Tuesday, January 8, 2013

Magnifying Your Money

Where I call home, we have people who pay $10,000 for a snowmobile, so they can spend $400 per month on fuel while they tear around the countryside dressed in insulated snowsuits (to keep out the cold) for three months a year in minus 30 weather.  Then, in the summer, they skip across Lake Winnipeg for another three months of the year in $25,000 boats, spending $400 per year on dock privileges and another $1,200 on fuel.  To get their favourite toys where they want, they haul them around in $55,000 trucks, spending $800 per month on fuel and $300 per month on insurance.  But they also complain about being poor!
The problem with this incongruity is that they may be correct.  Poor is a relative state of mind.  I was raised in a household where the annual income never exceeded $3,800 in any year, and averaged $1,500-2,000.  Yet, we were not poor.  I had the most wonderful Huck Finn childhood.  Around us, the rich families earned $12-15,000 per year.  The rest of our province – hell, the rest of our country – branded those elite wealthy of our community as poverty-stricken.  Of course, our province was officially listed by the rest of Canada as one of the half-dozen “have-not” provinces in the dominion.  But wouldn’t the entire population of Haiti think they were in Paradise if they each earned $1,500 per year?  Yes, poverty and wealth are relative.
The issue of wealth really has nothing to do with money.  It has to do with quality, priorities and preferences. Quality, like wealth, is not defined objectively, either.  Instead, the essence of quality is the purpose intended of an item or event versus the cost (money or effort inputted) of that item.  A $1 spatula, intended to be used twice at a family barbeque, may have more relative quality than a $15 platinum spatula, used ten times.  Priorities, again, are subjective, and are determined by evaluating cost, benefit and urgency.  A twenty-five year-old probably will value an $85 concert ticket for his favourite band over the $85 invested at 5% interest and used as retirement money, even though that $85 would be worth $570 by the time the person turned 65.  Preferences require a personal consideration, as well.  The same twenty-five year old may value his guitar at $300 and his band concert ticket at $85, but a chance to have a guitar signed by the band bass guitar player may be worth more than the sum of the two; many times more.  I prefer red wine to white, even though they are priced equivalently.  My red wine, the twenty-five year old’s signed guitar and the barbeque host’s $1 spatula may each represent a form of wealth.
Having presented my case for the idiosyncratic definition of wealth versus poverty, my own interpretation of how to become wealthy without money may well be an easy case to make.  The synopsis of this concept is that we can find the money for almost anything that is truly important to us and that all we need to do is pare down to the core of what we find to be important to us, in order to slough off the excess of what is not vital.
Let me take a sharp right turn in this conversation.  One of the recent hot political topics is the 99% versus the 1% in the USA , and the debate over the disparity in relative earnings of the top 1% of income earners against the bottom 99%.  Achieving what we 99 percenters want, for the most part, may be accomplished simply by uncovering an extra 2% of disposable income.  We may not be able to build a $12m mansion, but, after we complete our economic soul-searching, find our priorities and establish our preferences, we can attain our own personal definition of wealth.
I will discuss how to free up another five percent on your food budget, 10% on your clothing and toiletries, 5-10% on your household upkeep, 10-20% on gifts, and so on.  Perhaps you, too, would like your own snowmobile or boat, or like to enjoy the winter in a tropical climate.  Perhaps you would like to make a difference to the environment or global poverty issues.  This, too, may be possible.  Simply, we will redefine wealth, and show you how you already have the capacity to be richer than you thought possible.