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A Bankruptcy Expert Taught Me These 15 Things About What Keeps People Broke

by | Jun 6, 2022 | Money

Bankruptcy isn’t about a bank balance. It’s a mindset.

A friend I’ve written about many times lost his $100m empire more than 10 years ago. He’s still bankrupt today. He and his family live in a single motel room and rely on government assistance.

We regularly chat. His husky smoker’s voice is a clue to his future health. Surprisingly, he still has some of the best business ideas I’ve ever heard.

But he never executes.

Not because he’s lazy. But because he has no energy.

Years of smoking have stripped him of his youthful exterior and replaced his brain with one that can operate for two hours a day at best.

When I tell him to rebuild his empire the same way he did all those years ago, he gives me excuses. He made his fortune in real estate. Real estate hasn’t changed much and probably won’t.

Yet he doesn’t do it — and he loves real estate like Kim Kardashian loves telling us to work harder from the foyer of her mansion.

The reason is his mindset.

Somewhere deep down he doesn’t believe he can do it. The bankruptcy nuked his confidence and wiped out his belief he could do anything.

We must understand how to program our minds to deal with failure.

Here are a few more things an expert who worked with bankrupt people taught me about what keeps society broke.

“Treat your credit card like a debit card”

Credit cards are a trap. Suckers get them to earn worthless frequent flyer points designed as an elaborate scam.

“Just pay it on time and you’ll be fine.”

Sounds simple, except when you’ve got access to an infinite amount of credit, it’s stupidly easy to overspend. Even for a disciplined navy seal. I use a debit card that has rewards. Same benefits, but I only spend money I’ve made.

Too much debt is a tax on your future.

“Your job will eventually make you rich some day”

Jobs don’t make you rich because being ‘rich’ is about more than money.

Truly wealthy people own their time. No dumb boss tells them what to do. They don’t have HR puppet masters spreading cringe work culture and woke messages that don’t solve real problems.

The harsh fact is you can never say or do whatever you want at a job — especially online.

Your creativity is suppressed so your mind can be used for profit. You’re paid just below the market rate to ensure maximum money can be made from the time you give up.

We all start with a job. No problemo.

But a job doesn’t make most people wealthy in the true sense. The sooner you have that aha-moment the better.

“See self-education as an expense. Not an investment.”

Online courses and self-improvement attract their fair share of critics.

“Courses are a scam. Just google the info.”

These dummies forget that learning without a guide and nothing but a google search engine will drain all your free time. Time is worth more than money.

Self-education saves you time. It’s not an expense. It’s how you learn skills you can use to invest in your future and make a bucketload of cashola.

“See self-entertainment as an investment. Not an expense.”

It’s fine to unwind. But for many broke people that’s all they do.

Netflix doesn’t just cost $9.99 a month. It’s a time expense too.

You need to invest time to consume their woke tv shows. And instead of serving movies, they sway you towards useless tv shows that take back-to-back seasons and years of our lives to watch.

Balance self-entertainment with building a bright future. The 80/20 rule works well for this one. 80% building. 20% self-entertainment.

“Listen to people who are bad with money. Do not listen to people who are good with money.”

They’re all over the internet.

They act how David Letterman did when Bill Gates came on his late-night show to talk about the internet. The web seemed like a scam. Like a far-fetched, stupid idea. Now it drives everything.

The generation of broke critics say:

  • “Cryptos won’t work.”
  • “Metaverses won’t work.”
  • “NFTs won’t work.”
  • “Web3 is a scam.”

Meanwhile the biggest companies in America are throwing everything they’ve got at these new technologies.

People who are bad with money don’t understand innovation. They think that what we have now will exist forever. Spend time with people who’ve done well financially, who invested sensibly in a diversified portfolio of assets.

“I’ll do it tomorrow”

The idea we’ll have more time in the future is an illusion. If there isn’t time then it isn’t a priority. It’s a priority problem disguised as a time problem.

“Discomfort is bad. Comfort is good.”

Discomfort causes growth.

When you face your fears and stack up tiny wins you feel bloody fantastic. We live in a modern-day comfort crisis. Spend more of your time in uncomfortable situations to get an unfair advantage.

What starts as discomfort turns into comfort. That’s how your life gets exponentially better without you having to hope for luck or miracles from a god.

“Looking rich will make you rich so buy luxury brands”

The luxury epidemic created by instagram causes so many bankruptcies, according to the bankruptcy expert.

We chase bigger and bigger purchases to look richer.

If a new material possession doesn’t wow onlookers then we assume we need to go larger. Yet the wealthiest people don’t own flashy stuff. They live modestly so they can have free time and explore their creativity.

Chasing luxury is the same as begging for ‘likes’ on social media. Don’t do it.

“Buy a nice car before you buy a nice house”

A car is a chunk of metal with four rubber wheels. Don’t overcompensate for the importance of a car.

A house comes with land. Land goes up in value over time because it’s scarce. But a car goes down in value right after you drive it away. It’s a depreciating asset and they’re not scarce at all.

A second-hand Toyota is massively overrated. Or you can just catch a bus or ride an Uber. Better yet, you could walk or ride a bike to many places.

“Spend more than you make”

It’s a simple exercise. If more money exits your bank account each month than enters, then Houston, we have a problem!

The simplest solution is to reduce the cost of your shelter. Or learn how to make a little extra money online. Just don’t let your expenses keep rising as your income does (lifestyle creep).

Use excess money to invest in financial assets that make you more money.

“Ignore your physical health. Eat and drink whatever you want”

Building financial wealth requires energy.

What you put into your body determines your energy levels. Eat processed junk food and drink sugar water to destroy your energy. Eat more plants and drink more water to access high energy.

Businesses and careers don’t die. People just run out of energy.

“The best way to increase your income is to ask your boss for a raise”

Giving people raises is bad for business.

Most employers don’t even adjust salaries in line with inflation. They certainly don’t raise salaries because you want them to, either.

The motivation for an employer is to pay you the least money possible. Only if you’re at risk of leaving and a cheaper person can’t replace you, will they want to pay more.

If you want a raise then just change employers. Simple.

But the new employer, too, will try to pay you the least they can. They need to make a profit which means they need to pay you the lowest number they can.

Learn how to make money online and give yourself a raise.

“Do not start a business. Most of them fail and chances are so will yours.”

You are a walking, talking business. Your job is just one customer that pays you. There’s no limit on how many customers your personal business has.

Businesses fail … but they succeed too. If you live your whole life never trying to own a business, according to my grandpa, you’ll likely face enormous regrets on your eventual deathbed.

Whether a business fails or succeeds isn’t the point.

It’s what you learn in the process. A business teaches you how to think like an owner. It teaches you to take personal responsibility and stop blaming other people for your screw-ups.

The world could do with more personal responsibility and less victim mentality.

“Understand the world is fair and as long as you do the right thing, government and society will save you”

No one saves bankrupts.

My friend hasn’t got saved after all these years. The only person that can save you is yourself. Life isn’t fair. The capitalist structures that run the world don’t enable fairness. And they’re not likely to change.

Society wants to save you but we’re too busy with our own problems. Deep down the government wants to save you, too. But they can’t.

Too many people.

Too many political career goals.

Too much ego.

Too much greed.

Once you accept life is unfair (by design), you just wake up every day and make it a little fairer.

“Never ever take any risks under any circumstances”

You might argue bankruptcy is the result of taking risks. But some of the most successful people in history have gone bankrupt — Abraham Lincoln, Walt Disney, Cyndi Lauper, Elton John.

If you don’t take risks you won’t find out what works. You’ll spend your life wondering “what if?”

Bankrupts lose all their money because they push the limits. They don’t care if the risk takes away their fortune. Why?

You can always start again as many times as you want. Take regular risks to avoid feeling broke. It’ll help you come alive.

This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

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