117 | Uncommon Choices Build Wealth

If you’re always chasing bigger and better things than what you already have, you’re on par with most of the rest of society.

And your finances likely are, too.

Many people are stretching their finances to the limit trying to keep up with the latest and greatest—so much so that the majority are living paycheck to paycheck.

It’s common to spend everything you make and then some. It’s uncommon to spend substantially less than you make.

But spending less and investing the difference is exactly how you build wealth.

In this episode, let’s talk about making uncommon choices that lead to wealth.

Topics Discussed

• how we commonly think about and manage money
• the choice my husband and I made that has largely contributed to the financial accomplishments we’ve made
• lawyers and the fancy lifestyle
• why we decided to pay off our student loans, rather than investing
• millionaires’ thoughts on money management
• the result of delayed gratification and spending within your means

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Resources mentioned

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If you’re ready to learn the mindset and strategies to master your money, let’s schedule a call. 

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Email: hello@rhothomas.com

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Lightly Edited Transcript

You’re listening to Wealthyesque. We are a community of lawyers who believe that true wealth is having control of our time. I’m Rho Thomas, and as a busy wife, mom and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today we are talking about making uncommon choices in life specifically with your finances. I was thinking about how my husband and I have set up our finances and the choices we’ve made over the years that have led to where we are now financially. And I’ve also heard a few multimillionaires people and their thoughts on magnetic I’ve recently been aligned with a decision we’ve made which I thought was cool. So I will share some of that as well. In our society, the common thing is to get everything now and get the biggest you can get and as soon as you can trade up to even bigger and better so many people are stretching their finances to the limit trying to keep up so there was a study a few years ago that found that 78% of Americans live paycheck to paycheck. And another one last year found that 36% of Americans making $250,000 or more are living paycheck to paycheck as well. So I was thinking about all of this and thinking about the habits of wealthy people and how they differ from the way most people tend to use money. And it all comes down to the fact that wealth is not about how much money you make, but how much you keep. Making more can help but only if you keep more and that goes back to the statistic about people making 20,000 by going to the beach. So I think about my family’s finances and some of the things my husband and I have done one of the best financial decisions we’ve made hands down is the house we chose to buy starting out. When we were shopping for a house the bank said we qualified for something like $800,000. And although we qualified for the 800,000 we knew that we could not pay an $800,000 mortgage and still do other things we wanted to do despite whatever the things calculations were that said we could. At this point we hadn’t looked at our finances or anything like that we hadn’t started on this whole path of improving our finances and paying off debt and building wealth and all that but just from where we were at that time financially and how much the payment on an $800,000 mortgage would be. We knew that wasn’t for us at that time. So we decided instead to get a $200,000 mortgage and buy a smaller home that we could have gotten. And I think that decision has been one of the biggest factors in what we’ve been able to accomplish financially over the years. But it just got me thinking about how the typical way that we look at money is to buy stuff buy at the top of the list buy as much as we can, right always looking for more bigger, better. And so many lawyers want to get to this place of living this wealthy lifestyle as soon as possible. So get the fancy car right out of school. Maybe you don’t buy the fancy house at first, but often I’ll see lawyers renting the nicest place they can so like a big thing I see here in Atlanta is renting the high rise apartment right in middle of midtown. That’s three times as expensive as a slightly less fancy but still nice apartment a few miles away. And then many people actually trade up to the fancy houses. And as you can see, boy, you’re gonna setting ourselves to live this certain lifestyle before they put themselves in a really strong position to be able to do it. And that is a big source of the stress and anxiety and worry that people feel about the finances. When you’ve got so much of your income going out to bigger rent or mortgage payments to car payments to private school to parties and restaurants to whatever other things make up that lifestyle for you. And you end up with a lot less wiggle room. A lot less space in your finances to make the progress you want to make take longer, going back to my husband, my husband to get the house that we did. The mortgage that we have has always been a very small fraction of our income. It’s a big part of why we’ve been able to put so much of our take home pay half of it and sometimes toward paying off debt and saving and investing over the years. And it’s part of what allowed me to leave my job in big law even though I wasn’t making nearly as much of my business as I was making. If our mortgage were two or three or four times really because of people offering this full time we actually took out the property from him four times what it is, it would have been a lot harder to do those things and it would have taken us a lot longer to do them if we’re able to do them at all. So getting less than what we afford and some of our house even our cars I actually still drive the same car that I’m driving the muscle. I haven’t got a new car for years but when our second child was born, and I use this for years old, it’s a nice car right don’t get me wrong, but my husband has been on cars it’s I know it’s not as nice as what you ultimately want or we could have gotten. Those kinds of decisions that have allowed us to build wealth over the years because we’ve been able to keep or to use some of our finances, even though we didn’t keep all the money necessarily because we paid off student loans that didn’t pay off the loans freed up a bunch of money that we no longer have to have to cover no expenses, and I noticed people feel differently about the decision to pay off loans. But for us it was a strategic decision because the majority our loans were at 6.8 and 7.9% interest. So the argument that you can get a better return on the market didn’t really ring true for us. My student loan payment was like $1,000, a little under $1,000 and pay my loans off back at about 18 My husband and I kicked up to the full amount in 2019. And part of our plan was to pay mine off before his full payment. So while he was doing residency with him it was lower based on his income but we knew that when he moved into his attending position, the standard payment was going to kick in and we knew it was gonna be expensive and ended up being 3500. So that’s $4500 my $1,000 payment and his $3500 payment that we no longer have to worry about covering in our budget, and that has provided so much freedom and flexibility. But again, part of what we’re able to do that is that we live so far below our means. So now on the back end, we do want to get another house where we have more space both inside and outside, especially because the boys are getting bigger and especially after being home with them for almost two years. But when we do we’ll be doing it from a stronger financial position where we don’t have any debt but a mortgage and we just been building wealth. When we do make a decision. We want to have so much peace and little to no impact on our finances. I mentioned that I have heard some millionaires talking about this recently. So I want to hear their thoughts as well. I really like personal finance and business podcasts and books and videos and such and I was listening to one with a guy who’s a multimillionaire like he and his wife have hundreds of millions of dollars. And he was talking about when they hit their first million that he’s still trying to get over that Toyota Camry or something like that. And somebody saw the car and said to him, like Oh, I thought you were supposed to be rich. And that goes back to this common practice in our society of looking wealthy spending the money buying the nice things but not actually building wealth. He was actually building wealth actually had a million dollars in his account, but this person made this comment just because he didn’t fit their image of what a wealthy person should look like or should be. And he talked about how he actually did buy the million dollar house and luxury car and all that stuff. But they didn’t buy those things was such a small blip in finance, but it didn’t affect them at all. I also heard Grant Cardone share some similar thoughts on money management. If you’re not familiar with him, he’s a real estate guy and talks about real estate investing and business. But he said something to the effect of if you’re paying say 40% of your income to taxes, you’re paying the government 40% why not also pay yourself 40% and use that money to invest and then you live on the remaining 20. And if you don’t like the specific percentages he outlined, I think this is just an example of the kind of thinking that he and other super wealthy people have about money, right? Don’t spend everything you make live on substantially less than you bring in a small portion of it and keep more of your money for yourself and use it to improve your own financial position and build wealth. Both of you people are getting money much differently from the common way we typically do in our society. And you may discount it by arguing that they are super rich, but how did it get that way? Right. They weren’t always rich. Both of them talked about times in their life when they had nothing but the way they think about it manage their money has contribute to them building the wealth they have now, I think if we could switch the way that we think about and use our money, right with the practice delayed gratification rather than trying to get the fancy as quickly as possible. If you buy things well, there’s nothing special just beyond our means. It makes for a pretty good position to build wealth. And from that place, you might decide that you’re gonna upgrade or do something else. But when you do, it will feel like a strain. You won’t have the anxiety you may feel now and you’ll actually be able to enjoy your money and the things you buy without the underlying stress that comes with that. I am very grateful for the decisions we made because they sent us out to do a lot of things that we wouldn’t otherwise be able to do. And a lot of people around us are looking like well how are you able to do this and hear me I’m not saying you have to live like a law student and eat nothing but ramen noodles every day. Enjoy your life. I think that’s important. Just think about what decisions you can make that may be different from what you typically see in your circles different from what you see in society, but that will set you up better financially in the long run. If you can make more of those decisions rather than living away that’s most common right living beyond your means overextending yourself trying to keep up with whoever you’d have a much better experience with your money and the things you buy. You build wealth and you feel much more at peace. Making those uncommon choices leads to extraordinary results. I can teach you how to live below your means and have more than enough room to build wealth and achieve the results you want with your finances. So if that sounds like something you need in your life, head to rho thomas.com/call and let’s set up some time to talk. Alright, that’s it for this episode. Come connect with me over on social media I am most often on LinkedIn, rho Thomas and Instagram at I am rho Thomas. Subscribe to the show and leave a review both of which help more people to find it, and think of a friend who you think could use this information and share it with them. As we close out, friend, I pray that you take the information you learn here. Apply it in your life. And open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to regain control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.