Reduce Debt Increase Wealth

Start Building Wealth

March 31, 2024 MIsterchuck Season 5 Episode 212
Reduce Debt Increase Wealth
Start Building Wealth
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Show Notes Transcript

How to get started building wealth, again lost word file so no links information.

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Charles McDonald:

Hello, I'm your host, Mr. Chuck, I retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction, to achieve financial freedom takes commitment, confidence, determination. Start building wealth. How do you get started building wealth when you come from less than rich family building while start with getting your debt under control and increase savings, I have links in my show notes to two articles. They don't say that directly. But that's basically what they're saying, building wealth. If you're an investor already, and you're a day trader, and you're looking for tips on how to invest, this is not for you. So you can just go away right now, if you're somebody that's in the process of paying off your debt, or maybe you're already got that done, and you're still wondering how to build wealth, it comes down while getting out of debt is a very helpful tool in in your starting point. But if you never had much money in the past and your family was relatively poor, while let that's up to you to decide, you have to change your mindset, he got to quit thinking negative about everything, he needs to have a more positive outlook on life, a positive outlook on your job, a positive everything. And it starts with doing that. First, you have to be positive. And you have to know that you can achieve whatever goals you set for yourself. And it's just a matter of thinking you can do it. And over time, you will figure out a way how to achieve your goals. And that's really the first step and to building your wealth. That was really my first step and finally deciding I have to get my debt paid off. And I put my mind to it. And I figured out how to do it. And then I did it. It's the same principle was building wealth. I have two links in my show notes. One is talking about the principles building wealth. And the other one's talking about the fire movement, financial independence retire early. F IR E, they both are doing exactly the same thing. How fast you build your wealth is dependent ends on how much control how much are you willing to put aside, buying those things you want today focuses on only paying for the things you absolutely need, and then saving the most maximum amount of money possible, and then putting that money to work for you. That's how you build your wealth. Whatever your goals are, if your goals is have $5 million, when you retire and you're 20 years old, that's a real attainable goal, you could maybe have even more than that. If you're 60. And your goal is to have$500,000 And you'd have zero and you got massive debt. Maybe you can do it, he can get part of that. If you get your debt paid off. I did I was in my 60s when I decided to do it. And you can save up some money before you retire. So that you can live a better life, your team can meet that goal. Wealth is a matter of what you determine it to be. You don't have to have a billion dollars. You don't have to have expensive cars and a big fancy house or a yacht or anything like that. Wealth is what you want it to be. have enough money to live comfortably through your retirements, have enough money to pay for your children's college education. If they want to go to college, have enough money to take care of your grandchildren maybe and to pay your bills. That is plenty of money that you would be consider financially wealthy in my book, and you'll be much happier with lifestyle. Now if you want to make massive amount of money that's possible, but you got to do more than work for somebody else. So I'm not going to get into that right now. Let's start with the basics. Building One Wealth is a goal that many people aspire to become often seem like an overwhelming task. It takes time, effort and discipline to be successful with this goal. So don't be lured by the get rich quick schemes. And they could too good to be true opportunities that can send you down a dangerous path. The good news is there are principles and strategies that can help anyone build and preserve wealth over the long term. And the earlier you start putting these into practice, the better your chance of success. Before before we outline, it starts with one you got to earn money, you got to make money somehow, granted, it should be through a legal

Unknown:

proposition, through a legal job, or business opportunity.

Charles McDonald:

First thing I do is earn money. And you need to earn enough money to take care of your needs, and have some more to set aside for savings. That's step one. Get yourself a better job. Now, the mindset part of this is when you're thinking like a millionaire, let's say, the mindset if you're positive about your job, you go to work every day, you're positive, you're good influence and other people. You do your homework on market research on what your job pays on a national average. And you ask yourself, you ask your boss for a pay raise and you give him the facts. This is the national average is X amount, I think I'm way underpaid, I could use a 20% pay raise, ask for more than than what you really want. Because that way, you might get closer to what you want. So if you want a 20% Raise, ask for a 50% Raise, you might get a 15% Raise, but you have to be pro active and everything you do take the extra step, go the extra mile for him Boyer in though appreciate it and ask for that raise a particular appropriate time. Maybe right before they're given out pay, raise, ask for more. And never hurts. What's the worst they can do say no worse they could do as far as you do what you enjoy, do what you're good at that through something that's going to pay well, hopefully you have enough education to do those things. Whether it takes a high school education, not everything takes a college degree. Not everything needs to be a formal education, maybe you have high school with some technical school schooling to get and that got you into field you enjoy enjoyed doing that maybe you don't want to do that your whole life that was a good end to that field. Now you could take some Mike courses on management or whatever part of the field you want to move into. So that's how you do it. And make sure you make enough money. And don't overspend is basically here. We want to pay for our needs. First, try to keep them in allies as much as possible. And then save as much money as possible. You got to set your goals. Your first goal is you're gonna save for your retirement or save money putting extra money aside for your children's education, whatever the case would be, he got to start doing it from the sooner the better because it takes less money at a younger age, to have more money at an older age. I know that doesn't sound correct. But when I hear these big financial planners on the radio saying they saved $2 million. Well, I hate to tell you, they really did not save $2 million, they may be saved $250,000 and invested over time in there grew to $2 million. That's a big difference than saving two. If you want to save $2 million, you have to make more than $2 million and pay taxes and whatever in order to save that much. You want to save as much as you can invest it and make the money work for you. And over time it will grow into a larger number. track your spending at least once a month for at least a month. Track forever the rest of your life. Find the fat and trim it out. Look for things you don't need anymore. Look for things you don't use anymore. Get rid of it, trim it down, look for better prices on all those things. Set a savings goal how much you want Gonna save how much you want to save per month per year, things like that. Put your savings on automatic, if you know that you can transfer$100 a month into your savings with no problems, do it as soon as you get paid. So if you get paid weekly to $25 a week, if he had paid twice a month $50 Do it right away and put it on on a mannequin, you will never miss it. Once you have a couple 1003 four or 5000 in your checking account, you have to have an emergency fund that's important. But you want to keep your emergency fund down unless you're still paying off debt, then you want to build it up and then apply it to your debt. Right at that point in your life, it's not that important, you get a high yield savings, that once you have your emergency fund build up to three or $4,000 and your debt is getting under control almost paid off, then you need to look for either a high yield savings account, or a money market fund that pays a higher rate of interest. Put the money to work for you. That's the main point I'm trying to get on once you build up your emergency fund to have at least six months worth of your expenses. In their case, if something bad would happen, you can get by for six months, any money above that you can start investing in the stock market, I would then do it in the lumps of $5,000 save up some money. If you don't know how to do it, get yourself a financial advisor that somebody is going to work for you. He can tell him what your goals are, we can set a plan, he can set up a regular routine, where you're putting money into your investments on a regular basis. He wants to reinvest all your dividends and interest, and you're investing for the long term. If you're 25 or 30, you're gonna retire at 65. You long term, all your dividends, all your interest that you earn will be reinvested, that will grow, you're adding to it, the stock market value goes up the value of your shares go up, you've got more money, more money, more money. Now the stock market goes up and down. It's not a nice, even straight line up and continuous, they'll go up for a while and then I'll drop that did drop below what you got in there. If it go up and drop up and drop, just don't pay attention to that because you're looking at 35 years, you're not looking at six months or a year or even five years, you're looking for the long term. That's how you're going to build some wealth that you may have enough to pass down to your children. When you are no longer in this world. Then this article goes through stocks, bonds, mutual funds, exchange traded fund EFT, but another part of building your wealth is protecting what you already have. And you do that through insurance, life insurance to protect your income if you die, then the life insurance where we replace your income, at least be a lump sum. But your your spouse and family would have money available to pay some bills that generally you were paying based on your income, minimize the impact of taxes, do tax planning, that's why the 401 K through your employer is important, because that's all tax free. But you pay taxes when you draw it out. So while you're not paying taxes today, in the next 40 years, when you retire, you could be paying a whole lot more taxes. So tax planning overall based on what you have, and what you earning, not based on what you think you're gonna have. Then it's never it's always changing every four or five years because tax law change this change. The amount of money you have will change. It's a never ending proposition and that's something you always have to do. Manage your debt and build your credit. You're not going to build wealth if you have too much debt. Managing your debt is you have to have a mortgage to buy your home because you need a place to live. You need to have a car loan As you need a vehicle to go back and forth to work and get around, that is okay. The debt you don't want as a whole bunch of credit card debt, that's high rates of interest that's hard to pay down, you get behind you carrying a balance. That is the debt you don't want personal loan debt. All those thanks, build your credit is just pay all your bills on time. And you're gonna have a decent, pretty good credit score, have one credit card that you open up in your 20s, and you leave it open, use it occasionally, once a year or something, make sure don't have an annual fee. And keep it open until you're in your 50s or 60s. And you'll have great credit because you have a long term lender, that one credit card, they count that counts towards good credit, hey, should you pay off debt or invest? I kind of look at this depends where you are in your life. If you have a 401k through your employer, and you have a lot of debt, yes, put money into your retirement plan, you got to do that you got to invest there. And you got to do the maximum that your employer is matching, while you're trying to pay off your debt and get your data under control. Should you borrow money to invest? Absolutely not. Don't even think about it. Because if you borrow money invest it and you lose it through that investment, you still owe that loan, you're in bad shape. And the rest of the article, they talk about how much you need to open up a mutual fund and those type of things. The other article I have is the fire movement, retire early financial independence, retire early movement. It's been around for a while I talked about it a year or so ago. And their main focus is minimalistic, live on the least amount of money possible. Push that means if you live in your parents basement, and you save the maximum amount of money you can save. If you're if you're married, and you and your spouse each make 100,000 That's 200,000 income, you don't pay for rent, you don't have rent, or you have a relative lending expensive grant at a one bedroom, the cheapest thing that you can find that's in a decent area. And you take public transportation, you don't own a car, you don't go out and spend your money, you you work and you come home and you make your own food and you buy some clothes, you don't go overboard on anything. And you save a maximum amount of money as possible. Your biggest expense is going to be income taxes, I'm gonna tell you that right now. And you do that for 15 years and you retire when you're 40 years old. That's what they talk about. That's what the fire movement says you can do. I yet to find somebody that did that actually retired, they might quit their nine to five job or the regular career job. But they're doing something on the side, whether they have rental property, a passive income, or they're doing a part time job, or they're doing consulting, whatever it is, there's making money somehow. But they're doing it more on a part time basis. And they do it when they when they want to do it instead when they don't have to do it type scenario. But they are still working on one form or another. Or maybe they started a business that they're working 80 or 90 hours a weekend and trying to build a business and do this and do that they didn't retire. They're just doing more of what they want to do. And that's what they're being frugal early in their life achieve them for later. And some couples do that. And they don't start having children until they're in their 30s where they can be home with the children. And whether it be working part time jobs from home or whatever the case. I don't know what they're doing. I forgot basically. But that's generally what they're doing in a nutshell, nutshell. I'll be back in one moment with my final thoughts. If you're interested and learned about an online software that helped myself get out of debt, it does tracking, budgeting, and keeps track of all your assets and all your debt and even tells you how much and when to transfer money into your savings account and how much and when to transfer money to your debt and which debts to pay off in order. First. It's not cheap. It's a one Time payment. But it will definitely be an investment, something and yourself and an investment in your personal financial life. If you're interested, send me an email at reduce debt increase wealth@gmail.com. And I'll send you the information about this online software that worked great for me. So once you have your mindset, and a more positive mode, and you're thinking more about being able to achieve your goals, you start thinking about making decisions today, that will make you more money down the road in the future. And one of those is like accent, asking for a pay raise, or making decisions that's gone to further advance your goals may be some pain today, but in the long term, it's gonna benefit you a lot more. Once you get past all that and you've had any type of debt, you gotta get rid of it. If you're serious about really building a significant amount of wealth, you got to minimize your debt. That doesn't mean you pay off your mortgage, for your home or your car payments. But it does mean that all your personal loans paid off, all your credit cards paid off, get those student loans, paid down, paid off taken care of, and get down to you have one car payment, and one mortgage. Now you have your personal finances under control, you be able to save more money, build your emergency fund up to the minimum of six months, a year would be great, but at least six months, put then the that money into a high yield savings or a high yield money market, whatever is paying the most at the time that happens. And then keep building it up, keep building it up. Then when you have five or 10,000, I'd say at least 5000 Plus money, go see a financial advisor event financial planner that can help you invest your money and make the golf term goals that you've set for yourself. Whether it's for retirement, whether it's for your children's education or buying that yacht you want or that second home or whatever the case, go talk to a financial planner, and they'll help you and tell them I have $5,000 I want you to start investing for me. What's the minimum is get started on one 5000 A day I'm gonna put $100 a month in there. So every month you're gonna take$100 on my account, and I'm gonna make sure the money is there, then maybe in a year we can up that. The sooner you start, the better off you're gonna be. And the happier gonna be. Everybody can do this. You don't need to come from a rich family. You don't need to start that magic business that somehow makes a bunch of money in two years, and you sell off for billions of dollars. That could happen. Depending on your background, and what you're into. That's always possibility. Don't rely on winning the lottery because it probably won't happen. And a lot of people that win the lottery are broken five years anyway. Get your friends, personal finances under control, track everything. Have a monthly budget, do a debt reduction plan. Once your debts under control and gone, keep doing the tracking, keep doing your budget, maximize your savings, maximize your investments, and you'll be happy you did so