@personalfinanceclub • • • • •
This is me on my couch in my apartment. I live in San Diego, about four miles from the beach. My rent is $1,350 month (Pretty good for San Diego). My apartment is actually converted from a garage. It's owned by my friends who live in the main house that I share a wall with. I don't have heat or air conditioning. But I like living here!
My net worth is about $3.8M, so I certainly could buy a house. I haven't yet for a couple reasons. First, houses around here cost about a million bucks. The annual tax bill alone would be as much as my rent. Worse yet, instead of having my million bucks out in index funds or investment real estate earning 10%/year, it would mean that money is sitting in a house not making anything, maybe keeping up with inflation when I sell it one day. I'm building wealth much faster by renting.
Second, I like where I live. I'm happy here. I don't think dropping a million bucks on a house would make me any happier. There's nothing wrong with buying a house to live in, and I probably will someday, but I'll wait until it will increase my happiness.
I posted this because I like being transparent and I think it's important to see that looking rich and having wealth are usually two very different things. Most millionaires walk anonymously among us. They drive used cars. They own modest homes (or rent!). They're frugal. That's how they got rich, and that's how they'll stay rich. The guy buying rounds at the club or driving a leased BMW is likely broke and spending every penny he has. He probably also is a lot less happy because he's stressed about dragging himself to the rat race every day to try to keep up the appearances of his lifestyle.
So this is what a millionaire looks like. One of them at least. :)
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) invest early and often.
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