Best Money Advice

I’m rich! I’m making tons of money!”

“You may feel rich, but you will never be wealthy!” I interrupted Pete who was expressing his joy after getting a new job.

“What does that mean?” He asked with eyes wide open.

I returned his question with a question. “What are you working for, Pete?”

“Uhh Hector! Obviously, I’m working for money! I want money! Show me the money! I want to have lots and lots of money!”

“Well Pete, if you’re working for MONEY, if your goal is accumulating MONEY, you will NEVER be wealthy!” I said.

“WHAT? You are wrong, Hector! I’m accumulating MONEY! I work, for money, that’s why I work really really hard!”

“Pete, you are confusing money with wealth.” I answered in a calm voice to get his emotions under control. “Let me ask you something, how much are you making per hour?”

“I got a raise from $120 dlls/hour to $200 dlls/hour! I’m making huge money, last week I celebrated buying a Mercedes to my wife. She was so happy. I’m so happy that I can afford all her dreams.”

“You can’t afford it, Pete!”

“What do you mean I can’t afford it? I just did! I have the car at home now!”

“How much did you pay for the new car?” I asked.

“Ohh, you need to see it to believe it! It’s that SUV, with all the gadgets you can ever imagine, it’s a $90,000 dollar beast!” Pete said proudly. He couldn't contain his emotions. It meant success for him!

“How much cash did you pay?” I asked.

“That's the best part! The financing was unbelievable! With my new payroll, I qualified in a heartbeat! I charged my credit card with a small 10% down payment, just $9,000!”

“You couldn't afford it, Pete! That was a bad decision!”

“I deserve this! I work hard for this! I make $300,000 a year! I’m rich, Hector! I can buy all my gadgets. I love my boat, my motorcycle, my cars… and when you visit my media room at home and listen to that audio, your pants will drop!”

“No, Pete, your pants will drop the moment you realize that you are working for money. You are working to accumulate stuff and you will never accumulate wealth! The moment you lose your job you will be living in hell!”

“Shut up Hector! Don’t even mention it!” he quickly replied.

“Pete, wealth is only found in assets, not a job. People who own assets are wealthy. Assets increase their value over time or better yet, the best assets make money for you. That is what real wealth means.”

I continued.

“I invite you to see money through a different perspective. Money is a tool, a medium of exchange. Money is simply a unit of measurement used in the act of giving and receiving. Money is just a source of energy.”

“I don’t get it, Hector!”

“Pete, you make $200 per hour, that’s amazing! But have you noticed you owe hundreds of hours of work to pay your lifestyle? How much do you owe today?”

“About $500,000 including the mortgage of my house. I don’t worry about it because today I make much more!”

“Do the math, Pete. Convert your debt into labor hours! You make $200/hour, good, but take away taxes, of about 30%, take away cash invested into your IRA, 401K, etc. Effectively, you have available around $130/hour.”

“Correct…” Pete said attentively, trying to find something to prove me wrong.

“Let’s divide $500,000 / $130. That’s 3,846 hours of work you owe. You don’t owe money, you owe time! You are hooked! You don’t have assets to cover your debt. You are the only source of income. Your work, your labor, your time.”

“That can’t be right!”

“You can’t afford all those things! You must start accumulating assets!”