I have an author quoting Thomas Jefferson writing that the way to destroy the Shawnee was to trap them in debt. I won’t cite that until I get the original source, but if so, it must be the earliest example in USA of what is a common trap, and that is slavery through indebtedness, something employed from student loans in USA to hydroelectric projects in Peru.
In a recent class an exchange caused me on this as another facet of the problem as why people do not start businesses. The exchange went something like this...
Since in exporting from USA the buyer overseas arranges financing, should and importer switch to exporting if they run into financial troubles? My reply was if anyone runs into financial troubles it is because they a re not serving their customers. The solution is to listen to customers, not switch tacks...
A nice thing about teaching in IRC is the disjointed sequence from the time delays offer serendipitous juxtapositions. (Yes! Finally used it in a sentence!) As I was explaining the solution as customers, the other asked if banks are the best resources for cash.
I was challenged, “At some point you have to come up with 5, 10 or 20K to get the deal done.... f you don't have the money, presumably you must borrow.... Or walk away and never get started in your new business...”
There it is... probably the one core erroneous idea that keeps people away from starting their own business. “if I cannot get financing, I am sunk.”
So I come back.... $5000 at $10 an hour at McDonald's working for about 3 months... can you do it? Well, or learn to save, which is how you get rich anyway...
People spend all they get as an employee, so they are forever trapped as employees. Probably the first step in your way out of the trap and into self-employment is to save money to start your business. This is a critical lesson.
Aside for the simple fact you will never get a bank loan to start anyway, for the next era, 25 years or so, if you have any savings it will be stolen through inflation. if you have assets like a home, it will be taxed. The best idea now is to save enough money to get started, and then invest the proceeds back into your business, which is your lifestyle, thus minimizing the taxes, but at the same time making the world a better place.
The way out is savings... I think that is an important lesson... a loan, borrowing or debt is the way to slavery.
Thursday, May 28, 2009
The Way Out Is Savings
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2 comments:
So true about how debt reigns in our dreams, and then we forget the our goals.
At De Anza College it was mentioned in a Sociology class that the number one reason students discontinue their educations is them going into debt with car loans & credit cards.
The student changes from part time work into full time work to pay off the debt, and so they grow tired from working and paying bills and use this exhaustion as reason to quit school.
There is good debt and bad debt exhibited in montyly cash flow that is either growing and expanding one's goals or not.
I also believe the key to freedom is proper saving. Saving not only money, but other resources if available.
You don't have to be a hardcore "tightwad" as some may think, just practice a more frugal way of living. This will ultimately lead to more options down the road. Patience and dedication though, are not traits you see to much of these days.
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