Tuesday, June 24, 2014

Viewer Mail

In the mail today, this query:
Do you agree with this statement and quote: “If you work 80 hours a week to make $100,000 per year, then you are POORER than someone who works 40 hours per week and makes $60,000 per year”
Good Question! 

Poverty or Wealth (the latter being the inverse of poverty) has nothing to do with INCOME but with how much money you OWN.

For example, a young professional who makes $100,000 a year, but spends $101,000 a year, and has little or no assets and a mountain of debt is not "wealthy" but in fact is insolvent (bankrupt) even as he drives his $50,000 SUV to work every day and eats out five nights a week.
Wealth is not annual INCOME but how much money you KEEP when it is all said and done.

In the book "The Millionaire Next Door" the author points out that many people who are millionaires actually have low incomes relative to their overall wealth.   They save money instead of spending it on symbols of apparent wealth, and thus end up wealthy (owning money) over time.

The salary slave who works and works and works to make more INCOME is often broke, as they spend massive amounts of money on "convenience" items, which allow them to work the long hours.   So they hire a dog walker and a nanny and a lawn service and a cleaning service and so on, and eat out in restaurants because they are "too tired to cook" - and rack up credit card debt and end up broke.
I have a friend who is a pediatric nurse who lives this way.  She makes $110,000 a year in the ER and spends it as fast as she makes it.   She is over 50 years old and has less than $100,000 in the bank, rents an apartment, and has nothing to show for 30 years of hard work.  She thought she was "wealthy" but now facing retirement, is scared to death, as she realizes she has no savings whatsoever, and has to keep working well into her 60's or 70's (if they will let her) to maintain her lifestyle.

Owning yourself is the ultimate wealth.  And if you "have to" do something to stay afloat on a daily basis, you are not wealthy at all - not matter how much you make - but rather are a slave with very, very nice bling-encrusted manacles.

So yes, I guess I would agree with that statement.   It is sometimes better to make less money and SPEND IT MORE WISELY which means having the time to think about how you are going to spend your money and invest it and become wealthy, as opposed to running faster and faster on the hamster wheel going nowhere.
Learning to live on less, spend more wisely, and save and invest more, is the path to real wealth.   More income means only more income - and a job is a MEANS to and END, not an end it and of itself.  

Sadly, most people don't get it, and think that "making more money" is how you get wealthy.

I might add that having more time to yourself is really the ultimate wealth - "owning yourself" and not having to work long hours.

Who is wealthier?  The guy who "has to go to work to pay the bills" or the guy who can afford to spend time playing golf and going fishing?

Good Luck!