Rich Poor Foolish Excerpt

The Rich the Poor & the Foolish

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The Rich, the Poor & the Foolish

(Increase your financial IQ in just 60

minutes…)

By Paul N Liburd

Cover art

By Andrew Hazel


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©2013 By Paul N Liburd

E-books available on

Apple iBook

Amazon Kindle

Barnes & Noble Nook

Paperbacks available from

www.RichPoorFoolish.com

http://www.richpoorfoolish.com/


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This book is dedicated to my darling

wife, for believing in me, long before I

achieved financial success and to my

two daughters for their encouragement,

energy and enthusiasm.


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Foreword

This little book is based on real life

experience, including failure and success.

It is not a rags-to-riches story; it is much

more informative than that. It is not even

a step-by-step guide to setting up a

business; it is more useful than that too.

This book actually contains the keys to

understanding the real difference between

rich people and poor people, and this has

nothing to do with how much money they

had to start off with.

When I was younger, I succeeded in

making a lot of money through various

business ventures, but I was still poor because I was foolish. I allowed the


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money to pass through my fingers like

sand in an hourglass and disappear

without a trace almost as quickly as I had

acquired it. I earned a lot and spent it all.

Oh yes! I had a great time shopping and

travelling but the good times eventually

came to an end when the money ran out.

Later on in life, with many more

successes and failures under my belt, I

finally began to understand the real

difference between rich and poor people.

I realized that it had more to do with how

rich people think and what motivates

them, than how much money they started

off with.

One day, after losing a few hundred

thousand pounds in a poorly managed

business venture, I sank into a depression.


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As I thought about how foolish I had been

and what I could have, and should have,

done differently, my wife said something

to me that got me thinking:

‘If Sir Richard Branson (the owner of the

multi-million pound Virgin empire) lost

all of his money, moved into the house

next door and took an ordinary day job

just to survive, I bet you that within one

year, he would be a millionaire again.’

I thought about it for a while and

considered all of the world’s millionaires

and how many of them had hit rock

bottom (in some cases more than once) in

their working lives, and yet had managed

to bounce back to become even richer

than they had been before. If wealth


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were all about how much money one had

to start with and if rich people were rich

simply because they had a better financial

starting point, then these failed business-

men should never have recovered so

quickly from their financial setbacks. But

the fact is, they did recover and bounce

back. How did they do it?

If you read this little book carefully and

allow yourself time to stop and think

about what you have read, and if you

implement the simple principles outlined,

you will not only discover the answer to

this question but your personal wealth

will also increase and continue growing

without limit.

I have deliberately written this first volume


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as a small book because it is designed for

busy people who do not have time to sit

for hours and wade through hundreds of

pages. However, nothing is missing.

Everything you need to get started on the

road to financial success is included. I

have begun with a story. Tell this story to

your children and explain its meaning to

them. If they understand and remember

it, they will never be poor as long as they

live.


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Contents

16. How to Read This Book

18. Chapter One

Three Hungry Men

28. Chapter Two

I Want a New Car

34. Chapter Three

Saving Money

38. Chapter Four

Borrowing Money

44. Chapter Five

Assets and Liabilities


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50. Chapter Six

Financial Security

57. Chapter Seven

My Own Business

63. Chapter Eight

Higher Education

67. Chapter Nine

Financial Aptitude Test (A) 77. Chapter Ten

Financial Aptitude Test (B)


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How to Read This Book

The best way to get the most out of this

book is to begin by completing the quick

Financial Aptitude Test (A), on page 70.

This will indicate whether you have a rich,

poor or foolish mentality right now. Do not

worry too much about your test results at

this stage because they will most likely

change by the time you have read this

book.

As soon as you have completed the test,

return to Chapter One and continue.


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Chapter One

Three Hungry Men

One day, a wealthy poultry farmer saw

three hungry, dishevelled men sitting by

the side of the road, and enquired of each

one how he had fallen upon such hard

times.

The first man said, ‘Because no one will

help me and it’s not for want of asking. I

even play the lottery with money given to

me by kind people, but everyone except

me seems to be winning. It never seems to

be my lucky day. Life is so unfair’.

The second man said, ‘I spent all of my


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wages and then continued spending with

borrowed money. I ran up huge debts but

that didn’t matter because I was in full-

time employment and could easily make

the repayments. I thought my job was

secure but one day I was made redundant

and then the debt collectors came and

took everything.’

The third man said with a smile, ‘I made

some bad business decisions, trusted the

wrong people and undertook some risky

investments. I was doing great, but I

made one crucial mistake and lost

everything. But I’ll bounce back. It’s only

a matter of time…’

Being a generous man, the farmer

decided to help them by giving each one


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a live chicken and a rooster. Before he

departed, he said to the men, ‘Look after

those birds and the chicken should lay at

least one egg per day for many years.

Good luck, gentlemen.’ And with those

parting words, the farmer took his leave.

‘I wonder what each man will do with his

livestock’, the farmer thought to himself

as he travelled home.

The first man seemed to be a feckless,

foolish individual who somehow expected

to live on hand-outs and luck for the rest

of his life, as if society owed him a

living.

The second man seemed to be more

responsible but still lacked basic money


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management skills; because it was clear

that he had been living way beyond his

means for a long time.

‘No matter how much he earns, that man

will always be poor.’ the farmer mumbled

to himself.

The third man seemed quite different

from the other two. He spoke as if he had

already learned from his mistakes and

was well on his way to recovery. Even

though he had no worldly possessions at

that point, he expressed himself as if he

were already rich.

Upon receiving their gifts, the men went

their separate ways with a sense of

contentment for the good fortune that had

suddenly come upon them.


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The foolish man, filled with childish

excitement, decided to enjoy the moment

with no thought for the future. Calling his

friends together, they all feasted on

roasted chicken and rooster until they had

eaten every morsel of succulent flesh.

After the lovely feast, the foolish man

and his friends licked their lips and

smiled as they recalled the wonderful

experience of eating such tasty birds. No

sooner had the food finished than the

friends disappeared.

The next day, the foolish man was

hungry again, so he returned to the side

of the road where he had first received

the gifts, hoping that the farmer would

pass by again and perhaps be as generous

as he had been before.


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The poor man thought about the future

and what he could do to avoid becoming

destitute again.

‘I’ll not eat these birds,’ he thought.

‘Instead, I will eat one egg per day for as

long as possible. It’s not enough to fill

me up, but at least I will avoid starving to

death.’

So that’s what he did, and each day that

followed was the same as the day before,

with nothing to look forward to but the

daily ration of one measly egg. It was a

sad existence and the future looked bleak

because one day, the chicken would be

too old to lay eggs, then the chicken and

the rooster would have to be eaten, after

which, poverty and hunger would return.


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The rich man, on the other hand, seized

the opportunity and immediately set

about using the chicken and the rooster to

rebuild his fortune in ten simple steps:

1. He began by eating one egg every

other day, saving the uneaten eggs

until he had a dozen eggs for sale.

He sold the eggs, saved the money

and repeated the process. He lost

weight and it was very difficult, but

he stuck with the plan.

2. He continued repeating this process

until he had enough money to buy a

month’s supply of basic food, which

he planned to eat while allowing the

chicken to sit on a few of its eggs

until they hatched.

3. After three weeks (which seemed

like three years), the eggs finally


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hatched and he now had three baby

chicks.

4. It was difficult and he almost ran out

of food while he waited for the hen

to resume laying and for the new-

born chicks to grow up and also start

laying eggs.

5. In time, the hen resumed laying and

the chicks grew up and started laying

eggs of their own.

6. Now the rich man had four eggs per

day and four chickens.

7. He could now allow half of his

chickens to sit on their eggs while he

ate the eggs laid by the other half.

8. At this stage, he was able to increase

his egg intake from one egg every

other day to two eggs per day.

9. Eventually, by collecting half of the


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eggs and allowing the chickens to sit

on the other half, his 4 chickens

became 8 and then the 8 became 16,

then 32, then 64, then 128, then 256

and so they continued to double and

double again.

10. The chickens continued to multiply

until he eventually had so many

chickens and eggs that he could no

longer manage them on his own.

One day, the foolish man came to beg the

rich man for a chicken and the poor man

came along too, hoping to find a job

looking after the rich man’s livestock.

They both wondered how the rich man,

who, like them had started off with just

one chicken and a rooster, had managed

to become so wealthy.


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Chapter Two

I Want a New Car

The rich, the poor and the foolish are

found in every walk of life, and contrary to

popular opinion, they are best identified

not by their assets, liabilities or savings

but by their financial direction.

A bankrupt rich person is worth more

than a fool with a lot of money because

the rich save in order to invest, so their

wealth is always increasing. The fool,

however, knows only how to spend, so

his wealth is always decreasing. One is

going down while the other is on the way

up. Below is an example of how three


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different thought patterns approach the

same goal but with varying outcomes:

The foolish:

Obtained a high-interest credit card

aimed at customers with a poor

credit rating.

Purchased a car on credit and

immediately drove it through the

neighbourhood, showing off his

new car to his friends.

Eventually fell behind with the

credit card payments and finally

the car was repossessed by the

creditors, leaving him with no car

and a large outstanding balance still

needing repayment.

Was in a much worse financial

state at the end than he had been


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before the car was purchased.

Continued paying monthly for that

mistake, long after the car was

gone.

The poor:

Withdrew his hard-earned savings

that he had diligently deposited in

a savings account for a number of

years.

Bought the car with cash and

enjoyed debt-free driving.

Did not have any more money to

purchase another vehicle when, in

due course, the car depreciated and

needed replacing. So he sold it for

the value of its spare parts to a

scrap car merchant and returned to

public transport.


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The rich:

Took the money he had saved to

buy a car and used it as a deposit

to purchase a modest apartment.

Rented out the apartment and used

the rent surplus (the balance

remaining from the rent, after the

monthly mortgage was deducted)

to make the repayments on a loan

which he then used to purchase the

car.

Paid for the car with a loan and the

tenants in the apartment provided

the funds for the loan repayment

from their rent surplus.

In due course, the car became old

and needed replacing. Having paid

off the first loan, he obtained

another loan, which continued to


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be repaid by the apartment’s rental

income surplus

Purchased a second new car. The

initial lump sum he had saved to

purchase the first car was never

actually spent; instead, it was

invested and still remained as

increasing equity in his buy-to-let

property.

The rich do not spend their capital.

Instead, they invest it and only spend the

cash flow produced by their capital

investments. As a result, their capital

always increases, enabling them to make

further investments, leading to increased

cash-flow in the future.


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Chapter Three

Saving Money

The foolish:

Never save their money. As their income

increases, so do their living standards.

Income is always matched if not exceeded

by accumulated outgoings, so no matter

how much money they acquire, they are

always broke.

They are like a plane that is forever

taxiing on the runway but never manages

to leave the ground.

The poor:

Save in order to spend all of their savings

on the things for which they have been


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saving. Once they have purchased the

desired goods, they have no more money

left to spend and therefore, need to start

saving all over again. As a result, their

accumulated wealth repeatedly returns to

zero at regular intervals.

They are like a plane trying to take off

but unable to remain airborne for more

than a few seconds at a time. Instead of

taking off into the sky, it bounces along

the runway until it runs out of tarmac.

The rich:

Save with no intention of spending their

hard-earned savings (accumulated savings

= capital). Instead, they...

(END OF EXERPT...)

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