The Rich Are Frugal – The Poor Are Cheap

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Tom Corley boats - crop

Cornelius Vanderbilt, the richest man in the world in the late 1800’s, controlled much of America’s transportation in two sectors – the steamships and the railroads.

He was revered for his ability to minimize costs. His attention to financial details was unsurpassed during his reign.

For example, when he took over the New York Central Railroad, one of the first things he did was remove all of the brass from all of the trains. This cost him a lot of money in removing all of the brass from his rail cars. People thought he was crazy.

Why did he do it?

Brass needed to be polished every day. No brass, meant no more need to pay people to polish it every day.

Eliminating the expense of polishing the brass far and away exceeded the cost of its removal, saving his railroad companies an enormous amount of money in the long run.

Rich people find novel ways to stretch their money.

Poor people, on the other hand, spend their money foolishly. They focus on the short term – the cost of the product always comes first. Quality rarely enters their mind.

They will buy a cheap product, just to have it, despite the fact that the quality of the product is suspect. After a few years, the product wears down and they are forced to buy another cheap product or do without.

Be frugal, not cheap. Being frugal is a Rich Habit. Being cheap is a Poor Habit.

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Thomas C. Corley About Thomas C. Corley

Tom Corley is a bestselling author, speaker, and media contributor for Business Insider, CNBC and a few other national media outlets.

His Rich Habits research has been read, viewed or heard by over 50 million people in 25 countries around the world.

Besides being an author, Tom is also a CPA, CFP, holds a master’s degree in taxation and is President of Cerefice and Company, a CPA firm in New Jersey.
 
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  1. Will Huynh says:

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Trackbacks

  1. […] 10. The Rich Are Frugal – The Poor Are Cheap – Rich people find novel ways to stretch their money. Poor people, on the other hand, spend their money foolishly. They focus on the short term – the cost of the product always comes first. Quality rarely enters their mind. Be frugal, not cheap. Being frugal is a Rich Habit. Being cheap is a Poor Habit. […]

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