Two Principles of Personal Finance You Want to Understand

By:Jeremy Johnson

News about the current credit crisis in America should cause everyone to reflect on what got us here in the first place. It's not fair or reasonable to place the blame on the mortgage companies and other big banks. That's like blaming a fast food chain for your obesity. Hopefully you all understand that you're not fat because they force-fed you burgers, and you're not broke or on the verge of bankruptcy because a lender helped you buy more house than you could afford. We are all responsible for our current financial circumstances, whatever they may be.

If you've decided to take complete responsibility for your own financial future you're on the right track already. In the American economy for the past 200 years anyone and everyone that has made the decision to become financially successful has been able to do it - as long as they were willing to pay the price of financial freedom.

So what is that price? I'm sure a lot of people say they'd be rich if they only knew how, or if their parents had been rich, or if they weren't so unlucky, etc. I don't buy any of that. Here are a few principles that will change your outlook on your situation - if you'll let them.

1. You are the owner of your circumstances, whatever they may be.
One of the most powerful statements you can make is "I am responsible." If you will recognize that your current financial reality is something you have chosen, you are immediately in a position to influence it for good. You become even more powerful when you decided to accept responsibility for those things that are beyond your control. Sound strange? It's definitely a different way of thinking. The greatest innovators and achievers in the world are people who decide nothing is beyond their ability to influence.

2. Time is worth more than money.
Everybody says "Time is money." but how many people act accordingly? I'm not talking about the chronic time wasting we're all guilty of. I'm talking about people that actually choose to enter and stay in careers where they're seriously under-compensated for their time. No matter how rich you are, you're always trading hours for dollars. The richest people in the world are those who just happen to get lots and lots of dollars in exchange for very few hours.

If you're in a career where you'll always be trading a lot of hours for not so many dollars it's time to consider the long term consequences. It has never made sense to me that people would sell their time for so little. You wouldn't do it in other areas of your life would you? For example, let's say you're going to sell your house. You've had it appraised at $250,000 so that's the price you're asking. A prospective buyer walks in and says "I'll give you $96,000 for the house." Would you say yes? Of course not! Is that a ridiculous example? You tell me. Compare your hourly wage to other people and other professions. If they're making a lot more than you, but you feel you're just as capable a person, the above example might be more appropriate than you thought.

If you commit to having financial stability and then total financial freedom, it will be yours. You just have to figure out the price and then pay it.

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Jeremy supports his favorite teams with college hitch covers and loves to load his mountain bikes on his hitch bike racks.

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