By Jerry Fetta
I’m writing this article because in 2021 this is one of the top problems I see people facing with their finances. Being distracted. I used to be this way and so I do understand it, but I’m not this way at all anymore and so I want to share my viewpoint on it.
First let’s understand what a distraction is.
There are two definitions here that apply. The first is “to draw away or divert, as the mind or attention”. As in, the noise distracted her from studying.
The second is “to provide a pleasant diversion for; amuse; entertain.” As in the child distracted himself from the lecture by watching the fly on the window.
This means distractions can be other-imposed or they can be self-imposed. Either way it is a diversion of attention.
Alright so let’s talk about this as it applies to finances. A distraction is anything that draws away or diverts the mind or attention from true financial success. This can be other-imposed or it can be self-imposed.
Now, this is all based on the premise that a person should be focused on financial success. I believe they should, but just in case we’re not all on the same page on this let’s position money the way that it is. Money is a necessity. Just like breathing, sleeping, eating, and gravity. They are definite requirements in life and they have definite consequences when we don’t observe them or give them the correct importance. The consequence of not breathing as much as one should can be oxygen deprivation, brain damage and lead to seizures or even a coma. The consequence of down-playing sleeping is delirium. The consequence of down-playing eating is starvation. The consequence of down-playing gravity is injury or death.
The consequence of down-playing money is poverty for oneself and one’s family.
This isn’t hypothetical this is definite and it is a natural law. So yes we should be focused on succeeding financially just like we should be focused on succeeding in the realms of breathing, sleeping, eating, and understanding the implications of gravity.
This looks like studying and understanding economics (the subject of money and exchange), earning more income than we spend, saving money, staying out of or getting out of consumer debt, becoming solvent, and ultimately building wealth. Anything other than prevents us from doing this is a distraction.
Wealth is one that I want to mention as well. The Top 1% Net Worth Threshold is $10 million. I believe 100% of all working Americans can and should get there. The average American lives until at least age 75. Let’s say they really begin working and saving money by age 25. If a person invests only $577.22/mo at a 10% annual growth rate for 50 years, which gets them to 75 years old, they’d have a $10 million net worth.
For some of us $577/mo sounds like a lot. Why? Because we got distracted. We have a $577/mo car payment. We have probably another $577/mo in debt payments between student loans, credit cards, etc. These are external distractions. We had a need, borrowed money from a bank, and that bank came in and diverted our attention to giving them our income instead of paying ourselves first. Granted, $577/mo is probably only a 10% savings rate if we assume the average income is between $50,000 and $60,000. If we had stayed focused we wouldn’t have the debt and we’d be able to save twice that amount ($1154/mo) and get to a $10 million net worth in 43 years instead of 50.
For some of us 43 years sounds like a long time. Why? Because we got distracted. We know nothing of money and economics and don’t understand that we overpay on housing by about 300% because we have the wrong type of mortgage or just rent forever because we have no strategy to own real estate. Or we are illiterate on how to reduce taxes. This is an internal distraction. We all have the opportunity to access information about these things and it’s free to learn about. But we were bored, busy, or baffled so instead we distracted ourselves with entertainment. It was fun at the time, but now we are financially illiterate and frustrated at how “hard” life seems. The reality is the average American overpays in taxes by quite a bit and we could probably find at least another $577/mo there. And on housing, like I mentioned this can be reduced to about 1/3rd of what it costs most people for rent or a mortgage. If we achieve that, that’s $577x2 that we free up just on housing. Which mean had we been focused enough to understand money we could save another $1731/mo just from reducing our taxes and housing costs.
This means between having no car payment, no consumer debt, reducing taxes, and reducing housing costs a person on a $50,000-$60,000 per year income could be saving $2,885/mo.
$2,885/mo at a 10% growth rate becomes $10 million in just 34 years.
The final thing that most of us are distracted away from is earning good income. Because of the fact that after our paychecks come in and taxes are deducted we find ourselves still swimming in debt, barely able to pay for the roof over our heads, and making no financial progress we distract ourselves from earning. We either do this with apathy where work becomes something we avoid and trade for leisure based coping mechanisms or we do this through wild get rich quick speculation (aka buying Bitcoin because we secretly hope we become billionaires because we bought it at the right price and found someone who was willing to buy it from us for more than we paid).
But what if that wasn’t the case. What if we were winning with money? What if we had no debt, paid very little in taxes, paid very little for housing while still living in our ideal place, and were saving almost $3,000/mo? What if we knew that no matter what we’d be a Top 1% net worth within the next 40 years? I believe we’d set bigger goals. We’d want to get to $10 million in 10, 20, or 30 years instead of 40. So we’d go earn more income.
Distraction is insidious because it quietly steals our attention and does not keep us privy to those things we are losing out on by engaging in distraction. In this case, I just show you that factually and mathematically 100% of all workers can and should achieve a $10 million net worth before they die and the reason only 1% of do comes down to distraction.
Now there are a few personalities reading this.
The first is already doing what I’ve described and they now first hand that it’s true.
The second hadn’t been doing these things but now has hope and is going to try this for themselves (you are why I write these articles).
The third is the skeptic. They’re still trying to justify their own financial failures by poking holes in my logic. Questions like “How on earth does someone earn a 10% annual growth rate?” insinuating that it’s unrealistic or impossible. Well, I earn that or more on all of my investments and I don’t use the stock market. This goes back to financial education. Had this person not distracted themselves they’d know that everything in this article is completely realistic.
The fourth is upset at me because I don’t “understand” their “situation”. They earn less than $60,000. They can’t even get a car payment because they have bad credit. They live in a crappy $400/mo studio bedroom. And because of all of the other problems and reasons, this plan doesn’t work for them. This goes back to the point of financial education as well. A person at the bottom is better off than the person who has dug a whole. This fourth personality is at least at ground level. They don’t have to go pay off a bunch of debt. They aren’t upside-down on a car payment. They aren’t locked into a housing payment that eats up 30% of their income for the next 30 years. All I can say to this person is become financially literate and begin exchanging effort for money instead of sympathy. Being “understood” or sympathized with doesn’t produce anything. So stop bidding for it and instead go earn more income and build yourself an empire from the ground up.
By the way, I was in the fourth group. I was homeless, I grew up poor, we lost a house and a car, my family earned less than $30,000 per year with 3 kids, my parents were divorced, I was a C student, I didn’t go to college, etc. I had all of the problems and reasons why I couldn’t do it and I had plenty of reason to be distracted and for a little while I honestly was. But the disdain for feeling the real effects of financial slavery motivated me to get focused, figure this out, and make it happen.
If I can do it, anyone can do it.
I’m going to wrap up with this point. Someone who is distracted will end up in financial misery. It’s inevitable. Like we discussed about someone who doesn’t eat, sleep, or breathe.
Well, misery loves company. I found not a more enticing and pressuring group than those who desired my involvement in their pet distractions. So be aware of what a distraction is, what a distracted person looks like, and the fact that their #1 goal is to distract their friends so they have some company in their misery.
Understand your goals. Understand money. Stay away from distractions. Get to work.
If you’d like a Blueprint to follow, grab a copy of my new book here.
To Purpose, Wealth & Freedom,
Jerry Fetta is the CEO and Founder of Wealth DynamX. He is a nationally recognized financial expert featured in Forbes, Yahoo Finance, Fox, Chicago Weekly News, and other publications with dozens of features on popular podcasts and has earned endorsements and affiliations with names like Grant Cardone and Dave Ramsey. Jerry’s mission in life is to help create millions of financially educated and wealthy families navigating their economic futures with certainty and building more prosperous communities around them. Learn more at www.WealthDynamX.com