Wednesday, October 29, 2014

Finance 101: Your Entire Life is a Delete Button Away...

Literally!

Its a known fact, the World runs on debt. Debt financing, speculation, leverage, margin, yada yada yada. Get to know these words because they control your life. You don't believe me? Ok, say you buy a house, take out a bank loan, education loan, what determines the interest rate you receive? Ah I forgot, you're the type who deals in cash only. Fine, so where exactly is your retirement/pension fund held? Do you know what happens to it? or you think its sitting in a bank somewhere collecting dust?

If your money is in a savings account, over the long run, you'll more than likely loose the battle with inflation and suddenly your $10k is worth as much as $5k. Say hello to Mr Depreciation. So might as well have it in the Market. Market here meaning, trading stocks, mutual funds, fixed income, derivatives etc. So lets say you have it in the Market, you run the risk of loosing it ALL...Now you realize how your life is tied to the Worlds Financial system? What happens in London, Hong Kong or even Mongolia will affect you. Education is power especially when it comes to your finances. Make no mistake, ONLY money makes money. Ok, lets start by watching the following video below. It will make you think and ask more questions. This is exactly what created the economic burst in 2008/2009. All what I just said might not make much sense to begin with, so overtime I will break it down. Visit the blog often though :-). Finance Education 101 coming your way...


The Problem With Fear Is...

..it takes no prisoners. The truth is, it doesn't have to because it kills you first. Immediately it plants its seed within you, it shoots out young roots of doubt to every area of your life. Just like a tree, with time, these roots become stronger. Fear breeds more fear. Before you realize it, you have a full blown Iroko tree of fear planted firmly in your life. Now, this is where the fun begins!

You see the problem is, because it starts out as a small seed, we see no real threat in letting it "hangout" with us. Then it begins to manifest itself in our daily lives. We start rationalizing its existence, making excuses for it.You absolutely cannot afford to flirt with fear. It will paralyze your dreams, visions and future. It will make you constantly second guess yourself. You will begin to feel inadequate, not up to the task. The unfortunate thing is that it doesn't end with you. It is a contagious epidemic. It reaps relationships apart. As a parent, you transfer it on to your children. You preach the gospel of fear to them until they subconsciously buy into it The psychology and negative manifestations of fear is one reason why Poverty is a terrible thing. "The psychological feedback loop that keeps the poor trapped in poverty...has three links: poverty causes stress and negative emotions (ie: fear) which lead to shortsighted and risk-averse decision-making, which can, in turn, exacerbate poverty"(Haushofer).

So, how do you get rid of this little bugger called fear?
  1. I'm sure you're familiar with the saying, prevention is better than cure? well same rule applies here. Don't entertain it. Nip it at the bud the very moment you notice it trying to silently posses your mind. Fear is a mind thing .
  2. So what if it already is part of your life? fear not, (pun intended) you still can get rid of it. The mind is a very powerful thing and guess what? You own it. You can control your mind with the power of reenforced positive thinking. Quite cliche I know, but its the truth.
  3. Write down (if you care to) what your fears are on one column. Start doing all the things you've been afraid of doing. As you do them, one by one tick them off your list. Chances are if you're able to tick them off your list, it means that this your "FEAR" hasn't killed you. See, its not that daunting after all!
  4. With that said, there are some situations that will take time, talking to someone and prayers to get rid of. Once again, don't fret. How do you eat an elephant? a piece at a time. Start by thinking through that "Fear". Talk to someone in a position to reenforce positive thinking.
  5. Most importantly, do AWAY with negative & fearful people. What happens if this person is Family? Talk to them about their negativity. If that doesn't work, put a mental and/or physical distance between you and them. Fear is real, suck it up buttercup...or you will get eaten up. 
P.s: Note, not all fear is negative. For example, the fear you feel when you see a Lion charging at you. That fear is there for a reason, you better run. Don't try to talk to the Lion rationally...it will eat you. Don't say I didn't warn you.

Citation: Haushofer Johannes. The Price of Poverty: Psychology and the Cycle of Need. July 5th 2014 <http://www.foreignaffairs.com/articles/141640/johannes-haushofer/the-price-of-poverty>

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BG