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About money and friendship: Smart and dumb people!

March 8, 2011

I have one quick test for you. Find your financial self. Are you smart or dumb when it comes to saving money? If you are smart continue what you are doing, if you are dumb – change! Let’s compare what my friend George does and what I do: We both live in wonderful British Columbia, Canada where the average cost of variable mortgage in the last 2 years is less than 2% per year (it is 2.6% right now). That means that you could own a million dollar home and pay an average of less than $6,000 per year interest on a huge mortgage loan – around $500 a month! My friend and I are smart. We both realize that to maximize a variable mortgage loan during an economic crisis is a brilliant financial strategy! Add to it that we both refinanced when home values were going down is a genius strategy, but here is where George and I parted:

Whereas I use many great financial strategies to accumulate wealth, George used only the one I mentioned. He takes the extra money from maximizing his mortgage loan and opens a fixed savings account wasting his money bit by bit paying the monthly minimum on his huge credit card loan. I say to him, “George, you are my friend, for God’s sake, pay off your total charges on your credit card every month.” He argues, “I don’t have liquid money.” I say, “George, I told you always maintain the largest mortgage that you can get so you will have the extra money to pay off your credit card charges every month.” Telling George that is my mistake, hey, you know what my friend said, “Elior, stop telling me what to do all the time about my money, you make me feel dumb – lay off!!” That evening he emails me, “Buddy, lay off,  if I need financial advice I’d call Clark Howard.” I felt hurt. You see, ladies and gentlemen, I lost my best friend because I nagged him a lot because I cared too much. I felt hurt.  I know it happens to you too, so listen. Get ready for you ex-friend to be jealous of you when you make all that extra money and they don’t. I want you to understand that for dumb people it is more important not to feel dumb around a friend than to save $10,000 a year or more. That’s a fact of life.  Hey, my advice to you is “Continue to be smart and make a lot of money even though you lose all your dumb friends.”

If you are dumb, don’t buy my books. You have to have courage to read my “politically incorrect” stuff. I don’t know how you would feel if you read a lot about the psychological truth about money, friends and relationships, but let me tell you as a psychologist that the best strategy if you feel dumb around a rich friend is to learn what he knows about money and feel smart when you count all the money you save. You are my friend, George, don’t quit!

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