BUILDING WEALTH ONE CHANGE
AT A TIME
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Can you be frugal? Did you know that most
millionaires are? They don't drive the latest, hottest car cars.
They don't spoil their children. They don't own the latest fashions.
They live in modest homes. Can you do that? Read The
Millionaire Next Door According to Stanley & Danko there is a formula to determine if you are a "prodigious accumulator of wealth (PAW) or if you are an "under accumulator of wealth" (UAW). PAW = AGE times HOUSEHOLD INCOME (annual pretax) divided by 10 times 2 So if you're 42 and have a pretax income of $65,000 for your household the formula would read: (42 x 65,000) / 10 x 2 = $546,000. So if you have between $273,000 and $546,000 net worth you're doing okay. If you have accumulated less than $136,500 (half the minimum) you are considered UAW and anything in between is average. Try another a couple more to see where you're net worth should fall: you're 35 and make $40,000 -- PAW $100,000 to $200,000 -- UAW
$50,000 or less The good news is that you don't have to be a millionaire to be wealthy. Break your paycheck to paycheck cycle by increasing the amount of time you could live on your savings if you were not working. You can start minimizing your financial stress by living below your current means and increasing your savings. There is a difference of looking or acting wealthy and being wealthy. One piece of advice they give is that if you are not yet wealthy but you want to be you should not have a mortgage that twice your annual realized income. In Portland that's a bit hard to do if you have little or no savings to put down on a home and you make less than $100,000. The average home price is currently well above $200,000. You might find a small fixer for $180,00 or so, but you'll need to have money to fix it. I could see breaking this rule if you had no other debt like car loans and credit card debt. If you're going to spend a similar amount on rent (for reasonable accommodations) as you would for a mortgage payment there really is no question. Your tax savings needs to be considered too. Building wealth takes time, attention, and energy. It also takes sacrifice. It takes shifting your thoughts from where to spend your money to how can you save more. Remember, the good news is we can be wealthy. Discover things you can do to live below your means. Review your budget and your lifestyle. Clear out your debt and start saving. Discover ways that you can create passive income. One man, Robert Kiyosaki, had one way of thinking about it. You can read any of the series of Rich Dad Poor Dad to get an idea. Want to investigate ways to you can be more frugal but need a helping hand? Contact me at myficofixer@comcast.net.
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by Stanley & Danko. Stanley and Danko researched the lifestyles of
many millionaires and they discovered that there are two types of
millionaires. Those that are truly wealthy (PAW) and those who are not (UAW).
They identified seven factors that contributed to their wealth building,
including that the wealthy live below their means, they spend time and energy in
ways that lead to wealth building, and they choose occupations that work for
them.