Now that I’ve written about some of the habits of people who have accumulated and maintained their wealth, here are some of my observations on how people destroy wealth.  When I say “destroy wealth,” I am including not just the habit of taking a lighter to the dollar bill in your pocket, but also those habits that prevent the creation of wealth in the first place.

• Buying homes, cars, and other things just to “keep up with the Joneses.”  I knew a lawyer who decided to purchase a much larger home with six bedrooms in a swanky neighborhood even though her old house was more than large enough for herself and her mother.  She was bothered by the fact that several families, including her own brother, had recently purchased larger homes and she felt that she had to keep up as well.  At the same time, she decided to upgrade her Lexus 300 SUV to the larger Lexus SUV, even though she is a single person and has no reason to acquire extra car space.
• Engaging in instant gratification payoffs while shunning long-term investments:  A friend of mine invested $2000 in an S&P 500 index fund.  However, when the fund value dropped to $1,600 a couple of months later, he became very nervous and decided to sell the fund rather than wait out the volatility.  Of course the S&P 500 index rebounded and surpassed the price at which my friend made his original investment.  Meanwhile, he has no qualms about traveling to Vegas or other gambling hotspots (Niagara Falls, anyone?) to drop several hundred dollars at the craps table.
• Failing to acquire the necessary education to move up in your profession:  If you are an entrepreneur, this point may not necessarily apply.  But for those of us working in a profession, the surest way to increase your paycheck and therefore your bank account is to move to a higher position in your work organization.  However, some people don’t see that further training and education is often the key to moving up, particularly those positions in professional fields, like engineering or accounting.  My husband, an engineer, has seen several lower level technical employees in his company complain about their inability to move into engineering positions.  These employees, however, lack a four-year college degree, which is a basic educational requirement for an engineering position.
• Failing to take advantage of new opportunities because of fear:  I see this problem a lot, even with my own actions.  It’s a lot easier to stay put in a dead-end job or not take the plunge into becoming self-employed, because the “known” is more acceptable to us, even if it’s crappy, than the “unknown.”  Because of this fear of risk, we miss out on all kinds of new opportunities.  I am actively working on getting myself to move forward and not spend so much time dwelling on why a particular business idea might be a bad one.  I find when I do take a baby step in a certain direction (like starting this blog), it usually turns out to be a much more positive experience than I anticipated.
• Letting someone else control your financial destiny.  This is a rather extensive topic and probably will address it again in a separate post.  But I’m writing about it here because I just had a conversation with a friend about her finances.  My friend, sick with pneumonia, was concerned about job security because of all the days that she had taken off this past year to deal with her divorce and health issues.  Unfortunately, during her marriage, her husband controlled all of the finances, including much of the “spending.”  He bought a fancy car and squirreled away money in separate stock investment accounts.  When he demanded the divorce, my friend only had $30k in a 401(k) account and an old car that was ready to break down at any moment.   

Probably the one common thread throughout these habits is the failure to focus on the ”long-term” picture.  But even if you do have that long-term plan firmly seared into your brain, it still isn’t a cakewalk.  Chances are it’s going to be two steps forward, one step back.  Hey, I just splurged on a new outfit last week, even though I had vowed to spend no money on clothes for the next two months.  We’re all only human!