Welcome to Net Worth Explosion! I started this blog to address the ever growing consumption of consumer products in this country that affects how Americans live their lives. Most people earn normal salaries, have normal jobs, and buy anything they want whenever they want it. They care about what other people think and they try to keep up with the Jones’. But why does it have to be this way? This type of thinking keeps people in the rate race forever. I want you to be weird. I want you to get out of the rat race and jump off of the treadmill that is your life. Running on a treadmill gets you nowhere and I want you to consistently and continuously strive for success, as well as start living a great life. We did this on two normal salaries with no inheritance or sudden monetary windfall, by living what we thought was an extravagant and fulfilling existence. We are currently in the rat race but we have a plan that will make us financially independent and let us retire early.
How Can I Get Rich?
Great question. Let’s begin.
The majority of articles on financial advice says that you should work as hard as you can, pay all of your monthly debt payments, save for your kids’ college educations, and save any tiny slice of your remaining salary into a 401k plan. Then you have to work the rest of your life and hope that everything runs smoothly until you finally hit retirement age at 65 and can enjoy a few years retirement before you kick the bucket.
Of course, this is all BULLSHIT! Your life is filled with mountains of debt and excess, and by recognizing how much you’re wasting, you will easily be able to cut your expenses by as much as 50%!
Spending much less than you earn is the ONLY way to get rich. The earlier you can start and the more you can save means that you’ll be able to retire earlier.
But how can you save so much?
Here’s how to cut your life costs in half. Start by writing a budget and getting rid of your Debt if you have any. Don’t EVER borrow money for cars. Cancel your TV service. Stop wasting money on groceries. Lose the overpriced cell phones. Do work around the house yourself.
That’s about where 50% of your money goes. Invest 50% of your income and you’ll be able to retire in no time. To figure out your investing timeline, simply calculate how much you’ll need to retire and use an investing calculator (just google it) to see when you’ll be able to retire.
But then what do I do with all the money?
You run through these 6 steps:
- Make a budget
- Pay off all debt
- Build an emergency fund big enough to fund 6 months worth of expenses.
- Invest in retirement
- Pay off your house
- Build Wealth and Retire
How long will the money last?
25 times your annual expenses. If you can save 25x your expenses and only withdrawal 4% of your money every year, you will be able to live off of this money forever. This is the reason you need to keep your expenses as low as you can. The higher your annual expenses are, the more money you need to save. For example, if I spend $40,000 per year and wish to continue spending $40,000 per year during my retirement years, I will need to save $1 million ($40,000 x 25=$1,000,000). If you withdrawal 4% you’ll have $40,000 to spend and the rest of your money will continue to grow. Don’t worry about the details right now, just start to invest and continue to read these articles. This blog is mainly about learning common sense for your personal finances and investing. Over time you’ll see that you will change as you save and grow financially.
*If you like talking about Money, Paying Off Debt, Building Your Net Worth and Retiring Early…This is the place for you! Subscribe to receive emails of new blog posts!!!