Category: Build Wealth

Before You Buy Your First Home

The upcoming new year often leads people to start thinking about newer and bigger things, one of which might be the decision to become a homeowner.

As a self-professed house nerd, the home buying process fascinates me to no end. While some financial gurus say that home ownership isn’t worth the price (and in many cases they’re right) there is still something carnal in many people that yearns to own a home of their own. Read more

Is it Really Possible to Retire Early?

Many people, when they think about early retirement, think that it’s only an option for the ultra rich. I used to think that too, until a friend explained it to me this way.

“Think about it. Let’s say you need $4,000 in gross income per month to be able to retire. All you need to do is to own four rental properties that each net $1,000 a month.”

When my friend put early retirement in such simple terms, it got the wheels in my head spinning big time. I started to think about how early retirement could really be a possibility for Rick and I.

Your Early Retirement Plan

This friend/mentor of mine gave me some other tips for planning a route to early retirement too, and I’m going to share how we used his advice to make a plan – and how you can use his advice to make your own early retirement plan.

Any achievable goal has got to start with a step-by-step game plan to get you from where you are now to where you want to be. This is true with financial goals, fitness goals, relationship goals or any other goal you can think of.

So the first question you need to ask yourself if you want to retire early is:

When do I Want to Retire?

Early retirement means different things to different people. You can retire at 60 and be retired early. The general age of retirement is 65 and you can’t even collect Social Security benefits until 62, which means 60 is officially “early”.

Or maybe you want to retire at 55, 50 or 40. Whichever age you decide, you know that you’ve got the amount of years from your current age to your target early retirement age to work with. So if you’re 40 and want to retire at 50, you’ve got ten years to create and execute your early retirement plan.

Now that you’ve figured out how long you have to work with, you’ve got to create a plan by determining how much money you’ll need and how you’ll get that money.

How Much Money Do I Need for Early Retirement?

The answer to this question depends on a couple of things:

  1. What will your basic expenses be in early retirement?
  2. What kind of extras will you need to provide for in early retirement?

There are many things to consider as you search for answers to these questions. Things like: Will you still have kids to care for financially after you retire? Do you want to travel? Will you lead a simple life or an extravagant life?

Making a post-retirement budget is a great way to figure out how much money you’ll need per month in early retirement. Talk with your spouse if you’re married to make sure you’re on the same page regarding your post-retirement life.

Remember that you’ll be accounting for quite a few years of income needed if you plan on retiring early. Future potential medical expenses and other costs such as replacements for cars, etc. should be considered too as you decide on the appropriate amount of income and savings you’ll need.

Once you get a fairly clear estimate of how much money you’ll need, you need to figure out how you’ll get that money.

How Will I Get Enough Money to Retire Early?

If you read any of the early retirement blogs out there, you’ll find that most successful early retirees get their money from one or more of three different sources:

  • Investing in the stock market
  • Investing in real estate
  • Investing in or owning a business

Although there are other options, these three seem to be the most popular among successful early retirees. Your goal should be to research these three options  thoroughly and work to discover which one or combination of two or more is most suited to your personality, your risk tolerance and your interests.

That research obviously involves a whole lot more work than I could talk about in one article, but my friend and mentor that I mentioned earlier, Deacon Hayes, has just published a new book that outlines everything you need to know to determine the answer to that and other questions you might have about retiring early.

Recommended Reading: You CAN Retire Early: Everything You Need to Achieve Financial Independence When You Want it

I can personally vouch for the book that it really will tell you every single thing you need to know about gaining enough money and income to be able to be financially independent and retire early.

This book has become a financial tool that I refer to often as I look over the goals Rick and I have to obtain financial independence.

Note: As I mentioned there are other ways to amass wealth for financial independence than the three I mentioned above, but do be careful as many of the other ideas you’ll find on the Net and in books are very, very risky.

The three ways mentioned here are tried and true paths to wealth that experts such as Warren Buffett and many others have worked successfully.

Am I Willing to Make the Sacrifices Needed to Achieve Long Term Goals?

This is probably THE most important question you need to ask yourself as you plan a path to financial independence and early retirement.

Most of you will need ten years or longer to make your plan work. Are you ready to give up instant gratification spending for the sake of reaching that goal?

Are you willing to keep your nose to the grindstone day in and day out for ten years or more when those around you are buying new and shiny things and living large on credit?

Recommended Reading: How We Broke the New and Shiny Cycle

It’s not going to be easy. Temptations will come, especially as your income and net worth increase. The more money you amass as you work toward early retirement and financial independence, the more tempted you’ll be to start to coast in terms of saving and spending.

If you really want to retire early, you’re going to need to avoid those temptations like the plague. If you don’t, you won’t reach your goals.

The truth is that retirement isn’t an age, it’s a number. What number? The number of the amount of dollars you need to sustain your lifestyle for an indefinite amount of years.

For instance, if you need – like we will – $4,000 a month in gross income to survive on, and you have an investment account worth $1,000,000 that is earning a 5% return each year, you’ll make enough money to cover expenses and taxes for decades to come.

Now, saving that $1,000,000 or creating a rental property portfolio that earns you $4,000 a month isn’t going to be easy but it can be done.

With the right plan and the willingness to take the steps needed to reach your plan’s goals, you really can retire early.

Have you thought about early retirement? If so, have you made a plan to start reaching your goal? 

7 Ways to Give Your Financial Situation a Jump Start for the New Year

It’s November now, and the end of the year always gets me thinking about MONEY. Not just because of holiday spending (which by the way will likely average over $1200 for Americans according to this report) but because the New Year brings a new opportunity to give your money situation a fresh start.

January is the season of resolutions, and while I prefer S.M.A.R.T. (Specific, Measurable, Achievable, Relevant, Time-Based) goals over the traditional resolution, I do think that November is the perfect time to start thinking about how you’ll better your financial situation in the New Year.

Here are seven things you can do to change your money situation in the coming year.

Read more

How to Break the Paycheck to Paycheck Cycle (and Start Building Wealth Too)

Recent studies show that as many as 76% of families live paycheck to paycheck, meaning there is absolutely no money leftover at the end of the month.

Having lived this way for several decades, I can attest to the fact that it’s no fun being in a money situation where you regularly have more month than money.

Four years ago, my husband and I finally got “sick and tired of being sick and tired” of the paycheck-to-paycheck lifestyle. We had no idea how we were going to change things, but we KNEW that we were done living the stressful life of having no money and loads of debt.

Here are the steps we took to break the paycheck-to-paycheck cycle and start getting out of debt once and for all.  Read more

Is Buying A New Car Really That Bad?

According to Experian’s State of the Automotive Finance Market’s latest report, people are still living with a love affair of driving expensive cars.

But is buying a new car really that bad? Does it really destroy your chances for financial freedom like so many experts claim it does? Read more

Buck Up and Dream

At a large-ish gathering this weekend, I came to the realization that much of our society has been brainwashed into believing certain things about life that simply aren’t true.

I’m still in shock over the lack of education in many of these areas.

I know I don’t often write snarky posts, but for the last two days I’ve been feeling an urgency on my heart to speak to those who are still stuck in the world of the status quo, and you may see a little “snark” along the way. . Read more

12 Steps to a More Comfortable Retirement

Today’s financial experts will tell you that we’re not saving enough for retirement. With only 32% of Americans being involved in a workplace retirement plan and the average couple having only $5,000 saved for retirement, I agree: there is work to do.

The numbers are dim, indeed. Investment giant Fidelity tells us that a 50 year old should have six times his or her salary saved in a retirement account and a 60 year old should have eight times their salary saved. If you are worried about your retirement situation, there are things you can do to change it, even if you’re getting up there in age. Read more

7 Steps to Success That Most People Aren’t Willing to Learn or Utilize

Making changes that will lead you to success in any area is tough work. Whether your goal is to lose weight, pay off your mortgage or reach that million dollar mark in your investment account, a daunting goal is hard for most people to hold on to.

In this world of “I want it now and I shall have it now!” we’ve become offended at the suggestion of waiting for more – and often at the suggestion we work our tails off. Read more

6 Money Beliefs That Might Be Keeping You Poor

Today’s post is a guest post from Jon over at Money Smart Guides. Enjoy!

You think you know your way around money, huh?

Then how come you still have credit card debt, or how come you don’t have an emergency fund and a $10,000 car note?

There are some very commonly held beliefs about money that have permeated our culture and our way of life over the last 30 or 40 years. But if you step back and think about it, the beliefs that we seem to have been conditioned to learn did not come from a high-school or college-level personal-finance course. Chances are they came from the marketing-heavy credit-card companies. Read more