Page 66 -

Calcula te Wha t You Need to Become F inancially F r e e

One day I sat down with my wife, Shari, and we set up a plan to systemat-
ically pay off all our debt. It took us a little over four years to become
completely debt-free. (We have investment “debt,” but that is intentional.)
I can’t describe how good it feels to go to sleep at night without owing other
people money and worrying about bills. Our only monthly expenses are for
utilities, food, insurance, and fun. (We place a lot of emphasis on fun.) The
remainder of our income is ours to spend as we wish.
The sense of being free from the bondage of debt is truly exhilarating.
Today, rather than struggling to stay ahead of monthly payments, we have the
freedom to purchase what we want, and when we want it, on a cash basis.
Unfortunately, many people are drowning in a sea of fi nancial despair.
They’ve become slaves to their debt, and to the advertisers and banks that
created this system of control. Advertisers have trained us to become vora-
cious consumers who live and die by the motto: “Charge it!” “Buy it now!”
“Do it now!” New plasma TV! New stereo! New bigger car! New boat! Great
vacation! New house! The list goes on and on. Consume! Spend! Want!
Banks aren’t any better. They want to separate you from as much of your
hard-earned money as possible, which they accomplish by charging customers
as many fees as possible, in small monthly payments until the day you die, and
then beyond, collecting from your heirs if possible. They want you to be a
debt slave to them for eternity. How do they do this? With that little piece of
plastic called a credit card. With most credit cards, if you paid only the mini-
mum monthly payment, you would spend close to four times more than what
you actually paid for the original item. That’s how credit cards are designed.
Don’t get me wrong. I like buying and owning nice things, but the differ-
ence is, I pay in cash. I use an American Express card that I pay off at the end
of each month, rather than carrying around actual cash. It’s a good system
that works for me. I don’t accept monthly payment plans, and I don’t spend
beyond my means. The vast overwhelming majority of millionaires follow the
same principles. I’m not a fanatical penny-pincher, and I’m not telling you to
lower your standard of living. Far from it—I want you to actually increase
your standard of living by making healthy and solid financial decisions. As

you do, you’ll be able to own the nice things you want by paying for them on
a routine cash basis, instead of on a perpetual debt basis.
How do you make the transformation?
Say you purchase a new living-room set for $2,500, and the minimum
monthly payment is $44.44 a month with an interest rate of 21 percent (which
is normal for a furniture store charge card). At $44.44 a month, it would take
you 20 years to pay for that set of living-room furniture. By the time you

43

8/23/07 3:07:25 PM
c05.indd 43
c05.indd 43 8/23/07 3:07:25 PM