Tuesday, June 5, 2012

Financial mumbo jumbo...


Mike sent me this article in an email. {I love it.} It states our feelings exactly on financial matters.{even though we aren't your millionaire next door neighbor...Yet.} The subject line read: Blog material. So, This one is what Mike has to say. My thoughts are in orange. I'm sorry, This is a REALLY long post, But SO worth the time.

19 Things Your Suburban Millionaire Neighbor Won’t Tell You

That’s right.  Although having a million bucks isn’t as impressive as it once was, it’s still nothing to sneeze at.
In fact, Reuters reports that in 2009 there were 7.8 million millionaires in the United States.
That’s a lot of people, people.  And the odds are one or two of them are living near you.
Heck, one of them might even be your neighbor.  In fact, the odds are very good that it is your neighbor.
But, Len, you don’t know my neighbor.  That guy doesn’t look anything like a millionaire.
Well, guess what?  Your suburban millionaire neighbor called (oh yeah, we go way back) and the two of us had a nice little chat.
Here’s a few things he shared with me – but apparently doesn’t want to tell you.  (No offense, I’m sure.)

1. He always spends less than he earns.  In fact his mantra is, over the long run, you’re better off if you strive to be anonymously rich rather than deceptively poor.
I can only speak from our experience, But Mike is A car sales man. That means that we are on a commission based pay-plan. Some months are feast, and other months are famine. Our budget is based on the famine month numbers. Any excess that we have goes to savings.
2. He knows that patience is a virtue. The odds are you won’t become a millionaire overnight.  If you’re like him, your wealth will be accumulated gradually by diligently saving your money over multiple decades. Mike is a whole lot better at this one than I am.
3.  When you go to his modest three-bed two-bath house, you’re going to be drinking Folgers instead of Starbucks.  And if you need a lift, well, you’re going to get a ride in his ten-year-old economy sedan.  And if you think that makes him cheap, ask him if he cares.  (He doesn’t.)
Mike is known as the resident cheapskate at work... He doesn't care one lick. I think he takes pride in that fact actually. And as to the other part of this, Mike is constantly mocked about his Prius... Actually it is pretty funny that he drives one... It definitely isn't a chick magnet thats for sure. But he doesn't care one lick. We have a stupid cheap payment on the lease and it costs us about $100 a MONTH in gas. It's not a chick magnet or his dream old man Avalon... But it allows us to save money. And that's whats important to him. {And me}     
4. He pays off his credit cards in full every month.  He’s smart enough to understand that if he can’t afford to pay cash for something, then he can’t afford it. I've said this before, I don't care if it's a dollar... If we can't pay cash for it, we can't afford it. We don't buy ANYTHING on credit, Anticipating that we will get a paycheck and then be able to pay it off two weeks later. If the cash isn't in the Bank and our 6 month emergency fund will still be in tact after we buy it... It doesn't get bought. Period. Credit cards are so easy to get sucked into and so hard to get out of. Just get rid of them. OR lower your max limit. It's easier to pay off a $500 limit than it is a $5000 limit. And trust me, It's easy to rack that up.
5. He realized early on that money does not buy happiness.  If you’re looking for nirvana, you need to focus on attaining financial freedom. We have been lucky to learn this early. During our financial ruin years, we were just as happy and in love and grateful as we were during our prosperous years. 
6. He never forgets that financial freedom is a state of mind that comes from being debt free.  Best of all, it can be attained regardless of your income level. True Dat!
7. He knows that getting a second job not only increases the size of your bank account quicker but it also keeps you busy – and being busy makes it difficult to spend what you already have. Mike doesn't have a second job, Nor does he have time for one, But I will probably find something part time when all the kiddos are in school all day.   
8. He understands that money is like a toddler; it is incapable of managing itself.  After all, you can’t expect your money to grow and mature as it should without some form of credible money management. It's true, Nobody is going to make you wealthy but you. You have to do the research, and you have to do your homework.
9. He’s a big believer in paying yourself first. Paying yourself first is an essential tenet of personal finance and a great way to build your savings and instill financial discipline. Automatic savings and retirement was the best thing we have ever done for ourselves.
10. Although it’s possible to get rich if you spend your life making a living doing something you don’t enjoy, he wonders why you do.  Life is too short. I think it's awesome that Mike likes what he does and doesn't mind being at work... It's so funny to hear his stories about negotiating. It really is an art. And he is like the Michelangelo of it.
11.  He knows that failing to plan is the same as planning to fail.  He also knows that the few millionaires that reached that milestone without a plan got there only because of dumb luck.   It’s not enough to simply declare that you want to be financially free. You gotta have a plan. Write it down!
12. When it came time to set his savings goals, he wasn’t afraid to think big.  Financial success demands that you have a vision that is significantly larger than you can currently deliver upon. Mike laughs at me because I am a BIG dreamer... My motto is "if your dreams aren't big enough to scare you, They aren't big enough." And hey, If you reach for the moon you're bound to hit at least the stars right?
13. Over time, he found out that hard work can often help make up for a lot of financial mistakes – and you will make financial mistakes. Oh gosh, We've made LOTS of these... And still do. But we learn from them and don't get discouraged and give up.
14. He realizes that stuff happens, that’s why you’re a fool if you don’t insure yourself against risk. Remember that the potential for bankruptcy is always just around the corner and can be triggered from multiple sources: the death of the family’s key bread winner, divorce, or disability that leads to a loss of work. You HAVE to make this a priority. It's never convenient to pay for it, and there is never an excess of money to do so... If you have kids it is especially important. They depend on you to make good decisions on their behalf. And that includes being prepared for disaster or loss. 
15. He understands that time is an ally of the young.  He was fortunate enough to begin saving in his twenties so he could take maximum advantage of the power of compounding interest on his nest egg.
Even if you don't have a lot to put towards it, you'll be surprised at the difference starting an account even just one year earlier can make. 
16. He knows that you can’t spend what you don’t see.  You should use automatic paycheck deductions to build up your retirement and other savings accounts.  As your salary increases you can painlessly increase the size of those deductions. THIS IS THE BEST THING WE HAVE EVER DONE FINANCIALLY. If you don't do anything else, do this.
17. Even though he has a job that he loves, he doesn’t have to work anymore because everything he owns is paid for – and has been for years. The plan is a 15 year mortgage, paid off cars and enough money to go on missions by the time the kids are out of the house... I'll be 43. It's not going to be easy, and we will ceartainly have to go without a lot of "wants" But we've decided that that's what we really want.
18. He’s not impressed that you drive an over-priced luxury car and live in a McMansion that’s two sizes too big for your family of four.

Did you know....
  • Most millionaires live in homes valued at $300,000 (or lower)
  • More millionaires drive Toyotas than BMWs and Mercedes 
-Dr Thomas J Stanley.{stop acting rich}

19. After six months of asking, he finally quit waiting for you to return his pruning shears.  He broke down and bought himself a new pair last month.  There’s no hard feelings though; he can afford it.

So that’s it.  Now you know what your millionaire neighbor won’t tell you.
Oh, and, um, would you be so kind to keep this just between you and me?  I’d hate to ruffle anyone’s feathers or cause of any kind of neighborly spat.
Thanks.  You’re a peach.

Most of this is common sense, But the hard part is having the discipline to actually enforce these principles.... Any how, This stuff fascinates me, Sorry if I have bored your with this financial mumbo jumbo... But let's be honest, You really should be concerned with your financial state... It's not going to fix itself, and it's not going to stay on track by itself... Whichever boat you're in... I think we have one foot in each boat... But we're working on it. 

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