I don’t know what y’all are drinking these days, but you’re dropping off some mighty fine nuggets around this blog lately! And I’m loving it! I think you need to merge together and come up with your own financial blog or something, haha…
But for now, you sit there and read this gem my new friend Mark posted and you enjoy it :) He was kind enough to share his financial journey with us on last week’s book giveaway post (the 2nd one is still open btw!), and it was a nice refresher of how this money stuff all comes together. Check it out:
“I’m a millionaire. Been investing in mutual funds for 40 years. Never made more then $70,000. Paid cash for everything. Still have an allowance of $100.00 a week. That is for gas and if I want something new. I’ve been debt free for 15 years. I often sit back and ask how I did this, and then remember my mom who at 16 worked in the ship yards during WW2, never graduated from HS, but gave me a book called Your Last Dollar. I still live off of $40,000 a year and no longer work, outside of a part time job as a coach as I love high school kids.”
Look at that! An average guy making average money with not-so-average results. And people say it’s hard to become a millionaire, pssh…. you just need a simple plan and some time ;)
Let’s go over all 11 tips he dropped in this jam-packed paragraph – did you catch them?
#1) Invest for the long haul! Not for two or three or even ten years, but for decades. Mark did this successfully for over 40 years (longer than most of us have been alive- hah!) and he kept going through all the booms and busts and utter nonsense. You need this long term mentality so you don’t trick yourself into chasing the quick wins and get off track. It’s all about harnessing time!
#2) Funds get the job done. Yes you can try your hand at stocks and get your research/luck on and pray you hit the jackpot, but let’s face it – not even “professionals” get it right. For most people, sticking with mutual funds (or my personal preference – index funds – since the costs are much cheaper) are a safer bet. You won’t “beat the market” and have bragging rights amongst your friends, but matching it is better than underperforming it. And it’s one area I don’t mind being average.
#3) It doesn’t matter how much you make – you can still save! While $70,000 is surely a lot of money for most of us/the world, keep in mind it’s not the case when you’re nearing retirement. And even so, it probably took Mark 10-20 years to make it up to that level, so for decades he was making substantially less. Regardless, putting money aside every paycheck no matter how much you make WILL add up over time and especially over 40 years. Do the best you can with what you’ve got, and then up it every time you get a bonus or raise or any other types of promotions. Mark is proof that any of us can become millionaires over time.
#4) Pay cash for everything. Imagine never going into debt again? How much time, money, stress that would save? Using cash is surely one way to ensure that. You may not reap as many c/c rewards that way (and in full transparency – I’m a credit card budgeter myself! Where I put everything I can on cards and then pay them off in full each month!), but for the general public cash is the safest way to go. And plus, the research always shows that you spend less using cash than plastic anyways.
#5) Give yourself a weekly allowance. This is one of my all-time favorite budgeting tips. Not only do you give yourself some fun BLOW MONEY to do as you please, but you also free yourself from having to track every last penny and burn yourself out. Another nice side effect is tricking all your friends that you’re a “normal” person just like them, when deep down you’re as financially nerdy as it gets ;)
#6) Become totally debt free. He didn’t outright say, but I’m assuming that “being debt free for 15 years” means Mark doesn’t have any mortgages either. Which of course can never steer you wrong, whether you could make more money investing or not. I only know one person who regrets paying off their house, and I shake my head every time I’m reminded…
#7) Appreciate how fortunate we are to live in today’s world! Where we reap the benefits of those who fought and died before us, and which the life expectancy is much higher than it’s ever been before. Not to mention how 9/10ths of our problems really are 1st world issues, and that we can live off a lot less and still – shockingly enough – be just as happy.
#8) Read about money. You’re obviously already doing this or else you’re on the wrong site right now – hah! – but books and blogs can REALLY make an impact with how you think and act with your money. Especially when you find the ones that click. (Shameless plug – check out our list of favorite blogs here, as well as my favorite money books!). I tried to find this book that Mark’s mom gave him so I could check it out (I’d never heard of it before?) but didn’t have much luck. Although there is a “Your Last Dollar and How to Keep it” by Edgar T. Isaacs and Richard S. Lindner from 1976 which could possibly be it. If you want to take a gamble, it’s currently a whopping $3.40 right now on Amazon :)
#9) Live off the same amount of money as time goes on! You know when you get a raise or new job and all of a sudden you’re earning more money than you ever have in your entire life? And so you go out and buy new stuff and are now all of a sudden spending the same amount of money as you’re earning? That’s called lifestyle inflation and it’s one tricky bastard. Catch it early on and get used to spending roughly the same every month and your pile of cash to save/invest drastically goes up over time. You don’t have to save every last penny of it of course (you still want to live a little, yeah?), but getting into this habit now will help you reach financial freedom a lot sooner – I can promise you that. Because remember: the less you need to live on, the less you need to retire!
#10) Do stuff you love for money. Even though Mark has enough money to live off right now, he still does stuff he enjoys that also happens to pay. Imagine if everything you worked on brought you joy like that? It’s a great position to be in, and there’s nothing saying you have to stop earning once you give up your 9-5. Figure out what you’re good at and enjoy, and then see if there’s any cross pollination you can land on and start working it on the side. Many of the side hustles we share here were born out of specific interests that turned out to be pretty profitable – the perfect combination :)
And lastly, #11) The boring stuff works. You’ll notice there wasn’t anything new or sexy going on with our friend’s plan here at all. He just kept his expenses in check, funneled away as much as he could over the years, and then let the magic that is compounding do the rest. It’s not always easy, but it’s do-able! And I reckon Mark would say that any of you could become a millionaire too by copying.
See ya back here on Friday, you smarty pants…
PS: Do you like how I assume that dude up top (not Mark) is a millionaire just because he dresses like a baller and seems to be living the good life? Personal finance #FAIL right there, haha…
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!