Saving

What do you think is the path to riches?  Most people believe that you have to win the lottery, inherit the money or have a super high-paid job like a CEO or celebrity. While having a high paying job makes getting to the million dollar mark easier, it isn’t the only factor.  It isn’t even a necessary factor.

If you earn $40,000 per year, working from age 25 to 65, you will earn $1.2 million dollars in your lifetime.  About two decades ago I was told by a financial planner, “It’s not what you earn.  It’s what you keep.”

Think about that for a minute.  There are plenty of lawyers and dentists who are broke.  They earn $143,000 annually and spend $142,000.  What is left over usually is used to maintain credit card bills and rich living.  If anyone with an income spends less than they earn (after taxes and expenses), they will be able to save money.  Save money and you’ll have it available to invest.  You will have it available when “once in a lifetime” opportunities come up.

Most Americans don’t have 3 months salary in the bank.  You should have a few years worth of salary in the bank.

If you’re thinking of buying a house and the bank approves you for a $250,000 loan.  Buy a $150,000 house instead.

Your car running good?  How about a detail instead of a new car payment.

Instead of going out to the movies and blowing $100 on a family of 4, how about rent some movies and cook some microwave popcorn.

Live within your means!

This is one characteristic that you will find with all self-made millionaires.  THEY LIVE WITHIN THEIR MEANS.

Being frugal makes it easier to live within your means.  But if you are serious about becoming wealthy, you have to change your mindset to a state where saving and accumulating money becomes normal.  You’ll never get rich spending what you take in.  You have to spend much less than you take in and then save and invest.

Becoming a millionaire isn’t easy!  If it was, everyone would be rich.  But if you are serious about becoming a millionaire, you have to start by saving.

More on this topic as this blog evolves.  But if you’ve decided to start on the path to millionaire status, begin to start saving your money.  Track your progress and find ways that you can save more.

The use of copyrighted material in this website is protected by the Fair Use Clause of the U.S. Copyright Act of 1976, which allows for the sharing of copyrighted materials for the purposes of commentary, criticism and education.  All shared material will be attributed to its owner and a link provided when available.  All other comment on this site may be reproduced with the author’s consent.  Please source any references or quotes of this website to: http://www.my1stmillion.net

On being frugal

There are several disciplines that must be mastered in order to become wealthy.  Aside from inheriting money or winning the lottery, these steps are crucial and failure to master them most assuredly makes wealth growth nearly impossible.  In order to grow your wealth you must increase your income, manage and grow your investments, manage your expenses, and manage or eliminate your debt.  We’ll talk about income, investments and debt at a later time but for now, let us focus on managing expenses.  There is no more direct way to managing expenses than to just be plain frugal.

I get grief from my friends all the time about being a “tightwad,” being “cheap,” and they even nicknamed me “Jew.”  Now before I get a rash of hate-mail for being anti-semetic, let me just say that I take the Jew nickname as a compliment.  Let’s face it, per capita, Jews are the most wealthy people on the planet.  Why is this?  It is because they respect money and they teach that respect to their children.  All of my Jewish friends have told me the stories of being scolded by their parents for leaving $.35 cents in change on their dresser drawer at the end of the day.  “Respect that money, that isn’t how I raised you, put that money away.”  Quite to the contrary, most Gentile families criticize you if you don’t spend outside of your means, calling you cheap.

Well, lets just look at the results.  Being frugal with your $ = long term wealth creation as demonstrated by, not only Jewish families but also many in the Asian community, Armenians and even the American Scottish.  It may not seem like much, $.35, but added each day, over 10 years, when invested wisely, those pennies add up to dollars and then to thousands of dollars.

Now, I’m not talking about being “cheap,” wherein you sacrifice quality to save money.  I’m talking about getting good bargains, buying things on sale, spending within your financial situation and not overspending on silly things like tipping at restaurants.  My brother is notorious for tipping the wait-staff 25% for every meal.  He is an owner of a large corporation that does millions in business and I’d be surprised if he has $1,000 in the bank.  He also spends lavishly going out to dinner and to bars, on expensive cars and on gifts for his children.  I’m all for buying a nice Rolex watch or a Mercedes sedan, but only if you can afford it.  If you don’t already have a million bucks in the bank, if you have to borrow to afford it, guess what, you can’t afford it!

There is no way you will ever grow a million dollars if you are extravagantly spending money on things like this…

There is a lot of social pressure to “not act cheap” so much that people feel obliged to tip 20% or more at restaurants.  Didn’t tipping used to be 10%?  Then it went to 15% and now people are tipping 20-25% or more!  On a hundred dollar bill (not uncommon for a diner for two), you’re looking at an additional $25 for the tip!  Multiply that times twice a week and at the end of the year you’ve spent an extra thousand dollars!  Put that thousand dollars in a stock mutual fund and after ten years, you could have as much as $20,000!  Every time I tip 10% and sometimes 15% and I get that “look,” I just smile and think about that $20k in my bank account.

If you want to become wealthy, you have to be strong enough to ignore social convention and do what is right for you!  

Sometimes thinking of yourself first instead of other people (the waiter) is the difference between financial mediocrity and serious wealth generation.  Suppose you do cut back on tips and you do save $20k in the next decade.  You later hear that a house is up for sale because of some financial problems and you are able to step in and buy it at a discount.  Later, you sell the home and make an additional $50k profit.  This is how and why rich people get rich and stay rich – they have the financial means to take advantage of opportunities when they arise.  I bet deals pass you all the time and you don’t have the $ to take advantage of them.

Cut back on your extravagant spending now to have $ available for those “once in a lifetime” bargains that occur more often than you realize.

I have a colleague here at work, young, maybe in his 20′s.  He has a six-figure salary and he has no idea how to manage his money.  Last year he bought a Cadillac Escalade for $70k and put on $15k worth of rims and then bought two Breitling watches and a Rolex for an additional $25k.  Despite his six-figure salary, he is close to bankruptcy now.  Heaven forbid he should ever get laid off from work, he surely will be in bankruptcy court.  Meanwhile, banks are almost giving houses away to anyone with a serious down payment.  With the money that he spent on these luxury items, he could have easily bought four houses in the Texas area netting two thousand dollars a month in rent.

I made a deal with myself – when my account hit $750,000, I would buy an Omega watch to reward myself.  I told myself that when I hit a million, I’d buy a Rolex.  The photo at the top of this post is the watch that I’m going to buy.  But why haven’t I bought it yet?  Because I haven’t found the right deal.  Why do I want to spend $8-12k on a watch when I can find someone who spent outside of their paycheck, ran into financial trouble and now they’re selling theirs at a discount.  I’ve seen watches like this sell for as low as $3,800.  I’ll be patient and get a good deal.

When you go to buy ANYTHING, shop for the best price.  Most people say, “Oh, its not worth the trouble.”  Isn’t it?  If you save $50 here, $100 there, over time, those bits add up (just like the Jewish kid’s $.35 cents) and eventually, you’ll see a once in a lifetime deal and you’ll have the means to capitalize on it.

In my case, I worked and saved hard and when the 2008 stock market crash happened, I had a few hundred thousand in the bank.  I loaded up on stocks and in 2009/2010 I realized about $400,000 in stock gains.  If I hadn’t been frugal, hadn’t saved that money, I would have missed out on the best stock-buying opportunity of our generation.

When someone looks “down” at you for leaving a moderate tip, turn it around on them and tell them that to do otherwise is foolish and fiscally irresponsible.

Your bank account will thank you in the long run!

The use of copyrighted material in this website is protected by the Fair Use Clause of the U.S. Copyright Act of 1976, which allows for the sharing of copyrighted materials for the purposes of commentary, criticism and education.  All shared material will be attributed to its owner and a link provided when available.  All other comment on this site may be reproduced with the author’s consent.  Please source any references or quotes of this website to: http://www.my1stmillion.net

Think and Grow Rich

Probably the most profound “self-help” book ever written.  I first read this book nearly two decades ago and it finally paid off.  I can confidently say that my success in breaking a million dollars wouldn’t have been possible if I hadn’t read this book.

Authored by Napoleon Hill in the 1930′s this book is the original “get-rich” book.  But unlike so many of the fads that have come and gone over the decades, this book still delivers.  I would bet that most of the financial self-help books are spin-offs of this book.  Napoleon Hill wanted to know what made newly-rich people different from “ordinary” people.  He went around and interviewed people like Mellon, Carnegie, Edison, Vanderbilt and catalogued what they all had in common.  He found that they all had similar characteristics, recorded them and then set out to try them himself.

Indeed, Napoleon Hill did become rich and proved that the method that he recorded worked.  He does not take credit for the method – he only recorded what he learned from the moguls of industry and finance.

If you don’t have a copy, here is a link where you can download a free copy to be read on your Kindle, iPhone, computer or any other electronic device.

Think and Grow Rich by Napoleon Hill

Reading this book is a must read for anyone who desires financial independence.  Since it is free – and proven, there is NO EXCUSE not to read it.  I’m currently re-reading it again – this is my 8th or 9th read.  I’m reading it to glean ideas for my 2nd million.

I can vouch for this book – it worked for me, it can work for you!

The use of copyrighted material in this website is protected by the Fair Use Clause of the U.S. Copyright Act of 1976, which allows for the sharing of copyrighted materials for the purposes of commentary, criticism and education.  All shared material will be attributed to its owner and a link provided when available.  All other comment on this site may be reproduced with the author’s consent.  Please source any references or quotes of this website to: http://www.my1stmillion.net

So you want to be rich?

It seems everyone’s dream is to someday be “rich.”  But what most people don’t know, is how to get there.

Now, whether or not having a million bucks in the bank is “rich” or not is debatable as inflation has eroded the value of the dollar.  I was recently forwarded an article that says that the “new rich” is $3.8 million.  Well, I can say this.  Once you have a million bucks, it is a lot easier to get your second million.

Why is that?  Accumulating wealth is difficult.  But once you have wealth, if invested well and “left alone,” wealth will grow.  Eventually, the money that your savings earns is more than your job pays.  If you are frugal and wise, getting “rich” in your lifetime is not beyond reason.

Over the next weeks and months I plan to share my story of how I accumulated a million dollars and offer advice on how you can too.  I also plan to offer advice on investing, getting out of debt, on saving money and on changing your mindset.

Welcome to this site – I hope it is of some use to you.

The use of copyrighted material in this website is protected by the Fair Use Clause of the U.S. Copyright Act of 1976, which allows for the sharing of copyrighted materials for the purposes of commentary, criticism and education.  All shared material will be attributed to its owner and a link provided when available.  All other comment on this site may be reproduced with the author’s consent.  Please source any references or quotes of this website to: http://www.my1stmillion.net