Quote:
Originally Posted by BIGJake111
It is not all about the money haha. As long as I own a Porsche of some sort, and support the family well later on, I have all I need. So why would I give up owning one at the age when I can enjoy it the most for the next 20 years until I can truly enjoy it again.
|
Here's my experience when it comes to observing what people do when they come into some cash for the first time. It is
uncanny how true this has been. Basically you have group A. They spend it. These people never really get ahead. Some may seem rich, nice house, nice cars but they're heavily in debt. And some actually look the part of being broke (no hat no cattle). Neither ever really get to the point where their money is working for them. Jake, this means their investments are paying their bills, and not the income from their jobs. Group A have virtually no savings, no emergency cash fund. Some pay off their debts but when money comes around again the first thing they do is to spend it. They don't learn from their mistakes. So they continue living pay check to pay check and are in and out of debt. The U.S. savings rate is about 2% (that's shockingly bad Jake) so there are plenty of people in this group. In other countries like Switzerland, where people are better educated and smarter about their money, the savings rate is nearly 20%.
Then there are the people who are in group B. These people are rare. They'll come into some cash for the first time and
they won't spend the money. Instead they'll open up an account of some sort. Brokerage, college savings (529), maybe they'll buy a bond, or they'll simply save it in cash towards a down payment on a first home purchase. They may buy something small, like a TV or computer but nothing major, the rest they save/invest. They don't use the cash to pay off debt because they didn't get into debt in the first place. These people realize that a lot of money
must start off as a little pile of money. They continue these habits of investing/saving when tax returns come in, they maybe get a bonus payment at work, etc. If they need to buy something, they can pay for it in cash because they have it. Oh and they were not driving Porsches in high school.