Wealth Building Haters – 3 Ways They Try to Undermine Your Resolve

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In all walks of life, we’re going to be dealing with some sort of opposition to our goals. Why? Well, maybe it’s just life’s way of challenging us in order to make us stronger and more resolute.  You might even say that much of our growth as human beings on this earth comes from the trials that meet us every step of the way.

But, we always push harder. We always persevere.

Our path to financial independence is straight yet narrow, and as I’ve discussed in previous posts, it certainly ain’t easy! Other people we know, even family and friends, will surely question and doubt our path and our desire to be wealthy and financially free.

Mark my words, temptation to deviate from our dedicated wealth journey will be aggressive at times, and we may even find ourselves believing what doubters keep telling us.

So, I want to nip these haters in the bud once and for all. We need to address the wealth building naysayers so that we can remain determined, calm, and confident disciples of the wealth building generation. Don’t let these haters cloud your thought or hamper your conviction! So here we go:

1.) “What’s the point in having money if you don’t spend it?!”

Image Source: www.aviplimowinetours.com

Image Source: www.aviplimowinetours.com

The mother of all naysayer comments! We’ve all heard this statement from someone close to us.  The scenario might go like this:

Your friend, Trixie: “Crazy sale at Lululemon today!”  (this is crazy because I know personally that they NEVER have sales!  But I digress…)  Let’s go grab some workout outfits!”

You: “Sounds like fun, but I already have plenty of workout gear, so I don’t really need to spend the money right now”

Trixie: “C’mon, what’s the point in having money if you don’t spend it?!”

For the love of Pete, people! Don’t give in to this nonsense! Trixie is clearly feeling guilty that she’s not strong enough to resist the  pull of the instant satisfaction that comes from binge shopping.  So she’s taking it out on you…if you shop too, she’ll feel better.  It’s just human nature. Ultimately, she knows you’re smarter for resisting the temptation and saving your money, but she doesn’t have the discipline.

“What’s the point?”, she asks. Here’s the obvious kicker – the point in having money isn’t to spend it! The point of having money is to provide financial freedom for ourselves, our loved ones, and our communities!  We don’t use wealth as a means to acquire material possessions. We use wealth as a means to grow more wealth (through investment), achieve a stress free quality of existence, and then give back to mankind through charitable or generational bequests once we move on from this life!

 2.) “Quit worrying about saving and investing money now…you can just do that later in life when you’re older!”

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I can’t tell you how many times I’ve heard this statement in the past.  Unfortunately, most Americans are wired to think that it’s ok to simply wait until we are older to begin saving for retirement, or better yet, financial freedom.  Sure, we could possibly be making more income later on.  But, this is a horrible excuse.

As I’ve discussed in other articles on compound interest, procrastinating in our savings and investment plans can cost us huge dollars in the long run.  For example, let’s say you wanted to have $3 million dollars saved up when you retire at age 65 (a nice chunk of change, for sure!), and you’re 25 years old right now.  Assuming you make a 10% return per year on your money (roughly the average annual U.S. stock market return since the 1950s), you’d need to invest roughly $475 per month.

But since you feel you’ll be making more money in 10 years when you’re 35, you decide to wait until then to begin investing for retirement. You still want the same $3 million at age 65.  With only 30 years until retirement, you’d need to invest roughly $1,330 per month…almost triple the amount per month!  Will you be making triple the amount of money at 35 compared to 25? Maybe, but I wouldn’t bet the farm on it.  Furthermore, you’re expenses will undoubtedly be much higher in your mid 30s vs. your mid 20s (kids, a mortgage, a couple cars, etc).  Don’t be the average 20-something spender (or 30-something spender!) living paycheck to paycheck.  Instead, make something of your financial future with a little discipline.

Don’t wait, start investing now!

3.) “You’re just greedy and way too obsessed with money!”

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This one is tough to stomach, but truthfully, you’re going to get hit with this often throughout your journey. It may even begin to resonate deeply within you, making you feel guilty about your desire to be fiscally prudent.  Please, please, do not feel guilty. Never apologize for financial prudence!

As long as your motives remain sound (remember: we don’t seek wealth simply to buy material possessions), there is absolutely nothing wrong with setting a high priority on your financial future.

Unfortunately, our society is plunging deeper and deeper into a “have” vs. “have not” mentality, where a growing population of “have nots” feels destitute and somehow victimized by those of us who work hard and remain financially savvy.

This is America, baby…a nation forged from the entrepreneurial spirit of capitalism and wealth-seeking behavior. Without individuals’ desire to be wealthy, we would not live in the most prosperous society in the world.  Wealth seeking behavior cultivates innovation, creates jobs, and inspires charity.

Anyone who snubs his or her nose at you for being “greedy” is just plain un-American….tell them to go fly a kite and move to France.

America is for wealth-builders, not wealth-haters.

Anyone hating on your wealth-building plans?  Let’s hear the story…

All the best,

Wes

 

Financial Freedom for $500 per Month

Image Source: money.usnews.com

Image Source: money.usnews.com

A while back, I posted an article detailing some budgeting issues my wife and I were having as new home owners.  Long story short, we decided to make some cuts to our budget in order to make sure we were diligently sticking to our long term saving and investment goals.

By now, you’re probably well aware of my infatuation with compound interest, so I thought I’d showcase how a little cost cutting here and there can literally give you financial independence in the long run.  No seriously, actual millionaire-status financial freedom!

As I always say, this ain’t rocket science…it just requires a little discipline and willingness to give up a few luxuries.

So with that, lets break down a couple things my wife and I changed budget-wise:

1.) Bar Method workout membership – $150:  A trendy (and expensive) ballet-inspired exercise class enjoyed by my wife. Cutting her membership is a HUGE sacrifice, but I am extremely grateful for the cost savings!

2.) House cleaning service – $200:  $100 per service, twice a month is saving us $200 in total.  Cleaning the house ourselves isn’t actually that bad…I crank up the tunes in the house so we (ok just me) can rock out while we split cleaning duties.  It takes us a couple hours, but we do a much better job than any service would.

3.) Cutting the cable TV cord – $100: Since we rarely have time to watch television anyway, we decided we’d probably be better off without the distraction. We do continue to maintain our Netflix and Amazon Instant memberships, so we’re not complete weirdos. Dropping our cable TV bundle and opting for only high-speed internet (no extras) netted us roughly $100 in savings per month.

4.) Mowing our own lawn – $50: $25 per mow twice a month saves us $50 total. I’m loving doing yard work…seriously.  I take pride in my perfectly manicured lawn.  It’s the simple things in life that make me happy, and certainly, a clean and tight lawn is one of those things.

Badda Bing!  $500 in monthly savings, son!

Now, what to do with all that extra cash…um, how about we invest it!

For our purposes here, I’m assuming that we’ll save $500 per month, investing a full $6,000 per year into a long term portfolio of stocks.  A few great, low-cost investment examples come to mind here:

iShares Russell 2000 Value ETF (Ticker: IWN)
Vanguard Small Cap Value ETF (Ticker: VBR)
Vanguard S&P 500 ETF (Ticker: VOO)

The first two ETF’s (exchange traded funds) are a diversified mix of low cost, value-oriented small-cap stocks. While slightly more volatile, these aggressive options boost long term returns.

The S&P 500 ETF mirrors the performance of the S&P 500 index, a broad measure of U.S. stock market performance as represented by 500 of  the largest companies by market capitalization.

So with that, let’s looks at a chart of the total value over time of investing this $6,000 per year into hypothetical portfolios that earn 8%, 10%, or 12% annually. These are reasonable returns for allocations among the above mentioned investment ideas.

Actual performance will vary, but like I always say, more aggressive allocations to smaller-cap value-oriented stocks should tilt performance upwards over the long term. Remember, with more risk comes more volatility, but this is long-term money that doesn’t need to be touched. Thus, volatility shouldn’t be as important as all out return!

chartAs you can see, with a little patience, compound interest will work its magic on the $500/month I’ll be investing instead of spending.  Depending on my annualized return (let’s face it, I’ll be going all out to push the return aggressively since I’m young), $500 per month for the next 40 years could mean an additional $1.5 million, $2.5 million or even $4.5 million or more when I reach my golden years.

Sure, it’s going to take some serious dedication to keep plunking away this kind of cash regularly instead of spending it. But look, this provides a nice example of how riches are built and fortunes won over the long term.

In our example, $4.5 million dollars can do the world a lot of extra good!

So tell me, any areas of the budget you could stand to cut in order to be a millionaire?

All the best,

Wes