How Not to Become Wealthy

If you don’t care for the title of this article, it’s understandable. It’s not the sort of topic a rational person chooses to pursue … which perhaps explains why my extensive search of the Internet failed to detect any site devoted to such an endeavor. However, if it’s your wish to explore the subject of how to become wealthy, there seems to be no limit to the references available on the subject.

So the question you’ll likely ask: Why might anyone want to know how not to become wealthy? I’ve an answer for you, though you may question whether my reasoning is valid. It’s because, despite the countless sources of advice and information available on the pursuit of prosperity, relatively few persons actually become prosperous.

It’s because of this reality I’m inclined to believe the advocacy of positive advice is systematically ignored or rejected by the vast majority of society. If this is so, it just may be the advocacy of negative advice will also be rejected, thereby – inadvertently or otherwise – yielding a favorable result to enrich the recipient. With this as my rationale, you’re about to receive a set of guidelines on what you must do to be one of life’s abject losers. Now pay attention as I tell you how to successfully court failure.

If you’ll visit the prominent financial website, CashMoneyLife.com, you’ll encounter a most astute advisor, Ryan Guina, who writes extensively about personal finance. In his recent in-depth article about how to become wealthy, he states “The basics are simple: earn money, spend less than you save, invest and repeat the process. This sounds like a simple set of instructions, and on paper, it is. But a simple concept doesn’t mean it is always easy to put into practice. The good news is some simple changes in your lifestyle can produce a lasting and meaningful impact if you stick with them. Spending less than you earn is one of the most important financial concepts to understand and live by. If you don’t live on less than you earn, you will never get ahead.”

And with this piece of advice, you now know exactly how you must conduct your life if you intend to not become wealthy. Without a doubt, the surest way to remain mired in debt is to make certain your expenses systematically exceed your income. Regardless of how much you earn, it’s necessary you diligently and consistently spend more than this amount. And be aware dedication to your principles is vital if you’re to be successful in keeping the wolf at the door and your creditors in a state of perpetual anxiety.

A second method to make certain your cup doth not runneth over with unwanted assets relates to your mode of transportation. You probably know many people who own economy autos. As an example, my car is a 2012 Nissan Altima with more than 90,000 miles on it. The price I paid for it nine years ago was just $20,000, meaning its capital cost to date averages out at about 22¢ per mile. This represents dirt cheap motoring for a splendid vehicle proven to be thoroughly reliable and a delight to drive.

It goes without saying your transportation style must never replicate the method I’d chosen. To do so results in high efficiency and low cost – the very last thing you want. You must, instead, select something high priced and functionally inefficient.

An excellent choice might be a new Cadillac Escalade Premium Luxury Platinum Suburban Utility Vehicle. With its 2021 full list price a ludicrous $102,995, an 8-cylinder V8 engine capable of 420 horsepower and a curb weight of 5,823 pounds, it’s guaranteed to be beastly to drive and unbelievably expensive to operate.

How better might you be assured of an horrendous monthly expense? This is definitely the way to go – though most certainly not in overdrive.

The next item we’ll consider is housing. I’ve enjoyed homeownership since 1956, when I purchased a small tract house for $10,950 in Torrance, California, financed with a $900 down loan. Since then I’ve levered my way from residence to residence, with the appreciation from each sale sufficient to require no additional cash input, and I currently reside in an ocean-view home of substantial value, free and clear of any loan obligations … though you may describe it as my nine hundred dollar residence if you wish.

Obviously owning a home is more than just living style; it’s the gateway to long-term and short-term financial success. It’s for this reason you cannot consider home ownership, as it destroys your ambition to grow old impecuniously.

Your aim must therefore be spend a lifetime paying others for the cost of your residence, requiring you to remain a tenant forever. At the end of a certain period of time, your resultant assets will be a collection of rental receipts. In this way, as you see, you can fulfill your dream of remaining a prominently recognized financial failure. And if nothing else, you may be reasonably assured no one will want to deprive you of this distinction in any way.

Although what I’ve recommended thus far will help keep you in the lower asset category, there’s far more to financial mismanagement than mere expense escalation together with vehicle and residence extravagance. What you truly need to do is emulate the many millions of middle-class, middle-income, Americans who succeeded in discovering the joys of credit card borrowing together with a minimal payment schedule. Before I outline the most hazardous method to avail yourself of this insidious device, let me describe how purchases were conducted a couple of generations ago.

We’ll choose 1957 because in that year I acquired a new home to be furnished in Lompoc, California. In particular, the living room needed a four-piece sectional. I found one I liked at a local furniture store for a price of $300 – a good bit of money in those days. A traditional way to handle the cost involved possession, with three equal monthly payments over 60 days. With no interest involved, it became nothing more than an agreement between buyer and seller to defer portions of the purchase price over two months. As you see, the arrangement mandated a certain degree of trust.

We’re now long past such arrangements. Today you’ll charge such purchases on your credit card. If the full price is paid when the monthly credit card bill arrives, no interest is charged. If instead only the minimum is paid, interest on the card balance is in effect. And the interest rate can run well into double digits, at times pushing as high as 30%. And this is the way you ought to make your purchases, running your credit card balance to the limit and paying the bare minimum each month. Your shopping then becomes a fiscal monstrosity as interest pours from your account like water from a siphon. This then will be the finest way to deplete your stash of cash, thereby assuring you of your future insolvency. How much better does it get than this?

There’s one final factor to take into consideration as you envision the decimation of your current net worth. It’s that your real intent is just the opposite. This means you don’t actually conduct yourself as I’ve urged, but instead view my recommendations as examples of what to avoid under all circumstances. If you can play this game as I’ve contrived it, you’ll have performed exactly as intended. And if you’ve done so over an extended period of time, you’ll indeed become relatively well-to-do. As the old saying goes, being rich may not be everything, but being poor isn’t anything.

A final thought: It’s unfortunate most persons never seem to get their act together. What causes the rank and file of citizens to wallow in mediocrity for a lifetime is something I don’t understand. Although it’s not particularly difficult to avoid impoverishing actions, many individuals somehow seem to revel in them. My concluding realization is no more profound than to declare: It’s an insidious world in which we live.

Al Jacobs, a professional investor for nearly a half-century, issues weekly financial articles in which he shares his financial knowledge and experience.

Al may be contacted at al@abjacobs.com.