Ignore the Hype, Do What Works

by James & Miel on September 2, 2008 · 0 comments

Like our tagline says, we sometimes rant a bit on our blog. Well, today’s posting is a bit of a rant. Specifically, one major complaint we have is that much of the content on the personal finance blogsphere isn’t helpful for building wealth.

For our part, my wife and I have set the goal of having networth of $4,000,000 by the time we retire. Accounting for inflation that means we should worth about a million in today’s dollars.
This also means that we are focused on getting rich. Unless you want to eat overcooked spaghetti out of a styrofoam bowl at your local senior center during your retirement, you’ll do the same. To cut through a lot of the nonsense that out there, we’ve concluded it pays to say focused on tried and true methods of wealth building.

1) Live Below Your Means:

If you spend more than you’ll earn, you’ll dig yourself into a spending hole. This makes it tougher to build wealth. DON’T SPEND MORE THAN YOU EARN. Any expert you talk to will you tell you this. The math is super simple. If you have 10 dollars and you spend $11, then you’ll end up in debt and you’ll have to cough up the cash to pay the interest on the debt. If you have 10 dollars and spend $9, then you’ll have a dollar left over. This dollar will be earning interest for you and putting money in your pocket. It’s that simple. I can’t say this enough: DON’T SPEND MORE THAN YOU EARN.

2) Save and Invest Prudently:

Saving is old fashioned, but it works. For example, Miel and I saved $30,000 and used it for the down payment for our apartment, we also saved $17,000 for our wedding. No credit cards or borrowing was involved. We scraped up the money the old fashioned way. Now we have the benefits of being married and living in a great apartment without the debt hangover.

Regarding investing: Buy real estate and shares in quality companies. Both of these have worked for us. In fact, we’ve made maybe $80,000 by investing prudently. Click here for the info on our investment property and here for skinny on our investment in Hansen’s.

Ignore the hype, do what works.

Best,

James

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