One of the big things we have talked about time and time again is image.
A lot of people get themselves into debt trying to live up to an image they try to portray to the outside world.
There is a saying in Texas about farmers "Big hat, no cattle".
This simply means the farmer with the "big hat and no cattle" wants you to think he runs a big farm.
He walks the walk of a big farm owner, he talks like a big farm owner, he dishes out money like a big farm owner, and he even dresses like a big farm owner (e.
g.
the big hat).
But the truth is he is all smoke and mirrors.
And the sad fact is, he probably will never achieve his dream of owning a big farm because he spends all his money NOT towards advancing this goal, but looking like someone who has already made it.
If you really think about it, you probably can think of people like this in your life as well.
Someone I used to work with fits this description perfectly.
He lived in an extremely high-end neighbourhood.
His car was imported and only two-years-old.
He wore brand name clothing and cared about style.
Plus he would entertain friends and eat out a lot.
From the outside looking in, he looks as if he has money.
But when you dig under the surface a little, you found out his net worth was far below the way he lived.
Its not that he was poor.
In fact he had a high paying job for over a decade.
However his net worth was nowhere near what a person of his age and on his wage should have been.
He has spent much of it trying to look rich.
In a way, I believe he has convinced himself he is wealthy.
So the question falls back onto you.
Do you act your wage? But more importantly, do you act below your wage.
There is no quicker way to build wealth than to pretend you earn less than you do.
If your family earns $100,000 a year, why not pretend you earn $70,000 and bank the rest.
This has two major advantages: 1.
You will always have money is case of an emergency, as you will be building a good standby fund.
2.
Let's pretend you lose your job and the only job you can find pays you 30% less.
You can continue your lifestyle without missing a beat.
If you earned $100,000 and lived a $100,000 a year lifestyle then took a 30% pay drop, all of a sudden you need to make huge changes to the way you live.
Scrambling to change ASAP.
Most people live the opposite way.
They increase their lifestyle with each pay rise.
The boss rewards them for all their hard work; in turn they reward themselves.
A new TV, car, or a bigger house is on their hit list.
They never seem to have any money left over at the end of the month for saving.
This is because their lifestyle always keeps up with any pay rises.
Now this is a dangerous way to live.
When your lifestyle is right up to your wage, there is very little money left over for saving! In some cases none.
But you can also make silly choices based on this situation.
Let's use the example of purchasing a house.
The bank manager offers you a loan of UP TO $400,000.
You do your figures and work out yes; we can afford this.
So you take the maximum, the whole $400,000.
But all of a sudden your wage slips 20%.
This is something you didn't plan for and panic sets it.
On your new wage you can't cover the home loan or the day-to-day expenses.
Someone living below their wage makes a more sensible choice.
Sure they could have taken the full $400,000, but they say no.
They take a lesser amount, giving themselves 'wriggle room' in case something happens.
They know life is a bunch of ups and downs and you just never know when the next down is around the corner.
But guess what, while living right up to your wage is dangerous; living above and beyond your wage is crazy.
However, there are people who do it and do it for a long time.
They earn $100,000 a year while living an $110,000 lifestyle.
They achieve it by using credit cards, personal loans, and car loans.
They live in excess of their wage in anticipation that bigger wages are on the way.
If the bigger wages come they can continue this lifestyle, but if something doesn't happen the way they plan, the crash comes.
So do you act below your wage? On par with your wage? Or above your wage? Because how you live does have an impact on your real net worth.
A lot of people get themselves into debt trying to live up to an image they try to portray to the outside world.
There is a saying in Texas about farmers "Big hat, no cattle".
This simply means the farmer with the "big hat and no cattle" wants you to think he runs a big farm.
He walks the walk of a big farm owner, he talks like a big farm owner, he dishes out money like a big farm owner, and he even dresses like a big farm owner (e.
g.
the big hat).
But the truth is he is all smoke and mirrors.
And the sad fact is, he probably will never achieve his dream of owning a big farm because he spends all his money NOT towards advancing this goal, but looking like someone who has already made it.
If you really think about it, you probably can think of people like this in your life as well.
Someone I used to work with fits this description perfectly.
He lived in an extremely high-end neighbourhood.
His car was imported and only two-years-old.
He wore brand name clothing and cared about style.
Plus he would entertain friends and eat out a lot.
From the outside looking in, he looks as if he has money.
But when you dig under the surface a little, you found out his net worth was far below the way he lived.
Its not that he was poor.
In fact he had a high paying job for over a decade.
However his net worth was nowhere near what a person of his age and on his wage should have been.
He has spent much of it trying to look rich.
In a way, I believe he has convinced himself he is wealthy.
So the question falls back onto you.
Do you act your wage? But more importantly, do you act below your wage.
There is no quicker way to build wealth than to pretend you earn less than you do.
If your family earns $100,000 a year, why not pretend you earn $70,000 and bank the rest.
This has two major advantages: 1.
You will always have money is case of an emergency, as you will be building a good standby fund.
2.
Let's pretend you lose your job and the only job you can find pays you 30% less.
You can continue your lifestyle without missing a beat.
If you earned $100,000 and lived a $100,000 a year lifestyle then took a 30% pay drop, all of a sudden you need to make huge changes to the way you live.
Scrambling to change ASAP.
Most people live the opposite way.
They increase their lifestyle with each pay rise.
The boss rewards them for all their hard work; in turn they reward themselves.
A new TV, car, or a bigger house is on their hit list.
They never seem to have any money left over at the end of the month for saving.
This is because their lifestyle always keeps up with any pay rises.
Now this is a dangerous way to live.
When your lifestyle is right up to your wage, there is very little money left over for saving! In some cases none.
But you can also make silly choices based on this situation.
Let's use the example of purchasing a house.
The bank manager offers you a loan of UP TO $400,000.
You do your figures and work out yes; we can afford this.
So you take the maximum, the whole $400,000.
But all of a sudden your wage slips 20%.
This is something you didn't plan for and panic sets it.
On your new wage you can't cover the home loan or the day-to-day expenses.
Someone living below their wage makes a more sensible choice.
Sure they could have taken the full $400,000, but they say no.
They take a lesser amount, giving themselves 'wriggle room' in case something happens.
They know life is a bunch of ups and downs and you just never know when the next down is around the corner.
But guess what, while living right up to your wage is dangerous; living above and beyond your wage is crazy.
However, there are people who do it and do it for a long time.
They earn $100,000 a year while living an $110,000 lifestyle.
They achieve it by using credit cards, personal loans, and car loans.
They live in excess of their wage in anticipation that bigger wages are on the way.
If the bigger wages come they can continue this lifestyle, but if something doesn't happen the way they plan, the crash comes.
So do you act below your wage? On par with your wage? Or above your wage? Because how you live does have an impact on your real net worth.
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