You wanna know what’s a big life goal of mine? To die a millionaire.
That might sound strange since I can’t exactly take my wealth with me when I die, but my goal isn’t really about me. I want to die a millionaire so I can bless others – my children, my children’s children, (hopefully) my children’s children’s children, and the many charities that I hold dear to my heart.
If I could have a death wish, it would, in fact, be that.
But let’s get real, I’m 32 and late in the game of wealth building and I’m working with a less than average income to build wealth with. Some folks tell me it’s impossible to get wealthy because of these mistakes – but if you know anything about me, I love proving people wrong about me.
I love a good challenge, and I’ve been working hard to get my feet on the ground with this whole wealth-building thing, and such a lot folks want to know what my plan is and how we’re going to make my life goal come true.
Pay off the House
Okay, so I’m putting this one first because for us, paying off our house as soon as possible in our opinions makes sense. We purchased our home in 2011 when our area was still in the Recession. It was also a horrible foreclosure so we got an amazing deal on it.
So the reason for us paying off our house and including it in our wealth-building is because it’s our largest asset. We purchased our home for just over $89k and today it’s valued at $225k. So in just eight years, we’ve managed to increase our Net Worth, with very little work on our part.
And without a mortgage payment every month, we can increase our retirement account contributions every month, giving us more power to invest in our future. Also, we really want real estate to be a part of our Net Worth portfolio, so by having our home paid for, that will free up money to save for another property in the future.
Okay, so now we’re in the meat and potatoes of where most of our big planning is currently going. We’re slowly investing in various mutual funds in order to increase our over net worth. We have these mutual funds in a Roth IRA through Vanguard.
And since I know this area is really tricky and even scary to some (it was terrifying to me just two years ago, so I totally feel you darlin’!), I wanted to list out some resources that I suggest you check out that helped us:
The Legacy Journey by Dave Ramsey – okay, so I love Dave. I mean if it wasn’t for his The Total Money Makeover book we probably would still be in debt. BUT, I will say that in the area of investing, Dave doesn’t give a whole lot of concrete information. Even still, I think that this book, The Legacy Journey will at least help you get motivated to start investing. It’s a great read, but it is lacking in practical “how-to”. Which is why I recommend reading…
Unshakable by Tony Robbins – okay, so this one will educate you and then educate you some more. There is so much in the world of investing that I didn’t even know/think about and this book will shine a big ol’bright light on those areas. This book can be a little intense if you’re brand new to the world of investing, but I still encourage you to read this one as it will get you some practical know-how and knowledge that will help you make wise investment decisions. The only downside to this book is that in typical Tony fashion, he’s pushing a particular financial company. Other than that, it’s a fantastic and educational read!
Investing Made Simple by Mom and Dad Money – this is my FAVORITE resource! Seriously, it’s a $19 .pdf and I’d have paid more than double for the information in this book (and no, I’m not an affiliate – this is just a great resource if you’re totally clueless with investing like I was). It’s a super simple, straightforward, easy-to-follow workbook that is designed to get you started in the world of investing. He breaks everything down for you in easy-to-understand steps and language. For real, you’ll feel like you finally understand this stuff after completing the workbook!
In the photo below you’ll see my target portfolio to the left (that I figured out using the workbook by Mom and Dad Money mentioned above) and to the right, you’ll see what my actual portfolio looks like….uh, yeah it’s off. But that’s because we’re still working our way towards the 15% rule (mentioned below) and so I’m still building up enough funds to purchase the bonds I need in order to balance out my asset mix.
I share this with you so in case you’re behind on saving for retirement, you’ll see that you’re not alone. We still have a lot of work to do in the world of investing and building wealth, but I will tell you that it’s been a blast learning all of this stuff and putting that knowledge into action!
I use Vanguard for our retirement accounts simply because I love how easy it is to use, but you can totally use whatever service works for you and your family! The other service I use for small investing is Acorns – they work like one of those “keep the change” savings accounts. They invest your spare change and so you’re money gets to work even harder for you! To check out Acorns, head here.
The 15% Rule
Okay, so we aren’t technically here yet but plan to be once our mortgage is officially gone. The 15% Rule is basically just taking 15% of the income you earn and contributing it to your retirement/investing accounts. The thought process behind this is that it makes your money grow faster and keeps you from just spending it willy-nilly.
Now, here’s the thing. You know I’m all about living a real life on a budget – so there’s really no magic rule that’s going to guarantee that you become a millionaire. I think the 15% margin is a good target to shoot for but it may not be the best one for you at this moment.
Like if you’re deep in debt and don’t actually have 15% of your income to save. In that case, you’d need to free up the money in the budget by paying off the debt so you can hit the 15% target. Also, if you’re like my husband and I and are late to the game, you may actually need to put in more than the 15% in order to increase your grow earning potential.
But either way, for my husband and I – our goal is going to be to max out our contributions limit for the year. Or at least for now that’s the plan.
Side note: if you don’t already track your budget and Net Worth, you might want to try Personal Capital which is a free online budgeting software program where you can easily see and track your budget and Net Worth simultaneously.
Okay, so if you’re wanting to die a millionaire like me, here’s the nitty-gritty of what I suggest you do. Keep in mind I’m just a financial coach, not a fancy CFP so you should definitely use your best judgment before just taking my advice.
- Save up a starter emergency – meaning at least a $1,000 (more info here).
- Pay off all of your consumer debts (cars, credit cards, student loans, personal loans, wedding loans, etc.)
- Save up a 6-month emergency fund – meaning 6 months of living expenses (your bare-bones budget – what you need to live on, not what you need to buy designer clothing).
- Start contributing at least 15% of your income towards your retirement accounts (Roth or Traditional IRA/401(k)/Pension plan, etc.)
- Start working your way towards paying off your house – get aggressive about it like you did paying off your debt!
Okay, so those are the steps that I recommend you take towards building your wealth. Yes, I know that my husband didn’t follow these in order – again, our starting mortgage was so low that we realized that we could increase our Net Worth so much faster if we paid off the house and started applying our mortgage payment towards the house. Go with what you know to be the best for you and your family.
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