What the heck is Chindia?

Before I answer the Chindia question, let me just start off with a fun fact.

If you're an average Joe in this country (Amerika), according to some data I recently saw, you'll be working from now until the day you die, at a job you probably don't even like.

Does that make you depressed? If it doesn't, it should. And if it does, it's time to do something about it.

As you know, this blog is about money--the best ways to hold onto a lot of it, and how to make it grow for you the fastest once you've managed to do that.

I hate to admit this, but being "good at money," and especially investing (the exciting part of all this), is much less "sexy" than it's made out to be... and much more about discipline, psychology, and common sense than it is about pulling out your crystal ball and predicting stock price movements or knowing what company is the next "Apple" or "Microsoft." That's not really at the crux of what this blog is about.

At the most basic level, this blog is about making sure you're not biggest "village idiot" in a "village" FULL of other unthinking, wasteful, risky fools who make tons of money but never seem to have any left over at the end of the month. I know tons of people like this.

As I've tried to tell you in the past, the first thing you need to master in order to get rich (according to the math of early retirement) is SAVING. Investing comes later.

Before we talk about how to save... I want to share with you a few things about savers in America and a couple of other countries which should make you uncomfortable.

Americans SUCK At Saving Money

You probably don't know it, but the average, everyday “millionaire next door”—probably the kind you want to be—is less concerned with buying the newest Porche than they are obsessive and compulsive about saving a substantial percentage of each dollar they make. They realize that every dollar they make is an employee for them... which they can judiciously work to the bone day and night without mercy.

It's ironic, because most of the poor and middle class envy the lifestyle of the millionaire. Yet, they are so completely disconnected from and unwilling to do the very things that make millionaires who they are.

The Federal Reserve recently reported that the average American family has just $3800 in a savings account. That’s roughly one month’s worth of expenses for the average family. One month of safety net in a time of crisis. Those that are saving do so at a rate of just 3.9% of their income, meaning it would take 25 months to save just one full month’s worth of pay. That’s ludicrous.

Even more startling—25% have NO SAVINGS AT ALL, and are living hand-to-mouth with nothing to fall back on. 40% of us are not saving for retirement whatsoever.

The “non-saving” club seems endemic to the Western world. It’s strange, because we seem to have a much higher degree of “disposable” income than the rest of the world...

Like China for example. As ignorant Americans, we envision that people in China and India are the ones living hand-to-mouth on rice and beans.

I hate to break it to you, but since China's economy has grown so rapidly in recent decades, their adjusted per-capita income is relatively equal to our in the U.S. Also, it's not actually cheaper for U.S. companies to manufacture things in China anymore, due to the decline of the dollar, the strength of the Yuan (China's currency), and the growth of its economy.

For other "enlightening" ways China OWNS the U.S., see this article and others linked within it.

Not only is China surpassing the U.S. in myriad ways, Chinese are much smarted savers than U.S. citizens... and really every other "western" country. The personal savings rate in China is 38%. Read that again. Over one-third of every dollar earned in China is squirreled away for a rainy day. TEN TIMES the rate of the average American. That’s the highest rate in the world according to our data. Next in line is India, at 34.7%.

Hence, the title of this article: "CHINDIA" = China + India.

Two of the countries we know to have some of the lowest standards of living in the world, and the greatest income inequality, are made up of citizens which are actually far better at accumulating wealth than Americans.

Is it because these countries have no social safety net? Of course it is. At least, that's what the anecdotal research shows. Perhaps it is also because our comrades in less-developed countries know something we don’t about the basic principles of wealth building?

You Can't Be Wealthy or Financially Independent If You Don't Save

Our friends in China, India, or Chindia as I like to call it, know they will never get rich trading stocks or winning the lottery. Most of them don't know anything about these concepts, just like the average American.

Investing can help build wealth… but non-savers will never be rich… because they have nothing to buy productive assets with. How can you invest if you have nothing saved to invest? This fact seems so teleological (self-evident), I don't even know why I'm explaining it right now.

No one starts with $100 and ends up with $1 million by trading stocks… unless you are Warren Buffett, the "world's greatest investor." And he didn’t start with $100. He started with $100kback in the fifties, and turned it into $50 billion.

The research that's been done on saving shows that the everyday, independently wealthy average Joe works in baby steps to meet his financial goal of becoming financially free by vigilantly and relentlessly saving money, tracking and controlling expenses, limiting tax liability, and incrementally increasing income where possible. He does this to not only keep the money he earns, but also grow the money he’s put away.

Constantly adding to your wealth and savings is a critical aspect to becoming wealthy and independent long-term. The earlier you start, the better.

And what better way to start saving more, than to start spending less, by stop dumping money into the biggest money-abysses this country has ever seen?

So as I said before, huddle up, hunker down, and grab your favorite cold beverage to keep you company. Next we'll explore something I like to call financial Ebola, which is currently ravaging the lives of millions.

4 Strains of Financial Ebola to Avoid