A $100 bill—the difference between a rich man and a poor man. - What’s the difference between a rich man and a poor man? Some may think as I did that a rich man has a lot of money whereas a poor man doesn't. Is this really the case, or is there a way that an average person can feel rich even when they aren't. Does your money and debt control you or do you control them? There are tools to help people take charge of they're personal finances giving them more control over their lives.
A $100 bill—the difference between a rich man and a poor man.
By Brent D. Ropelato
Jan 30, 2010 - 6:05:46 PM
A long time ago and in a land far far away…
well actually it was 1980 and my wife and I, as newlyweds, just moved
to Alaska—this is a true story. I was working for a financially secure
and slightly older gentleman who, one day as I was passing by his
office, called me in and asked me an interesting question. “What’s the
difference between a rich man and a poor man?” Being young and just
starting my career, I thought the answer was rather obvious and so I
quipped, “one has a lot of money and the other one doesn’t.” It doesn’t
take a rocket scientist to figure that one out. However, his response
back, was somewhat surprising.
He stated that the difference
between a rich man and a poor man was a $100 bill. He asked me if I had
one. “No,” I answered. He then asked, “how many people out on the
street walking around right now do you think have a $100 bill in their
wallet, pocket or purse.” I responded, “probably not very many.” He
said, “my point exactly.” He then took his wallet out of his pocket and
pulled from it a $100 bill and handed it to me and said, “put this in
your wallet, keep it there and know that you have more money in your
wallet than most people do, and that if a small emergency comes up,
you’ll be okay.” So I gratefully put the bill into my wallet and left.
You know, I actually did feel rather rich, and knowing that a $100 bill
could cover about any minor emergency that could come up, like running
out of gas or an unexpected business lunch with co-workers or whatever
it might be; I really was covered. Back then my wife and I didn’t have
a credit card or debit card—just cash and a checking account, and for
some reason my wife said I wasn’t allowed to carry the checkbook.
Two weeks had passed, and I was again passing by his office, he called
me in and asked if I still had the $100 bill he’d giving me. I lowered
my head and said, “the other day I was low on gas and didn’t have any
money so I used it to fill the car up. Once I had broken the bill the
remainder went rather quickly.” He chuckled and pulled out his wallet
again and handed me another $100 bill and said, “see if you can make
this one last longer this time.” My first thought was, this isn’t a bad
deal we have going here, but he quickly said that this was the last one
he was going to give me. Well, again I was back on top of the world
feeling rich. This time I kept the bill for almost 6 months before I
needed to use it, once again, once it was broken it went fast.
Let’s now fast forward to 2010 where a large percentage of the
population of the U.S. carries either a credit card, debit card or some
other form of a charge card. Who carries cash anymore? How much cash do
you have on you right now? I went into a Subway the other day and
ordered their six-inch, special-of-the-day sandwich, which was only
$2.99, and I had to use my debit card to pay because I didn’t even have
$3 on me. Is it any wonder that so many people are having financial
struggles? Not only because of the current economy but also because of
what seems to be an endless supply of money that we really don’t have—
credit. This idea of credit, can at some point, come back to bite us hard if we don’t manage it correctly. Here are some interesting credit card statistics.
CREDIT CARD ISSUER STATISTICS
Total cards in circulation in U.S.
• Visa credit: 309 million, as of June 30, 2009 (Source: Visa.com)
• Visa debit: 352 million, as of June 30, 2009 (Source: Visa.com)
• MasterCard credit: 211 million, as of September 30, 2009 (Source: MasterCard.com)
• MasterCard debit: 130 million, as of September 30, 2009 (Source: MasterCard.com)
• American Express credit: 54 million, as of December 31, 2008 (Source: AmericanExpress.com)
• Discover credit: 57.1 million, as of December 31, 2008 (Source: Discover.com)
Americans currently owe $917 billion on revolving credit lines and $69
billion of it is past due, according to the latest Federal Reserve
statistics. (Source: www.consumerreports.org, September 2009)
What’s the biggest difference between now and 30 years ago regarding
our spending habits? Yes, 30 years ago many people used credit cards,
but many people also carried cash in their wallets. A credit card was
only supposed to be used for emergencies or for purchasing large dollar
items, limiting the need to carry around large amounts of cash, knowing
however, that when the bill came due, it was to be paid off in full,
monthly. So when your cash ran out, buying something else wasn’t an
option, you just made do without. People back then understood how easy
it would be to get into trouble financially using credit cards
excessively. People also know this today; however the idea of doing
without, if you don’t have the cash to pay for it immediately, or
saving towards purchasing it at a later date ,when you can pay for it
in full, has been lost or at least conveniently forgotten. This idea is
still sound financial advice today. When the money is gone, make due
with what you have and go without until you have the money to purchase
An excellent way to keep yourself from getting
into financial trouble is to create a budget and then track your
expenses daily. There are several ways to do this. Create a budget on
paper and then jot down, in a note pad, your daily expenses. This is
inexpensive but somewhat time consuming. Another, more efficient way is
personal finance software; either a desktop application or an online
service. Read “Online Finance Software vs. Desktop Finance Software” to get a better understanding of the pros and cons of both of them. Online personal finance software
allows you to easily create a budget and then automatically download
your daily transactions. When your purchases are in excess or getting
close to exceeding your budget, you’ll receive an email or text alert
warning you to rein in your spending. This will help you stay in
control of your money, instead of it controlling you.
feel great each day even if you do have financial stress; since fewer
people carry cash these days compared to 30 years ago, tuck a $100 bill
into the bottom of your wallet or purse and know that you have more
money on you, than most people you’ll meet and pass each day.
Also, see if you can make your $100 bill last longer than 2 weeks or 6 months. It truly is a great feeling.
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