I believe most people are one or two major financial decisions away from completely changing the trajectory of their financial future.
- Increase investment by $200 per month. If a 25 year old were to change their monthly investment by $200, it would change their net worth by $2,352,955 by age 65. (12% growth for 40 years).
- Eliminate all non-house debt. This usually reduces a person’s cost of living by $500 to $1,250 per month. Suppose an individual were making $750/month in payments. $750/month would equal $9,000 per year! If this were invested and received 6% interest for 20 years, it would be worth $346,531.
- Keep the paid-for car for an extra four years. Suppose the monthly car payment were $359.96 (like my first car payment). If the $359.96 were saved each of the next 48 months, it would be worth $19,475 (at 6% annual growth). No more car payments for the rest of your life!
- Eliminate cable TV. At $75 per month, this can add up to quite an investment. Suppose this $75 were placed into an investment for 30 years at 12% annual growth. This would be worth $262,122.
- Prepare a budget. When my bride and I prepared a written budget for the first time in July 2003, we discovered more than $500 was disappearing every month for “miscellaneous cash withdrawal.” This money was utilized to intentionally eliminate debt. In 14 months, all of our debt (except the mortgage) was eliminated. In 10 years 1 month, our home was paid off. Preparing a written monthly budget every single month has been a huge part of our financial progress.
What is the one change you could make this week that could completely change the course of your financial future?
It takes tremendous courage to make a change. It will require sacrifice. It is WORTH IT.