| Depending on your economic status, you are | | | | reduce their hours or eliminate the job completely. |
| either having the time of your life, struggling to | | | | Since many poor people have low credit limits on |
| survive, or frustrated by stagnation and an | | | | credit cards or ruined credit from past credit |
| inability to do anything. Right now, the rich are like | | | | abuses, they may not have credit as a back up |
| children in a free candy store. The poor are | | | | plan. Therefore, during a recession, the poor have |
| fighting to keep their children fed and fear | | | | a higher chance than any other group of finding |
| becoming homeless. The middle-class are trying to | | | | themselves homeless and hungry. |
| hold on to their jobs, the money they saved, and | | | | To the poor, a recession is full of misery with |
| to move toward wealth and away from the poor | | | | more misery to come in the future. |
| house. So, why do 3 different sets of people look | | | | The Middle-Class Stay Stuck |
| at the same economy in such different ways? | | | | Those in the middle-class look at money as an |
| The Rich Get Richer | | | | unstable commodity - sometimes it's in plenty and |
| Those with wealth look at money as being in | | | | other times it's in short supply. They don't |
| abundance. They understand that money comes | | | | necessarily trade hours for dollars, as many in the |
| to them by providing products or services that | | | | middle-class have jobs with salaries and bonuses |
| people want to buy. So, they serve as many | | | | or they are self-employed. However, they are |
| people as possible that are willing to provide them | | | | typically living close to paycheck to paycheck. |
| the dollars they desire to maintain their economic | | | | They tend to have very nice homes, cars, and |
| status. The rich don't spend...they invest. Spending | | | | clothes. They tend to go on some very nice |
| depletes wealth while investing increases it. The | | | | vacations once or twice a year. They can dine |
| wealthy look for opportunities to receive residual | | | | out at nice restaurants from time to time. |
| income - money that comes from a product, | | | | However, they are always in danger of losing it all. |
| service or investment that is setup just once and | | | | The middle-class both invests and spends their |
| pays them over and over again on a residual | | | | money. They understand the concept of investing |
| basis. The wealthy make money while they are | | | | and see it's value as the wealthy do. Just prior to |
| sleeping. Contrary to popular belief, the wealthy | | | | this recession, many in the middle-class were |
| also look for every deal possible. They never pay | | | | enjoying investments that seemed to be soaring |
| full price. To the wealthy, everything is negotiable. | | | | in an over-inflated economy. They continued to |
| So, what do the wealthy do during a recession? | | | | buy investments at high prices while expecting |
| They invest in the numerous low cost businesses | | | | the value of those investments to continue to go |
| and franchises that are now available. They hire | | | | up. In other words, they bought high. When the |
| the best and the brightest talent at a discount | | | | market began to plummet, and the value of their |
| because jobs are scarce. They buy investment | | | | investments began to reach rock bottom, many |
| properties while the price is at rock bottom. They | | | | in the middle class began to sell their investments. |
| continually focus on increasing their ability to take | | | | They did so in order to save at least some of |
| advantage of today's low prices so that when the | | | | their money. The net effect though is that they |
| prosperity cycle comes after the recession, they | | | | sold low. To profit, you should buy low and sell |
| can collect as much money as possible from | | | | high. They bought high and sold low, which is the |
| everyone else. They buy investments while they | | | | formula to lock in losses. |
| are at their lowest point and sell them before | | | | The middle-class spends the way the poor do. |
| they peak at their highest point to lock in the | | | | They spend their incomes and bonuses on more |
| gains. The wealthy have multiple sources of | | | | "stuff" that will not return a profit to them. They |
| income. | | | | save through a 401K plan, and then borrow |
| The wealthy also buy, but they buy differently. In | | | | against it to purchase a bigger than necessary |
| this recession, there are incredible deals on | | | | house or luxury car. They feel comfortable in |
| automobiles as an example. Therefore, they do | | | | monthly payments, and credit is extremely |
| one of two things. They make the purchase at a | | | | important for more purchasing power. |
| severe discount, or invest in a business, wait to | | | | During a recession, the middle-class are focused |
| have enough profit from that business to buy the | | | | on protecting what they have. Their jobs are in |
| car, and then year after year continue to profit | | | | danger of being lost. Their businesses are in |
| from that business. Many purchases by the rich | | | | danger of going out of business. They may have |
| are also well thought out as to it's resale value | | | | an income stream, but it's all from one source. |
| over time. The wealthy use credit when their rate | | | | The middle-class invest, but they wait for social |
| of return is higher than the rate of interest they | | | | proof from others before investing and can often |
| are being charged. This means that the wealthy | | | | miss the timing that the wealthy have. Meaning, |
| have the ability to profit from borrowed money. | | | | the wealthy invest at a lower cost than the |
| To the rich, a recession is full of opportunity and | | | | middle-class. The middle-class can also over |
| even more wealth in the future. | | | | extend by investing or spending more than they |
| The Poor Get Poorer | | | | can safely loose. The middle-class budget is based |
| Those that are poor look at money as always | | | | on their ability to pay credit minimums. However, |
| being in short supply. They view money as being | | | | if their income source is lost, they quickly find |
| only so much, and they can never quite get | | | | themselves under water. |
| enough. Money to the poor is day-to-day survival. | | | | To the middle-class, a recession is a time of great |
| The only way money can be earned is | | | | fear and uncertainty. So afraid of being poor that |
| hour-by-hour...money exchanged for hard work | | | | become overly conservative at their jobs, which |
| within a given time period. They trade hours for | | | | makes them fail to stand out. So afraid of losing |
| dollars. The problem is that there is only so much | | | | more money, they don't invest at a time when |
| time a person can physically work. Therefore, | | | | it's the most affordable and profitable to do so. |
| there is a limit on how much money a poor | | | | So, What Now? |
| person can earn with this strategy. | | | | Regardless of what your economic class is, you |
| The poor don't invest...they spend. Even when | | | | must first change your perception if you wish to |
| there is extra money, it must be spent before | | | | change your economic conditions. What you focus |
| something comes up that takes it away. To the | | | | on determines your reality. So, focus on finding |
| poor person, money never grows and always | | | | the opportunities, and not on potential loss. Focus |
| decreases. There is also no such thing as an | | | | on where you want to be after the recession, |
| opportunity in the future. What is more valuable is | | | | and not on the thought that you have to stay |
| money in hand today. So the concept of | | | | where you are forever. |
| investment, delayed gratification and profit are | | | | Many great businesses were born with little or no |
| ideals that only seem to work for very few | | | | money, a good idea and a website during a |
| people. | | | | recession. Many great partnerships were formed |
| When shopping, the poor are often confined to | | | | with a person with the passion and the idea |
| their neighborhoods due to lack of transportation. | | | | matching up with a person with the money and |
| Surprisingly, food can sometimes cost more in | | | | the belief that it could work. Many people raised |
| poorer neighborhoods than in wealthy and | | | | themselves from poverty to wealth because |
| middle-class neighborhoods! Some poor people are | | | | they were tired of always being one decision |
| willing to spend their money on making | | | | away from being out of a job. |
| themselves appear as if they have more money | | | | Know that you can take steps today to prepare |
| than they actually do. Therefore, many in the | | | | for the prosperity cycle that follows recessions. |
| poor communities purchase the most expensive | | | | Know that you can take steps today to ensure |
| clothes, which have no resale value, and jewelry | | | | that when the next recession comes around, you |
| that is a sunk cost (they will not profit from that | | | | are positioned to benefit from it instead of |
| purchase at a later date). | | | | becoming a victim of it. |
| During a recession, employers of the poor tend to | | | | |