Get rich by leveraging what you know and using what you’ve got. I have read hundreds of articles, books, and journals about money and finance. The common theme is to become an expert in one subject area and use this expertise to create cash flow by selling your skills and knowledge.
This is a glimpse of what I have learned…yesterday. That’s right, yesterday! There is a plethora of information out there on finances. For example, there are numerous mobile apps you can use to earn extra money and one just for locking your Android smartphone! You literally just slide your screen to unlock your phone and make a profit. There are also various budget apps you can use for free or a small fee to track your spending (no more excel spreadsheets) and let technology do all the work for you.
Even after over eight years of learning about money; I still learn new things about finances. For instance, the following is just an inkling of what I have learned over the years:
- Money can help you make better decisions because often times it’s the lack of money that can lead to bad decisions.
- Money cannot buy happiness.
- Money is the number one reason couples divorce.
Find ways to not only live below your means, but to expand them as well.
If you are good at writing, use this skill to build additional income as a freelance writer. Like to cook. Earn money on the side selling baked goods. Know your way around the city. Become a driver. Like being a homeowner and dream of being a landlord. Start by buying one home and renting it out.
These are just a few things you can do to earn income. The goal is to expand your means. Increase the distance from the amount you earn and spend.
For example, if you earn (that’s right because you don’t make money you earn it) $4000 a month and have expenses of $2500 a month, then invest the difference of $1500. The goal is to earn enough passive income to be able to live off it for the rest of your life. Once you hit your target number your working days are over.
In order to achieve this, you must limit debt and borrowing. Too much can have a negative impact on your savings goals. If I had to put debt in order of importance for payoff, it would look like this:
- Payday Loans
- Credit cards
- Personal Loans
- Auto Loans
- Student Loans
- Mortgage Loans
The first two come with high interest rates and fees. I have had the unpleasant experience of both types of debt. I decided to get serious about debt repayment and once I got my tax refund I paid off the payday and auto loans. I used a zero percent credit card to pay off my personal loan. From there I used the savings from paying off my other debts to pay down and off my credit cards. I am not so worried about the student loans and the mortgage because at least I can deduct the interest from my taxes on my tax return. However, this is not a time to rest on my laurels. The goal is to get out of all debt ASAP to be able to save.
Emergency fund. My suggestion would be to have a savings account that is just for emergencies. The ultimate goal is to have at least one year of expenses saved. However, just to start and have some funds in case small emergencies happen, i.e., leaky faucet, car repair or medical bill you could have $500 to $800 readily available. This will alleviate some stress as opposed to having no savings.
Simple Math can lead to Riches.
Amount per month Year One Year Five Year Ten
$100 $1,200 $6,000 $12,000
$500 $6,000 $30,000 $60,000
$1,000 $12,000 $60,000 $120,000
Looking at the numbers above, you can see that after five years in any scenario you could use the amount as the down payment on a home. After 10 years of saving, you could buy a car outright or pay off part of a mortgage depending on what you owe or even start a business. However, savings like this don’t come easy. You must be disciplined enough to pay off debt so that you can maximize saving. But just look at the possibilities. They are endless!
This is my motto; Cash is King. Leads to prosperity. Debt leads to poverty and can cause degradation of character. Just choose cash.