Tuesday, May 6, 2008

Wealth ≠ earnings: vivid example

This is sort of a follow up post on current real estate problems, but not only that: it illustrates that your true wealth has very little to do with how much you make.
This very well known professional athlete who made millions of dollars a year had to foreclose on his $2.5 mil. house. Unbelievable? Well, how about some well compensated doctors ( orthopedic and plastic surgeons, some ENT docs, etc.) who despite their OK income are in debt (credit cards, HELOCs) up to their eyes? How do you explain that?
All the usual evils are to blame, it seems: complete lack of even basic financial education, conspicuous consumption (I'm sure that above mentioned professional athlete didn't really lead a frugal life) and mental substitution of true wealth by high income. Very much applicable to all of us.

Here's a link to this article

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