Yahoo Finance 4 Bills You Don’t Have To Pay If You’re Rich
The good news about being rich is that there’s always plenty of money to pay the bills. The even better news is that when you’re rich, there are fewer bills to pay.
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Life costs more when you’re poor and less when you’re wealthy, so the affluent can leverage their fortunes to spend less, save more and reduce their stack of monthly obligations. Here are a few bills that the monied class has too much 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 the average borrower takes 20 years to pay it all off — but not the rich.
“Wealthy individuals and their families have the means to fund education expenses without resorting to student loans,” said Michael Ashley, a former high-level employee at Wells Fargo and Citi and founder of the personal finance site Richiest. “By covering tuition, fees, and other educational costs through personal resources, scholarships, or trust funds, they can avoid the burden of student loan repayments. This financial advantage allows them to prioritize educational goals without the constraints of debt accumulation.
In June 2023, the New York Times reported on so-called Dynasty 529 plans, tax-advantaged college savings funds that the affluent stuff with millions of dollars and hand down as generational wealth. With clever estate planning, no taxes will come due when future generations use those funds for educational expenses.
For the wealthy, that often includes big-money degrees at big-name schools that put the elite’s posterity on the fast track to making their own fortunes. The Times says Dynasty 529s pay for prestigious private schools like Duke University for $84,000 a year and the NYU dental school for $500,000 — not to mention luxuries like high-rise dorms and high-end laptops, all without the burden of borrowing.
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Car Payments
According to Experian, the average new car payment is now a whopping $726 per month — even used buyers pay an average of $533 monthly.
But since the rich can afford to pay with cash, that’s one bill they get to avoid.
“Affluent individuals commonly choose to purchase high-end vehicles with available funds rather than financing through loans,” said Ashley. “By paying for cars in cash, they bypass monthly car payments and avoid accruing interest. This approach not only simplifies their financial portfolio but also aligns with a preference for ownership without ongoing debt obligations associated with auto loans.”
In fact, paying for big-ticket items outright is one of the best ways to keep more of your money so you can stay rich for the long term.
For example, if you buy a 2024 BMW 4 Series for $50,000 with a 20% down payment of $10,000 at 7% interest for 60 months, you might look rich to the other drivers, but you’ll pay $5,290.96 more in interest charges than the actual rich person who writes a check to the dealership.
Paying cash is the smart move and the rich know it. According to Thomas J. Stanley, author of “The Millionaire Next Door,” only about one in nine millionaires report leasing their vehicles, which he calls “a popular substitute for wealth.”
Credit Card Finance Charges
According to a recent Motley Fool study, the rich are more likely to have every kind of credit card than the average American except for cash back cards, including travel cards, sign-up bonus cards, grocery and gas cards and balance transfer cards.
That’s because banks use the money they collect in finance charges from people who run monthly balances to pay points, rewards and miles to those who don’t — and the rich make sure they’re always on the right side of that equation.
“One significant bill that rich people often avoid is credit card finance charges,” said Abid Salahi, co-founder and CEO of credit card comparison site FinlyWealth. “Due to their financial stability, wealthy individuals typically pay their credit card balances in full each month. This habit saves them from high-interest charges and bolsters their credit score, creating a positive financial cycle.”
Mortgage Payments
According to a recent WSJ Intelligence survey, roughly four in 10 wealthy families do what most people could never even consider as a possibility — eliminate what is most households’ highest monthly bill by paying for their houses in cash.
“Wealthy individuals often have the financial capacity to purchase homes outright without relying on mortgages,” said Ashley. “By paying for their residences in cash, they eliminate the need for monthly mortgage interest payments. This not only saves considerable money in the long run but also reflects a strategic financial decision to deploy capital efficiently, considering the lower opportunity cost compared to financing through a mortgage.”
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