Chapter Five

Out of Sight, Out of Mind

For most Americans, what is saved is less than 5% of their income.

Realistically, there is only so much you can get from that. But, you can spend a lifetime trying to figure out ways to make it grow faster; you can stress out over contradictory information; and, you can take excessive risk of market loss – and actually suffer that loss - in the effort to force that small part of your income to do an unrealistically huge job.  

When all is said and done, this leaves your future at the mercy of the markets. There is a far better and safer way. Based in proven and timeless economic principles, the core of “being your own banker” is this: primary focus is changed from the 5% (the small part) of income that is being saved to the 95% (the big part) of income that is being spent. Let me explain.

If you earn $100,000 of income and save $5,000 you have $95,000 of expenses.

If you earn 8% on your savings, you earn $400.

If you can somehow increase the 8% to 12%, you earn $600.

However, if you reduce your expenses by 1% you save $950, which you can invest -- in addition to your $5,000 -- to compound your wealth.

Where would that savings come from? Your current wealth transfers. Interest expenses alone are typically 34.5% of disposable income. Add in saved money from other current wealth transfers (excess taxes, interest lost, fees, and certain insurance costs) and recovering much more than you are presently saving is a piece of cake. We can show you how. 

To email a question for an emailed answer, please click here.

To learn more about “being your own banker”, please click here.

 

Back	Next (Chapter 6)