Preface: When I say wealthy people, I am talking about people who make less than a million a year. I'm not talking about stratosphere rich people.
This is how we know you don't make the money you claim. You have this idea on how "wealthy people" spend money from TV shows. If you have $500,000 in cash, you don't go out and blow it all and buy a house with cash. My house is in a very nice neighborhood, but its probably worth 1/3 of the most expensive houses, but there's no reason to suspect it would greatly appreciate, so why would I pay cash for a house instead of taking out basically free money from the bank at 3.875%? Instead, I would invest my money in total stock market index funds, international market index funds, bond market index funds, and in REITs. With half a million in cash, you could purchase numerous rental properties and start a real estate empire, instead of paying cash for a house. Paying off the house may give some people peace of mind, but it would be the worst return for your money.
And with regards to vehicles, it's all situation dependent. I get to deduct the cost of the lease, so there's no reason for me to purchase the vehicle and be stuck with something that has lost a significant amount of money when I go to trade it in. Also, this is the last vehicle I will ever purchase new, it's just so dumb to buy new.
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If I purchased my leased vehicle now it would be $54,120.05, and at the end of the lease it is 40,500, which is around a 13,500 difference, which is about the same as my cost of the lease over the same time period. The rest of the math I put above in a little spreadsheet. So it's easier for me to deduct the cost of the lease, etc. And I don't have to sit there and depreciate a vehicle over a longer timeline.
Wealthy people may have one or two suits, but they aren't buying dozens of suits, that's retarded. I don't even own a suit. To me, splurging is buying Tommy Bahama clothes. I have a fake set of Louis Vuitton luggage that I use for work. Yesterday my "wants" took over me, and I went to go buy a used $65,000 sports car (which had a sticker price of $84,500 1.5 - 2 years ago), and I turned around half way and came home because I know it's absolutely retarded. You don't stay wealthy by blowing it all on fast cars, expensive suits, and Patek watches. Like I said before, I have one very nice watch, a Rolex Seadweller, and it was given to me. Instead, you take your money and figure out how to make it work for you.
