You’re in your 20s or 30s, you have student debt, you’ve accumulated some credit card debt and it looks like you’ll never be able to buy a home. There is a way to think about money that can help solve these problems. Our thoughts precede actions and actions precede results. So let’s start by changing your thoughts.
Let me define rich people. These are people who have thoughts and thinking patterns that precede and allow for the accumulation of money. Because I am defining rich people by the way they think, there are rich people that don’t have much money, yet. A good example of a rich person without much money would be Chris Gardner, the person portrayed by Will Smith in the movie “Pursuit of Happyness.” Gardner went from a bathroom residence in the subway to become a multimillionaire. His thoughts and actions allowed him to do that:
- always believing he could become rich
- working as hard and as many hours as necessary
- taking ridiculous personal risk and participating in arenas where he had no business being
- not relying on an employer for a salary
Don’t whine about your level of student debt or credit card debt. Work two jobs and pay them off. “Work two jobs'” you say “when will I have time to have fun?” If that’s your position, don’t plan on being rich. Rich people do what it takes. If they can’t get a job, they create their own.
Rich People Have Smart Debt
As to debt, rich people never ever incur debt to fund the purchase of consumables. When you do that, you consume the item (e.g. dinners out, vacation, ice hockey lessons) but you’re left with the debt and have nothing to show for it other than a pleasant memory. Rich people only use debt to purchase an item that will maintain its value or appreciate. They incur smart debt to buy real estate, businesses and make investments. If you think incurring your debt was necessary just to get by, then you need to lower your standard of living no matter how uncomfortable that may be. Time to grow up and live within your means.
Rich People Work a Lot of Hours
Meet Sam Walton. Sam Walton is the co-creator of the renowned retail chain ‘Wal-Mart Stores Inc.’ and ‘Sam’s Club’. The farm boy turned out to be a one of the greatest entrepreneurs of our time with sheer hard work and ambition. His day began at 4:30 am and consisted of a tough routine and long hours—even after he became a billionaire. Why? Because he received intrinsic satisfaction from doing the work, creating jobs for tens of thousands of people and allowing his customers to stretch their dollars. Rich people are not committed to consumption; they’re committed to building something.
Rich People are Investors, not Spenders
It’s common to hear stories of sports figures and actors who go bankrupt or die broke in spite of their having earned millions. These are poor people (i.e. defined by the way they think) who once had a lot of money. Poor people with a lot of money don’t become rich. The National Endowment for Financial Education cites research estimating that 70 percent of people who suddenly receive a large sum of money (e.g. lottery winners) will lose it within a few years. Why do they lose this money? These riches-to-rags subjects focus on spending, the focus of poor people, rather than on investing, the focus of rich people. Poor people buy cars, vacations and a lavish lifestyle when they have money. Rich people buy stocks, real estate and businesses.
Rich People are Not Concerned with Status
Do you need to get the latest iPhone, iPad or play the latest and coolest video games, frequent the hottest restaurant or club, have the most fashionable shoes or drive a Bimmer? These are not the hallmarks of a rich person. Read a copy of Tom Stanley’s great book “The Millionaire Next Door” in which he profiles the average rich person in this country. Half live in middle income neighborhoods and do not drive a luxury car. They don’t fly first class because it’s wasteful.
By the way, during the years 1982 to 1988 when Forbes ranked Sam Walton the richest person in the United States, he drove a 1979 Ford F150 pickup.
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