“Why in the world are you worried about paying an extra $10 a month on your cell phone bill? My wife and I pay over $200 a month. That’s just the way it is.” — a coworker that will remain nameless
I wasn’t fully prepared to respond to this questioning at the time. To me, saving money just seemed logical. If I save $10 a month on my cell phone bill, that means I could spend (or more likely, invest) that money somewhere else. Why pay more than I have to? I soon realized that I was either one of the few logical people at work, or was cheap and worried to much about money.
After putting a little more thought into the question of “why look for savings?”, I realized that this was just one of the pieces to becoming wealthy. Throughout the past four years, I have been continuously learning and writing about “life and my finances”. During this journey, I have discovered 5 tips to becoming wealthy. Follow these tips and you should soon find yourself in a position of wealth too.
1) Ignore those around you
To sum it up, pretty much everyone around you is a financial idiot. They all talk as if they are personal finance experts, but they are not. My number one rule in life is to ignore the financial “wisdom” of co-workers, friends, and neighbors. Many of them are surviving on credit and will never be rich.
Instead, open up a book written by Warren Buffett, Jim Rohn, or Dave Ramsey. These individuals have amassed millions of dollars and have made many friends along the way. Learn their life lessons and follow their success path. Do NOT listen to your broke friends.
2) Ditch the Debt
So many people have heard that taking on debt is smart and sophisticated, but there are very few instances where taking on debt is actually a wise thing to do. If you are making payments on anything that is not paying you back money each month, then you are not taking on the right kind of debt.
In order to get wealthy, I would suggest that you live frugally and use your extra cash to pay off your credit cards, student loans, your car loan, and yes even your mortgage. Your house is not putting money in your pocket, so even the low interest rate of 4% is still not wise. Get out of debt completely and then you can really start to amass your wealth.
How many hours do you work each week? 40 hours? 50 hours? If you are working less than 50 hours a week at your day job, then you have many extra hours to develop additional income (which can of course help you pay off your debt). If you increase your income wisely, then you should soon be able to work less and earn more (via passive income). If you put in the extra hours now, you can not only amass wealth, but you can almost certainly retire early as well.
4) Know what success means to you
Success is a subjective term. Perhaps you have a family and would love to spend more time with them. Success for you would be to escape work for a few more hours a week to have family time. If you are single, maybe you want to earn as much as you can as fast as you can. And, if you just want to do whatever you want, then perhaps success would mean an extreme early retirement by living frugally.
Define what success means for you, and then you can race toward that goal with your actions in the present.
5) Reinvest your profits
If you truly want to be wealthy, one of the most important steps is to reinvest your profits back into your business/investments. By reinvesting your profits (instead of using the money for your entertainment), you will exponentially increase your savings year after year.
I have been reinvesting my earnings and dividends over the course of four years and already I have seen an exponential increase in my account. In another five or six years, this investment fund is going to start growing at a crazy rate.
Reinvest your profits and you will see the benefit as well. In a short time, you will consider yourself severely wealthy.
Do you have any more tips on becoming wealthy?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.