I have a habit of holding off until the absolute last minute to separate myself from money. I realized it when I waited until the last minute to buy tickets to a financial conference I plan on attending next year. There was a deadline to buy at the cheapest rate, I knew I wanted to go, but I still waited to the evening of the last day to pull the trigger and make the purchase. I wasn’t waiting on a paycheck, we use credit cards for everything and can cover the cost. I just didn’t want to separate myself from the money before I needed to. After thinking about it for a while, I realized that a few major transactions and relationships have shown me that money is power, and I shouldn’t give that power away before I need to.
Even though it was only a few hundred dollars, and the chances of my mind changing in a 2 week period were low, I still didn’t want to pull the trigger until I needed to. As soon as you give money away, you have to do work to get it back. In this case, finding another person to buy it. Which requires my time, something I am very protective of these days.
Money is Power. Wield it Wisely
Money is Power – The Landlord Relationship
One of the first real “money is power” lessons I learned was while renting a house in college. It was close to campus, on the run down side of the equation, and most importantly, was just under our per month budget.
We were required to put down a full months rent as a damage deposit, which was about $350/each.
I didn’t think much of putting down a damage deposit. Figured it was a pretty normal requirement and I understood that they had to protect their investment. We knew we were going to add some party miles on the house and I’m sure our landlord knew it based on the looks of us. We were on the responsible side of college dumbshits (meaning we didn’t break stuff and knew how to clean up) but still capable of ruining a house.
At the conclusion of our 2 years of renting, we cleaned this place top to bottom, oven and all. Fixed some of the minor things that we broke.
Honestly, we probably went above and beyond and fixed things they wouldn’t have noticed. We also did some maintenance on the house that we weren’t required to do but improved our living situation. We thought we were sitting pretty to get our cash back, something we desperately needed to roll into summer with.
Our landlord came over and started going through the house, did a walk through and said he would send a written explanation with our refund within the week.
One Week Later Our Minds Were Blown
Notables on the “bill”
- Replacement of a pump for the diesel tank that fueled our furnace. Yes, our house ran on diesel fuel. A truck would have to come out and fill up a tank in our basement
- Charge for a plumber to come out and fix a plumbing issue that was caused by plumbing fixtures that were not up to code
- Cost of replacing the carpet in 2 bedrooms after our basement flooded through cracks in the wall
When these things happened, our landlord covered the costs and we thought everything was taken care of.
When he notified us that he wouldn’t be returning the damage deposit because of them…We asked why we would need to pay for something that is not our fault?
We were essentially told to pound sand, we weren’t getting our money back.
What could we do? Sue them? We were a bunch of broke ass college kids that could barely afford to keep our house’s gas tank full.
They already had our money.
Money is Power.
We would basically have to start a fight that cost more money to get it back. It wasn’t worth it and they knew it.
Money is Power – Need to Earn
The landlord example above, while annoying as hell, is nothing compared to the power our employers have. Trading money for time is the ultimate money power grab.
Think about what you have to do every day to simply “go to work”
- Wake up before you want to. I have zero issues getting up early, but when it is still pitch black and cold outside….salt in the wound
- “Get ready” AKA Not sweatpants and a hat (My ideal state of living at least until you get a cup of coffee, and if I am being honest I would wear a hat every day)
- Pack a lunch (or spend money later)
- Drop off kids
- Commute (20 minutes? 30 minutes? An hour?)
- 8-10 hours of at work time
- Commute (Again)
- Pick up kids
On top of that. I spend 2 hours every weekend getting ready for the week. Doing laundry, meal prep, getting the kid’s stuff ready for daycare.
Factor in some other random weekly tasks that get pushed into the weekend. Ya know, the time I am supposed to be relaxing with my family. Mowing the lawn, cleaning the garage, 37,000 other things that come up as a parent/homeowner/adult.
After all that, my life essentially revolves around work with sprinkles of free time in. I have said this before but I’ll say it again
I don’t know exactly what I want to do after FInancial Independence, but I know I don’t want to do this
Money is Power – Your Home
We all need a place to live.
But the rush to buy a house, upgrade that house, then upgrade again as we earn more is a dangerous wealth destroying trend.
Thinking about these major decisions, they have a tendency of happening when things are going really good. You are employed, might have just gotten a pay raise or a massive bonus. Your feeling good, you worked hard, why not show it off. You can afford some luxury.
Then boom. Something doesn’t go quite as you planned.
Those decisions don’t look as good when you lose your job or are hit with a ton of unforeseen medical expenses. Hell, even having a kid or two is enough to flip the script. Paying $18K-$32K for daycare is the equivalent of a second mortgage for some.
Can you afford two of those? Or afford 1 mortgage if you need to drop to one income? I speak from experience when I tell you it’s NOT EASY.
As soon as you sign the mortgage paperwork, you are signing over mandatory payments, every month, for the next 15 to 30 years. Power.
The more of your income that home takes up, the more power the bank has and the less you have saved to cover one of those unforeseen circumstances
Money is Power – Your Car
I don’t rail on people who buy new cars. After driving both brand new and very used there are definitely pro’s and cons of each. We have settled into buying cars that are a few years old moving forward in an attempt to balance it out.
What I will say is your car is a depreciating asset that locks you into a money spending contract. The second you put your name on the paperwork you are obligated to pay for that vehicle, every month until the debt is paid off. Are you going to want to make that monthly payment 1 year from now? 3 years from now? Up to 6 years from now? Maybe, maybe not.
There will be no judgments from me, I understand the draw of new cars. Especially when we talk about family safety. Just make sure you aren’t getting drawn into something you will regret later that has no chance of building wealth.
Wield money wisely and build your own Powerful Money Stash
So, how can I make money powerful for me?
Short-Term – Focus on Cash Flow
Whether it is crushing debt or taking on smaller housing or vehicle loans to keep your monthly costs down. The less you have going out every month the more powerful your income or nest egg is.
Another option for cash flow is looking at day to day spending, something we refer to as the Latte Factor.
Examine your spending and find expenses to cut that do not bring you joy or are the result of poor planning. Can you cut your grocery bill, eat out less, cut cable or even ax the lattes themselves?
We found hundreds of dollars to cut every month and you know what? It was pain-free. We didn’t miss traditional cable or the crappy last minute fast food trips.
Long-Term – Plan for Financial Independence
All of that cash flow that you open up by paying off debt, keeping housing and transportation costs low and cutting day to day expenses can be repurposed and invested. The ultimate goal for people who want to take control of their money and their time is Financial Independence.
We call it FU Money or an FU Fund and it is a powerful money force. It gives you enough cash and confidence to negotiate a better work-life balance.
If you are really sick of your job and have enough cash, you can go nuclear and tell your employer to completely F off and take your talents elsewhere.
Money is power, but that doesn’t mean it can’t be powerful for you
Do you think money is power? Have any other examples of money controlling your decisions?