Posted over 10 years ago

4 obstacles to creating wealth

I get a lot of questions about how do people gain real wealth in this country nowadays.. I decided it was time to address that in blog format. The problem in USA for most people is not MAKING the money. It is KEEPING the money. I've determined there are 4 main obstacles to real Wealth Creation.

1. Procrastination

2. Spending habits

3. Inflation eating away at your assets

4. Income taxes owed to the govt.

     Of these 4, lets chat about each one each by itself. Procrastination. Do you have this problem. Next year I'll start saving. As soon as I get that raise. After the little ones are in school. Just one more book or seminar to study. The list goes on and is different for everyone. So, I suggest you get rid of them and pick a time and goal. Whatever it may be. I'm going to do this before this date and then just do it. Start with something real and tangible, not nebulous. Baby steps are ok , so long as you're moving in the correct direction and continue.

Spending habits- We're a now country. We want it and we want it now. No waiting. Instant gratification and we'll pay for it later. This will keep you from getting ahead. Have you ever taken one penney and doubled it every day for a month? How much do you have? Try it, and you'll be shocked. That is the way money and compounding works. However, if you keep taking some pennies out to soon, it never arrives at the BIG doubling #'s. You have to stay on top of it. "If you put off buying everything you want today, when you're older, you'll be able to buy whatever you want and your principal will never erode."

Inflation- This will eat you alive if you don't own real estate. If you only own depreciating assets, clothes, cars, cycles etc., you'll join the ranks of Americans with negative net worth. One third of the population WISHES they were worth Zero. Unfortunately, they're worth less than that. Add up all your assets. Now deduct your liabilities and loans. Where do you fit in? If you own real estate, you have a chance to get ahead. That is an appreciating asset. You need to make sure you're acquiring the right things if you want real wealth. Otherwise, you'll be a big income earner and no assets.

In Texas, we call that "all hat and no cattle"

I'm going to leave the tax portion for another day. I want to see if anyone reads blogs. If not, I'll just post it. When I see 5 comments on here, I'll believe it is worth blogging on income taxes, the biggest obstacle to creating real wealth. Good luck.

Comments (23)

  1. Thanks for posting this Rich. I am at the stage of wanting to be more strategic with my tax planning. I'll be looking for your post about taxes to read.

  2. This real estate is NOT rocket science. I'm on a cruise currently, so very little time. I'll post more next week. Rich

  3. Some good things to think about. Thanks

  4. Ouch!!! This hit WAY to close to home. Hmmm, next week I will look into that deal of a lifetime. No wait, how can I get it today .. Look forward to the rest.

  5. I see procrastination more and more of an issue amongst us young folks. I think just about all of my friends hold off their school assignments to the last minute, cramming the hour before tests and etc. But I think it's more than just procrastination. It's lack of motivation. I sometimes see the things I learn at school pointless. I probably will never use Integral Calculus to find out the volume of a 3D object. When I have no motivation, I procrastinate. Last year I started a website to help out friends in my class with their assignments, but in order to do so, I had to do my assignments quickly and diligently. I created a motivation for me to not procrastinate. Eventually, It grew to the entire AP American History department using my site and I was always on top of my game. I am just guessing that those who procrastinate are usually lacking motivation.

  6. I took care of the spam . . . that said, as Will mentioned, Rich and anyone else with a blog, can simply delete any spam comments with the click of a mouse.

  7. Rich and Will, I told Josh regarding the spam posted above.

  8. Rich, keep them coming! You always have so much good information for one to read and learn something new.

  9. Rich, I have no issue with your 4 obstacles, but another one keeps coming to mind--Bad Investments. Many people earn good incomes and save/invest an adequate amount, but keep shooting themselves in the foot by making poor investments. For example, chasing performance in the stock market or with mutual funds. And then making bigger, more speculative investments (bets) to try to catch up. Or some bought real estate in hot areas over the last several years and lost their shirts, and have now sworn off real estate, even though now is a great time to buy. Now, they might be buying stocks that have tripled since March. I "wonder" what they will do when that stock drops in half? Or on the other hand, some are so conservative that they can never achieve substantial growth or income. These people are in CDs paying 1.85% and think it's good, because other CDs are paying 1.65% Inflation, plus no growth will keep them from building wealth. Are Bad Investments the 5th obstacle to building real wealth?

  10. Will- I already posted the 4th obstacle. I chose to put it in the dashboard and then maybe others would see it and come back here.

  11. Rich, just delete it, it is spam. You have the power in your own blog to delete comments. You should also report the spammer to the moderators. I get that every once in a while and delete them immediately. Great blog, can't wait to read how you nail down the last subject. Awaiting your brilliance. . . .

  12. Thanks Mark and Christopher. I don't know about the post between you two though!! Rich

  13. Very informative, yet so logical. So many people don't realize that #1 and 2 are things that they have the greatest influence over, yet complain when they're not getting ahead? I'm off to read your taxation blog now... Good stuff!

  14. Great blog! Short, to the point, and no BS. I'm going over to read about #4 right now!

  15. Steve, I need you to go to my blog from this morning on taxes. Your answers are there!! Then, post a new topic to direct folks to that blog. They're missing the boat!! Rich.

  16. Rich, I agree with your comment that 1 & 2 should be easiest - and that is because the individual is in control of that (at least should be in control of that to some degree). Inflation is a challenge to control for the individual. One can't really stop it, but one can act in the ways you described by holding the proper assets, with the intent of "countering" inflation. I'm looking forward to reading more of your take on taxation (and from what I know of you Rich, I expect it to be a lesson on AVODANCE of taxes).

  17. 1&2 are the EASIEST. All it takes is a single decision. Do it now and quit spending frivolously. The other 2 are MUCH more intensive,imo.

  18. While we do have control over all 4 to some degree, I think #1 & #2 are the most important. They both need self discipline to conquer.

  19. Always informative information, from Rich.

  20. Rich, nice blog. Looking forward to the tax portion.

  21. Without doing the math, it's about $10 million isn't it? Good stuff--thanks!

  22. Keep writing the blogs, they are informative!

  23. Thanks Rich for the blog ... looking forward to the tax one!