Things That Make You Poor

      


There are some things in life that can make you poor. I know of people who earn a high income, and yet complain that they feel so poor. They do not understand why they just could not save any money that they make. They are puzzled why some of their friends make only half their income, and yet become more wealthy than they. Unfortunate for these high income earners, they do not know the things in their life that makes them poor.

In today's lesson, I want to help you identify those things that can make you poor. Once you know what they are, flee from them. They are like monsters that will grab you, turn you upside down, shake you till your last penny has dropped out. But these monsters come is such pretty disguises you can't tell what they really are until your money is gone.

So if you're ready, here are the things that can make you poor:

a) A Big House

Of all the monsters that you can keep, none is as big as the house you live in. A lot of people mistake the house they live in as their asset. If you look up a dictionary, it says an asset is "a useful and desirable thing or quality". You want a big house. You desire a big house. So, by buying a big house, do you own an asset? WRONG.

A true asset is something that makes you money. If it takes money from you, it is not an asset, it is a LIABILITY. A big house means a higher mortgage. A big house means paying more for electricity and other utilities. A big house means more to spend on everything from the paint job to gardening to cleaning.

If you do not want your house to become the thing that can make you poor, do not live in a big house. And what's a big house? A big house is one that you would consider buying, that costs more than 3 times your household annual income. Say you are a two-income household. Your spouse and you together makes $100,000 per year. At such an income level, you should only purchase a house that costs no more then $300,000. More than that, and you are enroute to the poor house.

On the other hand, if you are able to buy a house, rent it out, pay the mortgage, and still have a balance to put in the bank, then that house is an asset.

b) An Expensive Car

An expensive car is an even worse monster than a house. At least a house keeps its worth, most of the time. A brand new car loses as much as one third of its value the moment you drive it out of the showroom.

What is an expensive car? An expensive car is one that costs more than half your annual income. If you earn $50,000 per year, you should not consider buying a car with a price tag above $25,000.

c) An Expensive Hobby

What's life without a hobby. It can be anything from reading to golfing. Some hobbies cost practically nothing, while others can blast a hole in your pocket. As a general rule, don't spend more than 20% of your monthly income to support your hobby, unless that hobby pays for itself.

Go for hobbies that make you money. If you are a stamp collector, and your buying and selling of stamps makes you money every month, it's a hobby to keep. On the other hand, if you only buy and never sells, it is a liability. Remember this: no matter how valuable your stamp collection may be, you don't earn till you cash it.

d) Fool's Tax

Fool's Tax go by different names: lottery, lotto, poker, horse racing, etc. Collectively, it is called Gambling. Unless you are a professional gambler (with all the misery attached to it), gambling should be an activity best left to others. Whether you are buying a lottery ticket or visiting a casino, the odds are stacked well against you.

You are better off putting the money under your pillow. The best way to avoid being addicted to gambling is to not learn how to gamble. Be blind to poker, have no idea how to bet on horses, don't learn to play the lottery, and you keep the monster that can make you poor at bay.

e) Things Adults Consume

Things like smoking. Like drinking. There is good reason why people have to reach a certain age before they are allowed to buy such things. More often than not, these are the things that can make you poor. Smoking for one has no attached financial value (not to mention health value). One pack of cigarette might not cost that much. But multiply it by the number of packs per week, per year, and it is a fortune up in smoke. Quit smoking, and think of how much you stand to save.

Is it worth the while?

The above are some of the things that make people poor. Now ask yourself: how much do you want to be rich? What's the price you would pay in order to have a bigger bank account? Would you be willing to forgo a big house? Can you resist buying an expensive car? Can you stop your gambling habit? Can you do without smoking? Can you stay away from liquor?

Is it worth the while? That, is for you decide.

What I can tell you is that, you do not need any of these things to be happy. There are people whose hobby is a walk or a run in the park. Who don't smoke. Who drink moderately, and only inexpensive liquor. Who live in an inexpensive house, driving an inexpensive car. Earning a modest income. And yet are millionaires.

Don't be fooled by big expensive houses and cars. The people who live in them, drive them, have probably spent their last penny upkeeping them, and keeping up with the equally impoverished Joneses next door. They are the people who continue to chase after the emblems of wealth, not knowing these are the things that make you poor.