cancel
Showing results for 
Search instead for 
Did you mean: 

How to gain wealth?

Auto Loans for ANY Credit Situation. Immediate Response.
Advertiser disclosure
Frequent Contributor

Re: How to gain wealth?


@ToxikPH wrote:

I'm very interested in increasing my net worth and hitting savings goals that would get me some banking status with some of the larger banks like maybe Citi Gold, US Bank Platinum, Chase Sapphire, or BofA Platinum Honors. Obviously this means getting some high amounts of money (up to 100k!). I'm not trying to do this overnight and I don't even think in the next five years but wanted to know how you would go from $0 to let's say $25k.

Would you use CDs? Investing? Savings? Others? Let me know your suggestions on moving up the ladder!


The standard answer is increase earnings and savings and manage spending. My journey went something like this...

 

  1. Stop the bleeding and identify the problem: I stopped all credit card and retail card spending and operated on a cash basis for about 2 years. Through that process, I recognized that I was an emotional spender. At the time, I unsubsribed from all marketing and stopped browsing Amazon when I was bored.
  2. Increase income: I worked my arse off and increased my salary through promotions and bonuses. As much as I may feel qualified and deserving, I was blessed to get signficant increases within a 4 year period.
  3. Increase savings by altering my self-reward methodology: As I earned bonuses or pay raises, I did not level up on housing, vacations or  luxury widgets. Now, 75% of these increases goes to savings.
  4. Be specific in your wealth accumulation purpose: The most signficant increases occured in the last 12-18 months once I established a clear financial purpose. I gave the money I earned, and the time I spent earning it, a purpose. That purpose drives how I allocate money to myself (pre and post-tax) and to others (expenditures, taxes, charity).
$mart $$$: #1 Invest, #2 Prioritize health, #3 Limit debt
Garden Goal: Mortgage ready and below 5/24

Last spade:Current spade:
Message 21 of 31
Established Contributor

Re: How to gain wealth?


@OmarR wrote:

@SteelerNYC wrote:

Everyone's top three expenses are housing, transportation and food. With that in mind:

 

Old cars (or no car!)

Cheap housing (family, friends, roommates)

Buying groceries, making coffee at home, eating at home, and taking your lunch to your work

 


 

In a nutshell, this is has been my framework for the last 5-7 years. I am now several years away from paying off my mortgage and after that, I intend to max out all my retirement accounts and retire as early as possible!


Given historically low mortgage rates and how well the stock market has been performing, wouldn’t it have made better sense to max out retirement accounts early on (to have taken maximum advantage of the run-up in the market) and not paid off the mortgage as quickly?  This comment assumes you’ve had the mortgage ~10 years. 

Message 22 of 31
Established Member

Re: How to gain wealth?

Pay off all credit cards every month so that nothing carries over to the next month.

Pay the essentials like rent electricity phone car gas.

Anything else I do not let sit in the checking since not much if any interest. Put into stocks. Been two years put about 20,000 into different sectors and so far about 14% return.
AMEX: blue cash everyday since 2003; blue sky since 2003; platinum since december 2017
Citibank: dividend world elite since 2005; Costco since 2016 when it came out
Chase: slate since 2003; freedom unlimited since 2005
FBNO: ducks unlimited since november 2019
Message 23 of 31
Frequent Contributor

Re: How to gain wealth?


@tacpoly wrote:

@OmarR wrote:

@SteelerNYC wrote:

Everyone's top three expenses are housing, transportation and food. With that in mind:

 

Old cars (or no car!)

Cheap housing (family, friends, roommates)

Buying groceries, making coffee at home, eating at home, and taking your lunch to your work

 


 

In a nutshell, this is has been my framework for the last 5-7 years. I am now several years away from paying off my mortgage and after that, I intend to max out all my retirement accounts and retire as early as possible!


Given historically low mortgage rates and how well the stock market has been performing, wouldn’t it have made better sense to max out retirement accounts early on (to have taken maximum advantage of the run-up in the market) and not paid off the mortgage as quickly?  This comment assumes you’ve had the mortgage ~10 years. 


I have only had my 30yr mortgage for 5 years. I aim to have it paid off in 10 years total time.

 

There are plenty of people that will agree with you, and plenty that will not. That mathematical argument will never die. Leveraging this and leveraging that. But I am a firm believer that the shortest distance to true wealth is having zero debt. But that is just me.

    EQ=846        TU=834        EX=822      INQ=0/0/2      UTIL=1%        AZEO
Message 24 of 31
Frequent Contributor

Re: How to gain wealth?


@Namaste7 wrote:

@ToxikPH wrote:

I'm very interested in increasing my net worth and hitting savings goals that would get me some banking status with some of the larger banks like maybe Citi Gold, US Bank Platinum, Chase Sapphire, or BofA Platinum Honors. Obviously this means getting some high amounts of money (up to 100k!). I'm not trying to do this overnight and I don't even think in the next five years but wanted to know how you would go from $0 to let's say $25k.

Would you use CDs? Investing? Savings? Others? Let me know your suggestions on moving up the ladder!


The standard answer is increase earnings and savings and manage spending. My journey went something like this...

 

  1. Stop the bleeding and identify the problem: I stopped all credit card and retail card spending and operated on a cash basis for about 2 years. Through that process, I recognized that I was an emotional spender. At the time, I unsubsribed from all marketing and stopped browsing Amazon when I was bored.
  2. Increase income: I worked my arse off and increased my salary through promotions and bonuses. As much as I may feel qualified and deserving, I was blessed to get signficant increases within a 4 year period.
  3. Increase savings by altering my self-reward methodology: As I earned bonuses or pay raises, I did not level up on housing, vacations or  luxury widgets. Now, 75% of these increases goes to savings.
  4. Be specific in your wealth accumulation purpose: The most signficant increases occured in the last 12-18 months once I established a clear financial purpose. I gave the money I earned, and the time I spent earning it, a purpose. That purpose drives how I allocate money to myself (pre and post-tax) and to others (expenditures, taxes, charity).

 

EXCELLENT POST!!!!!

    EQ=846        TU=834        EX=822      INQ=0/0/2      UTIL=1%        AZEO
Message 25 of 31
Established Contributor

Re: How to gain wealth?


@OmarR wrote:

@tacpoly wrote:

@OmarR wrote:

 


 

In a nutshell, this is has been my framework for the last 5-7 years. I am now several years away from paying off my mortgage and after that, I intend to max out all my retirement accounts and retire as early as possible!


Given historically low mortgage rates and how well the stock market has been performing, wouldn’t it have made better sense to max out retirement accounts early on (to have taken maximum advantage of the run-up in the market) and not paid off the mortgage as quickly?  This comment assumes you’ve had the mortgage ~10 years. 


I have only had my 30yr mortgage for 5 years. I aim to have it paid off in 10 years total time.

 

There are plenty of people that will agree with you, and plenty that will not. That mathematical argument will never die. Leveraging this and leveraging that. But I am a firm believer that the shortest distance to true wealth is having zero debt. But that is just me.


It would if you actually make the mathematical calculation. I’m all for being conservative when it comes to debt, but it seems to me you are being ultra-conservative when it comes to mortgage while possibly taking risks with retirement.  

 

Anyway, a quick Google brings lots of articles like this:

 

Should I pay off my mortgage or invest for retirement?

https://www.investopedia.com/mortgage-or-retirement-4770977

 

 

Message 26 of 31
Contributor

Re: How to gain wealth?

I really don't get the argument that you shouldn't pay off your mortgage early and instead should invest everything in the stock market or the opposite argument that should pay off your mortgage first and then invest everything.  Can't you do both?  I kick an extra $250 a month towards the principal of my mortgage right now and add an extra $1,000.00 a year principal payment on top of that to knock off more than a decade on my mortgage.  I also invest in dividend stocks as well besides just paying off my mortgage early.  You can do both it's not one or the other. 

 

Having no debt is awesome but if you don't have any cashflow from investments coming in your going to be hurting if you lose your job and/or your business goes under.  The samething goes for having investments that have cashflow coming in but not enough to cover your mortgage and other expenses making the extra money helpful if you lose your job and/or your business goes under but at the end of the day not going to prevent you from potentially becoming homeless.  I honestly think a more balanced approach is probably best here IMO.     

Message 27 of 31
Established Contributor

Re: How to gain wealth?

Of course no one is advocating putting ALL extra funds towards investments — all or nothing is rarely the best approach when it comes to money. I was merely trying to make a point that putting that much extra money towards paying off a mortgage that fast while “shorting” retirement contributions may not be the best idea — especially given recent market conditions and interest rates. In fact, the article I linked to suggests the balanced approach that you advocate.
Message 28 of 31
Valued Contributor

Re: How to gain wealth?

If it were me, i would likely pay off the Mortgage early versus invest.

A. The stock market is very risky versus having your home paid for. If it were to crash and you lose everything, it's gone. If said crash also affected Companies enough to have massive layoffs, one would lose their ability to pay said Mortgage as well. 

 

B. Land, it's something they're not making more of. Even if your hose depreciates, it's still yours and paid for. 






Message 29 of 31
Frequent Contributor

Re: How to gain wealth?


@tacpoly wrote:

@OmarR wrote:

@tacpoly wrote:

@OmarR wrote:

 


 

In a nutshell, this is has been my framework for the last 5-7 years. I am now several years away from paying off my mortgage and after that, I intend to max out all my retirement accounts and retire as early as possible!


Given historically low mortgage rates and how well the stock market has been performing, wouldn’t it have made better sense to max out retirement accounts early on (to have taken maximum advantage of the run-up in the market) and not paid off the mortgage as quickly?  This comment assumes you’ve had the mortgage ~10 years. 


I have only had my 30yr mortgage for 5 years. I aim to have it paid off in 10 years total time.

 

There are plenty of people that will agree with you, and plenty that will not. That mathematical argument will never die. Leveraging this and leveraging that. But I am a firm believer that the shortest distance to true wealth is having zero debt. But that is just me.


It would if you actually make the mathematical calculation. I’m all for being conservative when it comes to debt, but it seems to me you are being ultra-conservative when it comes to mortgage while possibly taking risks with retirement.  

 

Anyway, a quick Google brings lots of articles like this:

 

Should I pay off my mortgage or invest for retirement?

https://www.investopedia.com/mortgage-or-retirement-4770977

 

 


 

Janus' post basically sums it up for me. People just go for the math but ignore (or accept) the risk. Not for me.

    EQ=846        TU=834        EX=822      INQ=0/0/2      UTIL=1%        AZEO
Message 30 of 31
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.