Ramsey Nails It Again With The Two Questions Separating The Wealthy From Everyone Else

Are you wealthy or poor? If you believe Dave Ramsey, you will be able to place yourself in one of those two categories based on which one of two questions you ask yourself when you are trying to decide whether or not to buy something. 

So, what are the questions that separate the wealthy from the poor, according to the finance guru? Here’s what you need to know. 

The rich look at purchases very differently, Ramsey says

According to Ramsey, here’s the difference between wealthy people and poor people:

• Rich people ask can I afford it? when they are attempting to determine whether or not to buy something. 
• Poor people ask can I afford the down payment? 

The big difference between those two questions, according to Ramsey, is that rich people want to know how a purchase will affect their overall financial picture and they won’t buy something if doing so would cause them to overspend or be in debt or otherwise damage their net worth. They make responsible spending choices. 

He believes poor people, on the other hand, spend beyond their means and take on large amounts of debt solely to have items they want — even if they can’t really afford them, just as long as they can squeak by with the monthly payments. 

Is Ramsey right?

Ramsey is 100% correct that if you buy things just because the monthly payment seems affordable, without looking at the total picture like how long you’re going to be in debt, how much interest you’ll owe, and what the total cost is going to be, then you’re setting yourself up for a lifetime of struggle. You’re going to make it much harder to grow wealth and live within your means in the future because of the fact you’re committing income you’ve yet to earn towards paying for purchases in the past. 

Unfortunately, there’s a lot of emphasis on monthly payments that prompts people to think this way. When you go to the car dealer, for example, dealers often try to get you to focus on whether you can afford the cost each month without considering how long the loan will last or how much of your future income it will eat up. This is why so many Americans take on such long car loans and get stuck paying way more than the value of the car while eating up the income they could have used to save for retirement or to otherwise improve their circumstances.  

Of course, people are poor for plenty of other reasons besides frivolous spending. Maybe they got sick, or their kids did. Maybe they were born without much opportunity, didn’t get a very good education, and don’t have a good job because of it. These are conditions that have nothing to do with borrowing and everything to do with poor circumstances.

But, there are absolutely many, many situations where short-term thinking and monthly-payment mentality trap you in poverty. 

Ultimately, everyone can and should try their best to grow their wealth based on where they are starting out. A financial advisor can provide guidance on how to do that, for people at all different income levels, as advisors don’t just work with the wealthy.

These financial professionals can provide personalized advice on a wide range of issues, from how much to invest to where to invest money you save, to how to decide if borrowing for something actually makes sound financial sense for your family over the long haul. This advice can help set you on the path to wealth, and can help ensure you’re looking at the right things when making your spending choices.

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