The Real Cost of Pretending to be Rich

Hey there, real quick before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience. Live it is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Have you noticed how social media is basically one big flex fest? I mean, luxury cars, designer bags, exotic trips, all financed on credit cards or helocs and all that stuff that are really crying for help. But see, here's the shocking part. Most of those people aren't wealthy. They're exhausted, they're broke. They're trapped. Looking rich doesn't make you free. It actually makes you fragile. And here's the truth that nobody's telling you. The ultimate flex isn't flaunting. It's freedom. Quiet wealth beats loud wealth every single time. And I know because I've lived it. I'm Mel Abraham, a CPA and entrepreneur, a USA Today best selling author. And I thought success was a spreadsheet, a corner office, and a lot of luxuries. Until I realized money without meaning is just broke in a fancy outfit. So on this episode, we'll dig into the cost, the real cost of pretending to be rich, but the dangers of flaunting it. And how to align your money with your values so you can actually live free and not just look it. I'll even share with you a tool to calculate exactly what your real lifestyle costs. This is building your money machine, where we help you master your money, eliminate financial stress, and live a life by choice. Because earning more doesn't make you free. A money machine does. And that freedom, it doesn't start with your next raise or your next paycheck. It starts the moment you. You get your money to work harder for you than you did for it. All right, let's get in. Here's the lie. If you look rich, you'll eventually be rich. It's hogwash. I mean, looking rich doesn't buy you freedom. It buys you debt. And let's be clear. Earning more doesn't make you free either. The money machine does. And but way too many people are out there playing dress up with their money. They're driving cars they can't afford. They're buying handbags that Cost more than their rent they're posting on Instagram, their vacations that they'll be paying off until the next vacation. So I want to break this down for you because I think it's way more important to understand not only the real cost of pretending to get rich, and there's more than just financial costs. It's about the money you lose. It's about the peace you sacrifice. It's about the future you give away. And I'm going to show you that better path, the power of quiet wealth that's aligned with your values and your desires. That's the ultimate flex.

Okay?

And so this one might sting, but in the best possible way to make it happen. Now I get it. Whether it's purses, cars, or anything else, you know, I get it. I got to admit, I'm a cpa, so I don't get the handbag thing. My first briefcase was a $29 briefcase from Office Depot that literally lasted longer than most California marriages. Okay? And here's the kicker. It's not just bad for your wallet. You'll see that it's bad for your soul. You know, when you look at the average car payment right now in. In the US is $735. And I'm going to go through some examples in here, but 735 bucks a month, okay? If you invested that over 20 years at 8%, that's half a million dollars, okay? And instead of doing that, what people are doing is they're financing a depreciating hunk of metal that might make their neighbor jealous for five minutes, but that's it. And I think we need to think about things and say, is this building my machine, my money machine, the life that I dream of, the life that I want? Or is it just simply a mirage? Okay, so before you buy another status symbol or anything, I want you to figure out your actual dream life. One of the first things is to start asking yourself what actually matters to you? What does that life look like? Because. Because too often we are unconsciously spending on things that are driving our life and our debt and our finances, but not driving our fulfillment. And so what I think we need to first start off with, and I do this in my book, and I do it with my clients, is to really get clear on what that life is. That lane that you want to run in, what you want to experience first. And then we put the price tag on it, and we run that race. See, too often we allow the race to be defined by someone else by keeping up with the Joneses. By doing all of those things, I want you to define your own race. Run in your own lane. It's the only way you find film and you find that. That winning the race. So in one way to help you with that, I built something called the. The Lifestyle Cost calculator is totally free where it'll help you actually take that lifestyle you want, plug in some of your numbers and what you expect it to be. It'll give you what your lifestyle cost will be so you know what the target is, okay? It's living your rich life, not someone else's, not the medias, not the social medias, and not the fake one, okay? If you want to get it, go to melabraham.com lifestyle. We'll hook it up in the links below. Like I said, it's totally free. But I want to jump in now and let's start to drive through some of this stuff of, you know, the cost and everything of pretending to be rich. So here's the deal. Not everyone is playing that game. There are two kinds of wealth. Loud and quiet. Loud wealth. It's the flashy, it's the fireworks, it's the boom, and it's the gone in seconds. The Lambos, the Gucci, the private jets, the boats for show.

Okay?

Quiet wealth. It's boring on the outside, but it's powerful on the inside. It's the money machine that's compounding and growing. It's freedom, it's options, it's choice. Think about Warren Buffett. The guy's worth billions. He still lives in the same house he bought in 1958. He drives a modest car, and evidently he eats at McDonald's. That's something we should talk about. But he doesn't need to prove anything because he knows his worth. He knows what he's worth now. He knows his financial worth, but he also knows his personal, his self worth.

Okay?

And so the challenge is that you compare that to that influencer who's renting the Lambo for TikTok videos. One is literally free, the other is in fumes.

Okay?

Quiet wealth is that Tesla that's sitting in the garage, charging quietly, building energy over time. Loud wealth is the revving. It's like that revving of a Lambo at 3am it burns energy and it annoys the hell out of everyone around you.

Okay?

But here's the kicker. Quiet wealth isn't just financially smarter. It's emotionally stronger. Because when you don't need envy from strangers, when you don't need validation from strangers to feel valuable. You've already won. That's the key. Okay, so let's talk about the four costs of pretending to be rich. Like I said, it's financial cost is the first one. So it isn't just costing you money, though. It's going to hit you in four different ways. The first one, though, is the obvious one, financial cost, what you actually spend. Let's just talk about that. I'm going to give you a couple examples here. We're going to do some math, because the math actually matters, okay? Pretending costs are expensive. They're cold, hard cash that we spend. Now, let's just use an example of a vacation. Let's say $10,000 vacation, a single trip for $10,000. Now, I want to caveat this. I'm not telling you not to take vacations. I'm not telling you not buy cars. I'm not telling you not buy purses. What I am saying is that I want you to be conscious, intentional, and aware of the costs of doing that and make the decision in alignment with the values and the things that mean something in your life. My wife and I spend plenty of money. We go on plenty of nice vacations. But they are our joy points. Those are the things that matter to us. And then there are things that we don't spend a lot of money on because it doesn't matter to us. That's. I want you to be discerning in this process. So don't take anything. I'm telling you as don't spend a dime. I don't think deprivation is your path to financial freedom. That's not the path to fulfillment, but intentional living is. And so let's just look at a vacation as an example. So one trip, $10,000, you're going to look at it and say, okay, 10,000 bucks. But what happens if I took that trip and I took that $10,000 instead of taking the trip and I invested it at 8% over 20 years, that $10,000 would turn into 46, $47,000. But what happens if I were to do a trip every other year for $10,000, and I did that for 20 years, and instead of taking those trips, I took the $10,000 every other year and invested it at 8%? Now all of a sudden, that vacation, those vacations I was taking could be $256,000 if we just invested it. Now, that would mean that you're not taking the vacations, which isn't what I'm trying to get at, But I just want us to understand that the vacations need to be meaningful. Which also tells you this. If you're going to take the vacation and spend the money, then make sure that you enjoy it. Make sure that you're there and present every moment and really take everything out of it. Because it's not just the 10,000 that it's costing you, it's costing you 40,000 or 100 hundreds of thousands of dollars, depending how often you take it. Now let's add one layer to this, another layer to this, and let's assume that you don't have the cash for the vacation. So now we're going to finance it on a credit card at 22%. So now all of a sudden that $10,000 vacation balloons to over $17,000 because it's going to take almost six years to pay it off. And now you look at it and say, I've lost the ability to invest the 10,000, but now I've lost the ability to invest the interest. You've lost the investment growth on that. So you end up out almost $60,000 for that one week in paradise.

Okay?

That's not wealth, that's survival in a swimsuit. However, once again, if this is something that's meaningful to you, that aligns with your values, then I want you to do it smart. What I don't want you to do is continually be in debt to finance vacations. We need to be smart about it. You gotta use rules. You gotta. Maybe you're doing a vacation every couple years that is a really nice vacation, and then smaller vacations in between. We cannot finance lifestyle over the long term and think we're going to get ahead long term. In fact, my kind of base rule is this. If the enjoyment time for whatever you're spending it on is less than the payment time to pay it off, it's probably not the right way to spend it or the right way to finance it. Let's look at another one. Okay, Another example that, that is very prevalent right now and that's buying a car.

Okay?

Let's assume that you're going to buy a $70,000 luxury vehicle. Now, many of these dealerships and many financiers that they're doing these crazy deals. We're going to finance it over seven years, y'.

All.

A seven year financing time on a vehicle is pure ludicrous.

Okay?

It doesn't make sense, but let's just look at it for what it is. Finance it over seven years. Say a $70,000 car financed over seven years at 6% that's over $1,000 a month, $1,023 a month. So over that seven year time frame, you're going to buy this vehicle and it's going to cost you almost $86,000 total. So 70,000, but with the interest, it's going to cost you almost $86,000 total. The value after seven years of that car on average is probably only around 24,000. That means the economic loss for buying that car and financing it over seven years is over $60,000.

Okay.

Why I'm getting at this is that financing long term, very aggressively depreciating assets does not make a lot of sense.

Okay?

Now I full transparency. I drive a nice car. I didn't finance it. I paid cash for it. I put money away and put myself in a position to pay cash for it. And we keep our cars for a long period of time, seven to 10 years. We don't drive a ton.

Okay?

But financing a luxury vehicle over a seven year time frame like this, that's not building the money machine. That's not moving you to fulfillment. That's just broke in leather seats and financed. Let's compare it for a moment.

Okay.

When you start to look at even a smaller vehicle, a more affordable vehicle that you're going to keep over seven years, but you're going to finance over 42 months, okay? So let's assume that you have a more affordable car, $25,000 car, but you're going to finance it over 42 months at the same 6%. Now, I use 42 months because I don't want you financing a vehicle for more than three, three and a half years. What's going to happen? Is your payment still going to be substantial? It's still high, $661 a month. The total amount paid for that kind of a car is 20, 27, $28,000. The value after seven years is probably somewhere around $8,500. In the end, you lose about $19,000 on a more affordable car held over seven years, financed over three and a half years, versus buying that $70,000 vehicle. Seven, seven year financing at 6%, that gives you an ability to take the difference and invest it. That's the challenge is that we are building wealth or creating assets that actually aren't building the machine, they're costing us. And if we make better decisions, because the fact of the matter is the $70,000 car, the $30,000 or the $40,000 car, they're going to help both, all three get you to Costco. Just the same. One's just going to be more expensive. One's going to cost you more in the long run. And does it really matter? Okay, I think that's the thing that we need to think about. That's the financial cost of things and it's real. But there's other costs. And those other costs are opportunity costs. This is the question of what could you have done with the money. See, every time we spend money, we don't have it to do something else in our life because it's finite in what we have in the moment.

Okay?

So the money we have in the moment, we can either go buy the car, take the vacation, buy the purse, buy the car, buy the clothes, you know, buy the big screen TVs. But we can't do both at the same time because once the dollar spent, it's spent. So think about the opportunity costs. If I took the thousand $23 for that $70,000 vehicle and invested at 8% for seven years, okay, that's going to turn into $117,000. Remember the $10,000 vacation that we took every other year? If we invested that over 20 years, that's a quarter million dollars. There is a true opportunity cost with it. And again, if you want to do it, that's fine. I just want you to be conscious. I want you to be aware. I want you to be intentional. No, I'm okay with it. Like I said, my wife and I take expensive vacations and we know what it does to our financial future and we're cool with it because it's part of the plan. It's part of the work that we're doing to make it happen. So it's not about pretending to be rich, about being smart and strategic and work with a plan to make it happen so it's not wasting away your future. The third cost is, this is the emotional cost. Pretending it's exhausting. The stress from $1,000 plus car payments just to impress people, if that's the motivation, is going to pressure you and it's going to stress you out.

Okay?

The cost of having a huge over buying a house, just to have it, to be able to do that you is, yes, it's an asset. It's a home that you live in. It's great. You can show it off, you can have your parties. You do. But if you're constantly in debt or you're constantly stressed and you're having a hard time keeping it and maintaining it, what's it all for? Okay. The dread that comes in when the credit bill finally. Credit card bill finally lands from that dream vacation. You go, great, how the heck am I going to pay for it? Or the constant paranoia of being found out when the image you've created doesn't match the reality of what's going on. And here's what I mean by that, is that I actually watched someone who has. He owns this fuselage of a private plane that never leaves the ground, and he rents it to influencers to come walking up the tarmac, get up on the plane, they close the door like it's their plane, do their filming, and then get off the plane. The plane never moved and never went around. That's creating a facade. And at some point, people get found out, or at some point, the debt to get there, to create that image catches up on them. That's not confidence. That's anxiety in a suit, in designer clothes. That's not freedom. That's survival with a sunroof. I mean, it's something we need to watch out for. And then the fourth cost is this social cost. Finally, when it comes down to it, it literally can damage relationships. See, here's the thing. When you attract people who just love the image and not the person, what kind of relationship is it? How deep of a relationship it is? Is it? I have. I don't have a ton of friends. I have a lot of acquaintances, But I have a handful of friends that are near and dear and deep with me. They know my deepest secrets. I have the conversations. We spend the time. It's not because of where I live, it's not because of what I do. It's not because of my book. It does. Not because of anything. But it's because of who I am. See, and sometimes we get sucked into something circles where envy matters more than the connection. And sooner or later that falls apart. You end up with shallow friendships. You end up with deep financial holes to try and keep and support those friendships. And let's be real, the Joneses, keeping up with the Joneses, they're broke. Okay? They might be hiding it pretty good right now, but sooner or later they get found up.

Okay?

So the cost of pretending to be rich isn't just financial. It's your money, okay? But it's your missed future, it's your mental health, it's your relationships. It's all of that. And to flex for strangers who don't even really care. That doesn't make sense. So what's the alternative? Here's the shift. Stop using money as a mask. Start using it as a mirror. Money should reflect what you value, not what you fear. And I think I want to give you a three step framework to start to shift that, to bring it about. Because when you use your money as the paintbrush to paint your life that I call your masterpiece, now, money is aligned with your values, with what you value, with your, your mission and what your calling is in life. So the first step is to audit. Okay, I know that word doesn't seem or sound very fun, but I literally want you to track your expenses for 30 days, minimum 60 days. I'd like, okay, track your spending. I want you to document every dime, every dollar that goes out. Not for budget reasons, but for awareness reasons. And then I want you to go back through and I want you to journal what it was, how much it was. I want you to document the emotions around it. What were you feeling when you spent it? What was it about? And then ask yourself, does this align with my values? Family, health, growth experiences, does it align with my values? And if you're a couple, do it together. Because what we're trying to do is take your spending, take all your money and use it towards the actualization of your values, the life that you want. That's where fulfillment lies. It's not in acquiring stuff, because that's just stuff. It's meaningless. And so we want to take the mindless spending and make it mindful in the process. And this is one of the things to do. And when you see and document the emotions around the spending, you start to be able to dissect the emotional spending triggers that might be in your life. I haven't made no qualms about the fact that sometimes I'm a stress spender. When I'm under stress, I want a distraction. I might go to the Internet and start buying stuff, but I know that about me. And now I don't do it. I still do it a little bit, but not as much. Okay, but I'm aware of it. All I'm trying to do is raise the awareness so the money isn't in control of you, the emotions aren't in control of you, but rather you're in control of the money and the emotions. Okay, so step one is to audit the. Step two is to cut. Step two is to cut. I want you to circle the things that align with your values. And now I want you to cross out the things that don't. The stuff that when you look at it go, that was just for status. That was a feel good thing. Cross it out. Cross it out. Not because you're Going to eliminate all of it, but you will eliminate as much of it as possible. Because instead of buying things that are creating status to show other people, to flaunt for other people, you're going to buy the things that give you joy and give you fulfillment on the inside. So it doesn't matter what other people think, okay? I live my life, okay? We can have a bigger house, we can have even nicer cars than we already have. We can do a lot of things, but we just don't do it because it's not in alignment with the direction and the vision we have for our life. Now, I want the same thing for you, okay? So when you understand that I want you to eliminate the stuff that's for status that you don't need. And then I want you to take that money and go to step three. And step three is to redirect. Take that money and put it towards your freedom. Whether it's to build your emergency fund or pay down debt or invest, follow the stuff, the work. In my book, building your money machine, especially chapter 12, where I give you the wealth priority ladder and I literally tell you, here's the things that to spend your money on. Here's the allocation and how to take each dollar and optimize it to build your wealth in the best way possible. And at the first level is for you to first start to understand that it's important for you to build an unshakable foundation that is about debt management, that is about liquidity, that is about your emergency fund, your peace of mind fund, as we call it, and making sure that's in place. Then we're building on that unshakable foundation, the wealth and the money mach machine that gives you choice and freedom.

Okay?

Because here's the truth. That luxury watch won't give you more time, but financial freedom will. Okay, that's the thing that we're trying to get at. So what's the real cost of pretending to be rich? It's your money. It's your peace. It's your freedom. The ultimate flex isn't the car in your driveway, it's the freedom in your calendar. Okay, here's the thing. If you're trying to figure it out, remember I've got the lifestyle cost calculator. Download that. It'll help you understand your real costs, what your ideal life cost to build a plan, align it with your values so nobody else is defining it for you. You don't need anyone's approval. Okay, we'll put the links down in here and here's. My challenge for you now to go out this week, audit your spending, to ask yourself, is this going to get me closer to my money machine, the freedom that I want, the life that I'm envisioning, or is it a mirage? Okay, if it's a mirage, redirect it to your money machine, okay? If it's part of the money machine, accelerate it and keep going. Because here's the thing. Looking rich, that's expensive. Living rich on your terms, that's freedom, right? And hey, if you're ready to stop renting your life with debt and start building that money machine, make sure that you've subscribed to this channel. Let's build it together, okay? Because the world does not need more people pretending. They need more people free.

Okay?

And the real cost of pretending to be rich is your freedom.

All right?

I hope that this makes sense. I hope you'll take it for what it is. Remember, I'm not telling you to not spend. I'm just telling you to make sure that when you do the spending, when you do the investing, you do it in alignment with your values because that's the path to your fulfillment. So your dollars are doing the right thing in your life that you need, and you're in your lane. It's the only place you're going to win. The wealth game is in your lane based on the life that you want. All right, if I can help you in any way, do me a favor. Send me your questions, send me your notes, send me your comments. Let me know when you do the audit, what you might be eliminating. I'd love to hear from you. I'd love to support you on that journey and I'd love to see you on, on your path to financial freedom. And until I do, as I always say, always, always strive to live a life that loves you. See you in the next one. Thank you for listening to the affluent entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com group and I'll send See you there. And that's it for this episode of building your money machine where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple podcast, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people, because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.