smart spending

Want to build wealth? Break these 8 rules

But that's right-side-up-and-broke thinking. So, Shemin says, "The rich idiot in me found some experts to explain it to me, and now I understand. It's out there and it's growing and it's something that's of interest. I have a lot of students and friends who are making fortunes sitting around on the Internet."

4. Try to time the market

Every day, Shemin says he hears people say that the financial or real estate markets are down, making it a horrible time for investing. Sure, if you're trying to make money within 90 days, maybe it's not the best time to invest, he agrees. "But if your goal is five, 10, 20 years away like it should be, then we know over time the market's going to do well," he explains.

"Nobody can effectively time the market," says Sethi. "We've seen this time and time again, with people thinking they can time the market and failing." And as Peter Miralles, president of Atlanta Wealth Consultants, points out, "Timing the market is not investing. Timing is speculation." Miralles sees valuations, or the process of estimating the market value of a financial asset or liability, as less subjective than market timing and something that can lead to success.

3. Don't invest until you have the money or good credit

Certainly most finance experts would not agree, but Shemin says building credit and maintaining a good credit score aren't necessary in building and maintaining wealth.

This example of upside-down thinking is one he learned in his early 20s, when he went to buy his first real estate property. Shemin had grown up in a cash-only home, and it didn't occur to him that never having borrowed meant he had no credit history. The bank denied the loan. But rather than letting the property pass him by, Shemin found a friend with good credit and they cut a 50-50 ownership deal. When Shemin sold the property a few months later, his cut of the profit was about $20,000. "Not bad for a kid with no cash, no credit and no experience," he writes.

Even though he has built a credit history now, Shemin says he hasn't checked his score in more than two years. "Everybody in America worries about their credit score -- it's like a badge of honor," he says, adding that it's only important if you need to use your credit. His own experience has taught him that there can be ways around it.

2. Don't get into debt

"Most people think debt is debt," Shemin notes. "No matter how hard you work, your money is going to work harder for you if you put it in the right things." For him, that has even meant doing real estate deals with a credit card. "A lot of people say credit cards are bad, but not for me. It's discipline. I pay them off every month."

Sethi learned just how common it is to not to understand bad versus good debt when he gave a talk at the University of California, San Francisco School of Medicine and spent most of his time comforting the students who paying for their educations with student loans that they'd made the right financial decision. He knew they would enter an industry where they would almost assuredly be able to pay off their debt. "You made one of the smartest decisions in the world," he told them. "That debt is just a hoist to get to let you get to the next level."

1. Have a plan

Shemin says he failed math in high school, but he does remember learning that things with zero probability happen all the time. "Has anything in life not worked out as you planned? As a business person that happens about eight times an hour to me, so you'd better be prepared," he says. To most people, that means having a plan A. But Shemin says it's best to have a plan B and plan C, and sometimes even a plan D and E for when things don't work out as planned.

Miralles says, "A plan should be dynamic and will change as you grow in wisdom." He suggests building a plan and showing it to as many as five people, and then repeating the process every six months as the plan evolves.

Tanya Marchiol, founder and president of the Arizona independent real estate firm Team Investments, also agrees that it's best to break the rule of having a single wealth-building plan. She's an advocate of financial goals, but says the path to them shouldn't be set in stone.

"There will always be an abundance of opportunities that will present themselves to you. If you have your mind set on only those things written out in your plan, you could very well miss out on that opportunity, (which) could have been the one that would have gotten you where you wanted to be faster than your planned investments allowed," she says.

Yet, Shemin notes, even on the road to wealth, it's important to have the right mind-set and realize you're rich already -- with family, friends, health, freedom and "appreciation for what you have already and the gifts that are yet to come."

Melissa Ezarik is a Connecticut-based freelance writer.

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