We just read yet another financial article, The American Dream Shrinks, that says how the middle class are getting poorer and the rich are getting richer. That may be true, but one circumstance doesn’t necessarily result from the other.
We Don’t Have To Lose Ground
The fact that the middle class is getting poorer is not because rich people are taking our money. Like many others we know, we (the author’s household) are middle class too yet are not poorer since the national financial fiascos starting in 2007. In fact, we bought a house at the height of the housing “bubble” and actually paid it off during the recession.
Yes, we initially lost nearly half of the money we had in the stock market. And our house value slumped. But in 2007 we had no other debt but the mortgage, no car payments, no student loans, no credit card debt or any other payments. Granted we’ve been able to keep our jobs but we also continued to live cheap, drive older paid-for cars and save. Any extra money we could squeeze out of each month’s budget we paid on the house mortgage.
The stock market has made comebacks since it crashed big. And we continued to save since then. Bottom line, we did not end up poorer, but richer. It’s all because of this: We finally wised up several years ago about preventing others from taking our money (usually in the form of interest payments, but also in frivolous purchases).
We Can Weather The Storms
Job losses, health issues and other crises can bring on financial challenges, even disasters. But it doesn’t always have to be the case. Some of these surprises do not have to wipe us out. With no debt, it is much, much easier to weather the storms.
If the rich are getting richer, it’s only because they have figured out how to weather the storms. Understand this: Rich peoples’ houses (if they are big and fancy) can drop in value a lot more than modest sized houses after a bubble burst and are harder to sell. Rich people can lose money in a stock market crash just like the rest of us. They’re not immune to economical disasters, usually just better prepared for them.
Let’s Re-Invent The Average Joe
And that can be us – prepared for the bubble bursts, the job losses, the market dips and other unexpected hits to our finances. The first thing to do is get out of debt! It’s surprising how little you can actually live on if you have no debt. It’s also surprising how much money you can save if you have no debt – it almost feels like you’re rich.
We know a couple who has very little debt other than their mortgage. The husband lost his job nine months ago. His wife works just thirty hours per week. They can still make their house payment and even continue to save some money on one income because their debt level is so small.
Even better yet would be for all of us to pay off our mortgages. Can you imagine what that might feel like? Or, just rent – there is absolutely no shame in renting. Do whatever it takes to shake off and shake down those payments and put money into savings every month.
Join the growing number of people who are playing a new game, and setting their own rules. Getting out of debt is the only way to do it. Let’s stop blaming the rich for making us poor – because it’s really not them doing it.
Daniel and Deborah Minteer proved through their own experience how to eliminate consumer debt and how to avoid incurring more of it. They have achieved financial freedom through debt avoidance, focusing of what they really care about and dumping the rest.
Read their book Boiled Down Money Goo, tips for propelling your financial future, to learn how they did it and visit their blog at http://boileddownmoneygoo.com/ to learn even more.
Daniel R. Murphy
Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.