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From Riches to Rags

Oct 17, 2007
Some individuals do obtain and come into contact with wealth at a certain point in their lives. Unfortunately, most people tend to be mistaken in their attitudes of being wealthy. Instead of using and building up what they have to their advantage, most of them tend to lose what they have acquired.

Here are some examples that fall under the following categories.

1) The False Rich
These are usually made up of professionals and corporate executives who earn a high income, but who spend just as much. They are the ones who drive the latest luxury cars, fly first class and dine at the finest restaurants. They appear rich and successful. However, the sad truth is that they are poor accumulators of wealth who have few positive cash flow assets. They roll their credit cards and have huge credit lines. Their bankers love them. As a result, they are usually just one to two paychecks away from being broke.

2) Those Who Inherited their Millions
These are a bunch of lucky bums who did not have to break into sweat to earn their money. Such instant millionaires usually do not understand the value of money, as they never had to slog for their millions. And, as a result, they spend like there is no tomorrow. This is why it has been proven time and again that inherited wealth never lasts past the third generation.

Those who strike the lottery also fall into this category. Because it was pure luck and not financial intelligence that thrust wealth on them, most of them tend to lose it all within a few years, ending up deeper in debt than ever before.

3) Highly Talented Celebrities
These are the ones who earned their millions not because of their financial intelligence but because they were blessed with a spectacular talent in singing, acting or sports. Because millions come easily to these stars, they easily spend it all. Unfortunately for them, no matter how much they earn, many eventually wind up broke and in debt.

Some sad examples are Mike Tyson, MC Hammer and Michael Jackson. Mike Tyson earned over $500 million over a few short years as the undisputed heavyweight champion. Because of his lavish lifestyle of luxury cars, huge mansions and Bengal Tigers, he ended up filing for bankruptcy. Pop star MC Hammer who sang the hit single 'You can't touch this' made over $33 million in his career, but he too filed for bankruptcy.

King of Pop Michael Jackson earned over $700 million in his illustrious career. However during his molestation trial, his accountant testified that he spent $20-$30 million more than he earns every year, took loans of more than $415 million and is facing a severe cash crunch, causing him to default on his loan payments.

They are no end to stories of sports celebrities and movie stars who have earned hundreds of millions within a few short years and ended up broke and deeply in debt in an even shorter period of time. Why? Because lacking the 'million-dollar mindset', they could neither manage their money nor rein in their runaway expenses.

Without having a solid understanding of the principles of wealth, one may never truly be wealthy.
About the Author
Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his million dollar secrets and claim your FREE bonus report 'Get Out Of The Rat Race Now' at Secrets Of Self-Made Millionaires.
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