5 Ways You Sabotage Hopes of Getting Rich

Does money burn a hole in your pocket? If so, you are unlikely to ever get rich. Here are five common ways to kill financial dreams.

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Better Investing

“If only my income was greater,” or “If only I had a million bucks.” Sound familiar?

Well, even if one of those things was true, you’d probably do the same thing you’re doing now: Spend too much!

It is no secret that many Americans spend much more than they earn. That is why household credit card debt is through the roof.

By contrast, the relatively few great savers in our nation let their money work for them. They build up wealth over a long period of time, even if they don’t make a great salary.

Seeing modest savings grow into a financial fortune is a joy the habitual spender never will know.

Here are five possible reasons why you can’t save a dollar — and why your money will never work for you unless you change now:

1. You will not face your situation

When was the last time you sat down and really assessed your financial situation?

If it has been a long while, take action now. Sometime in the next two weeks, do an in-depth financial evaluation.

Start by reviewing your bank statements. Where is your money really going? Much of it probably goes to pay bills, but does the rest go into a savings account or investments? Or do you waste it?

While it’s fine to treat yourself, it’s easy to get carried away. It is not financially wise to both enhance your nail polish collection with each paycheck and continuously head to the spa. You need to make a choice.

Regardless of where the problem lies, now is the time to get to the root of it and start making changes.

During your financial self-evaluation, look at your credit card statements and see how much you actually owe. Pay special attention to the amount of cash you are throwing away each month on interest.

Once you have a clear picture of how much you owe, start tracking your expenses. Keep receipts for every purchase you make in the next 30 days.

At the end of that period, scrutinize your receipts. That should give you a clearer idea of the problem areas.

Then, you’ll be ready to set up a new spending plan. Check out “How to Develop an Effortless Budget You’ll Stick To.”

2. You refuse to discipline your desires

Perhaps your philosophy is “If I want it, I buy it” — even if your bank account advises otherwise. After all, you work hard, so why not enjoy life?

Unfortunately, there’s a slight problem with that approach: While tomorrow is not promised to any of us, adopting a short-term mentality toward your money is nothing short of foolhardy.

If you spend like a maniac now, with a reckless disregard for your wallet, you will surely pay for it many times over later on.

Take a look at “5 Ways to Game Yourself Into Saving Cash” to get back on track.

3. You are addicted to debt

Many people never learn to make do with what they have. Instead, they create a posh lifestyle supplemented by any and every ounce of credit on which they can get their hands.

As a result, they have a staggering amount of debt.

I’m not suggesting you should live in a hovel or a dive. But you must learn how to be disciplined with your money before you borrow from a credit card company.

If credit card debt seems like a normal part of life, you may have a problem. Still in doubt? Take a look at “10 Signs You’re a Credit Card Addict.”

From our Solutions Center: Help with credit card debt

4. You let the wrong things motivate you

As humans, we are wired to want more. But what is your motivation for coveting material goods?

Are you one of those people who always eyes the proverbial Joneses, looking at the new car parked in their driveway?

Imagine for a moment that it is you who owns that shiny new thing. Do you really think it would make you happy? Is your desire for the new car sincere? Or is it simply envy of a lifestyle displayed by the aforementioned neighbor or your favorite celebrity on TV?

If you want material goods for the wrong reasons — such as to fill a hole in your soul — no amount of money will ever be enough.

And remember, things aren’t always how they appear. The family you envy could be robbing Peter to pay Paul, and falling deeper into debt to live in their dream home and drive that car.

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Comments

  • Y2KJillian

    The book, The Millionaire Next Door, was a huge wake-up call to me. The idea that real millionaires would prefer plain refreshments to caviar and vintage wines shocked me. To think that the “average” self-made millionaire usually has cultivated simple tastes in all things rings so true–and the idea that if you look rich, you probably aren’t, was one of those lightbulb moments. It meshed so well with the book “The Only Investment Guide You’ll Ever Need” (any edition from 1970s to 2011!) and his frugality and good sense. Our money is indeed working for us, and we’re taking care of it. It’s a nice partnership!

    • somyakomya

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    • Jason

      The Millionaire Next Door was a big influence on my wife and I as well. That was 10 years ago when we were 25 and swamped in debt. Today we are debt free with a healthy net worth. We live in a modest neighborhood and drive reliable used cars. Having no debt allows us freedom to travel and not worrying about making payments has removed a lot of stress from our lives and marriage. Digging out of debt wasn’t easy, it took 5 years, but was well worth it.

    • MrKnowitall

      How true, I read the book a few months ago and I came away with the feeling that I wanted to be frugal, that I embraced frugality as an enjoyable lifestyle choice. I was no longer embarrassed to drive my old but reliable car or wear a Timex instead of a Rolex. I will look for “The Only Investment Guide You’ll Ever Need”, thanks for the suggestion.

    • http://ecofrugality.blogspot.com/ Amy Livingston

      I love _The Only Investment Guide You’ll Ever Need_ not just for its sound advice (lots of books offer that) but for Tobias’s entertaining writing style. The trouble with most investment guides is that they’re so dry, by the time you struggle through a chapter you can’t even remember what the advice was. Tobias keeps your attention with real-life illustrations and humorous anecdotes. It may not be the only investment guide you’ll ever need, but it’s probably the only one you’ll reread for fun.

  • Sulia

    There are situations in live which can put you in debt even with good knowledge of managing your money.
    Don`t judge book by it`s cover…

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