Economic Alchemy vs. Allocation of Scarce Resources - Posted by John Behle

Posted by David Alexander on March 29, 2000 at 23:06:42:

I’m printing this one… to share with everyone I know,

Thanks, John

Economic Alchemy vs. Allocation of Scarce Resources - Posted by John Behle

Posted by John Behle on March 27, 2000 at 20:47:10:

Life is just to short and precious to even consider something (sorry I can’t even force myself to say someone) like Hettie Green as an example of anything other than one of the greatest examples of what not to be in life.

Her absolute obsession with money and her miserly mindset led to her own son losing his leg to amputation. She spent so long looking around to find a free clinic that his leg got gangrene.

The point is important that people can save money by being cheap and frugal. Most people do overspend their means. Yet, the problem doesn’t lie in their bank account, it lies in their mindset.

It’s about “Economic alchemy” - making money, being creative, seizing opportunity - believing you are worth receiving abundance and prosperity in your life. Seeing potential not fearing the future.

A pre-occupation with being “cheap” can be contrary to exactly what you would hope to accomplish. I too know a multi-millionaire that used to live off the food tenants left behind and clothed their children with the clothes their tenants discarded. It took many years for them to break out of their mindset. In the meantime, they alienated many of those around them. It took quite a bit of effort and some outside help to break them out.

I know another investor that lived that cheaply. He’s worth a great deal now, yet is the most miserly human I have ever met. He can’t understand why he is alone, lonely, his children don’t talk to him and he is facing his third divorce. He has few friends and it is a daily test of strength for them to tolerate him.

What good is wealth if you have no family, friends or joy in your life. If most people avoid you because you are self-centered and cheap? What would you use if for? To watch a big screen tv alone? To go on a cruise alone? To drive a fancy car alone?

In my experience truly successful individuals know how to balance. They see wealth as a way to take care of those they love and give back to the world. Their attitude and magnetism draw wealth to them.

There has to be a balance folks. Drive, motivation and focus can and will bring wealth if you feel you deserve it and will be a responsible “steward”. A powerful motivator for many successful people is what GOOD they will do with their wealth once they have it.

Living within your means and conserving your assets and expenses is an important quality. YET - it can be scarcity based. If you re-inforce and drive the “there is not enough” attitudes deeper into your heart and mind, you may be trapped forever. At the least, the quality of life you experience will deteriorate.

You can conserve without being miserly. YET far more important is to be open to the abundance that is out there and creating wealth in your life and the lives of others.

Sure, conserve, but give, love and serve. Give clothes you don’t wear or other items to someone that can use them or the goodwill. Be open to more. Manage your finances, but don’t hoard them.

Avoid “Scarcity context”. How it looks is “More, better or different”. You want what you don’t have and don’t want what you do have - until you lose what you had and want it again or have what you wanted and don’t want it any more.

Not to get too philosophical here. I just think there is extreme danger in going overboard with miserly concepts. It will backfire. You may slowly build some wealth at a tremendous cost, but wealth doesn’t necessarily have to be slow. You could save 100k over a long time - or you could learn to go out and do a deal that makes you 100k in very little time.

Structure your life so you do what you love. Put your heart into it. Believe there is enough. Believe you can give to charity - EVEN now.

Changing the mindset will do far more to achieve your goals - and do so without casualities along the way - than careful penny pinching. Manage your mind and your money will be better managed. Change the thinking and the programming. Consider any form of positive programming.

The renowned psychologist William James stated that he believed the most important discovery of the 20th century was that “by changing our thinking we can alter our lives”. That we can influence and be in charge of how we feel and the results in our lives. Consider an affirmation and the power it can have.

You can change your attitude, beliefs and the results. Picture a slide projector, a screen and a slide. The screen is your life. The slide projector your body. The slide - your thoughts. Our lives are a reflection of thoughts, beliefs, and attitudes far more than opportunity. A direct projection of thoughts accumulated over a lifetime and even passed from generation to generation.

I know from experience that a lousy mood and attitude can be changed in a matter of seconds. I know William James was right in his observation. I experienced it one time just through repeating the following affirmation for a few minutes. That and other experiences lead me to know that I am responsible for my attitude and emotions. I remember the day I was driving along in a lousy, rotten, good for nothing, horrible mood. I literally forced myself to say that following statement and felt a shift. At first I struggled to say it and within a minute or two I could have yelled it out the window of the car.

“I deserve, desire and willingly receive the abundance of the Universe, which flows to me and is mine to keep. The world is blessed by my prosperity and all of my debts have been paid in full.”

It’s not about any magical statement. It’s about the power of our thoughts to influence our lives.

Sorry to ramble. Some of the posts below just punched a button for me.

Contrary Opinion - Posted by jimi

Posted by jimi on March 29, 2000 at 13:53:01:

although it’s difficult to disagree with your wonderful prose I’m concerned that it sends a message inconsistent with your intentions. For sure, miserly obsession will lead to deep sorrow and destruction(“the LOVE of money is the root of all evil”). And yes, I would sure hate to live off the tips from a lunch break at a Jack Miller seminar(grin). However, I observe with greater frequency those immersed in vanity and coveteousness - “I deserve material wealth”(without reciprocal productive effort). Consumer debt is at record levels while net worth declines. If anything, we need more frugality and prudence , not less.
Pursue delayed gratification …

One of my favorite Kiyosaki lines… - Posted by TRandle

Posted by TRandle on March 28, 2000 at 08:45:57:

Not that he originated the comment, but it certainly hit home with me. In Rich Dad Poor Dad, he discusses the same mindset adjustment in that we should not think “I can’t afford this”, but rather “how can I afford this?”. In other words, how do I do a deal, cut back on other expenses, generate new income, etc. to pay for this?

So, rather than creating guilt for having “overspent” here and there, the mind starts to churn, yes creatively, to solve the problem. It’s an amazing difference. Contrary to the miser perspective, this view has allowed me to pay someone else to occasionally clean the house, another person to maintain my yard, etc. and all for much cheaper per hour than I consider the value of my time. I now have more time to do what I consider to be the important things like spending time with my kids. How much is that worth an hour?

This is a very important question for all of us - Posted by JohnG

Posted by JohnG on March 28, 2000 at 07:58:49:

The genuis of what you say is exceeded only by the grace and beauty of the way you say it.

Once again, you challenge the soul and excite the mind.

I have only two brief comments :

(a) we have now become a society that is totally fixed on the notion of “give it to me now”. We are inundated daily with ads that promise ‘no payments till 2001’ and ‘no money down’ and ‘no payments for 90 days’. We don’t want to wait 24 hours to get that new car, fridge, big screen Tv, fancy watch, etc home and on the shelf and then its out to the mall to get the next major item that we ‘must have’.

(b) governments have now become addicted to revenues from casinos ( a tax on the poor or better yet - a tax on people who are bad at math). We have just seen reports that government revenues from gambling are now reaching a point where they can not do without them ; this creates a serious problem for many.

How many of us are strong enough to resist this pressure by advertisers to get into debt for all those things that we can have right now ? I watch Saturday morning cartoons with my kids and the onslaught of clever ads to buy toys is just amazing. And of course the kids are now programmed to watch TV, see ads, and then go buy.

We have to be able to withstand this type of pressure and be satisfied with the old couch, and the car that has a few miles on it, and not have to be decked out in the latest designer clothes. When I was a kid the only designer jeans I had were “irregular”. My kids don’t get that joke !

Lets forget being the first on the block with the latest new gizmo and focus instead on building a long term wealth building machine that will provide us with a secure and stable future. The only problem with that is there is no one promoting that lifestyle out there - corporations are telling us to spend spend spend and then take our 'no down - no payment’plan and governments are enticing us to gamble what little we hve left.

Those are two very strong opponents to fight.

Awesome post- (nt)s - Posted by steph in tex

Posted by steph in tex on March 28, 2000 at 07:57:31:


Re: Economic Alchemy vs. Allocation of Scarce Resources - Posted by Eduardo (OR)

Posted by Eduardo (OR) on March 28, 2000 at 24:33:02:

Hi John–

How about this: Continuum: At one end, cheap miserly skinflint. At the other end, profligate spendthrift. Balance, in the middle.
How do you get to the middle if you’re at one end or the other? Skinflint learns to spend. Spendthrift learns to save.
Most people don’t become real estate investors immediately right out of school. We sort of gravitate toward it at some point later in life. Many postings here over the years from those who would become r.e. investors but lack the funds. They ask how to do “nothing down” deals and “flips.” Why don’t they have any money? What have they been doing? Which end of the continuum have they been on?
I think of people as diverse as Andrew Carnegie, George Soros, and, yes Bill Gates. If they had spent or given their money away in driblets as they earned it, would they have accumulated such immense fortunes that the impact of their astonishing later charities would have been significantly reduced?
I don’t know. For beginners, I think the acquisitive mindset is essential for r.e. success and having the option of using personal funds however small to sweeten the pot to do the deals is preferable to showing up in a Mercedes and being limited only to transactions requiring no cash of one’s own.
Your thoughts are, as always, interesting and thought-provoking. I’m thinking you’re a UU alumnus. --Eduardo

Re: Economic Alchemy vs. Allocation of Scarce Resources - Posted by David Alexander

Posted by David Alexander on March 27, 2000 at 22:40:28:

Not to mention the fact that You can say things with such clarity, real thought, and pure heart.

Do you know how long it would take me to type (dont mean the mental part, the physical process) a post that long. Would mean instead of a couple hours on the comp I’d be here all day.

Thanks for the thoughts.

David Alexander

Couldn’t have said it better myself. - Posted by Nate Tyler

Posted by Nate Tyler on March 27, 2000 at 21:58:09:

I knew I liked you. :slight_smile:


False economies, scarcity mindset and sewer maintenance. - Posted by John Behle

Posted by John Behle on March 29, 2000 at 21:08:18:

It’s just a matter of extremes. Neither of which necessarily work. Thrifty, economy conscious, delayed gratification and a focus on the desires of the future work.

Kind of like the analogy of “Mr Right” vs. “Mr Right Now”.

I’d argue against both extremes. To me it’s about the mindset more than the money. Kind of a “Psychocybernetics” scenario (self image psychology).

Some people think that if thrifty is good, cheap must be great. Thrifty is thoughtful and contains forsight. Cheap can come from selfishness.

I see people drive all over town to save a few cents on something with no thought for the cost of fuel or their time. “False Economy” can be very deceptive. I think of a consulting service in our area one time where the accountant would do most anything to slash costs. Cut back the “800” numbers. Save a few bucks. With no attention to the unhappy clients and resulting refunds.

Or… the person that spends hours arguing over a small bill or even sues someone over a small matter. Again, no attention to their time or even how any of that might affect future business.

OR… paying someone the lowest possible wage - and ending up with unskilled, un-motivated labor, high turnover, employee theft, etc. To me an interesting example along the other end would be one of the top insurance agents in the world. He couldn’t stand his secretary and she couldn’t stand him. Yet, he couldn’t find more competent help and she couldn’t find a job with better pay. Of course, it would be better if they grew up and got along, but that’s another story.

To me it is about maximizing the value of your time and resources. Too many people are too focused on economy instead of increasing income. An intense focus in that area can draw more scarcity and become a deepening habit.

I had a neighbor that was a fairly well to do professional. His spouse had a drinking problem. Instead of taking some sort of action about her extremely dangerous driving - his approach was to convince her that they were not doing well financially and that he needed to sell her car.

I watched as that became a “elf fulfilling prophecy” and the “story” became reality. We attract what we think about. The focus can be powerful one way or another.

“I’m thrifty because I want more money to invest” is different self talk than where some go to - which is “I don’t have enough”. Where is the line? Two people might do very similar or even identical actions, yet one is thrifty in a positive way and another is re-inforcing the concept of “not enough”.

And in a couple examples I pointed out, the attitude can be very hard to change or sometimes doesn’t when the circumstances do.

The “not enough” type thinking is based in scarity, and limits creativity, resources and literally has a magnetism - of more of the same.

Don’t get me wrong. I’m sitting here in levis from Sam’s club and a Hawaiin shirt and that’s fairly dressed up for me :slight_smile: Yet, it doesn’t come from scarcity it comes from the fact that I am not invested in image. When the occasion is right, I’ll wear a suit, but I wouldn’t pay a thousand dollars for one. I wouldn’t wear a Rolex if I owned the company.

Thrift is wonderful, scarcity is self defeating. Economy is great - false economy is foolish. Sacrificing something you might “want” today to further your goals in the future is admirable and wonderful - and ESSENTIAL. I just think some take it to extremes.

Arsenic is an essential trace mineral. We would die without it, yet too much will kill us fast.

Way too much focus is given by most on the mechanics of making money. The right path, plan, technique - the right way. To me, in my personal experience and observation true wealth is a reflection of attitudes, beliefs and a mindset.

A tiny shift in mindset can produce large results in wealth. A few dollars saved produce results - but I submit that it is far less than the mindset. I think the focus most people need to shift is towards abundance, creating wealth and creativity.

And that isn’t saying not to be thrifty or there is anything “smart” or that works about spending money foolishly. I tend to believe there is usually a direct inverse relationship between overhead and solvency.

I just see too many examples like a friend of mine served up to me one day. I’ll call him Jim.

We were taking a break from a game of racquetball. He told me about a deal where he bought a property for 300k and sold it 30 days later for 375k. Now that wouldn’t be bad if he had worked 18 hour days for the entire month (almost $140 per hour).

Yet, it really only took him about ten hours. His time was worth $7500 per hour. I was impressed.

Later we were walking out to our cars and he was crawling into his dirty old beat to pieces utility van. I asked him “what are your plans today?” I will have forever in my mind the picture of him standing there in his overalls telling me he was heading off to fix a sewer. He had shared with me how his brain, contacts, resources and creativity had made him about $7500 dollars per hours, yet here he was with his body hauling that valuable brain off to a sewer.

Could he have hired that out and gone off that day to do more deals? VERY possible. Now, if his love in life was fixing sewers, I could argue that he has a right to do what he loves. But I don’t think it was. I think scarcity thinking and a sense of false economy were the root.

Yes, we have to do what it takes. Yes, we should never be above “getting the job done”. Yadda, yadda, yadda. I think we should also consider the value of our time, our brain and “deal making”.

Our bodies aren’t going to produce the results we want in life. Maybe for Michael Jordan and a few others, but not most of us. It is our brain power that will produce the results. “Brain equity” wins over “sweat equity”. I can’t picture Bill Gates stopping to fix a bug in some software someone is working on. And yes, he started in a garage. Probably ate some Top Ramen for a while. Yet, it was always with a focus on “ruling the world”.

It’s just that too many people get “stuck” in the focus on the cutting corners and scrimping. They do step over dollars to pick up pennies.

“Broke, but never poor. Broke is a temporary situation - poor is a state of mind.”

Re: This is a very important question for all of us - Posted by Brian Mac

Posted by Brian Mac on March 28, 2000 at 10:01:23:

Mr. G

Interesting point. It reminds me of when all the tobacco company litigation started to pick up steam a few years ago. I remember someone pointed out to me that no matter how dangerous cigarettes were proven to be, the government would never ban them or make them illegal simply because Federal and State government could not do without the tax revenue produced by them.

Brian Mac