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Money Lessons I learned from Jay Leno

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Photo: Forbes.com

Everyday and in every way, invest in yourself. Invest in your health and education to help build your wealth. With money comes power and protection. The wealthy are protected. Build up your knowledge and money coffers. A war money war chest is your way to ditch the 9 to 5 and get out of the rat race.

Jay Leno gives advice on how to do just that.

MONEY LESSONS FROM JAY

Jay on starting out

“I wasn’t a millionaire when I started.”

“I would alternate between the two, so it was cars and hamburgers, which are actually still two of my passions.”

He started his career working for minimum wage at McDonald’s in Massachusetts. Jay also worked at a Ford dealership. He discovered the key or secret sauce (pun intended) to getting rich: Developing multiple streams of income.

Jay on working more than one job

“I always had two incomes.”

“I’d bank one, and I’d spend one.”

“I had two jobs because I realized that was the quickest way to become a millionaire.”

“When I got ‘The Tonight Show,’ I always made sure I did 150 [comedy show] gigs a year so I never had to touch the principal.”

He has worked two jobs simultaneously since he was 16.

And there you have it. Basically, if you want riches, then you have to put in the work. If you work 40 hours a week, then find a way to work 50 or 60. Gotta make that paper.

Jay on saving money

“When I was younger, I would always save the money I made working at the car dealership, and I would spend the money I made as a comedian.”

“When I started to get a bit famous, the money I was making as a comedian was way more than the money I was making at the car dealership, so I would bank that and spend the car dealership money.”

“Then I got to the point where the comedy money was, like, five times the other money, so I decided to flip it around and save the comedy money.”

“I would always spend the lesser amount of what the two were.”

Therefore, if you are working 2 jobs or more, then you bank the bigger paycheck and spend the smaller checks. Bank the bigger of the two checks and live off the other.

Forget the pundits that tell you not to save. There is value in saving. You need an emergency to help in case of job loss or illness. Life is full of hiccups. Once you have saved reasonable amount, then you start investing your surplus income.

The key is not to only save, but to also invest. Savings help you live your life to the fullest. In addition, savings can help you fund your dreams. Not having to go to the bank for a loan is an incredible feeling.

Jay on living on one salary

“I pretended as if I didn’t even have the ‘Tonight Show’ job.”

“You know, when you start making money, you get lazy. I wanted to make sure I always had that hunger, so I never looked.”

“It would go directly into a bank.”

Simply put, bank it and forget it.

Jay on patience

It took 22 years to accumulate, “a nice little nest egg.”

You heard it here folks. Building wealth takes time. In many cases, it takes a couple decades. There are no get rich quick schemes. There’s is no free lunch. There are no shortcuts. You do the work, get paid, invest the surplus incomes, and wait to earn interest.

Jay on retiring

“If you do something and it works, then keep doing it.”

You do not have to retire early unless you want to. If you are passionate about something, and can make a living doing it, then do it.

Jay on Buy-And-Hold

“The McLaren F1, I paid $800,000 for it in 1998. The last offer I got was $12 million. … The nice thing is, if you buy what you like, and it doesn’t go up in value, you still like it.”

Warren Buffet likes to buy-and-hold forever. Therefore, don’t even part with your cash, if you don’t want to keep an item to infinity and beyond. Just don’t even open your wallet.

Jay on avoiding credit cards

“I barely use credit cards.”

Words to live by. Either use credit sparingly for a purpose and get it paid off ASAP or don’t even bother using it at all.

Jay on house buying

“I didn’t buy my house until I had cash. When you own something and you don’t have to write checks every month, you’re just better off.”

I learned from James Brown, Dick Clark, Jay-Z, Oprah, JK Rowling and Michael Jackson to own what you do. You can control your earning potential and life, if you own. You can continue to make money off the things you own and control for many years to come.

Regardless, of whether or not you’re still working. You can still earn royalties from work you have done in the past. That is how the rich get richer. Earnings on top of earnings.

Jay on debt

“I don’t carry any debt. I don’t write checks at the end of the month for anything.”

“I didn’t buy anything I couldn’t afford to pay for in cash.”

“Here is the money, give me the thing, transaction over.'”

Jay hates installments, as do I. His cash only solution is what the world needs to adhere by.

I have literally saved for two years or more to purchase items or services I wanted or needed.

When I wanted Lasik, I used my flexible spending and waited about 3 years before I did the procedure. It cost between $4,000 to $5,000. And was worth every penny. Paid cash, not credit.

When I needed dental work done, I saved for 2 years. Paid cash, no installments.

Don’t buy on credit, build a fortune.

Jay on Retooling

“Since high school, I’ve always had two jobs. I worked at a McDonald’s and I worked at a car dealership. … When I was doing the Tonight Show, I’d be on the road at least two to three days a week because I thought, ‘We’ll see how long this lasts.’ ”

Do not ever get too comfortable. Things can change. Always have more than one way to earn a living.

Jay on owning

“I own everything. I own my buildings. I own my cars. That way, if it ends tomorrow, I know what I’ve got.”

His conservative money philosophy gives him peace of mind. When you are out of debt you just feel better. Take control of your finances and this too will help give you some peace of mind.

Jay on old-fashioned values

“I’m not a big splurge guy, partly because I had Depression-era parents: “They just frightened me to death, saying, ‘You gotta save every penny!'”

“It’s a little old fashioned, I suppose, but it seems to work pretty well for me.”

No impulse buying. This is the debt trap. Plan your expenses. Budget just means you plan where your money goes and it gives you permission to spend. Use it.

Jay on Taxes

“I just pay. Fine, I’ll get another job, I’ll work harder. That’s probably not very good tax advice. I don’t have money in the Cayman Islands or any of that nonsense.”

Always pay your taxes. Period!

Jay on being frugal

“McDonald’s sent me these Happy Meal coupons, so one day I’m in the McLaren and I’m going to McDonald’s. I say, ‘Give me two Happy Meals.’ And I give them the [coupons].”

“Now I look like the cheapest guy in the world driving this multimillion-dollar McLaren and I’m trying to get a free hamburger.”

“I’ve never touched a dime of my ‘Tonight Show’ money. Ever.”

He hates spending on clothes and has not touched one dime of his Tonight Show money. At one point, he was earning around $30M a year! It pays to be frugal.

So, you just avoid the mall, invest the money you would spend on clothes and start earning your way to a fortune with compound interest. Delay your gratification. Discipline is the key to wealth. Once you have it, no one can take it from you. Then you can save money to invest. Easy as pie.

Jay on Shifting Gears

“So many friends of mine, all they ever did was the TV show. When the TV show ends, suddenly their life ends, because that was their whole life. I was never that guy.”

It’s great to have hobbies and interests outside of work. See if you can turn a hobby or side gig, into an income. At the very least, have something to do after one thing ends. Remember, no idle hands.

Jay on shopping

“I’m not a big shopping guy. I’m just not interested in clothes outside of the essentials.”

“To me, it seems like a complete waste of money. I just want to have enough clothes to cover legally what parts I have to cover.”

Hear, hear! I used to like shopping. Until I didn’t. That happened once I learned I was losing a small fortune for that new purse or shoes.  Read my post How Millennial Money inspired me to start saving $13,333.06 a year for more on that topic and see how I quit shopping for good.

Jay on Fixing Things

“When you’re in a business like show business, everything is subjective. Some people think you’re funny, some people think you suck. …When something’s broken and you fix it, no one can deny it’s running.”

Very true. Always be tweaking or working toward expanding and doing better. People notice you the harder you work.

Jay on setting high standards

He, like Coco Chanel, believe in setting high standards for yourself. Chanel said, “keep your head, heels, and standards high.”

Jay learned this attitude while working at McDonald’s. A key pillar of success: You can never go too far to ensure you’re producing a great product.

He would go home every night after work and write jokes. Jay would go through hundreds with his staff and get it down to the top 20. He would record himself and then re-listen for timing. Tedious? Yes, I know. But effective. The hard work paid off.

Jay on idle hands

“I meet with the writers at about midnight or so and work until about 4:00 a.m.”

“I sleep four hours, maybe five.”

The way he saw it was, “if you have time to complain, you don’t have enough work to do.”

I am notorious for going to bed thinking of work and getting up to work. Sometimes I get up in the middle of the night to write down ideas about work. I work so much I barely have time to breathe.

I learned that from Pat Benatar who was a workaholic in the 80’s.  But guess what? She wrote hits songs for like a decade. When there are times I need a break or pick me up while working, I’ll listen to her songs Invincible, Shadows of the Night or Love is a Battlefield.

For those who may not know or remember those songs, check out the links below. Good stuff.

Jay on failure

“You learn a tremendous amount from the mistakes.”

I have learned to fail better. It makes you stronger. It also humbles you and makes you more empathetic to others.

Jay on money to blow

“So many people get to be the age I’m at now and they’ve got nothing because they just blew it all.”

“I put my money in a hammock and say, ‘You relax. I’m going to go work.’ And when I come back, I put some more money in the pile.”

It’s your money. Don’t blow it.

Jay on Life

“Life is not that complicated … if you’re kind and decent, and try to be honest, it’ll probably work out. Yeah, you’ll get screwed once in a while. I certainly have, but that’s okay … don’t dwell on it.”

Pick yourself up, dust your wallet off, and get back into the grind. Don’t rest on your laurels. Put your head down and work. Stay humble and stay hungry. Generate multiple streams of income, diversify your earnings, increase your savings, and build your wealth. Get that net worth pumping in that interest faster than Arnold Schwarzenegger did lifting weights in Pumping Iron and you will start rolling in the dough!

Just FYI: Jay is worth over $300 million dollars. Has no debt. Is a self-made millionaire. And still works at the age of 68.

Financial Freedom, Financial Independence, Investing, Retirement, Saving, Self-Made Millionaires, Wealth

How Millennial Money inspired me to start saving $13,333.06 a year

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If you have been reading my blog recently, then you know I attended FinCon in Orlando, Florida this year.

However, what many of you may not know is that I have been listening to podcasts and reading blog posts by Grant Sabatier of Millennial Money.

Grant discussed saving money every day. Something like $5. And when I changed my mindset, I was like I want to do that too.

The escalation of your saving rate. Grant recommended that people try to escalate their saving by 1% every 30 days.

I knew this was a massive undertaking, but I was determined to do something.

So, I started where I was at and worked my way up. I just shifted upwards.

This is the first time I have ever opened up about what triggered me to start saving larger sums of money.

I am nervous just writing this post. However, I wanted to share some of the things that I have done in hopes that it may help someone else in the same way that Grant helped me.

SHIFT YOUR MONEY MINDSET

It was around 2013, that I started to do some Million-Dollar Math. I used an online calculator to determine how much I would have to save to get to millionaire status.

I focused on 2 numbers: $100,000 and $300,000.

The reason for this was because at an 8% return $100,000 will net you $1,000,000 in 30 years. At a 9% return, $300,000 will net you $1,000,000 in 12 years.

Even that, seemed like it would take tremendous effort.  Then I realized I had to think big, but start small. Start where I was at.

The answer was staring me right in the face. I was like Homer Simpson, Doh! Come on, Miriam. Use your Noggin.

I needed to take the small steps first in order to get to the bigger ones.

A number like $1,000,000 is too daunting. So, I broke it up into bite sizes like Oreo mini’s.

First, I focused on my retirement savings and then my regular savings. It went something like this.

Retirement Savings Escalation Example

Year Savings % Annual Increase Change
Savings Escalation    
2013 13% 2% +2
2014

2015

 15%

20%

 2%

5%

 +4

+9
2016* 25% 5% +14

*** I stopped at 2016 because I shifted my focus from mostly all savings going to my 401(k) to focusing more on liquid savings for the time being. Don’t worry. I still invest in my 401(k). I have to get that match after all. Can’t leave free money on the table.

In 2017, I made some changes to my savings approach. I needed to have some liquid cash too and not just have all my funds locked up in my 401(k). I had to have cash reserves. Especially, for any unforeseen emergencies that just pop up.

I decided to pay myself first. Instead of saving what was left over after paying my bills and spending money on things, I saved first. I set up an automatic deposit to my savings, then paid my bills and then spent what was left.

My savings rate was so high that there was not but so much left over to spend. I did this on purpose.

It meant I must not only spend less (a lot less), but I must also earn more if I want to spend more.

I started saving more liquid cash in my savings and money market accounts.

In order to get my savings rate higher, I had to cut subscriptions, payoff debt, and eat out less.

And there is a secret to my success. Shhh! But, I’ll tell you guys. The secret is this: I automate it.

Savings Year Monthly Savings Amount End of Year Total Savings
2013 $50 $600
2014 $100 $1200
2015 $150 $1800
2016 $250 $3000
2017 $333 $3996
2018 $1,111.04 $13,333.06
2019* $1,211.09 $14,533.06

I try to increase my savings rate by a minimum of between 1%-5% a year and even double or triple it, if I can. I just cut out everything. I spend as little on clothes as possible. I haven’t bought a car in almost 16 years. I don’t care. I’d rather save and be financially independent.

You can see from the numbers above that once I was introduced to Grant, my savings rate went through the roof and increased quite dramatically!

At the rate I’m going, I estimate I will have somewhere between $80,000 – $90,000+ after factoring in for life (cause things just come up).

And that is only if I continue on this path for at least the next several years and increase my savings by about 11% per year or around $1200 annually, which is a $100 increase in savings per month. I could decide to save even more over time.

I would then have enough savings in the bank to pay for 3-5 years of my expenses.

I estimated my FIRE number (25 x my expenses): $750,000.

Once I hit that or a certain number in liquid savings, I will then re-evaluate my situation.

WHEN I GOT INSPIRED BY MILLENNIAL MONEY

It happened around 2017. I like to read money articles, magazines and books. I like to study the self-made. Then maybe I can emulate their success.

I saw an article about Grant on CNBC in early 2017. I was intrigued to learn how someone could do this in just 5 years what most are unable to do in a 30 or 40-year career or even in a lifetime.

Once I read his story I was inspired to act. I was determined to get my act together too. I devoured personal finance (PF) books. I must have read at least 40-60 in the last 15 months alone.

However, I haven’t bought a book in about 3 years. Too expensive. I rent them all from the library.

I do have some books I own from the years I was buying personal finance books. I have a small mini-library in my home (just a medium-sized book shelf) full of all my PF books.

I feel that if you want to be wealthy, then you have to read. You have to pursue wealth. Your house should look like a Barnes and Noble, if you want to be rich.

And ditch the plastic, unless you can pay it off every month. Once you stop making those installments, all your money is yours and a lot of your money woes disappear.

However, for the first time in years I am allowing myself to buy a book and it will be Grant’s new book that is coming out in February 2019.

How do I know he has a book coming out at that time you ask?

Thanks for asking. I’ll tell you all about it.

MEETING MILLENNIAL MONEY

I went to Fincon, a financial conference where money and media meet, and Grant happened to be speaking at one of the workshop sessions.

I stepped in to see what he had to say.

He was awesome. I felt his passion for what he did. It was palpable.

He said blogging is a long game. Your blog and appearance should be clean and shiny.

Be unique, be yourself and tell your story.  Stand out from the crowd because the media will try to lump you in with all the other bloggers. Don’t let them.

Sell your feel goods. Feelings are what connect people to you and your blog.

Do you care about your reader? If so, be clear and transparent. Have a mission.

When I shared my story about having only $2.26 in my bank account it just one day exploded. I have done over 400 media interviews because of it.

90 days ago a firm offered me $4 million dollars for my site. I turned it down. I can’t sell my site. It’s my baby. There is more to life than money. It’s not the money. It’s the work.

If you want to be a blogger, make your posts memorable. Have personality. Be vulnerable. Be more giving. Show people that you are human.  Tell your struggles and challenges. Reveal things to your readers over time. Humanize your site. Be more open.

Screen shot your story. Make it unique so people can remember. Always start with a story.

Write lots of stories. Do your reps. Put in your time. Putting in the extra time to write 3 times more content means you connected the reader. Readers are looking for an emotional connection. And Storytelling.

I’ve written 1 million words about money. And I’m not done. Be distinctive.

This is the age of vulnerability and that is why digital podcasts are so popular.

At this point, I got the message. He was so passionate when he spoke I did not want to leave the session because he was so engaging.

I made a point to walk up to him later in the day and introduce myself and tell him how much I enjoyed his workshop.

He said thank you so much. I really appreciate that because it’s scary up there. Your like an island up there.

I also told him I did not think he should sell his website. I mean where I would get my feel goods.

I then gave him my card and he gave me his flyer. He was super grateful and humble when I told him I liked his speech. I felt and thought that he had a good personality and thoughtful disposition that was positive and hardworking.

And I was right. At the closing party, Grant displayed , yet again, his big-hearted and kind nature.

The DJ was packing it up for the night, but people still wanted to dance. He offered to pay the DJ (out of his own pocket to keep the party going). That was really nice.

That’s the type of people I need and want around me. Those with good character and that care about others. I want to be a good neighbor. And want to be around good neighbors as well.

After all, you never know when you may need to borrow a cup of sugar or need someone’s help.

Case in point, I had a close friend that needed some money fast in order to close on her house. I wrote her a check the very next day, with no other questions asked and she paid me back within 2 months.

My sister also many years ago was in a bind and needed to pay a debt. She said she needed $500 dollars. I wired her the money the same day. She said she would pay me back and I told her to forget it. After all she had done for me. I didn’t forget when there were times she helped me out. I had a chance to repay the favor, so I did.

I know some people out there may say it was just a DJ, but no. It was more than that. It was the fact that he was willing to dig in his pockets and spend money on hundreds of virtual strangers.

I have seen people not willing to give up a dollar, a penny even, not one red cent to help family members. Let alone a stranger. And this guy did it, no questions asked and without waiting for or expecting a thank you.

https://twitter.com/ptmoney/status/1046239732580188161

HOW I STARTED SAVING MORE AND SPENDING LESS

Well, there you have it. My story of how I started to save more.

You now know more about me than some of my close friends and family members do.

I’m not going to lie. I was scared to write this post, but if Grant can screen shot his bank account showing $2.26 in it, then I am willing to share as well.

I too lived at home longer that I wanted or planned to. I went shopping and spent recklessly to numb the pain. I felt I was failing at adulting.

I had to find a way to kick the habit because it was putting me in the poor house.

I started shopping with lists. I would make painstakingly long lists of clothes I wanted to buy. I would make myself wait 30 days before making a purchase. By then, I didn’t even want the clothes anymore.

To satisfy my cravings, I would at times (every few days or weeks) allow myself to go online to Nordstrom and put every item of clothing I wanted in the shopping cart. I once raked up a bill for $18,000 dollars!

However, I thought about my money or my life. How much in sweat would I have to toil to pay off that sweater that no one is going to see me in because I am too broke to go out?

By the time I would be able to pay off the debt (plastic fantastic), those clothes would be long gone and the interest would have made them way more expensive than the $18,000 I racked up just to buy them.

I did not buy one single item.

I proceeded to do this for about 6 months and sometimes I did it every day, in order to get it out of my system.

I have been cured of my shopping addition and clean and clothes sober for the last 5 years. Thank you very much.

I have never told anyone any of these things except my partner. He said do whatever you have to do not to spend.

I’m embarrassed to tell people that I used to do that, but whatever it’s my truth and I’m living in it.

I wasted so much money on clothes. You would not believe. For every event, I would go shopping. I needed a new dress or jacket or boots. I spent with reckless abandon to impress people that I didn’t even know, like or who didn’t even care.

Now, I never go on Macy’s website for longer than 10 minutes, I get what I need, and get out. I have bought very little and way less clothing than in the past. I rarely go to malls and no longer go to any clothing sites online.

I had about 600 items in my Amazon cart. Those items have been just sitting there probably for like the last 5 years. I was like forget it. I don’t need any more stuff.

I also notice when I don’t shop, I feel better. I get just as much joy in saving as I o spending. Almost. Let’s not go crazy now. I’m only human.

I started donating clothes and items all around the house. It feels good to purge all that stuff. It’s so freeing. It was cluttering up my mind and house. I don’t need a bunch of gadgets and new clothes and shoes. I would repair instead of replace.

I rarely go to the movies and almost never go on vacation. And if I do, it’s usually once a year.

I keep myself busy. I don’t like ideal hands. I find something productive to do. Even if, it’s just reading or cleaning the house.

Sometimes, I still get the itch to shop and spend, but I have learned not to scratch it. If the goal, is to be financially secure then sacrifices will have to be made. Hard work is required of anything good and important and it takes time. And hard work builds character.

And I am okay with not getting rich quick or overnight because I know anything truly worth having is worth the wait. The only way to really feel good about something is to earn it first.

I had to train myself on how to deal with large influxes of money and to keep my paws off of it. And much like the narrator said at the end of the Neverending Story, but  that’s  another story…

Entrepreneurship, Financial Freedom, Financial Independence, Investing, Self-Made Millionaires, Wealth

How Benjamin Franklin used 13 virtues to get rich

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“Tell me and I forget. Teach me and I remember. Involve me and I learn.” – Benjamin Franklin 

Benjamin Franklin is not only one of America’s founding fathers (known as one of the signatories the Declaration of Independence), but also its first millionaire.

He did this by investing in what he knew. That is how he built his fortune.

You can do the same to build yours.

I listen to what people have to say, but I always make my own decisions.

I research any industry I want to know and then focus on investing in what I know. I try to put my money where my values are.

I prefer consumer staples such as food, beverage, toothpaste, cleaning supplies, tissue, and other household items.

Companies like Proctor & Gamble, Colgate-Palmolive, Kimberly-Clark. Clorox, and PepsiCo.

You can find many of these companies included in many mutual funds such as any 500 index fund like the Standard & Poor’s 500 Index (S&P 500 index), the Vanguard 500 Index Fund Investor Shares (VFINX), the Fidelity Spartan 500 Index Investor Shares (FUSEX), the Schwab S&P 500 Index Fund (SWPPX) or the   T. Rowe Price Equity Index 500 Fund (PREIX).

I figured a good way to start my wealth journey was to learn about those that became wealthy.

Benjamin Franklin also created a list of 13 virtues to develop his character. This lets me know that your character is your destiny.

Here I provide you with his checklist. See which ones you can try to emulate to help you on your road to wealth accumulation.

THE 13 VIRTUES OF BENJAMIN FRANKLIN

In 1758, Benjamin Franklin published his essay The Way to Wealth.

Although, it was written 260 years ago, the advice still is holds up, even to this day.

Below is a copy of his checklist.

SPOTLIGHT ON FRUGALITY

My personal favorite is frugality because it includes all the other virtues.

Frugality is basically the will to spend money on what is important and avoiding spending on what is not.

Frugal is not being merely cheap or miserly like Ebenezer Scrooge.  See my post on Money Lessons I Learned from Scrooge McDuck. It is about saving money on things you do not really need.

Saving money allows you to put that money to work for you.

Imagine every dollar is a little soldier. What do soldiers do? They fight.

You have to fight for your money because everyone is trying to part it from you. Don’t let them.

Invest that money and each dollar (soldier) fights for you everyday 365/24/7. Even while you sleep.

FOCUS ON FRUGALITY

In this world, you’re on your own. Benjamin Franklin knew that. So, he set out to start a business in a field he knew. He was a printing apprentice and started a printing shop. He became an expert at that one thing and did it so well that people paid him for it.

He then reinvested the profits back into his business.

That is how he grew rich.

He knew to become wealthy, he had to ignore the charlatans or hype. He had to focus on himself and his spending habits.

And that is what you must do. Ignore the hype. Forget what everyone else says or thinks. Trust your gut.

FORGET THE FANCY SET OF WHEELS

You do not need a fancy car to make you happy. Ride a bike and get some exercise. Better yet, buy an inexpensive, older Chevy where the bumper looks like it will fall off any second.

Then people will be less likely to ask you for money, if they see you riding around in a clunker because they will think your broke, but it couldn’t be further from the truth.

It’s not that you do not like nice cars or can’t necessarily afford one. It’s that you choose not to spend your money on it. Sounds pretty good right?

And watch out for the hangers on. They tend to come around when your last name is followed by an M.D. or Esquire.

FORGET THE BIG HOUSE

You do not need a mansion to live in. You know what that does? It just causes you to spend more money to heat, cool, maintain, and furnish it.

You fill the home up with stuff. No one likes an empty corner. Every inch is piled high with stuff.

How is that stuff paid for? Usually with credit.

What happens if you need that money? For instance, homes need maintenance.

Do you know what the repair bill is for a roof on a mansion? Well, you don’t want to know. One thing we do know for sure is that it costs more than what you would spend on a smaller house.

What about PMI? Private mortgage insurance is what you must pay if you put down less than a 20% down payment. And folks, that money is on top of the insurance and a monthly mortgage payment. We aren’t talking chicken feed here. It can be hundreds of dollars per month!

What about property taxes? It can add hundreds or thousands to a monthly mortgage payment. That’s money that’s not working for you in the bank.

You want to be investment rich, not house poor.

Every dollar that goes toward the house, can’t be working for you in an investment account.

I know they say the value of the home will go up and your equity will increase as you are making the house payments. However, let’s not forget the 2008 housing bubble.

When that bubble burst, so did most folks equity. Foreclosure notices were going out in the mail all over the country. Many lost homes. And many have still not recovered.

FORGET THE DESIGNER CLOTHES

You know those people who say dress to impress. Well, that’s fine and dandy, if you can afford it. However, if you can’t swing it, then walk by the $400 clothing rack and head to the sales rack in the back. Forget sartorial superiority. Who wants to be the best-dressed poor person?

I now see more people walking around with designer purses today than I have seen at any other time I can remember. Who’s paying for it? Mr. credit card, that’s who.

I see people opening up store cards all the time.

They have so many different color credit cards in their wallet it looks like a skittles bag exploded.

Places are handing out applications for credit cards every, single day.

You must resist. Resist the urge to spend. Credit is seductive. The temptation is too great.

So you must decide, what is more important. Buying a designer’s clothing and paying for their summer home or funding your own future.

FORGET THE EXPENSIVE WATCHES AND JEWELRY

I read about an NBA player who had bought dozens of watches. And not just any watches, but Rolexes!

Just because. Well, hey, you know bosses got to be on time.

Do you know what those things retail for? Well, last time I checked, it could be anywhere from $2500 to $40,000 and up.

The guy could have started a college fund. He could have funded an entire small city of kids $1k college scholarships.

Who needs 30 watches? Someone who wants to know the exact moment they went bankrupt I guess.

FORGET THE EXOTIC VACATIONS

So you want to travel. That’s great. But unless you can afford it or do it on someone else’s dime (like for work).

You may just have to watch the latest episodes of House Hunter or any show on the travel channel.

I once read it is a great thing to go travel and see the world as it is a great education, it will only cost you: $25,000.

I think I’ll just read a good book on world travels instead and invest that money until it earns enough interest that I can pay for the trip with cash.

Here are some of my suggestions on traveling when your travel budget is on life support.

You want to see the northern lights in Iceland? See it on a YouTube video.

You want to go skiing in Switzerland, Aspen, France or Vail? Watch a travel show until you can afford it.

You want shopping sprees in Milan, Paris, Rome, New York’s Fifth Ave, or Rodeo Drive?  Focus on buying things that will appreciate in value. Clothes, once purchased, is money that’s burnt.

I know you watch the television shows and see all the families going to Disneyland or Hawaii. However, what they don’t tell you is how much it costs to go to these places. Lots of times the studio or the network is picking up the tab.

They do it for ratings. Because who wants to watch a show about people sitting on couches all day. They want to see the lifestyles of the rich not the broke and unknown. I say just stop watching those shows.

Focus your attention on earning and working. If your head is down working, you never can look up and notice what everyone else around you are doing.

FORGET FOMO (fear of missing out). It’s a myth.

I know plenty of people that go out, spend money, buy nice cars, big homes, fly to the islands, and go to lots of parties.

However, they are not the boss. They work a 9-to-5 just like everybody else. One missed check could cause havoc on their already precarious finances.

Many people are one paycheck away from being on the sidewalk.

Don’t be like them.

Practice the 13 virtues. Be frugal. Then you can live like no one else because you will actually be rich instead of acting like you are.

FORGET PRETENDING TO HAVE MONEY

Forget pretending to be rich. The only time bluffing works when it comes to money is at the poker table.

And you know what happens when the hand is over, the bluffing stops there.

So leave the bluffing at the table and check it at the door.

Remember that scene in the comedy movie Back to School with Rodney Dangerfield. He was a wealthy guy named Thornton Melon, but always said to his son: A man without an education is nothing.

There was one scene in the film where he was talking in class about being in business and all the things a businessman is doing to make it in the real-world.

The teacher disagrees with his assessment, even though he was coming from a place of information.

When the professor asks where to build the business after scolding Melon he replies, “How about fantasyland.”

When it comes to your money you cannot afford to live in a fantasy. You have to keep your feet planted firmly on the ground and your actions based in reality.

Earn money, save it, invest it, and get rich slow.

College, Credit Cards, Financial Freedom, Retirement, Saving, Wealth

How I went from $5k to a six-figure 401(k) in 6 years

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“It’s not your salary that makes you rich, it’s your spending habits.” ― Charles A. Jaffe

It seems like every other day I read about some new 401(k) millionaire.

I think that’s really great, but you know what I always think about when I hear about newly minted 401(k) millionaires; I think how that money is all on paper only. You cannot access those funds without cashing out. Making this investment illiquid.

There is nothing wrong with that except if you need or want the money now to spend or invest. Tapping a retirement account before age 59 ½ comes with a 10% penalty and a 25% income tax rate. Ouch!

Therefore, I focus on earning more, saving more, and investing more all at the same time.

However, years ago I thought to myself why not also focus on getting a million in investable assets.

That’s when I set about focusing on what I could do to get to $1 million in my retirement account.

After doing some research, I found that millionaires did the following:

  1. Invest at least 20% of their income
  2. Spend less than they earn
  3. Read about finance

So, then I determined that I would have to make some sacrifices, if my goal was to get to $1 million.

First, I looked at what it would take to get there.

I learned that a $100,000 could turn into $1 million in 30 years at an 8% rate of return or higher and that is a great return on investment (ROI). Since, the stock market has averaged a return of 9.8% over 90 years from 1926-2016, then I figure 8% ROI is not an unrealistic percentage. And that is without adding another dime to your portfolio.

Imagine what life would be like if you no longer had to contribute to a 401(k). Pretty sweet. All that money now comes back to you and you can put it in other places such as a college fund, real estate, or seed money to start a business.

Now, I am not saying not to continue investing. Especially, if you get a match from your employer. That’s free money. Don’t give that up. It’s just good to have and know your options. Just FYI, I am still investing in my retirement accounts.

This is how I went from $5k to five zeroes in retirement accounts in just over 5 years.

DECIDE TO GET TO SIX-FIGURES

Once I made the decision to get to $100k, then I had to figure out a way to do it.

I decided to stick to a conservative estimate of a 6% ROI. That would equate to investing $12,585 per year. That works out to $1,048.75 per month or $484.04 bi-weekly.

Salary of $35k-$100k means you would have to put in anywhere from approximately 13% to 36% of your income in investments to get this figure.

COMMIT TO SAVING

I had to then commit to the idea. That meant some belt tightening. I looked for ways to save. I cut anything that was not required for me to eat, sleep, or stay healthy. I know financial gurus say it is best to focus on earning. And while I agree, I also know it is easier to cut expenses than it is to earn more.  Therefore, these things had to go:

  • Cable
  • Subscriptions (magazines, books, etc.)
  • Buying clothes (waved bye-bye to this)
  • Vacations
  • Nail salon visits
  • Restaurant Meals (ate out less)
  • Movies
  • CD’s, DVD’s and books (rented from the local public library for free)

This freed up quite a bit of money. Anywhere from $200-300 per month. Yep, that went to saving.

Then I turned my attention toward my debt. I was paying about $800 per month to service debt. Yikes! Even though that included different kinds of consumer debt (personal loan, credit cards), it was still a huge monthly expense. So, I decided to make some changes.

I wanted to stop paying so much in interest. That money could go toward saving and investing after all. I figured I could either pay it off, see about getting the interest rates down or both.

I called up a couple lenders to see if they would lower my interest rate based on payment history and credit score. They said no. And here’s a word of caution: after calling one lender, my credit limit was lowered. That’s right. You have no say or control when you owe money. The lender has all the power. Therefore, it is your job to pay off your debt so that you can have all the power.

Your credit limit is very important because this also affects your credit score.

Say you have a $10k credit limit and you owe $1k. That is a 10% credit usage. Very low. However, if your credit limit is slashed by more than half to $2k, then that $1k balance becomes a 50% credit usage. This would increase your debt ratio and lower your credit score.

And we all know how important your credit score is. The credit bureaus – Experian, Equifax, and Transunion – hold a lot of weight in the eyes of lenders. If you have a low credit score, it can affect whether or not you get a job, are able to buy a home or even a car. Credit scores below 620 usually mean you pay higher interest rates. On a mortgage, that could mean the difference of paying $10,000 to $100,000 in interest! No pair of name brand jeans, destination wedding, or fancy exotic vacation is worth a $100,000 dollars!

Going back to saving on credit interest, I had to figure out another route. Therefore, I did two things. One, I paid off all the low balance credit cards. Any lender I owed less than $500, I paid them off. Then, went after the ones under $1k and so on until I only owed two lenders.

That’s when I used the 0% balance transfer deals I had. I was able to put $10k at 0% for 18 months and another $5k at 0% for 12 months.

I also paid off my $20k personal loan! I had previously paid off my car loan. See my post Outrageous loan terms for Porsche that even the rich can’t justify about how and when I paid off my car!

I went from spending $1k to $1,100 per month to spending $500 and saving $600 more per month!

MAKE YOUR MONEY WORK AS HARD FOR YOU AS YOU WORK FOR IT

I was able to put that in my retirement accounts. I went from investing $450 a month with an employer match to investing $1,050 to get to the required $12,585 annually needed for $100,000.

Once I hit this goal I started looking for other ways to save. Mentally, it was a great feeling to know if I never invested another dime, that I could still end up a 401(k) millionaire by just letting my money sit and work for me while I was sleeping.

Then, I turned my attention toward other goals such as paying off all debt, building a 12-month emergency fund, and building capital to purchase an income property.

I also started saving more and looking for higher rate saving accounts because it’s not that the sky is falling (shout out to chicken little); I just need a better saving rate because inflation is coming!

Thus, the purpose you need to invest. You need assets that will beat inflation, which is anywhere from 2-3% per year.

I prefer to pay off debt first. All of it as fast as you can. If not, then prioritize.

If you know that your credit cards are going to charge an Annual Percentage Rate (APR) of 11.99 to 29.99%, then this has to go.

If your student loans and mortgage are charging you 7% or higher, then you may want to focus on getting the amounts down to under $50,00 or $100,000 respectively. That way you pay less interest over the life of the loan.

If possible, I say pay them all off before age 50. Then all your money is yours in your golden years. If this is not feasible, like, say a 15-year mortgage, then you may want to focus on beefing up your savings and investing more if your loans are charging 5% or less.

Either way, automate your savings. Can’t spend what you can’t see. Pay yourself first. You do this by putting money aside in savings as soon as it comes in and not the other way around. Paying bills first and then saving what is left is a recipe for disaster. Try to aim to invest 20%, save 30%, and use the other 50% for living expenses. If you can aim to save 40-50%, and then you can invest more money to get out of the rat race sooner.

Investing 20% or more in retirement and saving 30-50% would mean you are saving and investing 50-70% of your income. At a 50% savings rate, you could turn every dollar into two. At a 10% compound interest savings rate, you could double your money every 7 years! Now that’s what I’m talking about. Turn one dollar into more.

Remember this: It’s not what you make, it’s what you keep that will make you wealthy.

Automobiles, Financial Freedom

Outrageous Loan Terms for Porsche that even the Rich can’t Justify

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Want to finance an exotic car? No sweat. It will only cost you $157,944.33.

That amount is based on a Porsche that costs $144,750 with loan terms of 144 months, with a 3.3% interest rate, and $14,475 down payment.

Yes, you read that right. Financing for 144 months is the equivalent of 12 years! Just ridiculous.

Especially, considering that a car depreciates in value the minute you take it off the lot.

For example, a $100k BMW 6 Series after five years will likely only be worth $40,000 in resale value. Therefore, over that time period you have paid over $70k. You would still owe approximately the same amount as the current resale value and it would be worth even less in a few more years.

What made me look into this was listening to talk on a radio show I heard about being able to finance a $100k Porsche over 8 years. I was like that can’t be real. Oh, but it is. The people on the radio said that people were doing it and taking out these loans. I was like that’s insane. You can buy houses in different countries all over the world or in certain parts of the United States for that.

If you are so set on having an exotic vehicle, then I think the best course of action is paying cash in the form of a cashier’s check. If you have to finance a $100k car, then that sounds like a red flag that you can’t afford it. Instead of spending $100k on a car, why not invest it? Over a period of 12 years with a 7% ROI you could have $272,641 in your 401(k). Even without investing another dime, you could be a millionaire in about 20 years. Is that car worth a million dollars? I don’t think so.

Who are these people that want to finance a $100k car? The only one I have ever seen was on a Canadian television show called Til Debt Do Us Part hosted by finance writer Gail Vaz-Oxlade. In one episode, a married couple had accumulated a significant amount of debt, but what made this episode stand out was the fact that the wife wanted a very fancy car and was thinking of financing over $100k to get it. Mind you, the couple had kids and debt, so where was this money coming from?

Here is a sample of how the show went on to explain to viewers how people are spending and where the money comes from: credit. If you want to order Gail Vaz-Oxlade or other financial books, then look to the side or go to the top of my blog page and click the Amazon banner link.

Who are these companies that are likely to finance these amounts? BMW Financial, Audi Financial, Porsche Financial, and the like. See the screen shot.

And not only do these companies allow you to finance, but expect a down payment on cars with six-figure price tags.

I have had my car for more than a decade. Actually, it has been 15 years. My car has been very reliable. Once I paid it off I decided I did not want another car note.  That was almost 10 years ago. Here is a snapshot below of my last payment. It may become my screensaver.

I have been able to do so much without having that payment hanging over my head. I decided to start paying off my credit card debt, invest more, get Lasik, join a gym, and get another degree. Basically, I invested in myself. I do not regret not purchasing a new car for one second.

Here is my take on it. Why stretch yourself financially, for a car you desire? Ask yourself if you would still be willing to do that, if the most popular car in the world among the money elite was a Honda? Financially savvy folks know that a fancy set of wheels is pricey in more ways than one.

I was told that a rapper was discussing online about owning a Bugatti or some other luxury vehicle that has three radiators. If one goes down, it costs $90k to replace. Gulp! That’s a hard pill or repair bill to swallow.

I heard an NBA player say that he knew people that would buy Bentley’s, but then would stop driving them because they were not meant for everyday driving. The wear and tear was ridiculous.  Owners were shelling out tens of thousands of dollars on maintenance. Don’t believe me. I read an article by Forbes about unreliable luxury cars.  Apparently, I am not the only one who has noticed that every luxury car that glitters isn’t gold, but merely sold to those willing to fork over their hard earned cash.

That means you basically are driving a house on wheels for the amount you paid. Then after all that, still have to worry about thousands of dollars in repairs. And since this isn’t your run of the mill car, you have to go to specific repair shops. Usually, this means repeated trips to the dealership. Who has time for that?

Luxury cars seem not only to come with a high price tag, but also lots of headaches. I say this: if you can afford the monthly payments, maintenance, and can hire a mechanic or chauffeur to repair or take your car in for service at a moment’s notice, then you can get the car. If not, you’re better off sticking to something you can take to Jiffy Lube.

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.