Own, owe, or use?

“Ownership” is over-rated – and so is money. Access, use, and control are MUCH more “valuable” and important. It is usually better to “own” very little – but be able to “access”, “manage”, “control”, or have actual, physical, or virtual (temporary or “permanent”) custody of whatever is needed or desired (through properly “structuring” business and personal affairs, agreements, and ideas about “ownership”).

There are MANY different ways people who do not “own” an “asset” (or “resource”) can still benefit from it. While the following may not be the best or most representative examples, I will give the first 3 that popped into my mind:

1. People can get the same books, audiotapes, CDs, DVDs, internet access, and all sorts of other “resources” that many people pay for from a public library for “free”. The only catch is that they don’t own what they borrow – and have to “share” with others. The library is not the only place where the “public” can enjoy the same things as those who pay for private “ownership”. There are (free) “lending” organizations for almost everything – including MONEY. Not everyone charges interest or demands a percentage of future business or profit.

2. Another idea is partial (or fractional) ownership – as a (“co-op”) member or partner. Again no one individual (fully) “owns” a timeshare, clubhouse, community center, park, playground, garden, or all sorts of other “real property” they can (reserve and) use (part-time). In some ways, part-time “ownership” seems similar to renting or leasing, but restricts access and use to a closed) group – and is often used for things like boats, planes, helicopters, cars, and even bicycles – that almost nobody uses and needs to “own” (or wants to maintain) full time.

3. And, of course, there is the corporate structure that almost all “wealthy” people use to “limit their liability” (from lawsuits and taxes) – and enjoy ALL the benefits they would as “owners” without actually owning anything (including the clothes they wear). When structured properly, everything they have, use, or even eat, is a corporate expense or tax write-off – for which they have no real “personal responsibility” (other than to “manage” the “resources” they “control” and have “use of” – for their maximum benefit).

Ownership is an elusive concept at best – and very little can really be said to be owned. Anything that can be taxed, taken, or told what to do with cannot really be considered truly “owned”. The ability of someone else to place a lien on something of yours makes it more like (long-term) leased or lent than “owned”.

Virtual offices, assistants, and readily available floor space for almost anything (including storage) eliminate the need for most business “brick and mortar” building structures – and “overhead”. Many businesses can be run entirely on the internet or in person (wherever that person happens to be at the time) – whether they even have, let alone “own” all sorts of technological electronic gadgetry or not. “Wealthy” people certainly do not go without (most things they desire – to be, have, or do). While their corporate entities may buy or pay for LOTS of things, (personal/private) “ownership” is seldom an issue.

An often overlooked concept in finance (especially in real estate) is that TERMS are almost always far more important than PRICE – and that PROFIT usually comes from the PURCHASE rather the subsequent SALE (of an asset – whether it “appreciates” and “increases in value” or not). Many (mortgage-paying) property “owners” complain about being “upside down” without realizing that for a small amount (every month), they can often “control” something worth far more. Most “rich” people have a LOT of “debt” – and aren’t worried about EVER having to “pay” it (back, forward, or at all). “Rich” and “wealthy” also seldom use their “own” money! On the other hand, wealthy people usually do make use of (and “leverage”) their ideas. Money is essentially only an idea – about which most people have all sorts of ideas (that either do or do serve them).

There is a difference between “money” (especially in the form of paper “fiat currency”) and “wealth”. Being “rich” means different things to different people. Money is just one means of measurement – and is only really meaningful in terms of what (assets, experiences, and assistance) it can be exchanged for. How much money is “earned” is far less important than how much is kept – and how it is used and what it is exchanged for. Eben Pagan puts it as “money has a hole in its own bucket”. There tends to be all sorts of (hidden) fees and charges (not mention taxes, compounding interest, and other common “costs” of business) altering the “balance”. Plugging “leaks” and reducing expenses and liabilities is often more beneficial than simply acquiring more “assets” (that can’t be kept or grow in value).

For reasons I (and probably they) do not fully understand, many people say things like “it takes money to make money” and/or that something they did “made money” – but no (new) money is “made”; it is just exchanged (usually at a “loss” – since most transactions involving “money” cost “money”). The more currency in existence, let alone circulation, the less any of it is “worth”. “Inflation” is a term more appropriate for balloons (and egos) than the (negotiated) amount of currency, “credit”, or “collateral” required to purchase (or “invest” in) something. Value is merely a subjective perception. In “financial” terms, things (including things that are not things) are only worth what someone else will accept in “exchange”.

People can get very emotional about money, but I do not think money represents emotion (nor does it really re-present e-motion or any other energy in motion). The idea of a PROMISE is much closer. Unfortunately, the main thing promised (especially by fiat currency) is NOT future payment or exchange, but (imputed) DEBT. The Federal Reserve Notes (usually referred to as American Dollars) have this clearly printed on them: This NOTE is LEGAL TENDER for all DEBTS, public and private. What is it backed by? ONLY the FAITH of the government to TAX.

Civilian casualties in wars are not called “collateral damage” for no reason. The PEOPLE (and their LABOR) are the only real “resources” that “governments” have (as “collateral”) for the fiat currency they issue and use for trade. Without constant and continuing DEBT, the entire financial system would collapse. That may not be as “bad” as many people think. Life (and trade) would still go on – perhaps even better than before. “Money” is not really required for anything – except by mutual agreement. “Defaulting”, “reorganizing”, and/or declaring “bankruptcy” sometimes is the best thing that an individual, business, or government can do (for all). Buying others’ “bad debts” (and “non-performing assets) is also a proven way to convert them into “wealth”.

People usually don’t mind paying for what they want, but few, if any, like being “sold” (anything – even including what they need). Most marketing comes across as trying to get something (usually in the form of money, personal info, or a testimonial/endorsement) rather than offering and providing something (that people would look for and choose to buy on their own). Scarcity, urgency, and other psychological pressure tactics and formulas (even including “bonuses” as “ethical bribes”) may extract money from people, but usually do not create trust or long-term loyal customers or relationships. One of the concepts that I hope will catch on is to freely offer the best you have upfront – with no strings attached. If people like what they get and appreciate is as valuable, they’re very likely to ask and pay for whatever else you may have to offer and share (without you having to chase them down and force anything on them).

That’s my perspective. What’s yours?

© 2010, Oren Pardes. All rights reserved.

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