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