Picture in your head a wealthy person. What do you imagine?

Meet Brandon. Brandon is 34. He’s an attorney. Brandon earns an impressive salary and enjoys the finer things. He owns a home in a gated community, and he and his wife both drive brand new, luxury cars. He has a custom motorcycle, a vacation home in the Keys, and a beautiful boat. Since he works long and stressful hours, Brandon makes vacationing with his family as priority, traveling to an exotic destination at least twice yearly.

Logan sees you side eyeing his dirty clothes and could care less. Guess why?
Meet Logan. Logan is also 34. He’s a plumber. He earns a respectable but more modest living than Brandon. His home and vehicles are certified used and far less extravagant. He, his wife, and their children spend a week every summer taking an educational trip of their children’s choosing.

Now, who is wealthy?

Brandon certainly earns a higher salary than Logan. But Logan is the wealthy one.

Brandon invested heavily in his education, not necessarily because he loves law, but because he wanted a lucrative career. He has $140,000 in student loan debt. Between his monthly student loan payments, his high car payments, mortgage (plus a second mortgage he took out when cash was short), the mortgage and other costs incurred from his vacation house, boat and motorcycle payments, insurance, utilities, and other expenses, he doesn’t have much of his salary left every month. What is left mostly goes towards astronomical credit card payments, which is how he pays for his expensive clothes, club memberships and vacations.

The sad fact is that despite his successful career with a high salary, Brandon lives paycheck to paycheck. Actually, that isn’t true, it’s worse: Brandon lives far beyond his means.

Logan, on the other hand, has been a saver since he had his first job at age 16. When he was 18 he started learning how to invest his money. He opted not to take on a lot of college debt and completed a program at a technical college, then a plumbing apprenticeship. The comparatively small loans he used for his schooling have long been paid off.

He is a master plumber and owns his own company. Although the salary he pays himself is smaller than the one Brandon earns, his cars have low payments, and his mortgage payment is relatively low at about 15% of his income. Logan’s business allows him to work when he wants and spend time as much time with his family as he desires. It also allows him to keep his tax liability low. He has employees that handle most of his workload, but he still takes certain jobs because he loves what he does for a living.

Although they can afford more expensive things, Logan and his wife purposely live on far less than they bring in. Besides their profitable business, they own various investments including stocks and rental properties. Excluding their home, they have near half a million dollars in assets. At their current rate of savings, and dependent upon overall market conditions, they will be millionaires around age 40, but plan to continue their current lifestyle for several years after so they can retire wealthy and enjoy the fruits of their labor.

The difference between Logan and Brandon is that while Brandon has spent his life buying things, Logan has spent his life buying assets.
This means that whether Logan is at work, at his daughter’s dance recital, or vacationing with wife, he is always making money.
If Brandon’s firm were to let him go, Brandon, in turn, would have to let go of his homes, vehicles, vacations, and fancy things.
Logan, on the other hand, controls his own livelihood. No one will dictate whether he will have income this month besides him.

The average person does not have enough hours in their day to trade their time for wealth. Their time is not worth enough to most employers. Few people have the skills and connections necessary to be paid a salary or wages that will make them wealthy.

What does this mean for the “average” person?

This means, that instead of thinking about building financial freedom in terms of working more hours or possessing more skills, you must think of wealth in terms of money that is being generated for you while you’re doing other things.

While there is a cap on how many hours you can ever work, there is no cap on the number of assets you can own that produce income for you.
Wealth is time.

Wealth means you do not have to trade your time for the money you need to survive. Wealth means you can spend your time doing the activities you love with the people you love, instead of spending it at a job creating passive income for someone else.
Wealth is freedom.

Being wealthy means you have the freedom to do what makes you happy. You have the freedom to take that trip, or be home with your children, or even buy the “things” discussed previously. If you have all the nice things but have to spend most of your time working all kinds of hours to pay for them, that is not wealth…because you are not free to do the things that make you happy.
Wealth is not a salary or wages.

In order to have the time and freedom discussed above, you must be earning money that you are not trading your time for. This means, income from a job cannot be wealth. So, where does the money come from?
Wealth is the accumulation of assets.

Being wealthy means you own things that generate your income for you. When you have these assets making money for you, you do not have to trade your time for money. This means you have freedom.
This is where so many people go wrong when they wish for wealth.
Instead of using the money they earn from a job to buy assets that generate money for them, they skip right to the “things” that keep them poor.

Logan was lucky enough to discover this early on.
Hopefully Brandon will catch on soon.

Now, I’m in no way implying that you shouldn’t go to law school or that you should scrape by on only half your income. There are financially savvy attorneys and there are plumbers drowning in debt out there too. These are fictional, extreme examples, and every person has different goals. My attempt here is to illustrate how ironic it is that Brandon (along with so many real people) took on all this debt and worked so hard to get through law school in order to obtain a career that would make him wealthy, but he still just living paycheck to paycheck. No matter how much you earn, you can still be poor.

Brandon has nice things, but when we shake away the fluff, he owns nothing that generates income for him except his license to practice law (which he still has to trade his time for, and he still owes on). Brandons and Logans are everywhere. They’re people you know. Your doctor could be a Brandon. Your mechanic could be a Logan. The difference between these two men is that they are using their means in completely different ways. Logan is using his money to buy assets, and Brandon is using his to buy liabilities.

Despite this, when one looks at Brandon, then Logan, and is asked, “Which one of these men is wealthy?” they will almost always say Brandon. If asked, “Who is up at night worried about how to pay their credit card bill?” they’re probably going to guess Logan.

Wealth has nothing to do with how much money you make or how many nice things you have. Wealth is about freedom. Wealth is about security. That starts not with making lots of money, but with maximizing what you already get and putting it to work.

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