You can’t Out-Earn your Spending
As I stepped out of my car and approached the redbox machine to return a DVD, I noticed three things:
- A shiny black Nissan Sentra – obviously new – with a wax job so good I could see my reflection in the paint.
- An attractive young lady standing at the movie vending machine making her selections.
- The parking lot outside a McDonald’s is flat NASTY. The grease and dirt became one and permeated the concrete, as a gang of disheveled sparrows fought each other over a dropped fry.
I stood in line impatiently as the young woman finished her selection with three movies and went to check out.
I wasn’t snooping (honest), but it was hard to miss the error message that popped up after she swiped her card.
With no hesitation (as if she were expecting it), she backs out to the previous screen, removes one of the movies from her cart, proceeds, swipes, and the charge goes through.
She took her DVD’s and hopped in the shiny black Sentra and left.
I was shocked. Astounded!
These rentals are $1.50 per day. I did the math….she had $3 in her checking account, but not $4.50.
Lifestyle = Wealth (or not)
Driving home, I reflected…
“How does someone live like that?”
“She’s obviously living paycheck to paycheck, how does she deal with the stress?”
“How does she afford that car, and why would she want it if it’s just strangling her?”
These thoughts ran through my mind as I processed.
After pondering and processing, I came to a conclusion.
You can’t out earn your spending. If you live paycheck to paycheck because of bills and debt, you’re always going to be broke.
Rich Broke People
I spent eight years as a loan officer, and saw several thousand tax returns during that time. I still remember some of the applications I worked, the ones that really stick out.
An anesthesiologist once applied for a smallish loan to buy some property. I got earnings information and was wowed to see the $400K income. Later on, I had to deny him the loan.
Because his debt to income ratio was 50%.
Clearly stated, that means that of the $400K he made gross every year, he spent $200,000 on debt payments.
And this wasn’t “good debt” (as if there were such a thing).
He had $300,000 in CREDIT CARDS.
Again, I was shocked. Astounded even.
I’ve come to be jaded about appearances. I see people with nice houses, nice cars, taking awesome vacations, and living the good life, and I wonder if they have two cents to rub together that aren’t borrowed.
Maybe I’m cynical. Probably so.
But I can rent three Redbox movies if I want.
- Spend less than you make. Save at least 10% your entire working life.
- Make smart decisions about buying vehicles and homes.
- Pick a good career, and get the cheapest & best education you can to get into that career.
Poverty happens on accident. Wealth takes planning. HAVE A PLAN.
What about you guys? Maybe the rich neighbor who had the best of everything went under? Do you have any shockers to share?
Image attribution COMPASSCARDINAL9000