Being A Late Stage Buyer Of Technology Has Everything To Do With Building Wealth

You’d think as a blogger, I’d be at the forefront of buying every single latest gadget. Goodness knows I spend more time on a laptop writing than 99% of the population. Furthermore, given my business is writing online, all expenditures that enable me to write online are business expenses!

Yet, despite my situation, I write this post on a six year old Macbook. It’s not the lightest, nor the fastest, but it gets the job done every single time. You might be wondering perhaps it’s a money issue. In a way, you are right. I am always amazed by how millions of people can buy the latest $1,699 13″ Macbook Pro Retina Display. You’ve got to make over $2,000 in gross income to buy such a beast of a laptop! As a result, I feel completely stupid to buy such a laptop when mine works just fine.

Besides the fact that it’s never wise to buy the latest and greatest version of a product until all the bugs are addressed, there is actually a huge correlation to refraining from buying the latest stuff and wealth accumulation AND happiness. Let me share with you some main reasons why I recommend everybody take a deep breathe before spending.

PLAYING WITH THE HOUSE’S MONEY

When it comes to building wealth, the number one rule is to never lose money. Sounds amazingly simple, but I cannot tell you how many people have blown themselves up in the stock market, real estate market, or private equity market by buying at the wrong time or going on margin. There are some people who have an incredible knack for losing money! Perhaps you know someone who feels like they can never get ahead? Ask them what the hell they are doing with a $2,000 laptop and see what they say.

If you’ve ever had a successful run in gambling, you know the amazing feeling of being up and not having a care in the world. If you play poker, being up liberates you to often play looser and tighter at the same time. The “tight-aggressive” style of play is the best strategy for dominating your opponents. When you are playing blackjack, you no longer hesitate to hit on 15 when the dealer shows a face card. As a result, you end up increasing your winning percentage in the long run.

The idea of being a late stage buyer of technology is getting your existing electronics to replicate the feeling of playing with house money. Electronics die all the time, whether due to its own error or from you dropping your laptop in the pool. The absolute worst feeling for consumers is buying something and having it break shortly thereafter. When you are rocking a six year old Macbook, you don’t care if you drop it, sit on it, or use it to play Frisbee. It’s provided so much return already that if it breaks tomorrow, you’re happy to buy a new one.

Every day that goes by where my laptop continues to work is like winning another $10 red chip. I originally planned for my laptop to last only three years, so in my mind I feel I’m $10,950 a head! The ROI on my laptop keeps growing and growing.

BUILDING WEALTH IS THE SAME

When you’re ahead, stay ahead. Let’s use buying rental property as an example. Rents keep growing, while the purchase price remains the same. As a result, the rental yield continues to soar. With your rental property continuing to build more wealth for you overtime, you can literally use “house money” to make bolder investments to further increase your wealth.

Thanks to the gains from my first rental property from 10 years ago, I bought another rental property which is cash flow positive. From the two cash flow positive rental properties, I was more confident in buying my primary residence eight years ago. With consistent mortgage refinancing and a skyrocketing of rents during this time period, my primary property is saving me over $40,000 a year in living expenses if I were to rent a similar property now. Real estate is my favorite asset class to build wealth.

With a real estate portfolio carved out, I gained confident in making investments in private equity and the stock market. If all else failed, I’d at least have my rental property cash flow. With the proceeds from the stock market, I delved further into structured notes and P2P lending to build new income streams. Due to the various investments, I was able to write for years on Financial Samurai without really bothering to monetize the site. And now that I no longer have a day job, I can experiment as much as I want with my online platform.

DISCOVER THOSE WHO DO NOT DELAY GRATIFICATION

When you see people in tremendous credit card debt, simply ask them, “Why?” More than likely, the reason is because they could not delay gratification. They were “C” students looking to live “A” lifestyles. Paying $2,000 in gross income to buy a laptop you will not fully maximize is a complete waste of money. Yet, college kids and 20-something year olds who make less than $100,000 a year buy them by the millions.

For those who want to build wealth, it almost becomes a game to see how long products can provide us utility before they must be replaced. The crossover point to when a product lasts beyond its expectations. The secret is getting there. Once you do, you will appreciate even more of what you have. Wealth creation becomes automatic.

Regards,

Sam