I’ve adopted the mental model of Charlie Munger when it comes to living a good life. It’s useful to gain insights into the thought process of certain rich people.
Munger was trained as a lawyer, got briefly into real estate development, and built his fortune together with Warren Buffett in Berkshire Hathaway. Munger says:
“My system in life is to figure out what’s really stupid and then avoid it. It doesn’t make me popular, but it prevents a lot of trouble.”
It’s attractive to talk about all the things rich people do and how you can build wealth. A large part of my work focuses on the right actions we should undertake to get wealthy.
But what I don’t always share is how I figured out the right actions. Most of the time it’s a matter of looking at the wrong options and doing the opposite. In this article, I’m sharing 7 things that you want to avoid if you want to get rich.
These things might sound obvious, but avoiding these types of pitfalls will set you up for success. They should never be overlooked.
1. Using credit card debt
Using credit cards as a payment method is fine. When the full amount is taken out of your checking out every month, you don’t pay interest.
I read somewhere that 77% of U.S. households have some amount of credit card debt.1 To be honest, I was shocked and find it hard to believe. That number just sounds too high to me. Either way, using credit card debt is dumb.
The average credit card interest rate is 18.79 percent right now. What?! Forget about how much more expensive it makes your purchases.
With interest rates that high, you’re only paying off interest, and your debt will just remain. This is how people get into debt and never get out of it. My parents still have credit card debt from 20 years ago. I’ve paid some of it off, but they don’t want to accept me paying off everything. I always tell them that’s stupid.
These crooks don’t deserve your interest payments. There are many other good things you can do with that money.