I Save Tons Of Money By Being Healthy

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I can honestly say that I’ve saved tons of money, year over year, for staying healthy and eating well.  I regularly exercise and eat well with home cooked meals and a Paleo style diet.  To me, when it comes to living frugally, staying healthy is a big part of my plan.  I haven’t been to a doctor in years, so no co-pay visits, no billing from the insurance companies….most importantly, no meds!

How many people do you know that are constantly sick?  If it isn’t a cold or sinus issues, it’s stomach problems, or some other health issue.

I see people like this everyday, especially at work.   A lot of my co-workers eat really bad and have no energy, or are just not motivated to stay active.  This is especially true at an administrative job, where you seem to get stuck behind a desk all day long.    I see co-workers eating fast food every day for lunch; taking in tons of sugar with junk food and soda, gaining more and more weight, then they wonder why they are sick all the time.   I just sit back and watch and appreciate the fact that I haven’t been sick even once this year or last year for that matter.  Obviously I’m not super human, but when I do catch a bug, I can quickly shake it and will be back to 100% in a matter of a few days.

Outside of my interests with my finances and investing, I love working out.  I’m a personal trainer and enjoy exercise as one of my passions.  Of course the way I look at it, both of these hobbies actually go hand-in-hand.  If I keep myself in good shape and take care of my overall health, I stay away from the doctor and save tons of money year over year.  I can imagine I’ve literally saved thousands of dollars over the past several years (in comparison to most people I know), by just maintaining my health.  I feel better than I did 10 years ago and I’m in a lot better shape.

I actually get the best of both worlds….good health and significant savings.  Both of which play a big part in my future goals.  I plan to live well and enjoy life to the fullest as I age.  Staying in shape, maintaining my health AND stashing away all that extra cash I saved in the process to reach my financial goals.  It’s a win-win situation!

Look good, feel good, live a long healthy life and stay away from the doctors office.  No meds, no insurance bills, tons of money saved in the process!   Get active, stay active, eat clean and live well.

 

10 Ways To Build Your Wealth In 2015

2015I came across this great Forbes article written by Laura Shin called “10 Surefire Ways To Build Your Wealth In 2015”, that I wanted to share.  It has some great information that we can all benefit from to help us stay on course to accomplish our financial goals this year.  Check out the article here.

I hope 2015 is a happy and prosperous year for everyone.  Stay focused on your goals and monitor your spending closely.  Watch your investment accounts grow and feel good about your accomplishments this year!

 

Joining The “Million Dollar” Club

Million Dollar Club

Ah, don’t get too excited with the title of this blog….I’m not really there yet, although it is exciting to me to be joining a list of many others that have dedicated themselves to achieving this goal.

I recently came across a great blogger J.Money at Budgets Are Sexy that has really inspired me.   He created a Million Dollar Club for people like myself that aspire to build some serious long-term wealth.   Although, at times it seems like wishful thinking for most of us working-class stiffs to make this type of a goal, I see absolutely no reason why I won’t be there by the time I retire (or during retirement).  Unfortunately for me, I started way too late in life and I did have a financially devastating divorce right in the middle of it all.  Still, starting late is better than not doing anything at all.

Now, I’m not one to sit back and just hope to make this goal, I know it’ll take a lot of hard work and dedication. I’m also not naive to believe that reaching this goal will be the end-all for me and I’ll fade off in the glory of my riches in retirement.   This is an excellent goal for me at this point in my life, plus I get to be a part of the “Club”, that’s the cool part!

In order for me to make this goal, I need to stay focused and listen to my own good advice…..at least I think it’s good advice!  If I do the following things and make some smart financial decisions, I will make this goal.  Hopefully sooner than later.  For the most part, all I have is time, and time is what it will take to make it.  With limited resources, time is really the only thing you have on your side.  To build this type of net-worth, it’s going to take me some time, but I’ve already dedicated myself and this website to long-term wealth building, so let’s take this journey together.

Here’s my plan:

1. First off, build up my savings account to give me a healthy emergency fund to cover all my unexpected expenses. Ideally, I would like to have at least two or three months-worth of living expenses saved up.

2. Continue to live debt free.  If I can stay away from debt, I’ll be way ahead of the game.  All of my resources will go into achieving this goal.

3. Continue to aggressively fund my brokerage account, especially buying good dividend paying stocks.  If I stay focused on this path, I will be able to build a solid income stream that will snow-ball my account year-over-year.

4. Finish out my current employment and earn the service credits it takes to lock-down a significant pension at my State job.  I pay 10% (mandated) right off the top of my salary every month for my pension.  If I can get 25 years of service, I will be able to secure about 65% of my three-year highest average salary for my pension income.  I already have 14 years of service, so I’m not too far out now.  This will be the life blood for me in retirement!

5. Build up my 401k and don’t take any loans against it (although this has been a great resource in a pinch).  I just pay myself back with a low interest rate and it doesn’t show on my credit report.   It’s has been a life saver in the past.

6. Build up my wife’s accounts: savings, Roth IRA, etc.  Remember, it’s a team effort when your married!  Ultimately, I want to make this goal with my accounts and investments, but we can get there twice as fast together.

7. Continue to fund my investment club with my co-workers.  At this club we use a separate brokerage account with four of us contributing monthly.  It’s been a nice pool of money building on the side.  I really don’t think about this one, I just fund it with the other accounts and it continues to grow.  It’s just another great way to build wealth on the side!

8. Look into purchasing rental properties.  I’m especially interested in vacation condos at destination resort areas.  I can rent the condo year around and occasionally enjoy it myself!  I have a good friend that has successfully owned and rented condos for years.  His guidance will be crucial and absolutely priceless when I get to that point.

9. Dedicate my spare resources to all of the above.  Continue to make smart financial decisions as I go.  Stay healthy and fit to hopefully avoid any health issues along the way.  Eating well along with routine exercise will keep your body healthy for the long haul.  I feel like I’m in better shape now than I was 20 years ago!   Good health can keep you away from expensive doctor bills and medications.  How many people do you know that rely on meds to get them by everyday?  It’s sad, but true.  Stay healthy, not only for your own life (and your kids, if you have any), and start to realize how much long-term health care could potentially cost you.   It’s extremely scary to think about health care costs in retirement.  I’ll take care of myself to try and avoid this hazard!

10. Last but not least, I should have a Social Security benefit as well.  I paid into the system for many years, so I’ll take whatever I can get from this income stream.

If all goes well, I will wear the badge of the Million Dollar Club.  Good luck to everyone else on the list!

Compound Interest: The Miracle Behind Wealth Building

imagesAn important feature of investment returns is something called “compound interest”.  With compound interest you can turn a modest middle-class investment account into millionaire status by the time you retire.

So how does compound interest work?

With compound interest, not only your initial investment appreciates in value over time, so does all the gains on that initial investment.  For example, you might expect $100.00 that gains a 10% annual rate of the stock market to appreciate to $110.00 after one year and $120.00 after two years without compound interest.  But if no money is taken out, then in the second year it is not just the initial investment ($100.00) that grows at 10%, but also the gains on that initial investment from the first year ($10.00).  So, after two years the investment is actually worth $121.00. After many years of compounded interest, the gains on the initial investment become very significant, making more money year over year.

The really cool thing about compound interest is how it can double the account value after years of saving.  It’s really like a snow-ball effect; it keeps growing, doubling and doubling over time.  Investment professionals refer to the “rule of 72”, which is basic rule of thumb that illustrates the power of compound interest over time.  The “rule of 72” basically says to determine the approximate number of years an investment will take to double in value, you divide 72 into the annual average rate of return earned on the investment.  So basically,  if an investment earns a 10% rate of return it will double approximately every seven years (72 divided by 10 is just about 7).  An investment that doubles every 7 years, will double twice over 14 years, quadrupling your account value.   You can see over time how this snow-ball effect works.  After 35 years of saving, your account could potentially double 32 times.

Wow, that’s crazy to imagine, but this is part of the mindset that you need to have to secure long-term wealth with limited resources.  The average middle-class worker really can manifest some serious wealth with compound interest.  This is why it’s so important to start saving today.  Obviously the younger you are, the better off you are, because you have time on your side.  The more years you can take advantage of compound interest, the better.  Start saving whatever you can at first, even 1% of your paycheck will get you in the right direction.  Then start adding an additional % of your pay whenever you can.  Imagine yourself getting to a point where you can invest 50% or more of your paycheck!  Can you imagine how much wealth you can accumulate when you dedicate that type of income to your investments?

Take a look at some of the investment tips that we have discussed on Middleclasssuccess.com and do your own research to help you try to achieve the best possible return on your money.  The better the rate of return on your investment, the more you can accumulate faster.  Historically the stock market over time has produced solid 10% returns.  Determine what the best investment vehicle will be for you….a brokerage account, IRA, Mutual Funds, 401k, real estate/rental income….maybe eventually all of these will be a part of your portfolio (I hope so!).

Stay focused on your long-term goals and start saving today.  Before you know it, 10, 20, 30 years go by.  If you start the process and stay on track, you will set yourself up for financial success and true wealth building.

 

Retirement: Will You Have Enough Money To Live On?

retirement  Planning for retirement is most often overlooked.  For some people it’s a complete afterthought.  Oddly enough, most people simply think they can rely on Social Security (SS) to get them by in their retirement.  To me this a very scary proposition.  Why in the world would anyone think that SS is going to allow them to live the type of lifestyle they are accustomed to when they actually do stop working?  It doesn’t make much sense to me, so I hope it at least raises the same question for you.

So when you do retire, how exactly are you going continue to support yourself?  I sure hope you have some additional income streams that can allow you to live the type of lifestyle at least close to where you are today.  In all reality you should at least have three or four different income sources to keep you afloat.  Some of which should be continually earning more money, even while you are drawing down on the account.

So let’s look at a few ideas for these income sources:

1. Social Security.  Yes, we already mentioned this one and it should be a source of income for your retirement (assuming you had been paying into the system).

2.  Savings account.  Hopefully you have a healthy savings account built up, if not start working on that now.  This account won’t give you hardly anything in return at the current interest rates, but it is liquid cash that you absolutely need to have at your disposal.

3.  Personal retirement account (IRA/401K).  If you haven’t already started at least one of these accounts, you need to think about starting one as soon as possible.  Research the tax implications/benefits of each type of account and decide what is best for you.  Generally speaking, you either pay taxes on the money going into the account up front or later when it is withdrawn.   Both account types are great for building wealth long-term.

4.  Personal brokerage account (taxable account).  Open a brokerage account with a reputable online broker, such as Ameritrade, E*Trade, Scottrade, etc.  Buy stocks, bonds, mutual funds, etc.  Pay taxes on capital gains and build wealth through dividend reinvesting with good solid dividend paying companies.

5.  Real estate / rental properties:  Create a consistent income stream through rental properties.  Build equity in real estate properties and have your renters pay down your mortgage.  Hopefully by retirement time there is no mortgage, so the rental income is pure profit.

There are obviously many more ways to create income sources, but these are 5 simple things that you do to start planning for your retirement right now.   If you manage to secure all five of these income sources successfully, you will have nice income streams to keep you afloat during retirement.  Of course, it’s all about how much you spend that really dictates your success long-term.  Analyze your spending habits closely, especially going into retirement. If you haven’t done so already, eliminate all debt and roll-on into your glory years without any liabilities.

I also found an interesting article from MarketWatch called with 5 tips to help you retire early.  These are some simple tips that can help you reach your goals in retirement, that also reiterate many of the past blog topics we have covered on Middle Class Success.com.   Spend wisely, save relentlessly, and build wealth.

Is Time On Your Side?

Time-Clock-Money-Vial

Depending on your age and current financial situation, time is critical for your future financial success.  Obviously the younger you are the better the situation because you have more time on your side to start the process of investing in your future.  You also have more time to cover the ups and downs of life in-general, including life changing events and the current climate of the financial world.  Although you have a significant advantage starting out at a younger age, just getting the process started at any age is better than not doing anything at all.

For me personally, I never understood (or really bothered paying attention) to my long-term financial situation.  This is unfortunately all too common with working-class folks like myself.   I think a lot of people just assume that everything will just work itself out and something like Social Security (SS) income will provide for them after they retire.  The reality of this proposition is frightening to me when you actually look at the sheer number of your SS benefit, in comparison to the type of living you are accustomed to.

It doesn’t take a mathematical genius to figure out that you simply can’t afford to maintain the type of lifestyle you currently have working now, with only a fraction of that income coming in from SS to live on.  With that said, do the calculation yourself on paper (or in your head, because it’s really that simple) then start understanding the realization that you will need other sources of income to be able to come close to your current standard of living.  As I mentioned earlier, it doesn’t really matter what age you are, starting right now is the key to moving forward.    I certainly wish I would have started to aggressively save money and investing years ago, but raising a family and working pay check to pay check was my dilemma, like so many millions of other people.

The bottom line here is, start paying yourself first (saving money) every month.  Even if it’s $10, $50, $100 every paycheck.  Start there first, stay focused on this task, and never stop.   The money will compound after years of saving and you will be shocked how much you can accumulate over time. Hopefully the money will be invested in an account that will give you a decent return on your investment.  That is a discussion for many more blogs, but for now let’s keep it as simple as putting money in your savings account.  After all, we all should have a savings account that can be quickly accessed in case of an emergency.

I can’t stress this enough, it’s very important to build up a savings account first, then investments will follow.   Of course reducing/eliminating any and all debt is also the key to long-term success.   Many more blog posts to come on that topic also.   For now, get that savings account built up to a comfortable level, then consistently add to it every pay check.  You will be amazed at how much it will grow year over year.