I write a lot about economics, and honestly I’ve come to understand a pretty good bit about how power is exerted at the macro level (remember economics is about levers and incentives, not money).<\/p>\n\t
At work (and in life) I have no real macro power, but I have seen people who do.\u00a0 Though I do not like politics from the perspective of Democrats vs. Republicans (since they are largely the same); I do like politics from the perspective of how to influence and how to barter power.<\/p>\n\t
I read Nietzsche’s “Will to Power”; I read Machiavelli’s “The Prince”.\u00a0 I even read the best-seller 48 Laws of Power<\/a>.\u00a0 Sadly I never read Sun-Tzu’s Art of War.<\/p>\n\t Here is some truth about Power:<\/p>\n\t – I will never have any….at least not enough to truly influence events on a macro level.\u00a0 Influence at a local level is nice; however, it will not likely change the general circumstances of my life.<\/p>\n\t – Money is Power.\u00a0 Information is Power.\u00a0 Guns are Power.\u00a0 I will pretty much never have those in any significant amount (and I don’t want them).<\/p>\n\t – We aren’t even in the game.\u00a0 We are pawns.\u00a0 The top 1% control 42% of wealth in the US.\u00a0 The flip side is that 40% of the population vies for 1% of the wealth.<\/p>\n\t – We will never make enough money to escape the hedonic treadmill.\u00a0 As our salary goes up, so will our lifestyle.\u00a0 Some people make enough to get our of this trap…most don’t.\u00a0 Working hard is not the answer.<\/p>\n\t – We will not be smart enough to “game the system”.\u00a0 There are a few people at the bottom who draw social security disability that shouldn’t or get too many food stamps, but they are still certainly not the winners.\u00a0 For us to begin to “game the system” at a higher level we will need more power\/information than we’ll likely ever have.<\/p>\n\t So what is my advice?<\/p>\n\t CUT EXPENSES<\/strong>…and save.<\/p>\n\t That’s it.\u00a0 You thought it was going to be some great revelation, but it isn’t.\u00a0 We don’t have access to that kind of power.\u00a0\u00a0 We play by the rules; we don’t make the rules.<\/p>\n\t That’s the best most of us can do.\u00a0 We cannot avoid taxes since we have no deductions.\u00a0 There is no get rich quick scheme and we’re always faced with potentially crippling medical\/education\/unemployment\/whatever costs.<\/p>\n\t We will not get ahead by making more money; our lifestyles will go up in lockstep with our salary, but we will be no better off (after about 40K there is no well-being bump from increased earnings).<\/p>\n\t We cannot pick stocks.\u00a0 We will not win the lottery.\u00a0 We will not become rappers and sports stars.\u00a0 Most of us will never even become managers or VPs.<\/p>\n\t There are only two sides to the equation:\u00a0 Expenses and Income.\u00a0 We cannot affect our income in a way that will allow us to get ahead (where did your 2% raise last year go?), so that leaves Expenses…the only thing we control.<\/strong><\/p>\n\t To get more concrete, it is FIXED expenses that kill us<\/strong>.<\/p>\n\t – A house.\u00a0 Don’t buy a big, expensive house.<\/strong> A house is not an investment; it never was.\u00a0 It is a place to live.\u00a0 Living in a smaller house with a smaller monthly payment is key.\u00a0 A smaller house will also help your energy bills.<\/p>\n\t – A car.\u00a0 Don’t buy a nice car.<\/strong> A car is a waste of money.\u00a0 Drive the worst car that your lifestyle will allow you to drive…then pick one a little crappier and older.\u00a0 When you’re out of work and you have 15K extra because you didn’t buy the brand new Infiniti…you’ll be happy.\u00a0 On a related note, pay cash for your car.\u00a0 Do not take out a loan.\u00a0 The car you can afford is the car you can pay for.<\/strong><\/p>\n\t – Cable.\u00a0 I fucking hate cable and as soon as I find a way to watch sports online, I will be ditching cable. <\/strong> I can already watch all the shows I want online.\u00a0 I can get movies (which I can never find the time to watch anyway) through Netflix. \u00a0 I still find it frightening that I drop nearly 100 bucks a month to watch a few sporting events.<\/p>\n\t – No debt:<\/strong> Don’t get trapped servicing debt, credit card or otherwise.<\/p>\n\t – Student Loans: <\/strong> Don’t go to a good school. <\/strong> They are expensive and will, at the best, get you a good paying job…which will not be all that beneficial for you.\u00a0 It will be much more beneficial to have no debt and be a hard worker, which will make up for the fact your didn’t go to a good school.\u00a0 However, do go to a GREAT school<\/strong> if you can get in (Harvard, Yale, MIT, etc.).\u00a0 This is where the people that make the rules<\/em> go to school.\u00a0 If you become tight with them it is definitely worth the money.<\/p>\n\t What can you spend money on?<\/p>\n\t – Flat screen TVs, expensive beers, going out to eat, etc:\u00a0 I’m not saying go crazy, but one time purchases can always be stopped.\u00a0 Next month simply don’t buy a flat screen TV.\u00a0 Easy enough. <\/strong> The expense is gone.\u00a0 This crap about the American consumer being in trouble because they spend too much of frivolous junk is a load of shit.\u00a0 Those kind of expenses, unless you have some sort of psychological shopping disorder, will not get you in trouble.\u00a0 It is the recurring expenses, FIXED expenses, that will cause you to go bankrupt<\/strong>.<\/p>\n\t – Health Insurance:\u00a0 Unless you’re 20 years old and invincible…buy some<\/strong>, at least a high deductible indemnity plan.\u00a0 Just wait till you get unlucky and drop 100K on open heart surgery…then try for the rest of your life to recovery economically (and medically) from that.<\/p>\n\t So that’s it.\u00a0 That’s being rich:\u00a0 spending less than you make and having a piece of mind about it.<\/p>\n\t If you are below that (and most people will be below the 50th percentile by definition)….its still good advice in general; however, there is very little you can do.\u00a0 Sorry.<\/p>\n\t Your expenses are likely already cut (except on crap like cigarettes and lottery tickets, which you should definitely cut out), and your income will likely never rise high enough to give you significant options.\u00a0 The US has poor income mobility<\/a>, especially at the bottom end.<\/p>\n\t
It occurs to me that I’m giving the above advice to myself and others in my income level, which would be pretty much everyone in maybe the 50 – 90th percentile of earnings.<\/p>\n\t