I have been a little busy. However, never fear your advisor to the financial underdog is here! Ha ha.
Let’s get to it.
The student loan pause has been extended. The Biden Administration has announced that the payment pause on federal student loans for 43 million students will extend through June 30, 2023. Payments will also not start until 60 days after, August 30, 2023.
This means the loan forgiveness first announced in August 2022 will have time to work its way through the Supreme Court (SCOTUS).
I'm confident that our student debt relief plan is legal. But it’s on hold because Republican officials want to block it.
That's why @SecCardona is extending the payment pause to no later than June 30, 2023, giving the Supreme Court time to hear the case in its current term. pic.twitter.com/873CurlHFZ
If you are a Pell grant recipient, that means $20,000 in loan forgiveness for you, if approved, and for all others $10,000, if you meet the eligibility criteria for forgiveness.
This is good news indeed, as it will give many Americans time to squirrel away funds for saving, beef up investments or additional savings accounts, and pay off debt.
My advice is always to start with an emergency fund of $2,500. Then work your way to three to six months of expenses. As debt is paid off, you can increase your savings and investments.
The 0% interest rate while loan payments are suspended is also an added bonus. That means if you owe an average of 6% on the median $38,000 of student loans, then you are saving $2,280 a year on interest. Even higher for those that owe more.
The three-year repayment pause has allowed Americans to save a collective of millions of dollars in unaccrued interest. Basically, the saving on interest has turned this into a form of loan forgiveness.
In addition, to the $10,000 or $20,000 loan forgiveness, if approved, would effectively turn those amounts into grants.
So keep your figures crossed and make this a wish on every star and birthday candle, if you are one of the ones that will get forgiveness as this will allow you to receive 100% loan forgiveness.
Without these estimated $300-$500 loans payments hanging over your head, you are now able to start saving for your future in the form a home down payment and socking money away in your 401(k).
And by the way, the IRS has now raised the 401(k) limit to $22,500 per year. If you were to max out your retirements account with this amount of money, with a historical stock market return since 1980 of 11.34%, you would basically be a millionaire in 16 years with a balance of $978,768.96.
Put every dollar to work that you possibly can.
The math tells you that being a millionaire is within your grasp.
I remember it like it was yesterday. I was just starting out and knew I needed to look into saving for my future. I was beginning at ground zero with $0 saved for retirement.
This was in line with the average 401(k) balance for a young person starting out in their 20s. My employer was offering 50% for every dollar we contributed up to 6% of our salary. I was all set to start making some moves into investing for my future so I got started right away. Then boom! Barely into starting out on my journey, the housing market crashed in 2008.
The Great Recession rolled in and people were losing homes and jobs left and right. I got my pink slip in 2009. I felt like I had just put $2 in my account. Not only did I lose my job, but also my employer contributions including thousands of dollars due to the fact you had to be an employee for 5 years to be fully vested. I was discouraged, but not defeated.
I always keep an up to date resume so I started sending it out. It took months, but I finally got a new gig that allowed me to be 100% vested from Day 1. This has helped me grow my nest age from $6,500 in 2010 to past a quarter of a million ($250,000) over a fairly short time later thanks to a raging stock market!
Total Vanguard Assets beginning from 2010
After I read a Fidelity report that stated 401(k) millionaires are on the rise, I figured I could be one of them too.
According to numerous financial pundits, it is recommended that you even need a minimum of $1 million to retire.
First, I had to get to $100k and that put me on the path to eventually passing the $250,000 mark. So you see, you have to have a goal. This is what I did to make it happen.
1) Set a goal
You can’t get anywhere without first knowing where you want to go. Therefore, I set a goal for myself of $100,000. I did this because after doing some research, I found that the first $100k is the hardest.
However, once you reach this milestone you can stop contributing completely to your 401(k) and still become a millionaire in 30 years without adding another penny.
As long as the stock market continues what it has done over the last 40 years (1980-2020), then you can expect returns of 10% a year. This will get you where you want to go over the long term. I’ll show you.
In 2012, I had $25,000 invested and by 2015, I reached my goal of $100,000. I have more than doubled my money since that time. You see how much faster your retirement accounts go up once you reach $100k. That money is doing all the heavy lifting for me.
It can take 5-10 years to reach the first $100k, but the next $100k may take only 3 years. Therefore, every year the next $100k takes less time.
Fourpillarfreedom.com
2) Cut expenses
I learned about house hacking from listening to a podcast on Bigger Pockets years ago. House hacking allows you to cut your housing expenses by 25% or more. Basically, you rent out your property and decrease your mortgage payment by having renters and becoming a landlord.
The other thing you can do is move to a less expensive location in order to save and invest the difference. You can also do this with a partner or roommate as you will have shared expenses that lower your living expenses.
I got my expenses down very low which allowed me to go from a savings rate of $1 to $5 dollars a day or 3% of my income to eventually working my way up to saving and investing 40% of my income.
Around 2013, my savings rate was 15%. Then it went to 25% in 2015. And I got it to around 40% by 2018.
I would incrementally increase my savings rate by 1% a month or a year depending on what I had going on. This is one of the best ways to give yourself a raise without feeling like you are being deprived.
Sacrificing when you are young and loose like a mongoose is best. Limiting your expenses during the lean years are well worth it.
Consider this. According to Vanguard, while the average 401(k) savings balance is over $100,000, the median account balance is much less at $25,775.
There was a time I was paying $448.65 a month for a car payment. I also had a $20,000 personal loan at $333 a month. Talk about a money suck!
This was draining my ability to save more. Once I got those items paid off, I started redirecting that money to my savings and investments.
That allowed me to put money into an emergency fund, brokerage account, 401(k) and my Roth IRA.
4) Start an emergency fund
The only way to stay out of debt is to have money in the bank so you will not need credit in the first place. Access to credit can become a nightmare when you have to start paying a large percentage of your income toward managing it. Therefore, I found a good number to start with is $1,000.
Then I worked my way up to $5,000. Again, I moved this number up to $10,000.
My personal suggestion is for people to have at least a minimum 3-6 month emergency fund. You can keep the credit card debt off you, if you can have money set aside for car and home repairs that tend to pop up at exactly the wrong time.
5) Be consistent
No matter what, I made sure to put money in my retirement accounts . If the choice was between having fun on a vacation or saving $10,000 first, I choose to save. Responsibility first, fun later. That is what my dad always used to say.
I save and pay myself first before doing anything else. That includes paying the rent! After my 401(k) and Roth IRA contributions are made, then I pay the bills.
6) Keep increasing your income
I increased my income through both annual cost of living increases, asking for and receiving pay raises, or getting a promotion. I was able to increase my income by 50% from my early 20s.
Every time I earned more money, I increased my contributions. However, please know that income is not enough alone to build wealth. It’s what you save. Notice the Vanguard chart below shows that higher income does not correlate with a higher 401(k) balance.
Annual income
Average 401(k) balance
Median 401(k) balance
Less than $15,000
$8,260
$1,356
$15,000 to $29,999
$13,069
$4,020
$30,000 to $49,999
$29,740
$10,439
$50,000 to $74,999
$66,033
$27,630
$75,000 to $99,999
$113,143
$54,020
$100,000 to $149,999
$177,597
$91,470
$150,000 and above
$298,851
$154,989
7) Live on cash
I know you hear this all the time, but cash is king and it is best to stay away from plastic. Debt just weighs you down. That money could be put to work for you in Mr. Market.
America likes to reward investors and shareholders by paying dividends. The more you invest the more you earn. Without doing any additional work, you are making money from income you already earned years ago. That is truly how you work smarter and not harder.
8) Invest in growth stocks
I started with a few thousand bucks and put it into Amazon and Apple back in May 2013. You can see from below that was the prices they were selling for back then. Amazon was going for $258 a share.
AMAZON.COM INC
Buy
5.0000
$258.84
APPLE INC
Buy
3.0000
$463.66
After investing more with both companies, as you should not only buy the product but the stock as well, the stock splits and appreciation has caused my investments to go up. I remember being amazed that Amazon had gone up to almost $2k a share. I even took a picture of it. Cause you know, seeing is believing. Back then it was going for $1,897 a share.
Amazon is now $3,300 a share! That is inching closer to the S&P 500 price of $4,000. Keep in mind the S&P 500 is made up of over 500 stocks.
Amazon is just one company. Its evaluation is pushing closer to what the evaluation is for 500 companies. Amazing! That is when I learned growth stocks can make you rich.
9) Invest in index funds
I invest with Vanguard because they have the lowest expense ratios I have seen. You can invest in the VITSX or VTSAX and get a low expense ration of around 0.003% and 0.04%, respectively.
The goal is to keep maintenance costs low as this will eat into your money later when you take those required monthly distributions (RMD) .
That is a good reason open up a Roth.
10) Have a Roth IRA
The Roth has no RMDs. You can let it ride forever or whenever you do take money out it is tax-free. Instead of paying interest on distributions with your 401(k), you could get access to them for free with a Roth.
If you are unable to do a Roth due to income limitations, then you can do a backdoor Roth. This allows you to convert your 401(k) into a Roth with a conversion ladder. Due to the Roth allowing you to make after-tax contributions, this is the superior investment vehicle.
Find a way to get one and watch that money go in after-tax and come out tax-free because you have already paid taxes on it.
And there you have it folks.
As of this writing, I have continued to watch my investments go up and continue to invest regularly. It has been awesome to watch my money grow. It has been very rewarding making those early sacrifices in exchange for building more wealth.
I have more money and freedom than I have ever had. All the sacrifice was worth it in the end.
My next money goal is 401(k) millionaire.
Keeping track of my net worth, investment portfolio, spending habits and increasing my savings have all helped me get here.
So my advice to you all is to keep stacking that dough.
I took a much needed hiatus for the last few weeks to come to terms with the new world order of life during the COVID-19 lockdown.
I did the usual. Stockpiled water, canned goods, cereal, and toilet paper.
Now I’m back.
If this blog could talk, I am sure it would have asked me this question.
After making sure I had food, water, and medicine to stay physically healthy, my mind started wondering about my fiscal health.
Then I thought, shouldn’t people also be making sure they are staying not only safe, but also financially solvent during the pandemic.
Much like Angela Chase (Claire Danes) was constantly obsessing about her crush Jordan Catalano (Jared Leto) in My So-Called Life (MSCL), I would find myself constantly obsessing over my finances.
For those of you who are unfamiliar with the show, My So-Called Life is an American teen drama television series from the 90’s that aired on ABC and then in reruns on MTV for years after it ended with only one season.
The plot surrounded a young 15-year-old girl that spent much of her time trying to figure out life and navigate being on the cusp on adulthood. The cast also just recently did a virtual reunion and reunited back together in 2020.
Now, back to my story.
I needed a fiscal safety net and plan in place that would allow me to weather and fiscal storm, including the coronavirus.
With over 33 million people filing for unemployment, I needed to shore up my resources.
My So-Called Finances needed my full attention. I was up for the undertaking.
START FROM THE FISCAL BEGINNING
Many of my lessons about money started when I was very young. I knew it was very important to have money so that you could take care of yourself and your family.
I got in the habit of saving when I was only three years old. That habit hasn’t changed. I have technically always been a saver.
However, along the way, I got lost. Kind of the same way that Alice did in Wonderland.
I too found myself in a maze of things I did not understand. I needed those signs like Alice got.
You know the ones. They said things like; Drink me.
By high school, I was an angst ridden teen with a penchant for spending. Then it hit me. Maybe I should start reading about this money stuff.
My 401(k) would be my new boyfriend.
As, time went on, I started obsessing about retirement. The hand-to-mouth existence dd not appeal to me.
I thought about what the heroine, Angela, in MSCL would do. She would probably start reading a book and asking a friend for advice.
I knew the same way Amy March did in Little Women that I would not be pauper.
Fun Fact: Claire Danes also starred as Beth in the 1994 adaption of the book.
Therefore, I had to change some things. They say the first step to solving a problem is admitting that you have one. It hurt to see that low bank balance, but it had to be done. To know where you are going, you have to know where you are.
The first step was to set a goal. If I had something to aim for, then I had a purpose. The goal: A one million-dollar 401(k).
LEARN HOW TO BECOME FI
The Tools to Succeed 1. Learn skills to sell for money You need the skills to become Financially Independent (FI).
I wanted to be fiscally savvy. Therefore, I had to read. Angela started off the show reading the book, The Diary of Anne Frank.
I started my FI journey reading a Kiplinger magazine. Then from there, I started watching the Suze Orman show. I knew I didn’t want to sit at a desk for 12 years only to end up sitting at a desk for another 40. I needed a plan. Being able to escape the rat race sooner rather than later appealed to me.
I started devouring personal finance books and blogs. Some of my personal favorites are The Automatic Millionaire, The Millionaire Next Door and I Will Teach You to be Rich. Then you have to decide on a path. I chose passive investing.
That turned on the light-bulb for me. Wealth building is about action.
Building wealth would take time, sacrifice, and work.
PASSIVE VS ACTIVE WEALTH STRATEGIES
Some people choose to start a business, become doctors, lawyers, actors, musicians, consultants, chefs or to make their fortune. I would get mine by investing.
I still needed a career to get paid. So, I found an employer to buy time form me and I equally willing to sell time to them. You can work in the public or private sector.
You can get further up the income ladder by gaining skills in the public sector and then selling them at a markup in the private sector to arbitrage your valuable skill assets.
I picked a job in finance. Once I got that job offer, I made the choice to start investing ASAP.
The 401(k) offers a maximum contribution of $19,000 and the IRA (Traditional or Roth) offers a max of $6,000. That is a total of $25,000 annually. I got my start with 6% and a match of 3%. Then, I slowly started working my way up by increasing my contributions by 1% a year.
2. Passive strategies There are two strategies here: A. Live below your means (LBYM); B. work smarter not harder.
Your employer wants to make more off of you than they pay you. Your work will not go unrewarded, but will be under-rewarded. Therefore, it is your job to invest in yourself by saving for your retirement.
CREATE AN INVESTMENT ATM
You must save enough to start earning large amounts of interest off your principal investment.
3. Accumulation phase Your job here is to start contributing as much as you can to your 401(k).
After, saving a 6-month emergency fund so you are no longer living paycheck-to-paycheck, start putting in every dollar you can into your accounts. Save until it hurts. Even if all you can afford is $50 a month. Save something. This will eventually become your own personal ATM.
It will be like a vending machine. You step up, put in your request, and the machine hands you what you want.
The RMD has now gone from 70.5 to 72. Therefore, you can let your money ride on the interest gravy train for an additional 1.5 years. On a million-dollar portfolio, that would mean an additional $105,000 with a 7% rate of return.
KEEPING IT PASSIVE
Building up your assets. I started with $5 and then went on to my first $100,000 and beyond. It can be done.
4. Passively build a sizable investment pool Find ways to earn income.
This can be with royalties from writing a book, collecting rent on rental properties, or renting out your parking space.
The goal is to trade time up front to build an income stream that with essentially last forever. Then you can kick back and relax.
If you have to sell 40 hours a week or the sum of 2,080 a year, you should get something out of the deal. Simple math can change your life.
I knew that one-million could spit off $50,000 of income forever with a 5% return. I just had to get there first. When I got to the point where my next money milestone was going to be $300,000, I knew I was on to something.
FREEDOM IS THE ANSWER
Why invest so much money? It’s simple. The answer is freedom.
Free from worry over how to pay bills, over how you spend your time, and quality of life.
Money equals power.
Money lets you be more confident.
Debt consumes as it only takes from you and gives you nothing.
The way to build your confidence is through positive experiences. Paying off debt then saving and investing that money will give you that. This in turn will build your self-esteem.
My favorite scene in MSCL was the one in the episode titled, “self-esteem.”
Confidence is key my friends. It attracts things to you. In Angela’s case, it was Jordan. Oops. I meant to say Jordan Catalano. For some reason on that show, he could never just be Jordan.
So, you see in the end, that you can get what you want. You just have to be patient, ask for it, and work for it. They say ask and you shall receive. Try it. I did.
For those of you out there that grew up in the in the 90’s, then you may remember a video game by the name of Maniac Mansion.
It was released on October 5, 1987 on multiple platforms such as Apple II, Atari and Nintendo to much fanfare and critical acclaim and was developed by the man who created Luke Skywalker and the Star Wars franchise, George Lucas, through Lucasfilm Games.
This was long before the iphone was released to worldwide sensation back in 2007, which was developed by another pioneer, Steve Jobs of Apple.
What I absolutely loved about this game was the character development. They were so much fun. Interacting with Weird Ed and Edna and the tentacles was a riot!
Even how the characters spoke to each other was hilarious. Let me provide you with this example.
However, as with anything, you have to look below the surface and take a deeper look. Therefore, I wrote this post focusing on the financial aspects of this game in regards to how you can relate money to the world around you. Even a video game.
And do not even get me started on the price of games today! Growing up we thought $60 a pop for one game was outrageous! Boy, were we wrong.
Today, you can spend $80 or more for a subscription to play your Playstation or Xbox console. Another subscription! Come off it marketing departments across America! You know people can’t afford to barely buy toilet paper out here, let alone video game subscriptions!
Don’t believe me?
When the longest government shutdown in United Sates history, it lasted 35 days, happened people were in line at soup kitchens!
Missing one check caused people absolute panic. And I don’t mean at the disco! One lady said that she was down to $1.26 in her checking account; that was all the money she had and she didn’t know what she was going to do.
You see back in the good old days, you would go to the store, buy an item, do the transaction one time, and like Cinderella’s fairy Godmother’s would say, “bibbidi-bobbidi-boo” and you owed the thing free and clear as the transaction was done, over, finito.
This post will show you how to save money, get rich, and maybe decide to put a down payment on some property, but it doesn’t have to be a mansion. So here we go.
5 Money and Life Lessons from Maniac Mansion
But first… What is Maniac Mansion?
Maniac Mansion is a 1987 graphic adventure video game developed and published by Lucasfilm Games.
It follows teenage protagonist Dave Miller as he attempts to rescue his girlfriend from a mad scientist, whose mind has been enslaved by a sentient meteor. The player uses a point-and-click interface to guide Dave and two of his six playable friends through the scientist’s mansion while solving puzzles and avoiding dangers. Gameplay is non-linear, and the game must be completed in different ways based on the player’s choice of characters.
MONEY AND LIFE LESSON ONE: MANSIONS COST MONEY
It has been over twenty years since a mysterious purple meteor came hurtling out of the sky and made a large crater in the front lawn of a large Victorian mansion belonging to the Edison family. Dr. Fred, his wife Nurse Edna, and their son Weird Ed were reclusive people who left the house very rarely, but the meteor’s arrival brought about a strange change in Dr. Fred. Now, a local cheerleader has vanished without a trace. Dave, her boyfriend, has gathered a few of his close comrades on a mission to invade the mansion and save Sandy!
However, if we just focus on the part about the mansion…basically, big homes costs big bucks! For fun, I looked up the cost of Victorian homes.
The Main House at Skywalker Ranch inspired the design of Maniac Mansion‘s setting, which is reported to have cost self-made millionaire George Lucas around $100 million dollars.
The Skywalker Ranch
So unless you are onstage with your two friends Kelly and Michelle or creating the next new franchise, you may want to stick with buying a home you can afford.
Let’s not forget that property taxes are forever! If you can’t pay your taxes, you can still lose your home, even if you own it free and clear.
Taxes are an ongoing expense to owning a home.
Let us not forget that even celebrities have to sell homes for unforeseen reasons and sometimes at a loss.
It was reported that Johnny Depp was suing his management company for $25 million and in the court filing it detailed his spending at at $2 million- a-month! He had considerable property holdings and it was also reported that he was advised to sell a family home located in Paris, France or something along those lines and possibly at a loss at that!
Curtis “50 Cent” Jackson was also recently in the news as his Connecticut manse was costing him $70,000-a-month to maintain. That basically is the cost of running a small boutique hotel or miniature bed-and-breakfast. He ended up selling the property at a loss, he paid $4.1 million and sold at $2.3 million, to stop paying the exorbitant cost of owning the place.
Lastly, Mary J. Blige was reported to own a couple mansion-style properties in New Jersey that were unable to be rented. You read that right. She is paying for properties that are uninhabitable, costing her money every single month night and day, and collecting no rent on the properties. In her divorce filing, she was reported to make over $300,000 a month so it is unclear why exactly these properties are unable to be renovated and sold without a closer look at her financial records and proper accounting.
The reason I refuse to buy a big home is because they along with cars can be wealth suckers.
Doing the math, if you buy a $350,000 at a 5% interest rate and take 30 years to pay it off it will cost you around $700,000! Or a $500,000 home could cost you $1,000,000. Yes, twice what you bought the home for.
And most people are working to pay for this behemoth, fancy vacations, and expensive nights on the town with bottle service meaning they are not even home enough to enjoy paying double the cost of it!
All good things come in time. Building wealth is no exception to the rule.
I started out with a toothbrush, a bag of clothes, and some books.
Now I have a home, paid off vehicle, stocks, investments, and even more books. The point I’m trying to make here is that you accumulate money and things over time. You may not have everything you want right now, but keep working.
Never let yesterday use up too much of today. – Will Rogers
If you are working towards something, the don’t stop or quit for anything. I turned a $450 car payment into $100,000. It took like a decade.
Come to think of it, it usually takes people 10 years or more to perfect whatever it is their doing so you may as well chill out.
The humorist Will Rogers (1879-1935) once told a young John Wayne some sound and simple advice. I will share it with you here.
After John Wayne (1907-1979) complained for a full 10-15 minutes of why he wasn’t being paid more to act on film, he asked Will Rogers what he should do? Will Rogers replied, “Well kid, are you working?” To which, John Wayne replied, “yes.” Then Will Rogers says, “keep working.” And then proceeds to walk away.
So my reply to anyone who wants something NOW, “have patience.” This is me NOW moving on to the next paragraph and lesson in this post, which is my equivalent to Will Rogers walking away. I have given you all the advice you need on that topic. Moving on.
MONEY AND LIFE LESSON THREE: MAKE FRIENDS NOT ENEMIES
One of the best things about the game are the characters. Each have different looks, mannerisms, ways of speaking, talents and abilities. This is part of what makes the game so much fun.
Dave is on a mission. To save his girlfriend Sandy. But he can’t do it alone. He brings along his friends to help him out and watch his back.
This is also sound advice if you want to build a fortune and an empire. Nobody does it alone. Eventually you will need to work with bankers, lawyers, businesses, investment professional, and tax attorneys.
It is always best to make friends than enemies as you never know when it is the next time you will see someone again.
When you are climbing that corporate ladder, those same people you tried to step on on the way up, you may see them again on the way down.
Hopefully, you offered them a piece of the pie instead of one to the face.
Mark Cuban said some great business advice in that if you start a company, then make sure your employees have some stock options invested in it as part of their compensation. That way if the company is successful and gets sold then the employees make money too.
This does two things: 1) eliminates wealth inequality (many of Mark Cuban’s former employees, 300 out of 330, became millions); and 2) encourages people to pay it forward through philanthropy and spend money that gets circulated back into the economy.
MONEY AND LIFE LESSON FOUR: RESCUE THE GIRL OR GUY FROM FINANCIALDUNGEONS
In the game, if you get caught snooping around the mansion, then you are sen t to the dungeon.
The game is notorious for constantly getting you thrown in the dungeon by almost every member of the household if you are seen.
Fortunately, the game has a cheat in which you can get the dungeon key and let yourself and others that have been captured out of the dungeon. Without this trick in the game, you are toast.
Speaking of toast, avocado toast is not causing millennial’s to be broke. It is the ever escalating cost of education, housing, and healthcare that makes it harder to save.
All wealth building starts with saving. Period. A good cash reserves is a must. Here is a tip for you. Pros have cash. Amateurs do not. Pros are not under any kind of financial pressure. They remove the pressure and make rational decisions because they have money in the bank. Only amateurs allow pressure to get to them. Remove much of the pressure in your life by having cash reserves.
I recommend that being $10,000 or more in savings. That is how you are able to rescue yourself from being trapped in a financial dungeon. Just have cash.
MONEY AND LIFE LESSON FIVE: ALWAYS HAVE A BACKUP PLAN
The video game Maniac Mansion has 5 possible endings. Depending on what players you chose to play and what actions you take.
The game allows you to have 3 characters for game play out of about 6. These are the people that have your back in case things should go wrong.
In addition, their different talents and unique abilities allow each kid to be an asset to the team. You must too do this in life. You must have back up…plans that is.
For example, I try to keep a minimum of 2-3 months or more of savings in the bank at ALL TIMES! Then I ramped it up to a goal of $10,000.
In addition, if you can save $233,000 in your 401(k), then you do not have to add another cent! After 20 years, with a return rate of 8 percent, you will have $1,001,857.35 in your retirement account. That’s Plan A. Cant’t envision making that happen? Then go to plan B. Save $168,000 in your 401(k), then do not add another penny. After 25 years, with a return rate of 8 percent, you will have $1,001,358.03 in your retirement account.
Are you starting to get the idea?
You can move the finish line and change your actions according to what is happening in your life, but keep the goal. If necessary, you can have a Plan A, B, C, D, etc. The point is to make it so that you are always moving forward by planning ahead.
Just like you have to do when playing Maniac Mansion.
So let’s get out there, have some fun, and start saving!
“Um, Anya, while I completely trust you to take care of the inventory and the money, um, dealing with people requires a certain… finesse.” – Giles, Buffy the Vampire Slayer
Yes, indeed. Say it with me, finesse. PEOPLE. REQUIRE. FINESSE.
I cannot tell you how many times I have done business with people and their attitude caused me to cancel my transaction. All I ask for is a little kindness. Being nice can go a long way.
If you are passionate about what you do, then you are generally more pleasurable as well.
People will forget the things you say or do, but they never forget the way you make them feel. I learned that from Maya Angelou. And it is so true.
Today, I want to share with you some advice from my peers. Money Bloggers.
You better believe it. I read every contract. Cross every T. And dot every I. The reason I have an Emergency Fund is for my peace of mind. It means no matter how much the government changes the laws, your job sucks, the lack of integrity around you, or people’s scruples, you are protected.
Here are some of my posts on the importance of emergency funds and having money in the bank.
You don’t need money in 8 banks, 20 credit cards, and 3 homes if you can’t find a way to manage it. Simplify it. Hire a financial advisor and property manager. Or just decrease the amount of banks and credit cards you use, homes you own, and stuff you have.
No matter what, simple is best. KEEP IT SIMPLE!
3. YOU DON’T HAVE TO SPLURGE ON EVERYTHING
Things Worth Spending MAX Money On For A Better Life – https://t.co/IXRyboM4Cm – You don't have to splurge on everything. Just the most important things. What's missing from the list? pic.twitter.com/3aM4LU7KGX
Absolutely, you don’t. I read a book years ago on health and fitness called Beyond Diet. She stated instead of buying all organic just get a few main items such as milk to keep your budget in check.
I have always spent my money on the things that mattered most. Namely, my health, education, a good pair of shoes, a good coat, and reliable transportation.
See more on saving and buying what really matters.
Because I'm a money nerd and a comics nerd, one of my favorite things is when these two obsessions come together in the form of (drum roll, please): financial graphic novels! You might think that's a niche I just invented, but you'd be wrong. https://t.co/ea0q30ojwlpic.twitter.com/e13jgOoPrs
I take every chance I get to educate someone about money. I bought the Automatic Millionaire for my best friend years ago, so she could get better acquainted with Mr. Benjamin, cause it’s all about those Benjamin’s.
If you don’t teach your kids about money, they will grow up not knowing how to earn and manage it.
If your not sure where to start, check out my post on Scrooge McDuck. It’s kid friendly.
You think you know where your money’s going, but you have no idea.
Well, welcome to the club. Most people have no idea where their money went.
I suggest you start tracking it right now. Yes, stop reading this post and go track your net worth right now!
You can only do better when you know better.
7. A CAR IS NOT AN INVESTMENT
A car is not an investment, it's a tool. It's ok to spend more money to buy a nicer tool. Especially if it's a tool that you use often and needs to be relied upon.
There is nothing wrong with owning nice things, just don't lie to yourself by justifying it as an investment.
Don’t even get me started on cars. Like money, it is just a tool.
I paid off my car about a decade ago. Here is a screen shot of my $0 balance. I paid off that car and out that money to work for me. Forget cars! You do not need an expensive car.
Ah yes, they say ask and you shall receive. However, you still have to ask and do the work. Nothing is for free.
The sorted topic of coin is a tricky one. Money is emotional. But side hustles can get you more money, so I say why not try to EARN money by doing something you are good at and do for free already. Just a thought.
How do you FIRE? Basically, you work your butt off when you’re young, live on like 50% or less of your income and save and invest the rest. You have a better chance of achieving this if you can save and invest 50-70% of your income.
From what I have read, most aspire to FIRE with 25 times their income. Could be anywhere from $500,000 to $2.5 million. Then live off the interest.
However, whether or not you FIRE, you can help others. It can be done with money or time. Either way, with financial independence comes the ability to choose what you do, as you become the master of your time when you no longer have to punch a clock.
When is it time to leave your job and FIRE?
Ask yourself: Would you do this job for free?
You want to be able to do your passion right? Then, you have to make some changes. Leave the grind of the 9-to-5. Get out of the proverbial rat race. It all starts with what you earn and what you spend.
Financial freedom allows you to spend more time doing the things you want. You can spend more time with family, take more vacations, serve in the peace corps, help build homes for habitat for humanity, and the list goes on.
Hope you enjoyed this post, as much as I enjoyed writing it. It was nice to remember some of the things I’ve learned along the way on my own journey to wealth.
“If you would be wealthy, think of saving as well as getting.” —Benjamin Franklin
Growing up one of my favorite toys was my piggybank.
I used to put all the spare change and money I found or received into it.
It was my ice cream truck money.
I just loved having my own.
It was such as source of pride, freedom, and independence because I was allowed to spend my money on the things I wanted.
That is how I want everyone to feel.
A sense of ownership and accountability over oneself and your actions.
In order to do this, you have to go back to saving the old-fashioned way, like putting money inside that old piggybank.
Here’s how.
A HOUSE IS NOT A PIGGYBANK
First, you need to stay away from borrowing. And if you truly must borrow, make sure to only get what is absolutely necessary. Every dollar you borrow just keeps you in debt.
Case in point, if you do a cash out refinance on your home, that can reset your mortgage debt-free clock and cause you to owe more interest over the life of the loan.
No one wants that.
You need to keep your hands off of large piles of cash. This includes the equity in your home, your 401(k), and easy access savings accounts.
It’s like losing weight. You have to keep your hands out of the cookie jar. In this instance, it’s the money jar. If you keep taking out of it, you will never reach your goals.
Forget taking out huge auto loans and personal loans. You do not need to drive a BMW to the airport on the way to Jamaica. That is the road to broke, if you cannot afford it.
I would rather you drive a Honda to the Grand Canyon, if this will keep you out of debt.
HOW TO START SAVING YOUR COINS
The most important step is to decide to save. If you want to save more, you have to earn more, slash expenses, or both.
Set a goal.
I started out with a goal of $50 per month and worked my way up to saving $13,000 a year by increasing yearly savings goals.
You have to write it down. Otherwise, it is a wish and not a goal. A goal requires action. It starts with writing it down. A written plan is 80% more likely to succeed.
I started saving my change. I would put it into a jar or bag.
I would save up anywhere from $25 to $100 dollars in change and then deposit this into the bank.
When you see the money add up and feel how heavy that coin jar or bag is, it gives you incentive to keep going. After, mastering the coin game, I moved on to bigger gains.
TURN SAVING COINS INTO SAVING DOLLARS
Then I started turning my attention onto dollars.
I started with manually transferring $50 per month into my savings account.
From there, I set up an automatic deposit of $25 every two weeks.
However, I was also getting tired of having to pay ATM fees. So, I found a way around this.
I would have to either go to the bank and take out a large enough amount of money to get me through the week, go to free ATM’s, spend less, or go to stores and do cash back.
For instance, grocery stores will allow you to do a debit card cash back of anywhere from $100-$300 depending on what store you go to.
Other places, like the convenience store, may allow you to get between $20-$80 cash back with a purchase.
I slowly worked my way up to saving more.
Every year, I would re-evaluate what my saving goals were, I would write it down, and figure out a way to make it happen.
If you zero sum budget, then you know when something gets paid off or you eliminate any type of expense that money gets freed up and must go somewhere or it disappears. Like all good dogs, it goes into heaven, I call it dollars heaven.
I started saving my money first from income I earned, and then spending what was left over.
I would decide to save $300 per month and figure out how much more to bring in to increase my cash flow or what I could cut in my budget to lower my expenses and then save that money.
It went down like this:
Year 1: Save $600.
Year 2: Save $1,800.
Year 3: Save $2,500.
Year 4: Save $3,600.
Year 5: Save $10,000.
Year 6: Save $13,333.
WHERE TO PLACE YOUR MONEY
Since, I knew I did not want to depend on having to go to the bank or grocery store every week, I decided to place money into a cash box.
I would put no more than a few hundred bucks in it.
I was placing my savings into several savings accounts such as regular savings and money market savings.
In addition, I would label my savings accounts to ear mark that money for things I wanted to pay for such as a vacation, car, home down payment, or college.
I started doing 5% of my income to now saving over 41% of my gross income!
It took years to get to this point.
Once I made the decision to save, I wrote it down, and created a plan.
It took over 5 years to get here!
So, take my advice, do not rush to try and do so much and then do nothing.
Take small steps toward bigger ones. That is the key to building wealth. The kind of wealth that lasts takes time to build. There are no shortcuts. Only patience, discipline, consistency, and time.
However, whether or not you FIRE, you can help others. It can be done with money or time. Either way, with financial independence comes the ability to choose what you do, as you become the master of your time when you no longer have to punch a clock.
