When I went to FinCon11 this past October, I had the pleasure of meeting a lot of wonderful people. Some bloggers I had been admiring for a year who were heavy hitters, and even bloggers who I had not heard of who were doing great things. One of the bloggers I met was Romeo Clayton, who was great fun to talk to. Myself along with another blogger gave Romeo a hard time at FinCon because he informed us he had published a book. We were amazed! The book is called How We Prevent Wealth and discusses what we do in life that prevents us from being not only rich, but wealthy. He gave me a copy and I’m so glad he did; it opened my eyes to a lot of things I’m doing wrong and made me say “that’s so true” about many other things.
Chapter 7: We Get Caught in the Upgrade Cycle
This chapter spoke directly to me. Have you ever heard of lifestyle inflation? It’s when your income goes up and so do your expenses. Most people live right at or above their means, leaving little to no room for savings. You get a raise, and you find more things to spend money on using your Chase Sapphire Preferred card. I’ve done it, and you’ve probably done it too. It’s the upgrade cycle! An excerpt from the book:
Before I purchased my home, I was comfortably paying only $1,000 a month in rent. But then I received a pay raise. And as my income grew, I decided that I could comfortably afford a mortgage as opposed to paying rent—a $500 per month increase. Against my better judgment, it seemed like the right thing to do at the time. Instead of taking the $500 increase and contributing to my IRA or setting the money aside in an emergency fund, I did not. And later when I received another pay increase, I purchased a brand new truck with the money, because “I could afford it” and I was convinced by a friend that the purpose of me working is to get the things that I deserve.
How many of you experienced that very same thing?
Chapter 16: We’re on Different Financial Pages than our Significant Other
Raise your hand if this rings true for you. I see, many of you! In order to be wealthy, you and your spouse have to be working towards the same financial goals. One can’t be the master spender and the other try to be the master saver. One can’t be researching how to compare cash back credit cards while the other just uses the cards. It won’t work that way. Hubby and I are both continuing our education so that we can get good jobs and accomplish our financial goals of no debt, being home owners, an emergency fund, money for college for our future children, and retirement. Romeo says:
Either way, unless both people in a relationship are heavy savers and agree upon a savings strategy, someone has to give at his or her own expense. This can be very difficult to do, because it plays on the emotional psyche of the saver. When a spender wants something, without discipline, there is little that their significant other can say or do to stop the spender from buying what he or she wants. And on the contrary, when a saver wants to squeeze in every last penny, because of discipline, there is little the other person can say or do to stop them, unless the spender spends all or most of the money. Either way, someone will be frustrated. Who is right? Is there even a right or wrong person?
Chapter 17: Our Marriages Often End in Divorce
I could scream right now, but I’ll settle for a virtual high five on this one. Divorce, divorce, divorce! We’ve been covering it a lot more than I’d like lately. So many people are quick to throw the D word around instead of working out their problems. How does this prevent wealth? Do you know how much a divorce costs? Especially if you don’t have a prenup and you have lots of assets. In a divorce, you’re sometimes losing property, tax benefits, and it can put you in a bind as far as paying bills if you lose that additional income.
The loss of income of one of the spouses or the additional expenses that may have to be incurred because a non-working spouse is no longer able to take care of children is an unfortunate reality of a divorce. For example, if one spouse was always accustomed to staying home with the children, but then is awarded custody of the children, whether sole or joint custody was awarded, he or she may now have to pay for the children’s care if he or she has to work, because child support may not be enough to support the previous lifestyle.
Divorce is hurting your chances at being wealthy people, wake up!
Anyways, I could rave about Romeo’s book all day, but I want you to read it. He’s being so generous, he has made his entire book, How We Prevent Wealth, available for you to read online for free! If you have personal finance and/or reading goals for 2012, this is a huge one you shouldn’t overlook. Thank you Romeo for writing this eye opening, tell it like it is book. We all needed it.
I enjoyed reading your view on Romeo’s book – he is fun to talk to. Love your blog!
Thanks Dorethia! Romeo’s awesome, I can’t wait until he writes another book!
Sounds like a pretty interesting book. The part about being on different financial pages from our spouses struck me as particularly relevant; I have quite a bit of trouble getting my fiancee to be on board with me on things like investing and saving for retirement. We’ll definitely to reach that point if we hope for success in our lives.
It’ll work out in time. My husband and I had differing views on investing and retirement as well. Sometimes you won’t get on the same page until later on down the road in your relationship.
Raising my hand to chapter 7. I use to do the same. More income, more stuff. It just seemed logical at the time 🙂
Same here! Then came the realization that when the income was cut, the expenses were too high.
I used to do a lot of lifestyle inflating back in the day. But over the last few years (while I’ve been working on improving our finances) we haven’t really done it. Last year my husband got a raise, so we increased our 401k contributions. I’ll have to head over and check out his book. 🙂
I had dinner with Romeo and 4 other PFers one night. I have to say, he’s quite a guy. There are people you meet and, after talking to them for a time, you know they are destined to be successful. Thanks for reminding me about his book, vacation coming up and I can use some reading material for the beach!