Tag Archives: Suze Orman

Celebrities and Money, Financial Freedom, Financial Independence, Self-Made Millionaires, Wealth

The six ways to get rich

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“What’s keeping you from being rich? In most cases, it’s simply a lack of belief. In order to become rich, you must believe you can do it, and you must take the actions necessary to achieve your goal.” —Suze Orman

Sure, there are lots of ways to get rich, but they all fall into one of these six categories as there are only six ways to actually get rich.

The six ways to get rich are:

  • Capitalize on a unique skill or talent.
  • Marry rich.
  • Inherit money.
  • Own a business.
  • Take calculated risks and get lucky.
  • Spend less than you earn and invest wisely.

Let’s explore each category.

CAPITALIZE ON TALENT

Don’t make money your goal. Instead, pursue the things you love doing and then do them so well that people can’t take their eyes off of you.” ― Maya Angelou.

Become an expert in one area or niche and exploit it. Dominate that field. And never stop growing.

If you read my post on Beyoncé, you will notice that she started young, developed her craft, and expanded her expertise. She not only sings, but dances, endorses products, started businesses, and writes songs. She owns what she does. Everything from trademarks – Blue Ivy and Ivy Park – to owning a music streaming service. Put it simply, she dominates in her field.

If you want to be the next J.K. Rowling or Stephen King, then you just have to start writing. J.K. Rowling famously said she was rejected at least 12 times before anyone would publish Harry Potter. Persistence and determination are vitally important if you want to succeed. And just FYI, it took her 7 years to write Harry Potter.

MARRY RICH

“Don’t you know that a man being rich is like a girl being pretty? You wouldn’t marry a girl just because she’s pretty, but my goodness, doesn’t it help?”

―Marilyn Monroe as Lorelei Lee in Gentlemen Prefer Blondes (1953)

Dating is all about introductions and proximity. It doesn’t matter if you swipe right on Tinder or meet at your family’s country club, you just have to get some face time. You can’t date who you can’t see or touch.

In my experience, men date and marry women who are in their vicinity or social circle. Therefore, if you are looking for a rich man, then you have to be where they are i.e., charity events, sports games, auction houses, doctoral seminars, or the like.

In addition, if you know where wealthy men tend to reside, then hey you can pack up and find a job there and frequent their haunts. Location, location, location baby.

People also tend to look for partners that are successful in their own right. You don’t necessarily have to be rich, but having some sort of talent or career outside of just being a wealthy mate’s plus one bodes well for you and your prospects of landing and keeping a partner. So, invest in yourself – get educated, cultured, learn opera, play piano, paint or learn another language – either way you have a skill.

Above all else, respect yourself. Have your own life, career, friends, family, and money. No one wants a loner that can barely make rent, they want someone who is open to people, new experiences, and can pick up the check.

Don’t agree. Well, how’s this for food for thought; Chrissy Teigen once responded to a mean tweet by telling someone she does not just spend someone else’s money, but in two words replied: “my money.” She also went on to note her Forbes ranking and that she is a best-selling cookbook author. She basically told people to chew on that – no pun intended. A very nice retort on her part and her equivalent of put that in your pipe and smoke it.

Ah, gotta love that Chrissy.

You have to admit it sure sounds better when you can list your own accomplishments.  Respect for self is attractive and shows confidence. And confidence is key.

INHERIT MONEY

I would rather make my name than inherit it. – William Makepeace Thackeray

Studies into the wealth of households have shown that most wealth today is now earned than inherited. In my experience, people truly appreciate and cherish that which they work and sweat for.

For example, when I was given gifts of money or other items I am usually losing or unable to tell you whom gave me the gift. The car in my driveway that I worked so hard for is still there 15 years later.

There are those that inherit their fortunes, but the saying goes that a fool and his money are soon parted. I suggest you get a career, get educated, and learn a craft to earn your own living. If you do inherit, then you can manage your money instead of squandering it.

OWN A BUSINESS

Only I can change my life. No one can do it for me. – Carol Burnett

Starting a business is what two-thirds of millionaires do. This lets you know that if you are successful and become rich, then most likely you will or do own a business at some point in your life.

I suggest determining what you are good at and then turning that into a business. Passion is great, but just because you are passionate about golf and want to be a pro golfer does not mean that is what you are good at or meant to do.

Also study up and get a mentor or work with people in the field you want to be in. Read books, attend seminars and save money. All businesses need capitol. If you can find a business to start with a low barrier to entry such as a food truck or blogging, then the better.

BIG RISKS FOR BIG REWARDS

“If you want big rewards, you gotta take big risks.” Jessica Biel as Tenley Parrish in Summer Catch (2001)

If you read my post, wealth comes from doing not luck, then you understand that from preparedness comes opportunity and hard work creates luck and success.

It is okay to take risks, but I prefer calculated ones. The ones where you do your research, study your results, learn from you’re mistakes or the ones of others and keep moving forward. Make that pro con list, watch videos, attend conferences or better yet, speak to those that have done or are doing what you long to do. If you’re going to risk it all, then best to know all the facts first.

SPEND LESS, SAVE AND INVEST OVER TIME

The formula for getting rich is this: spend < money earned

Simply put, spend less than you earn.

If you can do that, you have got a shot at getting rich.

For example, you can be a millionaire over time if you do the following:

  • Save $6,000 a month for 10 years getting a 6% return
  • Save $2,200 a month for 20 years getting a 6% return
  • Save $800 a month for 25 years getting an 8% return
  • Save $600 a month for 30 years getting an 8% return
  • Save $500 a month for 40 years getting a 6% return

The combinations can vary based on the amount of savings invested and the return on investment of compound interest. However, the bottom line is saving can earn you a fortune.

For those concerned with inflation, here is an inflation-adjusted. 25-year wealth accumulation chart.

Source: www.businessinsider.com

THE BOTTOM LINE

Ultimately, no matter what path you take if you partake in spending less than you earn and investing, over time you will become rich eventually.

Budgeting, Financial Freedom, Saving

Dom Perignon taste on a Budweiser budget

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“A budget is telling your money where to go instead of wondering where it went.” ― Dave Ramsey

Most people out there have probably heard of the saying “champagne taste on a beer budget,” and that is exactly the kind of behavior I have been seeing more and more of lately.

It is not that I have a problem with nice things.

Quite the opposite.

In fact, I like to buy high quality and first-class items. This can include anything from airline tickets to a nice vacation. However, you have to be able to afford it.

You must therefore follow this advice: “Act your wage.” ― Dave Ramsey

Therefore, if you can only afford Bud Light instead of Rosé, then go for the beer.

If you are familiar with the Suze Orman show, she had a segment called “Can you afford it?”

Basically, people would call in and ask if they could afford to buy whatever item was the hot new thing that year.

Suze Orman would require certain criteria like a six plus month emergency fund, a job, income, and a realistic way to pay for the item either outright or over a reasonable period of time.

It was very engaging. By far, the most popular part of the show.

Let’s see if this post can bring back some of those feelings tonight.

If you can’t afford champagne, then it is perfectly acceptable to buy sparkling wine.  Just make sure when you pay for it, that you use cash and not plastic or it will not matter how much you think you are saving, if you are paying interest on it. Then beer can turn into the price of champagne.

Interest over time makes any purchase more expensive.

For example, buying a pair of jeans that cost $50 on plastic at a 25% interest rate could turn into a $500 pair if you pay the minimum payment over 5 years. That wasn’t on the price tag!

It seems that if you pay cash you are protected against this type of price inflation. Especially, if you get a 0% deal (teaser rate) and then do not pay it off and are charged interest retroactively from the date of purchase.

So, be very wary when it comes to credit cards. They will give one to anybody with a pulse.

In Elizabeth Warren’s books, The Two-Income Trap and All Your Worth, she discusses how even with two-income earners Americans are still struggling with debt, filing for bankruptcy in record numbers, and still unable to afford housing and higher education for their families.

Credit, in large quantities, is trapping people in an eternal debtor’s prison.

In the book Maxed Out, author James Scurlock talks about how having access to easy credit at young ages (college kids) is ruining people’s financial future before it even begins.

Starting out in a hole due to student loans and credit card debt means playing a constant game of catch up and struggling to get by.

Curtailing spending and only buying what you need and can afford are the only ways to stop this phenomenon of being maxed out.

Therefore, we budget.

However, “A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” – William Feather.

Below I will provide some fictitious examples of how it all goes down similar to the show.

So, let’s go back to the infamous Suze Orman question of “Can you afford it?”

What do you want to buy?

So, let’s say I get some tweets from followers asking if they should make a purchase. Let’s go.

Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?

FOLLOWER: I would like to purchase a brand new Lexus RC 300 priced at $43,305. My birthday is coming up and I have never had a new car only used. Growing up, my parents said buy new. Why inherit someone else’s problems? I have always wanted one.

GBM: Ok. Show me the money.

FOLLOWER: I have $15,000 in savings, no credit card debt, $10,000 in student loans, no mortgage, no auto or personal loans and $55,000 in my retirement accounts. My after-tax income is $4,150 monthly. My expenses are $3,300 per month.

GBM Email reply: It’s great that your expenses are lower than your income by $850 so that you are able to save, but you could knock out the student loans and then have no debt. You have a 4 month emergency fund. I prefer to see 9 months ($29,700) as that is how long it takes the average person to find a new job (including me). Check out out my post How to build an emergency fund.

A car at that price of $43,305 will cost $676 per month at a 3.9% interest rate over six years. That will bring your monthly expenses up to $3,976 and decrease your net saving from a respectable $850 to $174. That is too close to the financial edge.

I want you to start putting more money toward retirement such as $200 more per month or whatever gets you to 20%. A car is not going to feed or house you it will only get you from Point A to B. You should also consider setting aside enough for a 20% down payment on a home as I know you are not going to want to rent forever.

Setting aside 4% of the purchase price of a home for 5 years will net you the 20% down payment. If you can beef up the 401k by $200 per month, pay off the $10,000 in student loans, start setting aside 4% for a home down payment, and get a 9 month emergency fund then you can get your car, but not before.  Until then, keep taking Lyft.

Next follower. Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?

FOLLOWER: I would like to buy a Sony PlayStation 4 at $300. I am 20 years old and currently a college student, but I am working part-time. I have a game system, but the PS4 has more of the games I want to play and is cheaper than a new Xbox One X.

GBM: Ok. Show me the money.

FOLLOWER: I have $1,200 in savings, no student loans as I go to college online which is cheaper than traditional and stay at home, no credit cards, no 401(k) and a car note of $150 per month. My after-tax income is $600 monthly and my expenses are $350 per month.

GBM tweet: It’s awesome that your expenses are lower than your income by $250 so that you are able to save, always a plus, but I would like to see you open a Roth IRA. You are so young that this money could compound for like 40 years! Your future self will thank you.

GBM 2nd tweet: You can contribute $50 per month just to start in a Roth IRA. I do prefer to see a 9 month rainy day savings ($3,150). Since you have so few expenses, and live at home with virtually no debt other than a car note you could simply take the money from savings. Have fun!

Next follower. Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?

FOLLOWER: My name is Lucy and I am 13 years old. I would like to buy an Apple watch for $219. I like it because it’s so cool and fun. A lot of my friends have it and I want one of my own.

GBM: Ok. Show me the money.

FOLLOWER: I have no debt. I have savings of $5oo from birthday money and saving my allowance. I get an allowance of $80 a month. I have no expenses.

GBM: Well, it is nice to see you saving. You could just take the money from savings as you have no expenses. I just want you to continue the habit of saving. You can afford it.

Less stress with a budget

You can see from the examples above that saving makes all the difference.

The more control you have over your money; the more control you have over your life.

Hope you enjoyed this walk down memory lane with me.

Now remember this: People first, then money, then things – Suze Orman

My motto is this: Always remember that cash is the best option. Cash is king. – Miriam Joy, author of financial freedom blog Greenbacks Magnet

Bankruptcy, Financial Freedom, Retirement

Do not cash out your retirement accounts

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“Don’t put your retirement on a credit card.” – Suze Orman

I recently read in the news that a guy emptied out his 401(k) to have enough cash to go see Super Bowl LII. That’s insane.

That is the financial equivalent of throwing all your money in a trash can, pouring gasoline on it, lighting a match, throwing it in, and setting it on fire.

The only time you should cash out is when you hit it big in Vegas at the poker table. Otherwise, just walk away and don’t do it.

They say poker is not about knowing how to play the game, “It’s about playing the other guy.” – Sam Winchester, Supernatural (Season 5 episode 7)

You can buy the whole Supernatural series on Amazon.

Well, in this case the other guy is the IRS. Since, the rules have recently changed you better make sure you learn them as there is no playing the feds.

This is not a game of craps where you just shoot the dice. This is for real.

Your future self is depending on you to do the right thing in the present.

The economy is still getting its act together, but in the meantime you still have responsibilities. I get it.

Millions are people are struggling with debt.

Americans owe about 2 trillion in credit card and student loan debt.

Many are just trying to keep their head above water.

Be forewarned, that even if you have good intentions, cashing out to pay college tuition costs for the kids or grandkids is a big no, no too.

YOU CANNOT FINANCE RETIREMENT

You cannot finance retirement, but your kids can finance their education. Just limit what you borrow.

I know someone living on a fixed income. She was short paying her property taxes because she owed over $25,000 in credit card debt!

And she was scared she would lose her home if she did not pay. She was shaking and crying it was so bad.

I gave her the part where she came up short. You see, she gave me a place to stay many (16) years ago. I had not forgotten. And I never forget a favor.

The good you do can definitely come back to you full circle.

I had a chance to repay her for her kindness and I took it.

Full disclosure: she is an 86-year-old grandmother who got into debt helping her grandkids.

I am not saying not to help your kids. Just be mindful what can happen if you do and you are not financially able or prepared.

Here is what I want you to know.

CASHING OUT A 401(k) IS EXPENSIVE

Cashing out means the following:

  • Paying a 10% federal tax penalty on the money you withdraw
  • Every penny is taxed as ordinary income (negating any pre-tax gains)
  • Any 401(k) loan money you repay is going to get taxed again
  • Every dime you take out is unable to earn interest for the future
  • Present pleasure will not erase future pain and problems when the money is not there to help
  • Every dollar is unable to turn into two from compounding over the years

I know people will switch jobs or attempt to stave off bankruptcy, but I am telling you this is not the way to do it.

Just like there is a way to structure your leaving a job, there is a way to structure how you repay your debts.

Did you know your retirement accounts are protected from creditors?

There’s a little tidbit many creditors will not likely tell you. Well, I am letting you in on the recipe of the secret sauce.

You can learn even more about money and debt by reading any of the books listed in this post and purchasing or renting from the library.

If you cash out, that money is up for grabs. You are all in and could lose to the house.

The decks are stacked against you in this standoff with the banks as you have nothing left to bargain with once you have exhausted all your resources.

That is why it is best to put down no more than 20% on a down payment on a home.

If you decide to do more, like, say 35%, and the market tanks, you could lose your shirt and every dime you put into the property!

That’s too much skin in the game.

ALWAYS PLAY TO WIN

You could also lose your home, literally as well.

Once the money is cashed out, it’s gone forever.

If you cash out to pay off credit cards, medical bills, or back mortgage payments then that’s all folks.

The money is spent. You can’t get it back. And if something else goes wrong, then it’s game over.

All of those things can actually be discharged and wiped away in bankruptcy.

You are; however, still responsible for child support, alimony, back taxes, fines, penalties, and restitution you owe for breaking the law and student loans.

So, you could cash out, pay the credit cards and mortgage, and still get into financial hot water again should a medical or some other type of emergency arise.

You are far better off going ahead with a bankruptcy than breaking the 401(k) piggy bank.

That is, if you truly can’t afford to make the payments and pay your debts.

When your financial back is against the wall a bankruptcy may be your best course of action not cashing out your retirement.

A chapter 13 bankruptcy can possibly even help protect the equity you have in your home.

The money in your retirement account is protected from bankruptcy.

That means if you have $1 million in your 401(k) and go into personal bankruptcy due to owing $100,000 in medical bills the banks and courts can’t touch it.

When you cash out you are likely to pay 35% of the balance of the funds you withdraw.

There is even a possibly after the taxes and penalties are paid, you will not have enough left over to pay the debts you wanted to pay off!

All that work and you still get the short end of the stick.

When the chips are down, just leave them on the table and walk out. Do not add in more chips!

Whatever you decide, make sure cashing out is the last Hail Mary pass in your financial playbook.