The Decline of Middle-Income Earner

Below is a report published on Tuesday, May 2, 2006 by the Rocky Mountain News (Colorado)

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Since the election of Ronald Reagan the wealth of the nation has more than doubled. Per capita, Americans are now 70 percent richer than they were in 1979. Where have these several trillion dollars of new affluence gone?

For poor people, the answer is clear: Essentially none of this wealth has come their way. Adjusted for inflation, the tenth percentile of after-tax family income is almost exactly the same today as it was in 1979 - about $13,500 (note this means that 30 million Americans live on even less). For the middle class, the situation is only slightly different. In 1979, the average middle-class family had an after-tax income of $38,000; today that figure is about $43,700, meaning that over the past quarter-century the average American family has seen its income rise by about $200 per year.

For our wealthiest citizens, by contrast, 25 years of Republican rule have made these very much the best of times. During this period, the average after-tax income of the top 1 percent of Americans has risen an astonishing 111.3 percent, from $298,900 to $631,700 per year (again, all these figures are adjusted for inflation).

In other words, in absolute terms the poor are just as poor as they were a generation ago, while a middle-class family's annual share of the last quarter-century's worth of economic growth allows it to buy one extra tank of gas every three months. Meanwhile, in relative terms, both groups are far poorer: indeed, compared to the rich, most Americans are now only half as well-off as they were during the Carter presidency.

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As you know, US is the world's largest economy and many Asian economies rely heavily on US. What's the message that this report is telling us? If you ignore the message, you or your future generations will regret heavily.

So to say, the rich gets richer and the poor gets poorer. The spending power of the rich will affect the middle class and the poor. The average American middle class family has income rise of $200 per year! That's pathetic. We all know that living expenses keep on increasing. When you start a family, you have more expenses. When you age, your medical bill goes up. The cost of daily neccessities increase with time. So does transportation cost!

What's going to happen to the middle-class earners? We call this phenomenon, the thining of middle-income earner. In the future, there will be only two classes: Rich & Poor

This is happening and I cajole you not to remain ignorant. Take responsibility to improve your financial potential. The best way to help the poor is not to be one of them.

Lessons From Robert Kiyosaki's Seminar, 'Secrets Of The Rich' At The National Achievers Congress

The Secrets of the Rich - No. 1
The poor and the middle-class work for money. The rich have money work for them

I've recently been to a property fair featuring Australia properties. It was indeed an eye opener for someone like me who has not invested in any real estate properties. It was demonstrated how easy it was for someone who has moderate savings could actually own one small size apartment and start earning passive income. Certainly, the apartment has to be situated in good locations. Besides the passive income, the land which the apartment sits on will also appreciate and provide capital gain if he intends to sell the unit later.
Using that passive income, the person could either spend it or serve a new mortgage loan for another residential property. This is a formula that will never be taught in school.
How much interest are we earning today from our bank savings? It's a shameful amount.
It can be quite scary if one has no prior real estate investment experience because the initial capital outlay may cause uncomfortable to most ordinary people.

The Secrets of the Rich - No. 2
Mind your own business

Robert is not telling us not to be a busybody. The advice is to tell us to start our own business. Many people actually have many great ideas. This world has no lack of great ideas. It's whether the idea is being put into action is another set of story. It's a habit for not doing new things and it's also a habit for constantly doing new things. So the major problem of most ordinary people is that they lack action despite having great ideas. Hence, no great result was produced.
So start putting your idea into action and start a business for yourself. You've got to take care of yourself!

The Secrets of the Rich - No. 3
Create investments, don't buy them

Robert uses an example of real estate. I feel that this secret apply to your business too. If you have a great idea which you put into action to create your successful business, you will attract investors. They put huge capital into your business for you to grow them. How much an idea cost?

Create investment = Create idea
But you must put that idea into action. In other words, make things happen!

The Secrets of the Rich - No. 4
Expand the product before you buy

This can be applicable to your business too. This is what the big guys are doing in the business world. If you own a successful business, you can take it to public through IPO. Your business is still the same business. However, you've added an element of investment into your business. Money rolls into your business quicker.
Robert's next question was, "What is your winning formula?"
For him, don't do what everybody else is doing.

I feel this is an important question. What we've been doing and thinking have gotten us to where we are today. So, I choose not to work for somebody else, just like many others are doing, and today I'm earning passive income.

What about yourself?