Stage 1

Having “emergency cash” is the first stage. It’s having $5-7,000 liquid for life’s inconveniences (the furnace going out, the car needing work, etc.) When faced the inevitable challenges that arise, many people are forced to run their credit cards to make it through. They become stuck with high interest rate, non-tax deductible borrowing.

Stage 2

The second stage is the elimination of “bad debt.” I define “bad debt” as any debt whose interest is not tax deductable. Obviously, those high interest rate credit cards must be the first to go. But, we also want to divest ourselves of the borrowing associated with car loans, student loans, and personal loans because it typically can be done cheaper.

Stage 3

Shockingly, when you arrive at stage three, you will be considered in the top 5% of Americans in terms of financial security. Stage 3 is accomplished when you have 3-6 months of your total expenses in reserves. The average American has less than 1 month in reserve! When life shows them a minor inconvenience (like a job loss, an illness, or worse) most people are in a panic situation. With 3-6 month’s reserves, you will have time to weigh options and make better choices.

Stage 4

True financial security is attained when you become “debt free.” But not without debt. I consider you “debt free” when you have enough liquid assets to pay off whatever mortgage they have outstanding. Wealth building accelerates utilizing the tax benefits of having a mortgage in combination with strategies that utilize the 3 miracles of money…

My next post will be about the 3 Miracles of Money!

Make it clear to your child that nothing he or she does could ever cause you to love him or her less than 100%. The most wonderful gift you can give your child is the absolute conviction that you love him or her completely, without reservation, no matter what he or she does and no matter what happens.

The most important single role of parenting is to love and nurture your children and to build in them feelings of high self-esteem and self-confidence. If you raise your children feeling terrific about themselves, if you bring them up full of eagerness to go out and take on the world, then you have fulfilled your responsibility in the highest possible sense.

Ask yourself what it would be like to be your own child. Put yourself in the position of your child or your children, and then evaluate yourself as a parent. What are your strengths and weaknesses? What do you do well and what do you do poorly? What are some of the things that you do that might be causing your children to grow up with lower self-esteem than you would like?

Thanks for supporting Dadsworld!  Be sure to follow us on twitter: @dadsworld