Connections to Health - The Four Pillar Rule

THE ISHTA HOLISTIC HEALTH CENTRE

CONNECTIONS to HEALTH

The Four-Pillar Rule

Schools should teach children the "four-pillar rule".

Unfortunately, in many cases, teachers have not yet learned it for themselves. The government understands this concept better than anyone does but they are going to make certain that we don't get to know about it.
The four-pillar rule is based on the fact that we will probably be working from the age of 20 to 60. Of course, some of us will have left school at 18; some of us will have gone to University. Some of us will work until we are 68 and some of us will die early. Put all those figures together and we end up with one of those averages we often talk about, which is where 40 years comes from.
Now in that forty years we will have four, and only four, "pillars" to our financial world. It doesn't matter whether we are black or white, redhead or blonde, manual worker or chief executive officer, these are the four things that will completely dominate our financial world for forty years of our lives, and then into retirement.

Pillar 1: We will have to pay unavoidable bills for the duration of our lives.
These include clothes, utility bills, food bills, haircuts, health costs, accommodation costs like gas, electricity, council tax, and a whole lot of other taxes which would take up the rest of this newsletter if I wrote them all down.

Pillar 2: We will choose to buy avoidable consumer items for the duration of our lives.
These include cars, holidays, fashion clothing, mp3 players, concert tickets, watches, stereo systems, gazebos, mobile phones, cameras, paintings, sunglasses, designer this and designer that, and on and on, and on.

Pillar 3: To finance the above we will have to go to work.
Self explanatory. And if you did inherit 16 million chances are you won't be reading this anyway.

Pillar 4: Since we do not earn enough in pillar 3 to finance pillars 1 and 2 we will take out various forms of credit.
This will take many forms including mortgages, overdrafts, loans and credit cards.

These are the four pillars of our financial world - unavoidable bills, avoidable consumer items, working to pay for these, and debt.
In fact they are not so much pillars as weights. Weights that we will carry all our lives. Although some spending can be described as "pleasurable", (meals out, concert tickets, new clothes) by far the majority of our spending is not very pleasurable at all. If you look at what you spend on things which you would choose not to spend your money on each month, tax for example, you will soon see what I mean.
It begins when you leave school

Now when we leave school or university and start our working life it is accepted that we will be surrounded by all four pillars. Who in their twenties is not struggling to find a few extra pounds?
But here's the thing!
Most people in this country will go for 40 years of their lives caught up in this vicious circle of work - debt - debt - work -work - debt.
People mistakenly think that reducing their spending a little bit, or earning an extra two grand a year, will solve their problems. It won't.

Even an extra ten grand a year from our existing job won't solve our problems.

Shock, horror, what!!!!!!!!
Yes that's right. Even ten grand wouldn't make the slightest bit of difference. Everyone thinks that a £10k pay rise would solve all of their problems. If your boss gave you that rise today how many of you would get totally legless this weekend? Bet that calls for a celebration meal at an expensive restaurant and how about that gazebo we always wanted for the garden, eh?

OK here's the science.

First of all you can forget any ideas that the ten grand would ever reach your bank account in the first place. Go back to the four pillars.
Pillar 1 is unavoidable bills. (Enter stage left Gordon Brown carrying his begging bowl with the words income tax and National Insurance). I am assuming that this pay rise will attract the top rate of tax at 40 per cent, plus one percent National Insurance means in reality from your massive £10,000 rise you get only £5,900.
So you get £5,900, which divided by twelve means you receive a lousy £491 a month. Take out the expensive meal and the gazebo and guess what? You are as broke as you were before. £491 a month will not get us out of the financial mess we are in. It will probably pay off our mortgage or the huge credit card debt we have run up but how long will that take?
Go on. If you took the whole £491 and put it towards paying off your debts how long would it take before you are debt free? Alternatively you could save it up for five years and go out and buy yourself a decent car - whoopee! After five years we still wouldn't have enough to buy a new Mercedes.

What to do?

What kids need to be taught at school is that the four pillars exist when we start work and it is our sole mission in life to change two of them as quickly as we can.
We cannot change pillar one - unavoidable bills. They are, well, unavoidable.
We can change pillar two slightly. Try and limit the amount of money we waste on consumer items we don't really need.
But we must attack pillars three and four as hard as we can, as often as we can, as soon as we can.
Get rid of debt now.

Bad debt will keep us a slave for our entire working lives and we will still be feeling the effects up to the day we die. Taking on debt to buy things we don't need with money we haven't got will bring us down and ultimately the economy around us too. We cannot spend ourselves rich.
Pillar three is the next target.
We cannot get rich by "working for the man". The concept of working one hour for one hour's pay will not lead us to the land of milk and honey. It is merely a hand to mouth existence. We need passive income. We need money to flow even if we stay in bed all day. We cannot have a financial structure that falls apart the minute we stop working.
This is the hamster wheel we used to laugh at.

Well guess what? Most of us are still on it.

So how do we get a passive income?

There are four main options.
1. Put the power of money to work for you. Have a lot of money to begin with and invest it wisely. Hmm; I think we can all see the problem with this one.
2. Put the power of an asset to work for you. For example buy rental properties and rent them out. Hmm; I think we can all see the problem with this one too.
3. Put the power of people to work for you. Start a business, employ lots of people and pay yourself all the profits. Hmm; might be a few problems with this one as well.
4. Put the power of royalties to work for you. All you have to do is write a best selling book, write and record a Christmas song, or invent a useful gadget and receive the royalties. Well at least we don't need money to begin with for this one.

There is, however, a way for ordinary people to put the power of royalties to work for them without having to write, sing or invent, and further more it doesn't require a large amount of money to begin with either. It does require some time and effort though.

We have been doing just this for some time now and it's very nice, as self-employed people, to continue being paid even when we're off on holiday.

Want to find out more about this form of passive income?

We are having two FREE talks about how you can take charge of your life and create a passive income for yourselves at the Ishta Centre. The first is on Thursday 22nd February, the second is on Thursday 22nd March. The talk starts at 7pm and will last about an hour to an hour and a quarter, depending on how many questions there are.

If you would like to attend, please talk to Allyn or Sue at the centre as space is limited.
If you want more information please ask for a free DVD.
You can also telephone 0870 383 3502 for a 9 minute presentation which costs approximately 70p from a BT line.