Banks are institutions that exist in society for the purpose of making bonuses for their directors. Despite their protests to the contrary, they do NOT exist to serve their customers. So long as there is a profit in it for them, they will serve your needs. Once your agenda and theirs diverge, you can no longer rely on them for any kind of support.
Banks can be a useful place to store your money but they will only pay you a paltry rate of interest and will put as many obstacles as they can in your way when you try to take it out again. Today, using electronic methods to move your money around is your best bet. You do need this facility so banks are a necessary evil.
Banks and bankers are not known for their high level of intelligence or their fine communication skills. They are prone to losing your paperwork and telling you incorrect things in their letters to you. They also make errors when conducting transactions such as misplacing decimal points. You need to watch them carefully and NEVER trust them to get it right.
To achieve great things, it is necessary to exert leverage. This means that you may have to borrow money from the bank once in a while. Once your objectives are clear and you are protected on the down side, this is fine.
DO NOT, HOWEVER, RUN YOUR LIFE ON DEBIT FINANCE (BORROWING).
Do not borrow money for day to day expenses. Keep as large a reserve of cash at the bank as possible so that you never, ever, ever go overdrawn. A suitable amount is one month's gross income. Learn to live within your means and do not give the bank any leverage on you. Leverage is power and the pettifogging little toads will squeeze you at every opportunity. Don't give them the satisfaction.
The key to staying out of debt and living within your means is to master the art of budgeting. At a simple level, this means knowing how much money you have coming in and how much you must pay out. You need to know these figures for the year, quarter, month, week and day. Using spreadsheets makes this exercise very easy. The secret is to set your budgets so that for every day of the plan there is a surplus. The next stage, once you have created the budget is to STICK RIGIDLY TO IT and do not deviate. If you haven't budgeted for it, DON'T SPEND IT !
If you live by this plan, you will have a surplus at the end of the year. Reward yourself by spending 10% of it and invest the rest.
Thursday, December 8, 2011
Sunday, November 20, 2011
561. What you Show to the World
There is a difference between what is called in Japan "Honne" and "Tatame". This is the difference between what you really think and what you show to the world. If, for you, the two things are too close, then you are giving the world too much of a lever with which it can manipulate you. Do not let anyone ever know what you really feel or think. Be very clear in your own mind where you stand but don't let those outside know.
Keep the stiff upper lip. Don't let them know what hurts or offends you or what things give you satisfaction. Maintain your outward persona carefully. You can use humour to great effect in keeping the outer world out of your inner thoughts.
If you maintain this outer ring of defense around your mind, you will protect yourself both from those who would be deliberately cruel to you and those who would hurt you through ignorance or through their neutral pursuit of their own ends without a care in the world for your welfare.
Very often, too, if you reveal too much about your own personal inner thoughts, you will not be believed. If, for example, you genuinely want to be good, generous and helpful, without the slightest care for your own gain, you will not be believed because everyone else is thinking one thing and saying another and will assume that you are too.
In particular, do not reveal your true thoughts about business, work, investments etc. The system, economy and the institutions are all set up to keep the wealthy wealthy and the poor poor. Any knowledge that you have that works in your favour and against the status quo is knowledge that has been hard won and is not to be shared with those who would misuse it or use it against you.
This is a very practical application of the principle of Omerta.
Keep the stiff upper lip. Don't let them know what hurts or offends you or what things give you satisfaction. Maintain your outward persona carefully. You can use humour to great effect in keeping the outer world out of your inner thoughts.
If you maintain this outer ring of defense around your mind, you will protect yourself both from those who would be deliberately cruel to you and those who would hurt you through ignorance or through their neutral pursuit of their own ends without a care in the world for your welfare.
Very often, too, if you reveal too much about your own personal inner thoughts, you will not be believed. If, for example, you genuinely want to be good, generous and helpful, without the slightest care for your own gain, you will not be believed because everyone else is thinking one thing and saying another and will assume that you are too.
In particular, do not reveal your true thoughts about business, work, investments etc. The system, economy and the institutions are all set up to keep the wealthy wealthy and the poor poor. Any knowledge that you have that works in your favour and against the status quo is knowledge that has been hard won and is not to be shared with those who would misuse it or use it against you.
This is a very practical application of the principle of Omerta.
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Labels:
Honne,
humour,
leverage,
manipulation,
not being believed,
omerta,
outward persona,
Tatame
Labels:
Honne,
humour,
leverage,
manipulation,
not being believed,
omerta,
outward persona,
Tatame
560. Warren Buffett on Creditworthiness
"Creditworthiness is like Oxygen - you don't notice it when it's around." - Warren Buffett.
558. The Purpose of Trading is Profit
When trading, remember that the purpose is profit. It is always better, therefore, to lose the opportunity than the money.
Friday, October 28, 2011
557. Information is Money
All information, even if old, is money but CURRENT information is always the best !
556. The Snowball System for Clearing Your Debts
The best system I have found for clearing debt is what I call the Snowball system. I call it this because the amount of money you can use to pay off your debts increases (like a snowball) with each stage.
The first thing to do is to find an accelerator, an extra income that you can use to "get the snowball rolling". This could be a part-time job or a sideline business that pays for example €100 per month.
Next list out your debts in 4 columns, the payee, the amount owed, the monthly payment and the date of the final payment.
Now re-write the list in the order of how soon the debt ends.
Apply the accelerator to the nearest debt horizon (the one to be soonest paid off) and speed up the payments on that so that if you were paying €250 per month to this debt, start paying €350 per month until it is cleared. In the meantime, continue paying the normal repayments on ALL other debts. You must not rob Peter to pay Paul here by stealing the accelerator from other debts. This is very important. The accelerator must be genuine extra income or genuine extra savings from reduced spending.
Once the first debt is cleared, take the new full payment (€350 in our example) and apply it to the next shortest horizon debt (say this is costing you €500). You are now paying €850 off this debt and you continue to do this until all your debts are cleared.
Once cleared, you can then start applying all the money you were spending on debt to building up your investments.
The first thing to do is to find an accelerator, an extra income that you can use to "get the snowball rolling". This could be a part-time job or a sideline business that pays for example €100 per month.
Next list out your debts in 4 columns, the payee, the amount owed, the monthly payment and the date of the final payment.
Now re-write the list in the order of how soon the debt ends.
Apply the accelerator to the nearest debt horizon (the one to be soonest paid off) and speed up the payments on that so that if you were paying €250 per month to this debt, start paying €350 per month until it is cleared. In the meantime, continue paying the normal repayments on ALL other debts. You must not rob Peter to pay Paul here by stealing the accelerator from other debts. This is very important. The accelerator must be genuine extra income or genuine extra savings from reduced spending.
Once the first debt is cleared, take the new full payment (€350 in our example) and apply it to the next shortest horizon debt (say this is costing you €500). You are now paying €850 off this debt and you continue to do this until all your debts are cleared.
Once cleared, you can then start applying all the money you were spending on debt to building up your investments.
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