When getting started in real estate I didn’t have much direction. So I asked the only contact I knew at the time about renting properties – my real estate agent. As a single man living alone in a 4 bedroom house, I told him I was considering moving into a small apartment and renting my house out.
His immediate response was “What? Why? You can’t do that!”
Me: “I can’t? Why not?”
Him: “Because then your renters would have a bigger house than you do!”
I didn’t know what life was really about at the time, so I kept my huge unnecessary house. Now of course, I see how ridiculous what he said actually was. I’m still not really sure why he said what he did, but I think he must equate having a big house to success or happiness, or wealth. He did have an arial photograph of his mansion hanging on the wall in his office that he was pretty proud of.
So this is how poor people (and rich people) think. Do not confuse my real estate agent with a wealthy person. He has a lot of money, but he’s not wealthy, he’s rich. A few years later after a housing bubble burst there were few people buying homes and one of his renters moved out of a rental property he owned. He was asking me for work so he could pay the mortgage on his huge house, having already had to fire his maid.
This false thinking is rampant in the United Stated. People at work talk about the new phone that’s been released, they talk about the new car they bought, and they use their hard earned money to buy houses that are as big as their coworker’s houses. This is a social trap of indirect peer pressure borne out of our need to fit in with our peers.
Now that you’re aware of it though, you can choose! Will you fit in, or will you purchase sensibly? For some readers it’s an easy decision to make, while others will have to think long and hard. There are a myriad of other factors involved of course, but here’s a basic outline.
Buy buy buy
Save save save
|You get a new phone and you love it for 1 to 2 months, but you’re locked in to the carrier at a high monthly fee for 1 to 2 years.||You pay cash for a reasonable phone and you have more free time because you play less candy crush.|
|You get a new car and you love it for 1 to 2 months, but you owe car payments for 2 to 3 years.||You save up to buy a reasonable car and you negotiate a better deal on the car since you pay all cash.|
|Your friends say “Hey, cool phone” when they see what you have.||Your friends ask “Hey, why do you have that old phone?” You now have a new unique and interesting thing about you that people want to know about.|
|You buy fast food every day. You hang out with your friends, but you also eat unhealthily.||You bring your lunch every day. You can now encourage your friends to go on picnics with you and you can make new friends that also bring their lunches.|
|You drive your car to work and to everywhere else you possibly can and you complain about traffic and gas prices.||You prefer your bike or the bus and you’re healthier and you read more.|
For many people the two most difficult differences to deal with on that list are about relating to your friends. Of course, if you’re not already wealthy then becoming wealthy will require lifestyle and mindset changes. That’s the idea – it’s a desired change. Be comfortable with who you are and you can make the choice to change your life and invest your money. Be zen.