WOULD YOU RATHER BE RICH OR WEALTHY?

By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

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What's The Difference?

If you are rich it means you have a lot of cash coming into your hands. Typically the rich are those who have high paying jobs. Rich people also typically spend about as much as they earn, though not all of them. I have worked with and know people who earn about $250,000, after taxes, each year and spend at least that much. Actually, it isn't uncommon for people to make a lot and spend a lot, typically on liabilities.

If you are wealthy it means you have a lot of assets that actually are assets. Remember from my early posts that an asset, I agree with Robert Kiyosaki, is something you own that puts money into your pocket each month (cash flowing investment properties or business are the best examples) and a liability is something that takes money out of your pocket each month (vehicles, your own home, and material possessions that you may be able to resell, but do not cash flow or grow in a controlled or expected way).

Here's the thing... Wealthy people are often rich, but rich people are seldom wealthy. Think about the people around you; it doesn't matter whether they are athletes, dual income families where both adults have decent paying jobs, doctors, lawyers, dentists, wall street brokers, etc. These people look like they have the world by the tail and yet often are struggling financially in many ways to keep up the facade. These 'rich' people tend to drive the newest BMW or Mercedes and live in a very nice area of town. They dress well and go on lots of holidays, and yet they often are people who experience bankruptcy or, at the very least, have to work like dogs to make make enough in their 50s and 60s in order to retire in a way that keeps up the lifestyle.

Now think about some of the people you know who tend not to drive the newest vehicles or live in the newest houses yet hold a bunch of real estate investment properties or own a few franchises or even have worked a farm to pay off the debt they needed to purchase the land. This second group of people don't look like they have a ton of money and yet they typically enjoy longer intimate relationships with their partner, are far more rested when they take a day off and, when they choose to retire, live a comfortable life no matter how long they live. In my experience these people tend to live even better in retirement than they ever did during their working years. Many of them retire in the early 50s and spend a ton of time with their grandchildren. If you've ever read "The Millionaire Next Door" you will know exactly what I am talking about. Good research shows that those who have a lot later in life and live well are those who did not look rich for a lot of their lifetime.

So.... Back to The Question

I would much rather be wealthy than rich. I would much rather make certain sacrifices for the next 10 years in order to live like very few others do later in life. Most of the people I know tell their children to have a lot of fun in their late teens and early twenties because 'they won't get a chance later in life'. I completely disagree. I'm hoping to teach my children to work hard and make sacrifices early so that they can retire wealthy when they are 30 and enjoy marriage and kids and travel and giving to others and figuring out deeper purposes in life for the last 50 years of life. I believe we often have it backward and the statement that people won't get a chance to travel and enjoy life later on shows that many people around me do not believe they have a chance at wealth. With this mindset it makes sense to enjoy life as much as possible and as early as possible with very little focus on the future.

A Challenge

Here's my challenge to you. First you need to ask yourself what you want in life. Do you want a midlife crisis from working hard but without a true purpose in life? If so, pay no attention to posts like this (actually, if that's what you want you have already probably stopped reading). If you want more in life and you want to life like very few others live, then you need to begin asking yourself another question: What am I willing to sacrifice now in order to live well later on? It is a worthwhile investment to spend weeks or even months figuring out the answer to that question and to begin putting a plan of action in place.





Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html