One of the things that makes this country great is the opportunity that every American has to rise from even the humblest beginnings to achieve wealth.
The problem is, the American Dream is wrong. By that, I mean: Our idea of the American Dream is a little skewed.
What most people think is the American Dream
When you think of the American Dream, what do you think of? A big house? A nice car? Seven figures nestled in your bank account? A boat?
Many of those things are nice to have but there's a problem with that vision... it's focused on accumulated wealth.
It's so easy to get caught up in accumulated dollars and cents. We look at millionaires and are impressed with their homes and their cars and their fancy clothes. But what many people fail to see is that all-too-often, MANY of these seemingly wealthy people are actually penniless. (Not all of them, of course, but probably more than you realize).
Those millionaires look like they've achieved the American Dream but in reality they are just "paper millionaires" who own a lot of high-end stuff but are actually living on barely anything. Certainly this isn't the case for every millionaire but I think you'd be surprised how often it happens… mainly because people are focused on the wrong aspect of what the American Dream is.
What the American Dream should really be
There is nothing wrong with owning a big house and a nice car and having seven figures in the bank and a big yacht floating in your own personal marina. But that stuff won't be very useful to you without one significant factor that is frequently overlooked...
Think of accumulated cash in your bank account as being the money you save up. Think of cash flow as your income and expenses – it's the flow of money in your life. (Keep reading; I'll tell you more about it in a moment).
Cash flow is your biggest opportunity to achieve the American Dream and to actually become truly wealthy (not just a paper millionaire). The people who master cash flow are the richest people.
Your cash flow is the stream of money that comes into your life (through income) and that goes out of your life (through expenses). The more income you have and the fewer expenses you have, the more money accumulates (which you can then invest more money to create more cash flow).
Most people live their lives not bothering to change anything about their income or their expenses. Instead, they just plod through their jobs and accept whatever meager raises they get.
(True story: I just heard from a friend who proudly told me that she just got a 2% annual raise at work. I was shocked because 2% won't even keep up with inflation. What she really got was a way to lose only slightly less money than she would have lost anyway).
To put it bluntly: People think they need to save money to achieve wealth but I ask you this: Have you ever met anyone who saved their way to wealth? It just doesn't happen that way.
It’s hard to save $10,000, let alone millions of dollars!
Want to know why Americans are suffering under a debt crisis right now? It's because people are focused on the accumulation of wealth (and of the stuff that makes them feel like they've achieved the American Dream) but they can't save their way to wealth so they're buying the dream with credit cards.
Here are some numbers that should shock you: According to the Federal Reserve (in a report they published in July 2011), there are an estimated 50.2 million households with credit cards in the US… and here's the alarming part… those households carry an average of $15,799 in credit card debt. That's about 30% of the average annual household income. If they stopped buying and didn't have to worry about interest, they'd still have to devote 30% of every paycheck for a year to their credit to pay it off.
They have completely ignored the more important aspect of wealth creation – cash flow.
Check back to my blog shortly because I'm going to reveal how you can optimize your cash flow to start your journey toward becoming a truly wealthy person.
Your cash-flow-optimizing friend and mentor,
Mark Evans DM,DN