A Thought on Wealth

I had an interesting conversation this week on the subject of wealth. What makes real wealth and what does it look like?

I noticed a long time ago that you can’t judge the wealth of someone just by looking at them.  Some of the wealthiest people I have ever met, dress like they are borderline homeless.  One very well known real estate mentor dresses so badly that people just assume he is broke.  If you ever take this famous real estate guru out to lunch, you can be assured that your waiter will bring you the check; because he doesn’t look like he can afford to pay at Eat N Park. Conversely, I have learned through experience that people who dress flashy tend to be broke. It is so bad that when I see someone in a new BMW wearing a Rolex watch, I just naturally assume that they are broke and in debt up to their eyes.

So what does wealth look like?  That is a really hard question to answer. In general, I would have to say that wealth doesn’t have a look.  I know wealthy people who drive crap cars and live in small houses, and broke people who live in huge houses and drive fancy cars.

So then, how do I define wealth?  It has nothing to do with income. I remember talking to a surgeon who made $750,000 per year, and he was so deep in debt that he couldn’t finance a $40,000 car. I was shocked that this guy didn’t have that much sitting around in petty cash. Apparently he spent more than he made, and he was broke as broke can be. I have also read about professional athletes who make millions per year with big signing bonuses going broke. 

I think of wealth in terms of freedom.  Are you free?  Do you own your house? Do you own your car, or are you making instalment payments on everything?  A lot of seeming comfortable people are one glitch away from losing it all. They are not free, but far from it. These people are enslaved to a job.  They are stuck on a treadmill of debt payment and wage slavery that requires them to trade hours for dollars just to survive.

Something happens when you pay off all of your debts.  When there is no more mortgage, or car payment.  Suddenly, you discover that you don’t need much to live at all.  Now, your money becomes disposable income.  When your money isn’t owed to anyone, suddenly you are free to spend it on whatever you want.

In my mind there are two types of freedom that everyone should strive to achieve. Time freedom is what you have when you don’t need a job. You are now free to travel, sleep in, and take a day off without a note from a doctor.  The other type of freedom is money freedom.  This comes when you have no debts.  Pure money freedom is a bit tricky to define. Even people who are free, may still borrow money on a short term basis to do a profitable deal. We see this in the world of private money or even owner financing. That short term borrowing is a real obligation but it doesn’t come with the same stress that household survival debt (a mortgage on your personal home) comes with.

My goal for everyone in REIA is for you to experience and live a life of FREEDOM

To your success
Josh
Real Estate Mentor

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