The problem with money and why I never give financial advice

By 20 September, 2010February 15th, 2011Newsletters, Registered

Hello again

Just to recap, none of this is financial advice. What I say is merely for entertainment purposes only. Shame that I have to keep writing that, but that’s the world we live in folks.

Over the last few newsletters I have been discussing the way we as human beings live our lives based around the concept of money. As a recap it is my philosophy that you should earn more and spend less. That way you get to a point where your investments are sufficient to keep you in the lifestyle you want…….. so that you can then step back and work only because you want to not because you have to.

Now for those who want to take up this philosophy (and let me tell you from the start it is not for everyone) the spending less money every month is the place to start. The reason being is a little law called “Parkinson’s Law”

“Expenses rise to meet earnings”

It doesn’t matter how much you earn if you spend it all. You have to break Parkinson’s Law if you want to be financially independent because you aren’t going to win it and you aren’t going to inherit it. Admittedly, you might be able to build up a practice and sell it for a large capital gain, but if you have large debts and large overheads, that’s really not going to be such a windfall. Just run the maths.

Some people take to this like a duck to water, others struggle with it immensely.

“But I like driving flash cars”

And that’s fine, there is nothing wrong with that. If you want to spend the equivalent of six months income on a box that gets you from A to B go for it. I’m not telling you what to do, I’m just exploring possibilities.

You see I have a big problem with the “buy me and be happy” culture that is rammed down our throats by marketers. One because much of the marketing techniques used today are based on dubious psychological and NLP technologies, and secondly at the end of the day most people find that the happiness found in that latest purchase is fleeting. A new kitchen quickly becomes an old kitchen.

But that wasn’t what I wanted to talk about today. If you remember, the second part of the philosophy is to make more money. And there will be many of you who will be tapping me on the shoulder saying “well I tried that, but I just got a whacking great tax bill that sucked it all off to HMRC”. And that will happen initially, and many people keep hitting this wall time and again. But, let me tell you a little secret.

That wall is there for a reason.

And there are 2 points of view on this. The first is that there is an international conspiracy of bankers and puppet politicians that have manipulated the whole system to stop people getting ahead and stop them breaking out of the “matrix” for want of a better word. Keep them trapped, keep them producing and tax them to the hilt.

I think the second point of view is more empowering, and somewhat more realistic. The wall is a test. If you pass the test you get to a place that very few people see. Having spoken to several people who have passed the test, let me describe that place for you.

You no longer worry about your tax bill. You no longer have any debt, other than business debt. Your credit cards (if you even use them) are paid off in full every month. You never travel economy, but you also don’t flaunt your wealth. If you found you were suddenly unable to work tomorrow, you could last several years on the reserves you had set aside.

And the little voices of protest are rising up. It’s OK, you situation is different, I know. You’ve got kids, business is slow, you lost money in a dodgy investment. Of course, the people I spoke to pretty much all have or had those same things in their lives too, but we’ll not talk about that.

Did you know that most American millionaires went bankrupt at least once?

There is a threshold with making money. Once you have reduced your outgoings and broken Parkinson’s law, you find it easier to put aside your tax money. The more you earn, the more your earning power starts to outrun the tax taken (harder now with the 50% tax bracket I know, but still very possible). And what also happens is you stop relying on earnings that are hit by income tax. You start to gather investments that come under capital gains tax. You start to think “well maybe a bank account with its taxed interest isn’t the best place for my money” and you start to look elsewhere.

Once you pass the test, you start to get smart. And then something amazing happens.

Money just starts to appear. You just seem to attract it. Because you are no longer worrying about money, you brain shifts……… and you start seeing opportunities all around you. It’s scary. There is of course something else that can happen, some people get complacent and lazy…… and get sucked right back below the threshold.

But you don’t even reach the threshold until you get out of the spending habit.

And as for making it, well I’m shortly going to announce something that will be extremely exciting to some of you. But only some of you.

The rest of you (the rest being the large majority) will have no interest in it whatsoever…. which is a good. Because firstly it involves an investment technique that is more risky than keeping your money in the bank. Secondly it’s very expensive. Thirdly, it’s not guaranteed to make you any money whatsoever, in fact you could easily lose money. And fourthly it involves travelling to another country.

I know that’s not saying much. What I can tell you is for those of you who are interested, I will be able to get you a significant discount through my contacts with the organisers.

I’ll keep you posted.

Right I’m off to buy myself a new car :)

Regards

Stephen Hudson BDS, MFGDP, DRDP

Please help support the Sick Dentist Scheme and the BDA Benevolent fund by buying my book atChoose Your Reality. A proportion of the profits from its sale are split equally between these two charities

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PPS: Remember to check out our regularly updated PDS blog at http://nhsdentistry.blogspot.com/

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Disclaimer: S.Hudson or SNH Publications will not be held liable for any actions taken based on the information provided in this newsletters. This information is for entertainment only.

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