INSIDE...
Secrets of the
Is Mortgage
Refinancing a
Good Idea?
Money Masters
Number 7, 2002
How You Can
Kick the W-2
Habit
Saving is Not
just for the
Wealthy The Art of Paying Yourself First
If you think “saving” is only for the rich, think again
I fyou’ve
you’re like most Americans,
probably had the follow-
Fascinating Fact ing conversation with yourself,
According to the “I’ll begin putting some serious
book the million- money away just as soon as I get
aire next door, my debt paid off and I have some
affluent Americans extra cash on hand.” Sound
accumulated their familiar? Sure it does, especially if
riches themselves; you’re struggling to pay the bills.
their average net But isn’t it funny how the
worth is $3.7 mil-
debt never seems to go away and
lion but most live
so modestly that
the “extra cash” is never on hand?
You can’t possibly be expected to
even their neigh-
bors don’t have a put money in savings under those
clue about their conditions, right? Well, you can’t
wealth. if you believe the notion that “sav-
ing” is something you do after
everything else has been taken
care of or if you have “extra” cash.
Did You Know...
Many people think “sav-
ing” is something only the
wealthy can do because
they have lots of extra
money lying about. But
most of America’s affluent
were not born with silver
spoons in their mouths.
According to the book
The Millionaire Next Door, eight
out of 10 wealthy Americans accu-
mulated their riches themselves
and they were largely
able to do so because
they learned early on the
art of paying themselves
*Names have been changed.
A Publication of Money Mastery®
first. As George Clason
teaches in his book The
Richest Man in Babylon,
the rich get wealthy and stay
wealthy because they have
learned how to keep a part
of all they earn for themselves.
Before a wise man pays his credi-
tors, before he buys goods and
services, before he indulges his
children, he pays himself first.
The Secret Principle
How does a person learn such an
art? It may seem hard when debt
is looming, but it’s easier to apply
than you might think.
First, you must change
the way you look at the idea of
“savings.” At Money Mastery, we
teach that there really is no such
thing as “savings.” Savings is
actually just “delayed spending,”
because after all, all money will be
spent, either now or later. If you
begin to look at savings in this
way, you will realize that saving is
not a special thing that you do “if
you have enough extra money left
over” but a monthly obligation
you must pay to yourself, just as
you would pay any other debt you
owe. Since savings is a form of
“spending,” you must treat it as
seriously as you would any other
kind of spending.
Second, you must track
your money carefully so you
can see where you are wast-
ing money. In last month’s
issue, we explained the impor-
tance of tracking spending in
order to control it. We profiled
the Harbrecht* family who discov-
ered, through tracking, that they
were wasting $187 a month on
junk food. How much money will
you find you’re wasting when you
begin seriously tracking your
spending? We can guarantee it
will be at least 1 percent of your
monthly income.
Pay Yourself First...It’s Simple.
Step 1: Set up categories for
spending for such things as gro-
ceries, transportation, and debt.
Be sure to create a category for
“self pay” or “savings.”
Step 2: As you track your spend-
ing look for wasted or “found”
money.
Step 3: Before you make a debt
payment or buy food or other
items, deposit this “found” money
in your “self pay” or “savings”
account. Anybody can find at least
1 percent they can set aside
immediately. Happy hunting!
2 Secrets of the
MONEY MASTERS Ask the Experts

Wit & Wisdom Q: Mortgage refinancing seems to be so

popular these days. But I’ve heard
that loan with a cheaper 30-year loan at today’s pre-
vailing rate of 7 percent... Your monthly payment
both good and bad about it. Should I
October. This is one drops from $752 to $619 — not bad. But what
consider it if I’m trying to reduce debt?
of the peculiarly looks like a big win for the borrower can end up
— S. Walton, Iowa
dangerous months costing plenty. If you had left the old mortgage in
to speculate in In today’s credit-laden world it’s become very place, your 360 payments at $752 per month would
stocks. Other dan- A: popular to consolidate debt through a home add up to $270,700 by the time the house was paid
gerous months are
mortgage loan. But this method of reducing debt off. Your new mortgage will cost $222,800. But
July, April, June,
isn’t necessarily the smartest. As Consumer Reports that figure doesn’t include the nearly $54,700 you
March, September,
May, November, in July of 1999 reported, “even the new math of already paid over the seven years of your first mort-
January, August, mortgage refinancing can add up to trouble for gage. Refinancing restarts the clock...so that new
December, and many borrowers who rolled over a higher-interest- loan will end up costing a grand total of about
February. rate mortgage for one charging today’s lower rate. $277,500 over a period of 37 years — an additional
— Mark Twain Had you bought a home in 1992 and financed it with cost to the borrower of $6,800.” Our advice is that
a $100,000, 8.3 percent, 30-year mortgage, for if you decide to refinance, try to make the same
example, you would still have $93,020 in principle monthly payment you made under your old loan.
left to pay by 1999. You could decide to refinance This will take years of interest expense off your debt.

According to the
Small Business Tax Tips
Administration
(SBA), the average How You Can Kick the W-2 Habit and Start Saving Serious Tax Dollars
home-based busi-
ness succeeds in
its first year and T axes have become the largest expense for
Americans exceeding what they pay for food,
spare time that could be
turned into a home-
achieves and aver- clothing, housing and transportation combined. based business? What
age income of Part of what keeps us paying this huge tax burden is skills do you pos-

$40,000 per year
with many earning
much more.
Secrets of the
MONEY MASTERS
Secrets of the Money
Masters is published
monthly by Time &
Money LLC. Annual
subscriptions are
$19.95.
Editor
Suzanne Kimball
Time & Money LLC, dba
Money Mastery, is a
Utah-based service
company specializing
in the education and
marketing of princi-
ple-based money man-
agement systems. For
more information on
Money Mastery please
call (888) 201-2524 or
visit www.moneymas-
tery.net
©2002 Time & Money LLC
that as a nation we have become entrenched in a
“W-2” mentality, believing that the only way to make
a living is to be subject to an employer and have a
set percentage of taxes extracted from our paycheck.
But working within this W-2 system isn’t helping
most people get ahead. Many Americans are break-
ing out of this system and launching home-based
businesses instead. In fact, there are currently an
estimated 30 million people working from their
homes. Doing so makes good “cents,” saving these
home-based business owners anywhere from $2,000
to $10,000 in taxes each year.
Have you ever wanted to kick the W-2 habit and
start your own business but have been a bit nervous
to try? Following are common objections we often
hear and how you can overcome them:
I’m not an entrepreneur. What can I possibly
do for a business. Unfortunately many people
view themselves as nothing more than a “nine-to-
fiver,” with no idea of what they can do to make
extra money in a side business. But you don’t have
to have the ambition of Bill Gates to become a suc-
cess business owner. All you need is a little imagina-
tion. There are many hobbies and activities that you
are probably already engaging in that could be con-
sidered a viable business venture if you would just
think of them as such. What do you do in your
W-2
sess? Brainstorm
for ideas, then write
them down. Check
out individuals that
are already doing a
business involving similar
skills or interests.
I already work myself into the ground. When
would I have time to launch a business? Most
people falsely assume that those who succeed at
working for themselves don’t have regular W-2 jobs.
Actually, most people who start a successful venture
are able to do so while still working for someone
else. These people are successful because they don’t
take the prospect of striking out on their own too
seriously. And because it is not their only source of
revenue, they don’t take the same kind of risks or
feel as much pressure. The time you spend on your
business doesn’t matter. What matters is the intent
behind a home-based business: to make a little
more money and save tax dollars. You determine
for yourself how much time you want to devote to it.
Read Money Mastery®: 10 Principles That
Will Change Your Financial Life Forever for more
information on how to legally and effectively launch
a home based business or call the Tax Reduction
Institute: (800) (800) TRI-0TAX. Get started today!