Demystified Blog Archive #38 - Mind Your Own Business (Part I)

We’ve all seen the headlines: the middle class wage earner in the United States (and much of Europe for that matter) has been in decline for years.

CNN May 18, 2018: “Almost half of US families can’t afford basics like rent and food”

Marketwatch June 2, 2018: “50 million American households can’t even afford basic living expenses”

Wall Street Journal February 13, 2018 : “US households shoulder record $13.15 trillion debt”

In general, being a middle class wage earner means you’re neither rich nor poor.

You earn enough money to be able to pay the bills without want or worry, enjoy modern conveniences and recreation, and still have some funds left over for savings and investment.

This a very delicate balance. And maintaining it depends heavily on the rate of inflation.

If wages rise faster than prices, the middle class thrives. If prices rise faster than wages, the middle class perishes. And that’s what’s been happening in the west, especially in the US.

Housing prices have obviously increased over time. But what’s really interesting is how much more rapidly home prices have increased over wages.

In late 2011, for example, the average home cost around 3.56 times the average salary in the US, according to data published by the Federal Reserve Bank of St. Louis.

By the end of 2017, the average home cost 4.73 times the average salary, even though mortgage rates were essentially unchanged.

In other words, even when you adjust for the fact that people are earning more, housing became 33% more expensive in just six years-- and that doesn’t account for increases in property taxes, home owners association dues, insurance premiums, etc.

It’s the same with rent: back in 2000, the average monthly rent in the United States was 7.38 times the average weekly wage.

By 2017, rents had risen to 8.66 times the average weekly wage, an increase of 17%.

So even though people are technically earning more money, their money buys them less and less house.

We can add to the list infinitum concerning other basic necessities (food, clothing, medical, education, recreation, etc.)

The majority of middle class wage earners make up for it by going further and further into debt.

Back in 1980, the average amount of debt per wage earner in the US was 1.96 times his/her monthly salary.

Today the average American worker’s debt is 5.00 times his/her monthly salary.

Same theme-- yes, people are earning more. But the amount of debt that they owe relative to their wages is more than 2.5x greater.

This pathway, over long periods of time, is fundamentally unsound.

“Let’s just spend more than we make and then go further and further into debt to cover the deficit”, said no successful business owner EVER!

The idea is completely ludicrous.

So how do we can we create safe, low risk investments with modest returns in a high risk environment and highly volatile market?

The answer is simple. Mind your own business.

Start that side hustle and then grow into something of substance. It will create massive benefits for you and your loved ones moving into the future.

Believe it or not, YOU can do this. In fact, there is nobody better, in my opinion. The obstacle is the way.

Of course the question becomes, “Where do I start?”

So, before you begin setting up business plans, analyzing markets, setting up vendor relationships, setting up LLC’s, opening bank accounts, considering tax and legal strategy, building websites, and producing business cards, it’s a good idea to grasp an understanding of the mind of an entrepreneur.

I’ve worked with many, I am one myself, and we are a different breed.

Realistically, it boils down to one major point. Keep going, no matter what. That’s it.

Learn how to move forward, learn how to execute, and learn how to continue this pathway, regardless.

What you’ll find is that this process is very esoteric and spiritual in nature. Where one door closes, another will open. Where you don’t understand, you will learn. When you are searching for that person, they will appear. And so on and so on.

Not be a bummer, but you will fail, you will be rejected, you will lose money on deals, you will work long hours, you will be stressed, and you will sacrifice other areas of your life to make this dream come true.

But in the end, you’ll be damn glad that you did it.

Of course, there is always additional information you should consider when starting a business. And, you should always be working with a team of professionals to help mitigate the risk of any investment.

To your investment freedom