When you make millions of dollars a year, it doesn’t mean you’re financially set. Lifestyle creep affects people at all income levels.
MC Hammer’s 40,000 square foot mansion had marble statues of himself, a gold hot tub, a pool shaped like his pants, and gold plated front gates that said “HAMMER TIME”. He employed a staff of 200 people just for his property, which cost him $500K a month. He bought exotic cars, a private jet, and helicopters. He even had race horses, some that were valued at $1 million.
Just five years after MC Hammer had one of the biggest hits of all time, he declared bankruptcy. And there are many other celebrities that have gone down this path. They have violated the first PFC rule: Live below your means.
Since then, MC Hammer has made his way out of debt. He now lives in a modest home in California that he bought for $375K. Today, he invests in tech startups and serves as a consultant to big tech companies like Twitter and Salesforce. These business ventures, combined with refusing to waste his money on flashy material things has led him to amass a net worth of over $2 million.
There are many people who make millions of dollars a year and still live paycheck to paycheck. Remember that wealth isn’t about how much you spend. If you spend all your money you’ll stay broke no matter how much you earn. Building wealth is about spending LESS than you make and investing the difference.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane