The Money Laws

01 February 09 Filed in: Personal Solvency | Book Excerpt | Business Solvency
(in order of appearance)
  1. Two skills required of a person are the ability to make money and the ability to control money. Control is the most important of the two.
  2. The value of money is based solely on an agreement.
  3. The value of money can be manipulated.
  4. Inflation is the devaluation of money.
  5. Inflation acts like a hidden tax.
  6. Money needs to be put to work to beat inflation.
  7. Compounding interest can be your best friend or your worst enemy—you decide.
  8. Your main financial goal is solvency.
  9. Solvency is measured by your networth and viability.
  10. Networth = value of assets less debt.
  11. Viability = income greater than or equal to your living expenses.
  12. There are two types of debt: Investment Debt and Killer Debt
  13. Investment Debt doesn’t always need to be paid off.
  14. Killer Debt must be paid off as soon as possible.
  15. Investment Debt speeds up the process of wealth creation when combined with sensible money management.
  16. Education in yourself is the best investment you can make.
  17. The more investments you have increasing in value, the faster your networth grows.
  18. Focusing only on reducing debt, without investing, is the slow way to build your networth.
  19. An asset is anything which others consider valuable and can easily be converted to money.
  20. Debt is what you owe.
  21. Payment of killer debt and overdue bills does not come from your living expenses.
  22. Money set aside must have a clearly defined purpose.
  23. Money without a purpose disappears.
  24. Only use money for the purpose it was assigned.
  25. Money control includes providing for the past, present and future.
  26. When solvent you must be viable on 70% of your total income.
  27. When insolvent, you must be viable on 60% of your total income.
  28. The fastest way to be viable is to reduce your expenses and then increase your income.
  29. Don’t ever tolerate not being viable.
  30. Getting out of Deep Water consists of 5 steps:
    • Know exactly what and who you owe
    • Communicate
    • Keep accurate records
    • Maintain a workable schedule
    • Make Money
  1. Use the dateline method when paying off overdue debt or bills (pay the oldest first, in full).
  2. An investor works on the principle of time in the market, not timing the market.
  3. The investor knows that economies work in cycles: they go up and down.
  4. Successful investing requires a strategy.
  5. Investing is a game and the different roles are Investor, Trader and Dealmaker.
  6. Everyone should be an Investor no matter what other role is played.
  7. An successful investor can separate fact from opinion.
  8. Judgement can only be made when one knows all the facts.
  9. To get solvent you have to be willing to work hard.