What Your Spending Habits Mean For Your Future

The Buying Habits of the People Who Want to Get Rich vs

. The Buying Habits of the Poor

Have you ever noticed that some people, no matter how much they make, must have a BMW, Jaguar, etc.? Typically, these individuals also spend a lot of money making the car look flashy via putting on extra additions. Contrary to most people, when somebody has a flashy car, I immediately think that they probably are not too rich or are gaudy. Again, there is a big difference between buying a car with a Jaguar on the front and buying a SUV which is expensive, though is unassuming. There is nothing wrong with buying nice things once you have the money. Unfortunately, this is not the practice of the majority of Americans.

The number one reason why the rich get and stay rich and the middle class stay in the middle class is spending habits and debt. Debt is a one way ticket to always being in the rat race. Additionally, most Americans who are stuck in the middle class and will most likely never get out are those who embrace the worst kind of debt - money sucking debt. This is the debt which Visa, MasterCard and Amex use to pay their high-end executives who have luxuries most only dream about.

There are many forms of bad debt, but I define bad debt as taking out a loan for a product which will not provide any return on investment and, instead will depreciate. Getting back to my above example, if you were to take out debt to buy a car, the investment you just made would depreciate at an alarming rate. Unless you are buying an antique automobile in while you don't plan to drive too much, cars are a terrible financial burden to have.

Here is a good statistic on the value depreciation on cars. In 2002, a new Ford Taurus cost roughly $19,000. Once that exact car was driven 100 miles, it was officially worth $3,500 less. Then, on a yearly basis, the same Ford Taurus would lose roughly 15% of its value. This is one of the main reasons that I am not impressed with people who have fancy cars is because in a lot of cases, is that understanding of debt and how money works is exceedingly poor.

Instead, the rich look at cars in a very different fashion. The rich never take on debt unless it is in the form of business or investment related debt; you will never see a rich person taking out debt for a car - never. The rich are fine not showing off their wealth with material goods. Also, when they do buy material goods, they ensure that they can afford them. The rich are also consistently predicting the future and preparing for the worst. For instance, if a person who is very good with money brings home a very high amount of income one year, they don't go and immediately purchase a house, a new car and jewelry. Again, this is the thinking of the poor.

Clearly stated, if you want to get rich, stay away from debt and only buy luxuries when you know you can afford them.

by: kas ksundheim

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