I was listening to a podcast on money and wealth building and the interviewee was telling the interviewer “You can’t tell who’s Rich anymore ! I also agree.
You have middle class people that live like wealthy people and you have poor people that live middle class., (cable TV, car, and iPods) Of course, both classes are living above their means.
For Example, the average middle class person has credit card debt. The credit card is the number product that can help you live beyond your means in my opinion. Want to take a trip to Hawaii and stay at the Four Seasons Hotel and have a round of golf and a day at the spa? No problem a credit card can make this happen. You do not need the cash to have a vacation anymore. Regardless of income, class or integrity, as your credit card limit is under the amount of your purchase, it’s yours!!
Do you want that new Infiniti M35? No problem, there is a bank somewhere that can make sure you are approved. Of course, you don’t know the stress and anxiety these people get on the first on the month when everything is due. Unless they open their credit report and bank account to you, you will feel that they have the money to afford these things.
During the 2008 housing crash, there were people that were making $50,00 a year and being approved for $500,000 homes, yes you heard right.
You can live in an upper middle class neighborhood and make an income of a middle class person, an interest only or a negative amortization loan can get you in the house of your dreams. In the long run, none of this will last. But the point I’m making you cannot tell the Rich from the Middle Class anymore, thanks to screwed up credit options– we all can live rich and have TVs in every room and take nice vacations and dine out extravagantly.
The way I can tell when a person is rich, (now that I am older and mature enough to know the difference) is when you are surrounded with great friends and loyal family members, have cash in the bank to handle emergencies for 6 months or more, a 0 balance credit card and a healthy retirement account. Having good mentors in your life can also make you rich.
There are people will adopt this strategy and they will also be people that can care less about personal finance/responsibility. These people will always find a way to get what they want without going taking the correct path. They are the shallow rich!