No Starbucks: New way to get rich?

Here’s some first rate advice from Seth Godin on a new way to get rich. I liked it so much I posted the entire thing.

“Urgent personal finance advice

If I could only share one piece of personal finance advice to grads or to just about anyone, it would be this:

Only borrow money to pay for things that increase in value.

It’s a short list: your business, your house and your education, mostly. Stocks if you’re smarter than me. That’s pretty much it.

If you have credit card debt, you’re in big trouble. Your bank account has a huge leak in it, and it’s getting worse. Hence the urgency.

If you have credit card debt, that means that every time you spend money (even cash), you’re borrowing money to do so. And so, if you’re going out to dinner or buying a new pair of shoes, you’ve just broken the single most important rule of personal finance. You’re spending borrowed money on stuff that is decreasing in value.

This is an emergency. It’s an emergency because every single day you wait, the problem gets worse. A lot worse.

My suggestion: Go to defcon 1, and do it immediately. Shift gears to live well below your means. That means:
No restaurants
No clothes shopping
No cable TV bill
No Starbucks

It means:
Take in a tenant in your spare bedroom
Carpool to work
Skip vacation this year

Eat brown rice and beans every night for dinner. Act like you have virtually no income.

The result? You’ll save $5,000 to $20,000 a year. Send all of it to the credit card company. Do this until you’re debt free, the faster the better.

There. Now you’re rich. Now you get interest on your savings instead of paying the bank. Twenty years from now, this emergency action will translate into perhaps a million dollars in the bank, depending on how much you earn and how serious you are.

You can thank me then.”

P.S. What is defcon one?

About the author

Kim Klaver


  • What? No Starbucks! Some would say that’s impossible…LOL.

    It’s sound advice when you need to cut expenses…but in the home based business industry, there are many who would say this is not the “mindset” you need to be successful.

    It’s sound advice to lower expenses which you can then invest into your business…but even then, you need to know how to put it into your marketing strategy to drive TARGETED TRAFFIC to your You Inc.


  • Oh NO… does that mean the new shoes I bought today and the 3 pair of pants were a no no…
    You are correct… over spending is over spending.If you have debit you can rationalize anything we do. Just like working a business. If you are not talking to people you are in a hobby. A business is working.

  • Yes, that’s one way to do it but I don’t think the majority of people with credit card debt will do it. I certainly didn’t myself when I realized the hole I had dug for myself.

    I have a debt elimination plan that will free me in about 4 years while I focus on earning more money. It still takes some discipline to not go deeper and to stick to the plan but as much as I like beans and rice I don’t want to HAVE to eat them every night.

    I can also say from my own experience that getting back to zero didn’t teach me what to do when I got there. There are some very good people teaching this approach, T Harv Ekar and Loral Langemeir being a couple that I know off. Abundance vs. scarcity mindset.


  • This is genius advice! I have practiced this kind of approach myself over the years when I needed to. Another great idea that worked well for me to account for the leaks in my finances was writing down everything I paid cash for so I could figure out where I was spending too much. To my surprise it was for the small things like coffee, snacks, etc. while out and about and because I had started writing those things down, I cut back significantly.

    For different people it may be different things that they would spend money on that they really don’t need. For instance right now I know if I needed to cut back, I already know what areas of spending I could change, but we normally do enjoy the “luxury” of eating out at least once a day. We do that by choice though since we work at home, we want to get away and have some family time away from the phones & computers.

  • Kim,

    Excellent financial advice. I wanted to add that some people may wonder what does this have to do with network marketing?

    In the words of Art Williams one of the few recorded “billionaires” as a result of network marketing…

    “Everything! Just everything! You can’t be a great recruiter if you’re a dud. A financial dud. Ain’t that right?”

    Roosevelt Cooper

  • I heard this years ago and never forgot it:

    “The less money you spend, the less you have to make.”

    As for me, I would rather have freedom and flexibility than to be a slave to payments.

    Paul Eilers

    P.S. A good book that I’ve read on this subject is “The Millionaire Next Door”. Most people in this country become millionaire’s by owning their own business and living below their means. Hence, the book title’s name.

  • At a time when more and more people are beginning to feel the pinch of rising prices and a housing industry struggling–living below your means to survive is sound advice.

    It often amazes me how we nickel and dime ourselves and then wonder where all the money went.

  • Great advice. Many times we think that those things are necessities, not luxuries. We did the no tv thing for a while and got used to it very quickly.

  • Hey New Schoolers,

    Isn’t it interesting how many people make a living by selling information? I have studied to proponents of debt free living; David Ramsey and John Cummutta.

    It’s the “I owe, I owe so off to work I go”. When my bride returned from three weeks in Spain, she told me she was most impressed by the absence of stress in the people’s lifestyles. She attributed this to the fact that they live within their means.

    I live in one of the hot spots for “keeping up with the Jones”. Ramsey says that activity is a total waste of time because the Jones are broke.

    I have found the comments in this thread particularly interesting and delayed my participation.

    Wealth, riches, giant heap, or whatever you chose to call it is between the ears before it is in the bank; likewise with poverty. I have to agree with Seth for the need to create an urgency to end debt. Ramsey calls it “gazelle intensity”.

    However, if I adopt the attitude that I don’t have two dimes to rub together because I am in debt, then I will definitely sink deeper in the hole; first in my mind and then my bank account. When the skins in my wallet have noting to hold on to, my attitude suffers. It is just me maybe, but very real just the same. If I do not reward myself on occasion, I get very negative and depressed with my finances. Doesn’t mean I have to take a word tour or buy a Bentley, but small perks really help me stay on target cheerfully.

    My 2 cents,

    Tom Doiron

  • This isn’t new. It was written about in a book called “The Millionaire Next Door” by Thomas Stanley and William Danko in 1996. I’m sure it was written/talked about well before that as well.

    That said, it’s great advice and well worth reminding everyone.

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