Part2: Making Money Off of My Credit

 Oldest Daughter Stephanie Tulloch when she attended Central Pennsylvania College

The difference between the rich and the poor is this! The rich plan and manage their plan for as much as 25 years. The poor plan and manage their plan for as long as 24 hours. This is why the rich are rich and the poor are poor. No plan means that the poor are at the mercy of the rich.

I can hear it now. The poor need help because the poor have no access to good education or to the means to build wealth.This is the excuse people have used for year defending the poor.

A public education will expose the poor as well as everyone else to reading, writing, and arithmetic. Basically, public schools teach people to follow orders and think within a small box. That way the masses will take orders without question and work hard for the local employers. Most colleges and universities teach people to think within a larger box. Ivy League schools and master degree programs teach people to run companies inside a much larger box.

David on his mother's ipad

Most people get the majority of their education from home not from schools, colleges, or universities. People start learning from before birth. My youngest grandson started using an ipad before he turned one year old. He would unlock the machine and bring up different screens. He could call people even though he could not talk. Why? Because from the time he was born, he was being breast fed, going to ipad School while his mother was on the machine calling people and going into websites. That is why when he mastered his motor skills and the ipad was in reach.  He knew exactly what to do and to everyone’s surprise, he did it. Today at 2 years old, he still does not talk well but on his mother’s $600 computer, he can bring up his cartoon shows, play video games, and do other things with no or little help. He thinks in the box that he is working in. That is his normal and my new normal.

You have the ability to expand your box if you know that you are in a box. This is why I write a financial blog. I want to expand everyone’s box so that one day, you young people and some of your descendants may be able to be financially independent by the time you reach old age. If you teach your children and grandchildren what I am teaching you just as my grandson learned from his mother, then you will be independently wealthy before you reach old age. This will enable you young people to do other things for your family.  That will jump start your children and grandchildren in managing their affairs better and become more politically influential in the world. 

Building Wealth

In part 1, “Making Money Off of My Credit,” we learned how to take a $1,000 loan from your credit card at 26% interest and by speculating, you can make $93,548.14 in 40 years. With this plan, you will pay back $1,293.33 to your credit card company. That means that you pay your credit card company $107.78 per month for 12 months. You keep the rest of the money over time.  Over the next 30 years, you can withdraw $259.86 per month. This figure is your return if you did not receive any interest or dividends on the money and you just withdraw it from a non-interest account.

But if you place the $93,548.14 in an investment that gives you an annual rate of return of 6% per year for 40 years, you will be able to withdraw 20% of the money each year, or $1,559.14 per month. That would start in the year 2053 (age 65) and end in 2093 (age 105). I am assuming that in these 40 years, you will have a 6% inflation rate. Today it is between 2% and 3%. You will probably die before the money is used up. The rest will go toward your burial expenses.

What if you borrow $10,000 using a home equity or personal line of credit and made $935,481.44 (by age 65; Year 2053) using the same investment strategy? Giving an annual rate of return of 6% per year for 30 years (ending at year 2083; age 95), you can withdraw $31,182.71 per year or $2,598.56 per month. 

This is what I call long term planning that lasts your full life time. Here is the difference between the rich and the poor.