In 1996, the book “The Millionaire Next Door” exposed the long-held secret of millionaires in America. Their secret? With the exception of a handful, most millionaires don’t live like the superstar millionaires on TV do. Instead, they look like regular guys and they work regular jobs. And yet, they manage to amass up to $10 million or more in money and assets.
If you’re asking yourself how this is possible, it may be that their millionaire tricks have eluded you. But that doesn’t mean it’s too late for you: You can obtain a bank balance worthy of the millionaire next door. However, you first need to understand why you may never gain financial freedom and then take steps to correct your habits. Here are three ways to do it.
1. Your Budget …show more content…
So what does living beyond your means look like? You might have a high credit card balance, because you’re using credit cards as a source of income. Your bills are also out of control: You pay too much for utilities, car payments, and other expenses relative to your means. You think nothing of buying a luxury item like a big screen TV on installments. Or you lease a car when you could buy a used car. You eat out at restaurant a couple of times a week. If you’ve ever looked at your bank statement and wondered why you have so little money, you’re living beyond your means.
To rectify this, cut up your credit cards and use debit cards instead. Cut out the bi-weekly restaurant trips. And don’t buy items unless you can pay cash for them. If you’re not sure how you’re overspending, think about keeping a ledger/ money diary for a couple of weeks. Be sure to put everything in their so you can get a realistic idea of how you spend. After that, create a budget you can stick to.
2. You’re Not Saving …show more content…
Financial expert Dave Ramsey suggests a thousand dollars to start with. This money goes to pay for emergencies like car accidents or trips to the ER. If you do use your emergency fund, you must also replace the money you spend. The goal is always to have at least $1000 in the emergency fund.
Once you have your emergency fund going, you’ll then want to save for a rainy day, a long rainy day. Most financial advisors agree that it’s good to put away six to nine months’ worth of income. This money holds you over in the event of a job loss or other “big” financial downturn.
3. Your Debt is too High
You’ll never gain financial freedom if your debt is out of control. And it usually compounds: Debt comes with interest. If you carry $10K in debt with an interest rate of 15%, you’re going to wind up paying $1500 extra on that debt before you pay it off.
The problem with debt is that it does impede your efforts to get wealthy because you have less money to invest. Very radical financial advisors even suggest going as far as paying everything off, including your house.
Aside from allowing you to invest more, however, being debt-free has another benefit. If you ever do lose your job, you won’t be worried about paying big bills like a
If you’re asking yourself how this is possible, it may be that their millionaire tricks have eluded you. But that doesn’t mean it’s too late for you: You can obtain a bank balance worthy of the millionaire next door. However, you first need to understand why you may never gain financial freedom and then take steps to correct your habits. Here are three ways to do it.
1. Your Budget …show more content…
So what does living beyond your means look like? You might have a high credit card balance, because you’re using credit cards as a source of income. Your bills are also out of control: You pay too much for utilities, car payments, and other expenses relative to your means. You think nothing of buying a luxury item like a big screen TV on installments. Or you lease a car when you could buy a used car. You eat out at restaurant a couple of times a week. If you’ve ever looked at your bank statement and wondered why you have so little money, you’re living beyond your means.
To rectify this, cut up your credit cards and use debit cards instead. Cut out the bi-weekly restaurant trips. And don’t buy items unless you can pay cash for them. If you’re not sure how you’re overspending, think about keeping a ledger/ money diary for a couple of weeks. Be sure to put everything in their so you can get a realistic idea of how you spend. After that, create a budget you can stick to.
2. You’re Not Saving …show more content…
Financial expert Dave Ramsey suggests a thousand dollars to start with. This money goes to pay for emergencies like car accidents or trips to the ER. If you do use your emergency fund, you must also replace the money you spend. The goal is always to have at least $1000 in the emergency fund.
Once you have your emergency fund going, you’ll then want to save for a rainy day, a long rainy day. Most financial advisors agree that it’s good to put away six to nine months’ worth of income. This money holds you over in the event of a job loss or other “big” financial downturn.
3. Your Debt is too High
You’ll never gain financial freedom if your debt is out of control. And it usually compounds: Debt comes with interest. If you carry $10K in debt with an interest rate of 15%, you’re going to wind up paying $1500 extra on that debt before you pay it off.
The problem with debt is that it does impede your efforts to get wealthy because you have less money to invest. Very radical financial advisors even suggest going as far as paying everything off, including your house.
Aside from allowing you to invest more, however, being debt-free has another benefit. If you ever do lose your job, you won’t be worried about paying big bills like a