A warning about my finance book


This is an extract from The Poor Man’s Guide to Financial Freedom: A Realistic, 10-Step Manual to Building Liberating Wealth on a Low to Medium Income.

A Warning

            You might be thinking, meh, I’m going to move up in my career soon enough anyway.  Once I’m earning the big bucks I’ll pay off my debts, start investing, and all of that sort of thing.  What’s the point of struggling through all this now when I don’t have much money anyway?  It’ll be easier to do it later on.

            This is the path to hell.

            Time is money, as will become increasingly apparent the more you read.  The longer it takes to pay off your debts, the larger they will grow.  The later you wait to save an emergency fund, the longer you will spend at risk of getting into a serious pickle.  And the longer you put off investing, the lower your eventual returns will be.

            To state this in the positive, the sooner you start working on getting your financial affairs in order, the faster you’ll pay off your debts, the sooner you’ll have a good safety net, and the larger your investments will grow.  The time to start is today, and three years ago would have been even better. 

The earlier you start, the sooner you’ll reach your destination.

            Further, financial freedom and a high income are not the same thing.  This is a point which will be reiterated throughout the book, to the point that you’re going to get a bit tired of it.  Many people with high incomes, as you will see, lack financial freedom because they have a debt-driven lifestyle, no emergency fund, and no sensible, long-term investments.  On the other hand, many of those with lower incomes manage to live within their means, save, invest, and live a much more financially secure life. 

That is financial freedom.

            You may indeed earn a higher income one day.  Good for you.  Once you’ve read this book and followed through the steps required, that extra money will help you to reach all your goals much faster.  On the other hand, if you have not learned the lessons in this book, that extra income will disappear like a sidewalk puddle on a summer’s day and you will continue to experience financial distress.  You’ll still live beyond your means because expenses tend to rise with income.  You’ll risk being wiped out because you lack an emergency fund.  You may lose everything if you don’t understand the fundamentals of investing.

A high income without financial know-how is like a V8 engine in a car with bald tires.

            Don’t believe me?  Consider the case of Michael Jackson.  He earned an income we can only dream of, but he died $400 million in debt.  Mike Tyson earned that much over his career, but by 2003 he was in serious debt to all sorts of people.  He is reportedly now solvent again.  Other rich, famous people who have had to declare bankruptcy include actors Stephen Baldwin, Burt Reynolds, Gary Coleman and Kim Basinger; musicians 50 Cent, Marvin Gaye, Meatloaf and MC Hammer; and US President Ulysses S. Grant.[i]

It got scarier.

You want one more?  I can give you one more.  Consider the great novelist Mark Twain.  He wanted to be rich throughout his career, and he made a fortune several times over, but each time he managed to lose it through one bad investment or another.[ii] 

Do not wait until you have a higher income to try to reach financial freedom.  Start now.  By all means, attempt to increase your income as per Step 5, but you must also complete the other steps, in order.  Vastly richer and more talented people than you and I have tried, and failed, to manage their finances through a high income alone.  It doesn’t work.  So long as you earn enough to meet your present expenses plus a bit left over, you can reach a higher level of financial freedom than all of those celebrities managed on an enormous income.

[i] https://www.businessinsider.com/rich-famous-celebrities-who-lost-all-their-money-2018-5?op=1#t-pain-said-he-went-from-having-40-million-in-the-bank-to-having-to-borrow-money-to-get-his-kids-burger-king-25

[ii] https://en.wikipedia.org/wiki/Mark_Twain#Financial_troubles

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  1. Pingback: The housing bubble. – Dark Brightness
  2. overgrownhobbit · November 20

    I’m being lazy (mea culpa) but I cannot tell from the chapter titles if your book has a bit on what questions to ask and considerations to consider if you decide you want to use a financial advisor to manage your assets.

    If it does not, but you’ve done a solid write up on the subject elsewhere, and take the trouble to post here, I’ll buy a copy anyways, and read it. “Do not bind the mouths of the kine that tread the corn”.

    Liked by 1 person

  3. Pingback: A Poor Man’s Guide to Financial Freedom: A Handbook for those starting out – Dark Brightness

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