Sunday, July 27, 2008

Nutty rich people

Recently I returned from a trip to London, where I read an article about a pawnshop in a prosperous neighborhood there, where wealthy people were showing up to pawn very expensive jewelry because they needed quick cash to meet urgent expenses. I'm talking mortgages or car loans. I didn't know much about pawn shops (having never used one), but as the article explained, you leave a valuable item as security, and in exchange, the pawn shop will give you up to 50% of the item's value in cash. If you don't re-pay the loan, the shop keeps the item.

The article said that some of the jewelry was incredibly valuable -- worth several hundreds of thousands of dollars' worth. The people pawning this jewelry were in need of cash to pay their home mortgages.

This is nuts. Who are these incredibly idiotic people, who spent their money on expensive jewelry when they have mortgages they can't afford? What made them buy something as frivolous as diamonds when they can't ensure a roof over their heads? They fell into the trap that Ed McMahon did -- getting lured into spending money on unnecessary items when the basics aren't assured.

Maybe I'm too conservative, fiscally speaking. But I believe that true wealth is having no debt. One of the first things I did when I became wealthy was to pay off my mortgage. No bank will ever take my house. I may not have fancy jewelry. I may not have a luxury car.

But I own my house, and I don't owe anybody anything. That, to me, is the definition of wealth.

No comments: