The good news about being rich is that you always have enough money to pay your bills. Even better news is that the richer you are, the fewer bills you pay.
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Because the cost of living is higher when you're poor and lower when you're rich, wealthy people can leverage their wealth to spend less, save more, and reduce their monthly contributions. Here are some bills that the rich class has enough money to worry about paying.
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student loan payments
According to the Education Data Initiative, the average student loan payment is $503 per month, and it takes the average borrower 20 years to pay it off in full, but not the wealthy.
“Wealthy individuals and their families have the means to pay for their education without relying on student loans,” says Michael, a former senior Wells Fargo and Citi employee and founder of the personal finance site Richest. Ashley says. “By covering tuition, fees, and other educational expenses with personal funds, scholarships, or trust funds, you can avoid the burden of student loan repayments. You can prioritize your educational goals without having to worry about it.
In June 2023, the New York Times reported on so-called Dynasty 529 plans, tax-advantaged college savings funds in which the wealthy accumulate millions of dollars and pass them on as wealth through generations. With smart estate planning, future generations won't have to pay taxes when they use those funds for educational expenses.
For the wealthy, this often includes expensive degrees from prestigious schools that put the descendants of the elite on the fast track to building wealth. According to the Times, Dynasty 529 pays $84,000 a year to prestigious private schools such as Duke University and $500,000 to New York University School of Dentistry, not to mention luxuries such as high-rise dormitories and high-powered laptops. All the payments are being made without any debt burden.
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car payment
According to Experian, the average payment for a new car is currently a hefty $726 per month, and even used car buyers pay an average of $533 per month.
But wealthy people can afford to pay in cash, so this is one charge they should avoid.
“Wealthy individuals typically choose to purchase luxury cars with available funds rather than financing with a loan,” Ashley says. “By paying for your car in cash, you avoid monthly car payments and avoid accruing interest. This approach not only simplifies your financial portfolio, but also eliminates the ongoing debt associated with a car loan. It also fits the trend of seeking ownership without incurring.”
In fact, paying for big-ticket items all at once is one of the best ways to keep more of your money and stay wealthy in the long run.
For example, if you purchase a 2024 BMW 4 Series for $50,000 with a 20% down payment of $10,000 and an interest rate of 7% for 60 months, you may appear wealthy to other drivers; You'll end up paying $5,290.96 more than you paid in interest. Actual rich people writing checks to dealers.
Paying in cash is the smart choice, and wealthy people know it. According to Thomas J. Stanley, author of The Millionaire Next Door, only about 1 in 9 millionaires report leasing a car, which he describes as a “loss of wealth”. A popular alternative.
credit card finance fees
A recent study by The Motley Fool found that wealthy people use all types of credit cards, except cash-back cards, such as travel cards, sign-up bonus cards, grocery and gas cards, and balance transfer cards, more than the average American. It seems more likely that you have it.
That's because banks use the money they collect in financial fees from those who manage their monthly balances to pay points, rewards, and miles to those who don't, and the wealthy are always a big part of the equation. Because you're making sure you're on the right side.
“One of the key charges that wealthy people tend to avoid is credit card finance fees,” said Abid Salahi, co-founder and CEO of credit card comparison site FinlyWealth. “To be financially stable, wealthy people typically pay off their credit card balances in full each month. This habit reduces the burden of high interest rates, improves credit scores, and creates a virtuous financial cycle.” .”
mortgage payment
According to a recent WSJ Intelligence study, about 4 in 10 wealthy households have done things most people never thought possible. In other words, paying for your home in cash eliminates the largest monthly expense for most households.
“Wealthy people often have the financial ability to purchase a home outright without relying on a mortgage,” Ashley says. “By paying your housing costs in cash, you avoid having to pay monthly mortgage interest. Not only does this save you a lot of money in the long run, but it also has a lower opportunity cost compared to mortgage financing. “Given the low price tag, it reflects a strategic financial decision to deploy capital efficiently.”
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This article originally appeared on GOBankingRates.com: 4 bills you don't have to pay if you're rich