From Riches to Rags

Some individuals do obtain and come into contact with wealth at a
certain point in their lives. Unfortunately, most people tend to be
mistaken in their attitudes of being wealthy. Instead of using and
building up what they have to their advantage, most of them tend to
lose what they have acquired.

Here are some examples that fall under the following categories.

1) The False Rich
These are usually made up of professionals and corporate executives
who earn a high income, but who spend just as much. They are the
ones who drive the latest luxury cars, fly first class and dine at
the finest restaurants. They appear rich and successful.

However, the sad truth is that they are poor accumulators of wealth
who have few positive cash flow assets. They roll their credit
cards and have huge credit lines. Their bankers love them. As a
result, they are usually just one to two paychecks away from being
broke.

2) Those Who Inherited their Millions
These are a bunch of lucky bums who did not have to break into
sweat to earn their money. Such instant millionaires usually do not
understand the value of money, as they never had to slog for their
millions. And, as a result, they spend like there is no tomorrow.
This is why it has been proven time and again that inherited wealth
never lasts past the third generation.

Those who strike the lottery also fall into this category. Because
it was pure luck and not financial intelligence that thrust wealth
on them, most of them tend to lose it all within a few years,
ending up deeper in debt than ever before.

3) Highly Talented Celebrities
These are the ones who earned their millions not because of their
financial intelligence but because they were blessed with a
spectacular talent in singing, acting or sports. Because millions
come easily to these stars, they easily spend it all. Unfortunately
for them, no matter how much they earn, many eventually wind up
broke and in debt.

Some sad examples are Mike Tyson, MC Hammer and Michael Jackson.
Mike Tyson earned over $500 million over a few short years as the
undisputed heavyweight champion. Because of his lavish lifestyle of
luxury cars, huge mansions and Bengal Tigers, he ended up filing
for bankruptcy. Pop star MC Hammer who sang the hit single 'You
can't touch this' made over $33 million in his career, but he too
filed for bankruptcy.

King of Pop Michael Jackson earned over $700 million in his
illustrious career. However during his molestation trial, his
accountant testified that he spent $20-$30 million more than he
earns every year, took loans of more than $415 million and is
facing a severe cash crunch, causing him to default on his loan
payments.

They are no end to stories of sports celebrities and movie stars
who have earned hundreds of millions within a few short years and
ended up broke and deeply in debt in an even shorter period of
time. Why? Because lacking the 'million-dollar mindset', they could
neither manage their money nor rein in their runaway expenses.

Without having a solid understanding of the principles of wealth,
one may never truly be wealthy.