We were taught the rules of money by our parents and adults who were playing a different money game. There are new rules of money. The rules that worked for people during the Great Depression era do not work in todays economy. You will lose if you follow the rule of saving as our parents did. Let’s dig into the WHY and how you can stay ahead of the game.
Upon first glance this looks like an average twenty dollar bill. Upon closer inspection, you will notice a few things we don’t see on todays bills. The word “GOLD”. This is what money was really meant to represent. A receipt for something that was backed with value. This idea of paying off debt comes from an era where money was backed by gold and represented real value and was not manipulated. The Great Depression era thinking of paying down debts made sense in those times because money was backed by something of value. It was fundamentally different than the money we are using today.
We went off the gold standard in 1971 under the authority of President Nixon. As soon as we untethered the dollar from the gold standard the dollar amount in circulation began a steep increase over the course of the next 50+ years as it continues to do today without any tangible value attached to the bill. Paying off your liabilities before 1971 was a good thing. Paying your mortgage off as soon as humanly possible made sense in those days. Now it’s a bad idea to do so because our economy is entirely based on debt. Dollars today are way more valuable than your dollars will be in 20 years so it would be unwise to rush to pay off your mortgage with the most valuable dollars you will ever own. Todays bills have printed on top “FEDERAL RESERVE NOTE”. A note as defined by the Merriam-Webster dictionary is a written promise to pay a debt. The term debt-based economy is a familiar term because it is our reality. Kiyosaki is famous for sayings like – savers are losers – for this very reason. If your money is sitting in a coffee can or sitting at the bank all it is doing is losing value over time. Likewise, we should be in no rush to hurry and pay off our car loans or our mortgage as preached by the #debtfree advocates.
There is good debt and bad debt.
We still 50 years after getting off the gold standard tend to see things from a savers mentality. Setting aside X amount of money today will cover X amount of monthly/annual expenses for retirement. We can not predict the cost to maintain our lifestyle 30 years down the road. We can not plan for retirement with a savers mentality. The system will work against you. Use debt strategically to WORK FOR YOU.
The New Rules of Money
The key to planning for the future in a debt-based economy is through the marriage of life insurance and real estate. It is the key to financial independence in today’s time. It involves reworking myths of money and productivity and profit with the advantage of freedom. If you are interested in learning more you can find us at Cash Flow Tactics and join the growing community of people just like you who are ready to take their future into their own hands and learn the tactics to play the game.