The Inverted Pyramid Of Debt Banking System.

.

Understand a simple explanation of a bank and why the banking system collapsed as it did.

The banking system collapse was a factor of many things, however, it is advantageous to have a basic understanding of what a bank actually is and why it is so vulnerable. After all, you put all your hard earned cash into it so it probably makes sense to understand how they work, wouldn’t you agree?

The Pictomin above shows a red triangle, a black circle and two arrows. This simple image is a pictorial representation of a bank. Don’t stop reading, I will explain.

The green ball is the actually amount of cash, back up by something of tangible value (like gold), that the bank currently owns. This is the amount of actual substance of worth the bank would have if currency and the effects of currency collapsed and people wanted to reclaim their money back in something solid and tangible. Yes, I know. It is worryingly small.

The red triangle that is balancing on this small ball is the inverted pyramid of debt that the bank has created from this small amount of cash through complex lending schemes and systems such as fractional banking, derivatives and future share buys. As you can see the triangle is pretty unstable, symbolised here by the arrows.

.

The bigger the bank becomes, the larger the triangle becomes and thus the more unstable the bank becomes. Everyone following? Excellent.

.

Over the last 10-15 years the banks debt triangle has been becoming incredibly large and thus the whole system in turn very very unstable as only a very small percentage of the monetary figures being thrown around are backed up against an actually commodity such as gold; the rest of it is just numbers, opinion and in some respect blatant lies and fabrications.

The banks are unstable but when all are operating in this way they tend to just about keep each other standing.

You can imagine, I hope, that if all these unstable structures are balanced very closely to one another, as they are in the real world, then the combined effects of all off them wobbling with just about keep them all upright. This is exactly what was happening before 2008 and the crash. The banks were holding each other up.

However, when consumer confidence goes, such as recently, the highly unstable banks have a tendency to very quickly fall over with the largest banks carrying the largest debt triangle falling first. Once one goes the resulting balancing act is unsettled and they all tend to start toppling unless someone, like the government, uses a vast amount of money to reduce the size of the triangle, pick them up again and once again start the balancing trick, which is exactly what happened.

As is probably obvious to most that have read this far, this is not a sustainable solution and once the banks start lending and creating wealth out of nothing again their triangles will once again start to grow and they will topple they again causing greater pain and misery to all involved, apart from the top guys at the bank who will walk away again having done very well out of the whole affair.

.

Since moving away from the Gold Standard in the 1930s, where currency had to be backed up against something solid such as gold, we have created a system that can create money out of nothing and now we cannot go back.

.

It is worth remembering the Pictomin image when you next put all your faith into a bank. They are very good at creating something from nothing, the only problem being that we then end up with a lot of nothing, also affectionately referred to as currency, floating around which can very easily disappear in an instant.

Why were so many people shocked when the biggest triangle pyramid of debt was broken and over a billion dollars disappeared instantly overnight. The reason being is that it never really existed in the first place, it was just numbers floating around the banks and the stock exchange.

I appreciate that this is quite a simplistic overview of the banking system but it is a good reminder for people to really understand the problems that are very much at the core of banking and why the governments interventions were no more than a buffer to a further more devastating collapse that will be inevitable if the banks are ever allowed to go back to their unmoderated ways. Unfortunately the truth is that they will.

I hope this has spoken to people, I will end on a joke to lighten things up again.

A woman gets on a bus with her baby. The bus driver says: “That’s the ugliest baby that I’ve ever seen. Ugh!” The woman goes to the rear of the bus and sits down, fuming. She says to a man next to her: “The driver just insulted me!”

The man says: “You go right up there and tell him off – go ahead, I’ll hold your monkey for you.”

Do You REALLY Know What A Bank Is – I Am Betting On No is a post from: thelifething.com
Thanks for subscribing, you should now be at least twice as attractive to the opposite sex. Loyal reading of these articles increases your sexiness further. (Just so you know) r. thelifething.com - Life Design For A Designer Life...or something

The 95% Way or the 5% way – Skoda or Ferrari?

.

Why Read (<850 words)

Finance can be a very complicated and disconcerting place, like France…but it doesn’t have to be. Understanding your most basic and important financial equation, your personal cash flow, is very easy using simple cash flow arrows. Knowing the cashflow arrows and knowing that they need to be balanced is easy. Going about balancing them in a different way to 95% of the populations requires more leg work…but the payoff is huge. If you want to learn how to go after the big prize then read on.

.

Cash flow Arrows

Financially speaking, there is a vast difference between the amounts of money that people earn. Some make more than others and some make substantially more than others. However, everyone shares the same cash flow balancing act. Everyone has cash coming in, (Green Arrow) and cash flowing out (Red Arrow). Ideally the cash coming in arrow wants to be larger than the cash going out arrow and not the other way round to ensure a level of financial security and freedom from the pay check. All fairly simple stuff so far.

Everyone has the same simple cash flow equation but there are two ways of balancing it. 95% of people balance it one way and only 5% of people balance it another way. You want to be in the 5% category and it is easier than you think.

.

The 95% Way - Sell Your Time And Experience

For most people the only way to increase the size of the green arrow is to sell more and more time or gain more and more experience (which also takes time). Selling more time is an obvious way to earn more and increasing your experience means that your time is worth more per hour. This in itself is very obviously a ultimately flawed solution as there is only a finite amount of time and experience that one person can sell and thus there is a finite size to your green arrow. The red arrow on the other hand, your outgoings, is not so finite and can very easily get very large, very quickly.

.

The 5% Way - Package Your Time And Experience And Sell It Over And Over And Over Again

How did Bill Gates manage to become the richest person in the world and a multi billionaire? According to the 95% way this just isn’t possible. Bill Gates experience, as great as it is, isn’t worth billions and he has no more hours available to him to sell than any other individual. What Bill Gates did, and what brought him huge wealth, was to package his experience in the form of software and ultimately his company Microsoft. He could now sell this package again and again and again. This is called a scalable model and in theory is infinite within the huge global market.

Only a small amount of people live this way, but in this current world it is the model that everyone should be aiming for. Possibly not at the scale of Microsoft but then it doesn’t have to be.

Repackaging and selling your experience in a product form means that, after the initial investment, you are not having to trade your time for cash.

Most people who make their money this way actually pay for other peoples time to keep it running and the money coming in, giving them freedom from the pay check. The more they sell, the more people they hire and the more money they make but without trading their key resource, their time. Cash generating assets like these make the owner money whether he is awake/asleep/on holidays or catching up on the latest episode of lost.

.

Leverage Isn’t Always Good

The trick to owning cash generating assets and having a stress free life is to ensure that they are not leveraged as much as possible.

Leveraged cash generating assets are those obtained by taking out loans and going into debt and are risky when not properly managed and understood. If the cash stops coming in you could be left with huge debts. Ideally your cash generating assets should be non-leveraged so that if they do dry up all that stops is the money coming in and if you have multiple streams of income, this should not present a problem. Non leveraged cash generating assets are not as difficult to set up as some might think and there are some great books out there that go into it in much more detail than I will. A good start is to read the 4 Hour Workweek by Tim Ferris.

.

To Sum Up

How you balance your Cashflow arrows will determine how wealthy you will become. No one becomes wealthy over night, it is a long term investment in knowledge and understanding. However you have a choice, follow the herd and do what 95% of people do to balance their arrows or commit to learning to create non leveraged cash generating arrows and become wealthy with the other 5%.

.

Help Me Out

I give all this advice out for free and so if you like what I write and it helped you, please help me out by letting others know. On this site, it has been scientifically proven that by doing so you will become instantly twice as attractive to the opposite sex. Can’t argue with science.

How To Get A VIP Pass Into The 5% Category Of The Wealthy is a post from: thelifething.com
Thanks for subscribing, you should now be at least twice as attractive to the opposite sex. Loyal reading of these articles increases your sexiness further. (Just so you know) r. thelifething.com - Life Design For A Designer Life...or something

Why Read

Everybody wants to be sexy and everybody wants to be wealthy but few are willing to make the decisions necessary put in the time required to learn how to created multiple streams of income so that they can become wealthy and live a sexy lifestyle. Big sentence, Big wakeup call. If you want to be wealthy in the future you are going to have to learn how to create rivers and not rely on pipelines. If you want to know why, read on.

Wordcount: >750

What Is Wealth

You cannot become wealthy having a job. No one in history has created lasting wealth this way, no matter how much one gets paid. Being wealthy isn’t just about having the money, it is just as much about having the time and freedom to enjoy the privileges that money provides.

.

Multiple Streams Of Income

Having multiple streams of income and ideally non-leveraged cash generating assets will help give you the very best chance to live the richest life you can dream of. Multiple streams of income will give you freedom from the pay check and the resources of time and money to pursuit whatever you wish; be that living abroad, going back to education, volunteering, experiencing the world or following in the footsteps of Batman. Whatever takes your fancy.

The trick is to create rivers, not maintain pipes

.

Create Rivers

Rivers are powerful because they are fed from many different streams.

If one stream is blocked or dries up, this does not affect the flow of the river greatly. Your finances should be structured like rivers also, having multiple streams feeding your main river of income so that if one stream dries up or stops, it does not have a detrimental effect on your quality of life and gives you time to create another one and replace it.

.

Don’t Maintain Pipes

Living from pay check to pay check is dangerous because your flow of income is more like a single man-made pipe.

If you lose your job then the flow of that pipe is stopped. A new pipe needs to be found quickly, and of a similar size as your last one to maintain your current lifestyle and this is not always easy or even possible. This pipe also, like your job, requires a huge amount of your time to maintain. The key to financial success is having your income flow structured like the natural rivers and streams that require very little, if any maintenance once created.

.

You Are Not Depriving Others

Thinking of your finances as an organic stream is a good image as it also highlights the fact that in this world the acquisition of wealth is not a zero-sum game.

In this we mean that, if one person acquires more, this does not result in another being left with less.

Put another way, the world’s total wealth is not like a pie, where if someone has a bigger slice then others are left with smaller ones. This is not how it works. Just like on an extensive mountain range there are multiple rivers all being fed by multiple streams, an additional stream will not result in less rain falling on the mountain side. There is enough rain for all.

Most financially successful people understand this concept, the trick is to create your non leveraged cash generating assets (streams) to help divert this abundance of wealth out there into your own personal income stream. Don’t worry, you will not be forcing others to live without.

This approach takes time to learn how to do, and it is far easier in the short term just to have a pipeline. However if you desire to be wealthy in the future then a pipeline is not enough, you need to have the streams. Learn how to create the streams and you will become wealthy.

Even if you enjoy having a job, as many do, it is a good idea to create multiple streams to supplement your income so that you are not DEPENDENT on your job. That is the key…not to be dependent on a job.

.

In Summary

Remember to keep your finances organic like the river with multiple streams feeding it and not man-made like the single pipeline which can be shut off at any time.

.

Help Me Out

I give all this advice out for free and so if you like what I write and it help you, please help me out by letting others know. On this site, it has been scientifically proven that by doing so you will become instantly twice as attractive to the opposite sex. Can’t argue with science.

.

Creating Multiple Steams of Income For A Super Sexy Life Of Wealth is a post from: thelifething.com
Thanks for subscribing, you should now be at least twice as attractive to the opposite sex. Loyal reading of these articles increases your sexiness further. (Just so you know) r. thelifething.com - Life Design For A Designer Life...or something

Focus on what you are good at and be a success at that. There are far too many things that you are not good at.

I Suck As An Actor

I used to want to become an actor – I think it was mainly for the same reasons many people fancy their chances at it – for the money, the fame, the girls.

Unfortunately my love of it was simply a HEAD want and not a HEART one. I was alright at acting when I was younger, I had a few leading roles in the school play and one in an actually city theatre but I never pursued it after college. I might have wanted all the things that come with being a famous actor but I was not willing to put in the time or take the risk on making a serious go at it.

Just recently while I was in Thailand I had the opportunity to star in a TV commercial for Dog Food and so naturally I went to the audition and against all odds was picked for the role. I loved it, the setting, the people, being the centre of attention – Acting I though, was something I could really do.

Except for one small problem – I was useless. I hate cameras and prefer to be behind the lens then in front of it, I have trouble smiling naturally and I am pretty self conscious and unnaturally when a in front of the lens.

Basically I am an awful actor who would only be hired by a completely blind, death and dumb director and only then because of a moment of bad judgement.

I Suck At Other Things Too

Other things I would like to do but suck at Professionally -

• Lead singer of a rock band
• Extreme Sports World Champion
• Professional Footballer
• Pilot
• Marine Commander
• Marine Biologist Scuba Diver

The things is, there are a lot of things that I suck at but enjoy. I will never make any money out of them like some people do and so they are just hobbies for me. You can get stressed about this predicament or you can focus on what you ARE good at.

Where Do Your Talents Lie?

As an example, my personal talents lie in creativity, people skills and making money or put another way Creative, Emotional and Financial Intelligence.

I love and have made money through entrepreneurship and design and I plan to shelter my earnings by investing in Real Estate. To this end I focus my talents on being good at two things – Building Businesses and Buying Buildings. This is where I will make money and this is what will make me rich – It also has quite a nice ring to it.

I am sure I will make money and find a manner of success and happiness on other ventures of mine – as a freelance designer, journalist and photographer for example. However, these things will always be secondary to my core focus which again is:

Building Businesses and Buying Buildings.

Mind Your Own Business To Be Successful

There are many ways to make money and be a success but there are few that you will excel at. Don’t waste your time pursuing everything just because it has worked for someone else.

Work out what works for you and utilizes your passions and talents and focus on that. Everything else you do is a hobby and should be enjoyed as such – if you find success and additional money through it then great but this should not be the focus. Your hobbies are for your own personal enjoyment and happiness and should be treated as such.

That is why I do not monetise my blog or get involved in affiliation marketing – it is not where my wealth is generated and I do not plan to complete with the super blogs that are out there and I do not understand enough about SEO to give affiliation a real shot. I use my blog to explore my own thoughts, develop new relationships and to give to others. That is its reason for being – it is my hobby.

Find out what your one line plan of action is. Mine is Build Businesses and Buy Buildings. I repeat it to myself everyday and that is powerful in embedding it into my make up. My professional life is dedicated to Building Businesses and Buying Buildings, my hobbies are another thing completely.

Others would call this “Minding Your Own Business” Mined your business and what you are good at and don’t worry about the other persons businesses.

What Is Your Business and what is your one line plan of action?

Unfortunately Sir, I Think Your Acting Career Is Over – Your Plan Of Action To Wealth And Success is a post from: thelifething.com
Thanks for subscribing, you should now be at least twice as attractive to the opposite sex. Loyal reading of these articles increases your sexiness further. (Just so you know) r. thelifething.com - Life Design For A Designer Life...or something

It’s January again, A New Year and another go at completely redesigning your life and reducing the amount of chocolate you consume. I am kidding of course, if anything one should be increase the amount of chocolate consumed, the redesigning life bit still stands though.

So to help you out I have spent the considerable time it takes to read all the articles on this site to put together for you a reading list to help you kickstart your 2010. Happy New Year.

* Also don’t be shy to comment even on old articles as I am interested to hear your opinions, views or gripes. Don’t make me come over there and make you comment.

If you are short of time I have starred my more favorite posts.

.

What Life Do You Want In 2010?

.

So tell me then, what do you want out of this year. Do you know? Have you even though about it? 2010 is not a year to be wasted so have a gander at these posts to get inspired and work out what you want your 2010 to look like and how you want your perfect life to be designed.

.

I Am Going To Tell You About One Of The Worlds Biggest Problems And How It Can Be Solved

.

At the beginning of 2010, be inspired by ordinary people that have done extraordinary things. Will 2010 be the year that you become EXTRAORDINARY.

.

Deliberately Make Your Life Remarkable *

.

“Most days of the year are unremarkable. They begin and then end, with no lasting memories or anything of significance in between. Most days have no impact on the course of a persons life.” In 2010, will you be Indian Jones or Mr Jones from accounting?

.

The Road “Most” Traveled Is Frikin’ Dangerous Man *

.

Before you run headlong into 2010 take some time to reflect on what the key to a full and successful life actually is and make sure you are traveling the right path. If you are not sure, then you need to read this.

.

Why Do You Fear To Be Great, You Yellow Bellied Coward?

.

Have you DONE something with your life? Do you have a STORY worth telling?

Are you GOING to do something with your life in 2010? Will you HAVE a story worth telling in 2010? Read on if you want one.

.

Soap.Lather.Rinse.Repeat – The art of living free in the moment while naked in the shower *

.

One of my favorite posts and one that I will be rereading many times over this coming year. However successful your year is going to be in 2010 always remember to put life into perspective.

.

No Gumpy Boy, Life Is Like A Thai Massage

.

Just remember that, unlike the 70s films of past years, the goal is not to have a happy ending, as by then it is too late. The real goal is to have a happy journey, however you work out the best way to ensure that.

Here’s to your happy ending, I mean journey. Ahem.

.

Improving Yourself In 2010

.

Make 2010 the best year to date and enter Christmas next year a greatly improved specimen.

.

Chocolate Coated SuperMagnets -The Practical Art Of Making Yourself Irresistible *

.

If you want to make the most of 2010 then you are going to need to be irresistible – and here is how to do it. Five core rules that are easy and practical to apply to ensure your social life gets ramped into overdrive in 2010.

.

The Five Killer Rules For Assassin-like Effectiveness In Your Work *

.

Don’t waste 2010, become hyper effective instead. This is one to print out and stick up.  If you want to become substantially more productive in 2010, waste less time AND become a Ninja then you need to read this.

.

How To Talk To Strangers Without Wetting Yourself.

.

Become a social animal in 2010 with these 7 incredibly simple and practical tips for engaging anyone, anywhere.

.

Beating the “Internal Conflict” for Long Term Weight Loss and Habit Change

.

Ever tried giving up weight and failed? Ever attempted to start a new habit and found yourself petering out? Ever tried setting an achievable goal only to not achieve it? Let this year be different to the last…seriously this time.

.

1 And 1 Make Eight Hundred and Eighty Six Thousand – 3 Things Necessary For Success That The School System Neglected To Teach You.

.

10 Ultimate Tips to Supreme Health and Fitness

.

Become a lean, mean, only fight when absolutely necessary machine in 2010 with this practical rules for great health, fitness and figure.

.

Finding Success In 2010

.

2010 could be the year of great things for you and these post will help give you the best possible chance to find that success.

.

Guaranteeing Blogging Success Without Shooting Yourself in the Head *

.

If you are or are going to be a blogger in 2010 then, like the instructions on a parachute, this is a must read. Failure to do so will have catastrophic consequences. You have been warned.

.

A Story Of A Life Designers First Time *

.

In 2010, Do not let life pass you by. Be forceful, make life play ball, make life work for you. Get your hands dirty, get sweaty, get involved until you physically can’t give any more and you collapse exhausted but content, safe in the knowledge that you gave it your all.

Another of my favorite posts, don’t miss it.

.

The Guinness Advert Got It Wrong – Good Things Come To Those That Don’t Wait *

.

Procrastination, they say, is the killer of progress, creativity and small puppies. In 2010 make this the year you get off your backside and do something.

.

5 Lies That Society Shouts At You And 5 Truths That It Keeps Quite On *

.

In 2010 society WILL lie to you and it WILL keep some things from you. Here’s a heads up moving into the New Year a little wiser than most.

.

Time isn’t money so relax– It is far more important.

.

You are only going to have one 2010, you will never get a chance to repeat it so worthwhile making sure you are investing your time effectively. Another one to print out and keep over your desk – 5 Investment tips for your time.

.

Some Super Sneaky Suggestions for Selling Yourself AND Your Brilliant Ideas without Resorting to Violence and/or Blackmail

.

Looking for success in 2010? Then you are going to need to get people to understand how brilliant you are. Unfortunately, not everyone may appreciate your brilliance or the brilliance of your ideas straightaway, and thus it is your duty to enlighten them. Here are three incredibly effective tips to allow you to do just that.

.

The Leap – How Three Simple Changes Can Propel Your Career From Good To Great

.

Planning to kick your career into overdrive in 2010 then let best selling author Rick Smith give you come guiding.

.

Structure Is Like A Strong Wind…Flow is Like A Frikin’ Hurricane  *

.

Learn how to harness “THE BEAST” (who incidentally goes by the name of Joe) in 2010 for incredible creativity and productivity like a hurricane on steroids.

.

4 Concepts For Kicking Ass In Life Learn’t From Mixed Martial Arts

.

Mixed Martial Arts isn’t all about kicking ass first and taking names latter. This 2010 apply the principles of Respect, Playing to your strengths, Understanding that Position Isn’t Everything and That The Key Is Balance for a successful year.

.

A Happiness Fundamental: The Social Spiderweb

.

2010 is a time for friends, families and loved ones. Here is a great tool for benchmarking whether you are spending your time with the right people and how to change things if you are not.

.

The Indescribably Pleasure of Doing Nothing and then Resting Afterwards

.

2010 need not be all about productivity and moving forward, some times, like a stag party at a nudist colony, it is good to sit back and let it all hang out – Find out how here.

.

Escaping the Rat Race In 2010

.

Whether literally getting out of a job full time or becoming financially independent outside of a paycheck here is how to escape the Rat Race in 2010.

.

Why Its Worth It

.

A Day In The Life Of A Traveling Entrepreneur *

.

Self explanatory I think but the “Day in the life of” posts are my most popular on this site so if you need some inspiration to kickstart 2010 then here is the place to get it.

.

Cubicle With A View: The Office Of A Traveling Entrepreneur

.

Need some inspiration in 2010 on why exactly you are wanting to leave your current office behind. Well here it is, 2010 could be the year that you move into offices like these.

.

3 Months In The Life Of An Entrepreneur

.

3 Months, 5 Currencies, 6000 photos, 150 Restaurant Meals, 40 Hours of Wake boarding, 3 Police Bribes, 2 Seven Foot Bull Sharks, 1 Elephant and more massages than can be safe for one man – Here is 90 days in the life of a traveling entrepreneur.

.

Proof That Experiencing The World Doesn’t Have To Cost The Earth

.

For anyone doubting that venturing abroad in 2010 might not be worth it then stick this in your pipe and smoke it. Seriously though, check out what £122 will buy you in Thailand. I mean it, it’s insane.

.

How To Do It In 2010

.

How To Bankroll Traveling The World And Living Your Dreams Without Being A Freeloading Little Rich Kid

.

Drastically change your life in 2010. Here is basically how I got to being able to escape the Rat Race and live my current lifestyle – minus the odd awkward relationship, dodgy curry and missed plane takeoff.

.

How I Live How I Do Without Having To Rob Banks

.

What exactly was my 9 to 5 job before ? What sort of business provides my passive income? How much does [living in Thailand] cost me monthly ? How much do I earn? Find out here.

.

How To Live An Awesome Life Abroad Without Having A Job *

.

Learn the secrets to gaining 300% Interest On Your Money, Hiring 10 Guys For The Price Of One and Reducing Your Workload by 80%. Oh, and the reason why I tend not to wear pants. 2010 could be your year for moving abroad.

.

Quitting Your Job In James Bond Like Style Without Ending Your Career

.

Is freedom from the Rat Race calling you in 2010? If so, make sure you read this article before flipping the bird to the man. Yes quit, it will probably be the best thing you ever do, but do it with style with 5 proven pointers.

.

Own Nothing…Experience Everything

.

Do you seem to own everything but have done nothing. Join the debate and see if the ONEE approach to life will bring you a more stress free 2010 full of experience.

.

Becoming Rich In 2010

.

Interested in leading a richer life in 2010? Then the Rich Series post will help you achieve that goal.

.

Stage 1 – Understand What It Means To Be Truly Rich.

.

On your journey to a richer 2010 start by understanding the five core areas for benchmarking a rich life: Financial Security, Freedom, Good relationships, Health, and Identity. Time to live the rich life.

.

Stage 2 – Understand The Three Financial Equations Of Wealthy Living

.

Are you a Happy Fish, An Unhappy Fish or A Dead Fish. If you don’t know then you need to if you want to become richer in 2010. Better scan this post and make sure which one you are hadn’t you, go on, you know you need to.

.

Stage 3 – To Come

.

So there you have it – An almost comprehensive list to make sure your 2010 goes off with a Bang. Have a Good One.

An Almost Comprehensive Guide To Knowing What You Want, Improving Yourself, Finding Success, Escaping The Rat Race And Becoming Rich In 2010. is a post from: thelifething.com
Thanks for subscribing, you should now be at least twice as attractive to the opposite sex. Loyal reading of these articles increases your sexiness further. (Just so you know) r. thelifething.com - Life Design For A Designer Life...or something

Read time: Approx 6-8 minutes / 3-4 Minutes Highlighted but important. If you don’t read anything else on this site read this. It will make you rich.

Football Superstar Ronaldo and balding Mark from finance are both in the same financial situation. As they are both living by the same financial equation and they will both reap the benefits or suffer the consequences of that equation.

Why Read

This is the second installment of my “How to be Rich” Trilogy. If you have not read the first one “ How to be Rich: First Understand What it Means To Be Truly Rich” then I highly reccomend you read it before moving on to this one.

This second installment looks at the three core financial equations that everyone will fall into and outlines the benefits and the consequences of each on personal wealth and happiness. You should read this article because it highlights just how important it is to live by the right equation for a rich and happy life and will help you Understand The CORE Financial Equation For Super Wealthy Living.

.

We are all similar

.

Everyone on earth, no matter whether they are Tom Cruise or balding Mark from the finance department, have only two commodities to sell: Our time and our abilities.

This is how it works when you are in a job; there is a certain hourly price on your “abilities” commodity and you “sell” you time to your employer at this price. A yearly wage or an an hourly rate. A basis of the footballers wage for playing football is no different from Marks wage for running the companies finance, only that it is larger. He is still being paid for his time.

.

The only difference is that the footballers “ability” commodity is valued at a much higher rate, however unfair that may seem.

.

The footballer is still selling his time, as is Mark. They are both still stuck in what some aptly refer to as the “rat race.” If either of them stop selling their time to their employer then the money stops coming in and this puts them both in a difficult situation due to the fact that it will always keep flowing out.

Football Superstar Ronaldo and balding Mark from finance are both in the same financial situation. They are both living by the same financial equation and will both reap the benefits or suffer the consequences of that equation. They are both either a happy fish, an unhappy fish or a dead fish. You are too.

Some may think that Ronaldo is better off, even if he loses his job and is not selling his time any more due to the fact that he is “richer” than Mark, but this is a misunderstanding of the financial equations. Ronaldo, with all his millions, is still financially in the same situation as Mark from an mathematical equation point of view and it is this that is important, not the numbers (the size of his bank account)

.

Just like in maths, the numbers may vary but the equation stays the same and thus the outcome is also the same.

.

It is the equation, and not the numbers that is important. Regardless of how high your “abilities” commodity is and thus how much you get paid, you are still only selling your time and your time is finite. You have to be living by the right financial equations or you will get into financial difficulties.

.

The three financial equations that you need to be aware of are the “Within Means”(Happy Fish), the “On means” (Unhappy Fish) and the “Outside of means.” (Dead Fish) I guarantee you will fall into one of these three.

.

.

The “Within Means” equation – Happy Fish Living

.

.

Living within your means makes you a Happy Fish.

.

Lets presume Mark has an income of 20k a year (we will ignore tax or currency for this example). If Mark is sensible he will be living on less than this and his lifestyle may cost him 15k a year leaving him with 5k of savings every 12 months. Let’s also presume Mark has been working for 5 years at this wage and under this equation and has thus saved 25k.

In this situation, should the worst happen and Mark gets laid off or he wants to take some time off to try his own ideas or start a business then Mark (and his family should he have one) can live comfortably at his current level of living for around 18 months without any income before he runs out of money. In this scenario Mark has the freedom to take a year out or, given the loss of a job, a fairly stressless 18 months to find another one. In this situation mark is living below his means.

.

Living below your means is the single most important financial decision you can make in order to live relatively stress-free and give you a degree of freedom.

.

This equation applies to all people who sell their time.

Superstar Ronaldo can be inexactly the same position. He can earn £1million a year and have a lifestyle that costs him 800k a year. If he has, like Mark, worked for 5 years and stops playing football he will still only have 18 months before he runs out of money because he is living a significantly more costly lifestyle. You may think he can down grade easily but this is not usually the case. Just as someone living on £15K would struggle to downgrade to £7.5K, someone else living on 500K would struggle to downgrade to £250K. There are mortgages to pay, loans to honor, a level of comfort you are used to to maintain etc.

.

The key is that it is not the numbers that are key, but the formula that is important and almost always the deciding factor.

.

.

The “On Means” equation – Unhappy Fish Living

.

.

Living on your means keeps you alive but makes you an Unhappy Fish

.

Ok, Now what if Mark was living just on his means. He is earning 25k and living a lifestyle that is costing him 25k. As before he has been working for 5 years but now decides he wants to take a year off to start a business. Mark has a problem, as soon as he stops selling his time the money stops coming in and he has no savings. He needs that 25K a year to support his lifestyle and so he cannot afford to stop. He is forced to keep selling his time to his employer. His freedom has been completely taken away.

What’s worse is that if Mark gets laid off, he must find a job straight away otherwise he will be in debt very quickly and paying a substantial interest for the privilege. This is a hugely stressful time for Mark and he may well not be able to get a job for many months which will put him deeper and deeper in debt. Mark is now forced to work longer hours to live the same lifestyle he was previously because he now has all the debt interest to pay back as well.

Again, Ronaldo on a higher “abilities” wage is in exactly the same position, if he doesn’t get another contract worth what his current lifestyle is costing him, he will soon be in substantial debt and his repayments will be even higher. As you may be beginning to see, it is not about the amounts earned.

.

The numbers are not important, mathematically the equation is the same and it is the equation that is important.

.

The current equation is detrimental to Mark and to Ronaldo, and to anyone living by this equation no matter how much or how little they are earning.

.

You can see real life examples of this with footballers such as Gazza or Popstars like Britney who all went bankrupt within a year even though they had previously been earning millions.

.

.

The “Outside of Means” equation – Dead Fish

.

Living outside of your means makes you a Dead Fish

.

There is a third equation and unfortunately this is how a great many people have been living and is part of the reason for the unprecedented levels of stress in todays society.

.

The third equation relates to living outside of your means.

.

Ever since we moved away from the Gold Standard we have been a society based on credit. In this scenario Mark is still earning 25k but now he has a credit card and the bank was more than willing to lend him cash. Mark’s lifestyle over the last 5 years has been costing him 35k. This has meant that over the last 5 years he has had to borrow 50k to live his lifestyle, he now owes the bank 50k plus the cumulative interest that is owed on these debts.

.

Cumulative interest is like a snowball rolling down a hill and gets exponentially larger the longer it rolls on.

.

What Mark really owes could be closer to 80K depending on what his bank is charging him.

In addition, that is £80K if he pays it off right now, if not then he will continue to owe interest, he might even get into a position where he is paying more and more and still only paying off the interest on his loan. In this situation, Mark has absolutely no freedom and has to continue to sell more and more of his hours to keep up his lifestyle and repayments, he has become become a wage slave.

There is no option to take a year off or try his hand at business, he must keep working, and working hard, which brings stress and misery. What is worse is that if Mark ever loses his job he really is in massive trouble. He is already in debt and may not be able to lend more from the bank without a wage coming in, mortgage repayments will be missed, loans defaulted on and he could end up losing everything and having to file for bankruptcy.

.

Applying this equation to the Ronaldo’s situation should he be living by this equation and he gets an injury that puts him out for life, has exactly the same outcome accept the numbers are bigger and the material loses are greater.

.

The overall loss and the overall stress however remain the same.

Living outside of your means is not a right, much to the disagreement of advertisers everywhere who relentlessly promote that we are entitled to anything we want, and we can have it right now. Do not listen to them, the small pleasure of living outside of your means is not worth the complete destruction of your freedom and permanent slavery to the wage slip.

.

Please, Think Of the Fish

.

A good way of reminding yourself of the above is to think of the fish.

.

Dead Fish Economics

.

When in water (Within means) it is happy and relatively stress free. When on top of the water “On means” it can survive but is a quite stressful. When out of the water (Outside of means) it is in a lot of trouble and the longer out it is the worse off the fish is.

.

Anyone who has to sell their time for income is in the rat race. For some this is what they want and it can be a viable option, but only if you live within you means.

.

Living from paycheck to paycheck with the “On means” equation or worse, in debt through the “outside of means” equation is a destructive and stressful lifestyle.

.

Don’t fall into the trap. If you are already there, seek financial advise to help you get out of the trap. It will be a long, painful process but it is possible to get back control of your finances and thus your freedom.

.

The image I use for Dead Fish Economics is from a project I am working on called Pictomins – Little Pictorial Bites Of Wisdom For a Visual World. You can check out the site at http://pictomins.wordpress.com/ . I would love to hear what people think about the idea.

.

.

An Apology

.

I realise that this post was probably not as entertaining or humorous as usual but that is deliberate because of how important I believe the content is. However, I will end on a joke so you don’t feel too hard done by.

.

Two men where walking out of a bar when they were held up at gun point. As they were handing over the cash from their wallets, one of the guys tuned to his mate and said, “Hey Dave, heres that twenty I owe you.”

.

How to be Rich Stage 2 – Dead Fish Economics for Super Wealthy Living is a post from: thelifething.com
Thanks for subscribing, you should now be at least twice as attractive to the opposite sex. Loyal reading of these articles increases your sexiness further. (Just so you know) r. thelifething.com - Life Design For A Designer Life...or something

When we think about being rich the first thing that springs to most peoples mind is money. Indeed having money can be a big part of being rich, however, it is by no means the only part. There are many, many people that have a lot of money but do not lead a rich life.

.

So what does it mean to lead a rich life?

.

This will differ slightly from person to person but there are some fundamental and underlying aspects of a rich human existence. I like to keep things simple so I have categorised these into five core areas for benchmarking a rich life.

.

The 5 Core Areas for Benchmarking a Rich Life are: Financial Security, Freedom, Good relationships, Health, and Identity.

.

The order of priority isn’t really important and will probably differ for different people.

.

Financial Security:

.

A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.
Suze Orman –

Having money is nice, and not having money is really not at all pleasant, no matter what anyone says. However, research shows there is a point in a person’s financial worth where the numbers become meaningless and having more and more money does not bring an improved, richer life….in a lot of cases it can actually prove detrimental. It is generally agreed that, as Suzy Orman puts it, once a person’s heart and mind are free from worry about the what-ifs of life, subsequent increases in wealth won’t have a huge impact, in the long term, on living a richer life and ones general happiness. This is especially the case if health, freedom or relationships are sacrificed to achieve the financial gain.

.

Benchmark number 1 for living a rich life; Have enough money to be financially secure.

.

Freedom:

.

Arguably the best thing about humanity is freewill and the privilege of freedom. I know around the world this is not always the case but for most of us we do not suffer from serious oppression to our freedom. What most people today suffer from is the lack of freedom from having to work in order to pay the bills. Over 95% of people working today are caught in the “rat race.”

Every day they have to get up and go to work to ensure that there is enough money to put food on the table, clothes on backs and roofs over heads. They live from paycheck to paycheck. This is both a stressful and needless existence. Just small changes to lifestyle and life goals can help people break free from the rat race and claim back some of their freedom.

I am in no way advocating that a rich life entails not working, as everyone needs to work to lead a rich life, a persons work is part of finding their identity. The loss of freedom comes through not being able to make the “decision” not to work, for a short or long period of time.

If you lose you job today or decide to take 6 months off…could you? Part of being truly rich and leading a rich life is being able to answer yes to those questions. In the next stages of “How to be rich” I will explain how this can be achieved.

.

Benchmark number 2 for living a rich life; Be free of the rat race

.

Good Relationships:

.

“Happiness is best shared” Into the Wild

Humanity is greatly blessed with the gift of friendship. There are a great many things that the human mind can endure; however, if you have no one to love and no one to return that love, any individual can very quickly become a shell of who they were designed to be.

.

Friendship is what sets us apart from all other animals on this planet. Where animals can offer and experience companionship they cannot experience the emotional bond that humans create with one another.

.

The core to a happy and rich life will always involve strong relationships and human connection. Achievements are greater when you have someone to be proud of you, experiences are richer when you have others to remember them with you, sorrow is more copable when there is someone to sit with you. Laughter is fuller when there are others in on the joke, songs are louder when there is a shared passion, victories are greater when it’s been a team effort.

Think back to the best memories of you life and I bet that everyone involved other people.

Some are blessed with good people skills and confidence, others are more shy and introverted but both have equal opportunity to deep, lasting relationships with others. Each have the opportunity of a rich life of relationships. In the next stages of “How to be rich” we will explore how to build and maintain these relationships.

.

Benchmark number 3 for living a rich life; Share the journey

.

Health:

.

The greatest wealth is health.  ~Virgil

Life is about balance and so is health. Being in good health acts like the foundation for living a rich life.

.

Being in good shape, exercising regularly and eating healthily reduces stress, increases energy levels and improves the brain functions. When you are physically fit you feel more confident in yourself and this improves every other aspect of your life from your social interactions to the challenges you face at work. Click here for 10 easy ways to Get You Started.

Team sports, Triathalons, Hiking mountains or just a few laps in the pool with friends gives a counterbalance to the daily challenges of life. In addition these activities offer further opportunities for new experiences and friendships.

.

Benchmark number 4 for living a rich life: Get Healthy. Stay Healthy.

.

Identity:

.

“The value of identity of course is that so often with it comes purpose.” Richard R Grant.

If you don’t stand for something, you will fall for anything. In order to truly lead a rich life one must understand their own identity, their own uniqueness, their own way of seeing the world and be true to it. The greatest conflict in life comes when we don’t know ourselves and constantly seek approval and our identity from others.

Those that seem so confident, so sure of themselves in life almost always have a great sense of identity and from that purpose. They understand their own uniqueness and the uniqueness of others but derive the worth and meaning from their own principles not the principles of others. Everyone needs a purpose in life, something bigger than themselves to be a part of.

Lack of purpose in life is like being on a small looping train ride at the fairground going round and round until its time to get off instead of being on the mountain pass train aiming for the top and taking in the breathtaking views, the ups and downs and the fellow passengers on the way.

A great book to read for more on this is: The Purpose Driven Life by Rick Warren

.

Benchmark number 5 for living a Rich Life: Know Who You Are

.

.

This is the first of a three part series. If you have enjoyed it or it has meant something too you I would love to hear what you think by leaving a comment below. Don’t worry if you are reading it many months after its posting I am still keen to hear your thoughts.

How To Be Rich: Stage 1 – Understand What It Means To Be Truly Rich is a post from: thelifething.com
Thanks for subscribing, you should now be at least twice as attractive to the opposite sex. Loyal reading of these articles increases your sexiness further. (Just so you know) r. thelifething.com - Life Design For A Designer Life...or something