Rich and Poor

I’ve been confronted about our money-saving ways. “Why are you doing this? You are acting like you are poor, and you aren’t poor.”

We aren’t doing this because we were on the verge of bankruptcy, living paycheck to paycheck, or because creditors were calling our house. It wasn’t even close to any of those things. We just decided we want to keep our money instead of send it off to everyone else. What good is your money if you don’t have any of it?

And really, how can you tell if someone is rich or poor? Do you base it on the house they live in, the car the drive, or the clothes they wear?

Take one of Dave’s recent callers as an example. Her husband made $280,000 per year, so people would tend to put them in the “rich” category. They lived in a $700,000 home – again, another reason people would consider them rich. But they also had this:

$650,000 mortgage on that home
$50,000 home equity loan on the home
$68,000 in credit card debt
$35,000 in student loan debt
$22,000 loan against their 401K

They also had a $19,000 property tax bill due every year, paid for their daughter to go to private school and had a nanny come to the house. They had major debt and they were scared. They were current on all their bills but didn’t have anything left over at the end of the month to pay down their debt. As she described it, they were “hemorraging money.” Even though they had a good income, they were extremely poor.

She said she was “trying to put together a budget, but it’s hard.” Dave got all in her face and told her they needed to quit acting like a prince and princess and quit buying stuff. Their take home pay was $11,000 per month for crying out loud! “You need to learn to sacrifice,” he told her bluntly. “You’ve never sacrified in your whole life and now look where you are!”

Frankly, I don’t want to be where they are. I’ll learn to sacrifice on my own, thankyouverymuch.