in, a hand came out and slapped you across the face. That might get our attention.

Unless you did something incredibly foolish like betting everything you had on a racehorse, poker hand or spin of the roulette wheel you didn’t get into debt immediately. We get feedback concerning our finances everyday, Unfortunately, most of that feedback goes unnoticed. I’ve known people who’ve lost their homes or vehicles. I’m not suggesting they’d been careless and misplaced them. I’m saying that they missed making payments and the property was repossessed or they were forced to sell. This was not an overnight process. The vast majority of the time the lending institution does not want the property back. They just want their payment. They’re not in the repossession business they’re in the collecting interest business.

In these people’s situation the first form of feedback should have come from themselves. They should be the first people to know that they don’t have the funds to make the payment. In most cases, they should have known this critical piece of information well before the payment deadline. If you pay rent or a mortgage you know that it has to be paid every month. Being expected to pay it shouldn’t come as a surprise. If you missed your first form of feedback you can count on the second, which is a call or letter from the interested person or institution. This is generally followed by another notice until we get to the FINAL notice.

The reality for some of these people was that it took four months or more to get to the final slap in the face. What were they thinking? Were they hoping the Bill Paying Fairies would slip in during the night and stamp, “Paid” on their problems? I don’t know of any bill or problem that got smaller by ignoring it. In business we have what are referred to as gauges. Much like in a car where your gauges tell you your speed, amount of fuel and the situation with your coolants and batteries, gauges in your business tell you what’s going on at any given moment. You have to have gauges too. Keep a list of all your monthly expenses that have to be paid. Once you’ve put away enough money to cover one of the bills put a check mark beside it. You’ll know well in advance if you’ve got the funds to pay your bills and allows you to take productive steps if you look like you’re coming up short. This beats a ‘Slap in the Face’ every time!