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5 Things About Rich People that the Middle Class Doesn’t Understand

5 Things About Rich People that the Middle Class Doesn’t Understand

Poor and middle class people often feel resentment towards the rich – after working like a beaver for several decades and finding yourself not better off than when you’ve started, it is easy to assume that those who earn a thousand times more with seemingly lesser effort are either devilishly lucky or plain dishonest. In truth, the difference between the middle class and the rich is not so much about luck or morals as about state of mind. Which means that by learning to think like the rich you can make your first step to achieving the same level of success.

1.The Wealthy Prioritize Earning over Saving

Work hard, start saving early, live below your means – it’s all the usual advice for building your financial independence. And it is exactly opposite to what rich people do. They don’t put money away for a rainy day in order to ensure their future – they put it to work. They aim at increasing their earning ability, which is very rarely limited to simply working harder. Instead of trying to ensure the safety of already earned money, they try to make this money bring them even more dividends – and we are not talking about retirement funds but full-fledged investments: in real estate, in business, in everything middle class people consider too risky.

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2. The Wealthy Live within Their Means

At the same time, the rich don’t increase their earnings just to feed their ever-growing appetites for consumption – they do it to satisfy their appetites for growing richer. When a middle-class person suddenly starts earning considerably more, he is quick to show it: by buying a more expensive car or moving to a larger house, for example. When a rich person increases his income, he looks for ways to invest it in assets, not liabilities. The richest people are indifferent to showing off their wealth – they don’t shy away from looking how to extend the life span of their old cars instead of buying new ones or living in a much smaller house than they can afford.

3.The Wealthy Are Always Ready to Change and Grow

The main feature that differentiates the rich from all the rest is their ability to change, grow and learn. They don’t feel obliged to follow the way of life they’ve chosen a decade ago just because there is so much time invested into it. If they find something better, they will immediately use the chance of improving their position. It means constantly learning new skills, reading things that inspire them to do better, drastically changing lifestyles and so on.

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4. The Wealthy Care More about Wealth than Consumption

All in all, truly wealthy people are indifferent to all the nice shiny things their wealth can buy them – they value the wealth itself. Warren Buffett, one of the richest men on the planet, still lives in a house he bought back in the fifties for $31,500. Today Mr. Buffett is worth more than $68 billion – and if you compare the place he lives in with mansions owned by people that don’t have a fraction of his wealth you will get a very important lesson: possessions have nothing to do with success.

5. The Wealthy Are not Afraid of Aiming High

Since early childhood most of us are taught to be reasonable about our dreams and desires. Set easily achievable goals, move ahead a step at a time, choose a direction and steadily move towards it, hoping to achieve something one day. Somehow, with the rich this lesson doesn’t take. They don’t suppose that the goals they set for themselves are overly ambitious, impossible or just plain crazy – and quite often they turn out to be not that impossible after all.

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The important thing to understand about wealth is all about thinking, not luck. You may win a jackpot in lottery, but if you don’t think like a rich man, you are most likely to lose everything you’ve won or stay a the same wealth level.

Featured photo credit: Rich Danbo 2/Mohd Haniff Mazlan via flickr.com

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Melissa Burns

Entrepreneur

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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