The C Route to Practical Financial Advice; How to Build Wealth in 8 Steps: A Guide for the 21st Century

Introduction

You’re not paranoid. Everyone does want your money.

Even as you are reading this, someone is devising a way to get your money.

It starts even before you are born, when Gerber tells parents their food is healthiest, and Huggies tells them these diapers are driest. McDonald’s has become so good at targeting kids, it gives away a meal with every toy it sells.

By the time our children turn 10, rockers du jour — Madonna or Britney or Miley — are promoting promiscuity and premature maturity. If record sales falter they amp up the innuendo and precocious or simply curious young people are further swamped with sex.

And if we complain, somebody calls us square or old-fashioned or that it’s our fault in the first place. We did something wrong somewhere along the way. They tell us we should turn off the TV.

It’s overwhelming.

And here’s the curious thing.

It’s not about sex.

All of this is to get our money. If marketers and corporations could get us to pony up by promoting promise rings and innocence, they would. In fact, sometimes they even do.

It’s just to make a buck.

Colleges try to convince us they are the ticket to future success. Ivy League graduates routinely ascend the heights of business and government — the hudge and gudge of power and position in our nation. They don’t need to read this book, because their doors are already open.

This book is for the rest of us — we who didn’t go to Harvard to get ahead in American life.

We choose a college and a career, find a home and raise a family, look for ways to save, hopefully even to invest well. By the time we’re about age 30, we finally understand we must do it on our own. No mortgage fairy appears once a month to help us out just this once. There are no rich relatives who start kicking the bucket and leaving us their inheritances. There are no genies and we don’t qualify for that super-duper-special-no-fee-no-interest-magically unrealistic pile of money just waiting for someone to trip over it. Unlike the movies, there is no one at the end to rescue us.

Thus we become the self-taught. We teach ourselves, figuring out what type of salary our diploma will earn, and ways to boost that income.

We read business and personal finance magazines and books. We listen to radio or watch television, hoping to find the true nugget that will turn our financial world in the right direction.

There is so much financial advice. Some of the advice is excellent such as don’t spend more than you make. That is easier said than done. What about the times you must take out a loan? This book will tell you how to gauge such loans and whether they are worthwhile. Some advice could only be followed by Superman.

There is plenty of advice filled with fraud. This is why the FBI, the SEC, local police and dozens of other regulatory agencies exist – to prevent you from getting ripped off. What they don’t often say is that once the theft or bad advice has occurred, it will be very difficult for you to get your money back.

This book is the C-Route to building wealth. Let me explain. In the olden days, travel by barge on a canal or walking along sea level or by ship was often the easiest way to get around. A trip by walking inland often entailed going through lands patrolled by enemies and thieves. Mountains made the journey even more treacherous and difficult.

The C in business circles also means the C-Suite or C-Level which is the floor with offices of the top executives like the CEO, the CFO, the COO, the CTO and so on. This book is to help you think like these successful executives. They look forward. They try to determine what will help their companies and what will pull them down.

Here are the Eight Cs:

1. Counsel: Where do we turn for advice? How do we determine if the person advising us knows what they are talking about? When should we listen to relatives and friends dispensing their version of wisdom? What about professors and mentors? How do we know if politicians in our governments are telling us the truth or saying something to get elected? Somewhere somebody is no doubt asking a taxi cab driver about real estate or the local economy. (A longstanding joke among editors is the reporter who includes quotes from the taxi cab driver about anything.)

2. Commentary: Once we leave school, where do we learn new things? It is usually the media, whether in print, television, radio or the Internet. Here is how to discern the good advice from the bad.

3. Career: From college to career — how should we decide what field to be in? Some 17 million Americans have earned a college degree, yet are working jobs that don’t require one. Student loan debt exceeds a trillion dollars. It’s become far higher than credit card debt or car loans. These student loans are weighing down a generation of Americans. If college loans were a country, it would have the 15th highest gross domestic product in the world.

4. Costs: We know we must not spend more than we earn. Should we take out loans for that dishwasher or new car? Should we get upset when the spouse orders the $20 steak rather than the $13 pasta? This is a look at how to view costs in the long run. It will teach you not to worry about the small costs.

5. Crooks: Who are these guys and how can you spot them? Sometimes it’s easy. I’m writing this email to you from Nigeria because a government official left a lot of money in an account and all I need is a bank account to put it in. You will get a big portion of it. Sometimes even the best investors get taken. Scamsters are everywhere, selling you something with the charm of a George Clooney. Besides your money, they take two valuable assets – your time and your dreams. Here is how to avoid them.

6. Castles: The American Dream or The Money Pit? Notice that Castles is plural -- Is it really better to have more than one home? It’s a good investment, but not as great as some of these seminars and media articles will have you believe. Real estate is one of the media’s weak spots. This chapter will explain how to gauge property ownership.

7. Currency: Is Wall Street evil or does it really build wealth? Many of us are scared of Wall Street and fear its insiders are stealing our money in ways we don’t understand. We worry they are too cozy with our government leaders. Wall Street is often thought of as a street in lower Manhattan, full of yelling traders. In reality, Wall Street is a metaphor for a global way of thinking about money. Ignore Wall Street and you certainly won’t become wealthier. If the right path is taken, Wall Street can be a great way for regular workers to build wealth. Investing can be fun. Yes, really. Especially with free money.

8. Coads: This is a story of how a family made a number of right decisions to strike it rich.

This book is to help you walk along the easiest route to building wealth. You don’t need to climb Mount Everest to become rich. You can see your own route for financial success.

As a journalist for more than 30 years, I’ve read and heard a lot of good advice. I have interviewed some of the world’s top executives and investors. They’ve given me a number of clues, which are spread throughout this book.

I’ve also seen a lot of bad advice spread throughout the media. I’ve talked to dozens of scamsters and have exposed their shenanigans. I’ve been threatened with jail, being tossed out of the country and sued for a million dollars. What does a scamster look like? See the chapter on crooks.

I can spot the problems most people, especially our children and grandchildren, can’t. They’re young. I know it, and you know it. When we were young, we often learned the hard way and then asked for advice.

We have all heard of a certain magazine or TV show or other news outlet falling victim to a hoax. It’s because a reporter or editor believed something that turned out to be false. I’m one of those people who vets whether something is real or not. I’m always on the lookout for fraud. People want to make my news organization look bad for whatever silly reason they have.

These hoaxsters think they’re funny or making a point. What they don’t realize is that most people want the truth. They don’t want a lie.

Who should buy this book?

•     If you’re in your late teens or early 20s, just starting out in life, looking for counsel in college or career, concerned for your financial future, this book is for you. It offers guidance to start you moving in the right direction.

•     If you’re in your 30s, trying to figure out if you will have enough money for the long run while you work in your profession and raise a family. Should you go back to school to further your education? This book will help you begin a serious wealth-building effort.

•     This book is also for parents and grandparents who know where they have made financial mistakes in their lives. They want to give the right advice to their children and grandchildren. There is so much to say, so many nuances to explain. They cannot readily explain their reasonings to teenagers and 20 somethings who are on the top of the world. They probably know a lot of what is already in this book and they can point out passages they agree with (or disagree). This book is a starting point for financial discussions.

I wrote this for people who don’t own companies. For those who are not searching for the hottest stock or the sure-to-get-rich seminar. We’re working for regular pay at a common company. This book is for those of us — more than 130 million by one recent count — who earn a paycheck.

We deal with a flood of information and try to spot the best financial advice. The noise has turned into a full-blown symphony of selling.

Yes, everyone does want your money. No, I won’t teach you to flip real estate.

We may not have the highest-paying jobs; the good news is we can still thrive. Earning $50,000 a year doesn’t sound like much, but it’s $2 million. A spouse doubles that. And it triples with a 2 percent annual salary increase.

Can a middle-school woodworking teacher live in a multi-million dollar home overlooking one of the world’s most famous beaches? Yes. You can read his story in the chapter on castles.

Speaking of homes, what about yours? Did you buy it as Retirement Plan A or did you find out you can’t buy it all? Know how to avoid common real estate mistakes? Did you ask Mr. Wonderful?

And when you have a home, fill it with a spouse and children. These are really great investments.

Working hard makes American dynamic. As a reporter in Latin America, I saw many men and women work quite hard — often more than 60 hours a week. It didn’t make them wealthy, long-term. Poor decisions often hurt them. So did governments and a lack of opportunity for growth.

Once you’ve found good advice, settled on a career, started a home, and begun to put your money where your life is, don’t forget those people who want their mitts on your money. Spotting scamsters is science and art. They’re wily creatures full of charm and guile. They are hard to spot, tough to kill. Metaphorically speaking, of course.

I once heard a winner on the TV game show Jeopardy! say he knew so much by reading the New York Times front-to-back every day. He’d made a lot of money on the show; he confessed his wife hated all the time he spent reading the newspaper. Even editors at the newspaper of record don’t read the entire paper.

Who cares when Mozambique became a nation? We want to know what to do when gasoline costs 50 cents more a gallon and our commute is going to nail us for another $200 a month.

Don’t get me wrong. Reading is important. But reading the New York Times every day front to back won’t be the most important way to build wealth. If reading alone were the road to wealth, librarians would be billionaires.

Our choices are the most important factor in building wealth.

What we do, and it comes down to this —

First, follow the right advice -- counsel.

Second, make the most of your career.

Third, buy a good home and take care of it -- castle.

Fourth, invest incrementally in stocks and bonds -- currency.

Fifth, protect your assets as they grow.

We need simple steps, quickly communicated, and ultimately understood.

We need this book.

When people ask me for advice, I ask them a simple question —

Do you want to make money?

It’s an uncool answer to say yes – particularly if you are in college.

I’ve been in the simple homes of really poor people in the Third World. Their roofs were tin and floors were dirt. If they had electricity, it was a single bulb hanging from the ceiling. The food was scarce. Poverty is like quicksand — it’s tough to get out of. It breeds an inability to make good decisions. School and homework are skipped. Money is wasted on lottery tickets, get rich schemes and shoddy products.

If we told the truly poor that money wasn’t important, they’d think we were crazy. Who wants to be poor? And who wants others to be poor as well? No truly poor person wants to stay that way.

They know poverty sucks.

They will tell you in a heartbeat that they want to be rich.

So when I ask —

"Do you want to make an extra million dollars in your career?

would you?

If your answer is no, stop reading. I don’t want to waste your time. Maybe come back another time when you realize you do want that vacation in Europe.

If the answer is yes, let’s get started.

1

Counsel

Ever been told the key to wealth is to sell laundry soap, magazines or other products to your friends and relatives? Heard of a seminar on how to flip real estate and earn thousands of dollars? Ever been encouraged to start your own home-based Internet company? Seen those magazines with photos of beautiful beaches saying you can own a piece of paradise as well? What about TV pitchmen saying you should buy a particular stock?

We need to remember the hucksters. No, you’re not paranoid. They really do want your money.

They take our money. They take our time. Worst of all, they take our dreams.

And one of the primary ways they pursue these — especially the money — is ignorance and confusion. If you don’t know, or if you can be so muddled you don’t know if you know, they win.

In this chapter we’ll look at ways to know … and when to run.

Some people offer good advice and some … well, theirs is bad.

Telling the difference between the two, then, becomes pretty important. It’s not always easy. You know about the shysters