Recently I posted an ad on my local Kijiji (classified advertising website) for my Financial Coaching service. The title of the ad was “Stop Borrowing Money!” next to an image of a shark carrying a briefcase. I wanted to conjure up the idea of a loan shark in the reader’s minds. In the last week this ad has generated the biggest response of anything I have ever posted on Kijiji, ever! Which would be great except for one thing, every single person who has responded to the ad has asked me in one way or another if I would lend them money.
What part of STOP was unclear?
Here’s the full text of the ad. Maybe you can see where someone might think I am offering to help them do the very thing I am unapologetically against because I sure can’t.
Payday Lenders are legalized Loan Sharks!
Credit Cards aren’t much better, and Banks are too beholden to their share-holders to care about YOU.
The only way to build wealth it is to get out of debt.
Are you ready to change your life and start building long term wealth?
How could that be misconstrued?
One of the people who called said that they had read the line about building long term wealth and thought that must mean I was an alternative lender of some sort, even though the line before it clearly said the only way to build wealth is to get out of debt. Another caller said he was starting a business and since everyone knows you need money in order to make money the idea of being debt free just didn’t make sense to him. When I probed a little more he admitted that he had actually understood my ad perfectly but because it is so counter intuitive he thought maybe he missed something.
Counter intuitive? Really?
The issue here is a societal disconnect between the meaning of things like debt, wealth and net worth. Simply put, there are two ways to measure wealth, the right way and the wrong way.
The wrong way is to total up all of your assets and say that’s how wealthy I am. I have a house, a car, and a big screen TV a pension plan and some money in the bank, I pay my bills on time and never have to go without therefore I must have a certain measure of wealth. Just because you aren’t getting calls from creditors every day and you can continue to live a somewhat comfortable life doesn’t have anything to do with how wealthy you are.
True wealth is a measure of net worth. The correct way to measure your wealth is to total up the market value of all of your assets (not what you paid for them but what you could realistically sell them for) and subtract that number from all of your current debts and obligations, i.e. liquid assets minus debts. Keeping in mind that your big screen TV is not worth the $1000 you paid for it, if you tried to sell it on eBay you’d be lucky get half that. Cars depreciate even faster.
Nearly ten years ago, when I first started on my debt free journey I was told that there are two ways become wealthy. Make more or spend less. That too is wrong!
The fact is that making more usually leads to spending more as we tend to raise our lifestyle to meet our income. The real key isn’t in how much you make or how much you spend it’s in how much you keep. And if a lot of your income is going to service debt it can get pretty hard to keep anything at all.
In Canada today the average household is in debt to the tune of 164% of their annual income.
Read that line again.
That means that, even if you liquidate all of your assets you will still be in debt to the tune of over half your annual income. If your net worth is -64%, you are not wealth, you are destitute!
The simple truth is this. People who are wealthy do not have any debt or a negative net worth!
I’ve said it before and I’ll say it again. The only way to build wealth is to first get out of debt.
Stop borrowing money! I don’t know how to say it any other way.
For more information on my Financial Coaching service and my proven 6 Step Process to getting out of debt, building wealth and leaving a legacy, write to firstname.lastname@example.org or purchase the book “6 Steps to Financial Freedom” available now on the products page above.