Do you remember 2000? I do. Technology stocks were all the rage, the US had a bitter, close election between George Bush and Al Gore, and the word terrorism meant nothing to the average person. These past ten years have flown by and these next ten years will fly by just as quickly. If you truly devote yourself to sound financial values you will be amazed at where you will be in 2020, just ten years from now.
You will not need to win the lottery or rob a bank to transform yourself from broke to wealthy and secure financially. You simply have to take control of yourself and your finances. Money rewards the wise and punishes the dim-witted over time. The power of compound interest exaggerates the effect of this to an even greater degree. Instead of buying a new $30,000 car, buy a reliable, used $12,000 car. The $18,000 you save could end up being $40,000 in ten years and $200,000 in thirty!
How much money you make is obviously very important. It is a lot easier for a surgeon to succeed financially than a teacher, however playing “defense” financially is even more important. I have seen teachers and nurses out save lawyers and engineers far too many times.
The first thing that you need to do, no matter what situation you are in, is to see how much money you bring home monthly and where the money you are earning is being spent. Create monthly budgets and do everything in your power to curb your spending. Ideally you should save around 20% of your take home income, but the more the merrier.
Next you should pay off any debt, especially credit card debt. The average American has over $8,000 worth of credit card debt to his or her name, which is crippling! I suggest that you “debt snowball” a term popularized by Dave Ramsey. This means that you will be paying off your debt in order from the smallest you owe to the largest.
Paying off your debt could take a while depending on what situation you are in, but in the long run it does not matter when exactly you get out of debt, just that you do end up getting out of debt. As long as you stay completely committed to turning your finances around, you will be out of debt before you know it. Once you are out of debt you will be amazed at both the piece of mind you have financially and the things that you can now do with your money. Invest 20% your money in a diversified portfolio of stocks, bonds, and even real estate and you will have completely transformed in just a decade.
You cannot realistically go from being broke to being a billionaire in just 10 years, but you can completely turn your finances around. Becoming “free from broke” will change your life in every way imaginable. You will live better and healthier and you will be doing the right thing for you and your family.
In ten years when we laugh about how silly we were to use ipods, watch youtube, and use gas to fill up our vehicles, you have the ability to completely change your life for the better.
This is a guest article from Evan at StockInvesting101. Evan is a college student who has started to blog about the stock market and personal finance.
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Being younger and single I really have taken more to working on a 10 yr financial plan, especially since I have no debt outside of a car payment. I have begun more with retirement and a general investing fund. Problem is expenses are higher living in an expensive city and wanting to have an active social life is expensive too. Trying to find that balance and working on earning more to make more savings possible.
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It’s definitely tough in an expensive city! But I can look back at my single days and definitely find places where I could have saved more or spent less.
Aside from the snowball (I prefer to suggest people pay higher rate debt first) this is a great article. 10 years passes faster than you’d think, better to plan for it.
And the older you get the quicker it passes! Time lost is money lost but it’s never too late to start making financial plans.
The older we get, the quicker time passes indeed. It’s actually simple math. 1/50 years left to live is twice as fast as the first 1/100.
In 10 years, I will be “retired” from my day job and pursuing everything i’ve wanted to pursue that I couldn’t fully.
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Sounds like an awesome goal!
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