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10 Differences Between Middle Class And Rich People

10 Differences Between Middle Class And Rich People

According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined. But what about the people in between? The middle class? You may be considered middle class. You’re not poor, but you’re not rich…yet. The middle class seems to be shrinking, according to the data revealed over the last couple decades. That means you’re going to be less likely to be middle class in the future. You’ll more likely be poor or rich. Which side do you want to be on?

If you want to be on the side with the rich, you’ve got to start thinking like the rich. Here are 10 differences between middle class and rich people for you to learn from…

1. The middle class live comfortably, the rich embrace being uncomfortable

“Be willing to be uncomfortable. Be comfortable being uncomfortable. It may get tough, but it’s a small price to pay for living a dream.”
-Peter McWilliams

middle class and rich differences

    “In investing, what is comfortable is rarely profitable.”
    – Robert Arnott

    It’s comfortable to work a “safe” job. It’s comfortable to work for someone else. The middle class think being comfortable means being happy, but the rich realize that extraordinary things happen when we put ourselves in uncomfortable situations. Starting your own business is a risk and risks can be uncomfortable, but a little risk is what it takes to create wealth and achieve superior results.

    Step out of your comfort zone. Look at all your options. You will have to be at least a little uncomfortable if you want to become rich. You might even have to fail and that’s great, because if you’re not failing, you’re not doing much.

    2. The middle class live above their means, the rich live below

    “There is no dignity quite so impressive, and no one independence quite so important, as living within your means.”
    -Calvin Coolidge

    rich and middle class

      You won’t catch the average millionaire in a $100,000 car or a multi-million dollar home. The rich don’t spend their money on depreciating liabilities, they spend their money on appreciating assets and they live below their means. On average, the rich drive cars that are a few years old and they don’t buy them new, according to studies done in the book “The Millionaire Next Door.” Even if they can “afford” that fancy new Escalade, they usually don’t buy it.

      Remember, if you earn $1,000,000/year and you spend $1,000,000/year, you’re still broke.

      3. The middle class climb the corporate ladder, the rich own the ladder

      “The richest people in the world look for and build networks; everyone else looks for work.”
      -Robert Kiyosaki

      Middle class corporate

        The middle class tend to work for someone else. They have a job. A career. Upper middle class tend to be self-employed. They own a job. The rich tend to own the business. They own that corporate ladder that the middle class are busy working up. The rich understand that they need more people working for them to earn more money. The rich understand the power of passive income.

        4. The middle class are friends with everyone, the rich choose wisely

        “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
        -Warren Buffett

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        rich and middle class friends

          The rich understand that when you surround yourself with successful people, your own success will follow. Likewise, surrounding yourself with unsuccessful people tends to have the anticipated effect. Your income is usually the average of the incomes of your three closest friends. If you want to earn more, hang around people who earn more. It’s all about aligning your mindset with the mindset of successful people. If you want to be rich, you have to think rich.

          5. The middle class work to earn, the rich work to learn

          “When you are young, work to learn, not to earn.”
          -Robert Kiyosaki

          work to learn, not to earn

            The middle class are easily persuaded to change jobs when someone offers more money. The rich understand that working isn’t about the money, especially in the early years. It’s about developing the skills and traits you need to develop to become rich. That may mean working a sales job to better understand the world of selling. Or it could mean you work at a bank to better understand accounting. If you want to be rich, you should be working to learn the skills you need to become rich. Most rich people didn’t get there by earning a high salary.

            6. The middle class have things, the rich have money

            “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.”
            ― Will Rogers

            middle class and rich difference

              Back to the fancy cars and big houses. That’s where much of the middle class spend their money. Drive through a middle class neighborhood and you will usually see brand new cars, expensive landscaping and high-dollar homes. The rich understand that to become wealthy, you have to want money more than you want things. If you keep buying things, your money will keep going with them. It’s funny how that works. For example, Warren Buffett still lives in the same home he bought in 1958. And he only paid $31,500 for it.

              Stop buying things and start focusing on keeping, saving and investing the money you earn. If you are a shopaholic, start shopping for assets. Become interested in investing, then look for bargains on stocks and businesses instead of shoes and electronics. That being said, it’s not all about saving your money.

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              7. The middle class focus on saving, the rich focus on earning

              “Your greatest asset is your earning ability. Your greatest resource is your time.”
              -Brian Tracy

              middle class and rich people

                “If you would be wealthy, think of saving as well as getting.”
                -Benjamin Franklin

                Saving is important. Investing may be more important, but earning is the foundation of both. You understand that you need to save and invest, but to really achieve extravagant goals with them, you need to earn more. The rich understand this and work on creating more avenues to earn and earning more with the avenues they have. If you really want to become rich, work on your earning ability, not your saving ability.

                8. The middle class are emotional with money, the rich are logical

                “Only when you combine sound intellect with emotional discipline do you get rational behavior.”
                -Warren Buffett

                middle class and rich money

                  Steve Siebold interviewed over 1,200 of the world’s wealthiest people over the past 30 years for his book “How Rich People Think”, and according to him there are more than 100 differences in how rich people look at money compared to the middle class. One of the key differences he found was that the middle class see money through the eyes of emotion, but the rich see money through the eyes of logic. Making emotional financial decisions will ruin your finances. Warren Buffett explains that investing has much more to do with controlling your emotions, than it has to do with money. Emotions are what cause people to buy high and sell low. Emotions create dangerous business deals. Leave emotions out of this and turn to logic.

                  9. The middle class underestimate their potential, the rich set huge goals

                  “Set your goals high, and don’t stop till you get there.”
                  -Bo Jackson

                  middle class and rich goals

                    The middle class set goals. Sometimes. It’s the capacity of the goals that differ from the middle class to the rich. The middle class set safe goals that are easily obtainable. The rich set goals that seem impossible, difficult or crazy. But they know they are achievable. It all comes back to having the proper mindset.

                    When you’re setting your goals, ask yourself if they could be bigger. Ask yourself if that’s really all you can do or if you can do more. I think you can do more.

                    10. The middle class believe in hard work, the rich believe in leverage

                    “It is much easier to put existing resources to better use than to develop resources where they do not exist.”
                    -George Soros

                    rich and middle class workers

                      Hard work is a necessity. For all of us. If you want to reach the top (whatever that may be for you), you’ve got to put in the work. The problem is that hard work alone will rarely make you rich. You can’t become rich by doing it all yourself. You have to use leverage to truly become rich and stay that way. Leverage works in many ways, from outsourcing to investing. The more leverage you can incorporate, the more time you will free up to work on the things that really matter in your business and your life.

                      Some differences between the middle class and the rich are vast, while others may seem simple and minor. The fact is that if you want to become rich, you have to think like the rich and do the things the rich do.

                      Featured photo credit: Dude Walkin/Alejandro Escamilla via unsplash.com

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                      Kalen Bruce

                      Military, Writer

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                      Last Updated on July 10, 2020

                      The Definitive Guide to Get out of Debt Fast (and Forever)

                      The Definitive Guide to Get out of Debt Fast (and Forever)

                      Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

                      Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

                      Identifying All of Your Debts

                      The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

                      Here’s how you can get started identifying your debts:

                      1. Own Your Debt

                      Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

                      Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

                      2. Make a Debt Tracker

                      It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

                      Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

                      3. Get Your Debt Number

                      Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

                      Prioritizing Your Debts

                      All debt is not created equal. It’s imperative to understand that there are different types of debt.

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                      1. Understand Bad and Good Debts

                      Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

                      There are three main types of bad debt:

                      • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
                      • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
                      • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

                      Good debt is identified as investments in your future. Here are three common types of good debt:

                      • Student Loan Debt
                      • Mortgage Loan
                      • Business Loans

                      2. Decide Which Debt to Pay off First

                      Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

                      Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

                      If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

                      3. Don’t Pay the Minimum Amount

                      Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

                      Removing Obstacles to Pay off Debt Quickly

                      Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

                      1. Set a Reminder to Track Your Debt

                      “If you can’t measure it you can’t manage it.” -Peter Drucker

                      It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

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                      Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

                      Set weekly and monthly goals so you can have short term wins and keep the momentum going.

                      2. Hide Your Credit Cards

                      If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

                      Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

                      3. Automate Everything

                      Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

                      4. Plan Ahead

                      Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

                      For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

                      5. Live Cheaply

                      The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

                      • Live with roommates
                      • Cook dinners and prepare lunches for work instead of eating out
                      • Cut cable and choose Netflix or Amazon Prime
                      • Take public transit or bike to work

                      Finding the Lowest Interest Rates

                      The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

                      If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

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                      1. Maintain a High Credit Score

                      Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

                      • Never miss a payment
                      • Don’t exceed 30% of your credit limit
                      • Don’t sign up for more than one card at once
                      • Limit hard inquires, like auto-loans and new credit cards
                      • Monitor frequently with free credit-tracking software

                      2. Find Balance Transfer Offers

                      Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

                      Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

                      If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

                      How to Get Rid of Debt Forever

                      Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

                      1. Keep Monitoring and Adjusting

                      Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

                      Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

                      2. Earn More Money

                      There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

                      Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

                      Here are some examples of ways to earn more money:

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                      Talk to Your Boss

                      Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

                      Start a Side Hustle

                      This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

                      Build an Online Business

                      There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

                      3. Celebrate Your Wins

                      As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

                      While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

                      4. Set New Financial Goals

                      Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

                      Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

                      These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

                      Conclusion

                      Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

                      Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

                      More Tips on Getting out of Debt

                      Featured photo credit: Pepi Stojanovski via unsplash.com

                      Reference

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