How To Win With Money

SERIES: How To Win With Money – Part 9

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

9.  Live a great life!

When you have accomplished Levels 1 through 8, you have positioned yourself to fund all of the amazing dreams and plans you have for your life. It allows you to be generous, provide in an amazing way for your family, and fund dreams you hardly dared to give breath.

Utilize your wealth to bless the poor and serve the less fortunate. Recognize that life is fleeting and that a life lived serving others and in the service of others is amazing. Ensure that you teach your children to apply the levels so that an inheritance will bless them instead of ruin them. Take no pride in your financial status as it will only amplify who you are anyway.

Have a blast with life! Life is amazing. And awesome. And wonderful. It is worth being FIRED UP over! And it is way too short to live it financially broken.

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 8

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

8.  Place at least 30% of your gross income into tax-advantaged investments.

Now that you’ve eliminated all of your debt – including your house and business debt, you have nearly reached the top of the ladder of winning with your money. At this level, you are now positioning yourself to prosper like few others choose to do. You have become an elite manager of money. Everyone can do this, but not too many are willing to make the few (but tough) decisions necessary to do so! In general, it takes between seven and ten years to move from Level 1 to Level 8.

Invest money into tax-advantaged holdings. It is important to pursue diversification to protect the investments to protect against a massive loss. Many people have achieved Level 8, but became so enamored with a particular investment (such as Enron) that they disregarded the importance of diversification and fell from Level 8 back to Level 1! After all, this is not about greed and hoarding. It is all about funding goals – your plans, hopes, and dreams.

Consider a 40 year old couple earning a combined income of $50,000 per year who has arrived at Level 8. They are now able to invest at least $15,000 per year. Suppose they already had $60,000 saved up because of their efforts in Levels 3 and 6. If they invest $15,000 per year from age 40 to age 66 and gain 12% annual growth, they will have $4,000,156 at retirement. That is with zero pay raises for 26 straight years.

Level 8 positions you for the final level on the “How To Win With Money” Ladder. It’s the best one of all.

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 7

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

7.  Pay off house (and business debt)

This is a level that marks a “major milestone” for most people. It is the goal of most people to retire with zero debt including their home. It provides a sense of security and accomplishment like little else will.

Utilize extra income and “found money” to eliminate the mortgage. There are several simple steps you can employ that can have a major impact on the velocity of your pay-off.

  1. Make a half-payment every two weeks Because there are 52 weeks in a year, this will result in 13 full payments each year. This can eliminate around 5 to 7 years on the average mortgage.
  2. Each year, use tax refund to make one extra payment toward principal This will accomplish very close to the same as option #1
  3. Pay extra money toward principal each month  Use our early pay-off calculator to help you figure out how many months you can shave off your mortgage!

When you eliminate your final debts, your monthly cost of living has usually been reduced by 50% or more. This accomplishes two things:

  1. It provides more financial security
  2. It makes your investments last twice as long because you now require only half of your previous need.

By the way, I paid off my house by age 38, and I promise you this is an incredible feeling.

You can do this!

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 6

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

6.  Place at least 15% of your gross income into tax-advantaged investments.

At this level, you truly begin to change your entire financial future. You have built savings, initiated investing, and eliminated all non-house, non-business debt. It is time to build wealth in a big-time way. You might call this “the dream funding” level.

Consider your annual gross income that you expect to receive this year. Multiple that salary by 0.15 to calculate your Level 6 investing goal. Suppose your gross income is going to be $40,000 this year. This means that your goal is to move at least $6,000 into tax-advantaged investments. Imagine how much this could grow to be after doing this year after year!

This money will be used to fund your big-time dreams and goals that you established way back at Level 1! This includes funding college for your child(ren), retirement, blessing others financially, dream vacations, and other items that are very important to you.

It is important to note that this 15% investment of gross income does not include any match you may receive from your employer. Whatever they may contribute is above and beyond the 15% goal.

Consider the following example:

  • 28 year old parents earning a combined income of $50,000 commit to follow this process
  • They achieve Level 1 (set goals) and Level 2 (save $2,500) in three months by using their tax refund
  • They achieve Level 3 (invest enough to capture company match in retirement account) one month later by contributing $100 per month and their employer matches with another $100.
  • They achieve Level 4 (become debt free except house) over the next 3 years
  • They achieve Level 5 (save 3 months of expenses) in another 8 months
  • They are now 32 years old and have arrived at this level – Level 6 – and begin to invest $7,500 (15% of gross income) into tax-advantaged accounts.
  • They receive another $3,000 in matching contributions from their employer making their total annual investments equal $10,500 per year (or $875/month)
  • They invest this amount every year until they are 66 (for a total of 34 years)
  • Because they started investing in Level 3, they have been investing $200 a month for 32 months. This investment is already worth $7,499 at age 32!
  • Using this $7,499 and assuming an annual growth rate of 12% with monthly contributions of $875/month, their investments will be worth $5,418,542 at age 66.

Get. Fired. Up!!!! By the way, this assumes that this couple never received a pay raise for 38 straight years.

Any doubt that this process will help you win with your money?

Read the entire series (available after 4/20/2013)

SERIES: How To Win With Money – Part 5

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

5.  Build savings to three months of expenses

Read step #5 again. Note that this level focuses on saving three months of expenses – not income. Because this follows level #4 (to eliminate all non-house, non-business debt), your monthly expenses should be much lower! In general, this level will take three to nine months to achieve.

It is amazing how much confidence this will give to you! Your ability to live is no longer wholly dependent upon an employer’s willingness to keep you. You can encounter financial challenges with substantially reduced stress. Even more, you are able to look beyond the current day and week and focus on “what could be.” It is at this step that you will begin to live in the vision and goals you documented at level one – the start of your journey to win with money.

Take a moment to determine how much your monthly expenses will be once you have eliminated all non-house, non-business debt. Now, multiply that number by three. This is your “Level 5 Savings Goal.” If you don’t have this much money saved right now, take a moment to think about how you might feel upon achieving this level. Let that feeling provide fuel to you as you progress up the nine levels required to truly win with money!

Read the entire series (available after 4/20/2013)