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Use 20/20 Financial Vision And Build Some Wealth

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These are the EXACT same steps I used to PERMANENTLY get rid of my mortgage, student loans, credit card debt, and auto loan debt.

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by Paul Kindzia in Personal Finance
May 31, 2019

As a wealth advisor and financial planner, the one question that I get over and over again is, “HOW DO I BECOME RICH?”  We all just want to know the secret or the fastest way to reach our dreams.

If it were only that easy.

But, here’s the good news, there are ways to put you on the faster path.  Proven ways.  Time tested ways.  You do that through modeling.  Not the fashion runway modeling kind.  The other kind of modeling.  The modeling type where you systematize something where basically “you copy what has worked for others.”  Why go through all the trials and errors in life the hard way and deal with the errors and lost time when you could just mimic what worked for countless others?

When I studied and observed my most successful wealth building clients I noticed one thing right off the bat.  They were all very good savers.  Some made more money than others but they all had savings goals and made sure they met them.  I took notice and modeled that behavior for myself.  You’ve heard the saying, “Pay yourself first.”  That’s a proven model to financial success.

The average household savings rate in the U.S. is about 5%.  Most people have been told to save 10% of their income (that may have been accurate in the past when the economy and markets were different).  But super-savers and wealth builders, they saved in excess of 20% of their income.  Annually.  Every-single-year.  No excuses.

What’s another common denominator of success that they had?  They kept the cost of home ownership as a percentage of their total income less than 20%.  This freed up earnings to allocate towards savings.

Keep in mind, the cost of home ownership is more than just your monthly mortgage payment. It is ALL of the items required to own and live in a particular house.  These would include items such as;

  • Repairs and maintenance (which average over 1% of the value of the home annually)
  • Utilities
  • Insurance
  • Taxes
  • Homeowners association fees
  • Pest control
  • Painting
  • Landscaping

It’s not uncommon to see the cost of home ownership >30% for many households (including high-income households).  Houses are super expensive and soak up far more financial resources than people want to acknowledge.  They are not investments.  They are cash drains.

It doesn’t mean that you shouldn’t own a home.  It’s owning the right home for your budget and goals.

So let’s connect the dots and follow the bouncing ball for many households;

  • Federal, state, local, sales, social security, Medicare and other taxes may be 30% of gross income
  • Cost of home ownership is 30% of gross income
  • Total cost of autos exceeds 10% of gross income
  • The household is already at 70% of total income

Now if I let these typical households know “the secret” to wealth building which is to save and invest >20% of their gross income, that would leave them only 10% to spend on ALL other areas of their lives.  Would 10% of your gross income be enough to cover the expenses related to all the rest such as;

  • Food
  • Clothing
  • Vacations
  • Kids expenses
  • Gifts
  • Charity
  • Pets
  • Medical
  • Entertainment

The answer is “no way.”  So what gives?  I’ll tell you what gives – the savings rate of the household.  Since they can’t live on 10% of their income and they have already committed themselves to an expensive house with nice cars and they can’t tell the governments that they don’t feel like paying their taxes, what gives is their savings.

They can’t and won’t save and invest >20% of their gross income.

So they never turn out to be wealthy.  End of story.

They go their entire lives:

  • loaded with debt
  • living paycheck to paycheck
  • always worrying about their job to keep the bills going
  • buying new cars
  • upgrading to bigger homes
  • feeling the stress of living on the treadmill of life while spending money on things that they hope will make them happy

That’s living in the United States in a nutshell.  95% of the population is in this camp.

What do I recommend you do?  Live your life using 20/20 financial vision;



If you could do these two things, you’ll be way ahead of almost everybody else.

One last nugget before I go.  Do you want to know how to have the most money to spend on fun stuff in life?  Get out of debt.  Pay everything off.  Then every dollar that you bring in could be spent on things that you want right now versus what you thought you wanted yesterday and now have to keep paying for them (plus interest).

The debt is trapping you.  Your life is stressful.  Connect the dots.

Good habits lead to good behaviors.  Good behaviors lead to good decisions.  Good decisions lead to a good life.  Live by principles and choose wisely.

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These are the EXACT same steps I used to PERMANENTLY get rid of my mortgage, student loans, credit card debt, and auto loan debt.

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