The Poor Are Poor Because They Are Poor

Last weekend I rented a car.

I got to the car rental counter and started to deal with the usual paperwork and formalities. I handed over my ID and driving license. The woman behind the counter showed me the conditions I had booked.

The usual stuff.

But as we were about to wrap things up, the woman mentioned something I wasn't expecting.

She mentioned that on top of the insurance coverage I had contracted, which included a deductible, I had to choose between 2 additional coverage options.

Either they would charge 1.400 euros in my account to be refunded after returning the car…

Or I could pay 78 euros upfront and forget about the charge.

"Smart Cover" is the cool name given to a theft in disguise.

"What?", I asked in shock.

She fired back: "It's all in the contract you got when you booked the car. Didn’t you read it?"

Touché!

"Eh... well... I skim read it...", I mumbled back.

Actually, I should have read it. But I didn't. Who in his right mind reads terms and conditions and the fine print of a car rental contract?

I felt outraged and abused when I left the car rental agency.

But this experience got me thinking.

78 euros is the cost of not having 1.400 euros in your bank balance.

Sure, 78 euros is also like paying to not have to worry. It's like "peace of mind" insurance.

But let's assume you don't want that coverage yet you don't have 1.400 euros in your bank account.

How much would you save if you had 1.400 euros available over the weekend?

Assuming an annual interest rate of 3% for your bank balance, you would be forfeiting 2 days of interests, or 0.23 euros.

0.23 euros vs. 78 euros.

Having 1.400 euros available in your balance would save you 77.77 euros.

Almost the whole cost!

I recall my uncle Juan's saying:

"The poor are poor because they are poor".

There are more ways of expressing the same idea:

"It's very expensive to be poor".

"The poorer you are, the poorer you are".

"Poverty breeds poverty".

And so on.

Back then, when I was a kid, I didn’t quite understand that saying. But now, I couldn’t agree more. I had just experienced a real life situation in which the difference between having the money or not was remarkable.

There are many examples of how expensive it’s to be poor.

• Credit cards that charge you high interest if you cannot reach month’s end;

• An essential car repair you delay, risking a bigger issue later;

• Bills that have late fees because you couldn’t pay on time;

• Missing out on investment opportunities because you don’t have enough money;

• A health problem that you postpone, but that could cause an illness in the future.

And on goes the list.

Although escaping poverty is challenging, there're ways out.

I'd start by applying a technique I learned from David, my productivity coach.

He calls it "The Trident Of Achievement". Before you raise any objection, he's already admitted that the name sounds "salesy". But if he called it "Fork", or "Trinity", it'd sound even worse, right?

Anyway, as the name says it, the trident has 3 prongs:

1. Have a clearly defined objective;

2. Develop a sustainable method to achieve your objective;

3. Work towards your objective following your method as much as you can.

If you're struggling with goal definition and low productivity, I'd encourage you you take a look at his productivity system (only available in Spanish, sorry).

Check it out here.

P.S. Don’t forget that if you’re in need of financial modelling services, you can always hit reply and let me know.

• If you liked this email, forward it to a friend.

• If this email was forwarded to you and want to receive similar ones, visit agilibus.