Earn Money. Spend Money. Save and Invest Money.

Money can be a complicated thing, but many times we just over complicate it. If you want to be successful with money, it’s really comes down to just 3 things. The three things are how much money you earn, how much money you spend, and how much money you save and invest.

If you pay attention to those three “money metrics”, you’ll do just fine. The problem is that most of us don’t pay attention to any of those metrics, and that’s why most of America is broke. It’s also why so many people end up relying on social security.

Even successful career people don’t pay attention to these metrics, and consequently, they end up squandering years of wealth building opportunity. What do I mean? Well, for most of us college graduates, we enjoy seeing our incomes grow substantially from the time we graduate college through the first 20 years of our careers. However, as our incomes grow, so do our spending habits. We raise our expenses to match our income, and there goes our wealth. Bye bye millionaire potential.

I was on that path when I got out of college. I made $39,000 on my first professional job out of college, but somehow I ended up $16,000 in debt. What?! How the hell did that happen? Fortunately, that was my wake up call, and I made some drastic changes. For starters, I got money smart. I learned everything I could about money because obviously I didn’t know jack. I read Kiplinger’s magazine. I read Smart Money magazine, and a host of other things I can’t recall. That was 20 years ago. It changed me. It transformed my financial future. After I got money smart, I decided I wanted to be a millionaire. I was 26 and decided to become a millionaire by the time I was 40. I made it.

The funny thing about goals and plans. They often don’t work out exactly as you plan, but many times you still hit your goal. I hit my goal, but my path was a little different than I planned. That’s okay. For anyone wanting to become a millionaire, the place where we start is often the same. Get money smart. Then pay attention to how much money you earn, how much money you spend, and how much money you save and invest.

These were all keys elements to my millionaire plan when I was 26, and they’re still part of what I teach today. For anyone who aspires to be a millionaire, they apply to you too.

  1. Pay attention to how much money you earn. Always work on ways to increase how much you earn. If you’re stuck in a job that limits how much you can make, you need to look for other ways to make money, and that may include finding a new job. Don’t let yourself get stuck at an income plateau. If you make $50,000 a year, set a goal and look for ways to boost that to $100,000 a year. If you make over a $100,000 a year, set a goal and look for ways to boost that to $200,000 a year. You can do it. Almost anyone can do it.

    Early in my career my goal was to make more, but work less. I started out working 60+ hours a week and making $39,000 a year. I was able to lower my hours down to 45 a week an raise my income to $47,500, but I was stuck at an income plateau. Shortly after that, I changed jobs and saw my income soar into six figures plus. I’m sure glad I made that change. It was a key piece of the puzzle on my millionaire journey.

    My world was rocked recently when I met a new friend. I was about 36 or 37 by the time I had earned $1 million as an adult. It took me about 10 years to earn my first million dollars. Then recently I met a new friend. He rocked my paradigm. He was 22 without a college education when he earned his first $1 million. Ouch. He beat me by at least 14 years.

    Are you “income stuck?” Change it. Get unstuck. Do it today.

  2. Pay attention to how much money you spend. Don’t let your spending habits kill your ability to build wealth. Big ticket items like buying new cars on debt can cost you hundreds of thousands of dollars in future wealth. But bad daily spending habits like eating out can cost you just as much if not more. Take a look at your spending habits and learn to make better decisions. Keep your lifestyle under control until you’ve built your wealth, then you can really enjoy a more relaxed and cushy lifestyle. It’s worth it.

    If you’re not doing a spending plan, do one. Spending plans and budgets are a pain, but the results are worth it. If you’re not the type of person to run a tight budget, then do a “spending audit” and make adjustments. I guarantee you’ll find money (and your future wealth) slipping through your fingers. Do an audit. Find the problems. Make a adjustments. Every wasted dollar you find can help you build future wealth and help you with your millionaire goal.

  3. Be aggressive with your saving and investing. Many of us are so busy living life that we make excuses for not saving and investing more. The reality is so many of us are afraid of what we don’t know that we just avoid it. Sadly, we’re just too lazy to learn more so that we can get comfortable with it.

    Many of the people I talk to are clueless about investing tools, the stock market, or real estate. Real estate and the stock market are two of the primary investing tools available to us for wealth building, but very few of us take the time to learn more about them. As a result, we fail to leverage them, and that’s a perfect recipe to stay broke.

    How much should you save and invest? Well that’s really up to you. If you want to be a millionaire, which is the lowest goal you should set for yourself, you need to account for your age and create your millionaire plan. For most people, $10,000 a year is a good number to hit the millionaire goal in a respectable time, but you still need to account for you age. However, if you want to be an over achiever, keep pushing yourself to do more. Whatever the case is, get started ASAP with whatever  you can do and keep pushing yourself to grow it. Can you do $100 a month this year? Set a goal to double that next year, and then double it again the next year. If you can double that $100/month investment each year for 5 years, you’ll be investing $1,600 a month in 5 years. That’s $19,200 per year! That will add up quickly, and make you a millionaire pretty quickly.

Once you get “money smart” you’ll be better equipped to develop your own Millionaire Plan and build wealth for you and your family. If you don’t have a financial coach, you should get one soon. It’s good to have someone smart to talk with about money and building wealth.

Once you have built your wealth, life gets even more fun. You’ll be better equipped to help other people in need, and it is so rewarding. You can be a millionaire.

Great books/resources to read:
I Will Teach You to Be Rich by Ramit Sethi

Good Financial Cents website by Jeff Rose

 

 

How You Use Your Time Affects Whether or Not You Will Be Wealthy

Have you heard that time is money? As I’ve grown older and a little bit wiser, I’ve realized just how true that statement really is.

Now in my 40s, I look back over what I did with my time in my 20s and 30s. While I’ve attained a moderate level of success moving up through the executive ranks, I can see how much time I wasted, and I’m left wondering how much untapped potential I left on the table. Now heading into my 50s, I’m determined to make the best use of my time possible. Minimize the distractions. Focus on what’s really important. Focus on what creates lasting value for you, your family, your friends, and the people you want to help. The people you care about. For me, that’s about helping orphans and people trapped in poverty mindset and cultures.

Perhaps one of the best books that helped me re-prioritize my time was Robert D. Smith’s 20,000 Days and Counting. Robert does a masterful job of explaining the importance of every single day and encouraging us to make the most of each one. By looking at historical figures and seeing what they accomplished with the time they were given, Robert helps us to take an introspective look at what we’re doing with our time. Are we using it wisely?

Now, if you desire to become wealthy and you’ve set your eyes on becoming a millionaire, what you do with your time will affect whether or not you reach either one of your goals. Millionaire or Not. You Can Choose. One of those choices is what you do with your time.

As I mentioned, I wasted a lot of time in my 20s and 30s. I spent a lot of time on video games and watching movies. A lot. How much exactly? A number that I would be embarrassed to share. Fortunately, somewhere in there I found time to squeeze in some personal growth and development time, and through that time was able to reach a moderate level of success. However, I’m still left watching great people like Tony Robbins, Grant Cardone and host of others who’ve done a much better job focusing and leveraging their time. I’m left wondering what else could I have accomplished if I’d been more focused. Well, I can’t do anything about the past, but I can be more purposeful with the future.

The reality is if you want to maximize your life’s accomplishments, you need to maximize your time. Time bandits as I like to call them, rob you of your time. They keep you from reaching your peak potential.

Time Bandits.
Time bandits rob you of your most important resource. Your time. Whether or not you realize it, time bandits are stealing your future. Minimize the time bandits and you’ll maximize your future.

  • Video games
  • Reality TV
  • TV and movies
  • Overdoing sports tv
  • Social media (Facebook, Twitter, etc.)
  • What other time bandits are stealing your future potential away?

Life Multipliers.
Life multipliers help you maximize your “life output.” They boost your ability to accomplish really cool things during your lifetime, and ultimately how much you can help other people. By using your time wisely and boosting your performance with life multipliers, you’ll leave an impact in your own life, but also on the lives of those around you.

  • Reading a book (Top CEOs read 50+ books per year)
  • Listening to a growth podcast (marriage, money, parenting, career)
  • Hanging out and networking with awesome successful people
  • Picking up some side work to increase your income. Invest it.
  • Starting a small business for additional income.
  • Volunteering to help others in need
  • Learning something new

Resources to help you rethink and maximize your time for a more successful and purposeful life.

20,000 Days and Counting by Robert D. Smith (Amazon.com)

Halftime by Bob Buford (Amazon.com)

7 Habits of Highly Effective People by Steven Covey (Amazon.com)

Time Bandit vs. Life Multiplier Exercise

So try this…

  1. List out 3 Time Bandits in your life that you’re going to remove or reduce.
  2. List out 3 Life Multipliers that you are going to do now that you’ve squashed the time bandits.
  3. List out what results you hope to accomplish with this change. What will be different in your life in 12 months as a result of this change?

Always remember, your time is one of the most precious assets you have. Don’t waste it. Make every minute count no matter what you’re doing.

Retirement. Yuck. Wealth Building. Yay!

Over the years I’ve noticed that personal finance can be a very touchy subject for a lot of people. For whatever reason, I’ve just always enjoyed learning and talking about it. I’m probably way over into the realm of TMI as several of my close friends continually tell me. My filter is set pretty low.

Lately, I’ve been considering a widely used term in the personal finance world. Retirement. Yuck. Just saying it brings a bad taste to my mouth. I’m 46, and by traditional standards, I’m about 19 years away from retirement. However, I don’t like the word retirement, nor do I like the idea of waiting till I’m 65.

Retirement is a Dirty Word

To me, retirement is a dirty word. When you’re young, you don’t really care about it. When you’re old, you’re scared of it usually because you didn’t do a good job preparing for it. For example, my dad feels like he’s invincible. He’s 67 and works 50-60 hours a week. He plans to work until the day he drops. Is that realistic? No, especially since he’s been smoking since he was around 10 years old. However, he doesn’t have any other option. No retirement, and social security is a joke.

So, I prefer to dump the term “retirement”. It’s a dirty word. Instead, let’s use the words “wealth building”. Whether you are young or old, you can and should do wealth building. The more wealth building you do, the better off you’ll be when you need money. And who wants to retire in their 60s anyway. Try setting a date to quit working at 59 1/2 years old which is the earliest you can draw on your retirement without tax penalties. If you did enough wealth building earlier in your life, it’s totally doable.

I’m big on the 59 1/2 years old or sooner number because of my past life experiences. I’ve seen too many of my friends and family pass away in their 60s to wait. My mother passed away last year at age 67. My former boss passed away around 65. Every one of them would have had a good 5-10 years to enjoy more time with their family and living life however they wanted if they’d just focused more on their wealth building and broke free from the traditional “retirement mindset.”

Wealth building. 59 1/2 years old or sooner target. Do it.

Vanguard Retirement Wealth Planning Tools

Vanguard Retirement Wealth Calculator

Working. Making Money. Building Wealth.

Work. 95% of eligible Americans do it.

I started working for minimum wage at age 13. Before that, I worked for my Dad helping out on his job sites. Sweeping floors, carrying trash, but I always wanted to hammer or saw something too. Apparently power tools aren’t for kids under 10 years old. For my mom, it was working at the convenience stores she managed re-stocking shelves, and yes once again, taking out the trash. Oh, and re-stocking the cold drinks in the cooler. That should have been called torture! My hands got so cold!

Eventually, I graduated up from family jobs to a real job at the local grocery store sacking groceries. I still think that was one of the most fun jobs I’ve had. Sacking groceries, checkout lines, sweeping and mopping floors, restocking shelves, and helping people to their car with their groceries. Once again, it paid minimum wage or close to it.

After graduating from high school, it was time for college, and I was a bit more ambitious with what I wanted to earn in compensation. I moved up from minimum wage to $7 per hour while working for RPS (Roadway Package Systems), and then it happened. I landed a $15 per hour summer job with P.I.E. freight company! My world was rocked. I was making $600 a week! Along with that jump came a shift in my expectations and what was possible with my income. As a young man and college student, I had reached a break through!

So many of us go through a similar experience of working and making money. Thinking in terms of single dollar increment raises. A $1 per hour raise blows us away! After I got out of college and landed my first engineering job, that’s exactly the world I lived in. Once I knew I could earn $15 per hour, I knew one day I could do it again, and I did. But sadly, I couldn’t imagine anything much more than that. $15 per hour is roughly $30,000 on a 40 hour a week job. $20 per hour is $40,000 per year. $30 is $60,000 per year. Hourly Rate x 2000 hours of work.

So ask yourself this question, how much money do you want make for your 2000 hours of work per year? $40,000? $60,000? What about $100,000? What about $250,000? More?

The idea of making $250,000 per year may sound ridiculous to many people who read this article, but it is doable. Lots of people are doing it. Why not you?

We can all work to make money, but working doesn’t have to be the only way we make money. Many people make money by developing multiple income streams. They start with a typical job, and develop supplemental income streams

Making More Money

So you want to make more money? I applaud you. Don’t settle for the status quo, every day routine. Expand yourself.

  1. Grow yourself. If you want to make more money, you have to grow yourself. You have to make yourself more valuable by learning and increasing the value you offer.
  2. Look for opportunities at work. Can you contribute at work on a higher level? Sometimes opportunities are right around the corner. Don’t wait for opportunity to find you, go looking for it.
  3. Be excellent. Do the best work you possibly can. Sloppy work won’t get you very far, and it definitely won’t make a you a highly valuable and top paid employee. Be excellent. Do excellent work, and money will flow your way.
  4. Might be time for a job change. Many people get stuck in a lower paying job because they get comfortable. You work the same hours whether you get paid $30,000 or $120,000. Why stay with a company that can’t pay you or won’t pay you more for your work? Think about this. If you make, $60,000 a year, that’s like working 2 years for $30,000 a year! Land a $120,000 a year job and thats 4 years at $30,000 or 2 years at $60,000. Don’t get stuck in a low paying comfortable job.
  5. Develop income streams outside your typical JOB. Developing multiple income streams can let you keep your day job and make extra money to help build wealth faster. You can start with side work, a hobby, or even a small business on the side. Millions of people are doing what is called an MLM (Multi-Level Marketing) or Direct Sales. While MLM has a bad stigma in the United States, millions of people are successful in using to make money to supplement or even replace their entire income.
  6. Rental Properties. Rental properties and real estate are historically a great income stream. Whether you’re flipping properties or buying a few rentals, you can make money in real estate. Starting with a low cost townhome rental can get you going or even renting out a room in your house. AirBNB makes it easy to find short term renters or if you like stability and a little more security, look for a longer term renter.

If you want to build wealth, multiple income streams will help you do it. I waited a bit longer than I should have to create my own multiple income streams, but I’m working hard to put them in place now. We have purchased 2 rental properties over the last 2 years. Now I’m engaged with Wealth Generators , a good MLM based around investing and helping people build wealth. They’ve created some investing tools, financial training and money management tools to help everyday people succeed with money. It’s right up my personal finance and wealth building alley. For more information on Wealth Generators, drop me an email. tony @ tonybradshaw.com

If you want to go the MLM route, there are tons of good companies like Melaleuca, Advocare, Kyani and others. If you are interested in one of these programs, I’ll be glad to connect you to some very awesome people. Drop me an email. tony @ tonybradshaw.com

How much more do you want to make per year and put towards your wealth building? $6,000 per year? $10,000 per year? $100,000 or more perhaps? It’s all up to you and what you choose do. The more money you can sock away into your passive investments or building your income streams, the faster you will become a millionaire and the more people you will be able to help with the wealth you’ve built.

 

 

Learn About Money. Be Wealthy.

There’s a saying that there are no guarantees in life, but I’d say that there are some guarantees. You can pretty much guarantee that if you don’t take time to learn how to make money work for you, then you won’t be wealthy. That’s pretty guaranteed. People who are learn about money become smart about money. It’s just that simple.

Learning About Money

I was 26 when I started learning about money. Needless to say, before that, I was pretty clueless following in my parents financial footsteps. Spend more than you make. Don’t save. Don’t invest. Work you whole life and probably die with a relatively low amount of net worth. Thankfully that all changed when I was 26. You see, I got my first W2 form for my fully employed year of work after college. I worked as an engineer for a small family owned manufacturing company. My income that year was $39,000, and when I opened that W2 envelope, I was shocked. I had relatively little to show for that year of work and most of what I had to show for it was debt. A new car. A new computer. Some credit card debt for I don’t know what. That year, I knew something was wrong with my finances and how I handled money. It was time for a change, and change I did.

I spent the next several months going to the bookstore buying financial magazines, and learning about money. At the top of my list was Kiplinger’s investors magazine. That was what began my journey to build my financial knowledge and one day become a millionaire.

One of the first steps in becoming a millionaire is learning about money. How to make it, and how to use it to build wealth. You can’t build wealth unless you know how to make your money work for you. Otherwise, you’ll just go through life making money and spending money. That will never get you ahead.

While there are a ton of ways to put your money to work for you, I started with the stock market. At 26, I put $500 a month into an aggressive growth mutual fund. Back then, I chose Kaufmann funds, but I was a bit green. Today, a better bet would be Vanguard family of funds. While $500 seemed like a lot of money to me as a 26 year old single man, I should have been investing $1,500 a month. The more aggressive you are in making your money work for you, the better off you will be later on in life, and the more wealthy you’ll become. Eventually, you won’t even need to work for money. The income streams you create will work for you.

My second investment strategy was to put money into tech stocks, and I was able to make a bit of money as a young investor. I invested in Intel, Dell, Cyrix, Iomega, Nvidia and a few others. Holding each investment for 3-6 months, I was able to make 30-50% on each investment. Focusing on staying ahead of the new technology releases by the major vendors, I was able to make some money when the tech leaders saw their new products hit the market. It was a good start to changing my financial future.

At that time, I also made the decision to become debt free and live without debt. Being in debt doesn’t make you rich. It makes the banks rich. Avoid debt. Since I had already gotten into some debt, it took me 2 more years to pay off all of my debt. I paid the 5 year loan off on my car in 3 1/2 years. Hindsight being 20/20, I should have paid it off a bit sooner, but I was putting a bit of money into the stock market.

Being older and wiser now in my 40s. There are some things I would have changed along my financial journey, and one of those would have been how much I studied and learned about making money and putting it to work for me. I made the mistake of think I learned everything I needed to know about money when I learned about mutual funds and the stock market when the truth is, there is so much more to know and learn. While simple plans and investments do work, they leave so many more wealth building opportunities on the table.

I believe becoming wealthy is a noble goal. If you use your wealth properly, you should be helping others. The more wealthy you are, the more people you can help, and there are a lot of needy people in the world today. In fact, there are probably a lot of needy people in your neighborhood today. Wouldn’t you like to be able to help them?

Anyway, I encourage you to build your financial knowledge by committing time each month from this day forward to learn about money. Learning about money will help you build a better financial future for yourself, your family and your children for generations to come. By making this one small commitment, you will forever impact people’s lives.

Here are a few foundational books to get you started increasing your financial knowledge, but don’t stop here. Keep going.

If you build your financial knowledge and put it to work, you will build wealth for yourself and your family, and then you will be able to put that wealth to work helping others. It’s good. It’s noble. Do it.

The Millionaire Next Door. A Book Review.

The Millionaire Next Door

I’ve been learning about and working in personal finance for 20 years. I don’t know why, but I put off reading The Millionaire Next Door until this year. On many personal finance book lists, it is listed in the top 10. After finishing my reading this week, I can understand why.

The Millionaire Next Door is quite a bit different from many of the personal finance books you will read. Many other books focus on principles of managing money and try to get you to adopt their teachings. The Millionaire Next Door set out with a different intention. The authors, Thomas Stanley and William Danko, invested a tremendous amount of time in discovering how America’s millionaire’s lived. What were their habits and behaviours? What were they doing that was different from what everyone else in America were doing. They believed it was this difference that would hold the key between building wealth and becoming a millionaire or not.

Being a bit of a numbers junky myself, I found their research fascinating, but I also discovered something that surprised me as well. I’ll save that for later.

While you’ll have to read the book to truly appreciate all the work that went into the book and the knowledge they share, I’ll entice you to read their book with a few nuggets.

Did you know?

(From The Millionaire Next Door, Copyright 1996)

  • Only 3.5% of American households were millionaires?
    (In 2016, the number of millionaire households has increased to 10.8 million or roughly 8.5%)
  • 80% of these millionaires were first generation millionaires meaning they built their wealth.
  • EOC (Economic Outpatient Care) is almost always is bad for the recipient. This is when a parent supplements their child’s income in some way. Many times this continues on into adulthood and undermines the ability of the child to mature fully and independently often resulting in the adult/child from attaining as much success, income levels or wealth as their peers.
  • A large number of millionaires, 37%, buy used cars. They prefer to buy automobiles that are 1-3 years old to save money on the depreciation of the car. 50% of the time the priced paid for the car is $30,000 or less.
  • The average millionaire is very frugal. Choosing frugality over flash. The #1 watch owned by millionaires is a Seiko. The average suit cost $399 or less.

Perhaps one of the most fascinating things I found in the book came when the authors mentioned UAWs and PAWs. UAWs (Underperforming Accumulators of Wealth) and PAWs (Prolific Accumulators of Wealth) exist in the millionaire world. UAWs typically accumulate 1/2 the wealth of the average millionaire for their income level due to their spending, saving and investing habits. By contrast, PAWs typically develop twice the wealth of the average millionaire with their income level. Even with the same income level there are wide spreads of wealth accumulation. It all comes down to how you handle your money. Which one are you?

What I found most surprising in reading The Millionaire Next Door was how closely it fit my family and I. We’ve splurged a bit on some amenities, but overall, The Millionaire Next Door was a virtual match for how we live our lives and manage our money. It’s nice to know I’m on track.

If you want to become a millionaire, I suggest you read The Millionaire Next Door and learn a little something from the guys that studied millionaires.

Get The Millionaire Next Door at Amazon.com

 

Saving Money. A Penny Saved is a Penny Earned.

Learning to Save Money

So often we are focused on making more money, budgeting our money or investing our money as a way to build our wealth. While these are all good foundational building blocks of a strong financial plan, they overlook a simple and easy way to make more cash available in your monthly plan. Putting more cash in your monthly plans means you can eliminate debt faster, payoff your mortgage earlier and build your wealth sooner. What if you were able to find $250-500 more in your monthly cash flow plan? While it may not seem like a lot of money, but it adds up. $500 per month is $6,000 per year! Do I have your attention?

Saving money on your purchases and spending is a valuable part of your financial plan that is often overlooked. Why? Because it can take a bit of work. It requires you to change your thinking and plan ahead, and who wants to do that? Yuck!

Well, an extra $6,000 a year paid on your mortgage can knock your 30 year mortgage down to 16 years and save you $88,000 or more in interest, depending your loan amount and interest rates. I’d say that’s a pretty good use of $500 a month!

Or perhaps, you’d like to invest that $500 a month. Well $500 a month invested monthly for 10 years can turn into $95,000! What’s even more amazing is what can happen after that. You see, if you leave that money alone until you’re 59 (I like 59 because I want to retire before I turn 60), it can become $600,000 to $1,600,000 depending on your age. That’s what I call a good investment!

Well that’s what can happen with your money if you save it, but how do you save it? How do you find that $500 per month?

Saving Money Tip #1

Many people today have “stuffitus”. That’s the love of stuff. They just like buying stuff. Stuff they don’t need. If you can just cut back on buying “stuff.” It’s amazing what you can save. When you’re at the store, think twice before buying that thing that you don’t really need.

Tonight for me at Publix, it was chicken wings. They smelled so good I bought them. They were hot. They were tasty. However, my wife and I had a dinner appointment at a friend’s house in an hour and a half. All I needed was 1.5 hours of self-control, but I blew it. It cost me $9.95. Blow $9.95 per day for 30 days and that’s nearly $300 a month…$3,600 per year!

Saving Money Tip #2

Eat at home more. My wife and I have been looking for ways to save money. Our budget is a bit tighter than it has been in the past. With a family of 8, it’s expensive to eat out. We developed a bad habit of eating out. We can feed our family at home for 25% of what it costs us to eat out. Now that’s real savings!

If you’re going to eat out, use a coupon. Always use a coupon. Train yourself to use a coupon. I worked with a few guys who were pros at this. They would find buy one get one free lunch coupons, then they’d split the cost of the lunch. They were able to eat out at lunch for 1/2 the price! Brilliant!

Saving Money Tip #3

Always be on the look for more money saving tips and there’s no better place than PennyHoarder.com . At PennyHoarder you’ll find the best of the best ways to save even more money.

Also, use coupons whenver you can. It’s easy, and it’s effective. It’s an easy way to save money at the grocery store, and if you’re really good, you can save 25-50% on your grocery and household needs. That adds up! Checkout Coupons.com and CouponMom.com

 

Got anymore money saving tips? Add them in the comments section and tell us what you’re thinking.

Debt Free Lifestyle. Going from Debt to Debt Free.

Debt Free Lifestyle

What does it feel like to live the debt free lifestyle? Simply stated in one word. Amazing. Now if you want a more exhaustive description, I need a few more words. Let’s see. Amazing. Freeing. Liberating. Inspiring. Empowering. My list could go on, but maybe you should hear the story to truly grasp what living debt free is really like.

The Debt Free Journey

My journey to the debt free lifestyle started in my mid-twenties. I was a freshly minted college graduate and had just finished my first year out of college. Still at home with mom and dad, I was paying a modest amount of rent, and I had racked up a bit of credit card debt while looking for a job. A little later the same year, I picked up a car loan, $13,500. My Saturn SL2 four door Sedan…after all I would be getting married and having kids, so I might as well spring for the four door. Yes. I was that kind of kid. Always thinking ahead. I confess I did regret letting go of the hot rods I drove in my teen years. Along with the credit cards and car, I financed my first computer…I needed it to be successful at work. In all, it was around $20,000, and I was 24. Luckily, I avoided the student loan mess that many college graduates are dealing with today. So like any good son, I followed in my parent’s footsteps. Credit cards, car loans, etc.

It was spring 1996, when my debt wake up call came, and thus my quest to become debt free began. In all, it took me 2 years to pay off my debt, but I also invested during that time. Hindsight being 20/20, I should have focused on my debt 100%, but I was young and didn’t have a coach or guide to help me. Once I paid off that $20,000, it was time to start paying on my fiancee’s $20,000 debt. Yes. The double debt whammy. Unfortunately for me, my spouse had gotten into the same mess I had.

Along the journey to pay off my wife’s debt, we encountered a few other snags. Well, actually, they were just stupid mistakes. We all make them. Right? In a stroke of utter genius, I bought my new wife a Kirby vacuum cleaner on credit. After all, it’s the perfect gift for a new bride. That was mistake #1. Then, mistake #2 hit. The meat delivery service…complete with a freezer on credit to store your meat in. Now that was more her than me, so I don’t take credit for both of our mistakes. Those two mistakes set us back 1 year on our debt free life journey.

Now I know this is supposed to be about the debt-free lifestyle, but to truly appreciate the living debt-free, you need to know the journey. Knowing and remembering the journey is critical to never going back into debt. I’m routinely surprise when people finally reach their goal to be debt-free, but then choose to go back into debt believing they can handle it. It’s a lie. Never go back.

The Debt Free Lifestyle

My wife and I paid off our consumer debt in 2002. Just 10 short months after I began working for Dave Ramsey. We were 31 years old. That was 16 years ago. No credit card debt. No car debt. No student loans. It was amazing.

In 2004 or 2005, my wife’s car had a meltdown. For you motor heads out there, her engine blew a head gasket. Yes. It was as bad as it sounds. Rather than making that expensive repair to a 1997 Plymouth Breeze, we paid $3,500 cash for her aunt’s used white Buick LeSabre. She was asking $5,000, but I worked in the family discount. It was the first car we purchased with cash, and it felt goooooood! Since that time, there’s been the silver 2001 Honda Odyssey ($7,000), the red 2004 Honda Odyssey ($11,000), the green six speed 2007 Acura TL ($23,000) (that I purchased after my green 1994 Saturn SL2 started smoking at a red light), the 2007 Honda Odyssey ($21,000) (purchased to accommodate our sixth child), the 2003 Chevy Avalanche ($12,000) I purchased in 2012 when we sold the Acura, my wife’s black 1969 Corvette ($20,000) (she loves that car), and our latest addition my 2012 Grand Sport CE Edition Corvette ($50,000). All paid for with cash. Yes you can do that when you don’t have debt hanging over your head. Oh, and we’ve passed on the debt free cars lifestyle to my son who purchased his 2004 Honda CRV with cash.

I have to say, it’s a lot of fun to get good deals on cars when you pay cash.

Once we were out of basic consumer debt in 2002, we took a short break due to family growth which required us to move into a new home. Once we settled into the new home, it was time to turn our attention to paying off our house. Without consumer debt, its easy to pay off your house early. We paid and extra $15,000 off on our home in about 12 months, then we started paying double house payments. As my income increased, we poured more cash onto “home mortgage fire” while at the same time doing some home expansion. We were able to pay our new home off in around 5 years!

Having your house paid off is a major part of the debt free lifestyle. Let me tell you, the grass really does feel greener in a yard that has a paid off home mortgage. I will say that one thing did shock me a little. When we sent in that last payment, things didn’t feel very different right away. It took about three months to really sink in. When you don’t have debt and you don’t have a mortgage, you’re bank account grows really really fast. Before you know it, you’re looking at your checking account balance going “wow. that’s a lot of money. What do I do with it?” You see. You are now totally, 100% debt free!

I won’t lie. Becoming debt-free is a tough journey. It’s worth it, but sometimes do yourself a favor. Bend the rules. Take your wife out to dinner. Enjoy life just a little. It’s nice to have an oasis or two to refresh yourself in the middle of the journey. It’s okay as long as you don’t abuse it, and lose track of your goal to become debt-free.

Now, one of the most exciting parts of the debt free lifestyle is vacations. You enjoy them more. You get to pay cash. You get to take more vacations, and you get to take almost whatever vacation you want. We like to break ours up a bit. My wife and I decided we liked to take vacations without the kids. I know. Don’t judge me. If you haven’t tried it, you should. You’ll love it. So, I’ve gotten addicted to traveling once per quarter, so four trips per year. My wife and I sneak away two times a year, and two times a year we take the kids. We actually travel a bit more than that, but now that we’re debt free, we can afford to take four bigger trips per year while doing smaller less expensive weekend trips throughout the year. Adult trips to places like New York, the Florida Keys, and Sandals Resort in the US Virgin Islands. Kids trips to Disney World, Sea World, Bush Gardens and more. It’s one of the most enjoyable things we get to do as a family.

We’ve been 100% debt free and living the debt free lifestyle for 5 years now. It changes how you think. It changes how you dream. It changes what you aspire to do with the rest of your life. Now, I’m on a journey to figure out how to pass wealth on to my children and grandchildren as well as whoever I can help.

I was a 24 year old when I realized there had to be a better way and set out on my quest to live the debt free lifestyle. That’s the time I set out on my goal to become a millionaire, and now at forty six, I believe everyone who wants to become a millionaire and is willing to work hard enough and do the right things can be one. Aspiring to become wealthy is a good thing if it is done with the right heart. It’s a noble goal and worthwhile. Wealth is having enough money to meet our needs and wants while leaving enough left over to help others.

Tools for Your Debt Free Journey – Financially Fit Step 5, Becoming Debt Free for Life

 

Millionaire or Not. You Get to Choose.

Over the past 5 months as the new chapter of my life and future continue to develop, I’ve really enjoyed talking to people more about their finances. I guess something clicked in me, and I have more passion for people’s personal finances than ever before in my life. The more people I talk to, the more I realize how much people need help with their money. Even my closest friends and past co-workers need help. Perhaps I was too busy or just too focused on my own family’s needs. Whatever the reason, something has now awakened in me, and I’m excited.

The Millionaire Goal

So now I ask, how many of you have your finances figured out? Maybe you’re doing pretty well, but let me ask you this. What’s your millionaire plan? What’s the date on which you will cross the millionaire threshold with your wealth? Seriously? Have you set a date or year? If you haven’t set your date, then the likelihood of you reaching that monumental goal is pretty slim. I was 25 when I set my goal to become a millionaire at 40 years old. I put together my plan and went to work.

So today, I really enjoy asking the people I meet “what’s your millionaire goal?” It’s fun talking to a young man in his 20’s and sharing my story with them and seeing the lights come on. I dare say its the first time someone in their life has talked to them about becoming a millionaire, and in many cases, probably the first time a millionaire has talked to them.

I find it sad that so many people that I speak with haven’t aspired to reach the million dollar milestone. I guess it shouldn’t surprise me considering my family and life experience. On my mother’s side of the family, my grandmother was a single mother of 5 who eeked out a meager living. My grandfather was somewhat of a small time farmer. On my father’s side, neither my grandmother or grandfather accumulated any level of wealth.

My mother and father managed to pay off their house, but unfortunately lacked any financial sophistication. They were wonderful providers for my sister and I, even managing to put us through an affordable private school and somehow managing to get me through an inexpensive college without any student loans. Quite the achievement, and I’m eternally grateful. However, wealth of any kind eluded them. The question I ask is why?

According to The Millionaire Next Door, 3.5% of American Households are millionaires. Statistically, my grandparents, my uncles, my aunts, my parents, my cousins, my neices, and my nephews all fall into the 96.5% non-millionaire statistic. Why? And why do I, and my family fall in the 3.5%? The answer is relatively simple. Well, at least part of the answer is simple. It’s a choice. Yes, I know it’s a little more complicated than that, but at the core, a 25 year old young man decided he was going to be a millionaire by the time he was 40. It was his millionaire goal.

My Millionaire Plan

At 25, I was just learning about finances. While I was always told to save, I wasn’t shown how to save. It wasn’t modeled for me. In fact, my family was very bad with money, and I need to cut mom and dad some slack. They did stretch their dollars for my sister and I to attend an affordable private school. However, that caused us a few inconveniences. Sometimes the water was cut off. At other times, the power was cut-off. I remember bounced checks trying to pay bills which of course result in returned check fees exacerbating the problem. You could say I learned a lot about what not to do.

At 25, my millionaire plan was simple. Without a mentor, I had to learn for myself. With my DIY lifestyle, I headed to the books store and picked up 6 or so financial magazines. It’s been 20 years, but the magazine I remember most is Kiplinger’s. Kiplinger’s is an investing magazine. It was an excellent learning tool for me. It’s where I learned about the stock market, mutual funds, front load funds, back load funds, management fees, etc.

Armed with my newfound information, and a semblance of a millionaire plan, I set off on my journey. As any DIY person knows, you’re going to experience and learn some things along the way. It wasn’t a perfect plan, but it was a plan. The important thing was, I got started.

My plan at 25 was simple.

  1. Learn about investing in the stock market
  2. Don’t go into debt. Debt is bad. No debt. So I started paying off all my debt as fast as possible. I paid off my computer and credit card fast, then I paid off my 5 year car loan in 3 years.
  3. Keep your expenses low. Really low. My rent was $200/mo.
  4. Invest monthly. My plan had me investing in mutual funds at $500/mo. Personally, I should have been investing $1,000/mo.
  5. Then I set aside additional money for single stock trades. I traded in tech stocks since I was more familiar with them. Cyrix, Dell, Intel, Iomega, and a few others.

By anyone’s standards, it wasn’t a perfect plan, but it got me started and it had a few core elements that should be part of any healthy financial plan.

  1. Debt is your enemy. Avoid debt.
  2. Keep your expenses low.
  3. Invest aggressively.

But I did miss a couple of items that I should have included. If I’d had a mentor, my plan would have been more complete. A more complete millionaire plan would have included things like.

  • Increase your cashflow.
  • Expand your income streams.
  • Develop passive income streams.
  • Diversify.
  • Use retirement accounts for tax benefits.

While this is an extremely simplified look at becoming a millionaire, it does include everything you need to guide you. If you use this as your basic checklist and you build out it out with more detail by “filling in the blanks”, you will be on your way to becoming a millionaire.

So I leave you with this final question, on what date or year will you cross the millionaire milestone? Millionaire or not. You get to choose.

Millionaire Resources

The Millionaire Next Door

Secrets of the Millionaire Mind

Get Out of Debt. Live Free.

Well, I was thinking today about the fact that I spent 15 years from March 2001 to May 2016 working for Dave Ramsey, the debt free king, but I’ve never written anything about money or debt on my blog. What a shame! Now I’m working for Steve Down, who has a very similar story to Dave’s. After leaving Dave’s, I thought I was done with the personal finance world, but God had other plans. In early December 2016, all that changed. Now I find myself working to build a new personal finance company to help people say goodbye to debt and re-imagine wealth. Why “re-imagine wealth”? Let me tell you. For most Americans wealth is something they will never have and for other Americans wealth is evil. I’m here to tell you that both of those concepts of wealth are lies. It is my belief that you and everyone else can be wealthy. What is wealth? Wealth is having enough money to meet all of your needs and wants while leaving enough left over to help others. The path to wealth starts with good money habits, and one of those money habits is living without debt. Here is where my story began.

So you want to know how to get out of debt? You’ve come to the right place. Personal debt destroys your ability to build wealth. It’s just that simple. I was 25 when the lightbulb first came on for me. I was fresh out of college and enjoyed what I considered a good paycheck. I worked as an engineer for a local manufacturing company making more money than I had ever made before. I had risen through the compensation ranks of my high school minimum wage jobs to an amazing $13/hr manufacturing engineer. My rent was cheap…very cheap, and life was good. I had a nice reliable car, my green four door Saturn SL2 sedan. I had a 75Mhz Micron computer, a real powerhouse for the time. My other belongings included a 27” Sony TV, a Harman Kardon stereo system, a bed that I made out of wood from Home Depot, and a desk my father built for me. Life was good, or so I thought.

It was tax time, and for the first time in my life, I actually had enough money to be taxed. Along with millions of other hard working Americans, I received my annual W2. I cut open the envelope, pulled out the W2, and then stared in amazement. I was shocked not at the taxes I’d paid, but at the amount of money I had made. $39,000 give or take a little. $39,000…wow. That’s like 10x more than I’d ever made in my life annually. Where did it all go?

I looked around my apartment. I had a paid for TV. I had a financed computer. I had a paid for stereo with some kickin’ speakers. Suddenly, that bed I built and was so proud of didn’t look as good. In the driveway was my financed car with a $315/mo payment. That was my wake-up call. That was the day I realized debt steals your ability to build wealth, and I changing the way I felt, thought and acted about money. I had to discover how to get out of debt.

That’s the first step to getting out of debt. You have to have that wake-up moment where you realize that debt isn’t helping you. It’s hurting you. It’s hurting your ability to find financial security. It’s blocking your opportunity to become financially free. It’s destroying your ability to become wealthy, and it’s preventing you from helping others. Personal debt is not your friend and that’s why it’s important to know how to get out of debt.

Knowing how to get out of debt isn’t the hard part. The hard part about getting out of debt is the doing.

When I had my wake-up moment at 25, I set out on a mission to be a millionaire by age 40, and the first step in my plan was to get out of debt…fast. Unfortunately, there’s no silver bullet to getting out of debt. You didn’t get into debt overnight and you’re not going to get out of it overnight either. Getting out of debt requires a plan and hard work.

How to Get Out of Debt

  1. Create a Debt Checklist. Unfortunately, many people just pay their bills as they come in and don’t keep track of all their debts or where they stand on their balances. This is a disaster for your finances and not to mention a disaster for your health and life. The first step to getting out of debt is to make a list of all your debts including interest rates and payments. Make sure you include any student loans, your mortgage if you have one, and even debts you owe your grandma.
  2. Organize your debts. Create Your Debt Waterfall. Now that you have your list of debts, it’s important to organize them into a payoff schedule. At Financially Fit, we call this the Debt Waterfall. Your Debt Waterfall is the order of your debts that allows you to accelerate your payoff speed with each debt you pay off. Once you pay off your debt, you use the money you were using to pay it off and use it to accelerate the payoff of your next debt.There’s a lot of discussion on how to organize your debts to pay them off quickly, but the truth is, just stay focused and pay them off. If you get distracted or discouraged, you lose. Stay focused and you’ll eventually become debt free.
    (1) Highest Interest Rate to Lowest Interest Rate: In many cases, paying the highest interest rate off first can get you out of debt the fastest and save you the most money. However,
    it can also be one of the hardest ways to stay motivated to execute. If you don’t finish, you don’t get out of debt.
    (2) Calculate the Priority Quotient: The priority quotient is a special method developed by Financially Fit. The priority quotient uses your minimum monthly payments to help order your debts into the fastest payoff method. The debt with the lowest Priority Quotient is the debt you payoff next. The debt with the lowest number of months to pay it off is your highest priority debt. Attack it first, then move on to the debt with the next lowest number of months to pay off. To calculate your Priority Quotient use this formula:
    (Balance / Minimum Monthly Payment = How many months to pay off that debt)
    (3) Lowest Balance to Highest Balance. Ordering your debts and attacking them with the lowest to highest balance can offer you the highest satisfaction giving you little wins along your debt payoff journey. By using this method, you can help keep yourself motivated along the way until you reach the finish line. Many times by attacking the lowest balance first, you can get your first debt paid off in 2-3 months, then use the money you’ve freed up to attack the next debt.
  3. Assess your cash flow. How much excess cash do you have each month? Use it to accelerate your debt payoff plan. We call this building your Focus Fund. A Focus Fund is cash that you are using to focus on accomplishing a financial goal. In this case, you are using your Focus Fund for paying off your debts. It’s important to build your Focus Fund to a sufficient level to attack your debts and pay them off as quickly as possible. If your debt payoff drags on for too long, it’s possible for you to get discouraged and quit only to return to your old lifestyle. Keep your Focus Fund attacking your debts, and you’ll make it through.
  4. Pay Off Your Debts. Once you have your list in order and your cash flow plan, you can begin your debt waterfall. The debt waterfall is what Financially Fit calls your payoff plan. As you pay off each debt, you take the cash you’ve freed up by paying that debt off and attack the next debt. As you pay off more and more debts, you’re Focus Fund grows larger and larger until you have all of your debts paid off.
  5. Never go back into personal debt. Personal debt is a trap that will rob you of your ability to build wealth. Sadly, many people who finally become debt free return to debt believing they are more mature now and can handle it. Once you become debt free, the trick is to put your money to work for you. That’s how you can become financially free where you no longer
    work for money because your money now works for you.In most cases, your consumer debt can be paid off in two years or less. For those who are even more aggressive, you can become debt free including your mortgage in 5 years or less. yes, that’s right, 5 years or less including your mortgage! Now that you’ve learned the principles of how to get out of debt, it’s important that you tell others how to get out of debt.

I’ve personally been free of consumer debt since January 2002, and a little later we paid off our mortgage. I can honestly say the grass is greener when you’re debt free.