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The Financial Road To Riches

A transcript presented by Clay Clark, US Small Business Administration Entrepreneur of the Year, and Tim Redmond on Thrive15.com, a leading Ohio business college made just for you. 

Clay:                Well, here's now Principle No. 5, that kind of ties into this whole “wants” aspect here: “Quit Trying to Keep Up With Your Neighbors”. Tim, according to a study that was published by CNN Money called, “Controlling Your Personal Debt“, the average American household … the average with at least one credit card had nearly $15,950 in credit card …

Tim:                Yeah, about $16,000 bucks. That's amazing.

Clay:                And I know that a lot of it comes down to the sub-conscious desire. We don't want to spend a whole lot of time on it, because a lot of us know about this, but we still … we're not really dealing with it. We have this sort of sub-conscious desire to keep up with the neighbor.

Tim:                Right. Yeah, we begin to define our value based on what we have instead of who we are. We may feel really good. Like, I went out there and bought a Ford Escort. That thing goes, I mean it goes from zero to 60 in 12 1/2 seconds. I mean, that thing is awesome!

Clay:                Yeah, I used to have a Ford Escort, for anybody who's thinking about it. I had it …

Tim:                And then our next-door neighbor … and we're feeling good about ourselves, our favorite color, everything about it. Then our next-door neighbor buys a BMW; paid five times more. Now, we felt good about ourselves, but by looking at what somebody else had, now we feel poor and inadequate. And this comparison thing is a trap that gets us making stupid decisions, putting us into this place of weakness where we cannot build our future, we cannot build our … the decisions that we want. We want to position ourselves with power, the cash and the savings. We're living above our means to keep up and it's a horrible rat race.

Clay:                I saw … there's a guy I used to network with a little bit. I was working with a business and he networked with some guys who installed pools. And he told me the phenomenon is when they install one pool they put a sign on the front lawn that says, “This pool is professionally installed by Such-and-Such Pools.”

Tim:                Right.

Clay:                And he said, inevitably, if it's in a nice neighborhood, 2 or 3 houses down someone will call and want to install a pool. And he said, so the best thing you can do is get into some neighborhoods and just get one going and then it kind of takes off because, right “Well, if the Smith's have one, I want one, too.”

Tim:                Yeah, that's amazing. Keep up with the Jones'.

Clay:                Yeah, I thought it was amazing. So this is one of the deals, I think in America today I want to specifically speak to some things right here I see. I drove, years ago, down to Dallas with a guy. We go down to Dallas and he's not a gambler, OK? But the guy he's with, he gets out and buys about 20 lottery tickets. We're all in the car together on a business trip. And then the other guy is like, “I want to buy a lottery ticket.” So he then goes and buys a lottery ticket. Well then they go down to the phone store and one guy upgrades his phone to the super-duper whatever phone with the new thing. Well then, the next weekend, the other guy now has the same phone. You see it happen all the time.

Tim:                Right.

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Clay:                So I think it's important that we're not … when we're making our budget we cannot just go, “Well, to keep up with the Jones' this month, I just obliterated my budget. We've got to be …

Tim:                Right. We are mistaking our possessions, comparing to other people, we're mistaking that for our net worth.

Clay:                Mmhmm.

Tim:                Building our net worth.  Building solid assets that can produce for us; that can take care of us. And this whole compulsiveness to keep up with the Jones' … We begin to define our self worth based on what we have or don't have compared to other people. And how silly is that? When you are bound by having to keep up with what somebody else is doing, you're actually trapping your creative energies and you're living in the bondage of what other people are around you. You're living far below your design. And here at Thrive, we want to move you from just surviving … That's how survivors think. Thrivers think, “It doesn't matter what people have around me, I'm going forward with smart decisions.”

Clay:                What's an action step that I could do there? If I'm watching this and I'm kind of finding that I'm maybe guilty of doing that? Is it just kind of waiting before I make a purchase to ask myself, or just looking at my budget, or what would you recommend as a practical action step for someone who maybe, this is what they do. They realize that, “Yes, he's talking to me right now.”

Tim:                I really believe in this power of accountability. Without accountability, nothing improves – never, ever.

Clay:                OK

Tim:                Without accountability. So, if you set up a budget and you're the only person that knows about that budget

Clay:                Mmm

Tim:                Then you're going to probably break it. You're going to ignore it. So I recommend getting somebody that is outside of your normal role of life here, that you tell about the budget, you tell about the spending and you commit to them anything that I want to spend that looks like a need or a want.  If it looks like a want, if it's over $100, I've got to talk to that person about it.

Clay:                OK

Tim:                And if you get somebody in your life on a regular basis, it's a huge difference.

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