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The Rich the Poor & the Foolish

The Rich the Poor & the Foolish

The Rich, the Poor & the Foolish

(Increase your financial IQ in just 60
minutes)
By Paul N Liburd

Cover art
By Andrew Hazel

The Rich the Poor & the Foolish

2013 By Paul N Liburd

E-books available on
Apple iBook
Amazon Kindle
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Paperbacks available from
www.RichPoorFoolish.com

The Rich the Poor & the Foolish

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.

The Rich the Poor & the Foolish

The Rich the Poor & the Foolish

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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The Rich the Poor & the Foolish

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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The Rich the Poor & the Foolish

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 worlds 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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The Rich the Poor & the Foolish

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 businessmen 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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The Rich the Poor & the Foolish

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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The Rich the Poor & the Foolish

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 its 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 didnt matter because I was in fulltime 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 Ill bounce back. Its 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 Rich the Poor & the Foolish

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.
Ill not eat these birds, he thought.
Instead, I will eat one egg per day for as
long as possible. Its not enough to fill
me up, but at least I will avoid starving to
death.
So thats 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
months 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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4.

5.

6.
7.

8.

9.

hatched and he now had three baby

chicks.
It was difficult and he almost ran out
of food while he waited for the hen
to resume laying and for the newborn chicks to grow up and also start
laying eggs.
In time, the hen resumed laying and
the chicks grew up and started laying
eggs of their own.
Now the rich man had four eggs per
day and four chickens.
He could now allow half of his
chickens to sit on their eggs while he
ate the eggs laid by the other half.
At this stage, he was able to increase
his egg intake from one egg every
other day to two eggs per day.
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 mans 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 apartments 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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