Posted on April 17, 2009 at 8:35 pm I believe that if we budget our money and tried to live beyond our means , then we will live a more comfortable life

Posted on April 17, 2009 at 10:41 pm Budgets help initially, but the truth of the matter is that budgets are just like diets.  They don't work.  The best strategy is to completely understand the new rules of money and adjust our finances to fit these rules.  The elite and wealthy know and live by these rules.  The middle class does not.   We must also understand how taxes, compound interest,  inflation and compound inflation work to destroy our money.  We must come to the realization that the financial institutions (big banks) we once trusted are to be trusted no more.  It is when we truly understand what money actually is (money is only a game really) will we be able to take control of it.

Posted on April 18, 2009 at 12:03 am Budgets help initially, but the truth of the matter is that budgets are just like diets.  They don't work.  The best strategy is to completely understand the new rules of money and adjust our finances to fit these rules.  The elite and wealthy know and live by these rules.  The middle class does not.   We must also understand how taxes, compound interest,  inflation and compound inflation work to destroy our money.  We must come to the realization that the financial institutions (big banks) we once trusted are to be trusted no more.  It is when we truly understand what money actually is (money is only a game really) will we be able to take control of it.

Posted on April 18, 2009 at 10:03 pm maybe it's because they are easily influence by others. For example, when they other live a good life with a lot of branded stuff, they also wanna follow but they didn't realise that their budget is not enough to purhase most of these branded stuff. Thats my opinion.

Posted on April 19, 2009 at 8:16 am Its easier to live within your means if you have extra money each month ;)  A lot of people get bad credit debt early in life especially in college.  Not only are you not making that much money but your less likely to know how to deal with things.  Also a big problem for a good percentage or people in debt was not even their fault.  They had things under control and them something happens and the get hit with tens of thousands of $$ in medical expenses or some other emergency.  Once you lose control its hard to get it back.

Posted on April 19, 2009 at 10:38 am These facts are certainly some the reasons that people get into debt...but there are far deeper reasons that most middle income earners do not fully understand, and most have to do with our financial literacy being taught to us by retail banks (who drove us into this current mess in the first place).  I do not like to totally blame families for this economic mess and I'll explain why.  Many of the families I work with do not buy expensive cars, vacations or otherwise, but still have an average of $8,000 or more (sometimes up to $80,000) in credit card debt and no money at the end of the month.  The main reasons for this is that they are living by the old rules of money..those rules that the retail banks teach us: For example:  Save your money with our bank's "high interest savings account", pay your mortgage off asap, don't invest until your mortgage paid, buy "safe" investments through the bank (these don't even keep up with inflation), sign up for credit cards to increase your FICO score, get a retail mortgage product through our retail bank (these cost more!), buy mortgage life insurance with our bank, (and the list goes on and on).  These "strategies" help only the retail banks (and their shareholders) who have been using their psychology on middle class families since the great depression.  The fact is that the wealthy know a few things that the busy middle class does not, and they use certain techniques and products that are actually offered by the "back office" of the same retail banks that are ruining our middle class!   The middle class families are the ones that create all of the wealth in society, work the hardest are punished the most by retail banks and taxation.   Most families simply work and work and cannot even afford to take their kids on a much deserved vacation to Disneyland even though they should be able to afford to do so, theoretically.  So, they charge the trip to a credit card and have no way of ever paying it off.  Telling a hard working family like this to “live below their means” only makes them feel worse and this type of “advice” tends to lead to more and more divorce and issues at home.    I came to the conclusion that FINANCIAL LITERACY is the most important asset a family can own (it’s FREE for the asking), and I have seen families go from broke to happy and financially stable (I’m not talking rich here) once their financial education was in place.  Let me begin with one very important lesson: Most people I work do not even know where money comes from and are often shocked when they view this video (watch all 5 parts): http://www.youtube.com/watch?v=vVkFb26u9g8  

Posted on April 19, 2009 at 1:23 pm Here is another lesson illustrating how banks teach us to LOSE money without teling us.  Don't forget when we give banks our hard earned money to "save", they can earn as much as 23% annulay on it!!  Look at this illustration regarding bank savings vehicles (called CD in the USA and GIC in Canada)   How Taxes and Inflation Affect You* (aka what your retail bank won’t tell you!)     Five Year GIC                                                               3.10%   35% Marginal Tax Rate                                                - 1.09%                                                                                         2.01%     Average Rate of Inflation                                                3.2%   Annual Result (2.01 – 3.2%)                                         -1.19%     Multiply by 20 years                                                     -23.8%     $100,000 invested today would be worth only 76,200 in 20 years!         * based on page 18 of Ric Edelman’s book Rescue Your Money  FP 2009 and adjusted to reflect rates in Canada.  Earnings represent hypothetical return.