Friday, May 29, 2015

How to Tell If You Want To Be Rich or Wealthy

Would you rather travel by water or land?

What’s shakin’ everyone?  Today I have a battle of epic proportions for you.  I’m paving a road that splits in two directions, and you have to decide once and for all, which path to take.  I made my decision a long time ago, at 25, one year into my teaching career.  Thirteen years later, I’m convinced I made the right choice, even though I’ve yet not accomplished my ultimate goal.  What is my ultimate goal?—to have enough passive income coming in to replace my salary ($5,500) and leave the rat race.  Because the cost of living goes up, inflation and all, I figure I will need around $8,500/month in passive income to live comfortably through retirement as I am doing now.  The quest for more income producing assets continues…

In a world where the poor are plentiful and the self-made millionaires get to preach, there are seemingly endless paths to take toward a financial goal.  I’m here to tell you that despite all of the noise being made by droves of financial columnists, bloggers, gurus, etc., there are really only two paths you can take with respect to money: Toward being Rich or toward being Wealthy.  

People mistakenly use rich when meaning wealthy, and wealthy when meaning rich.  In, 22 Money Secrets Your Millionaire Neighbor Won't Tell You, I shared a link that explained the difference between the two.  Why I’m focusing on it again is quite simple.  I want you to stop wasting time reading the wrong type of article or following the wrong money General.   
Speaking of money General, to make my point clear to you that there are really only two camps, Camp Rich or Camp Wealthy, go Team Edward!...I’ve always liked vampires over werewolves…I am going to showcase two champions of either camp, cause, call it what you will.
In the red corner, we have Mr. Money Mustache:

Peter Adeney (I had to Google: “What is Mr. Money Mustache’s name?” to get his name as I did not know it) is a personal finance blogger many of you may follow.  He refers to his soldiers as “mustachians,” and he’s a Spartan.  By Spartan I mean that Mr. Money Mustache, no sense in calling him Peter as his branding is not in the name, follows the ancient Spartan lifestyle of minimalism and simplicity.  The Spartans were much more than an elite warrior society!  In, Why should I be frugal, when I'm so rich?, MMM communicates his personal philosophy, and as can be seen from the headline, it is no mystery that his cause is You joining Him at Camp Rich.  Before I go any further in my analysis of MMM and others like him, I want to present to you Camp Wealthy’s champ.

In the blue corner, we have another money General I have repeatedly written about at CCM blog.  It is none other than Mr. I will teach you to be rich, Ramit Sethi.

It's interesting that Mr. Sethi chose the word “rich” to be part of his site's name because when you watch videos, or read his emails or articles, becoming rich per se is not really what he preaches.  In fact, he was criticized and called a snob for switching teams, so to speak, early in his branding career.  Although Mr. Sethi wants you to make a ton of money, he is NOT a minimalist, and “simplicity” is only what he believes the task of becoming wealthy can be if you become his soldier.  Mr. Sethi is a modern day Roman…a visionary who believes in carving out an empire.  Just read his about Ramit page and you will understand why he’s a Roman and not a Spartan as is MMM.

For every Roman, there are at least 10 Spartans.  And what I’m basically saying here is that Camp Rich is densely populated, and promoted much more than is Camp Wealthy.  Why is that?  You may decipher from the comparison below:    

Battle at Common Core Money Blog Circa. 2015

Belligerents: Spartans vs Romans
Generals: Mr. Money Mustache (Sparta) and Ramit Sethi (Rome)

Which side do you fall on?  If nowhere, who will you join?

Camp Rich
Camp Wealthy
Save for Retirement
Save to buy or start a business
Invest in stocks and bonds to grow a nest egg
Invest in stocks to make more money to buy passive income producing assets like real estate
Stay Diversified
Concentrate on a few stocks that will result in the most gains, sell, and repeat
Live within their means, philosophy of frugal living
Live within their means so long as it doesn’t compromise their empire building
Are realists
Are dreamers
Believe in education
Formal education is not necessary
Make safe and prudent choices with money; avoid risk if possible
Make and take calculated risks; taking risks comes with the territory
Drive four door economy sedans until it is more expensive to fix than to buy a new one
Drive any vehicle in working condition until they “make it,” and once they do, they don’t buy a four door economy sedan
Don’t mind the rat race provided they are socking away or growing their money
Hate and loathe the rat race!  It sickens them to have to be part of it
Have to work doing something even if it isn’t a conventional job.  Substituted a rat race job for another, must keep up or ultimately starve, undertaking
Don’t have to work anymore; they have enough passive income coming in such that if they maintain their lifestyle, they will be just fine
Start early and utilize compound interest
Never too late to start
Hard, consistent work for 30+ years
Extremely hard work for less than a decade; move onto something else if it doesn’t work
Side-hustle using someone else’s platform
Create their own hustle, are entrepreneurial
Financial security and freedom
Financial Independence
Love by giving ongoing help and support/coddle you
Love by being brutally honest and tough/shake you
Celebrated for their rich aspirations
Vilified for their wealth aspirations

There are certainly more contrasting characteristics than what I have listed above, but I think these are enough to provide a lucid depiction of Camp Rich and Camp Wealthy.

Whether you feel it happening or not, there really is a battle going on between Camp Rich of Sparta and Camp Wealthy of Rome.  The various Generals of each faction are after your hearts, minds, time, and attention.  My analysis is to help you see when you are being pitched a Camp Rich or a Camp Wealthy philosophy.  Don’t waste time reading from an opposing camp’s war journal unless you want to see the other side’s battle tactics.  

I, myself, belong to Camp Wealth though this blog is more of a hybrid, albeit weighted more toward Camp Wealth (70:30, I’d say).

You may have already decided the philosophy of money most suitable to your personality.  If it isn’t making you happy or keeping you satisfied, there is nothing wrong with switching camps.  Both camps have outstanding Generals, and so the choice of path to stay on or take is up to you.  The worst you can do is look out at the diverging road and stay put out of fear.  Spear or sword?  Grab a weapon!

This has been Camp Wealth General, C. Osvaldo Gomez, reporting from the battlefield. If you liked what you just read, I can dispatch more battle tactics your way when you subscribe to this war journal. Carlos, out!
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