Growing your net worth from $0 to $1 million takes time. First, you have to ask for what you want. It starts at the negotiation table.
The sorted topic of coin. Everybody needs it, but those that really want it ask for it.
Ask for what you want. Anything at all. That includes money.
It may not be easy, but you have to negotiate.
It is the only way to get the best deal for you.
You know your worth, so don’t accept anything less.
Speak up to be heard.
Always be reaching. Never settle.
SPEAK UP
A lot of people are afraid to say what they want. That’s why they don’t get what they want. – Madonna
Remember that piano scene in Sex and the City where the piano player kept saying, “one more time for the cheap seats in the back.”
Well, that is real advice.
No one can hear you if you whisper. You have to shout. If you do not speak up on your own behalf, no one will.
Believe me, prince charming or princess darling isn’t coming.
It’s like that part in The Lord of the Rings where Gandalf shouts, “fight for your lives.”
I say that to myself all the time. Do it like your life depends on it. Whatever it is, make it count. Finish strong.
Like that voice in Mortal Kombat used to say, “fight hard.”
Either that or die trying.
BE FEROCIOUS AND FEARLESS
Better to live one year as a tiger, then a hundred as sheep. – Madonna
I can’t tell you how many times I’ve been called a rebel.
For standing up for myself. For voicing my opinion. The list goes on and on.
I think back on that scene in Troy. To fight back.
If you want something, then you better be willing to go to bat for it.
I have asked or negotiated for better pay, grades, food, clothing, a deal on a house, fees, and interest rates.
I’m a lioness. I’m like Miley Cyrus says, “I can’t be tamed.”
I like to go for the gold, but I’m not ashamed to get silver or bronze.
Now when people say no, I only hear yes to my dreams.
WHATEVER DOESN’T KILL YOU
I stand for freedom of expression, doing what you believe in, and going after your dreams. – Madonna
You know the saying…only makes you stronger. Well, it’s true.
I will never forget those hard times being picked on as a kid.
I heard Jillian Michaels say she was bullied and teased relentlessly until she started taking martial arts. She says then the bullying stopped real quick.
I just focused on my studies. And my dreams. Just ignored everyone and everything. I was laser-focused.
I maintained good grades, a well-kept appearance, good manners, strong work ethic and a no nonsense attitude. The teasing stopped real quick.
It truly has paid off. As I have done the following:
Completed my education
Paid off debt
Learned how to invest and build wealth
Traveled more
Maintain my health
Took martial arts
Became a writer by starting a blog
I just did what I believed in. And I believed in myself. I just trusted my instincts. I picked a path and didn’t look back.
Things may not have always worked out the way I wanted, but I was never standing still. The needle of my life was always moving forward.
BE THE ARCHITECT OF YOUR LIFE
Don’t you ever let a soul in the world tell you that you can’t be exactly who you are. – Lady Gaga
What do you want?
Be specific.
I’ll give you an example.
I plan to have enough money to retire in 13 years.
Be more specific. No problem.
By May 5, 2031, I plan to have enough money in savings and investments to retire from full-time work forever.
And that is not a wish, but a goal. This is real.
I am planning for that date. Right now.
Will I retire? I don’t know. However, I still plan to have the option to do so.
Madonna said, “Poor is the man whose pleasures depend on the permission of another.”
Warrant Buffet decided at age 10, after going on a trip to the NYSE, this planted the idea in his young head to organize his life around money.
You are the person in charge of your destiny. Never forget it.
PENNIES OR DOLLARS
The mind is the greatest weapon. – Rambo
Oh, it is. If you have ever seen an episode of MacGyver or been in a tight situation and talked yourself out of it, there’s your proof right there.
I have noticed that math and science are great skills for analytical thinking. Great subjects to study in school or to use to prepare for a career.
In the 2004 film Ray, Jamie Foxx plays Ray Charles and is told the way to get a better deal is to ask for one.
Don’t be afraid to ask for more.
My mother taught me that.
She says all people can do is say yes or no.
In the movie, the man says to Ray you think pennies you get pennies, you think dollars you get dollars.
That was just by changing your mindset.
When I think now, I always think in millions.
For instance, it will take approximately 20-30 years to build a million-dollar investment portfolio depending on how much you save and the interest rate. Investing $10k a year at a 8% interest rate will net you $1,000,000 within 28.55 years.
You just have to decide.
Do you want thousands or millions? You think millions, then you get millions.
If you ask for it and are turned down, then use your mind to find a way to create this reality.
This $100,000 bottle of water costs as much as a house in some parts of the country. Heck, even the world!
Thirsty? Well, this bottle of H20 will only cost you $100 grand. You heard me. $100k! Yes, that’s USD.
That’s the most expensive sip of water I have ever heard.
What if I accidentally spill it? Oh, to perish the thought!
I was sure it was a joke. Like how Jokey the Smurf brings you a present and then you find out it’s a gag gift. You know, something like that.
I can’t even fathom parting with that much cash for something you could get for free out the tap at home or at any restaurant.
Who are the marketing geniuses who thought of this? Who is the target market? What are the demographics?
Who in their right mind would pay $100k for some water?!!
WHO WILL BUY $100K BOTTLE OF AQUA?
Fine. I’ll bite. Who are they?
I guess you could say this water is targeted at a high-end clientele. Those that have pockets so deep, that smacking down that type of scratch is no problem, as all they have to do is whip out their Centurion Black Card. Swipe, sign, and done.
The company actually got rapper 2 Chainz and DJ Diplo to taste the water. They have both sold millions of albums. So, sure you could market to them. Market to the affluent is a must at this price point.
If you don’t have to bat an eyelash at this type of transaction, then good for you.
The rest of us reasonable mere mortals are not buying it. Where did this water come from? Is it magic water from the fountain of youth? Will it heal all maladies or whatever ailments you have. Basically, will it cure what ails you and eliminate the need for the ever increasing cost of healthcare?
Could I rub it and make 3 wishes?
Like in the show Gargoyles, this isn’t Aladdin’s lamp. All things have their limitations. Even the character called Puck agrees with me. Check it out 30 seconds in.
MAKERS OF THE MOST EXPENSIVE BOTTLE OF WATER IN THE WORLD
The company is called Beverly Water. They are located in Beverly Hills, California. The water is called Beverly Hills 90H20. It is crafted spring water from the California Mountains.
Coined “The Most Expensive Bottle of Water in the World,” is clearly meant to entice people with deep pockets that this is a must have item.
Here is the description that I posted on their website:
Description
“The Most Expensive Bottle of Water in the World”
Limited to only nine bottles in the world, the Diamond Edition of the Luxury Collection of Beverly Hills 9OH2O is the ultimate in water. Designed by Jeweler to the Stars Mario Padilla, each exquisite bottle features a white gold cap set with over 600 G/VS white diamonds and over 250 black diamonds, totaling 14 carats. Each bottle comes in a custom secured presentation case together with four engraved Baccarat crystal tumblers, and it is presented in person by renowned water sommelier Martin Riese at a private water tasting anywhere in the world. In addition, the Diamond Collection package includes a one year supply of the Lifestyle Collection of Beverly Hills 9OH2O.
THE MOST EXPENSIVEST SH*T
There is a video posted of 2 Chainz and Diplo getting a tasting of the water from a, get this, water sommelier. It turned out as expected. Neither care to buy $100k bottle of water. Why you ask? It’s simple. It’s just water!
After, introducing the water to the two gentlemen, which is housed in a massive case, you get the feeling something is seriously off here.
Then comes reality.
THE $100,000 DOLLAR QUESTION
2 Chainz asked what everybody wants to know, “What are you paying $100,000 for?”
The white-gloved sommelier then points at the bottle cap.
You are not really paying for the water, but what the water comes in and with.
Which is a 14 real diamonds, 600 white ones, 250 black diamonds, and white gold.
For this diamond luxury experience, you’re getting the case, and 4 diamond baccarat glasses.
After I stopped laughing hysterically, I started reading the comments on the video.
The hands-down and absolute funniest part after watching the video is reading the comments section.
MY SENTIMENTS EXACTLY
Here are just some of the comments I saw that popped out at me.
Imagine how disappointed you were if you paid $100k for this bottle thinking its vodka
MBA lesson right here
If you can convince someone to buy a bottle of water for $100k. You deserve that $100k.
I will put some tap water in a bottle and sell it for 500k!
Marketing and BS.
Ima stick with my Aquafina😂😂😂
I’m no mathematician, but that’s more than 2 chains.
For those who didnt catch it, you are not paying 100k for the water. You pay 100k for the Diamonds and the gold on the Cap.
The glasses the diamonds and the case cost 99,999 and the water 1$
0$ water … 100k bottle cap
Man, that water better have the power to cure all diseases for that kind of price. 100K seriously???
I better become a mermaid after taking a sip for 100k
100k for a bottle of water? That sh*t better bring Jesus and 2pac back.
Meanwhile in Flint, Michigan…
This water better come from the fountain of youth.
Bottle of air 2billion dollars
One person put my exact thoughts, as I described above, into an elegant rebuke of buying water this freaking expensive.
MadeInVolantis 2 years ago
For 100k that water better turn me 18 again. For 100k that water better cure my thirst forever. For 100k that water better wash me of my sins. For 100k that water better make me a million dollars back somehow.
Well said.
Basically, it’s a $100k jewel-encrusted capped bottle with water inside.
Let’s think about this for a second. What could you do with one hundred thousand dollars? I’m about to tell you.
YOU COULD DO BETTER THAN BUY A DIAMOND CAPPED BOTTLE OF WATER
You could do all types of things with that kind of money. These are just some suggestions.
WHAT YOU COULD DO WITH $100,000
Start a college fund for underprivileged kids
Put every dime in the market and get historical ROI average of 7%; be a millionaire in 30 years (there goes that million bucks the commenter above was talking about)
Start a business
Donate $1,000 to 100 charities
Donate $10,000 to 10 charities
WHAT WOULD BE FUN TO DO WITH $100,000
Rent out a blimp over your old college campus, get $100,000 worth of ones and make it rain
Go to Vegas, rent out the Penthouse of an expensive hotel , and bet 10,000 on black
Get on a plane to Dubai, UAE, fly first class on the Emirates and visit every attraction
Visit Rome, Paris, China, London, and Australia just to get a keychain
Get back stage and front row passes to see your favorite artist in concert
Enter a professional poker tournament with a $10,000 buy-in
Walk up to anyone of the people collecting for the salvation army and give them a check for $25,000 (kind of like that scene in the movie Ghost)
Great scene. You will love it. No need to thank me for uploading it here.
If you have never seen the movie, then I highly recommend it.
WHAT YOU SHOULD DO WITH $100,000
Donate 10% to charity
Put a down payment on a piece of property
Pay off all or a large portion of your debt
Invest in the stock market like the S&P 500 index
Pay cash for college
Buy a car outright
Invest in your health
If you want to impress people, just show up to their events on-time and don’t complain.
And if you just so happen to get thirsty, stick with VOSS, Evian, or Deer Park. Can’t go wrong.
That’s just my $0.02, er ehh, I mean $100k money saving tip of the week.
Everyday and in every way, invest in yourself. Invest in your health and education to help build your wealth. With money comes power and protection. The wealthy are protected. Build up your knowledge and money coffers. A war money war chest is your way to ditch the 9 to 5 and get out of the rat race.
Jay Leno gives advice on how to do just that.
MONEY LESSONS FROM JAY
Jay on starting out
“I wasn’t a millionaire when I started.”
“I would alternate between the two, so it was cars and hamburgers, which are actually still two of my passions.”
He started his career working for minimum wage at McDonald’s in Massachusetts. Jay also worked at a Ford dealership. He discovered the key or secret sauce (pun intended) to getting rich: Developing multiple streams of income.
Jay on working more than one job
“I always had two incomes.”
“I’d bank one, and I’d spend one.”
“I had two jobs because I realized that was the quickest way to become a millionaire.”
“When I got ‘The Tonight Show,’ I always made sure I did 150 [comedy show] gigs a year so I never had to touch the principal.”
And there you have it. Basically, if you want riches, then you have to put in the work. If you work 40 hours a week, then find a way to work 50 or 60. Gotta make that paper.
“When I was younger, I would always save the money I made working at the car dealership, and I would spend the money I made as a comedian.”
“When I started to get a bit famous, the money I was making as a comedian was way more than the money I was making at the car dealership, so I would bank that and spend the car dealership money.”
“Then I got to the point where the comedy money was, like, five times the other money, so I decided to flip it around and save the comedy money.”
Therefore, if you are working 2 jobs or more, then you bank the bigger paycheck and spend the smaller checks. Bank the bigger of the two checks and live off the other.
Forget the pundits that tell you not to save. There is value in saving. You need an emergency to help in case of job loss or illness. Life is full of hiccups. Once you have saved reasonable amount, then you start investing your surplus income.
The key is not to only save, but to also invest. Savings help you live your life to the fullest. In addition, savings can help you fund your dreams. Not having to go to the bank for a loan is an incredible feeling.
Jay on living on one salary
“I pretended as if I didn’t even have the ‘Tonight Show’ job.”
“You know, when you start making money, you get lazy. I wanted to make sure I always had that hunger, so I never looked.”
“It would go directly into a bank.”
Simply put, bank it and forget it.
Jay on patience
It took 22 years to accumulate, “a nice little nest egg.”
You heard it here folks. Building wealth takes time. In many cases, it takes a couple decades. There are no get rich quick schemes. There’s is no free lunch. There are no shortcuts. You do the work, get paid, invest the surplus incomes, and wait to earn interest.
Jay on retiring
“If you do something and it works, then keep doing it.”
You do not have to retire early unless you want to. If you are passionate about something, and can make a living doing it, then do it.
Jay on Buy-And-Hold
“The McLaren F1, I paid $800,000 for it in 1998. The last offer I got was $12 million. … The nice thing is, if you buy what you like, and it doesn’t go up in value, you still like it.”
Warren Buffet likes to buy-and-hold forever. Therefore, don’t even part with your cash, if you don’t want to keep an item to infinity and beyond. Just don’t even open your wallet.
Jay on avoiding credit cards
“I barely use credit cards.”
Words to live by. Either use credit sparingly for a purpose and get it paid off ASAP or don’t even bother using it at all.
Jay on house buying
“I didn’t buy my house until I had cash. When you own something and you don’t have to write checks every month, you’re just better off.”
I learned from James Brown, Dick Clark, Jay-Z, Oprah, JK Rowling and Michael Jackson to own what you do. You can control your earning potential and life, if you own. You can continue to make money off the things you own and control for many years to come.
Regardless, of whether or not you’re still working. You can still earn royalties from work you have done in the past. That is how the rich get richer. Earnings on top of earnings.
Jay on debt
“I don’t carry any debt. I don’t write checks at the end of the month for anything.”
“I didn’t buy anything I couldn’t afford to pay for in cash.”
“Here is the money, give me the thing, transaction over.'”
Jay hates installments, as do I. His cash only solution is what the world needs to adhere by.
I have literally saved for two years or more to purchase items or services I wanted or needed.
When I wanted Lasik, I used my flexible spending and waited about 3 years before I did the procedure. It cost between $4,000 to $5,000. And was worth every penny. Paid cash, not credit.
When I needed dental work done, I saved for 2 years. Paid cash, no installments.
Don’t buy on credit, build a fortune.
Jay on Retooling
“Since high school, I’ve always had two jobs. I worked at a McDonald’s and I worked at a car dealership. … When I was doing the Tonight Show, I’d be on the road at least two to three days a week because I thought, ‘We’ll see how long this lasts.’ ”
Do not ever get too comfortable. Things can change. Always have more than one way to earn a living.
Jay on owning
“I own everything. I own my buildings. I own my cars. That way, if it ends tomorrow, I know what I’ve got.”
His conservative money philosophy gives him peace of mind. When you are out of debt you just feel better. Take control of your finances and this too will help give you some peace of mind.
“It’s a little old fashioned, I suppose, but it seems to work pretty well for me.”
No impulse buying. This is the debt trap. Plan your expenses. Budget just means you plan where your money goes and it gives you permission to spend. Use it.
Jay on Taxes
“I just pay. Fine, I’ll get another job, I’ll work harder. That’s probably not very good tax advice. I don’t have money in the Cayman Islands or any of that nonsense.”
Always pay your taxes. Period!
Jay on being frugal
“McDonald’s sent me these Happy Meal coupons, so one day I’m in the McLaren and I’m going to McDonald’s. I say, ‘Give me two Happy Meals.’ And I give them the [coupons].”
“Now I look like the cheapest guy in the world driving this multimillion-dollar McLaren and I’m trying to get a free hamburger.”
He hates spending on clothes and has not touched one dime of his Tonight Show money. At one point, he was earning around $30M a year! It pays to be frugal.
So, you just avoid the mall, invest the money you would spend on clothes and start earning your way to a fortune with compound interest. Delay your gratification. Discipline is the key to wealth. Once you have it, no one can take it from you. Then you can save money to invest. Easy as pie.
Jay on Shifting Gears
“So many friends of mine, all they ever did was the TV show. When the TV show ends, suddenly their life ends, because that was their whole life. I was never that guy.”
It’s great to have hobbies and interests outside of work. See if you can turn a hobby or side gig, into an income. At the very least, have something to do after one thing ends. Remember, no idle hands.
Jay on shopping
“I’m not a big shopping guy. I’m just not interested in clothes outside of the essentials.”
“To me, it seems like a complete waste of money. I just want to have enough clothes to cover legally what parts I have to cover.”
Hear, hear! I used to like shopping. Until I didn’t. That happened once I learned I was losing a small fortune for that new purse or shoes. Read my post How Millennial Money inspired me to start saving $13,333.06 a year for more on that topic and see how I quit shopping for good.
Jay on Fixing Things
“When you’re in a business like show business, everything is subjective. Some people think you’re funny, some people think you suck. …When something’s broken and you fix it, no one can deny it’s running.”
Very true. Always be tweaking or working toward expanding and doing better. People notice you the harder you work.
Jay on setting high standards
He, like Coco Chanel, believe in setting high standards for yourself. Chanel said, “keep your head, heels, and standards high.”
Jay learned this attitude while working at McDonald’s. A key pillar of success: You can never go too far to ensure you’re producing a great product.
He would go home every night after work and write jokes. Jay would go through hundreds with his staff and get it down to the top 20. He would record himself and then re-listen for timing. Tedious? Yes, I know. But effective. The hard work paid off.
Fun Fact: Did you know @jayleno started his career making minimum wage at McDonald’s? Here are 5 things the self-made millionaire did that catapulted him to success: via @CNBCMakeIthttps://t.co/Y7ewRMHNXV
“I meet with the writers at about midnight or so and work until about 4:00 a.m.”
“I sleep four hours, maybe five.”
The way he saw it was, “if you have time to complain, you don’t have enough work to do.”
I am notorious for going to bed thinking of work and getting up to work. Sometimes I get up in the middle of the night to write down ideas about work. I work so much I barely have time to breathe.
I learned that from Pat Benatar who was a workaholic in the 80’s. But guess what? She wrote hits songs for like a decade. When there are times I need a break or pick me up while working, I’ll listen to her songs Invincible, Shadows of the Night or Love is a Battlefield.
For those who may not know or remember those songs, check out the links below. Good stuff.
Jay on failure
“You learn a tremendous amount from the mistakes.”
I have learned to fail better. It makes you stronger. It also humbles you and makes you more empathetic to others.
“I put my money in a hammock and say, ‘You relax. I’m going to go work.’ And when I come back, I put some more money in the pile.”
It’s your money. Don’t blow it.
Jay on Life
“Life is not that complicated … if you’re kind and decent, and try to be honest, it’ll probably work out. Yeah, you’ll get screwed once in a while. I certainly have, but that’s okay … don’t dwell on it.”
Pick yourself up, dust your wallet off, and get back into the grind. Don’t rest on your laurels. Put your head down and work. Stay humble and stay hungry. Generate multiple streams of income, diversify your earnings, increase your savings, and build your wealth. Get that net worth pumping in that interest faster than Arnold Schwarzenegger did lifting weights in Pumping Iron and you will start rolling in the dough!
Just FYI: Jay is worth over $300 million dollars. Has no debt. Is a self-made millionaire. And still works at the age of 68.
Before Mr. McPherson died, he wrote an article called Falling, that was published in 2014, regarding his descent into poverty. It was published in The Hedgehog Review.
He went from book critic, novelist, and an editor at The Washington Post to destitute. That is a far fall from grace indeed. Here is his story.
HOW TO GO FROM PULITZER PRIZE WINNER TO PENNILESS
William Alexander McPherson was born on March 16, 1933. His father worked as a plant manager and his mother was a homemaker.
He attended public schools and eventually went on to college. Between the period of 1951 to 1966, he attempted to get a college degree. He attended several universities during this time. Alas, the coveted sheepskin (college diploma), remained ever elusive as he did not earn a degree.
He married in 1958, but it ended in divorce.
By 1969, he started working at The Post.
As an editor, he was in charge of Book World for The Post and under his leadership, he turned that into one of the leading literary publication in the United States, which is no small feat. That is a tremendous undertaking, job, and responsibility. However, here in the real world versus in college, he thrived.
WINNING THE PULITZER
In 1977, he was awarded the Pulitzer Prize for distinguished criticism and the judged noted his large breath of literary and historic knowledge.
A Pulitzer Prize is a coveted award in literature. It first began in 1917. This prize is given out for achievements in magazine, newspaper, literature, journalism, and music composition.
The Pulitzer is named after Joseph Pulitzer, a famed newspaper publisher, that made his fortune in publishing. The award is administered by Columbia University in New York City. Either a gold medal or cash prize of $15,000 (increased from $10,000 in 2017) and certificate is awarded to the winners.
He wrote two published works. One in 1984 and the other, a sequel to the first novel, in 1987. A third was in the works, but was never completed.
At the age of 53, he decided to leave his job, and head to Romania, after the fall of the Berlin Wall. He stayed there for seven years. Mr. McPherson opted for early retirement at the ripe old age of fifty-three. He would not be eligible to receive his pension for 12 years; at which time he would be sixty-five. This is where things began to spiral downward.
Why not retire at 65, when you can receive your money? That just makes more sense. In my opinion, unless you have between $2.5 to $5 million in assets it will be tough for most folks to retire or even justify retiring early before you have access to 401(k)’s, IRA’s, Social Security and pensions.
THE FALL FROM MIDDLE TO LOWER CLASS
Don’t follow any advice, no matter how good, until you feel as deeply in your spirit as you think in your mind that the counsel is wise. – Joan Rivers
After choosing early retirement, having no real plan and giving little thought for his future income, he set out for an adventure overseas.
Although, he is a writer by profession, with age and the decline in his health, he is unable to sustain this way of earning a living. It is far different to be a man of twenty-two, eking out a living by writing than it is at seventy-two. He can long longer grind out the words as he could when he was a young man. He states this is one reason that he is poor.
Inflation would also erode the purchasing power of his money. From 1986 to 2014, inflation has gone up 109.7 percent. Meaning things have doubled in price.
His pension becomes worth half of what it once was and it not adjusted for inflation.
He receives Social Security, but having not worked formally for the last few decades means that this amount would not be very high.
Medical insurance has skyrocketed. It is a much higher cost to insure anyone, let alone a man in his golden years. It now costs him more monthly than he used to pay in a year.
He did not pay attention to his investments and bought stocks on margin.
In addition, he allowed advisors to manage his money and give him advice against his own gut instincts.
Eventually, his investments and brokerage accounts were empty.
FINANCIAL MISHAPS AND MISSTEPS
These are the things that caused Mr. McPherson to lose his financial shirt:
No clear vision of a career
No path to wealth creation ever established
He did not complete his degree; after numerous attempts which is time and money wasted
His only income consists of a Social Security check and a miserable pension
He retired early without a financial plan
Gave no thought to the future or inflation
High cost of medical care never even considered
Higher cost of housing not considered either (as news flash, things become more expensive not cheaper)
Did not plan for health issues
Divorced without having a financial net
He invested on margin
He spent his investment capital
Took bad advice from advisors that told him not to buy shares in AOL and Apple
Due to this he has to depend on the kindness of family and friends
He couldn’t pay for $10,000 of dental work
Did not have the money to attend a funeral
He subsists on a HUD subsidy for housing and medical benefits
Things got so bad, at one point, he only had a quarter to his name in his pocket and no bank account
POVERTY IN OLD AGE
He states by all standards of living that he is poor. Living in poverty is awful and humiliating he writes. Being poor is exhausting and time consuming. Waiting for buses and in lines at assistance offices takes all day.
His income is above $11,670 annually, putting him above the poverty line, as he receives more than that in Social Security. Even though, he has not ever had to apply for food stamps, welfare, or Medicaid he still has had to ask for government assistance.
He feels his younger self was delusional and naïve.
Although, he does not live in a homeless shelter, but living in subsidized housing isn’t exactly palace living. Many living there are poor as well.
The ailments that come with age are hard. Without good medical insurance, medical bills can be catastrophic to say the least. Medical debt has caused some to declare bankruptcy.
According to Elizabeth Warren, Americans are filing bankruptcy in record numbers. The main causes are job loss, illness, and medical bills. Women with children are also most vulnerable to file for bankruptcy.
The things he did that harmed his financial future were unable to be undone.
I share this story because the author had the fortitude to do so. I urge you to not just eliminate, but crush all of your debt and save at least 20 percent of your income because one day you may need it.
“It is so liberating to really know what I want, what truly makes me happy, what I will not tolerate. I have learned that it is no one else’s job to take care of me but me.” – Beyoncé
Many of you may have heard of the FIRE movement (financial independence, retire early). However, what some of you may not know is that there are different ways to FIRE.
Let’s explore some of those ways shall we.
WHAT IS FIRE?
According to Camp Fire Finance, the elevator pitch for FIRE is this, “When your investments generate enough money to cover your annual expenses you’re financially independent (FI). At that point work is optional and you can retire early (RE) if you want to.”
Basically, you have more than enough money coming in to stop working. Usually, this requires anywhere from $1 million to $5 million dollars depending on what you want or need to spend to maintain your lifestyle or that of the one you dream of having.
For example, if you decide you want to withdraw at least $80,000 a year, you would need to have a $2-million-dollar portfolio.
HOW DO YOU BUILD A $2 MILLION DOLLAR PORTFOLIO?
“Don’t focus on getting to $1 million; focus on getting to $2 million.” – Arnold Schwarzenegger
I heard that little gem when Mr. Schwarzenegger was doing a radio interview.
So, one word: invest.
Property, stocks, art, and stamps can all help you build your net worth.
“Market crashes are the best times to buy,” he said. “When Walmart has a sale, everybody would run in to buy. But when the stock market has a sale, or the real estate market has a sale, everybody runs away. That’s why there’s a difference between rich and poor today because they don’t know a good thing when they see one.” – Robert Kiyosaki quoted from a MarketWatch interview
Do not focus on your income; focus on your net worth.
Earning a high income means nothing, if you spend it all. If you make $85,000, but spend $86,000 you’re in the red. You can blow through just about any paycheck.
PURSUIT OF LIFE, LIBERTY, HAPPINESS AND FINANCIAL FREEDOM
The pursuit of financial freedom takes work and time. I thought this post from Apathy Ends, hit the nail on the financial head on why people are not rich, yet. See my post on Patience is the key to wealth.
I will never forget that episode of America’s Next Top Model (ANTM) when Ms. J was teaching the girls how to walk down the runway. He was fierce and determined. What he got from the girls was gentle and undetermined or undefined and lazy.
He commented to them, while slapping his hands together, with one palm face up against the other hand palm down for emphasis: “I want you to walk like you’re selling it and the rent is due tomorrow.”
I could think of no better way to tell someone that is how you approach your money and your life’s work. Either be all in or don’t do it at all. Passion is what separates the have’s from the have not’s. And in that case, it was a $100,000 prize and modeling contract.
Get a financial education. Learn all you can about money. Make a plan or a budget for your money, but make it sexy. I know for some people talking about interest rates puts them to sleep, but how about we think of the subject differently and come at it from another angle.
I went to a meetup in DC and heard J. Money of BudgetsareSexy say this, “Do you want to learn how to balance a check book? Boring. Or do you want to learn how to save a million dollars?” WHAT?!!!
Did you also know reducing your 401(k) investment fee by 1% can provide you with 10 years of income? Shocking? Yes, I know. I can teach you how to save $1 million and keep $100,000!
Now, those things sound sexy and exciting. Yes, please tell me more.
Once you have a question. Start looking for answers.
THE RULE OF 25
“I can never be safe; I always try and go against the grain. As soon as I accomplish one thing, I just set a higher goal. That’s how I’ve gotten to where I am.” – Beyoncé
If your annual expenses are $55,000 a year, then you need $1.375 million to retire (55,000 x 25) and then this should last you for the next 25 years.
The formula used to calculate your 25 years of expenses is this (expenses x 25 years).
Estimate your FIRE number.
You want more money to retire on? Like Beyoncé says, set a higher goal.
For $100,000 in income, you would need a $2.5-million-dollar portfolio to generate that kind of cash.
“Keep your feet on the ground and keep reaching for the stars.” – Casey Kasem
The 3% rule refers to your withdrawal rate: the annual percentage amount you can safely withdraw from your investment portfolio when you retire.
This allows you to touch your interest earned at a slower pace. Since, you are withdrawing 3% instead of 4%. Meaning your draw down the principal more slowly, if ever. The more you have squirreled away and the less you take, you may not even touch the principal at all.
I know that is really shooting for the stars, but that really is the goal. You never want to touch principal. That way, you live only off the interest forever!
I got this chart from doing another online search and the best I came across was from the blog Financially Alert.
“‘Enough’ is what it takes to not worry about the bills.”
“‘A lot’ is enough that you never have to worry about working again.”
“‘F you’ money means you can rent a jet to go wherever you want, whenever you want, and no party is out of reach.”
“‘F everyone’ money means you can have your favorite band in your backyard, not care how much it costs, and lend them your jet to get there.”
We’re not talking about rich; talking about wealthy. Chris Rock once said, “Shaquille O’Neal is rich. The guy who pays his salary is wealthy.” He also said comfort is the poison. Too much of it can slow down your progress on the road to wealth. All I mean is to stay hungry. I’m just saying there are different levels of wealth.
FIRE IT UP
“Focus on all four of your net worth factors: increasing your income, increasing your savings, increasing your investment returns, and decreasing your cost of living by simplifying your lifestyle.” – T. Harv Eker
Simple math can help you retire rich.
Unfortunately, many people think of math as a foreign language and say it’s too hard to learn.
In my experience, to build wealth you need to know addition, subtraction, division, and multiplication. And that’s about it.
Why FIRE AT ALL?
More control and satisfaction over how you spend your time and money. Finding something you love to do and are passionate about is life changing and fulfilling. What you want is…FREEDOM. Waste less money and work with what you’ve got. Do more with what you have.
What do you want out of life? Write it down. Go seek answers. They say seek and you shall find.
According to Mr. Money Mustache, you should focus more on you than your bank account. Get wiser and healthier so you can increase your probability to get wealthier. My favorite quote of his is this: “Salads and barbells every day.” Become your best self with hard work, dedication, and consistency. Be the Boss.
READY, AIM…FIRE!!!
According to an article by Physician on Fire (POF), called What is fatFIRE?, a Facebook group defined FIRE as the following:
FIRE = Financial Independence. Retire Early.
leanFIRE = FIRE on a shoestring budget.
fatFIRE = FIRE on a generous budget.
Most aspiring to fatFIRE have a target of $2.5 Million or more or the equivalent annual budget of $100,000 or more based on a 4% withdrawal rate.
I found a breakdown of the terms financially speaking on Miniafi on the difference between lean and fat FIRE under the title So Many Terms!
I break it down like this:
LEAN FIRE = $1 million dollar or less portfolio
FIRE = $1.25 to 2-million-dollar portfolio
FAT FIRE = $2.5 million dollar or more portfolio
FIRE is about having enough passive income flows to never work again or to decrease the amount of time you spend doing work you don’t want to do and increasing it on the work you do want to do.
If you use a credit card, you don’t want to be rich. – Mark Cuban star of “Shark Tank”
According to CNBC, Americans have an average credit card balance of $6,375 and owe a record breaking $1 trillion in credit card debt, which is the most ever recorded in history.
Investing that money instead could net you anywhere from $50,000 to $200,000, depending on how long you invest it and getting a return on investment of around 9%.
And that does not include an employer match or if you invest more. You could save and invest your way to a small fortune thanks to compound interest.
Here are some ways to avoid paying interest.
MAKE IT AUTOMATIC
I’m sure to many of your out there this is not new advice. However, how many people are actually doing this is another story.
Setting your bills up on automatic payments is a great way to avoid missing payments.
Credit card companies can levy a hefty fee for missed payments. The most recent I read was $38! Forget that. I rather use that money for gas or some other function. Anything is better than paying fees.
In addition, credit card companies can ratchet up your interest rate to 29.99% for missing a single payment!
That means almost near perfect timing of paying all bills.
The closest you can get to doing this is to make all your payments automatic.
Set up everything you can on autopay.
You can put the gym membership, cell phone, utilities and insurance payments on a credit card. Then set up automatic payments with your bank to pay that credit card off at the end of every month and you’re done.
PAY DOWN YOUR DEBTS
Paying off high interest debt is a must on the road to wealth.
Every dollar you spend towards interest cannot work for you compounding interest instead.
Think about it. If you pay $700 per month servicing debt and pay 50% of that in interest, that money is gone. Dust in the wind my friend.
If you can do the polar opposite, investing the entire $700 and earning interest instead, you have a clear path to building wealth over time.
That is the equivalent of $8,400 a year you are investing as opposed to using that amount to pay debt in which $4,200 goes to principal and the other $4,200 in interest and that money you never see again.
Many may not know this, but credit unions are not allowed to charge more than 18% on loans or credit cards (unless you default).
The savings gain alone from not having to pay some credit companies 22-27% interest is huge!
You could save anywhere from $50-150 bucks or more per month with a lower interest rate. That’s another $600-1,800 per year!
Just something to consider.
REFINANCE YOUR MORTGAGE
If you can lower the interest rate on your mortgage, you can save $100’s or $1,000’s of dollars a year.
In addition, if you can change your repayment period from 30 years to 20, 15, or 10, then you can save a ton of money. Maybe not tons of money monthly or right away, but over the life of the loan.
For example, a $250,000 mortgage at a 3.92% rate over 30 years will cost $425,533. You reduce that to 15 years and total output is $331,058. That is a difference of upwards of $100,000!
If you take that $100,000 and put that into index funds, you could have anywhere from $600,000 to $1 million dollars over 30 years with a minimum 6% return on investment.
Many folks will buy at least 2-3 homes in their lifetimes. If every new purchase resets your debt-free mortgage clock by 30 years, then you are likely to spend most of your working years in debt.
I hate to be the bearer of bad news, but this is actually the norm for most people.
You do not want to be normal. You want to be different and extraordinary because that gets results.
If more folks put down 10-20% and got 15 year mortgages, you would be better off in the long run.
Paying on one item for 30 years is a long time.
A lot can happen in 30 years. Heck, a lot can happen even in 10 years!
Retire that debt ASAP or as fast as you can.
You can build an in-law suite, swimming pool, and remodel the kitchen after the debt is gone and the home is paid off.
People used to have mortgage burning parties, after paying off their home. Let’s try to bring that back shall we.
I have recently read in the news personal finance experts expressing their concerns over mortgage payments that Americans are making.
Most wanted the debt paid just before you retire. Others said get rid of it in your 40’s. Like around age 45. Why you ask? Since, this is the point where you are halfway through your career, it is best to spend the second half of it working toward building capital to fund your nest egg.
That is excellent advice.
Basically, you spend the first 20 years paying off all you owe, and the last 20 years building up your retirement accounts you will need in your golden years.
SUMMING IT UP
All you have to do is follow these four steps and you can avoid paying interest or at least a whole lot less of it.
Remember these 4 steps:
Make it automatic
Pay down your debts
Bank with a credit union
Get a 15 year mortgage
Sounds pretty simple right?
Well, you would be surprised by how many people are not doing any of the things stated above.
Therefore, if you can start doing even one of these things now, you are well on your way to building up your bank account.
And in the illustrious words of Porky the Pig, “That’s All Folks!”
