Being rich is a fantastic feeling and an underrated experience. I never thought I would go into a department store and buy almost anything I want—with cash. Here is my favorite quote on what being wealthy is.
Wealth is having excess income vs. expenses. Simple enough. So it is not necessarily the amount of money you make but how you control your life based on your income. Let’s take a look at my life.
My wife and I bring in roughly $17,000/month from our jobs and passive income sources. Our total expenses per month are about $4,000. So that $13,000/month buffer is what makes me rich.
5 Creative Ideas to Make Money While You Sleep
But what if I wanted to look rich and act rich—would I still be financially rich? Let’s see how fast I can spend this $13,000/month in true American fashion.
Let’s be creative and start with our cars. Both of our vehicles are currently paid off, but I am feeling froggy. I want a new 2021 Chevy Corvette because they look cool. Kristina (my wife) wants the Tesla Model X with all the trim. They each will run us $1,000/month for a grand total of $2,000.
Not bad; we still have $11,000 to spend per month. Kris wants to upgrade the house to something more fitting for a wealthy family. We currently pay zero out of pocket for our home, and we can keep the house and rent it out for a profit. But, we can get a mansion in West Florida for $1 million. With current mortgage rates, that’s only $5,000/month.
Now, having a 6,000 sqft house will require someone to clean and mow the lawn. Kids will need to go to private school to reflect on their situation better. All and all, we can add another $2,000 worth of expenses to our budget. That leaves us $4,000/month remaining. Not too shabby.
However, we haven’t gone clothes shopping, bought the best of the best foods, went on vacation, bought jewelry, etc. We still have a lot more money to spend. At the end of the day, we can easily be in debt or in the negative per month.
Start a Home Business
Sounds ridiculous, right? This scenario happens every single day in American and other first-world countries. This behavior is called Lifestyle Inflation, and it is the killer of wealth. Nothing I can say or write can help you prevent lifestyle inflation.
Lifestyle Inflation is a mindset that permeates almost everyone in America. Actually, I walk around the office saying how rich I am just to see people’s reactions. They look at my little Ford Focus and start laughing. To them, I need to prove how rich I am by showing off my cars, jewelry, and clothes.
Many of us did not have loads of money throughout high school. What if you had the chance to go back through high school, but as a rich kid? Where are all the kids who had fancy cars and clothes and didn’t have to work during high school? Did they become successful entrepreneurs, business people, or politicians? Most likely not because they never formed the work ethic that us poor kids did.
The Velocity of Money
But a funny thing happens when you turn 40—everyone wants to pretend like we are in high school again. When you go to Facebook, all you see is people 40s years old going on vacations, buying new cars, showing their kids in private school uniforms, getting augmentation surgeries, etc.
The worse part is that lifestyle inflation only gets worse with time; it doesn’t heal itself. So imagine making decent money in your 40s, only to start spending more of it throughout your 40s, 50s, and 60s. At some point, you will need a boat or vacation home. I’m telling you, this crap can get out of hand very quickly.
Don’t expect your friends to help. In fact, I have noticed that people who inflate their lives surround themselves with people who appreciate the cost of their lifestyle. They are not interested in friends who aren’t interested in their expensive tastes.
You can try this phenomenon out for yourself. When one of your self-important friends tries to talk about a new purchase, act utterly clueless about its existence. It goes like this. “Hey Josh, I just bought the new Tesla Model X fully loaded.” I then say, “Oh, is that the new cheap model? I get them confused.”
“Hey Kris, we just enrolled our kids in St. Mary’s Catholic school.” Kris responds, “Oh, is it suppose to be a good school? My kids are in the ghetto high school down the street.”
I am telling you from personal experience; they cannot stand when people don’t understand the cost of their lifestyles. They are literally living their lifestyles to brag about it. So when they can’t brag to someone, they move on to circles who can appreciate their spendy lives.
Compounding: The 8th Wonder of the World
That is precisely why Kris and I have very few friends. Have you ever listened to middle-class Americans talk to each other? It is brand-dropping, luxury-shopping madness. Rich people don’t have to talk about these things because they inherently have them.
Rich people talk about investments, business, and real estate. These are the conversations I love to have. In the military, I am surrounded by people with college degrees. They sometimes start to talk about wealth creation, but a few comments from me and that stops.
If you continue down the path of building passive income streams, you will quickly become the smartest person in the room. Think about it. Anyone can work hard for money. Anybody can join someone else’s business and have a boss dictate the terms of their work.
I made $40 in book sales last month because I sold the equivalent of 20 books. How many people in America can clear $40 profit in book sales. Do you know how hard it is to sell 20 books in one month?
JOMO: The Joy of Missing Out
Yes, people can pay a lot of money for advertising, someone to ghostwrite for them, for an excellent cover, to start a blog, etc. You could easily spend $3,000 to get your book out the door with a bit of fanfare. You would need to sell 750 books @$4 profit each to break even. Selling 100 books in one month is considered exceptional for an independent writer.
So again, I sold 20 books in one month. I do my own advertising, write my own words, edit my own books, write my own blogs, and make my own covers. I do everything I do to be successful in the book-writing world. And halfway through this month, I have already sold 15 books.
It takes time, work, and knowledge to create an income stream from nothing. People would instead go to work because it doesn’t require much mental effort. Get dressed, grab a Starbucks coffee, sit in traffic listening to self-improvement podcasts, and repeat every day until 70 years old.
Retirement Planning in Your 50s
Lifestyle inflation is the killer of wealth, and jobs are the killer of innovation. So if you can reverse both of these trends in your life, you can become rich rather quickly. Reversing lifestyle inflation is the same as lowering expenses. Reversing dependence on your job by making passive income streams is the same as increasing income.
So let’s go back to our quote, “Wealth is having excess income vs. expenses.” We can re-write it as “Wealth is building streams of passive income and preventing lifestyle inflation.” Simple.
In part two, I will cover, step-by-step, how to prevent lifestyle inflation and get started on building streams of passive income. I’m telling you, for someone who has crossed over, life is good over here.
I cannot tell you the feeling of having little to no urge to buy anything. I walk around the store without any need or want to buy something. I am just browsing because I can actually afford to browse.
Happiness isn’t Free
One day I was window-shopping, and a $14 dividend popped into my Cash App account. It was one of the better moments in my life. It is what passive income is all about. I could have spent that $14 without any guilt or shame. I know that my stock (AGNC, REIT) will pay me again next month and the month after that. I do not need to work for this money again. I no longer need to exchange time for money to receive the following dividend payments.
That $14 is what makes me rich. My wife and I have decided that the money from my book royalties will be our restaurant money. Last month I made $40, so that is a good afternoon at our favorite sushi joint. We like to go to happy hour where that have specials on nigiri.
How cool is it to be able to pay for our couples lunch courtesy of Amazon book sales? Even if my book sales stayed at $40 for the rest of my life, it would still be cool to use that money to eat out every month. Not too many people have a free stream of $40/month for their lifetimes.
That is what makes us rich, making money without exchanging time. Do not get caught up in working for money and spending that money to show how much you earn. It is a fool’s errand and will add years to your time in the workforce.
Hopefully, this article hits home. It is a stark contrast to the teaching and doings of American life—only you can prevent lifestyle inflation. I will see you for part two. Good Luck!
Download Passive Income Printables for Your Financial Journey (here)
Read My Books for Free: Free Kindle Books Schedule also on Kindle Unlimited Join me on the best app for Crypto- Voyager
Follow us on our Facebook Page (here). Join our Facebook group (here)
20 Books that Will Make You Rich (here) part 2 (here)
See all my books on Pinterest (here)
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Leave a Reply