I’m telling you this story so you can learn from my financial mistake and save yourself a huge amount of money. Its wiser to learn from other people’s mistakes than your own. Learning from other people will save you a lot of money and time.
I never look back at mistakes with regret. I Look back to analyze the lesson so I can move forward with wisdom. Most people look back at the past to blame others and complain. You can’t gain wisdom like that.
In my mid 20’s is when I started making decent money. I did what most people do and started buying material symbols of success. I purchased cars, watches and designer clothes. I always invested in stocks, but I could have invested a lot more if I avoided hyper materialism. It’s all about opportunity cost. When you buy a consumer product you don’t need, its costing you more than the sticker price. It’s costing you the opportunity to invest in income producing assets that will multiply your money.
The most unnecessary frivolous purchase I ever made was a convertible corvette in 2008. I thought I was being a financially savvy by getting a gently used 2-year-old corvette with only 5,000 miles. I paid around $50,000 vs. paying around $65,000 if it were brand new. The little $15,000 savings was inconsequential. I calculated I lost the opportunity to profit around $400k over the next 10 years if I had invested that $50,000 in blue-chip dividend paying stocks.
I was investing but I should have invested more with the corvette money. Most of the top-notch stocks I had on my watch list all went up between 300% to 1000% between 2008 and 2019. Even the general S&P 500 index went up around 300%.
I mostly prefer individual dividend paying stocks and I didn’t have to be a genius stock picker to make profits. Most of the stocks were individual stocks that did well were household big brand names that people already know. Most of the stocks on my watchlist such as Nike, Apple, Amazon, Microsoft, Google, Home Depot, Clorox, Pepsi, Netflix and Boeing all made major gains between 2008 and 2019.
Learn from my mistake. Don’t buy luxuries until after you are rich. Its about getting rich not looking rich. Luxury goods won’t enhance your life unless you already earned financial freedom. Invest in assets that produce passive income and let those profits pay for your luxuries.
If you are working a job, then most of that money should be piled into investments and/or your own business. No one knows exactly how well stocks or and other investments will do in the future, but income producing assets such as stocks and real estate have always gone up over the long run. Always have a long-term outlook with any investment.
Never buy luxuries with debt. Those items become a burden instead of a joy. If you can’t pay cash then you really can’t afford it. Proverbs 22:7 says “The borrower is a SLAVE to the lender.” Don’t sacrifice your future freedom for meaningless consumer debt. They will always make new cars, designer clothes, and luxury homes every year. It’s not going anywhere, and you can always get it after you are wealthy.
The ironic thing is that the more money I get, the less I desire expensive cars, clothes and homes. I have nothing to prove and I realize the true value of money. I value the freedom and options that wealth can bring. Lavish goods are nice but once you can really afford them, you don’t seem to care as much.
The flashiest people are usually the ones with the least money. I accelerated my wealth building when I decided to downsize and live below my means. You’ll never get rich if you worry about what others think. You don’t have to prove that you are successful to anybody. Most people only splurge on luxury because they want to present a successful image. Many people want to be associated with the status and reputation that luxury brands have built.
Always remember the popular quote “People buy things they don’t need with money they don’t have to impress people they don’t like.” In the Bible Proverbs 29:25 says “Its dangerous to be concerned with what other people think.” A major key to financial freedom is to not care what other people think.
Understand that the thrill of any lavish purchase always wears off. The excitement after 4 months of driving the coolest car will always diminish. It’s smarter to drive an economical car you can pay cash for and invest the rest. Sacrifice now like no one else will today so you’ll be able to live like no one else can in the future. Resist the temptation of spending and making corporations rich. Think like an investor not a customer. Make yourself rich first.