Why you are broke (and what you can do to fix it)
If you are one of the 78% of people living pay check to pay check, you’ve been lied to. By your parents, your government, your friends, your teachers and your banks. I’m going to give you some tough love and some hope if you want to change things, because it CAN be changed.
In 2007, just prior to the global financial crisis, a book came out called “The 4 Hour Work Week”, by the author Tim Ferris. It was a self-help book,but it was more of an indictment of the American mentality of the time.
When this book was published, Tim Ferris had not yet had his 30th birthday. Yet he propelled himself into the spotlight of fame by publishing a book that said what people wanted to hear. He told them that they could have it all now, with little effort on their part. This was to a generation that had been raised by parents that enjoyed the wealth of the 80s and 90s and lived by the mantra that they wanted their kids to have it easier than they had.
Why did they believe this? Because their parents had believed the same. Each generation of parents following WW1 felt that their generation had it tough, and that their kids were not going to suffer like they did. Post WWII, those generations finally got some traction on that promise. Even with the challenges of the 1960s and 1970s, still the new generations were doing better than their parents. So it isn’t surprising that Mr. Ferris was raised with that same philosophy, just as all others of his age shared.
From the time of his birth until the publishing of his book, his generation didn’t have to take up arms to defend their country. They didn’t see a collapse of their government from within. They didn’t see the threatened attacks from Russia of the cold war. They were the MTV generation, embracing new technological inventions such as the personal computer, cable TV, and eventually the Internet. Struggle? What was that?
Mr. Ferris was simply a reflection to a generation that only experienced the upside of life, and with the backing of parents that wanted their kids generation to do better than they did. Now I’m not saying that Mr. Ferris didn’t have self-discipline and didn’t work hard for his success. But he gained notoriety on the “click bait” title of a book that spoke to his generation - you don’t have to work hard (or at all) and you can have everything you want.
I mean that is how you sell millions of copies of a book. Have some outrageous title that publishers know will have your book flying off the shelves. Imagine, rather than working the normal 40-60 hour work week like everyone else, you could do it in 4 hours. Less than half of one day - you get 6 1/2 days of leisure for 1/2 of one day of work. Sign me up!
The problem was that his message was just another message in a constant drone of similar messages from advertisers, banks, and media companies, all with the tacit backing of parents who only wanted their kids to have a better life than they did. You can have it all for no effort, cost or suffering. Not only can you have it all, but you deserve to have it all. I mean your parents said that, so it must be true.
Rather than challenge this, society decided to embrace and celebrate it. These days I hear more and more people who were influenced by the teachings of Mr. Ferris. He explained that by using the Internet, you can hire those in impoverished countries to do work at pennies on the dollar that you would pay locals, and by affording to outsource everything, you only need to work 4 hours a week. Pretty simple.
Only one problem - what if the teacher of this mantra had never been around the block before? What if the teacher had never been broke, divorced, scuttled, etc? The blind trust that comes from just outsourcing everything means you really have nothing of substance because someone else in some far away land is doing all the work for you. Don’t you think at some point that those in the far away land are going to feel pissed off that you are keeping the lion’s share of the proceeds of their labor? While they continue to live in poverty, and you are living in some expensive San Francisco apartment, with all the time of leisure? At what point does human nature and envy start to threaten your very enterprise?
When is it that those countries start to out-think their employers? When is it that they start to poison their produce so that you lose and they ultimately benefit? When is it that they work out who the end customer is and they decide to approach them directly? Give them an offer to make 2-3x as much money by cutting out the middle man? I mean the Internet is for everyone, right? All they need is to spend some time to find the end customer of the product and game over.
But if all you have to do is sell books, you don’t have to guarantee that what you say works for everyone. There’s plenty of plausible deniability there if you have enough caveats. If it didn’t work, its not the author’s fault. It is your fault for not implementing it right. Or you didn’t read the fine print. Or you didn’t follow the essence of the teachings correctly. Its not the author; it’s you.
Why am I singling out this book and Mr. Ferris? I must admit, I’ve never met the man. I’ve heard his podcasts, and he sounds like a really nice guy. But the truth here is that he is following the mantra of his generation and what his parents taught him. He deserves the winnings without the struggle.
And that’s where we find ourselves today.
Why is it that in a world of the 4 hour work week, that 78% of Americans are struggling - living pay check to pay check. And now we find ourselves staring down the barrel of depression and recession, we have no wiggle room here. People are so freaked out, that rather than working out a way to get through the challenges, they are turning on their friends, their countrymen, their brothers, other tribes, etc. and in fighting. They are spending all of their time reading social media rather than acting socially responsible. They are spending too much time reading Facebook & Twitter, and not enough time reading LinkedIn and looking for a better job. Or finding employment in “essential” business rather they prefer to curl up in a ball and worry about the longevity of their non-essential job.
Why? Because no one ever taught them how to act in times of struggle. If you consider the generational guidance that was exposed to them by the likes of Mr. Ferris and his tome, it is pretty clear how they have no raw skills of survival. Only the skills to make it when times are good because that’s what their parents told them they deserve.
Yet the reality of a time of pandemic, social collapse, unsolvable debt load, racial and tribal inequality are foreign concepts that none of them were prepared for. Who’s responsible for that? I lay the blame on the parents, personally. But you are the only person who can craft your future and that means you have to seize the challenge with both hands and realize that maybe what you had been taught was wrong or at least not appropriate for the current times.
And that’s where I want to talk about the one thing they should teach all senior high school kids before they kick them out of education and into the “real world”.
Maslow’s Hierarchy of Needs
Maslow’s Hierarchy of Needs is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as a hierarchical levels within a pyramid. Needs at the lower levels in the pyramid are expected to be satisfied first, before individuals can attend to needs higher up. Even Maslow admitted that this is not a hard and fast rule, but the general concept is that you start at the bottom - like building the foundation of a house before you attempt to move upwards and solve higher levels needs.
Imagine a pyramid. At the base of the pyramid is a layer we will call the “Physiological layer” and it represents the needs of survival - food, shelter & clothing. Without achieving what is needed at this level, nothing above it will work. You must ultimately survive. Consider someone who loses their job, gets evicted from their apartment and is now living in their car. What are their immediate needs? They no longer care about their power bill, as they have no power. If they spend all of their time on their phone playing games, they will start to get hungry and then they will shift their efforts to obtaining food. Once their money is extinguished, then they must satisfy their need for food some other way. They sell what they have, they try and find work that can give them a small income, they beg, etc. But 90% of their time is focused on finding food. No different to cave-men or animals. Survival consumes all of their attention. If you don’t have any skills to make that easier, you will never advance higher up the pyramid because you will spend all your time at that low level.
As we advance above physiological needs, we begin to look to safety and security. We realize that living in a car is dangerous and so we try and find a way to find shelter that is safer. We prefer to find safe neighborhoods, but with an eviction history finding a place is next to impossible, particularly if you are without some predictable level of work. You can see that lacking skills at these low levels make it next to impossible to escape the lower levels of Maslow’s hierachy and that means ultimately you will not be happy.
While we struggle through this, everywhere we look - our billboards, our Internet advertising, the books advertised on the store shelf, etc. all are telling us the polar opposite of what we really need to know. They say we “deserve” to have the new car, the big house, the best meals, etc. and the best way to get it is with someone else’s money. A credit card, a loan, a bank. If you look at any large metropolis in any urban city center, and you go to the center of the city and look at the skyscrapers, what are the names on the top of the buildings? Presiding over the city like eagles surveying the landscape looking for prey? Banks & Insurance companies mainly. Yes, if you can’t see this with your own eyes, they really have you hypnotized. We raise the banks on high above the church steeples, and preside over us. And we do this willingly.
Why? Because we were raised like Mr. Ferris - we don’t want to work hard. We want to work for 4 hours, so how do you exist based on Maslow’s hierachy if you do that? Well you use someone else’s money, and you sell your future earnings to them in order to have what you need today. It is sure easier than going out and working some minimum wage job.
You see, Abraham Maslow moved psychology forward towards the pursuit of happiness. He deeply understood that the goal to attain a higher level of existence must begin first with the lowest levels of survival and physiological needs. And if you are patient and disciplined to get past each level, you gain permission to move upwards in the pursuit of happiness.
This is the basic law of persistence and patience. It takes time, it isn’t what anyone wants to hear and is juxtaposed to the very title of Mr. Ferris’ book. There is no quick fix, no magic pill, no special conjuring and no snake oil that will allow you to rise above the basic needs and responsibilities that all humans have on this planet. Because if you avoid struggle and learning how to survive, then you lack the skills needed when society throws you a curve ball such as pandemic, war, economic collapse and other events only embraced by preppers these days.
The answers are not found on some Instagram post, or some Tik-Toc video. The answers are found in returning to the basics and embracing the art of struggle and finding a way to enjoy it. I’m not saying your goal should be to struggle for all of your life, but considering the way that we have channeled society, it is clearly in the wrong direction and goes against basic universal physics and reality.
The rich know the power of patience
I’m going to give you a choice between two options - I can give you a pile of gold today. Or I can give you the Goose that lays the golden egg. Although the goose will only lay one egg per day. What do you choose?
If you were only taught Mr. Ferris’ teachings, you would likely take the pile of gold. It is quick, immediate and you have the gold. But that’s the wrong choice.
Why? Because forever more, the Goose will continue to lay eggs. You can have gold every day for the rest of your life. You don’t kill the goose. You nurture the goose and let it continue to lay the golden eggs. You find a way to live on next to nothing for as long as you can, while your goose continues to deliver you gold that you stockpile.
Those that took the gold, got it once. Then it was gone. Most likely they have no skills in management of capital, so the gold was spent for something that gave them some immediate fix but no longer lasting support of Maslow’s hierarchy in their life. So they are back to nothing - no learned skills, and no goose. And the worse situation is that if they had to borrow someone else’s money for that choice - now they are indebted to that person and have nothing to show for it.
This is the world we live in today. 78% of people live paycheck to paycheck and they don’t know why they are broke. I’ve just told you exactly why they are broke. They lack the basic skills at the lowest levels of Maslow’s hierarchy to survive, and most importantly they lack patience. They want it all and they want it now, while the tall skyscrapers in their towns look down upon them like prey. After they get screwed over for the car loan they can’t afford, then waller in self-pity and self-doubt, looking for solace in social media and peers as to why “woe is me” and everyone’s out to get me, and it is the other tribe’s fault, or if only my Presidential candidate was elected - he or she would make it right.
This is pure fiction. Until anyone realizes this they are cursed to remain broke for the rest of their lives. They won’t teach their kids anything so they circle of life will continue. They will discover books like the 4 hour work week and think that this is the answer to their plight. It isn’t.
There is one thing that poor people can do to avoid being poor. Realize they are poor and what they did to get to where they are didn’t work. If you can at least do that, you stand a chance to not be poor.
I get asked by a lot of people to help them with advice on how to become unconstrained. I’m sick of people telling me it can’t be done. I’m sick of people telling me that they can’t do it because they are living pay check to pay check. Like this is some disease or something. It isn’t. They are choosing to live pay check to pay check.
I would welcome a really open pragmatic and honest person to contact me who has no money, is broke and wants to not be like that. But they don’t contact me. Because they find it easier to justify their situation rather than to challenge themselves to break free of it. They know it is hard to break free of habits that got you in that mess in the first place. But the only person that can do that is them. No one is going to do it for them. They want to take a magic pill and all the problems go away, but it doesn’t work like that. Patience, persistence, struggle and suffering is the investment you have to make when you don’t have capital to invest in. Once you do that, and you obtain capital then you can start to act like an investor. But until you have something to invest, forget about watching CNBC or Bloomberg and pretending that you are some Wall Street Barron. You are not. You are broke and you should do what you need to do in order to NOT be broke.
This is no different than those that aspire to climb Maslow’s hierarchy all to quickly in life. You must first have the lowest level foundational levels under control and know that life will throw you curve balls that will force you to fall back to lower levels. So make sure you don’t make it difficult for yourself if & when that happens by stepping on people along the way. We are all on a journey through the hierarchy and we must all respect each other on that journey.
There are no quick fix solutions by taking debt either. Sure, you may need to get yourself to the point where you need to use business capital to buy your version of the Golden Goose in life (ie. rental real estate). But you need some form of down payment of your own first, and that means you need to not spend your income.
How can you do this on a small income yet you still need to survive? Well you scale back your expectations. You house-hack, you share accommodation with others in similar situation, you don’t eat out, you learn to buy from thrift stores, you find ways to acquire what you need by sharing with your community - you don’t need an Internet service of your own if you can share it with your neighbors. You don’t need water service for just you, if multiple people can share it. You don’t need to cool a house for just you, if others can contribute to creating a suitably cooled or heated environment, since you all share the same physiological needs. There are ways, but you have to think far more creatively than you have been.
If you do this, and you amass your capital, you can buy the Goose. Once you get enough geese, you then can likely live the 4 hour work week, without giving up control to anyone else. But this takes a lot of time & patience. Along the way, however, you will survive, you will be motivated and happy, you will be more social and you will be optimistic about the future. You know that whatever life throws at you, you have a plan for it.
Stop looking for short cuts
If I was asked to speak to High School Graduates on what they can do for their future, I’m sure most high schools would never have me back ever again to speak. Because I would immediately tell them to not go to college. Why? Because unless they have saved up the $100K cost of university education for an undergraduate degree, they have no business spending that money until they have earned it. If they want to go to college, then the path is clear - go and earn $100K first.
Yet most students don’t want that. Nor do their parents. Yet if the parents didn’t do the responsible thing and save the money for their kids, what business do they have to tell the kids to take on debt to do it? Is that not just perpetuating the very same poverty thinking that got them to that point? No kid “deserves” to go to college. Whoever told you that lied to you. You don’t deserve opportunity. You work at finding it and you struggle to get it. Then it means something and then it is something you cherish. You don’t waste it in some beer filled binge fest in the dorms. You work hard, you struggle, you have a side job or two. This is what it means to learn. It isn’t what you are being taught in the lecture halls - it is what you learned to get the right to BE in that lecture hall. That came from waiting tables, serving in a coffee shop, mowing lawns, whatever you had to do to be there. That’s where your learning came from.
Because the day that comes when a pandemic, war, economic depression, etc. hits, guess what... You have the skills to do it again, and you’ll be just fine. But those that embraced selling their future out, and find that their own future is uncertain now have nothing to offer other than what they learned in the lectures, and I can tell you as an employer of people, I don’t use any of what they learned in college in normal day to day work challenges in my businesses. Give me the kid who mowed lawns to get through college, because that is the skills I really need.
You see the kid who mowed lawns learned about Maslow’s hierarchy. They learned how struggle and patience works. They are wise. They have the ability to make the right choice between the Gold & the Goose. And they will use those skills throughout their lives to protect their families and advance themselves up Maslow’s hierarchy with honor. They will respect every challenge and everyone around them. They will make their parents proud.
And when times get tough, they are the chosen ones that can lead the rest of the flock forward. Because they can relate every decision needed by the group based on their own history of struggle. That is what real leadership looks like. Not fake leadership by way of trust fund or debt.
That’s how you get rich
Rich is a state of mind. It is not real when it is fed to you as a trust fund kid. It comes from patience, wisdom, struggle and hard work. It isn’t a 4 hour work week. It is a life long journey up Maslow’s heir achy towards your own personal form of enlightenment and once you start to understand just how simple that is, then you can spend your real mental energy on creative ways to get through it. Share the burden with your peers and everyone gets rich. This is not a game in which only the assholes win at the expense of everyone else. That’s not true wealth. That’s TV wealth and something better written about in the next edition of the 4 Hour work week.