The law of the farm on Wall Street - A Voice From America

_{As I travel around California and other states, I am often puzzled and amazed why so many people are broke and dirt poor in a country called the land of milk and honey. For instance in Los Angeles, where over seven million people reside, a few blocks southeast of the Biltmore Hotel, anyone who is not blind can witness (and smell) hundreds of homeless people who literally live in the streets with their carts filled with personal belongings and dirty clothing. They live day by day and subsist solely on doleouts from the government or churches and non-profit agencies. The existence of our society's "homeless" population and mentally-disturbed people is also common in New York, San Francisco, Chicago and all megacities of America.}

_{I still remember reading Max Soliven's pungent humor in his "By the Way Column" when I was in high school in the Philippines, when he wrote that "God loves the poor so much that He made so many of them!" Probably so. But I believe it is more than that. I think the root cause starts from one's upbringing, since the time we were born. (Some books even claim that the education of a child starts even in the womb. Nowadays, some parents even read and sing to their unborn child!) Like clay, people are molded gradually until they cannot be molded anymore.}

_{When I was a kid on the farm, I would always hear people say, "Save for a rainy day." My old-fashioned father even fashioned an alkansiya (piggy bank) made of bamboo where we put our "savings" of coins through a slit into the bamboo. My parents never had a bank account until I was in America in the Seventies and I advised them to open one at the PNB in Urdaneta, Pangasinan to expedite my dollar remittance and for safety and convenience.}

_{The law of the farm (that's how I explain it to my clients) also applies in the financial world and on Wall Street even in this day of the Internet. To relax and provide some mental calisthenics to my clients, I often give them a "fun quiz": Which option would you choose: Option A: To receive $1,000 per day for 30 days or Option B: To receive the money as a result of one penny doubling itself every day for 30 days? Majority of them, whether college graduate or not, select Option A because it is obvious that the result will be $30,000 after 30 days. However, if they want to become financially wealthy that is the wrong choice because Option B will be exactly $5,368,709.12 after 30 days. (Check it out: your penny doubling itself every day will only be 64 cents after seven days; after 14 days, it becomes $81.92, but on the 21st day, it will be $10,485.76 and on the 28th day it will be more than $1.3 million. Amazing.)}

_{Einstein is said to have called this compound effect the eighth wonder of the world. Since elementary grades, everybody learned that Interest equals Principal times Rate times Time (I=PRT). It's a very simple formula but often ignored by many in the real world. We can always choose and decide our P (the AMOUNT we save/ invest) and the R (vehicle where we invest, like the alkansiya) but Time waits for no one. Time, like death, is the greatest equalizer of all people. Little did I know that the money in the alkansiya never grew as the Rate was zero, but the lessons learned and habits acquired were priceless!}

_{Filipinos in America, especially those with college education, can easily adapt to their new environment and soon become "Americanized," especially in the consumer arena and the world of plastic or credit cards. To spur and facilitate massive consumption, unsecured credit was invented. Remember that advertising slogan "Fly Now, Pay Later"? To go on vacation (like many balikbayans who are sometimes derisively called balikyabangs ) many do it by charging their credit card to the limit. But there is a hefty price to pay. Paying just the minimum payment on a $5,000 credit card, for instance, will take over 25 years.}

_{Once indebted to the limit, you become a slave of the credit companies that have become modern-day slave owners. People who are in debt live from paycheck to paycheck and never will have enough eggs to hatch. (Check my website: http://www.progressivetimes.com for 10 Reasons Why People Must Save and Ten Myths About Money and other entrepreneurial/consumer articles.)}

_{In America, although the growing economy is being fueled by high tech and Internet companies, the law of the farm still applies to every family's economic life. What I learned in the barrio two scores ago, the alkansiya habit from my farmer parents, still holds true. In the financial world led by Wall Street, money is king. The more you have, the more powerful you become. In a capitalistic society such as the US, everybody knows that he who has the gold makes the rules. Most people understand that in the physical sense. First, plant the seeds and in due time the plants grow, have flowers then the fruits appear. The harvest always comes after the planting. It can be a few months like corn or tomatoes but it will be as long as five to 10 years for some fruit trees like mangoes or coconuts.}

_{Over the last two decades, I have learned much from lots of different clients. For instance, I have a client who simply saved and saved, like the infamous Silas Marner, and after 30 years, became very rich but still seemed unhappy compared my poorer clients.}

_{Another client lives life to the brim: Las Vegas trips a couple of times a month, nice cars, flashy designer clothes and fancy restaurants, but already has filed bankruptcy twice in his life! American bankruptcy laws, in my opinion, are immorally crazy as these laws totally forgive and discharge the debts of a person or a corporation, often ignoring any moral or ethical considerations. How those debts were incurred in the first place is not legally relevant as long as the debtor-petitioner complies with the liberal requirements of the bankruptcy court. In America, it is easier to consume than to produce. With very lenient credit everybody can consume even without producing, a predicament that is causing a wider economic chasm among the American people.}

_{We Filipinos in America are fast learners as we easily adapt to our new environment. Even the promdis (whose very first airline trip was when they left Manila for the United States) can become Americanized overnight, especially in the consumer world. Department stores issue their credit cards to almost anyone who has verifiable employment. Once a person establishes one credit card, dozens of credit cards follow. Credit is like fire. It can prolong life or it can also destroy it. Many have been helped by its prudent use. But many also have been buried by its weight. I have clients who are now multimillionaires because of their wise use of credit coupled with habitual prudent investments. Likewise, there are also clients who are buried in debt and have no way out but to file bankruptcy to have a new beginning.}

_{For those who are just starting their journey in America, it behooves them to fully understand, accept and apply the law of the farm, coupled with the wise and prudent use of credit. Like the surgeon's knife, credit can either improve your (economic) life or accelerate your financial hemorrhage. There are so many good books on this hot topic these days as the baby boomer generation is now entering their retirement period. Several books readily come to mind, like The Richest Man of Babylon (Clayson), The Courage to be Rich (Zusanne Oltman), Millionaires Next Door (Danko & Stanley), The E-Myth (Gerber), Even Eagles Need Push (McNally) How to Live Free in an Unfree World (Browne), The Roaring 2000 (Dent) etc. etc. You can also check my website: http://www.progressivetimes.com for useful consumer / entrepreneurial topics that will stimulate your mind. Another free website whose motto is "Bringing Dignity to Living Within One's Means" is: http://www.cheapsk8.com. It is worth visiting.}

_{The columnist, an alumnus of Letran College in Manila and Cal State University-Los Angeles, is a CPA and a practicing businessman-entrepreneur based in Orange County, Southern California. He is the founder-CEO of Progressive Funders Group, a mortgage company, and the owner of Premier Financial Services that markets mutual funds, annuities, pension plans, insurance products and estate planning in the United States.}

_{You can e-mail him at: erdelusa@ hotmail.com or ernie.Delfin@ progressivetimes.com or visit his website at http://www.progressivetimes.com.}