In my last column, I cautioned against relying on money to build wealth. If this seems counter-intuitive to you, that's because you're in the middle class. Poor people make do with the day-to-day struggle for meals and a place to live, so they're converting their dollars into other things right away. Rich people buy houses, commodities, businesses, yachts and even foreign currencies as a hedge against the dollar.
The people overexposed in US dollar investment are the middle class. So, if something happens to the dollar, it's the middle class that's going to bear most of the pain. Go ahead, tell me I'm wrong!
So, how can we limit our holdings of dollars while still maintaining, or even increasing, wealth? We have to convert our dollars into other things that will retain and hopefully increase in value. While no strategy to maintain or increase wealth is fool-proof, watching what those rich people are doing is certainly instuctive. I'm particularly intrigued by how they got their wealth in the first place.
Answer: The vast majority of them started their own businesses. In other words, they decided to offer a product or service that other people would want enough to give them something in return. Even if the dollar collapses, the products or services they offer will continue to have value.
Hmmm...Should we start our own businesses? That's getting a lot harder as the government is more actively seeking revenue and control. I recently talked to a friend who works for the IRS, and he mentioned that he's seeing changes in their internal policies that are disturbing him. Businesses are being more carefully scrutinized and forced to pay higher amounts that what is ostensibly the legal lesser amount. New regulations are being passed at an accelerated rate, too.
But here's the good news; you can still invest in yourself to build wealth, even without any customers or write-offs.
Take, for instance, a home vegetable garden. This effort on your part offers tremendous return in nutrition, money savings and convenience. You're creating something of real value, which will continue to be valuable regardless of what the dollar does.
My garden may not be a formal business, but I do have "customers." I give away extra produce to others. It's no hardship for me, and I've increased wealth for someone else, even as we avoid waste.
I'm a customer, too: A friend of ours who's an electrician offered to stop by while we were installing a new oven, to assure us our wiring connections wouldn't immediately burn the house down. And when I had extra strawberry plants and tomato starts, guess who happily took them off of my hands?
So, what do you have to offer? Hair cuts? Piano lessons? Eggs? Rides? Plumbing know-how? Canned fruit? Babysitting? Any frugal person should be learning new practical skills, and as many of them as he can. And buy books: real, paper books that detail these skills, for reference.
These kinds of small-scale trades, what we may think of as "just being neighborly," can make a tremendous difference to how well we make it through economic hardships.
Keep working on your product line!
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Elise Cooke details even more ideas for self-sustainability in her newest book, The Miserly Mind, 12 1/2 Secrets of the Freakishly Frugal. Use the promotion code RESOLUTION on her website to get 25% off, and free shipping!
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