We are moving into a new era during the 2020s. We are transitioning from the prosperity era to the austerity era.
This new austerity era will take no prisoners. If you don’t grasp how unforgiving this new timeline is, then you risk losing it all.
What is the austerity era? This new era represents the complete destruction of the middle class. So let’s take a quick look at what it means to be middle-class.
Retiring to a Small City and Living on Passive Income
Middle-class used to mean someone in your house had a decent-paying job, you owned your home (or could afford one soon), and you could afford a car and college tuition.
You also had a pension coming your way after 20+ years of working for the same company.
Today the middle class is defined by assets or lack thereof. If you do not own assets, you are poor.
You are poor if you own your primary residence but it generates no income. The only way to stay middle-class is to earn passive income while you sleep.
Why minimalism? Why now? Unfortunately, people are still living as if we are in the 1950s. They now have two parents working, paying for childcare, saving 10% toward retirement, and believing it will all end well.
There are only two ways for it to end well: If your assets (and passive income) outpace inflation, or you can create income from your brain (content creation, business).
Minimalism is essential to controlling lifestyle inflation, rebuffing the Joneses, and over-spending on things we don’t need.
Time is Money #3: Invest
The dream of the American dream. As kids, we dreamed of having it all. We wanted to be independent, own a nice car, attend sporting events, and dine at fancy restaurants.
This fantasy or illusion is so prevalent that we shoot out of the gates at age 18 and head straight for debt central. We accumulate tons of stuff, the worst of all being bad habits.
From age 18-35, I spent tons of money (probably $100,000+) on video games and gaming consoles. I didn’t even have time to play all the games I bought.
My spending was utterly ridiculous, but I didn’t have the information. I could have bought a few shares of Amazon or Apple in the 2000s.
The $5 per Week Dividend Investor
My saving grace was my military career (24 years), marrying the right person, and accumulating three homes over my working life.
Parents and minimalism. That’s why we must reign in our kids’ dreams of spending. We must lead by example.
As parents, it is our duty to learn the ways of passive income, investing, saving, and building. I recovered at age 38 and built massive wealth by age 42.
I had a high-paying career, an intelligent wife, and bought into the housing market before the huge run-up in asset prices—I got lucky.
Keep Your Writing Top of Mind
I do not expect my kids to have the same chance of getting ahead as we did. They will need as much assistance from us as possible.
Therefore, could I spend my money on a fancy $60,000 car or invest that into my kids’ income investing portfolio?
What is minimalism? Don’t get caught up in all the hype around being a minimalist; it simply means living below your income level.
It’s a daily decision to purchase things you need and consider things you want. It doesn’t mean you can’t drink coffee or buy a Blu-ray disc.
It means reviewing your budget religiously, making healthy spending decisions, and prioritizing people over things.
Five Signs Your City Is Too Expensive For You
One of the best ways to know what you can afford is to get on a daily budget. A daily budget, whether $10 or $50 per day, lets you know exactly where you stand.
If you need something for $200, you can balance it over a few days. I’ve been on a daily budget for a year, which has helped me decide what is truly important.
How much stuff do you need? I don’t know how the world convinced us to become hoarders. I still have all my video games, all 24 years of them. I need to get rid of these as soon as possible.
If you have trouble getting rid of stuff, read “The Life-Changing Magic of Tidying Up” by Marie Kondo.
I am so glad I overcame my urge to spend $300 to $400 monthly on video games. Today, I may buy one game and one Blu-ray per month.
Generation Quit: Being a Leader in the New Workforce
Watching people play video games on YouTube while I grind away on my book business is much easier and enjoyable (and cheaper).
Which items do you love to buy? Do they make you money? My spending obsession has moved to buying dividend-paying stocks. I get great pleasure from buying income products and receiving dividends from them.
I also work on my books in my free time, so I don’t spend hours on Amazon. I avoid watching lots of gadget reviews and technology updates.
We decided to give our kids (16 and 12) an allowance instead of them working for money. I worked at McDonald’s at age 16, and it took me 22 years to recover from those bad habits.
The goal is to have our kids understand the difference between working hard and working smart.
I Heart Income Investing
I plan to put one car on Turo and have my kid help me book and clean the vehicle. It will teach him to be his own boss and use his time effectively.
Where do we learn to spend? Where did our urge to become spenders originate? It’s tough to put a finger on it.
If you grew up broke, you always wanted something. If you grew up wealthy, you always had something. Either way, we all have the urge to buy things we don’t need for reasons we don’t understand.
Conclusion. However, there is no longer time for us to make spending mistakes. It is almost impossible to recover from $10,000 of debt today.
There is No Work-Life Balance Until You Are Wealthy
If you are renting, expect your rent to increase exponentially every year. There is no reason for your landlord to take it easy on you.
Student loan payments are making a return after three years, interest rates on credit cards are higher than ever, and you cannot refinance your home to get a cash infusion.
We are all trapped with nowhere to run. We must be more intelligent than ever with our money, resources, and the information we feed our children.
I wasn’t very resourceful for the first 20 years out of my parent’s house, but I recovered. However, there won’t be many stories like mine over the next ten years.
Too many forces are working against the middle class today for us to mess around. Let’s get serious about building wealth via income-producing assets. Good Luck!
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