Category Archives: The Facts of Finance

WHOLE COSTS and Depreciating Value Purchases

The price of something is not really the cost of something: 
There is a difference between price and Whole Costs.

We buy many things, and those things have a life.  Some things are bought, and disappear, like food.  Some things maintain value after being owned for quite some time.  Some things require a lot of maintenance cost, whether the item retains value or not.

rainbow lambo(Image from:

What we buy has value: what we buy also presents us with windows of opportunity loss.  Considering that cutting small corners in purchases can lead to a full bloom Early Retirement account, being aware of Whole Costs is the ultimate factor in cost savings…


and the Rich get richer…

We can talk about the crises in cash flow occurring in modern economics all day long — it’s a major issue and looming catastrophe in America today.  The banks own 63% of the country, and those banks have not only survived their own self-made recession, but that same recession cause a wake of corporate buyouts, and now just 5 banks own most of that 63% of all national wealth.

The entire Federal Reserve system was set up, piece by piece, over the years to give banks an insidious amount of leverageIn fact, did you know that a bank only needs to have 2% of the actual money necessary to fulfill their loans?  that means with $2 million dollars, a bank can write out $100 million dollars in loans, sit back, and collect mountains of interest payments forever.  If you can’t pay your mortgage, they seize the properties, capsizing even decades of payments, and sell those properties again.  The government actually helps banks do this, and our entire money system is based upon it.

squirrel-saga(image rights: Solent)

           Now that you are aware of that crisis (if you weren’t already), keep your eye out for monopoly-busting politicians and vote for them!  Right now Elizabeth Warren appears to have the first truly antagonist approach since Theodore Roosevelt who personally sued and broke up a dozen of the largest super-monopolies in the nation.

But let’s jump to a different track of the same topic, in regards to your own life how does the following phrase affect you?

The Rich Get Richer
And the Poor get Poorer…


Saving up $500,000 sounds difficult, yet it’s possible with the leverage of Compound Interest. Boiling down the effect of small expenditures and small amounts of savings is often the turning point away from ignoring savings altogether.  Holding our breath for a better future, a better paycheck, a better opportunity is rarely fruitful.  We CAN create those futures, sure but waiting is not an action.  Instilling great concepts in money management is often the difference between having something, and doing nothing.

Let’s gaze upon some monthly savings brackets, and the outcome these will provide…

GUT-LEVEL: Early Retirement Savings

Let’s spell it out.  Let’s point out the exact power and potency of savings, and how money turns into the Money-Machine
required to enable Financial Freedom. Doing this will ingrain it in our GUTS, and have us saving money like squirrels save nuts.

To begin, Yes, every person will utilized their savings differently. The most obvious route is to invest in ‘safe’ market tools, like mutual funds/annuities, and allow the magic of Compound Interest to multiply your money in 30 years (possibly tripling it).  You can then use that large lump of money as a Money-Machine, and rather than reinvesting the same yearly interest of 5% – 6%, you pay yourself that money every year… forever.

Then, in the last handful of years of life, that entire nest-egg can pay out in totality, as we exit our last breath on Earth… OR, we can leave a legacy of cash behind them for their families (perhaps with some ‘trust fund’ rules, so that your family doesn’t blow your master savings on expensive cars, and luxury vacations after you worked so hard to save that money for so long.)

If you save like a champ, and manage your money well, THAT IS THE INEVITABLE FUTURE OF CASH.

Some people save, and some people instead live for today only, assuming that a disaster could take their life at anytime, so just living for today seems good enough.  Many other people just find that the small pile of cash leftover after paying the bills is not enough to bother saving. For these reason, many people end up working forever, with little to show for it, and nothing left when they need it most…

!!! CRITICAL understanding of SAVINGS IMPACT !!!

Saving money is by no means about self-torture.  It’s not about crafting shoes out of squirrel hides, boiling chicken carcasses t, and it’s not about avoiding the expense of doing something interesting.

Saving money is about a person gathering themselves and pulling a heroic move for their own future.

Consider this – if you had $160 right now, would you trade it for something worth $10?  Of course not!  The truth of savings and investment makes very clear that… FOR EVERY extra $10 spent on unnecessary things, it actually costs you $160 over a lifetime…

Is MONEY the root of EVIL????

You might have seen television shows that involve bartering for goods… it is not a simple process.  Few argue against the convenience of money for trading goods and services.

Money systems, deep roots in governments, whole economies, all tied to the inherent  problems with financial speculation-driven markets:  All these qualities frequently obscure true value and create legitimate problems that derail the best humanistic considerations of most people involved.  The staggering difference in world economic leverage yields a huge disproportion of the value of money/labor across the globe.  That global leverage is a great source of wealth for some, and a great circumstance of tragedy for others.

People know one thing – almost no one else is willing to sign their paycheck over to them directly.  So, since money isn’t exactly flowing like an endless gift exchange on Christmas day, the need to horde cash will probably never go away…

REAL MONEY vs. INCOME – with Housing Example

Our income is not our measure of ‘Money’.

The money that remains after bills are paid, taxes are settled, and all expenses are accounted for… that’s our “money”.

This means our income tells us very little about where we are financially.

The material things around us, our living situation might reflect qualities about our income, but the proportion of our income already spoken-for by our living situation is the real determining factor in our situation of wealth.

We must ask ourselves, what happens if the income stops? The amount of money saved relative to the length of time our lifestyle can be extended without income are the only two factors we can use to assess wealth…

INCOME : $1 MILLION made = $1 MILLION lost

Everyone wants a miracle, and businesses everywhere are experiencing those miracles EVERY DAY!!!  With effort and fortitude they are setting up a pattern of miracles for themselves: they are achieving traction and leverage… to separate you from your cash, and it’s working.

Maybe it’s time stop singing the Busker Blues, and start thinking about money differently – a handful of businesses are peeling away millions of dollars away from individuals over a lifetime.  That’s right, you will likely make millions, so where does it all go?


Being a Great Saver is not about living among others (who spend their every penny) while you torture yourself in abstinence of spending, while living a terrible, bland, horrible, boring lifestyle.

The Saver is usually a DO-ER.

Spenders might see DOING differently though…

Achieving Financial Leverage

If a person spends most of their income, they have no leverage.
Consider that if we ran a small business, it would need to profit to Survive AND to Grow.

Having leverage means having the ability to grow.
It means being able to use what you have, with greater power,
so that your own resources exert effort FOR you.

Businesses operate that way – they use some of their money to pay you to work FOR them. They have achieved leverage, and use their cash to multiply their own efforts. The business owner sets up a situation…