You have to pay for gasoline, overhauls, insurance and repairs afterwards when there is a technical problem. Buying a house involves regular charges to pay, insurance costs, notary fees, annual housing taxes to be paid. An individual who ignores this and buys several apartments, villas, yachts and cars,can end up financially “dry” spectacularly quickly. This disregard of ongoing charges also occurs at more modest levels. A friend of mine who does not earn a very large income had saved a lot to be able to buy a car that was slightly over his budget.
A year later, he was forced to resell it in a hurry:
He had neglected all the costs related to insurance and maintenance of his car, which he found himself unable to meet.
- This is one of the key principles evoked by Robert Kiyosaki in his book “Rich father, poor father”, people who get richer buy assets that pay them regular income, while people who get poorer buy assets.
- Liabilities that cost them money on a regular basis.
Do you know that Donald Trump, despite his current colossal fortune, has gone bankrupt 6 times during his career? This is because of the second great destroyer of fortunes: excessive risk-taking. Trump invested heavily at the time in casinos that were not making him money. Refusing to take his losses quickly and admit that the project was a failure, he persevered until he had to admit that the establishment was bankrupt. So Is the Evergreen Wealth Formula legit? You can opt for Evergreen Wealth Formula Also.
This has happened to him 6 times. In another register, Jesse Livermore, the man who made the biggest stock market profits in history managed to lose 95 million out of the 100 he had won in record time. And lottery winners now benefit from specific support to avoid making disastrous investments. This phenomenon can be quickly worsened by the misuse of financial leverage (i.e.: borrowing heavily to buy “rotten” assets, whether on the stock market or in real estate and end up with losses greater than the amount invested. at the base). You probably understand better why I emphasize the importance of minimizing risk in so many articles.
Forgetting the tax system
Pamela Anderson, Mike Tyson and Nicolas Cage (among others) all had to declare bankruptcy following a visit from the IRS (the US tax authorities). They had all neglected to pay their taxes (which given their income levels were quite colossal) and found themselves unable to pay what they owed the state.
A problem that we can often find ourselves confronted with even on a smaller scale in September when we receive our taxes and we realize that we have planned for an amount much lower than what is asked of us. A problem that can be circumvented by opting for the monthly payment option (the amount of withdrawals is then to be taken into account in the calculation of our monthly budget).Now that we have briefly seen what to avoid doing to get poorer, let’s take a look at how to manage your money to get rich.