|About This Book
This book is dedicated to bankers. As a banker of nearly 34 years, I know the importance of bankers to their customers and to their communities. I would like to dedicate this book to bankers across the country who work every day to help their customers improve their financial conditions. Your banker can serve as a trusted advisor to help and guide you along this path to financial freedom.
In The Money Marathon, I use my decades of financial expertise and love of running to compare the steps toward financial success to the steps involved in training, preparing, and running a marathon. Whether you've ever run a race or not, this book reveals how to complete your race to financial freedom. Download my brochure with more details...
Running the race to financial freedom and running a marathon starts with commitment.
One of my hobbies is running marathons. I have run a marathon in each of the last four decades, and I am a member of the 50 States Marathon Club, having run fourteen marathons in thirteen different states. (A person has to document running a marathon in ten different states or more to qualify for membership.) Running a marathon is much like running the race toward financial freedom, and comparisons will be made throughout the book. The most important comparison is that a person has to commit they are going to do it. Without commitment, nothing else matters. A person doesn't awaken one morning and say to himself, "I am going to run a marathon today." It takes six months to a year of preparation, training, and planning to be ready to run the race. None of this happens without commitment. Running the race to financial freedom also starts with commitment...
Our purpose in life is to love God with all our hearts, souls, and minds and to love others. I believe God has made each of us special with unique talents, abilities, passions, and interests. I believe he wants us to enjoy our lives by using our talents to help others and thereby make a positive difference in the world.
Money is a tool we use in our lives to help us fulfill our purpose. Money is not an end; it is a means to an end. Money will never make a person happy; however, a lack of money can go a long way in making one unhappy.
Following are the introductions to each of the 7 Simple Steps to Financial Freedom.
STEP 1: Logging Miles: Increasing a Person's Abilities
Most how-to financial books ignore income, and yet income is half of the equation, in that income minus expense equals the amount that can be saved and invested, which ultimately will determine a person's financial wealth and success. If a person can increase the income side of the equation without increasing expenses, the amount available for saving and investing can grow substantially. How can someone raise his income? Everyone's particular circumstances obviously make a difference, but let me list a few possibilities to consider: First, everyone should consider obtaining as much education as possible. It is a proven fact that, on average, the more education a person has, the more money he will make...
STEP 2: The Training Log: Prioritizing Limited Resources
In order for a person to control what he spends, he has to know how he is spending his money. This means he needs a written budget. Budgeting can be laborious, but it doesn't have to be. Budgeting is about having a written plan for how you will spend money before it is spent. It is making a conscious choice of how to spend money rather than spending it haphazardly and then wondering where it all went. This allows a person to stay within his income and make choices or priorities on how he will spend his money. If a person wants to drive from Kansas City (near my hometown) to New York, he doesn't just start driving in any direction on any road; otherwise, he could end up in Los Angeles, Minneapolis, or Houston. Instead, a person plans the trip using a map. Without a budget, a map to a destination of financial success, a person will most likely wander around aimlessly and ineffectively to a destination of financial failure...
STEP 3: One Step at a Time
If a person can raise his income using some of the suggestions in the Income Chapter or lower his expenses using some of the suggestions in the Spending Chapter or both, he can increase his savings. The key to saving is not so much the amount but the discipline and regularity. One dollar saved every day and invested according to ideas in the next chapter can grow to over a million dollars in 51.2 years. Most everyone can save a dollar a day. I got in the habit of going to the Sonic Drive-In after work to unwind and would order a Cherry Dr. Pepper, which cost me $2 per day with tip included. If I would cut that out, I could save $2 per day, but I probably won't because I love Cherry Dr. Pepper. All of us have items like this we can cut out if we choose--if we decide saving is an important, number one priority for us. The main premise of The Automatic Millionaire, written by David Bach, is...
STEP 4: The Long Run and the Magic of Compounding Interest
Saving without investing is like driving a car on a super highway at only ten miles per hour, which would mean it would take much longer to get to your destination than necessary. Investing is what gets your car (savings) up to highway speed and allows you to reach your destination (financial freedom) much quicker. Compound interest has been called the eighth wonder of the world. Albert Einstein is reported to have said, "It was the most powerful mathematical concept I ever learned." A person doesn't need a financial calculator to see how compound interest works; all he needs to know is the Rule of 72, which states that ...
STEP 5: Debt: Running the Race with a Heavy Weight
If money is a tool to help reach a person's goals and purpose, most consumer debt is a straightjacket that prevents him from reaching these goals. Previously I have shown how $2,000 compounding at 12% can grow to $1,000,000 in 54.8 years. Debt can compound against someone even faster. I call it the "Rule of 72 in Reverse." Some credit cards charge as much as 22.9%. Using the Rule of 72, 22.9% divides into seventy-two 3.16 times. That means debt can double against a person in only 3.16 years. Yes, a person is supposed to make minimum payments, but I have seen borrowers compound their credit card debt by using a new card to make the payments on other credit cards, effectively compounding the debt. At 22.9%, $2,000 could compound to $128,000 in a little over twenty years. I have not seen credit card debt compound much higher than $100,000 because...
STEP 6: Good Quality Shoes: Protecting a Person's Assets
We have reviewed ways to increase income, lower expenses, increase savings, grow investments, and eliminate debt. In addition, there are basics a person needs to consider to protect himself and his family, his assets and his income stream. First, let's review the basics about insurance. Insurance is designed to cover catastrophes or, in other words, things that would financially wipe out or severely hurt someone. If a disaster could occur that could be a financial catastrophe, a person should consider insurance. As an example, it is unlikely that a person's home would burn down, but if it did, in most cases that would be a catastrophe for someone to have a total loss without insurance coverage. It is probably not necessary to insure what a person can afford to pay on his own. As an example, a person doesn't need insurance to cover the first $100 of any loss he might have. That is affordable without insurance. If someone can cover the cost without severely hurting himself financially, it...
STEP 7: Crossing the Finish Line: Making Money Work for You
When I talk to students, I tell them I am not asking them to save $1 today so they can spend $1 tomorrow. I am asking them to save $1 today so they can turn it into $500, which is the equivalent of $2,000 growing to a million dollars. Then a person can spend half or even all the interest from that accumulation every year for the rest of his life. I was working on a financial plan for a couple, which involved a plan to save money for the future. The wife's question to me was, "When do I get to spend this saved money?" My answer to her may have surprised her because I said, "If we do this right, maybe never." Making money work for you may be the most important concept of the entire book. A person saves and invests money today, taking advantage of the power of compound interest and the Rule of 72, so that money accumulates to a level where he can withdraw and spend annually a sizeable amount while the principal (the saved money) continues to grow. Consequently, the interest a person withdraws continues to...
The Medal for Finishing the Race
At the end of the marathon, a medal is placed over the runner's head, indicating he has completed the race--something that only a small percentage of people in the country have been able to do. The medal, in the marathon, is a symbol of ultimate success, and most all races go to great lengths to make sure their medal is unique and classy, something a runner would wear with pride. I have all my medals mounted together in a frame that hangs in my study. When the medal had been placed over the runner's head, it is time to reflect, relax, and enjoy the accomplishment. Once a person has money working for him, he has finished the race for financial freedom and he can likewise reflect on the accomplishment, relax, and enjoy himself. This doesn't necessarily mean a future of nothing but fun and games, although that could be financially possible...
"The Missouri Bankers Association has worked with Ed for years to promote financial literacy. His new book reflects his passion to help people with their finances and the information in the book can be of great benefit to readers in all areas of personal finance." --Max Cook, President, Missouri Bankers Association
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Other Books by Ed
Making a Million with Only $2,000: Every Young Person Can Do It
25 Truths: Life Principles of the Happiest and Most Successful Among Us
Related web sites are www.eddouglas.com and www.getthebookofjohn.com.
You may also request a FREE copy of The Book of John and/or "The Four Spiritual Laws" with your orders.
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