Do you act rich? Do you flaunt your wealth, or pretend to be rich by driving a car you can’t afford?
Well, you need to stop. Thomas Stanley who’s the author of “The Millionaire Mind” (which was fantastic) has a new book out called “Stop Acting Rich and Start Living Like a Millionaire.” Now, I have not read this new book yet, but I do have some advice which could save you thousands of dollars in the long run.
Why Not To Buy A BMW
I started investing in real estate in college and was able to make some decent money in my early 20’s. Then again, any money in your early 20’s is decent. And I ended up wasting a lot of it by doing immature things. For example, I had a BMW. I only had it for a short time because I realized it wasn’t me and I felt stupid driving the car around. I’ve also wasted a good amount of money on going to Atlantic City and Las Vegas.
Yes, I certainly believe in having fun, but you need to be smart and save your money–at least 10 percent of it. However, I’m not writing to you to try to get you to save your money. That’s common sense. The reason I want you to stop acting rich is to protect your assets and keep yourself from being a target of fraudsters.
Don’t Become a Target Of Con Artists
You see, if someone is a con artist who do you think they’re going to get in a “car accident” with: The guy driving the 1999 Toyota Camry or the guy who’s driving the brand new Porsche 911? Or, if two people are walking down the street, who do you think is going to be robbed: The guy dressed in jeans and a t-shirt or the guy dressed in a fancy suit wearing a $25,000 Rolex watch?
I don’t know about you, but I personally want people to think I don’t have much money at all. When I go on a date, the last thing I tell a girl is that I’m a real estate investor (I tell her I’m in the marketing business.) I don’t want some gold digger trying to use me. I drive a 2002 Toyota which is an average, ordinary car. Just think how stupid I would look if I still had my BMW showing up to pick up a girl on a date.
So… how else do I make people think I’m “poor”?
I try not to own any assets. I try and make myself judgment proof. For example, my car is not in my own name. If something were to happen, for all technical purposes I don’t own any vehicles. Also, I only own one house in my own name. And the only reason the property is in my own name is because I’ve been too lazy to transfer it out of my name yet.
Now, I’m not a lawyer and this is certainly not legal advice, but in my opinion the use of LLC’s and trusts is the best way to make yourself look like you don’t own a thing. I don’t believe in going as far as having one LLC per property, I think that’s going a little overboard. Instead, I like to hold a certain dollar amount of real estate in each LLC. Such as $2 million in one LLC, $2 million in another LLC, etc. I think this gives you plenty of diversity.
Also, it doesn’t matter if you’re a millionaire or if you only have a little bit of money. I think you should always want to protect the money you’ve worked hard for. Plus, if you’re a real estate investor who’s working hard, you could easily have a large sum of money in a few years, which you’ll want to protect.
In short, get your ego in check. The fact that you know you have tens of thousands, or hundreds of thousands of dollars in your bank account should be all the satisfaction you need. You shouldn’t need others to validate you.
Also, review your current asset protection plan. Do you own all of your houses in your own name? Do you lack proper insurance? You certainly don’t want some car accident or a tenant slip in your property to destroy your life’s savings. By the way, can I borrow some money?
Photo Credit: SolYoung
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Article Author:
Jason HansonJason has written 75 articles for us.
Visit Jason's Website: http://www.PrimoCoach.com
Jason R. Hanson is the founder of National Real Estate Investor Month and the author of “How to Build a Real Estate Empire”. Jason specializes in purchasing properties “subject-to” and has purchased millions of dollars worth of property using none of his own cash or credit.
Joshua Dorkin
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{ 7 comments… read them below or add one }
Great article w/ smart points !
“… By the way, can I borrow some money?”
Love it. OPM all the way.
I need to read all the books by Thomas Stanley. I have heard nothing but good things about them.
I hear you Jason, loud and clear. I do like toys, but you have to CYA.
Justin McClelland´s last blog ..Virtual Numbers, Tax Sale Buyers, Municipal Code
A great point. Another might be to logically look at your assets and decide which ones are completely safe. What would you lose if someone sued you and won? Make sure to have things spread out into different things. The same with investments, having everything in real estate or everything in the stock market is not nearly as safe as balancing between the two. I even go so far as to keep gold in the safe in the house just in case I woke up one day to find that the dollar collapsed and the American way of life with it. Gold will pay for food if my bank account cant.
-Tyler
Tyler´s last blog ..Red Onion Thai in Nob Hill
Good points. If you don’t seem rich, then you fly under the radar – just like everyone else.
Great post and some the exact reasons why I still drive a Manvan around(it’s not a soccer mom van!!!) I don’t have money or assets but……the LLC’s do, I’m just hangin out like a regular guy
Nick Johnson´s last blog ..Finding Subject2 Deals with Refinancing Leads
I’m a real estate agent and have had to help quite a few people with short sales lately. The sad thing is that the only reason these people need the short sales is because they spend like they are rich even though they don’t have the income to justify it.
They have expensive cars, huge flat screen high def tv’s, fancy stuff and more, all bought in credit.