5 Steps to Build Rapid Wealth

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Did you just turn 50, deathly afraid that you’ll never be able to retire? Or maybe you’re 20 years old and just want to build up a massive amount of wealth in a short period of time.

No matter where you are on your life’s journey, these steps to build rapid wealth WILL work for you.

I can tell you that with confidence because my wife and I follow these exact steps, and we’re well on our way to becoming millionaires in our mid-30’s.

5 Steps to Build Rapid Wealth

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“Alright, so what’s the secret, Derek?”…”Is it network marketing? Developing the next Angry Birds app? Buying a car wash…? It’s got to be something crazy if you think we can build up a million bucks in roughly a decade!”

No, no, no, annnndd not true…nothing crazy. Just simple hard work and intentionality.

Here are the steps we’ve taken to build wealth, and the steps we continue to take to stay on the path toward millionaire status.

build rapid wealth1) Get Out of Debt….FAST!

Debt is not a tool for wealth, and it’s not an avenue for quick riches. It’s a trap that almost everyone should avoid like the plague.

Unfortunately, I’ve had debt in my life. But, once I made the decision that it was ludicrous to keep it, I got myself out of consumer debt totaling $21,000 in just 6 short months.

To be honest. It was hard getting out (extra hours working, spending practically nothing, changing my every day life dramatically), but it was endurable because I did it fast. If you told me I’d have to live on nothing and experience nothing for 10 years, I don’t know if I would have done it… So if you’re going to tackle your debt, do it with a vengeance.

You’ll never be upset that you got out of debt, and you’ll be thrilled when you get out fast.

Related: How the Debt Snowball Really Works (Free tool included for YOUR Debt Snowball!!)

2) Save Up an Emergency Fund

If you want to build rapid wealth, an emergency fund sounds like it’s just getting in the way… I mean really, I’m telling you that to build wealth you’ve got to slow down your investing and stash some cash to the side that’s going to earn you nothing… “Brilliant Derek….brilliant.”

But seriously, this is what you need to do if you want to build extreme wealth, and here’s why!

  • You can increase all of your deductibles with confidence and thereby reduce all of your premiums (since you have the money in the bank)
  • You’ll never make stupid, quick decisions because you don’t have money accessible to you. Borrowing money for the ‘short-term’ often leads to long-term pain

If you’re really bent out of shape about earning nothing on a savings account, then read this post to set up a 3% interest checking account. At least you’ll earn something with your money.

3) Invest 15% of Your Income

If you want to build rapid wealth, you’re going to have to invest. That’s just the name of the game. And most advisors suggest putting away 15% of your income into a retirement account. It’s large enough to build up a decent nest egg (no matter if you’re 18 or 50), but it’s small enough that people don’t just scoff at the idea and do nothing.

The question then is, what should you invest in?

For starters, you should be investing into your company 401(k) and snatching up any possible match that they’re offering. For me, I invest in the low-cost indexes (like the Vanguard S&P 500 fund). I know they won’t outperform the market, but at least they’ll keep up with the market and I don’t have to pay anyone to manage the fund.

Beyond this, I invest my money with Wealthsimple. They make investing so simple that anyone can get started with confidence, AND they’re currently giving $50 to anyone that starts investing $100 with them (offer good through November)! Not too shabby!!

4) Pay Off Your House

This was a HUGE step in my mission to build rapid wealth. Imagine how much money you could save each month if you didn’t have a house payment! Instead of saving just $500 a month, you could be saving $1,500 or $2,000!! That’s $24,000 every single year!

If you’re serious about building rapid wealth, I would highly recommend paying off your house (while investing your 15%). It might take you 4-5 years of constant focus and extra jobs, but once you make that final payment I promise you it will all be worth it.

After that house is paid off, your wealth will increase dramatically!

Related: Should You Pay Off Your Mortgage Early?

5) Invest 70%+ of Your Income

During this entire post, you should have been rolling your eyes and nodding along. “Yeah yeah, Derek. I got it. Pay off your debts and invest 15%…it’s what you talk about all the time.” But THIS point should make your eyes bug out a little. Yes, I said it — Invest 70% of your income. How in the heck do you DO that?

Well really, it’s not all that hard. Let me show you.

Back when you were deeply in debt, this was how you spent your money each month:

  • House mortgage: $1,200
  • Car payment: $400
  • Student loan payment: $350
  • Food: $400
  • Insurance: $150
  • Car Fuel: $250
  • Cable/Internet: $150
  • Phone: $100
  • Utilities/Other: $250
  • Total: $3,250/month

When you get rid of your debts to build rapid wealth, take a look at how dramatically this reduces your overall spending:

  • House mortgage: $0
  • Car payment: $0
  • Student loan payment: $0
  • Food: $400
  • Insurance: $150
  • Car Fuel: $250
  • Cable/Internet: $150
  • Phone: $100
  • Utilities/Other: $250
  • Total: $1,300/month

By just getting rid of your debts, you successfully got rid of $1,950 of your spend each month. Now, you can live on just $1,300 a month our of your $3,250 income. Looks to me like you’ve already freed up 60% of your income for investing. Now you’ve just got to find another 10%! For many, this comes with their natural raises at work. By keeping their lifestyles the same, but still getting a 3-4% raise each year, they quickly move into the camp of investing 70% of their income.

Related: How Much Should You Spend on That??

Then What? What’s the Point?

Why the heck would people do this? Why, on a $3,250 income, would someone willingly live on just $1,300?

It all boils down to just one word for me:

Options.

I refuse to live paycheck to paycheck because I want to have options in my life. Options to…

  • Have my wife stay at home with our young daughter
  • Retire extremely early or work for myself
  • Travel while we’re young
  • Help others – both with our time and financially

Related: How We Survive (and Thrive) on Just One Income

When you spend all your money every single month, you’ll be chained to your job, you’ll have nothing to give to others, and you’ll constantly wonder about your uncertain future…. That life — that’s most definitely not for me, and I wouldn’t think it’d be for you either.

What to Do With the 70%+?

Alright, so you can save over $2,000 every single month, how do you build rapid wealth with it?

Here’s the key:

  • Buy assets that create assets

This could be a business, it could be stock purchases (or better yet, mutual funds ;)), or it could be real estate – it doesn’t really matter, just as long as the asset produces an income for you and can be sold at a later date.

Liz and I – we’re choosing real estate (we’re actually working on our second house now – it needs a few things yet…like walls…everywhere). We purchased our first rental back in 2015 for $81,000. Today, it’s worth $137,000 AND it’s produced over $15,000 in profits.

The second property will take roughly $15,000 to fix up and we bought it for $75,000. When we’re done, it’ll be worth about $135,000. That’s already an unrealized profit of $45,000. THEN, we’ll start earning $1,300 a month from it.

Our assets are creating assets, and it’s the best way to build rapid wealth.

If you hate real estate and would rather shoot yourself than be a landlord…then don’t be a landlord! You’re going to suck at it! Instead, look at other assets you can buy that will produce an income and create more wealth for you down the road.

The Results

Liz and I have been at this for almost 5 years now. We’ve committed to build rapid wealth and boy has it paid off! In our late 20’s, we were worth about $60,000. By our mid-thirties, we’ll be worth over a million.

It’s weird putting our net worth numbers out there, but I want to show you what’s possible! And, I want to show you just how simple it is to win with money! Hopefully, I’ve done that here. I want to see you win with money and build rapid wealth of your own. Then you can live how you want, give how you want, and put a permanent smile on your face all along the way.

What about you? Are you ready to build rapid wealth??

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