Ok as you all know I have been on this huge financial kick for the past 4 months. Had a large amount of set backs and finally able to get the ball back rolling. As I was enjoying my friday evening I was reading blogs one to be exact called stuff educated black people like (yall know bout it). Anyways I started to wonder about us folk and what it is that actually makes us successful people.
Most Educated folk after they get their college degrees move outta state and make there first home purchase, get their first car, and take that first trip to another country. At first I used to be close minded thinkin yea this was really how to show people you made it. After I hit rock bottom from losing just about all my stuff (and mind) I started to realize that all that stuff didn’t really make sense and the friends I thought I was keeping up with had less than I did. So now I have a new list of what it means (to start) to be financially successful along with your college education. Just because you have an education does not give you permission to be stupid about money.
1. Don’t buy a house unless its more than just you living in it and if you do pay it off in 15 years or less
Yea I know we look good and we can show off but truth is now days unless you are purchasing a home for 50 cents on the dollar its not a wise choice. Most of us if we travel and work them 75k and up jobs dont even have time to enjoy that lavish home so it just sits there looking cute and going down in value. Also paying a home in 15 years will cost you more on the front end but will save 10’s of thousands in the long run. Most folk say they don’t plan to own a home more than 5 or 10 years but truth told if you pay it off you can have this as an asset in addition to the new home you purchase, instead of dumping all the interest. Also the so called tax deduction you think you get from owning a home (per the irs) is not really helping you (ask me for more info on this)
2. Pay off your student loans
We all think its the American way to live in debt and have student loans but truth is the longer you keep them the longer you will be broke. I looked at my student loan balance it said it would be an extra 7,000 if i drag my payments on for life instead of paying off the original 11,000 I actually owe, the rest is interest. It is a wise choice to pay off all your loans regardless of what they tell u in college. also stop going to school trying to avoid paying back loans and get a job!!!!
3. Pay for cars with cash Thats just smart and its what rich folk do they don’t typically drive BMW’S
4. Actually contribute 15% of your income to retirement some kinda way
Please don’t believe ssi will be there when you turn 65.
5. Stop borrowing money
Buying everything on credit is not cute anymore even if it is a 0% interest card.
6. Have a net worth
The definition of net worth is what you own – (MINUS) what you owe = what you are worth. meaning if you had to get rid of everything what would you be left with. If all your money is tied up in house payments credit cards, car payments, bikes, boats, and time shares and when you add it all up hello?? your broke. You have to actually have something you own to be wealthy and also not have debt if you owe 500,000 on stuff and none of it is paid for unless you got 1 million in the bank your broke
7. Stop Using credit cards
Who wants to argue with me about this really?
8. Learn how to really invest in real estate
This does not mean borrowing the equity against your principal residence to go buy rental properties and fix and flip its (this is not property ladder on TLC). Those people who do that don’t have money and neither do you. If you wanna be a tv look a like, the least you can do is pay cash for your investments and us cash to fix them up. If all those rental properties you never sell go belly up or u lose your job God forbid, your house will be foreclosed on first!!! this isn’t cute when you have mouths to feed.
9. Save Money for stuff you want to buy
So I know we live in a get it now pay for it later society but honestly if we saved for it for a couple months you might not feel such stress later on when your not using it.
10. Don’t get a loan to start up a business
Most new businesses cost under 5,000 to start so you do not need the SBA to get off the ground!! Stop being lazy, if you want to advertise print some flyers and drive around town and post them, make a website, tell friends, work your butt off. You don’t need hundreds and thousands of dollars in capital to start a company and make it work.
I am learning these things now. It took me losing most of all I had to figure out I really had nothing. I don’t want to live the life of my broke friends who look like they got it going on. I want to be the one who actually has money to lend and not need it back, actually take real vacations and actually own nice cars and houses. Most importantly I want to give back to my community we can’t do that financially or spiritually if we work 100 hours a week trying to pay a house note.
I am currently working on getting out of debt, its not cute to be in it. Its not fun getting out. I have to live on nothing and work my butt off for a number of years (hopefully less that two) but it will be a great feeling when I say I truly have a net worth.
Mikki
Hmm…interesting I thought that it was better to buy a house then to rent.I also thought house’s appreciated meaning they increased in value. But I’m not a homeowner so what the heck do I know lol. I’m about to graduate and I definitely need a tax write off (and I don’t want it to be children!!!lol). This definitely opened my eyes. Thanks for the tips.
@ A Journey
I think I was a bit vague when I wrote that short synopsis about home ownership. Houses are going down in value because they got over priced in the housing boom. Now that things are slowing people are upside down on mortgages and stuck with interest only loans that are due to end and they cant sell. Home ownership is a good thing but if you go out shopping for a home it should be (rule of thumb) only 1/4 or 25% of your monthly take home pay (the actual monthly payment) at a 15 year fixed rate if you can do it 30 year fixed is ok if you must, and no interest only loans (ARMS). If you can pull that off, which you should be able to with the market the way it is then you are a true boss!! You can own a home just know what comes with it, paying lights, gas,trash,taxes,cable, internet and other stuff that can go wrong or break or fall off, plus you still gotta eat and manage to buy clothes to look cute!!!! I am not trading my JimmyChoo shoes for a house payment ever again!!! lol
Well I’ve just read over a few of your blogs and I’m glad things are working out for you! Thanks for stopping by my blog. And you made me rethink about some things and thanks for the song, needed it. Sometimes I get so lost in the bullshit, I forget to enjoy the music. I was taught a lesson!!!!!!!! God Bless, smooches Kizze’
OMG trying to pay off my credit card ad get rid of it like ASAP! That is a pain i the butt
@ Kizze21
Thank you its been rough for the past 6 months, I think it all started when I turned 25 Musta been like MINI midlife crisis lol. Scared to know whats gonna happen when I hit 30!! geeezzzz. But I am glad You got your music fix, Its always there to get you through them rough times.
@ Hadassah
lol I know its a pain trust me I have many credit cards to pay off But never again will I get back in debt.
this is needed information, thank you for sharing.
Peace my Sister
How are you doing on this beautiful day? I would like to collaborate with you for a mutual project. I’m working on a project for the youth {http://www.whatthefico.org} on the importance of credit and money. I stumble upon your blog when I google my keyword. Nice job! I understand the power of unity. I would like to know if you would love to help our people out by maximizing our efforts. Together, we can educate our future homeowners on how to obtaining credit so they can live the American Dream. From your knowledge and wisdom we can help out millions. Please contact me at your earliest convince thank you. I look forward to hearing from you. Contact me at phaatfico at gmail.com
Peace and Prosperity.
I agree with all of these except for the house. As much as rent is in most places, you come off better buying a house; although yes, there is up keep that you don’t worry about when renting. They both have pros and cons, but being a single woman, I never would have bought my house if I waited until Mr Right came along.
Definately pay cash for everything or use your bank card. If you only buy things you actually have the money for, yoou will probably buy less stuff or at least think twice about making a purchase.
I actually disagree with most of these with the exception of 3, 4 and 6. I think the quickest way to have what you want is to make more and drive that income to smarter asset based savings (like self directed ira’s etc)
Wealth creation is less about passive savings. And more about creating value and leveraging it with a business. And using those dollars to save to buy other appreciating assets (businesses and real estate (that makes sense).
re: real estate there are still places all over this country that didn’t realize the over inflation the way that other places did. There are pieces of real estate that you can still buy and rent for 20k.
I do believe that most conspicuous consumption is on depreciating things. What I hate are people telling me that I can get rich if I give up my espresso. To me its too much based on restriction. Particularly when there are faster ways to save and get fiscally smart.
@ Shelia
I didn’t actually mean don’t buy a house, I just more so want to express the importance of it making sense for you when you do it ie you can’t live in a 300k house making 30k ect… people do it all the time, and why do you need 10 bedrooms when its just you and your dog fico? Thats all im saying lol.
@ Comeback
First I would like to say I am not trying to sway people from buying homes at all. It just needs to make sense when you do it. If people brought homes and it made sense this housing crisis wouldn’t be going on. People wouldn’t be upside down in their mortgages and panicking because there adjustable rate mortgage is about to adjust and they can’t sell. I am A current home owner but Its a 75k house that I paid 57k for so it has equity and its affordable to where I don’t break my bank every month. I didn’t go and buy the biggest thing I could find and get caught making payments I couldn’t afford. I just want people to be smart that way. Detroit is a great hub for investment properties for cheap and when I am able to pay cash for a 10 or 20,000 home and fix it up to make it worth 70,000 to sell I will do that but I will not get into more debt trying to finance my shoulda coulda woulda maybe fix n flips. I am not a hard numbers person nor am I an accountant for that matter But I do know about risk management.
The ultimate goal is to make your income go up so I agree with you on that. But with a 200k a year salary and no savings, student loans and credit card debt that equals 400k there is no way you can safely invest because everything you do will be built on risk and you out there trying to live like Bill Gates on a Bill the postal workers salary. But if you make 200k and live on 100k and save the rest assuming you have no debt you have plenty money to invest and not pull out your hair while doing it. I am not an advocate of giving up your mocha latte talls to get rich. What I am saying though is to pay off your debt and actually live on what you make if you make 30k and you live like you make 60+ you will always have a deficit and you can’t get ahead like that. However if you make 60k and live on 30k that leaves you plenty room to invest, save, spend and buy as many lattes as you want until your heart is content or at least until you start twitching from to many.
I didn’t mean YOU personally was telling me to give up my lattes but Suzie does and so does the Ramsey guy. I just think its WAY WAY too restrictive.
Everybody knows how to DO something that they could turn into a partime SOMETHING, cleaning offices, VA admins, landscaping, childcare, writing etc etc. YOU BUILD WEALTH not just by saving to get a 1-2% return from a savings account. YOU ALSO CREATE VALUE AND LEVERAGE.
The market rolls in cycles. I’m not upside down but the length of time it would take for me to sell if I was in trouble, I might as well be. Maybe its some of the optimisim I have, but there are ways to deal with the financial home crisis if you are in one. HUD Secure, loan mods. There are some creative stuff people could do with rent to own or loan assumption. Suzie and Ramsey don’t teach it and its perfectly legal. In fact some of their buddies crafted and perfected the concepts.
I bought a house for 2,000 in bmore 6 years ago. And sold it 4 years later to an investor for over 30,000. But now the strategy has to change. Its buy low sell low.
And the market will come back. But people just need to start thinking outside of the box. Saving is VERY VERY important. but one should be saving to BUY things that make sense. (like businesses and real estate (some again can be bought all over this country from less than 30k and rented).
And risk is inherent in everythign you do. Its a risk for me to drive to starbucks. Its a risk for me to walk down 35 steps alone. Its a risk for me to live by myself. But its HOW YOU MANAGE RISK.
@ Comeback
I personally have not read or heard of Suzie but I think I may look her up today. Dave Ramsey on the other hand I subscribe to on a daily basis. I listen to his podcast and I have yet to hear him say give up your latte. He is however an advocate of cleaning up debt (all of it) and investing later, the concept is that if you live like no one else now you can live like no one else later spending one or two years depending on your situation to cut spending as much as possible to get outta debt so if that means giving up whatever you habit is for a while then so be it. I doubt a cup of coffee will break anyones bank but if your up to your eyeballs in debt then maybe u need to lay off the type of exspensive lifestyle TEMPORARILY. I wouldn’t describe him as restrictive at all because its up to you to change but if you believe your life sould be lived full of debt then thats your choice. He also is about getting your money up and changing career paths if needed, I wouldn’t think with a family of 4 on 30,000 a year is much to say yea I am going be rich on that, but if you change jobs and start making 100k and continue to live like you make 30k then dreams and goals seem more reachable than before, meaning saving for kids college, or buying that dream home. I am not into getting rich quick so who ever is teaching that can eat dirt in my opinion.
He also doesn’t recommend savings at 1-2% he actually recomments savings that have rates of returns in excess of 12-15% but again thats if you have no debt and you can dedicate more of your money to saving rather than payments on houses,cars,boats,ect… He doesn’t say you can’t have those things he just says save to get it which is possible when you have money.
Realestate I don’t know much about but again I am in the business of lowering my risk Financially to 0 risk If I pay cash for investment property there is no financial risk. People take out loans on homes to finance rentals flips and stuff and I just refuse to do that. But to eaches own.
I don’t suggest anyone subscribe to any financal guru. I do believe they all have very basic concepts and you can take them for what they are worth.
Good post on tips to reach financial freedom. I’m working my way thru that mess right now. Don’t help that I had to borrow money for law school but I’ve got a scholarship helping me out so I didn’t even borrow the maximum amount like most people.
Glad to hear you can see the light after all you’ve been through. Keep the faith!
@ Leisha
Thank you, I aim for you to take what information you think can apply well to your particular situation. God job for going to law school you are going to be paid!! and scholarships are a big help so thats good you doing it right.
“in the business of lowering my risk Financially to 0 risk”
let me know when you find this…I will eat all the words I ever said. I have heard Ramsey and Suzie Orman talk about lattes (its the first and “easiest” thing people like them preach on giving up) $5 a day * 365 is close to $2,000. There is a reason why Starbucks is suffering. My whole point is I’m on the boat with the laurel langemeier’s of the world building cash machines to not just pay down debt, but accumulating wealth building assets that in turn create other wealth building assests. But to me its all about fiscal responsibility Ramsey has a market. I respect that. Not everyone can or will get there head around monetizing what they know how to do.
different strokes for different folks.
btw what mutual funds is he suggesting that has 12-15% year after year yeild?
particularly this last quarter.
@ Comeback
seriously you bout to have me up in the book store trying to find Suzie Oman and Laurel Lanemeier books. Please explain to me what risk are in paying cash for an investment (outside of taxes) ???? I must be a plum fool on this concept.
Again you must have not listen to Dave or read his books, I wouldn’t think everyone should take those words literally (altho I do) thats not for everyone. Dave doesn’t preach get rich on saving up starbucks money I can guarantee you that, again this Suzie lady I can’t speak for. I didn’t say pay down debt I SAID GET RID OF!!!! the only bill you should have is a house payment and frankly I plan to pay my house off in the next few years to be totally free of debt. last time I checked 0 debt=0 bills= more money for me to invest in what you call “cash machines” I am all about investments 100% But I can bet money that I can become financially sucessful without getting into more debt. WHICH IS RISK ANYTIME YOU DO IT.
Rameys plan happens to be working for me so thats why I can adamantly speak on it. I haven’t invested in anything but payin off my debt. so far I have created no risk. If I lost my job yesterday I would have savings to cover my living expenses for a good while. Again we are talking about me who just went from living out of my car to a nice apartment and 2 jobs and 1,000 in the bank. Now that might be pennies to you but its a lot to this sista right chea! Plus Daves plan has put me on a better walk with God and I don’t care who you are aint no amount of money going to give you that peace.
12-15 mutual fund accounts that AVERAGE THIS
Mik
What mutual fund do you know of that doesn’t have INHERENT risk in it? 0 risk is NOT POSSIBLE EVER EVER EVER in anything speculative INCLUDING STOCKS, MUTUAL FUNDS, OPTIONS, GOLD, SILVER, TITANIUM, dirt, feathers, dust. Mutual funds are SPECULATIVE. Sure you’ve spread the risk out amoung various stocks in or outside the same industry but its STILL SPECULATION.
I actually watched Dave before on some you tubes. And I think paying down and off debt is smart. There are some Christian concepts that I think he is aligned with. And I agree. I’ve bought my second to last car for cash and it was smart. From and individual perspective. My goal is to get everything out of my name (with the exception of my house in 5 years).
He loses me on the wealth building parts. The returns he talks of are going to be an exception this year (considering the losses just in this first quarter.)
What I am trying to do is get my company to own most if not all my assets (particularly the depreciating ones).
I just did some looking around on realtor and there are houses all over this country that are livable, rentable that can be bought for 20k. I’m pumping my “savings” into something that can make me monthly cash flow. He also doesn’t talk about people creating businesses (nor does Suzie that much). People have skills. That they need to incorporate to build cash flow to drive into self directed ira’s to by things that “appreciate”.
I think there’s a faster way to build wealth than on the 60 year plan. Thats all. I believe and am with paying off debt. I am NOT down with his alternatives to building wealth. Those yields just don’t hold in times like these. But people ALWAYS need somewhere to rent/live/rent to own. etc.
oh if you are free tonite laurel is doing a free webinar to talk about cash machines, http://www.liveoutloud.com/jayandloral.php
its free it starts a 9EST, 8CST. Check it out. I think I’m going to start to blog about her on my plan.
she was in the “secret”
hmmm??? common concert or laurel tonight?? Ah Since I didn’t buy common concert tickets its going to be laurel lol.
The investment principles Dave speaks of is mostly to do with long term, but he is not a get rich quick type of person so if thats what you need then 9 times outta 10 your not going to agree with any of his wealth building ideas. Most people who have followed His plan aren’t looking to get rich they are looking to have a financially stable life, ie. affording kids college, owning a home, having retirement money. Self directed IRA’s is one thing he talks about so I know all about how that works. I think when people get on a plan to change there life financially everything else gets aligned along with it ie a better paying job or better yet doing something you love, I know actual people who have changed there entire career path based on Daves principles and ultimately when you have passion for something the money will follow provided you work hard at it.
Yea I know mutual funds are risky but we are talking over all risk/long term, this isn’t based on ideas of jumping ship when the stock market takes a dive. All my money won’t be tied up in IRA’S or mutual funds or stocks. But it will be a portfolio mixed in with some paid for realestate (including my house) Again with no debt the sky is limitless on what I can do provided I don’t go to the local casino to gamble it away. Hell even if I was the dumbest investor out there and I put my 50,000 into my savings account at a local bank, I would still be better than joe who has no savings at all but a bunch of “Assets” he can’t get rid of without losing money on.
I guess the bottom line will be what you consider at this point “wealth” To me wealth is not my million in the bank, its me being able to sleep at night knowing that if I got hurt tomorrow and couldn’t work, I could still afford my bills without living on credit cards, wealth is not living pay check to pay check, wealth is knowing I don’t have to work at my job for 40 years and retire with little to no savings depending on ssi, wealth is sending my kids to college without student loans, wealth is not fighting with my future husband about money, wealth is knowing i have a job or career that puts a smile on my face everyday and giving to those who can’t afford much and showing them how to do what I did to have wealth. Anything above all this is great too. I have experienced peace in my life beyond what a million dollars could do, even at this stage of getting outta debt. If I do make a million one day that will just be icing on the cake, but until then I am learning that stuff can be replaced and I am content with what I have been blessed with thus far.
ps I will tune in tonight ignorance is bliss so i hope i learn something.
I’m not looking get rich quick either. But I’m also not looking for 1 million in the bank by 55. I want to be “retired” by 38. Meaning that I can leave off of investments/interests and other passive business income. That gives me a little over 5 years.
And I also aint looking to keep up with anybody. I am the highest income earner in my little subdivision who is also single. Im not saying that to brag. But I ONLY compete with myself. When my mother told me (why am I asking for an increase on my rate 5 years ago because I “made enough”, I knew I was on my own little planet.
I want to leave a legacy for my kids. Not just a couple hundred thousand. I want to leave property, money, businesses and a “free mentality”. I had to hustle in college majoring and doing stuff that I wasn’t REALLY REALLY passionate about. I want to leave passion to my kids. I couldn’t spend 4 years in film school and then 1 year at a sundance workshop like i wanted. because I didn’t want to be broke. I want to give my kids that.
“”GO CREATE NEW MONEY”””
you listenin girl
Great blog Mikki! I think it’s great that you are spreading knowledge. Keep it up.
I’m sure I have arrived late for any of the debate, but I just wanted to clarify for anyone why Mutual Funds is a better investment. I read someone state that right now you couldn’t get 12%, and this is true, but this is also why Dave says that investment is long term. Every 10 year period has averaged 12%. When times like we are experiencing now things are low, then you buy and wait for them to come back up. They will come back up.
I also read that comeback wasn’t trying to get rich quick but then read that she was trying to retire in 5 years. Maybe I misunderstood something but that is REALLY quick, and in order to build the empire she was referring to she would have to GET RICH QUICK. Everyone has their own way of doing things and that is fine but personally I am going to choose following someone’s advice that became a millionaire twice. Dave Ramsey went bankrupt and became a multi millionaire in 20 years or less. He used Mutual Funds to do this.
I would also like to add that there is risk in a lot of things but that doesn’t mean that all risk is equal.