Wealth is what you get when your income is higher than your expenses. According to a recent survey by Charles Schwab, most people believe that being wealthy means having at least $2.4 million — but the survey also found most people defined wealth in terms of having enough money to be comfortable and buy what they wanted. So the idea of being “wealthy” can mean, to some extent, what you choose to make it mean. If your wants and needs are modest, then a much smaller net worth may be more than enough to make you wealthy. And if you haven’t been able to reach this point, perhaps one of the below problems is to blame.
Debt: the black hole of personal finance
Too much debt can be a real wealth-killer. Every time you borrow money, you’re making a promise to pay back the money you borrowed and then some. The higher the interest rate on your debt, the more it will drain your income and make it even harder for you to become wealthy.
The biggest challenge today debt-wise is that it’s so darn easy to borrow money. All you have to do is swipe your credit card or punch the numbers in on a website and boom, you’ve put yourself deeper into debt. If you’ve got a lot of credit card debt, you may need to make it more difficult for yourself to use a credit card until you’ve broken the addiction. One old-school way to “freeze your credit” is to stick your credit cards in a container full of water and put them in the freezer. Before you can use the cards you’ll need to thaw them out of the block of ice, which gives you the chance to have second thoughts about spending that money.