7 Days To Maximize Your Future
In 7 days, you should be able to setup new goals and things to execute on. You are going to evaluate yourself financially daily. And take a 30,000 feet audit of where you stand vs. where you want to be. It’s a vital self-discovery tune up, necessary to understand how to improve and create financial habits. Retirement is planning. You can steer your boat with your paddles, thinking about the next row. Or figure out how to sail the winds of the market for years to come.
This strategy will only work if you have already minimized your credit card debit. Credit card debit is hamburger money. Meaning, you eat it up and flush it out, when you know you shouldn’t. 19.99%-29% interest rates will do more damage to you. Don’t earn boatloads of money for the bank. Leaving you with cancerous debit side effects. Your first goal must be to rid yourself of any debit. After which you can start applying these strategies. But please discuss these strategies with your financial advisor first before implementing them.
Short Summary: Use your tax return earnings as seed money for the future. Put the time upfront into working out multiple solutions for your future income. Consider today what you could accomplish in the next seven days for your future. Lay the foundational pieces now. And then commit to becoming an active user of your own principles, for passive income later. When you’ll ultimately want and need the money the most. If you want your money to work for you, you need to understand and adopt our strategy of paying your dues upfront. Invest now for your future self later. That means maximize the opportunities you have in front of you today, while spreading out your money in a systemized way to invest for tomorrow. Let us explain.
When retirement hits, you won’t know what to do. Your dedicated focus on work hasn’t allowed you enough time to reflect on how you want to spend your glory days. Life has taught you to live a comfortable life; money is an inevitable and unavoidable evil. The truth is, it doesn’t have to be. You work to provide for you and your families needs. To fulfill your desires as best as you can. If you maintain your productivity through the ups and downs of life, you should have something to show for it. That’s where saving comes in. Do so repeatedly, and you are compounding your money. Do so over time, and rake in the cash later. Create this into a habit, and once retirement comes, you would be so used to moving your money to work for you, you could finally sit back and just watch the income flow back in waves to you. At the end of day, the richest and most successful people in the world know how to manage their time, and their money. They prioritize what to execute first. And then execute, creating habits. And in the spirit of Lao Tzu, your habits become your character. And your character becomes your destiny. I’ll explain the habits you should develop later. If you are like most Americans, you have 6 avenues of investment available to you right now. You can save your money. Invest in IRA’s. Maximize your pension plan. Save and buy a home. Create rental property income. Maximize your life insurance policies. Or create a retirement plan. All of these suggestions are investments in the short term for long-term thinking.
Day-1-Maximize Your Savings Potential
If you haven’t already, open a rainy day savings account. One, where under extreme cases you use. This thing is off limits otherwise. And we mean off limits. Build up in your mind a maxim for using the money. If you break the security glass, and remove money from this account, you promise to double what ever you take out. If you had to go there once, chances are you’ll go there again. So double down, to avoid future slips. Commit to contributing 1% of every paycheck like a self-tax for yourself. Do it now. Ideally keep stock pilled 6 months of income for just in case situations. Out of sight out of mind. But be sure to gain the habit of saving. Be like the humble squirrel, saving his nuts for the winter.
Day-2-Maximize Your IRA’s
If you are capable of saving $5,500 every year, over a long-term period of 20+ years, you have earned the opportunity to become a millionaire. Thanks to compounding, by the time you are ready to retire, because you planned well in advanced, and you used the system to your advantage; your investments will pay out handsomely. Even with the economic downturn of 2007-2009, if you contributed regularly—you’d still have money. Even booming. The way the system is created is meant to constantly grow. Although the markets move in waves, and Mr. Market can steal your money at any time. Placing a bet on the US economy in a low risk form is a smart investment. All in all in the long term, under well guided principles the market can earn you money. It’s consistently proven this over time. And under the security blanket of an IRA, tax-free money at the end of rainbow is what you’re planning for. That’s it. Thought of another way, if you were able to invest $1,712 every month for 30 years; at a really measly 3% rate of growth, it would still payout $1 million dollars over time. Just set it up already and don’t touch the money, until the time is primed. Patience and persistence wins every bet.
Day-3-Maximize Your Pension Plan
If you have a pension plan with your employer or under your own self-employment, be sure to set yourself up for maximize benefits and contribution. In the long term, the ability to make money while doing nothing but living is part of our strategy. By shopping in bulk now, the stockpiled dividends will leave you speechless. However, the game becomes macro vs. micro thinking. Think in the future. Here’s one of our favorite examples. There used to be a client of ours who was a mechanic. He had his own shop, and a crew of two other mechanics. Every month, I would visit him to talk shop and collect some bookkeeping work. And since we were great friends, I would always casually at the end ask him, “Did you pay yourself off this month?” Sometimes he would smile, other times he would say no. 30 years later, he tells me he wants retire. He’s done doing motor swaps. We started crunching the numbers. Like clockwork, since I would visit him every last Friday of the month, he would also contribute a little towards himself. Some weeks more than others. Total payout now that he’s entered the other side of the hill: $3,450 a month. Quickly he sold everything he owned. Left the USA and moved to Peru where his money stretches far more than he ever thought possible. I regularly get phone calls from him telling me about the latest ceviche he had, or the how the Andes Mountain’s looks breathtaking in July. If he can grow the habit, so can you.
Day-4-Become a Home Owner
Hopefully, the roof over your head is under your name. If not, dedicate today into learning what it would take for you to own your own home. There are so many benefits to being a homeowner. From gaining tax relief and deductions, to building up your asset portfolio—taking on a mortgage instead of giving away rent money is one shortcut to building up your potential for the future in residual income. Once the time comes to retire, you can sell it off, rent it, or just keep using it. It should be paid off and yours. Make it work for your lifestyle and your strategy.
Day 5-Rental Income
Once you accept the responsibilities of being a homeowner, understand the new possibilities of owning more properties. Spend today understanding what could happen if you owned more than one home. How much more would you be able to make a year? Tax deductions? You bettcha! Where would the house be located? It’s up for you to decide. But there are tons of things to consider. From who you want to rent to. And for how long do you expect each renter to be there. And what about repairs? Not to mention, where would you want to retire in relation to this rental property? Think about all the reasons of why and where you want to be. Then plan to see if you can already plant some seed money towards building up a rental property stream in a location where you want to be later in life owning and managing. Learn how to make money in a residual income stream. And see what a second home, in some basic cases, an extra $36K and some extra tax benefits a second home could bring to your portfolio.
Day 6-Maximize Your Life Insurance Policy
Tax-free money sounds good to anyone’s ears. And with insurance policies, you can put this money away for just that option for you to use later. Or for your loved ones to inherit. Maximizing this asset just makes sense. It’s tax-free money you get to put away. Make sure you have a plan, and maximize it today. Unfortunately I had a client once who wasn’t able to see the importance of insurance. He passed young at 45, and didn’t really believe in putting anything away. He had an interest in rental properties. By this time he had his own home, and two other properties working. Vividly I remember him looking for another way to scramble together the funds for another property. I told him he should instead invest in a life insurance policy. He had his rental income all figured out. And was covered by all means. He knew that in 8 years he would start turning over profit in all of them. And wanted another mortgage. So instead of buying insurance, he bought another house. Tragically he suffered a car accident and passed away months later. Along with the death of a husband and a father, the family inherited rental properties that also had just finished their rental agreements and went vacant in the same three-month period. Thankfully, his wife has been able to pick up the slack, but she quickly understood the miscalculation in protecting oneself. Not just for yourself, but for your family.
Retirement. Let that word sink in a little more. If you’ve had an over extended vacation, you might think you know what retirement is. Think again. Retirement can be a thrilling ride, or an anxious filled rollercoaster waiting for miracle money. The difference is knowing where and what you want to be doing when you stop “working”. Really think it through. Ask yourself what steps are you taking today to ensure you get there? The average American wants to have a million dollars reserved for retirement. But more and more that might not be enough. And sure 60K a year in a pension plan sounds wonderful. But social security goes bust in 2034! Remember you could be making an additional 36K a year renting another property, assuming you opened that avenue early. Cash out the million dollar IRA. Cash out the half a million life insurance policy, feel safe knowing your 6 month saving commitment has compounded into a lump sum of 30 years times your salary plus having all these saving habits has taught you something beautiful. Money is a tool. And you’ve mastered how to live worry free. Because now when you need some Rocket 5 booster money for anything, you have an entire arsenal at the ready. All because you planned and paid yours dues today. Start now.
Any questions? Comments? Suggestions? Send us an email, and we’ll make sure your concerns are covered.
Ramon & John Barbieri
BARBIERI CPA since 1983