5 Mistakes Rich Folks Make

I read with great amusement an article in Business Insider Rich people make the same 5 mistakes over and over. I found it amusing, because it attempts to fool you into thinking that if you act like rich folk, you’ll become one. Unfortunately, Lies travel faster than truth.

Maybe the article is attempting to convince you that Rich Folk and you are similar, since you make the same mistakes? This is hardly the case.

Rich People Can Make Financial Mistakes

That is what you should take from this story. Rich folk have the luxury of being able to make financial mistakes, they can recover from them. Most of us don’t have the wiggle room to escape financial blunders.

Rich folks can become like the rest of us, if they make mistakes, that is true. The story the great Investment Monolith wants you to believe is that the reverse is possible too. I think it is possible but the former is much more likely than the latter.

Mistakes are easily made, we all do them, every day. To succeed financially takes dedication, discipline and damn hard work. The mistakes mentioned in this article are bad:

  1. Assuming they can out-earn bad spending habits. That is not a mistake reserved to the rich, in fact this is how we all dig the big hole called debt.
  2. Not automating their savings. Another spin on pay yourself first, which is something you can do as long as you are not spending more than you make.
  3. Not speaking with a professional for tax-planning or estate-planning purposes. This seems like sound advice, if you take it as, making sure you do your taxes well, and you have your Will and Power of Attorney up to date.
  4. Assuming they don’t need a financial adviser because they’re successful. This is the heart of the article, as it seems to have been written by a financial professional. I have a great mistrust of the financial industry in general and in advisors in specific, but if you use this type of service, you had better trust them (and you had better watch them closely). In the end, it is your money.
  5. Not having any idea how much they spend, again not a mistake reserved to the rich. I had no idea I was that far in debt ? We’ve talked about that before.

What Should You Do ?

Don’t make financial mistakes? Easier said than done, but you must be careful with your money. Don’t make rich folk financial mistakes? Absolutely, because you don’t have the luxury of making them.

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Who Green-Lit this Tom-Foolery ?

This is a homogenized version of an expression I have picked up from Letterkenny Problems, and I feel it is something that you can use in your financial life as well. So many times folks try to explain to you about financial things that you know are wrong, and this turn of phrase works for me.

Letterkenny
Wayne is curious who Green Lit this Financial Tom-F**kery ?

Who Green-lit this financial Tom-F**kery ?

  1. Selling an 85 year old woman a leverage hedge fund? Who Green-lit this Tom-F**kery? Most likely the investment sales-douche who needed to make their commissions for that quarter, is my guess. “Give your head a shake“.
  2. You bought a Corolla and signed up for 7 year financing. Who Green-lit that Tom-F**kery ? The car is a good one, but you really want to amortize a $22,000 car over 7 years? If you can’t afford it in 4 years, you shouldn’t be buying it at all. “That’s a Hard No!“, on that contract.
  3. An acquaintance claims they have made a fortune on a pyramid-sales scheme, and wants you to join in and be rich like them. “You want to blow smoke, go have a dart“, don’t include me in your pyramidal sales stupidity. I buy my soap at the Wal-Mart.
  4. You plan on getting married so you ask the invitees for cash only as gifts to pay for the wedding, or worse you set up a GoFundMe page so that you can pay for it.  “Oh I’m stomping the brakes, put that idea right through the f**king windshield.”
  5. The government allowing various firms to claw away more than 20% of someone’s disability tax credit? If they did it themselves it would have cost nothing, so what services do they offer that can add up to over $10K in fees? “What’s the nature of that, David Suzuki?”

Still Have Issues Squirrely Dan?

As you can see this turn of phrase is quite useful in your day-to-day financial dealings. I encourage folks to use it, if not just to see the reactions of the folks your saying it to. If you still have a problem, go have a Puppers.

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The Seduction of Spending

I like that title, in fact that could be the entire post, I like that title that much, but I will elaborate on this provocative statement, about the seduction of spending.

Today’s consumers (myself included) love of things and what money can buy has turned into a full-blown obsession with money and it’s trappings.

Are you a victim of the seduction of spending ? Ask yourself these question:

  1. Does anyone really need to spend $8.00 on a cup of coffee? In my mind if the beans were picked my Marilyn Munro in the nude (and she delivered it to me in that same state), then I might think that coffee is worth the money I spent. Starbucks has seduced you to spend that money with its cache and marketing.
  2. Can you hear the difference of $10,000.00 speakers for your stereo over a cheaper set of speakers? I can’t, but I am also fairly deaf from younger days in printing plants and rock concerts. If you feel it is really important and you can tell the difference, you have been seduced into hearing something that may well not be there (except for your dog).
  3. Why would you pay $16,000.00 for a Toyota Corolla when you could pay $80,000 for a BMW or Mercedes-Benz? Do you live in your car? For that price, in some places you could get part of a house for the Benz. If you think people will be impressed by the Mercedes name you have been seduced into thinking people care what car you drive (I might care if you drove me to work).
the seduction of spending

Must You Spend This ?

These are pretty crass examples of the seduction of spending that we all fall for (I am not portraying myself as being lily white in this, I have bought things that afterward I have asked, “Why did I do that?”), but this is one of the hardest things to control, the urge to spend money.

We can stop ourselves from walking up to an attractive member of the opposite sex and introducing ourselves, simply by rationalizing the embarrassment we might feel and the fear of rejection in that situation, yet we can’t stop ourselves from spending money when we know we shouldn’t (and worse we know we can’t afford the thing we want to buy).

Should we all be taking Prozac or some other psychotropic drug to curb our spending urges? I don’t know, I don’t think they would stop us (they might make us so stoned that we might not do much of anything), so how can we stop ourselves?

No Credit Therefore No Buy

The idea I have is so simple but also very hard to do, for most of us, since we feel naked without a wallet full of credit.

If you go out with no credit cards and no money, you are going to be hard pressed to buy something, aren’t you? Yes, I know with instant credit it’s not impossible, but it will slow you down a fair amount. If you are going out to look at a high priced item or even just going “shopping” with friends, don’t take your credit cards, and maybe bring enough cash to buy a coffee (not a $6.00 one either).

If you are someone who can control your impulses to spend, I applaud you, and strongly suggest you should write a book about it, I’d buy it on the spot (anyone see the dichotomy of me impulse buying a book that is to stop me from impulse buying).

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Use Your Calendar

Almost pulled a major blunder this month, by forgetting to pay my MasterCard Bill when it was due.

Let’s review, when you don’t pay your Credit Card Debt off monthly, you then incur exorbitant usury fees, that dig you a hole that you will have a very hard time to get out of, so paying your Credit Card debt off monthly and on time is of vital importance in any financial plan you put together.

Late

Why did it take so long?
(Image courtesy of Nutdanai Apikhomboonwaroot,at FreeDigitalPhotos.net)

What I usually end up doing is putting the date of when the payment is due in Outlook, and then download from there into my Smart Phone so that there is a reminder there as well. I should really write it on the Calendar at home on the Fridge as well, and you may have other places where you put important dates, but that one is really important.

Pay that darn credit card off ASAP!

Carrying credit card debt will hurt you financially, make sure you get rid of it and pay it right away.

You Can Get Penalties Reversed

I was able to call and ask that the penalties be reversed, since I am a “good” customer (i.e. I spend a lot of money with the card and I pay it off every month), and MasterCard was nice enough to forego it for that month. Since I had paid the entire amount, I didn’t have to pay any more penalties as well.

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Sometimes You Just Gotta Set the Toilet on Fire (to learn a lesson)

When I was younger, I was a bit of a pyromaniac (OK, a lot of a pyromaniac), in that I really enjoyed burning things, and I indulged my love of burning things many times in my younger life.

Many a time, I would lock myself in the bathroom with a set of matches stolen from my Dad (who was a smoker), and I’d set things on fire. It started just with the matches, then I looked at the toilet paper roll and I thought, now that might burn nicely as well, and once or twice I indulged in this activity. Very satisfying and enjoyable (at least I thought at the time).

Then came the day, I used a little too much toilet paper, and a scene similar to this erupted:

That was a little too much toilet paper

Needless to say, I ran, my mother found the remnants of this foolish behavior (luckily, it ended up that only a toilet seat had to be replaced), and I got heck for that (and am on occasion reminded of that foolish behavior).

What does this have to do with Money? How many times did you do something foolish with money, knowing that you were being an idiot, but just kept going? Have you had the flash fire that finally breaks you of this bad habit, or do you keep doing this bad habit?

My toilet fire moment (financially) was buying High Tech Stocks, and hanging on to them for much too long.

Thanks to Snoop Lion for the fun reminder of my youth.

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