The Four Stages of Wealth
1. The Starting Out / All on Credit Wealth ($15-20/HR entry level Job, Loans on mostly everything)
Here you are getting your first job, working your way through a degree – and are in the ‘borrowing’ phase to get you started on your journey. You are financing your car, because you have to. You are financing your degree, because you have to. You are living paycheck to paycheck and accumulating loans.
2. Long career – Doing Well Wealth ($100K Job)
Here you are in the midst of a well paying career, making a steady high paying ($100K up) paycheck, paying down your loans. You are still carrying loans and debt because you have to – but have got a higher standard of living and consumption to match as you are no longer scraping by on entry level jobs or salaries. You are paying down your loans although slowly, and saving some money for a rainy day. Possibly even investing for the future. Your future investment fund is slowly growing, and it *could* become your crutch if times get tough (layoffs, change of career, etc).
3. The Pay All Cash Wealth (1-10MIL Wealth)
You have saved and accumulated. You have paid down your loans. You now have cash at your disposal to pay for most large purchases, including cars. You see no reason to ‘borrow’ money – as that wasn’t taught to you as being financially savvy or smart, and you feel good about paying off your purchases in cash and ‘owning them’.
4. Mass Wealth – Long Term Vision (Accumulated 10MIL+)
When your outlook is decades instead of months / years. Your actions and mindset adhere to long term investment strategies and philosophies. You are back to borrowing money – as it makes more sense to borrow and leave money in market (because of your long term vision) – rather than spend that cash on large purchases. As long as interest rates are low, you will win over the long term.