Why You Should Do Exactly the Opposite Governments Want You To Do

Beware of little expenses; a small leak will sink a great ship.

Before I turn myself into a full-time writer, I worked in the real estate business.

I made almost $20,000 a year, plus some real estate investments that generally made me earn another 15k. So, I reached nearly a minimum of $35,000 per year, which is very good for a Portuguese.

The minimum wage in Portugal is $715, and the average salary is $1,500.

Yet, if your financial philosophy is to spend all your money in credits, it doesn’t matter if your Portuguese, American, English, or Chinese.

In a world where the financial system is structured for you to spend money, if you play the same game as governments want you to play, you’ll be running the rat race indefinitely.

What do I mean by that? The banking system was built to create a credit cycle for people to spend money with fees. If you want a house, first, you buy the bank’s capital, meaning the bank will lend you money in exchange for commissions.

You get the money upfront, and the bank charges you the interest on that loan. It seems simple, but in this game, if the temptation is too much, we are in a rat race, with loans for the house, car, television, PlayStation, clothes, and so on.

Generally, ordinary people don’t save money, so when a financial crisis arrives, they have to give back their house to the bank for someone with money to buy it at a discount. And ordinary people turn to poor people, and the ones who saved money get more prosperous. So it’s a vicious cycle.

But why can’t ordinary people save money? Because they don’t have a proper financial education. They don’t know how the money works and how they should manage their income.

The financial system was built for all of us to spend money, not save it.

Even governments spend more money than they earn. That’s why you hear that debt is constantly rising. Fortunately, governments and institutions buy the country’s debt from one to another until one day this system stops working.

It’s much easier for you to lend money that isn’t yours and carry the problem to a later time. The problem we have later is that we have to pay back what we borrowed, plus interest.

Apart from the house and eventually the car, everything else should be purchased through savings, but most people reject this strategy.

So, in reality, what is the best plan for managing our lives, creating wealth, and becoming financially independent?

I had no idea bankruptcy could be so exciting.

At 31 years old, I was bankrupt.

To speak the truth, at 27, I was also bankrupt. So, in 5 year-time, I was bankrupted twice, but for different reasons.

As you can imagine, being without any money to support my family and bringing food to the table is very dramatic to a young adult.

Yet, it was the only way I could learn. I had the worst financial education anyone could have. And this lesson cost me $32,000 that I had to pay smoothly in small amounts every month for the next 8 years.

Now, I’m proudly credit-free, and I have enough money to breathe, live, and appreciate compounding interests.

In the learning process that cost me $32,000 (2 bankruptcies), I read all the books I needed about financial independence. I read Warren Buffett, Howard Marks, Peter Lynch, and even Tony Robbins.

My father always said that Everything is in the books.

And he was right! As I was in my learning process, I realized that the same person that gave me the worst financial education, my father, also gave me the best solution.

My father always believed that commercial banks and their workers could help me when I needed money. But what my father didn’t know was that when you rely only on credit, one day you’ll get hung up and then begin the rat race again.

Only books could teach me how to manage money.

Put all your eggs in one basket, and then watch that basket.

When I was in my learning process to stop being a rat racer and become a free man, I read a simple book that changed my life.

The author of that book was a young and entrepreneur Portuguese guy that explained in the simplest way possible how money works and how anyone can escape the rat race and have enough money to feel free.

The book was called My First Million.

For the first time, I heard someone talking about the Dream Basket. But what is the dream basket, after all?

Imagine you close your eyes and start dreaming about things you would love to have or to do. Now, write them on a piece of paper. Next, put the amount of money you need to fulfill those dreams and at what age you think you can satisfy them. Then, add it all up and see the result.

Dream basket

Everything starts with a dream.

Do you want to be in the same house 10 years from now? Then, finally, you want to make that memorable trip for three months? Do you want to quit your 9 to 5 tedious job?

Ignore all your fears and allow yourself to dream.

Dreams get people close to each other and get all strengths together.

Creating a simple task of designing a dream basket change immediately our mindset. Our subconscious starts an automatic process of finding intelligent ways to reach the set goals.

With perseverance and patience, anyone can see their dream basket full of good things in a strict savings regime.

I found out that I need 2.5 million dollars to get what I want.

One of my dreams was to buy a farm, plant as many trees as possible, export wild berries, and whatever profit I’ll make, donate it to Scott Harrison’s foundation, Charity Water, which supplies water pumps to offer clean water to villages in Africa and Asia.

785 million human beings lack clean water, causing 18,000 child deaths due to food shortages and disease.

I already bought the farm. Now I’m in the rebuilding process, and I have started planting trees. At the end of the year, I’m beginning the wild barriers project.

Another dream in my basket is to travel all over the world. Planet earth is the most precious and beautiful thing any human being has. I’d love to know it better.

And that’s it.

My dream basket is short and straightforward.

I live in Europe, a prosperous continent. In Portugal, I have everything most people would love to have. I’m a privileged human being, but most human beings are not. And there are so many things to do on that behalf.

Do not save what is left after spending, but spend what is left after saving.

Read that headline again.

Pay yourself first. Pay yourself first. Pay yourself first.

Can you put 10% of your income in a savings account? Can you put 20%, 30%?

As much you save, the closer you are to fulfill your dreams. Yet, if you want to save what is left after spending, you’re not hearing what Warren Buffett is whispering in your ear.

My car has 14 years old and I’m in a renting house. I just buy clothes when it’s indispensable. Yet, if you see my banking account, I may be considered a wealthy guy.

Why don’t I change to a new car? Why don’t I buy a new house?

I could do both without needing a loan. But that was not what Warren Buffett taught me to do.

I’m accumulating my savings, investing them to make the magic formula work for me. And the magic formula is called compound interests.

I invest every month a portion of my savings in the stock market and another part in the real estate business.

I have a life with controlled costs so that one day I can achieve financial independence. But, for that, I can’t spend what I don’t have.

On the contrary, I pay myself first; that is, as soon as I receive my salary, I put 30% aside in savings and live with the 70% left over. This 70% does not allow me to buy a new car or a new house. I learned that this is the magic formula for achieving my financial independence.

I will have to be able to have a fixed monthly income to cover my fixed expenses. Only then will I be truly free and have the money working for me.

Final Thoughts

After you finish this article, you’ll find it challenging to change your mindset into a saving mindset. Believe me, I’ve been there. I was bankrupted twice, remember?

If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse.- Jim Rohn

What is your little devil whispering in your ear right now?

The little devil is probably saying nobody understands your life. The little devil is saying that you can’t do it because of this or because of that.

You can make an infinite list of reasons why you can’t be financially independent. My subconscious spoke to me 15 years ago and said the same to me too.

See, we have this selfish way to manage our own interests. And generally, we want to take the shorter cut. We don’t want it to hurt or take too long.

Just like starting a workout after being in a pure sedentary lifestyle for decades, changing our mindset to something painful it’s not an easy task. And not everyone can overcome their own inertia.

Those who manage to overcome all the traps our mindsets do to us are the lucky ones.

Those who continue to listen to the little devil continue to feel that the government, friends, family, dog, cat, or parrot are to blame for their ineffectiveness.

The power is all in our minds.

This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.

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