The Cost of Ignorance

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Cost of Ignorance

Education is expensive. No doubt about. But, ignorance can be even more expensive. And literacy goes way beyond being able to read and write. I’m talking about what’s called “financial intelligence.”

Think about it. How much did you learn in school about finances? I mean, about everyday things like credit, debt, asset protection, or the danger of identity theft? This isn’t advanced economic theory. No, this is basic training. We don’t send our soldiers into battle without their basic training, do we? So, why do we send our youth into the battle of adult life and business without the basic training they need for success?

Here are just a few areas that financial “basic training” should cover. The list could be much longer.


Basically, an asset is something positive in your expense ledger. In the best scenario, it’s also something that generates income for you. Think “small business, stock investments, oil wells,” etc. On the other hand, a liability is something negative in your expense ledger. Worse, in every scenario, it’s something that costs you. Think “mortgages, auto loans, credit cards” . . . you know, the expensive “fun stuff” our consumer society drives us to acquire.


Credit is the ability to become indebted. Period. Now, if you’re wise, you know how to leverage that debt into future assets. Otherwise, you just end up living on borrowed money. That’s right: credit is not money, at least, not for the borrower. No, credit is the ability to use someone else’s assets today based upon the promise of repaying them (with interest) tomorrow.

Compound Interest

Compound interest, according to Einstein, is the great wonder of the modern era. It can make you either very wealthy or very poor. It all depends on whose favor it works. On the one hand, you can double one penny for one month and end up with over $5,000,000. Yes, that’s really true: see this site to see how it works, at least in theory. Or, you can borrow money (i.e., carry a balance on a credit card) and spend years paying thousands of dollars in interest.


Face it: we all spend our time doing something to make a living. For many of us, that comes down to little more than the exchange of our time for someone else’s money. And, there are only so many hours in a day able to be exchanged. This, in turn, leads to what Robert Kiyosaki calls “the cashflow quadrant,” where income is sourced from one of four occupations:

• employment
• self-employment
• business ownership
• investing

We’ve already spoken of the difficulty making ends meet as an employee in today’s economy. The bottom line is that you need to know how each of these quadrants works in order to reap the most benefit from them.


Taxes. Nobody likes talking about them. But, ignoring them doesn’t make them go away. According to Sandy Botkin of Taxbot, there are essentially 2 distinct tax systems in the USA. One is for the employed (W-2), while the other is for the self-employed, business owners, and investors (1099). See how one lesson (taxes) ties-in with another (work)?

So, what’s the moral of this long story? Just two short words: take charge! That’s right, take charge of your financial life and livelihood by becoming your own best advocate. After all, you work hard to earn your money. Shouldn’t you work just as hard to keep it? Start by clicking the link below for more information!

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