Wisdom of Rich Dad

It is typical to grow up believing that if we studied hard, excelled in school and landed a good job, the fairytale of having a luxury car, a dream home and being able to live the good life would come true.

But the reality is, there are many people, including highly educated ones, who work hard for money and yet plunge deep into debt with every dollar earned.

Some take the short cut by placing bets on the lottery. While millionaires have been made overnight, they can become bankrupt just as quickly if they lose all of their winnings to extravagant lifestyles and frivolous spending.

Even today, the downward spiral of the real estate markets has completely shattered the dreams of ordinary people hoping to create wealth. It is worse for those who have been driven out of their dream homes and into the “poor house” as a result of property foreclosure.

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We’re familiar with the idea of work-life balance — that miraculous sweet spot where one’s out-of-office world is rich and full, and doesn’t collide with one’s career.

But how about money-life balance? According to J.P. Morgan Chase and Co. and the nonprofit advocacy group Consumer Action, a reasonable money-life balance considers the positive emotional benefits that go along with behaving responsibly with money.

In other words, you achieve money-life balance if you’re not racking up massive credit card bills during late-night online shopping binges on Zappos.com (ahem).

In a newly released survey conducted by Chase and Consumer Action, only one-third of 1,016 adults said they had money-life balance.

The Key to Good Balance

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Divorced three years, Albert Ramos shares custody of his son and daughter, ages 5 and 8, with his ex, but the kids live primarily with him.

Their mother contributes $800 a month in child support, but he bears the bulk of the costs for the kids’ day-to-day care.

As primary provider, “I never want to live paycheck to paycheck,” says Ramos. So he’s become a super-saver, stashing away 18% of his $100,000 income each year.

“He’s saving more than most people in his situation,” says Plantation, Fla., financial planner Benjamin Tobias.

On the other hand, he’s barely treading water on his home as a result of his tapping equity for an investment that hasn’t gone as planned; he’s way underinsured; and despite his power-saving, he’s shortchanging his kids’ college funds.

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Technology’s evolved to the point where you can go right around the cable company to get your favorite programs. Depending on where you live, you might have to stick with them for Internet access — but there’s definitely no need to pay for big packages that include channels you don’t watch. Here’s how you can keep the good stuff…

Step 1: Take Note of What You Watch and See What’s Available.

Before you buy or cut anything, figure out what channels and programs are important to you. Then see where else you can get them. There are a lot of options:

Broadcast. You can still snatch many stations out of the air with an antenna. But before you go buy one, use AntennaWeb to get an idea of the channels available at your address and the best place to put an antenna. Thanks to the switch to all-digital in 2009, there won’t be any fuzzy pictures or static — you either get a channel or you don’t. And if you do, it might even be in HD. If that’s the case, your TV needs an “HDTV tuner” to take advantage of the HD signal. Many but not all newer TVs have them built-in. Check your manual.

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How much better will you do if you invest well instead of poorly (or earn the average)? — James McGrath, San Marcos, Calif.

Considering all the attention investment pros (and financial magazines) lavish on picking the right stocks and funds, I can understand why you might think superior investing ranks above all else when it comes to a `secure future and a comfortable retirement.

Savvy investing is certainly important — you don’t want to blow your savings on lousy funds or ineffectual strategies. And you’ll end up richer if you happen upon a winning investment. If you’d owned the Sequoia Fund for the past decade, for example, a $10,000 balance would have grown to more than $16,000 now, vs. $12,800 if you’d simply earned the market return.

But as a practical matter you can’t know in advance which fund or stock will beat the market — in fact, over the past 15 years, only 55% of U.S. equity funds did so, according to Morningstar. Rather than pinning your hopes on higher returns, I’d say boosting your savings rate is a surer way to improve your retirement prospects.

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The last couple weeks have been a zoo in Washington, showcasing much of what is wrong with our country, our politics, and our economy. It’s said that as Rome declined, the emperors said, “Give them bread and circuses.” Feed the populace and entertained them, and they’ll never revolt—until you run out of bread. People can live without entertainment, but they need bread.

Sadly, our government is the circus, and many people are starting to get hungry.

Yesterday, the house has passed a compromise bill to raise the debt ceiling that has no details and opens the way for a potential historic lobbying effort as the rich and powerful get ready to fight for the scraps of government funding.

But I don’t need to point out how dysfunctional our government is to you. The whole world knows by now.

Instead, I’m going to focus on another dysfunction—the college education system.

Huffington Post, reports that in an effort to pay for college, many young women are exchanging sex for tuition with dirty, old, rich men.

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