There are two kinds of people. People who are really rich and then there are people who are not rich but they pretend to be rich.

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A rich person may not be dressed up the best. He may not be driving an expensive car. He may be eating at value-priced restaurants or just cooking at home.

However, a person pretending to be rich, drives new expensive cars leased at big amounts spends 25% or more of their paycheck, dines at fancy restaurants and pays the bills with credit cards. Most of these people are not rich, but they are in debt and if they lose their jobs, they will have to declare bankruptcy to pay their debts.

When the big real estate bubbles burst in the year 2007, a lot of people had bought million dollar homes, and were able to get 100% financing without any down payment plus also had taken a home equity loan of $150,000 to buy furniture. They also leased a BMW car which had a lease payment of $1200 a month. When interest rates started going up he had no money to pay the mortgage interest on the home and lease payment on the car. Their children were going to private schools and they could not afford to pay. He was behind for the alimony payments to his ex-wife; she threatened to have him thrown in jail. The credit card debt mounted up to $100,000. The final result was bankruptcy. Half of them, their wives had to leave them and most of them, they lost their jobs because either because of the recession or because of the lack of attention to their jobs.

These kinds of people who pretend to be rich are broke financially and mentally, because they are irresponsible. You will stay poor if you have a habit of spending and borrowing for things which depreciate and do not bring any return.

Watch every dollar you spend. There is a saying that a bucket will fill up with just one drop of water. It is the same then you start taking water out of the bucket one drop at a time, it will become empty. By spending one dollar here and five dollars there, you will never be able to save money. Spending money on things like eating out, cigarettes, soda, coffee, lotto tickets, and entertaining friends who will not spend any money on you in return, will keep you broke.

By Ashok of http://becomerichinfiveyears.blogspot.com



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