Posted by M.S. on June 4, 2009
If there were 8 simple rules you could follow that would help you build a fortune and a satisfying life, would you be interested to learn about them?
Just in time for Summer reading, I recently came across a very inspiring book written by Dwight R Lee and Richard B McKenzie called “Getting Rich in America“.
I highly recommend this book because the focus of the book is on “ordinary people” like you and me, people of modest means and talents and how they “made it” through simple steps taken without sacrificing their quality of life.
I believe wholeheartedly in the idea that if you want to accomplish something, model someone that has already done it. This book uses real life examples of people that have accumulated enough money to be financially independent and tells you how to do that too!
They went from Frugal to Rich!
Here are the 8 Simple Rules featured in the book:
1. Think of America as the Land of Choices
2. Take Compound Interest Seriously
3. Resist Temptation
4. Get a Good Education
5. Get Married and Stay Married
6. Take Care of Yourself
7. Take Prudent Risks
8. Strive for Balance
The quote from Ben Franklin at the front of the book explains it well. “The way to wealth is as plain as the way to market. It depends chiefly on 2 words, industry and frugality: that is neither waste time nor money, but make the best use of both. Without industry and frugality, nothing will do; and with them-everything!”
So basically, that means work hard and be frugal! If you save your money and invest, it will build wealth!
Look at these thought provoking questions the authors pose to help you on your way to getting rich!
Buy it used on Amazon.com or request it for FREE at your local library!
It is well worth your time!
Posted by M.S. on May 12, 2009
As we mentioned in the last post, I’m Drowning in Debt, What Do I do Now?, there are 2 components in the plan to eliminate debt. They are: spend less of what you currently earn and make more money.
Today,we will look at the expense side of things. Remember, this is about building an exciting future, not about dull budgeting and deprivation!
To keep you motivated, I highly recommend cutting pictures from magazines so you know what you are aiming for and to inspire you to stay on track when the going gets tough or you feel deprived.
Long ago, I cut out a picture of a beautiful home as a short term goal and a beautiful beach as a long term goal. The beach photo reminded me that I want to be able to sit on the sand some day and NOT work hard every day.
I decided to sacrifice spending now for financial freedom and life at the beach later! Now that you know what the goal is–you can determine how to get there!
Simply–Eliminate every expense you possibly can!
- Drive an inexpensive car Save with a Cheaper Car.
- Eat at home and bring your own food to work. Muffin Calculator
- Quit buying junk you do not need!
- If you need clothes, buy them on sale or at the thrift store or at a garage sale. I buy almost brand new clothing that way! Don’t knock it till you’ve tried it!
- Adjust the the thermostat to save energy costs.
- Cancel Cable TV.
- Do not smoke!
- Get your books and movies FREE from the library!
Cutting these expenses will give you cash to pay down your debt, so you can begin to save and invest.
If that sounds extreme or harsh–ask yourself these questions: Do I really want to be rich or don’t I?
Will spending on this item get me closer to being rich or keep me poor?
You get to decide!
Posted by M.S. on May 11, 2009
According to recent news reports, the average American family has credit card debt of over $8,000. You will NEVER get wealthy carrying this kind of debt, because your money is going to paying off your past rather than building your future! Let’s create a plan to get rid of it NOW.
Did you know that when you have this type of debt, the magic of compound interest is working against you, rather than for you? Face it, you are making the credit card companies rich–not yourself! That should the incentive to get moving on this!
Start to turn things around right now and gain some financial peace of mind.
First and most importantly, STOP using your credit cards now! Don’t make things any worse than they already are! The next step is to determine what money is coming in and what is going out each month. Where do you stand on both sides of that equation?
Let’s look at the income side of things. How much do you have coming in each month? Add up all salary and wages, child support and any other income you receive.
Then, determine what you have going out each month. Be honest! In order to see exactly what you owe, add up all credit card bills and the all bills paid through your checkbook. Once you you know exactly what is coming in and what is going out, you can develop a spending plan. If you find you are spending more than you have coming in, you are not alone! It is reported that over 40% of American families spend more than they earn each month!
Once you know exactly where you stand, you can focus on the 2 basic sources for the cash you need to pay off debt: spend less of what you currently earn or make more money. We’ll examine the ways to do both of those in Part 2.
Posted by M.S. on May 9, 2009
When our children were born and people wanted to get a gift for the baby, we asked everyone to give the baby the gift of money that we would invest for them.
We knew the immense power compound interest would have over time and wanted our offspring to take advantage of that fabulous wealth builder. Most people honored our wishes! We set up a stock index mutual fund along with a general stock mutual fund for each child and start investing.
When the children were old enough to start working, we wanted to really encourage their frugal living and investing, so we made them an offer they could not refuse! We said for every dollar they contributed to their savings, we would match it–so they would double the amount of money they had to invest!
We set up a spreadsheet that we reviewed with them periodically to demonstrate how much richer they were getting. They became much more enthusiastic about saving their hard earned money after they started to see how their investments were earning them “free money” they didn’t have to earn by working.
On the day our children graduated from college, we switched the entire portfolio into their name! They EACH had a nest egg of over $25,000 to begin their adult lives at 22 years of age!
That’s a whole lot better than a bunch of smashed up old toys and NO money!
Wouldn’t that be a fabulous graduation present for your child too?
Posted by M.S. on April 26, 2009
In 1977, after having just gotten married after graduating from college, we were DEAD BROKE– and we didn’t intend to stay that way for long!
We both have degrees in Business and learned that through hard word, perseverance and frugal living it is possible to save and invest to build wealth, especially when you start young.
Our quest to get rich began when we had a fateful conversation with a friend of ours named Pat. In the course of visiting with Pat, he casually mentioned that he needed to drive over to his 4 investment properties and pick up the monthly rents! Pat was the same age as us, 23, and he already owned 4 duplexes! We were stunned! How could this be??
Over the years, I learned something that that has served me well! When I see someone accomplishing something I would like to do too, I ASK them directly– How Did You Do That?? So I asked Pat to explain how he accomplished this amazing feat!
Pat said– It was easy! He told us he saved like crazy by setting a very strict budget based on the money he made at his job at an insurance agency and, because he wanted to accomplish his goals quickly, he supplemented his income by working at his family’s sweet corn business- so he could save more.
Pat’s family had financed all 5 children’s college educations through the selling of sweet corn at a farm stand on the side of the road in the summertime! They all worked very hard and made lots of money that was split between each child!
Pat decided to defer his spending and build his wealth NOW by saving a large percentage of what he earned and use that money as a down payment on investment properties. When he purchased a property, Pat would move into each duplex, so it was considered owner occupied and he only needed to put 10% down. He then would repeat the process!
He’d save the money, move into the property, live there while he continued to save for the next property and buy another property and move into it! Then, Pat rented the entire property he had just vacated. He did that 4 times!
We said WE CAN DO THAT TOO! And we did it!
While aggressively saving money from our jobs, we also took on piecemeal assembly work for my company that we did at home on the weekends so we could save even more! We didn’t sell sweet corn, but we utilized the same concept. Take on extra work and save all that extra income!
At the end of our first year, we bought our first piece of real estate!
We were on our way!
Posted by M.S. on April 24, 2009
When we were married in 1977, after graduating from college, our entire savings was $500.
We promptly spent that $ 500 on a used and functional (but very ugly) pea-green colored Plymouth Duster car. You know the type—similar to the one on the Dukes of Hazards. The “ugly” car worked fine and got me where I wanted to go. It wasn’t pretty and it wasn’t new, but it worked.
My husband was a salesman, so his company gave him a car. So—at that point we had 2 great cars at a total cash outlay of $ 500. Not bad. But, now we were BROKE.
Both my husband and I had majored in Business is college because it gave us a marketable skill (we could get a job) and it would help us understand the workings of personal finance and building wealth. We learned that rich people do things differently than people that were always struggling to pay the bills.
The # 1 thing that has influenced ALL our buying decisions is this: Whenever possible, spend your money on items that will go UP in value—not on things that go DOWN in value. Thus–the $ 500 “ugly” car. It would have been throwing money in the garbage can to buy a brand new expensive car! We wanted to BE rich– not just LOOK Rich!
Our goal was to purchase real estate as soon as possible to build equity and have a place of our own. That required some serious saving for a down payment. We figured we needed to save more than 10% on a $ 70,000 purchase price for all the costs . That meant we would need to save approximately $ 12,000 by the end of ONE YEAR–that’s $ 1,000 a MONTH.
Considering we were each only earning about $ 14,000 a year in 1977—that was almost 50% of our pay we wanted to save!
AND WE DID IT!
Not only did we do it ONCE—we repeated that procedure 3 times in a 5-year period!
The primary motivator behind our intense saving effort was we did NOT want to rent an apartment more than one year—since the rent money was making the landlord rich—not us.
We bought duplexes rather than single-family homes because we could own, rent and control a larger value property. We would rent half the building, until we moved out, then we’d rent it all, so the tenants were paying the mortgage off! What a deal! Frugal to Rich!
