Common Sense Millionaire
Common Sense Millionaire
EP 13: How I Became a Millionaire: A Guide to Secure Your Financial Future
Ever wondered how someone could go from financial zero to millionaire status? Brace yourself for an insightful journey into my life, where I started with nothing and now have over a million in investable assets. This episode is packed with my personal experiences, strategies, and tips that will help you secure your financial future. I'll share how I maximized my job's sponsored retirement plan, invested wisely in the stock market, rebuilt my credit from scratch, and managed to get a low-interest rate on my car loan and first investment property.
Retirement can either be a dream come true or a nightmare, and your financial choices today have a significant say in this. Focusing on the key choices you need to make today leads to a comfortable tomorrow. Whether you're just starting out or trying to get back on track, you'll find this episode packed with valuable lessons that can guide you towards financial advancement and a secure retirement. So, buckle up and let's navigate this journey together.
Thank you for listening to The Millionaire Mindset Podcast with George Dines.
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Welcome to the Common Sense Millionaire, where we work to promote your financial advancement in knowledge process and education so that you and your family become financially secure. This is the place I share Common Sense Action Steps that you can take today to assist your financial advancement. So sit back, grab a drink and let's get started. Common Sense Millionaire here. Hope you all are doing well out there and we're back to continue our series on how do you get to that millionaire status or just simply advance your financial opportunities for yourself and your family. One of the biggest questions I've been getting is because I kind of freely talk about how I went from nothing to a million plus in investable assets. Now a lot of folks are like, well, you must have had some help or something like that. I was like no, so let's just get this clear when I first started moving in this direction, I had absolutely nothing. I had a disastrous financial situation and I actually moved to another city, which was my home city, and came back starting with nothing. So, in order to avoid what I had been through in the past, I decided you know what, you need to sit down and look at what's going on with your planning and how are you going to shape your financial activities and actions to match that. Starting from nothing was relatively easy. I had no credit card debt. I had no other long-term debt. I was lucky enough not to have student loan debt. So I immediately went to my job and the first thing I did was to maximize my withholding for the sponsored retirement plan. So the amount I think back in the day was probably around $18,000 a year. So that was all on a pre-tax basis. So I just maximized that and said whenever I would get a raise, instead of actually taking the cash, I would put the raise amount into an additional contribution to make sure I always maxed out. Second thing was you always have choices in these types of plans as to how are you going to invest the money. I just said I just need to do something simple that almost anyone can understand, and that I was not going to look at these choices because I knew I was making a 20-30 year investment. So what I did was I just invested in the wide stock market itself and just let it roll. Basically, when the statements came in, a lot of times I didn't open them because I didn't want to see that I might have money that I could get to in some way, and that was very, very important to me.
Speaker 1:The second thing I did was just to make sure that I had to rebuild my credit. So I wanted to make sure that my credit was going to be okay in the future, because I wanted to make a home purchase and at some point I knew I was going to have to purchase a car and there was no way that I was going to be able to do that because my credit was so poor that the rate I would have received would have been onerous for anyone. And I've seen so many people get caught up in car debt where they're paying ridiculous interest rates because they're such a high risk. So, believe it or not, it's easy when you start from zero. So to rebuild my credit, I started with one of these crazy cards where you had to put a deposit down. So I put $500 down and that gave me $500 to spend. So every time I would spend it, I would, of course, repay it to keep that $500 balance. Again, I had no credit, nobody was going to ever give me a loan, and I just used my common sense principles to build the credit Okay and over time, as I got rid of that card and I got other cards that gave me higher limits, on the same premise that I would have to make a deposit and then also pay it off as I Used that credit for various items. Now there's a lot of negativity around those types of cards, but the negativity is because most people can't manage that and you have to make up your mind what you want to do and when you want to be 20 years from now and we'll get to that shortly as to why you have to think about that.
Speaker 1:So then, moving forward, I Decided I need to go back to school. I went back to school and I paid it with another credit card when I charged tuition, and then I was using the money from my job and savings to pay that card off, and Over about four years, I was able to ditch those credit cards and get a normal credit card where I had a reasonable interest rate and reasonable limit and Continue to just turn that over. So I would use the credit card to purchase something. I would use my cash to pay it off. So I continued to follow that process until my credit score increased enough that I was able to get a Regular credit card which is like a regular card, mastercard from a known bank or from my credit union. So my score just kept increasing. Now what's what's the benefit of that credit score increasing at the end of the day? Well, you know, let's go to the, the present future, as you want to call it.
Speaker 1:When I got my Car loan, when I finally was able to to buy a car that I really wanted Okay, my credit Score helped me get a really low interest rate. My most recent car purchase, I had a interest rate of 1.74% From my credit union. That was attached to my job. You know, right now, we all know currently Interest rates for cars are ridiculous. They're in the 7 8% and a lot of people are paying $1,000 a month for a car. I'm not trying to do that. I'm trying to get whatever I'm going to purchase as low as possible. So I have to maintain my credit score to make sure that happens.
Speaker 1:Now I wanted to buy a home. That was a little bit more difficult because I was still a little concerned about my credit score and how that was going to impact on buying. The house Didn't turn out that bad. I was able to get a wonderful loan and bought my first investment property for about a hundred thousand dollars and Proceeded very quickly to rent that out, had there for a few years with a renter and actually sold that property For a pretty significant profit that I was able to walk away with to do some other things. All of that's happening while my money is automatically going into my retirement fund and increasing each year because of the upward flow of the market.
Speaker 1:A Lot of people down the road got really scared. It was around 2008 and we had the financial crisis and a lot of people I knew we're actually trying to move their assets out of retirement funds because the stock market was collapsing, not in the way of a great depression, but there was significant reduction in the value of assets tied to the stock market. I Looked at that and said look, I'm 20 years out, 15 years out, this can write itself. So, instead of selling the assets, I doubled down, made sure I maxed out my contribution I and kept everything where it was. Remember, when the price of an investment goes down, you can typically buy more of it. So that's what happened with me Just let it ride and let it go.
Speaker 1:Very simple situation, very simple way to solve that Because, remember, you're looking at a 20 plus year horizon before you have to retire. Of course, as you get closer to retirement age, you make adjustments in that portfolio to ensure that, if there's a sudden shock, you're not wiped out. Why is this so important? One of the most interesting things is that the Federal Reserve actively tracks retirement investments by individuals. In 2019, if you're from the age of 65 to 74, the average investment account has $426,000 in it. If your 75 years are over, it's about $358,000. Now, that may sound great, but how long is that really going to last you in retirement? This is also brought out by a Federal Reserve study that showed that most people in the United States don't have $400 for a cash emergency. So what this tells you is that the folk who have investment accounts is skewed. It's skewed towards either high earners that have made investments, and then it's also low earners who have absolutely nothing. This is why I decided 20 years before all of this I was not going out like that and I was going to put away as much as possible.
Speaker 1:Sometimes, when you make that decision, people are going to be talking. There's going to be chitter, chatter going on about why are you doing this. It doesn't make any sense. Why are you putting all of your money in the stock market? Well, there's a historical analysis that showed that typically the market increases about 10 percent a year, and also that takes into account when we've had depressions and other fluctuations and devaluation of the market. You've got to get past that. You can't listen to the chitter chatter. You've got to figure out how to get the facts. So that means you either have to do work on your own to make sure that you understand this or you engage with a professional who can do that. Honestly, the only reason I got an MBA is because I wanted to understand investments. I took every investment class that I could, everything dealing with asset valuation. I wanted to make sure that I was moving in the right direction, at the same time also understanding what alternatives exist that can promote the increase in the valuation of your assets.
Speaker 1:Again, if you don't get it, if you're not in the market, if you're not investing for your own retirement, you need to step up. You need to get with someone who can help you. If you need to contact a common-sense millionaire, feel free to do that. If you have another professional, feel free to do that. But you've got to take action because if you still have a 20-year window, you still have an opportunity, as long as you make your own opportunity and don't listen to the naysayers who are going to tell you that you can't do it.
Speaker 1:You also have choices to make. Do you need to buy some of the stuff that you got? Do you need designer clothes? Do you need fancy shoes? Do you need a fancy car? It's not going to help you. A lot of people think I'm nuts. I drive a small Lexus Miniature SUV and people are like why are you driving that? You could get something. No, I've been there and done that and I'm not doing that anymore because I want to advance to make sure that I have a comfortable future in retirement.
Speaker 1:Most people are not going to have an opportunity to retire. We all see what happens. We all have seen the 75, 80-year-old folk serving as a greeter at Walmart or struggling through other types of jobs because they have no way to pay for what they need. This is a very unfortunate thing. So what I'm going to do is I'm going to really offer you an opportunity. Feel free to contact us If you need some guidance. We'll be glad to help. I'll be glad to help. I can steer you in the right direction. That's what you have to do if you want to make it. Thanks,
