Mind Your Own BusinessBy Sharon Lechter

Are you minding your own business? If you are an employee, it is not what you do from 8-5 that counts. It is what you do with your paycheck after you receive it that counts.

In other words, what you do from 8 to 5 is your profession or your job. What you do with your paycheck is your business. Too many people rely on their employer or their government to take care of them.

Who are you working for? Let’s say you have a salary of $ 48,000 per year. In other words, you are paid $4000 per month to mind your employer’s business. Then you receive your paycheck and it is for only $2500. The $1500 of withholding taxes is you minding Uncle Sam’s business. Then you have to make your mortgage payment to the bank of $1500, which represents you minding the bank’s business. Oh, and let’s not forget that credit card balance that you let get away from you. That $400 payment is you working for the credit card company. Another $440 goes for living expenses. What are you left with? At the end of the month you are lucky to have $160 for investment, that’s $1 per hour that you are earning working for yourself.

Let’s review:

Salary:................. $4,000 You working for your boss
Less: Taxes ..........$1,500 You working for the government
Less: Mortgage.... $1,500 You working for the bank
Less: Credit Card.... $400 You working for the credit card company
Less: Living $.............440 You working for your creditors
Less: Net ................$160 You working for you!


It isn’t how much money you make that counts, it is how much money you keep. Most people work for everyone else but themselves. Financial struggle is often a direct result of people working all their lives for someone else and at the end of their working days they have nothing left for themselves.

To become financially secure, you need to mind your own business. Your business revolves around your asset column, as opposed to your income column. Learn the difference between assets and liabilities and start buying or building assets. Assets include businesses, real estate and paper assets.

The rich focus on their asset column while everyone else focuses on their income column. Many people think we are telling people to quit their jobs. For some that may be the right answer, but it is not the right answer for everybody. We want people to take more responsibility for their own financial decisions. Realize that you have the choice with every dollar you receive, how you are going to spend it.

Start buying or building real assets, not liabilities or personal effects that have no real value once you get them home. Build your asset column and keep it strong. Once a dollar goes into it, never let it come out. Think of each dollar as your employee. Money in your asset column is money working for you instead of you working for money.

You can start minding your own business today!

Top Tips For Controlling Debt

Tip #1 - Understand the difference between good debt and bad debt.

Tip #2 - Get a handle on your spending.
Awareness is an important first step in gaining control.

Tip #3 - Evaluate the debt you owe.
(See Kim's article in this issue... Her plan will help you do it!)

Tip #4 - Review 'best bets' on borrowing.
Take a good look at your options and decide what choices are make the most sense for you?

Tip #5 - Expect the unexpected.
Don't let life interfere with your plan. Correct and adjust - and move forward!

How We Got Out Of Debt

More and more people are getting swallowed up by debt. I'm sure you've read and heard many of the statistics and stories in the news.

One of the keys to financial independence is to get rid of your bad debt and acquire good debt. Bad debt is debt that makes you poor, such as credit card debt, car loans, school loans - this is consumer debt. Good debt is debt you acquire that actually works for you. The best example of good debt is a mortgage loan on a rental property that throws off positive cash flow every month. Good debt is money that you borrow to purchase assets that puts money in your pocket.

In 1985, Robert and I had a good deal of bad debt. And even though we kept making payments every month, we never seemed to make a dent in the amount of debt we owed. Each month we paid a little over the minimum on each one of our credit cards as well as on our car loan. Obviously, there had to be a better way to get ourselves out from under our creditors. And sure enough there was.

"Stick with the Formula"
This is the formula that Robert and I followed to pay off our debt. You'll find that if you follow this formula you will be out of debt much quicker than you imagined. Most people find themselves "bad" debt-free within 5 to 7 years. The key is to stick with the formula. You will not get ahead if you say, "I'll just skip this one month," and then two, and then three. If you stick with the formula it then becomes a habit you follow for a lifetime.

Here is the formula we used:

Step 1 - Stop accumulating bad debt. Whatever you purchase via credit cards must be paid off in full at the end of each month. No exceptions.

Step 2 - Make a list of all your consumer (bad) debts. This includes each credit card, car loans, school loans, home improvement loans on your personal residence, and any other bad debts you have acquired. (One item on our list was an outstanding debt to a partner from one of Robert's past businesses.) You can even include your home mortgage in this list.

Step 3 - Next to each items listed make 3 columns:
- Amount Owed
- Minimum Monthly Payment
- Number of Months

Enter the appropriate numbers into each column. To arrive at the number of months, simply divide the amount owed by the minimum payment.

Step 4 - Based solely on the Number of Months begin ranking each debt. Put a "1" next to the lowest number of months, a "2" next to the 2nd lowest number and continue up to the highest number of months. This is the order that you will be paying off your various debts.

Get Your First Win!
The reason you will start with the debt with the lowest number of months is that you want to have your first "win" or success in this process as soon as possible. Once you get that first credit card (or debt) paid off, you'll begin to see the light at the end of the tunnel.

Step 5 - Come up with an additional $150 to $200 per month. If you are serious about getting out of debt - and, more importantly, becoming financially free - then generating this extra money will not be difficult. To be candid, if you cannot generate an additional $150 per month then your chances of becoming financially independent are slim.

Step 6 - Pay the minimum amount on every debt you have listed EXCEPT for the one you've marked with a "1." On this first debt to be paid off, pay the minimum amount due plus the additional $150 to $200. Keep doing this each month until your first debt is paid off. Scratch that first debt off your list.

Step 7 - Congratulate yourself!

Step 8 - Pay the minimum amount due on every debt you have EXCEPT for the one you've marked with a "2." On this debt, pay the minimum amount due, PLUS the entire amount you had been paying on debt #1. For example if on debt #1 your minimum amount due was $40 and you added the additional $150 then you were paying a total of $190 each month. On debt #2, if the minimum amount due is $50, you will now pay $50 plus $190 or a total of $240 per month.

After a debt is paid off then take the total amount you were paying on that debt and add it to the minimum amount due on your next debt to get your new monthly payment. You will be amazed at how quickly this amount adds up and how quickly your credit cards, car loans, etc. are paid off.

Continue this process until all the bad debts on your list are paid off.

Step 9 - By this time the monthly amount you are paying on your last debt is likely to be quite substantial. Keep paying that amount every month. Except now - instead of paying it to creditors - you pay it to yourself for only one type of purchase: assets that give you positive cash flow each month. You will be out of the Rat Race faster than you ever dreamed!

Kim Kiyosaki