Yes Trevor, and when goods, petrol, living costs in general go up with triple the percentage you get as a raise on your salary? What is one to do? Keep lowering your living standard until all you can afford is a shack and pap? The middle class is getting poorer by the day, while the poor stay poor and the rich get richer. That is not a healthy environment for saving and living debt-free.
There is a statement that people often quote. Is goes a little something like this, "The rich get richer, while the poor get poorer".
The irony of that statement, is that it couldn't be further from the truth. People who believe that the rich get richer and the poor get poorer, have sealed their own financial doom.
In reality, foolish and/or unlucky (but usually foolish) rich people loose 'everything' all the time, all over the world. And then there are smart, wise, poor people who become wealthy all the time, all over the world.
The truth is, smart, wise and enlightened people 'become' richer regardless of how poor or rich they were to start with, and foolish, unenlightened people become poorer regardless of how rich or poor they were to start off with. That, is the real truth.
I would say less than 1 out of every 10 people I know personally who ever bought a house bothered to check the graph of interest rates in SA over the last 100 years to ensure that they only buy houses that they can afford if the interest rate rise to their 100 to 50 year highs, as they will during the course of this recension. Instead, they borrowed more than they originally planned, at interest rates that leave them on the edge of there monthly budget from the first month. Even though some of these people are my friends, I offer little sympathy for the predicament they find them selves in. There is another saying, it goes like this, "if you dumb, you going to struggle".
@ Succubus - While I do agree with most of what you say, it is easier to obtain more wealth when you already have a lot to work with. If I have R 100 million to buy an apartment block, that return will be huge, I will get richer. On the flip side, if you have nothing, and every cent you make is used to cover already limited expenses, you will struggle regardless. I'm sure there are exceptions where people have made millions from nothing, but those are exceptions and not the norm, and often those people already had wealth, in terms of their knowledge and abilities to start successful businesses. The blue collar man on the street doesn't have that. What is sad though, is that there are many middle class people with good jobs, wasting what should be their wealth on interest repayments. My strategy to my finances has always been about how much money I pay the bank, and how much goes to me. I've met people earning double my salary but pay 80% of that money to the bank, on interest. So technically they earning a lot less than I do even though they live a better lifestyle. Renting your stuff from the bank is not helping you in the long term, only building wealth will. Those people will retire poor, and lonely.
peter I was one of those rich who became poor but I now actualy have more spare cash. The reason is easy when i was rich and earning over 8k a month my 5 bed house with pool cost 4k my 4.4 vogue range rover and my wife's ml 230 merc 4x4 cost over 1k plus running costs ect ect. I now earn less than half that but my 3 bed no pool house costs 600 I have no payments on my cars ford and fiat ect ect.. it works. also everyone can save just save relitive to what you earn if you earn 50k you can save 5k if you earn 100 you can save 10 or even 5
One of the greatest dis services any one can do to them selves, is to choose the belief that they need more money now, to have more in the future. If you believe that you need money to make more money, then that will become your reality, simply because you won't even try. You wont even try because you will have already eliminated the possibility that you may have more with out first having something to start with.
The frustrating thing for me is most of my financially indebted friends and acquaintances all started with many times more than me, are more educated, and have earned higher salaries than me. The only difference between my self and them is that I don't believe I need anything to start with in order to make more, where as they all believe they need something to start with in order to make more. Our realities diverged over time based on these beliefs. I became very wealthy starting from nothing, according to my belief. Then lost it all, and then made most of it back again, again in accordance with the beliefs that I have chosen. My financially indebted friends, most of whom ironically earn more than me, fell into the debt trap, in accordance with their beliefs. They all tell me that there is no way out and that its the governments fault. And so, that has become their reality. I don't believe the government has any influence over me at all, and that my financial status is 100% my responsibility, and consequently, that is the reality that I experience.
Well said Succubus - if more people would listen to and take heed of what you have to say, they wouldn't have this debt crisis.
As the saying goes - "a fool and his money are soon parted".
@ Succubus - I'm not disagreeing with you that it's possible to make a lot of money out of very little. What I'm saying, is that your money is most likely obtained through wealth right? In other words, you aquired assets that provide a return, which is used to aquire more assets and make the cycle. The problem is, where does that money come from? Thin air? Really? No, whatever money you obtain from wealth, comes from someone elses pocket, normally the poor and middle class. For example, if you own shares in a company you earn dividends from the profits of that firm. That money should technically have gone to the employees, but it doesn't. Shareholders are more important than employees. So employees are technically working (often for small salaries) for the shareholders to get paid out. Other asset classes? How about property. Your properties are rented to people who often cant afford to buy their own. Why not? Cause they too busy working for the above company, who pays them the bare minumum so that they can pay their shareholders a cut. Also investors (often the above shareholders) buy properties so they can rent them, increase demand for property, and thus the price becomes out of reach for most, forcing them to rent. Do you get it now? For every person (like yourself) that owns wealth, another must pay, it's just nature. So not everyone can be wealthy as you and Robert Kiowsaki so claim. If you earn money for doing zip, someone is working for you.