The Twenty Dollar Swim

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Gratuitous mid-lake selfie from yet another day of nearly-zero-dollar “motor”boating, earlier this week.

It was mid July, and I had just finished a sweaty run on the trails which criscross my older sister’s farm in Canada. I was overheated and heading straight for their swimming pool when she saw me walking across the lawn.

“Oh yeah, please do use the pool! You’ll help get my cost per use down because it’s still way up there in crazy territory”, she joked.

Moments like these are why I love being part of this family. The self-deprecating Spock-like humour where we can make fun of our own flaws and indulgences, while simultaneously enjoying them just as much.

But it also sparked an interesting conversation, because I knew they had been running this pool since the early 2000s, raised their two now-adult water loving boys in the house, and hosted gatherings for family and friends throughout every summer. And it wasn’t an exorbitant pool. Surely this was one of the more affordable indulgences, right?

“Has the cost per swim really been that high?”, I asked.

“Every jump into that pool has cost almost twenty bucks, if you average it out.” she replied.

“Wow, how could that be true?!” I mused.

So I did some rough calculations like those you see in the box below, which you can totally skip right over* if you just want the final answer.

The pool originally cost $30,000

But that money could have been invested instead, which would have compounded at 7% for these 18 years.

$30k compounded at 7% (30×1.07^18) is an amazing $101,300!

Electricity at 10 kwh/day x $0.20 at for 100 days per season is $200 per season or $3600 total
Chlorine and other chemicals: $600 per season add to $10,800
Maintenance like vacuums, nets, a new liner: $800 per season $14,400

We’re already at $130,000

Not even counting the hundreds of hours that went into scooping out bugs, spiders, mice, and even raccoons, and potentially higher home insurance premiums and water bills (in my region a 25,000 gallon pool costs $125 in water to fill – once!)

And how many swims were enjoyed in the pool? If every family member swam every day for every season, you’d still only end up at 18 years x 100 days x 4 people = 7200 swims.

$130 grand divided by 7200 is $18.oo


So the final number is about 18 bucks per person per swim, just as my sister claimed.

Looking forward to a refreshing dip with Mom and Dad and the kids? That’s $72 bucks that you ended up burning, by the time all the chips fell.

I know this is a strange way to think about a swimming pool. But this is a Mr. Money Mustache article, and this site is all about different ways to think about your life decisions.

Most people just say something like, “Well, we’ve already got it so we might as well enjoy it, right?”

The problem is that they also apply this to other purchases, even those they haven’t made yet. The richer our tastes become, the more likely we are to buy ourselves little upgrades “just because it would be nice”, or “just in case”,  or because Joe Jones next door or a magazine article mentioned the idea.

“Okay Mr. Money Mustache, What Are You Taking Away From Me This Time?”

Don’t worry, I’m not necessarily going to strip you of your dreams of that swimming pool, or anything else. But I do want you to start thinking about these costs in a much more visceral and explicit way, so you can really make sure you are not fooling yourself. For example, let’s step through a few more common blunders:

  • “We had a great time visiting the Smiths in their ski house last weekend – LET’S GET ONE OURSELVES!” – sure, as long as you are ready to devote your financial life to the activity and the activity is worth $890.00 per night you actually spend there. But if this number sounds like anything other than chump change, you and your friends might want to just share an Airbnb for your ski weekends, or even better, take up local mountain biking instead of far-away skiing.
  • “I like these two houses equally, but one of them has a much bigger yard which is better for Junior to play in. They’re the same price and the bigger yard is just ten miles down the road!” – okay, but make sure that Junior’s time in the extra yard space is worth $150 per hour.
  • “I’m thinking of springing for the $9000 long-range battery in my upcoming Tesla Model 3 order” – this one strikes straight at my own heart, because I crave a long range Model 3 myself. But even for a serious roadtripper, this works out to $125 per hour of charging time that you manage to avoid. Aren’t you willing to take a few minutes occasionally to walk around and admire your beautiful car if you get paid $125 per hour after tax for it? If you are, standard range will do.
  • “I live in an area with snowy winters, so I need all-wheel-drive” since we already learned that all-wheel-drive does not make you safer, the only time it actually helps you is when it prevents you from being stuck. But this could work out to between $50 and $500 per time the AWD actually gets you out of a bind. Aren’t you willing to shovel your driveway a bit more thoroughly (or work from home on the worst days) for $500 a pop?
  • “We’d love to have an extra bedroom as a way of accommodating Grandma’s Annual Visit” Sure, but if you spend $30,000 extra on a slightly larger house and use that guest room 20 nights per year, it’s about $70 per night that you use it. 
  • “I live in Chicago and we just love to spend weekends on the Boat.” Even if you go all-in and give up all your weekend activities on the land to maximize your time down at the marina, those nights in that little wedge-shaped cabin bed will average out to about $500 per night. Or more if you opt for a bigger boat or more time with the motor on.
  • “We love to explore and be free for a few months each year, so we’re getting an RV and towing the car…” But a three month, 15,000 mile RV trip works out to about $200 per night that you sleep in that vehicle – why not pick up a fairly new Prius and a good tent and hit the road, and treat yourself to beautiful rental accommodation whenever you want it along the way?

We could go on and on with these examples, but the real thing to understand is that making commitments usually comes with a bigger cost than you expect. There are a shitload of dollars at stake, but also a substantial portion of your focus and mental energy which will go into furnishing, maintaining, insuring, and cleaning these pleasant weekend distractions.

“But How Can I do It Better While Keeping My Life Fun?”

As a Mustachian, you have way more options open to you than you realize. But to take advantage of them, you need to stop doing what other people are doing, and live differently.

At the most frugal level, you can just cut yourself off cold turkey. From now on, just start doing all leisure within biking distance of home, and preparing all of your own food – no exceptions. You can still organize and host parties, however.

If you’re in a stressful debt situation right now and want to be out of it, you should just do this right now as a mental reset and watch the incredible results on your wealth. Most people who hit this reset button end up between $20,000 and $100,000 further ahead within just the first year, with many happy stories to share about it, so if you’re in need of a quick life boost, do this instead of dilly-dallying around with my rich person suggestions below.

But if you’re a debt free person with higher income and just want to accelerate your path to financial freedom, you can still dabble in the spendier life and keep up with your peers, by simply shuffling the luxury deck a little bit differently. A few principles that can still cut your budget by 75%:

  • Prioritize the healthy stuff first: It’s the weekend and you are ready to celebrate. But first, what’s on your to-do list? Are you fully caught up on your workouts, grocery shopping, and various nonsense with the incoming mail? If not, budget a full day for that rather than packing up the car for a road trip. How’s your yard looking? Have you fixed that door that doesn’t latch correctly? Well, look at that, your whole weekend is booked after all and you’ll feel better for it.
  • Muscle over Motor: If you like being on the slopes, learn to mountain bike. If you like being on the water, try a big, cushy sea kayak complete with cupholders for your sunrise coffee or sunset beer. Invite your fit and funloving friends and start exploring waterways everywhere. Or if you want a night out on the town, choose somewhere close and grab your bike rather than somewhere far and looking for your car keys or your Uber app.
  • Rent Instead of Buying: With Airbnb or even plain old hotels, you can still have weekend getaways when you truly deserve and can afford them, and yet the cost per use is much lower. The numbers will still look big, and that’s a good thing because you will be reminded that it is always expensive to leave your already-perfectly-good-home and go out to do even fancier things. When you’re living large, it’s best to joyfully acknowledge it rather than pretending it’s normal.
  • Make Special Arrangements: If you like cottages, make yourself useful to a friend who owns a cottage, by always being the one to bring the food or the wine, or donating your time to help with the maintenance or renovations. I helped build a cottage for my inlaws in Canada a few years back, and have enjoyed the fruits of our combined labor ever since – at no cost to the MMM family. Similarly, if you like boats, volunteer as part of the crew on a real yacht. If you like houses, specialize in building or renovating them, or hosting paying guests in the unused portions. If you like cars, become a car expert rather than just a car consumer.

The Final Word:

If you’re already eating and sleeping well, chances are that you already have all the basic ingredients for a happy life.  So as you go on to start adding some spices to the dish as all of us do, just be sure you look at the price tag. The advantage you’ll gain will last a lifetime.


Epilogue: Just this year, after her boys had grown up and flown from the nest and all the fun had been had, they filled in the pool and are in the process of replacing it with trees and other natural landscaping instead. A bold move that few people would be rational enough to take – live long and prosper, Sister.

Extra Credit: Here are a few of the cost-per-use calculations I made for this article. Share some of your own in the comments!

Mountain house: $24,000 per year mortgage and/or capital cost, furnishings, utilities and maintenance divided by 30 nights per year. Plus $90 in car costs per roundtrip drive for a weekend.

Bigger yard: 1 hour per week of activities that really could not have been done in a smaller yard or an outdoor park, compared to 100 miles of extra driving ($50) and 3.5 hours of your time ($100) spent doing that driving.

Tesla Battery Upgrade: The only time you use the longer range is on roadtrips over 230 miles. If you do a 600-mile trip once every month, you have to make two extra 30-minute charging stops per month. Figure the $9000 battery costs you about $1500 in extra capital cost and depreciation per year, or $125 per month. However, if you are a Tesla fan like me and you want the company to make more profit to continue their mission, you may still opt for the extra options since you have nothing better to do with that money anyway.

All wheel drive car: if the car costs $5000 more up-front plus an extra $200 per year in fuel and maintenance, you could estimate it as about $500 per year more expensive to own. Then, how many times do you truly get stuck in a front-wheel drive car with really good dedicated snow tires on winter rims? (because snow tires always come before buying AWD!)

Grandma’s bedroom: a $30k more expensive house might consume about 2% of that extra cost in maintenance and taxes annually ($300), plus 5% annually in financing/capital costs ($1800), for a total of $2100 per year. Strangely enough, this extra bedroom works out to be one of the cheaper indulgences in this list, especially if you can use that room as an office too, or rent it out occasionally.

Boat: It costs about $15,000 per year to own, dock, store, transport, maintain, depreciate, and fuel a 26-foot motorboat with a little sleeper cabin in the front. If you spend each of the sixteen weekends of Chicago’s warm seasons exclusively in the boat, you’ve still done only about 32 days there, which yields the surprisingly high cost of almost $500 per night.

RV: Even a relatively small $50,000 RV depreciates about $0.50 per mile and burns fuel and oil and tires at another fifty cents. And that’s before you even pay for supplies, maintenance and nightly parking fees! Large RV travel is even dumber, financially speaking – note that the fanciest tour-bus-sized RVs you see cost about $500,000! The physics are simply against you if you are trying to travel in your own personal rolling building. Although stationary living in a not-too-expensive RV or trailer can be a highly Mustachian choice.

* I let you skip that one just so you would keep reading and see my point. But now that you see it, hopefully you also see that you do need to look at the numbers in life and figure this stuff for yourself, because it’s a way bigger deal than you might think!


How I learned to stop worrying and love DIY

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“Oh good,” Kim said when I rolled out of bed yesterday morning. “I’m glad you’re up.” She gets up at 5:30 for work most days, but I tend to sleep in. Especially during allergy season.

“Huh?” I grunted. It was 6:10 and I was very groggy. My evening allergy meds kick my butt. Plus, I hadn’t had my coffee yet.

“Something’s wrong with the bathroom sink,” she said. “Look. It’s leaking. The floor is soaked.” She wasn’t kidding. The bathmat was drenched. When I looked under the vanity, I was greeted by a small lake.

“Ugh,” I grunted. This wasn’t how I wanted to start my day.

Kim kissed me goodbye and hurried off to work. I pulled on a pair of pants, poured some coffee, pulled out the vanity drawers, and got to work.

I was worried that I might have caused the leak when I replaced the sink’s pop-up assembly last month, but no. The problem was obvious: The hot water line to the bidet (which I installed in October) had worked itself loose. (By the way, I love my bidet. Too much information, perhaps, but it’s some of the best sixty bucks I’ve ever spent.)

The water line to the bidet

Fortunately, the fix was simple. I reattached everything, then added a light layer of tape to prevent similar problems in the future.

Note: As a safety measure — to make sure I wasn’t missing anything — I took photos of the issue and made a trip to the hardware store to ask their advice. They told me everything should be fine.

This might seem like a small thing to some folks but it’s a big deal in my world. You see, I’ve never really been a DIY type of guy. I used to get overwhelmed by home improvement. I felt unprepared, incompetent.

More and more, though, I’m learning that I can do it myself. It just takes patience and perseverance. And the more projects I complete, the more confidence I gain.

Learning to Love DIY

When I was younger, I avoided do-it-yourself projects whenever possible. As a boy, I never learned how to be handy around the house. I could program (or build) a computer. I could write. I could do accounting or analyze literature. But I couldn’t replace a broken window or repair a leak.

My ex-wife and I bought our first house in 1993. Fortunately, it was in great shape. During our ten years in the place, there weren’t a lot of things that needed to be repaired.

And when things did need work, they were obviously beyond our abilities. The water heater exploded on Christmas morning. The electric wall heater caught fire. We discovered an infestation of carpenter ants. These were problems I was never going to fix myself. We hired experts to solve them for us.

In 2004, we moved to a hundred-year-old farmhouse. The previous owner had lived there for fifty years and had done a lot of lazy repairs himself.

Because buying the place tapped nearly all of our financial resources, we were forced to handle some of the repairs and remodeling ourselves. We hired somebody to hang drywall for us, but we tore down the old walls ourselves. To fix the faulty wiring, we asked an electrician friend to help us find problems and make repairs. And so on.

Still, I didn’t feel completely comfortable with DIY projects around the house. I did them when I had to, but mostly I tried to put them off — or to pay somebody else to solve the problem.

After our divorce, I deliberately sought a place where I did not have to deal with home improvement. I bought a condo. All exterior work was handled by somebody else. Sure, I was on the hook for problems inside my unit, but those were easy to foist on contractors. For five years, I completely avoided home repairs and home improvement.

When Kim and I bought our current country cottage, we had a chat. “You know you’re going to have to do lots of DIY projects,” she said. “There’s a ton wrong with the house — and that’s just the stuff we know about.”

“I know,” I said. “But I’m older now, and I’m actually looking forward to developing my DIY skills. I have a better attitude. I think I’ll be fine.”

You know what? I have been fine. After paying a small fortune to get the major things handled — roof, siding, floors — we’ve deliberately been taking on the day-to-day stuff ourselves. It’s much slower this way, but it’s also cheaper. Plus, it’s more satisfying.

In the past eighteen months, we’ve:

  • Painted several rooms in the house, and have plans to paint the others.
  • Installed new molding and trim in several rooms.
  • Painted the kitchen cabinets and installed new hardware.
  • Replaced the kitchen faucet (on Super Bowl Sunday).
  • Repaired the bathroom sink pop-up assembly.
  • Replaced our only toilet.
  • Installed a bidet attachment on the toilet.
  • Built out the inside of a Tuff Shed to make it my writing studio.
  • Built a porch for the writing studio.
  • Stained our new back deck (which we did not build ourselves).
  • Begun work on a fire pit for summer gatherings.
  • Installed raised beds for vegetable gardening.
  • Removed a cedar tree and planted a small orchard.
  • Hung lighting in the laundry room.
  • Installed a car stereo.

Some of these projects (the writing studio, for instance) were major. Some (like the laundry-room lighting) were minor. All of them have helped me gain confidence that yes, I can do things myself.

It’s still no fun when I wake up to find that a leak has flooded the bathroom. But at least now I don’t feel overwhelmed. I’m able to pause, think about what needs done, and then tackle the job. It’s a totally different feeling than I had even three years ago. Three years ago, stuff like this would overwhelm me. Now, I almost love these DIY projects. (For real!) Maybe it’s because I’m old.

Nine Steps to DIY Success

Yesterday as I was crawling under the bathroom sink, I thought about how I’ve learned to love DIY, how I’ve shifted from viewing these tasks as chores to viewing them as opportunities to learn.

As I fixed the leak, I made a mental list of the things I’ve learned over the past couple of years, the guidelines I follow to make sure my home-improvement projects are productive and fun instead of something I dread.

I believe these nine “rules” have helped me embrace the do-it-yourself mindset:

  • Read the instructions. This point is obvious enough for some folks that it ought not even be listed. But for others, this is a vital first step. I know too many people who rush into DIY projects without bothering to read the directions that come with the parts, tools, or kits that they’re using. Instruction sheets and manuals are tedious, yes, and they don’t always make sense when you read them without context, but they also provide a vital framework for the project you’re about to undertake. Don’t skip this step!
  • Tap your social network. While you may have never tackled a particular project, you probably have family or friends who’ve done something similar in the past. Draw on their experience and expertise. Ask questions. Seek advice. While replacing our kitchen faucet, I texted Mr. Money Mustache for help. When installing my car stereo, I asked my brother lots of questions. (He’s an audio nerd.) When Kim and I work in the yard, I often ask my ex-wife for advice. And, of course, I’m not shy about posting to Facebook to draw on the power of the hivemind.
  • Practice patience. DIY projects can be long and tedious. They can be frustrating. When I replaced our kitchen faucet, I was stymied from the start. The space was small. Tools didn’t work or didn’t fit. We had plans with the neighbors that put a time limit on the project. The old me would have been angry and irritable. The new me stayed calm. I forced myself to practice patience, to pause and think about the situation from a variety of angles. I had to make three trips to the hardware store. Ultimately, my patience paid off. I replaced the faucet and made it next door in time to watch the big game.
  • Be methodical. Another reason DIY projects used to frustrate me stemmed from my lack of organization. As I disassembled things, I put them in a common pile. When it came time to put things back together, I was lost. Nowadays, I’m smarter. I put small parts in ziploc bags and label the bags so I know what they are and where they go. If it’s not obvious what large parts are for, I label them too. At each stage of the project, I take photos with my phone so that I have a reference when I put things back together. I take notes in the manual to provide clarity in the future. Then I store the manuals in a drawer. Being methodical makes the process so much easier.

Replacing the toilet

  • Think outside the box. Sometimes you’ll encounter situations where the instructions don’t apply. Normal solutions don’t work. When this happens, you’ll have to be creative. You’ll need to think outside the box. Using the kitchen faucet as an example again, none of the recommended methods would work to remove the old faucet. It was stuck, and there was no space to work with typical tools. In the end, I had to purchase a Dremel and cut into the collar, then hammer at it for five minutes before it came loose. It took a long time (and was frustrating), but it worked.
  • Decide on rules for buying tools. The unfortunate reality of DIY projects is that they often require specialized tools. When I replaced the kitchen faucet, I needed a basin wrench. Then I needed a Dremel. When Kim and I re-seeded our lawn, we needed an aerator. Sometimes it makes sense to simply buy the tool(s) you need. (I know I’ll use the Dremel again in the future.) Other times, it makes much more sense to borrow or rent. (I’m never going to need a $1500 aerator again, so I rented.)
  • Do things right. It’s tempting to cut corners when you do projects yourself. It’s tempting to skip steps, to not work to code, to do the minimum required to get things working right now. Please, do your future self a favor: Do things right the first time. Yes, it takes longer and costs more, but it also means you shouldn’t have to repeat the project. Plus, it’s nicer for whoever inherits your work. The folks who owned our house before us seemed to live by the motto, “Why do something right when you can do it half-ass?” Kim and I inherited a stack of shitty fixes that have made life miserable for the past two years.
  • When you’re stuck, take a break. One reason I’ve avoided DIY projects in the past is that I inevitably get stuck. I reach a tricky and/or confusing step and become frustrated. This used to be a disheartening deal-breaker. Now, though, I accept this as part of the process. When I do get stuck, I take it as a sign to slow down — or stop. I go do something else for a while. I do more research on the interwebs. I re-read the instructions. I contact somebody I know who has done a similar project. I give time for the frustration to fade, then return to the project with fresh eyes.
  • Have fun. Most importantly, enjoy the process. Accept it for what it is. Yes, you’ll have moments of frustration. Yes, it sucks to make repeated trips to the hardware store. Yes, most jobs take two or three times longer than anticipated. Once you agree that this is part of what DIY is all about, you’ll have a better attitude and be better able to enjoy the work instead of resent it. Plus, remind yourself that each time you tackle a task yourself, you’re building a library of knowledge that can be applied to future jobs.

Here’s another guideline: Keep the end in mind.

Home repair and home improvement can be annoying because there are other things you’d rather be doing. You could be hanging out with friends. You could be reading a book. You could be playing a game. The last thing you want to do is replace a broken window.

I’ve learned to consider the reason I’m doing the work. I know that when I replace the kitchen faucet, we’ll no longer have to worry about leaks. Plus, we’ll have a better, more attractive fixture. After we’ve spent six hours staining the deck, we’ll get years of enjoyment from the space. Once I build out the writing studio, I’ll have an ideal space to work in.

Don’t focus on the drudgery of the moment. Remind yourself of the ultimate payoff.

Text conversation about sink repair

Choosing DIY Just for Fun

Last weekend, I tackled a DIY project for fun (gasp). I installed a car stereo.

Three months ago, I bought a 1993 Toyota pickup for projects around our little acre. Fittingly for the era, the truck came with a tape deck. Unfortunately, I don’t own any tapes. I purged the last of them over a decade ago.

Still, I couldn’t resist an indulgence. “I wonder if you can get Taylor Swift on cassette,” I thought to myself. I checked Amazon. Sure enough, if you’re dumb and determined like I am, you can order Reputation on cassette for 30 bucks. So I did.

When the tape came, I was disappointed to discover that while the radio worked fine, the tape player was busted. What to do? What to do? Should I write off the T Swift tape as a $30 loss? Or should I go all in, take the risk of buying a new tape deck?

I think you all know the (irrational) course of action I chose.

I found a $70 tape deck on Amazon and ordered it. Last weekend, as a birthday present to myself, I spent an entire day installing the thing — despite having no clue what I was doing.

The project was fun! (Frustrating but fun.)

I got to take apart the truck’s front console, puzzle out the messed up wiring (a previous owner had spliced new speakers incorrectly), connect the new tape deck, then put everything back together. On my drive to work at the box factory Monday morning, I cranked up the Taylor Swift. The dog was unimpressed but I had fun.

The old tape deck in my Toyota truck

The post How I learned to stop worrying and love DIY appeared first on Get Rich Slowly.

Hitting a Wall: What to Do When It Feels Like You’re Not Making Financial Progress

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Tell me if this sounds familiar.

You’re in reasonably good financial shape. You probably have an emergency fund of some kind. You’re almost definitely not carrying any high-interest debts – you might have a student loan or a mortgage, but nothing overwhelming. You’re probably contributing at least a little to retirement. Things are good.

Yet there’s still this overwhelming sense that you’re just running in place. Things might be on solid ground, but you’re not really building the foundation for the things you hope to have in life someday. You’re just running in place, one day after the next. Life is comfortable but… it’s not going anywhere.

You have some dreams, but they feel just as distant as they did years ago – they might be negligibly closer, but that’s all. Your life really doesn’t seem any better than it did a few years ago, except that you’re a few years older.

Is this it? Is the American dream just a treadmill with a pretty picture on the wall in front of it?

I want more out of life than that. Many of my friends do. I’m guessing you do, too. Yet that sense of running in place and never making real progress is a very common thing.

How does a person get out of that rut? For me, there are several techniques that I use to make sure I don’t feel like I’m just running in place with my financial progress. Here are six strategies that have worked really well for me over the years.

Strategy #1: Reassess Your Goals

If your life feels like you’re just running in place, what are you running for? What are you running from?

Often, that sense of just running in place or of hitting a wall comes when you’ve got a big goal you’ve been working towards and you’ve either achieved that goal in part or in full or else that goal is so far off in the future that it doesn’t seem to be a real part of your day to day life.

Let’s say that your big goal has been to repay some or all of your debts. You’ve managed to achieve it – you’re free from credit card debt. You have a lot of good financial habits that you’re continuing to follow but now the extra money feels rather purposeless. It’s tempting to just start splurging, but that feels wasteful, so you just kind of run in place and money builds up in your checking account. (I have a friend who is in this exact position at the moment and this post is in part written with him in mind.)

Maybe you do have a big goal, like retiring at age 50 or 55 with a healthy annual income from your retirement savings. The only catch is that you’re 32 and that goal seems like a lifetime away. You started when you were 28 and that seems almost forever in the past… and you have far more ground to cover ahead of you than you’ve already covered. That mountain in the distance looks just as far away as it ever has.

There are many variations on these stories and they all lead to that sense of plateauing, of no longer making meaningful progress toward any goal even though your tactics are still good and you haven’t really changed them.

Often, the problem isn’t your tactics, but your goal.

When you achieve a significant goal in life, there’s a sense of accomplishment, but then quickly thereafter there’s a sense of … nothing. You have a lot of good tactics in place for reaching the goal you just achieved, but now it feels aimless and empty.

If you’re in that situation, spend some time seriously thinking about what’s next in your life. What do you want to do in the future? Maybe you want to change careers. Maybe you want to start a business. Maybe you want to retire early. Maybe you want to get your kids through college with minimal or no student loans.

If you’re without a goal, set one.

The nice thing about big-long term financial goals is that, in the early stages, they’re usually really flexible. They center around either paying off debts or saving money somewhere. That means that you can decide, in a few years, to change your goal radically and you’re usually in good shape for whatever your new goal is. So don’t worry about the possibility of wanting a different goal in the future. Instead, worry about choosing a meaningful goal right now. What speaks to you? Make that your big goal and use that initial enthusiasm push you along for a while. Not only will it feel fresh and new, you’ll find that your initial progress feels quite big, too.

What if you’re in the other bucket and you do have a long-term goal but it seems incredibly far off in the future and your regular progress feels slow?

First of all, do a gut check and make sure that you still really want this goal. Visualize your life at the point where this goal will be achieved. Does that vision really excite you still? Or is it interesting, but not something that makes you feel a little tingly?

If you still find it exciting, indulge in visualizing that big goal regularly. This helps keep the goal feeling lively and meaningful.

For example, the exciting vision in my life is Sarah and I effectively retiring about the time our youngest son finishes his schooling. For the first couple of years, we are going to do a lot of touring around the United States, visiting tons of national parks and significant state parks and national monuments and weird roadside attractions and the like and simply seeing America, just the two of us, like we did when we were dating and in the early years of marriage before a flood of kids made that kind of thing much more difficult. Except, this time, we aren’t worried about a career or about jobs or anything and we still have our health and many years ahead of us. That, for me, is the dream. That’s the big vision.

If you don’t find it exciting, spend some time soul searching until you find that goal that seems exciting, then indulge in regular visualization of that goal. Again, it’s that regular visualization of something you deeply want that makes a huge difference in terms of making your forward progress seem meaningful.

In other words, if you really are on a treadmill, make sure that picture in front of you is as beautiful and engaging as possible so you don’t notice the treadmill as much.

Strategy #2: Change Your Focus

One reason why people start to feel like they’re stuck in a rut is that they’re looking at a particular way of measuring their forward progress that isn’t showing them the actual benefits of their effort.

A great example of this is when you focus on the standard of living of your day to day life when you’re aiming at a big financial goal. You might feel like you’ve been working hard forever, but nothing is changing and nothing is going to change for a long time. You’re still working at a demanding job. Your standard of living is roughly the same as it has been for a while. Nothing seems to be changing in your life, but you’re still working really hard.

In those situations, it can be really valuable to look frequently at a different metric, a different way of examining your life and charting your progress.

For example, rather than thinking about your day to day life, keep your eyes on a number like your net worth or your overall retirement balance. Keep track of those numbers over time and compare your current number to earlier ones.

In my own life, I look at both of those numbers fairly often when I’m feeling like I’m running in place, and then I don’t look at them much at all when I feel good about things. Seeing the growth in my net worth and in my retirement savings makes me feel really good about my financial progress, even if my day to day life feels unchanged.

In truth, my daily standard of living hasn’t changed much at all in the last decade, so if I looked at that, I would feel like I’m not headed in a great direction. However, when I look at my retirement accounts, Sarah’s retirement accounts, and our children’s 529 accounts, it’s pretty hard to miss the immense progress on all fronts. Things like helping our children with their education have gone from wistful dreams to mortal locks. Things like trying to retire in our early fifties (or so) isn’t a dream at all, it’s more like an inevitable conclusion (assuming that’s what we choose to do at that point).

My day to day life is a bad metric for what my future holds. I only feel disheartened when I look at my day to day life as the main metric for success. The thing I need to remember is that my big life goals involve being very busy and almost overwhelmed at this point in my life and having many parts of my life be simple and automatic is part of my biggest life ambitions. I want to raise three children to be solid citizens in the world (which I’m doing now) and then when they’re on their own, enjoy the rest of my life with Sarah in a very low stress environment (which I’m actively preparing for).

So, my metric for seeing whether or not I’m successful at those endeavors isn’t the quality of or change in my day to day life. If I’m looking at that, then I’m going to feel like I’m running in place. What I need to look at instead is the quality of my relationship with my children and my wife, how frequently I put aside time and energy to listen to them and genuinely try to understand them and guide my children in a positive way, and my savings progress toward the big events coming down the road. Those things are in good shape and they’re aiming in a very positive direction, even if my day to day life doesn’t seem to be radically impacted. The changes are there, but they’re subtle, and I have to know where to look.

Remember, when you look at a beautiful house, you usually don’t see the foundation right away. If you’re improving your foundation, then measure the foundation, not the house.

Strategy #3: Look for the Things That Don’t Matter

One common element of feeling like you’re hitting a wall and not making any progress is that you’re, in fact, not actually making any progress. If you take a peek at other indicators like account balances and net worth and find that it’s not growing very fast at all, then your money is going toward things that aren’t your goals and you’re making extremely slow progress (if any) toward your financial goals.

The Simple Dollar is loaded with advice on how to handle this situation, but there’s really one single piece of advice that stands above all else: What are you spending money on that’s unimportant to you? Whatever that is, cut it down to the bare minimum.

The common reaction that many people have is to reflexively say that everything they spend money on is important, but that’s very, very rarely true. Most of us spend at least some of our money on things that are really unimportant in the big scheme of our lives.

Instead, if you’re feeling like this, then it’s time to run through all of your expenditures with a fine toothed comb and ask yourself whether or not this item is really, really important to you and, if it’s not, look for ways to cut that spending to a bare minimum.

Is your car insurance vitally important to you? Well, you have to have it, but very few people are going to have deep personal feelings about their auto insurance policy. Shop around and get a cheaper rate, then start funneling that savings straight into your long term goals.

Is your cell phone plan vitally important to you? Many people may need or really want some form of cell phone plan, but many people are on a plan that’s overkill for what they actually use. Look at what you actually use, then shop around for a plan that matches that, and start funneling the savings straight into your long term goals.

Is the brand of ketchup you buy vitally important to you? Maybe if you’re a ketchup connoisseur, but for the vast majority of people, ketchup is ketchup. Start buying ketchup – and all of the other things that aren’t vitally important to you – in store brand form, and channel those savings straight toward your long term goals.

Do this with everything you spend money on. Stop spending your money – and thus the time and energy and effort that went into earning it – on things you don’t really care about and start channeling it toward stuff that you do care about. You’ll find that you start moving toward big goals far more rapidly.

Strategy #4: Automate Your Good Financial Moves in an Aggressive Way

A big part of strategy #3 is about channeling the “found money” in your life toward your big financial goals. This sounds good on paper, but when you have some cash in your checking account, it might not be on top of your mind to put that money toward retirement or college savings or whatever.

That’s where automation comes in. When you’ve cut your spending in some notable fashion, you should set up an automatic transfer of that exact amount you cut toward a big goal that you have.

Did you cut your monthly cell phone plan by $20? Add $20 per month to your automatic contribution to your Roth IRA.

Did you save $60 a year by changing auto insurance policies? Bump up your retirement savings at work by $5 a month.

Did you manage to trim $50 a month from your grocery and household supplies spending by switching to mostly store brands? Schedule an automatic extra payment on one of your debts for – you guessed it – $50 a month.

Did you find some other way to save $10 a week? Set up an automatic $10 weekly transfer from your checking to your savings to start building up an emergency fund, so the next car breakdown doesn’t catch you off guard.

Since you know how those cuts were made, doing something else with the savings shouldn’t affect your standard of living one iota outside of those specific changes. Meanwhile, you’re now making automatic progress toward whatever your goal might be.

That progress will become apparent over time if you’re looking at the right metrics (see Strategy #2). You’ll see your debts declining a little faster. You’ll see your retirement savings growing a little faster. You’ll stop plateauing and start heading toward your goals again.

Strategy #5: Focus on the Meaning: What Do Your Contributions Actually Represent?

Often, when we’re working toward a big financial goal, the little steps we take along the way can feel really insignificant and meaningful. What is a step when you’re running a marathon? It’s one of tens of thousands of other steps, right?

Yet each of those steps requires some effort. Each of those steps requires some sacrifice. If you’re putting $100 into retirement savings, that’s $100 that you’re not enjoying in one’s daily life. That’s a choice and a sacrifice, and it’s one that many people start to struggle with.

It’s an even more difficult choice when it’s hard to tangibly see what the $100 toward a big financial goal represents. $100 might be a great dinner with my wife and a movie together and maybe a stop at a bookstore where we each pick out a book. What is $100 toward retirement? It’s hard to see it.

For me, I find that there is a great deal of value in seeing what those individual steps represent. For me, what I have found a great deal of value in doing is breaking down my cost of living into how much that is per day and using that as a measuring stick – I call it a “day of freedom.”

Let’s say my annual living expenses are $36,500 per year. That’s just a convenient number to make this easy to understand. If I translate that into a day, that means that every $100 I have in retirement represents roughly a day of freedom from having to work. It’s a day I can sleep in. It’s a day I can rise and stretch and not have to think about work unless I want to keep working on a project. It’s a day I can fill with leisure if I choose. It’s a day where I can chase down whatever passion is on my mind. I can go on a long walk or whatever it is that I want to do. It’s just a day of complete freedom. It’s a complete day of freedom for Sarah, too; we might spend it together, or we might each do our own thing.

Every $100 I put into retirement savings represents a day of complete freedom like that. Even better, every time I put in $100, it’s an extra day on the front end of retirement, meaning a day when I’m as physically and mentally healthy as I’m going to be.

When I look at my $100 contribution to retirement that way, things start to reshape themselves. I could spend $100 on an exorbitant date with Sarah, or we could have a modest dinner at home, cuddle up and watch a Netflix movie, and go on a nighttime walk hand in hand, and then that $100 goes into retirement and buys us a day of freedom later.

Naturally, there are some things and some experiences where it’s pretty sweet to have them right now, but that threshold gets a lot higher when I see it gobbling up days of freedom from my life. Those are beautiful and valuable and precious.

You can do that kind of translation with almost any goal that you have. Retirement makes it really easy, but you can look at college savings as basically opening opportunities for your kids. You can look at debt freedom as lower bills and more opportunities for you. Just divide it up into pieces that are really meaningful for you – for me, the thought of a day of freedom is really powerful, so I use it a lot. $100 in retirement savings buys me a day of freedom, and each and every $100 contribution moves those days of freedom ever closer to today. Eventually, my life moving forward and those days building backward are going to meet up, and every single bit of savings shrinks that gap.

Strategy #6: Raise Your Income

This final strategy is a little different because it’s not just a switch that most of us can easily flip in our lives, or else we’d do it. Raising your income usually requires a lot of effort within your career or entrepreneurial path, a career switch, or a second job or side gig, and all of those are challenging and require effort and planning.

However, if you want a way to sustainably get out of your financial slog, jumpstarting your income (and directing that increase to your financial goals) is a guaranteed way to do it.

So, how is this relevant and actionable? Simply put, you can simply choose to make improving your income into a short-term or medium-term goal that’s part of your long-term financial goals. Your goal might be to retire early, but the thing you can really work on right now on the way to that goal is setting yourself up for more earnings.

For example, if you think that the best next step to earning more for you is to get a raise or a promotion at work, talk to your boss about a concrete plan with clear steps that you can follow to take you to that goal. That plan becomes your medium-term goal; the individual steps are short-term goals.

If you want to start a side business, write up a business plan (short-term goal) and execute that plan (medium-term goal) by following all of the steps (a bunch of short-term goals).

If you want to launch a new career, figure out what your path looks like from where you’re at to that new career path (short-term goal) and start following that path (medium-term goal) by getting the education you need (medium-term) a class at a time (short-term) and setting yourself up to dive into that new path with success.

If you want to jump to a new job in your career path, figure out what you need to have on your resume to make that leap (short-term task) and make building that resume your goal (medium-term goal). Each step in that process is a short-term goal that you can work on at your current job or in the evenings.

In short, you turn income growth into a medium-term goal, and the steps to getting there into short-term goals, as part of your long-term financial goals.

Those steps aren’t guarantees of more money – nothing ever is. However, those steps are all about you controlling the part of the process that you can actually control, which is your actions, thoughts, and behavior. You do your part and good things will typically follow.

Final Thoughts

When you feel like you’re stuck in place with your financial progress, there are many potential causes and you’ll often find that more than one of them apply to you. You might not have a compelling long term vision at all. You might be focused on the wrong measurement of success. You might be misusing your resources and wasting your efforts. You might not be appreciative of the usefulness of each step and what it really means. Or, you might just need some tangible short term and medium term goals.

Whatever the case may be, there are ways to break through this wall and either start making fresh financial progress or recognize that you’re actually making a lot more progress than you thought. In either case, your path forward becomes illuminated in a whole new way.

Good luck!

Read more by Trent Hamm

The post Hitting a Wall: What to Do When It Feels Like You’re Not Making Financial Progress appeared first on The Simple Dollar.

Lifestyles of the Rich and Foolish

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It’s the first of April. You know what that means. Spring is here! Your friends and family are pulling April Fools’ Day pranks. And my tree allergies are kicking my butt. Every year, tree pollen makes my life miserable. This year is no different.

Facebook kindly reminded me this morning that three years ago, Kim and I were in Asheville, North Carolina. After wintering in Savannah, Georgia, we’d resumed our tour of the U.S. by RV.

While in Asheville, we toured the Biltmore Estate, the largest home in the U.S. This 250-room chateau contains 179,000 square feet of floor space — including 35 bedrooms, 43 bathrooms, and 65 fireplaces — and originally sat on 195 square miles of land. (Today, the estate “only” contains 8000 acres.)

The Biltmore Estate

“This feels like Downton Abbey but in North Carolina,” I said as we walked the endless halls. Just as Downton Abbey documented the excesses of British upper class, so too the Biltmore sometimes feels like an example of how rich Americans indulged in decadence.

George Washington Vanderbilt II, the man who built Biltmore, was a member of one of the country’s wealthiest families. His grandfather, Cornelius Vanderbilt, was born poor in 1794, but by the time he died in 1877 he had become one of the richest men in the world. During his lifetime, he built a fortune first from steamships and then as a prominent railroad tycoon.

By family standards, grandson George didn’t have a lot of money. He inherited about $7 million, and drew income from a $5 million trust fund. He decided to use the bulk of his fortune to build a huge house high in the Appalachians. Work on the Biltmore Estate began in 1889, when George was 26 years old. Six years and $5 million later, he moved into his palace. (That $5 million would be roughly $90 million in today’s dollars.)

Strolling the grounds of the Biltmore Estate got me thinking about the stories we hear of wealthy people who squander their riches. How and why do they do this? Are there lessons from their stories that you and I can put to use?

We hear all the time about the “lifestyles of the rich and famous”. Today, on April 1st, let’s look at some lifestyles of the rich and foolish.

Lifestyles of the Rich and Foolish

There are so many stories of athletes and entertainers who have blown big fortunes that it’s tough to know where to start. Who should we pick on first? Since I’ve never been a fan of Nicolas Cage — and since he seems to be especially bad with money — let’s use him an example.

Over a period of fifteen years, Cage earned more than $150 million. He blew through that money buying things like:

  • Fifteen homes, including an $8 million English castle that he never stayed in once.
  • A private island.
  • Four luxury yachts.
  • A fleet of exotic cars, including a Lamborghini that used to belong to the Shah of Iran.
  • A dinosaur skull he won after a bidding contest with Leonardo DiCaprio.
  • A private jet.

It’s not fair to characterize Cage as “broke” — he’s still a bankable movie star — but his net worth is reportedly only about $25 million. (That’s like someone with an average income having a net worth of roughly $25,000.) He could be worth ten times as much but his foolish financial habits have caused him woe.

Cage got in trouble with the IRS for failing to pay millions of dollars in taxes. He’s been sued by multiple companies for failing to repay loans. His business manager says that he’s tried to warn Cage that his lifestyle exceeds his means, but the actor won’t listen.

Cage is but one of many celebrities who have done dumb things with money. Other prominent examples include:

  • MC Hammer sold the rights to his songs to raise money after being bankrupted by his lavish lifestyle. Hammer earned more than $33 million in the early nineties, but spent the money on a $12 million mansion (with gold-plated gates), a fleet of seventeen vehicles, two helicopters, and extravagant parties. [source, source]
  • Actress Kim Basinger paid $20 million to buy the town of Braselton, Georgia in 1989. When Basinger filed for bankruptcy just four years later, she was forced to sell the town. [source]
  • On the night of 01 February 1976, Elvis Presley decided he wanted a Fool’s Gold Loaf, a special sandwich made of hollowed bread, a jar of peanut butter, a jar of jelly, and a pound of bacon. He and his entourage flew from Memphis to Denver. The group ate their sandwiches and then flew home. Price: $50,000 – $60,000. [source]
  • Even authors get in on the act. Writer Mark Twain made tons of money through his work, but he lost much of it to bad investments, mostly in new inventions: a bed clamp for infants, a new type of steam engine, and a machine designed to engrave printing plates. Twain was a sucker for get rich quick schemes. [source, source]

When it comes to frittering way fortunes, it’s hard to compete with sports superstars. In a 2009 Sports Illustrated article about how and why athletes go broke, Pablo S. Torre wrote that after two years of retirement, “78% of former NFL players have gone bankrupt or are under financial stress.” Within five years of retirement, roughly 60% of former NBA players are in similar positions.

Some examples:

  • Boxer Mike Tyson earned over $300 million in his professional career. He lost it all, spending the money on cars, jewels, pet tigers, and more. He eventually filed for bankruptcy. [source]
  • When Yoenis Cespedes signed a new $75 million contract with the New York Mets, he drove a new vehicle each day during the first week of training camp, including a Lamborghini Aventador ($397,000) and an Alfa Romeo 8C Competizione ($299,000). [source]
  • Basketballer Vin Baker earned $100 million during his career. He’s now worth $500,000. He manages a Starbucks store in a small town in Rhode Island. (To be fair, Baker sees to be turning his life around, which is awesome.) [source]
  • Hall-of-fame pitcher Curt Schilling earned $112 million during 20 years in the big leagues. It wasn’t enough to keep up with his spending. Plus he lost $50 million through the collapse of a company he owned. In 2013, he held a “fire sale” to avoid bankruptcy.

It can be tough to sympathize with these folks. Used wisely, their immense fortunes could sustain them and their families for a long time. Instead, they squander their money on fleeting pleasures and the trappings of wealth.

Still, I believe it’s best to keep the schadenfreude in check. “There but for the grace of God” and all that, right? I’ve seen plenty of examples of average folks who have wasted smaller windfalls. In fact, this sort of thing seem to be the rule rather than the exception.

But why does this happen? The answer might be Sudden-Wealth Syndrome.

Lottery winners have the same kinds of problems. A 2001 article in The American Economic Review found that after receiving half their jackpots, the typical lotto winner had only put about 16% of that money into savings. It’s estimated that over a quarter of lottery winners go bankrupt.

Take Bud Post: He won $16.2 million in 1988. Within weeks of receiving his first annual payment of nearly half a million dollars, he’d spent $300,000. During the next few years, Post bought boats, mansions, and airplanes, but trouble followed him everywhere. “I was much happier when I was broke,” he’s reported to have said. When he died in 2006, Post was living on a $450 monthly disability check.

Sudden-Wealth Syndrome

In 2012, ESPN released a documentary called Broke that explores the relationship between pro athletes and money. How does sudden wealth affect young men? What happens when highly-competitive athletes with high incomes hang out together? Lots of stupid stuff, as it turns out.

Here’s a nine-minute montage from Broke in which wealth manager Ed Butowsky talks about why athletes get into trouble with money:

Broke is an interesting film. The players speak candidly about the mistakes they’ve made: buying 25 pairs of shoes at one time, buying fur coats they never wore, buying cars they never drove. They’re not proud of their pasts — some are ashamed — but they’re willing to talk about the problem in the hopes they can help others avoid doing the same dumb things in the future.

Curious how much your favorite actor or athlete earns? Check out Celebrity Net Worth, a website devoted to tracking the financial health of people in the public eye.

Broke does a good job of explaining why our sports heroes can’t seem to make smart money moves. The problem is Sudden-Wealth Syndrome. Essentially, young folks who earn big bucks don’t get a chance to “practice” with money before they’re buried with wealth.

The typical person earns a little when they’re young, but watches their salary grow slowly with time. Their income peaks during their forties and fifties. As a result, they get time to make mistakes with small amounts of money first which means (in theory) that they’re less likely to blow big bucks down the road.

On the other hand, athletes (and entertainers) have a completely different earning pattern. They leave school to instant riches. For a few years, they earn great gobs of money. But usually their income declines sharply with time — until it stops altogether.

Here’s a (pathetic) chart I created to help visualize this phenomenon:

Sudden Income vs. Normal Income

Athletes and entertainers need to figure out how to make five years of income last for fifty years. This never occurs to most of them. “[A pro athlete] can’t live like a king forever,” says Bart Scott in ESPN’s Broke. “But you can live like a prince forever.”

Sudden-Wealth Syndrome doesn’t just affect athletes and actors. Lottery winners experience it too. So do average folks who inherit a chunk of change or business owners who sell their companies.

The fundamental problem is that nobody ever teaches us how to handle a windfall. Windfalls are rare, and in most cases they can’t be planned for. (Some folks might be able to plan for an inheritance or the sale of a business, but these situations are relatively uncommon.) As a result, when the average person happens into a chunk of change, they spend it.

Here’s what you should do instead.

How NOT to Waste a Windfall

When you receive a windfall, whether it’s a tax refund, an inheritance, a gift, or from any other source, it’s like you’ve been given a second chance. Although you may have made money mistakes in the past, you now have a chance to fix those mistakes (or some of them, anyhow) and start down the path of smart money management.

It can be tempting to spend your windfall on toys, trips, and other things that you “deserve,” but doing so will leave you in the same place you were before you received the windfall. And if that place was chained to debt, you’ll be just as unhappy as you’ve always been.

If you receive a chunk of cash, I recommend that you:

  • Keep five percent to treat yourself and your family. Let’s be realistic. If you receive $1,000 or $10,000 or $100,000 unexpectedly, you’re going to want to spend some of it. No problem. But don’t spend all of it. I used to recommend spending one percent of a windfall on yourself, but from talking to people, that’s not enough. Now I suggest spending five percent on fun. That means $50 of a $1,000 windfall, $500 of a $10,000 windfall, or $5,000 of a $100,000 windfall.
  • Pay any taxes due. Depending on the source of your money, you might owe taxes on it at the end of the year. If you forget this fact and spend the money, you can end up in a bind when the taxes come due. Consult a tax professional. If needed, set aside enough to pay your taxes before you do anything else.
  • Pay off debt. Doing so will generally provide the greatest possible return on your investment (a 20 percent return if your credit cards charge you 20 percent). It’ll also free up cash flow; if you pay off a card with a $50 minimum monthly payment, that’s $50 extra you’ll have available each month. Most of all, repaying debt will relieve the psychological weight you’ve been carrying for so long.
  • Fix the things that are broken. After you’ve eliminated any existing debt, use your windfall to repair whatever is broken in your life. Start with your own health. If you’ve been putting off a trip to the dentist or a medical procedure, take care of it. Do the same for your family. Next, fix your car or the roof or the sidewalk. Use this opportunity to patch up the things you’ve been putting off.
  • Deposit the rest of the money in a safe account. It can be tempting to spend the rest of your windfall on a new motorcycle or new furniture or new house. Don’t. After attending to your immediate needs, deposit the remaining money in a new savings account separate from the rest of your bank accounts — and then leave this money alone.

To successfully manage a windfall, you must allow the initial euphoria to pass, getting over the urge to spend the money today. Live as you were before. Meanwhile, calculate how far your windfall could go. Most people have unrealistic expectations about how much $10,000 or $100,000 can buy.

In 2009, I received an enormous windfall. The old J.D. would have gone crazy with the money. The new, improved model of me was prepared, and made measured moves designed to favor long-term happiness over short-term happiness.

Today, the bulk of my windfall remains in the same place it’s been for the past five years: an investment account. That cash eases my mind. It helps me sleep easy at night. And that’s more rewarding than spending it on new toys could ever be.

Setting a Good Example

Not everyone who gets rich quickly does dumb things with money. Especially as the plight of pro athletes becomes better known, there are prominent examples of young superstars making savvy money moves. They’re learning from the lessons of those who came before.

Take Toronto Raptors superstar Kawhi Leonard, for instance. This 27-year-old NBA MVP earns $23 million per year — but still clips coupons for his favorite restaurant. He drives a 1997 Chevy Tahoe. Sure, he bought himself a Porsche, but he’s not interested in flash and bling. “I’m not gonna buy some fancy watch just to show people something fancy on my wrist,” he says. [source]

Jamal Mashburn has made wise use of his wealth. So has LeBron James, who takes his investment advice from Warren Buffett:

Here are other superstars who act as money bosses:

  • During his 12-year career in the NBA, Junior Bridgeman never earned more than $350,000. Unlike most players, however, he planned ahead. He recognized his basketball income would eventually vanish. He bought a Wendy’s fast-food franchise and learned the business inside-out. He became a hands-on owner. He expanded from one store to three to six — and then to a small empire. Today, twenty-five years after retirement, Bridgeman owns more than 160 Wendy’s restaurants and 120 Chili’s franchises. His company employs 11,000 people and generates over half a billion in revenue every year. His personal net worth tops $400 million. [source]
  • Patriots tight end Rob Gronkowski — who just retired last week — is a shining example of how to handle sudden wealth correctly. The 29-year-old earned over $53 million for playing on the field — and hasn’t spent any of it. Here are his own words: “To this day, I still haven’t touched one dime of my signing bonus or NFL contract money. I live off my marketing money and haven’t blown it on any big-money expensive cars, expensive jewelry or tattoos and still wear my favorite pair of jeans from high school.” [source]
  • Oakland Raiders running back Marshawn Lynch has a similar story. During his twelve-year NFL career, Lynch has collected nearly 57 million from his contract. Reportedly, he hasn’t spent a penny of that money. Instead, he’s been cautious to live only off his endorsement earnings. Whether this is true or not, Lynch is known to be a good example to his teammates, helping them with their 401(k)s and other financial issues. [source]

Sometimes superstars who have been poor with money have a flash of insight and they’re able to turn things around. Former NFL player Phillip Buchanon is a perfect example. After watching ESPN’s Broke, he realized he was headed for trouble. He mended his ways and started managing his money wisely. Now he’s written a book with advice for other folks who are fortunate enough to encounter a windfall. [source]

When people make a lot of money, they’re able to spend a lot of money. Sometimes the super-rich can afford to build a place like the Biltmore Estate. The problem isn’t a single extravagant purchase, but a lavish lifestyle in which they spend more than they earn. Real wealth isn’t about earning money — it’s about keeping money.

The post Lifestyles of the Rich and Foolish appeared first on Get Rich Slowly.

The Financial Wisdom of Rob Gronkowski

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While I’m not a particularly big football fan, I have been in a variety of fantasy football leagues (including a long-running dynasty league) with several friends for many years. For the last decade, one of the best players in the game has been Rob Gronkowski, a tight end for the New England Patriots who has consistently been one of the best players in the league at his position. He recently chose to retire from the game, hopefully with his health intact.

So, why am I telling you about Rob Gronkowski? He’s on my short list of professional athletes who have been incredibly smart with their finances and lifestyle (along with one of my favorite baseball players, Daniel Norris). In short, Gronkowski has saved his entire NFL salary for his whole career, never spending a dime of it. He has lived entirely off of endorsement contracts and, in the end, has spent only a small fraction of what he has earned.

Pretty impressive for someone who had a reputation of being a bit of a “meathead.”

In this article from CNBC, Gronkowski lays out some of the details of his financial planning and the advice he gives to other players:

Although he was one of the highest-paid tight ends in the league, the 29-year-old had not touched a dime of his NFL money. As he revealed in his 2015 book, “It’s Good to Be Gronk,” he lived off his endorsements instead.

Gronkowski […] says that as a veteran on his team, there is one piece of advice he would always gives his rookie teammates about managing their money.

“Financially, I just say: Keep it simple,” he tells CNBC Make It.

Unlike many other professional leagues where athletes’ contracts are fully guaranteed, NFL players’ are not. That’s why Gronkowski says he would always tell his young teammates to “get what you need to live comfortably but don’t go crazy with splurging until you feel comfortable in the league.”

When he got his first NFL paycheck, Gronkowski said he put it all in the bank. And he spent his endorsement money carefully too. It wasn’t until recently, after eight seasons of being frugal, that he finally decided to splurge.

While I was unable to find any hard numbers on this, Gronkowski had a $54 million contract in the NFL, and NFL analyst Darren Rovell estimated Gronkowski’s lifetime endorsement earnings at $3.5 million. That equates to somewhere above a 90% savings rate. I’m impressed.

“When I signed my incentive deal last year, my friend had a chain and I was like, ‘Dang, man, that’s a nice chain,’” Gronkowski told entrepreneur Maverick Carter on an episode of UNINTERRUPTED’s “Kneading Dough” last year. “I never had jewelry in my life. He let me wear it last year at a party and it made me feel good.”

After a successful 2017 season that included a Super Bowl appearance, Gronkowski decided to treat himself and buy a nice chain.

So, Gronk’s one big splurge for himself after playing in the NFL for seven years, having a huge contract, and appearing in (and winning) several Super Bowls was to buy himself a necklace.

The article goes on to give a big nod to another NFL player, Kirk Cousins:

Gronkowski wasn’t the first or only well-paid NFL player to be open about his frugal spending habits. Minnesota Vikings star Kirk Cousins, who is the first quarterback to have a multi-year, fully guaranteed deal and so can count on $84 million coming his way, nonetheless drives a dented GMC Savannah van that he purchased from his grandma for $5,000.

Cousins also revealed to GQ that, after being drafted into the league in 2012, he and his wife still spent their summers living in his parents’ basement to save on housing costs.

In a 2016 interview with the Wall Street Journal, Cousins explained, “You don’t know how long you’re going to play. You’ve got to save every dollar even though you are making a good salary.”

There are a lot of valuable lessons in these stories. Here are a few of the key lessons that stood out for me that also resonate in my own life.

You can never be sure of your future salary or your future self. Both of these guys nod strongly to the idea that they don’t know what the future holds for their income. All they know is that they’re earning quite a bit now and that they can live quite happily well below that income level.

The same principle applies to everyone. Your future income is never secure. Your future self is not reliable. Instead, you should be looking at your current life and asking yourself if you can live a happy life spending significantly less than your income. Aim for the minimal spending that brings you a happy life and bank the rest for a future when you can’t earn as much. Ideally, you will keep earning a nice income for a while and then you’ll have so much in the bank that you can retire early.

Fancy items don’t bring lasting happiness. An NFL starting quarterback on a multi-million dollar contract drives a used GMC Savannah he bought from his grandmother. Why? A fancy car won’t bring him lasting happiness. On the other hand, financial security will bring him that happiness.

Gronkowski spent several years in the NFL, earning millions in salary, before deciding to splurge on a chain. Why? He realized that he was going to be a lot happier in life knowing that his whole future was taken care of rather than owning a bunch of stuff.

Stuff doesn’t bring happiness most of the time. Money itself doesn’t bring happiness. What does bring happiness is good relationships, life-affirming experiences, challenging yourself, and building a strong foundation upon which those things can rest.

When you do splurge, give it some thought and make it meaningful. As noted earlier, Gronkowski spent a long time thinking about buying that chain as a splurge of his. He didn’t just go out and buy it for giggles. He considered it carefully and when he made the purchase, it wasn’t disruptive to anything in his life and it was something he had wanted for a long time.

That’s a good model to adopt when it comes to splurges. If you decide that you really want something that’s not a necessity, give it time. Let it rest and decide if you really do want it. If you give it reasonable time (and I don’t just mean “five minutes”) and decide you do want it, then do a bit of homework and indulge. Make it a meaningful, powerful indulgence that provided some blissful anticipation and is something that you’re going to really enjoy.

Be spontaneous with your time and energy, not your money. Many people balk at being financially responsible because they don’t want to lose a sense of spontaneity in their life. The problem with that is that financial spontaneity is just one flavor of spontaneity – you can be spontaneous with your time and energy without throwing your money to the wind.

Go run across the yard barefoot. Make an amazing dinner that your family didn’t expect. Spend an afternoon reading a great book instead of scrubbing behind the toilet. Tell someone you love them.

Gronkowski built a bit of a reputation in his NFL career as being a bit of a goofball and a partier, but if you look closely, it was clear that he was just spontaneous and gregarious with his time and energy, not his money. That’s a great approach to have with your life.

There are infinite ways to be spontaneous in life without just spending money frivolously.

Keep things simple. Financial planning doesn’t have to be complicated and loaded with decisions. If you have two household incomes, bank one and live off the other one. Automate as much of your saving and bill paying as possible. Invest in target retirement funds if your goal is retirement. Automatically put a little money each week into a savings account for an emergency fund – just set this up once and let it sit. Buy late model used cars and drive them for many years. Live in a relatively small house or apartment. Buy store brands. This doesn’t have to be complicated or difficult.

In other words, channel your inner Gronk.

Good luck.

Read more by Trent Hamm

The post The Financial Wisdom of Rob Gronkowski appeared first on The Simple Dollar.

How I Sold This Website for $9 Million

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Dearest Readers,

I’ve been waiting to tell you this with considerable excitement for a whole year, but the sales contract prevented me from doing so until this moment. And as of April 1st, 2019, I’m officially free to reveal that:

Mr. Money Mustache has been sold!

Yep. I’m not sure if it’s the age-old truism that “Everybody has their price”, or the fact that I got bored after eight years of writing it and just ran out of things to say, but over time I have come to realize that it was time to pass this golden opportunity on to someone else.

The highest bidder in this case was Shamrock Financial Trust*, a financial products company in the Isle of Man, UK that specializes in special premium investments that beat the market while dodging the taxman.

I was unsure of exactly why Shamrock would be willing to pay so much for my collection of five hundred articles mostly about spending less money and investing in index funds. But when you put six zeroes after a number on a check, it is amazing how quickly uncertainty and questions can vanish!

From my understanding, a site like MMM has a certain value just from its ranking in the search engines, and ongoing traffic of several million page views per month and about 33 million unique visitors over its lifetime. But still, those are just numbers on the page and don’t seem real because I haven’t been taking full advantage of the opportunity.

But, the Shamrock leadership team has assured me that the site will take on a vibrant new life, with a team of professional writers churning out fresh content on the daily, and an SEO-optimized stream of monetized offers that deliver maximum value-added solutions to all stakeholders.

And I just thought I’d reach out to see if we could jump on a call to catch up on the bleeding edge of some big data, to see if there’s any Corporate Synergy in our Core Competencies.

Fuck! Don’t you hate corporate bullshit and business buzzwords? Me too.

(thanks to reader Ron Cameron in the comments below for mentioning this incredibly appropriate Weird Al / Crosby Stills and Nash song. It is SO good!)

It was both fun and sickening for me to type that cheerful little story, but hopefully you realized from the title alone that it is April Fool’s Day, and I thought I should play along with a preposterous headline of my own.

In reality, of course I have no desire to sell this website, because doing so would violate some of the core math of early retirement happiness:

  • It would subtract something from my life that brings me true happiness (the ability to be in touch with you, which in turn brings more friends and lots of challenge and a sense of meaning into my life)
  • while adding more money, which would make absolutely no improvement to my life because I am not feeling any pain due to a shortage of money.

And that’s the real reason I figured this lame April Fool’s prank also contained a life lesson that was worth sharing as a blog article. Because I am still hearing from people every day who are selling out their own lives for their careers.

So many people are using a successful working career and earning loads of money as an excuse for not facing the realities of life.

Although this is certainly not a gender-specific problem, as a 44-year-old man living in a wealthy area I am surrounded by peers who are afflicted by this disease of Success-itis.

People who are rockstars in the corporate sphere and at the peak of their careers, who have become so addicted to the activity that they can’t see they are just chiseled Kuhl-clad rodents jogging in the latest trail runners on a gilded hamster wheel.

Career success is a very sneaky thing, much like a layered salad of Superfood Greens that gradually devolves into a dessert of Creme Brulee enhanced with crystals of Crack Cocaine as you dig deeper. It starts out with all sorts of self-actualization and personal growth, but as you begin dining you are also hooked up to intravenous feeds of ego stoking and copious income. So even as the worthwhile parts fade, you grow more and more addicted to the superficial rewards.

Of course, the standard American tradition is to spend all of this money as soon as you get it, locking in a lifestyle that is so bloated and inefficient that you “need” to keep earning the enormous bucks to “support your family.”

It becomes very easy to justify career-itis as a noble and selfless thing, rather than the lame indulgence it really is, when you are simultaneously addicted to corporate accomplishment, and bad at managing the veritable shitload of money it generates. If you are making a multiple six figure salary in your 40s and still not even financially independent, please grow up and learn a bit about money beyond just buying yourself nice stuff. It should be embarrassing to be still dependent on a paycheck while sitting in such a privileged position.

But even for those of us who get the money part solved, with investments large enough to see us through several prosperous lifetimes, the career addiction still remains strong. The fact that people still end up on redeye flights, missing their kids’ school performances and barking out buzzwords at underlings during endless conference calls even with tens of millions in the bank, should serve as a real warning of how addictive this disease can really be.

So for this April First, I would like to issue a little reminder, for overly successful men and women of my overly rich country:

A successful career is a fine way to learn some life skills and earn some money. But if you’re still doing it at 40 years old, you are probably sucking at something else.

And if you’re still in the office at 50, you’d better be changing the world and not just a cog in a machine that is doing something you don’t believe in.

Since career-itis is an addiction to success, the easiest way to break free is to give yourself permission to suck for a while.

If you are a Successful Career Man and you want to start a family, there is going to be a 20-year period where you are either a half-assed worker, or a half-assed Dad, or both. But you can’t be amazing at both. And that is totally okay.

Because a good life is one that is well-rounded and nuanced. It’s not about PERFORMANCE at all costs. It’s about being okay with trying new things and making mistakes, and growing as a human in exchange for that.

Your kids don’t care if you make $75,000 or $75 million per year, because either of those numbers is more than enough to have all possible doors to happiness open to them.

So my challenge to you is not to work the longest and most fruitful career possible, but rather to move on to new and bigger challenges as soon as you are strong enough to do so. 

Complacency and doubling down on your existing half-satisfying job is a form of weakness. Moving on and trying new things is a sign and source of flexibility and strength. And mental flexibility and strength are the biggest allies you’ll ever find in the long journey through life.

Thus, of course I did not sell this website, and of course I’m going to keep occasionally writing things for it, on my own schedule and nobody else’s, while struggling and fighting and learning in all the other areas of life.

It won’t be perfect, but it will be interesting and fulfilling and awesome. I wish you the same in your badass and ever-changing life!

* This is a fictional name that I picked because it contained the word Sham, plus a real financial company from the Isle of Man sent around some bogus legal threats to a few bloggers several years ago so I thought it would be nice to combine the ideas. 

How to get college scholarships in 2019 (how I got $100,000+)

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How to get scholarships in 3 easy steps

Step 1: Adopt a robust “scholarship application mindset”

Step 2: Learn to find the scholarships that will pay THOUSANDS

Step 3: The only application strategy worth doing

How to get letters of recommendations

How to write a college application essay that stands out

Key things to remember to get any scholarship

What do I do AFTER I get my scholarships?

Step 1: Adopt a scholarship application mindset

One thing I’ve noticed is that a lot of people just hope they get “a scholarship” for college.

Instead of hoping you get one scholarship, you need to reframe it to “I hope I get a LOT of scholarships.”

This is a mindset of abundance — and it’s incredibly important when you start applying for different scholarships.

Which means two things:

  1. Instead of hoping you get a huge scholarship or full ride, you need to apply to as many as possible. After all, $500 here and $1,000 there can really add up.
  2. Don’t get discouraged if you don’t get one you apply for. Scholarships are a numbers game, and many have only a handful of applicants.

Use every resource at your disposal — apply to any and all relevant scholarships you can find. Once you cast a wide net, you increase your chances of getting more money for school IMMENSELY.

Step 2: How to find scholarships that will pay thousands (and ones nobody applies for)

If you’re a high school student, you have a lot of scholarship resources available to you. They can be broken up into five areas:

  1. High school career centers
  2. Library and bookstore
  3. Scholarship search sites
  4. Ethnic organizations
  5. Friends and family

With these resources, you’ll be able to earn thousands of dollars in scholarship money. Here’s how:

High school career centers

First, go to your high school career center. If your high school doesn’t have a career center, your school’s counselor can help you with this too.

Most high school career centers keep an updated list of scholarships sorted by date. Go through this list and make note of every single scholarship that applies to you. You should literally be writing down the information for each one — you’ll need it when you actually start the application process.

Do this in a Google or Excel spreadsheet. When recording, I suggest you write down the scholarship name, the amount it’s worth, a due date, and whether or not you’ve applied yet.

When you put it together, here’s what it might look like:

Scholarship name What it’s worth Due date Applied
IWT Scholarship $2,500 05/16 Yes


Of course, you can be as detailed as you want with your spreadsheet and include things like GPA requirements and whether or not you need an essay.

Once you’ve exhausted your school’s list of scholarships, call up other high schools and ask them if you can go in and talk to them about what scholarships might apply to you.

That’s right. I want you to call up other high schools in your city to see what scholarships they have. They’ll actually LOVE this because no high schooler ever goes out of their way to get scholarships.

If you show just a little bit of initiative in your educational future, they’ll be more than happy to help you out. Do the exact same thing you did with your school’s scholarship resources and record all the ones relevant to you.

When I was in high school, I ended up applying for 60 scholarships from my high school’s career center — and earned thousands for college in the process.

Library and bookstore resources

Once you’re finished exhausting all of the scholarships from your high school, head to a bookstore or library and pick up the latest copy of an annual scholarship book.

These books are comprehensive catalogs of grants and scholarships you can earn as a high school student. They’re FANTASTIC resources if you’re looking to find cash for college.

Here’s a list of a few good scholarship books to look for:

  1. The Ultimate Scholarship Book 2020 by Gen Tanabe and Kelly Tanabe ($19.71)
  2. Scholarship Handbook 2018 by The College Board ($22.51)
  3. Scholarships, Grants & Prizes 2019 by Peterson’s ($24.09)

I’ve included the Amazon links here so you can check them out — but I highly suggest purchasing these at your local bookstore so you can get started ASAP!

Once you get the book, do what you did with your high school’s scholarship resources and make note of all the scholarships you’d like to apply for.

Scholarship search sites

Once you’ve looked at all the scholarships you can through the aforementioned resources, you can turn to different search engines and websites that can help you find scholarships.

Many of them even include features that allow you to search for specific criteria like:

  • School-specific scholarships
  • Amount of money earned
  • GPA requirements
  • Essay requirements

You can set up email alerts so that you are automatically notified when the sites find scholarships that fit your specific needs too.

Here are a few suggestions for great sites to help you look for scholarships:

Ethnic organization scholarships

Ethnic organizations of all stripes tend to offer scholarships. These can help you earn hundreds — if not thousands — in scholarship money.

Many of these are ethnicity-based, meaning that you’ll have to be a certain race or background in order to qualify for the scholarship.

A few suggestions:

Of course, simply fitting the racial criteria for ethnicity-based scholarships isn’t enough. You’re going to have to knock the application out of the park (more on that later).

Friends and family

Talk to your friends, parents, and parents’ friends to see if they know of any scholarships.

There are a lot of companies that offer college scholarships — companies that the people you know work at. So ask around! Some of the best scholarships come from some of the most unexpected places.

When I was applying for scholarships, my sister was working at Kaiser — which offered a college scholarship to relatives of Kaiser employees.

My mom is a teacher and she knew about a scholarship offered through the California Teachers Union.

These are scholarships barely anyone applies to because many high schoolers simply don’t know to ask about them. So when you DO find out about one, you automatically have an advantage over everyone else.

If you feel odd about it, know that every person wants to help out a high schooler. They won’t think it’s “weird.” In fact, they’ll find it admirable.

Which brings us to my favorite part…

Step 3: The only scholarship application strategy worth doing 

Okay, so now you have your (hopefully) large list of possible scholarships to apply to.

The strategy is simple: It’s time to apply to ALL of them.

This might seem like an incredibly daunting task. After all, these applications generally require you to do two things:

  1. Send a letter of recommendation
  2. Write an essay (or a few short ones)

However, there’s an easier way to go about the process that doesn’t involve writing 60+ unique essays.

Don’t get me wrong: Each application is going to take time and a bit of nuance in order to create a compelling case for you that’ll have the reader clamoring to give you the scholarship money.

But you can make the process a lot more effective and simple if you just look at the letters of recommendations and essays.

Get letters of recommendations

Most high school students are afraid to ask for letters of recommendations. It’s a little bit awkward to ask a teacher or other trusted adult to write a glowing recommendation for you.

HOWEVER, if you were a good student and established a good relationship with your teachers, they’ll be more than happy to help you out with your letter of recommendation. Most students never do this so they’d be happy to help.

You’re going to want to approach it the same way I approach asking for a testimonial: politely and with the majority of the work done already.

When you reach out to your teacher for a letter of recommendation, you’ll want to give them several things:

  • A broad view of what you want them to highlight
  • 2-3 key points they should touch on (maybe it’s something specific to the scholarship?)
  • Your resume so they have a reference to your accomplishments

If you provide them practically everything they need, they’ll be more than happy to give you an awesome letter of recommendation. In fact, many teachers will just ask you to write a draft that they can edit and sign.

Write a college application essay that stands out

When it comes to writing an amazing scholarship essay, I’ve developed a highly complex intricate process of algorithms and systems that you need to follow EXACTLY if you want your writing to soar.

The steps are:

  1. Figure out what most students will write about
  2. Write something else

…and that’s it.

Why does this work? Most scholarship essays bore judges to tears.

Put yourself in the shoes of the person who will be reading your application — they’re going to be reading hundreds, maybe even THOUSANDS of these a day. And the fact of the matter is 99.99999% of the applications they read will be almost exactly the same.

Oh, you got good grades? You were in a bunch of extracurriculars? That mission trip you took to Honduras junior year was “life-changing”?

Get in line. What’s particularly unique about any of those things? Not a whole lot.

And if you fall into the same formula as everyone else, I guarantee you your application won’t get a second glance.

However, if you subvert the expectations of the scholarship judge, you’ll grab and hold onto their attention — allowing you to properly make your case.

To do that, you need to follow the aforementioned two steps.

First: Figure out what other students will write about

You’re sitting down at your laptop, the scholarship essay prompt is in front of you, and you’re ready to dive in.

Before you write a single word…STOP!

Think about the other people applying for the exact same scholarship — what are THEY going to be writing about?

What’s the easy answer to the prompt…and how can you subvert that?

Back when I was applying, I had one essay prompt that asked, “If you could have dinner with anyone, living or dead, who would it be and why?”

Classic prompt. So I started thinking.

Nelson Mandela? Meh…that would be the “logical” choice. And to be honest, dinner with Mandela wouldn’t be the most exciting thing for a 17-year-old kid.

Maybe President Clinton? That’d be cool for bragging rights…but what would we talk about?

Given this prompt, I could have just written some BS about Mandela or the President but I would have sounded like every other person applying for the scholarship. Plus, I didn’t really want to meet them.

It’s almost like the people applying forget that it’s a competition. Would a coach say to his players, “Okay guys, we’re playing against every team in our division next week, so we’re just going to do the same plays over and over”?

No. So why would you want to do that too?

So when it came to who I wanted to have dinner with, I decided to go with my gut and pick someone different: Chris Rock.

Which leads me to the next step…

Next: Write your application with UNIQUE answers instead

When you take a step back and consider the common answers to the prompt, you’ll be able to come up with an answer that will subvert the judge’s expectations and keep their attention.

In my case, while other students wrote about historical figures, I chose Chris Rock, the famous comedian.

My essay went on to argue that though he’s perceived simply as a comedian, he’s actually a highly astute social commentator. His jokes revealed the things we want to say but won’t articulate — because we’re afraid to.

I even deconstructed one of his jokes and went into an in-depth analysis of why it was an examination of the racial attitudes our society holds.

And it worked.

My approach was offbeat — yet professional. When looking for the unique angles, you shouldn’t make it offensive or inappropriate. Instead, aim to make it deep, personal, and a little bit against the grain.

To show you what I mean, here are a few common essay prompts — as well as the boring responses judges will typically see AND an example of a good answer.

Question 1

“Is it fair that professional athletes earn millions of dollars?”Typical boring answer: “No way! We should be paying that money to teachers and firefighters. Athletes are just playing a game.”

What’s wrong with it? You could find this opinion in the “Letters to the Editor” section of any newspaper. It doesn’t matter if the answer is right — it plays everything safe and is BORING.

Better answer: “Salaries aren’t decided by fairness. They’re decided by supply and demand. LeBron James is a millionaire because millions of fans pay to see him perform. Besides, if the athletes weren’t getting the money, the owners would. Those are the only two options.”

Question 2

“Which major world problem would you solve if you could only pick one?”Typical boring answer: “I would end world hunger. Every man, woman, and child deserves this basic requirement of human life.”

What’s wrong with it? The reader makes no human connection to you. Why on earth would they want to read more?

Better answer: “My life changed forever when I spoke at my best friend’s funeral. Standing there under the storm clouds, I felt a personal duty to make sure no one sees suicide as their only way out.”

Question 3

“Respond to this statement: America’s middle class is in trouble.”Typical boring response: “The middle class is America’s heartbeat. We need to put big corporations in their place to make room at the table for everyone.”

What’s wrong with it? This is such a cliche answer, the judge won’t help but roll their eyes. Reading an answer like this will have them mentally checking out before you can say, “Full-ride scholarship.”

Better answer: “Classes aren’t fixed groups of people. Most of us move in and out of different classes throughout our lives. In fact, many people who were in the middle class twenty years ago are in the upper class today.”

These answers practically grab you by the lapels and COMMAND attention. They stand out like a lighthouse in the ocean of boring applicants.

This is the difference between following the crowd and hoping for the best versus thinking strategically and winning the game.

Key things to remember to get any scholarship

Before you jump into the system above, there are a few things to keep in mind when you’re applying:

  • After you write the essay, get at LEAST two other people to proofread it for you. You might think your first draft is perfect — but chances are it’s not. Plan to go through a few drafts before you land on the one you’ll be submitting.
  • Barely anyone applies to the majority of these scholarships — so you’ll already have a huge advantage by applying at all. The Craigslist Penis Effect is strong with scholarship applications. Leverage that knowledge.
  • Some scholarships require you to interview — so you need to prepare. Remember to prep for it by practicing interviews a LOT. That means doing them in front of a mirror, having your friend run through questions with you, and reading up on interview strategies. Here are a few great resources from IWT that’ll help you:

Check out my video on how you can crush your interview below:

What to do AFTER I get the scholarships?

Once you get your first scholarship, CONGRATS!!!

You’re now ahead of a vast majority of your peers when it comes to paying for your education — but it shouldn’t end there.

When it comes to scholarships or even school in general, you don’t have to be the smartest person in the room — you just have to do the work.

If you’ve read all this, try doing just one step today. Not tomorrow, not after you finish that physics quiz, but TODAY.

Take someone out to lunch. Send an email to that professor you admire. Ask someone a question. It doesn’t have to be perfect, it just has to be today.

It’s easy to take the “safe” route. It’s much tougher to build your own confidence to do things differently — let alone at all.

But if you’re willing to take that first step, I want to help you.

Join my free email list to learn my secrets to earning more, learning, and finding a passion that’ll earn you money forever.

How to get college scholarships in 2019 (how I got $100,000+) is a post from: I Will Teach You To Be Rich.

How to talk to people (even if you don’t know what to say)

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You’ve probably been there before:

  • You walk up to a group of friends talking. Stand there awkwardly while waiting for one of them to notice you. Wish for death.
  • You start telling a story to a group of people and — in the middle of it — realize the story sucks. Continue anyway.
  • You go to an event and instead of meeting people, pull out your phone and furiously check email.

With your friends or family, you have the BEST stories, but if you just met a group of people, all of a sudden your mind goes blank and you have nothing to say.

Today, I want to teach 3 systems that helped me know how to talk with confidence and know exactly what to say in any social situation.

They are:

  1. Perfect Words
  2. Story Toolbox
  3. Question Toolbox

Let’s get to it.

How to talk to people system #1: Perfect Words

A while back, I went out to coffee with a good friend of mine. Now normally, when I order coffee, I just say, “Hey, I’ll have a latte. Thank you,” before going on my way.

But when my buddy went up to order his coffee, he had four people around him absolutely cracking up within seconds. The barista was smiling. People around him were laughing. And everyone seemed to just really enjoy his presence.

And guess what he said that got all this going. It was, “What’s good today?”

That’s it! From that one line he was able to start a great conversation.

Now I want you to check out the rest of his conversation — and see what you notice:

MY FRIEND: What’s good today?

BARISTA: (smiling) Everything is good.

MY FRIEND: (teasing) Everything isn’t good. Tell me the truth!

BARISTA: Well, we just got a new cold-pressed coffee machine and I hear that’s supposed to be good.

MY FRIEND: No, I mean what would YOU get if you could get anything?

BARISTA: (laughs) I actually think that our scones are the best things ever.

MY FRIEND: Well, I’ll have two of those please!

A few takeaways:

  • He’s just saying normal things. There’s no magic line or canned jokes here. My friend was just saying simple things that, on their face, aren’t very clever…but none of that mattered!
  • He had a lot of energy. The way my friend said things was way more important than what he said. If he went into this situation with low energy and delivered everything in a monotone voice, he would not have gotten the same positive effect.
  • The cashier LOVED this. She spends all day listening to those aforementioned monotone voices order the same thing over and over. Finally, she got someone who broke that monotony and made her smile. My friend brightened her day and was memorable.

My friend did all this by leveraging a system called the “Perfect Words.”

What are the Perfect Words? Luckily for you, they created a whole book of them called…

…the dictionary.


The truth is there are no Perfect Words.

Instead, it’s how you say things that determines how you come off.

To show you what I mean, I’m going to give you three phrases and show you exactly how you can use them to open a great conversation:

  1. Hi, how’s your morning going?
  2. Hi, I don’t think we’ve met. I’m Ramit.
  3. Good morning. How are you?

These three simple phrases have no “magic” to them — and yet they’ve worked millions of times since the dawn of conversation openers.

What I want you to do now is start to consider the different ways you can deliver these phrases.

Here are three simple ways you can do that:

  1. Smiling. Many of us don’t typically smile when we’re opening a conversation. We’ll say things like, “Hi, how’s your morning going?” and deliver it like we’re a doctor giving bad news.

    But when we DO smile, it’s the instant ice breaker. And it’s so simple to do.

    So practice letting your smile “fill your face.” I used to videotape myself speaking to find out I wasn’t smiling enough. It gets easier once you start practicing.

  2. Slow down. The speed in which we say something can have a huge effect on how people perceive us. When we’re nervous, we tend to speed up the way we talk. When we slow down though, it gives people time to connect with you. Couple that with a good smile and you got a winning system.

    So try slowing down what you’re saying by 50%. It will feel sluggish, but this is perfect for everyone else. It helps to enunciate your words too. Young Ramit got way ahead using this one tip.

  3. Change your tone. Way back in the day, I had no tonality whatsoever when I talked. I’m sure you could close your eyes and not tell if you were conversing with me or Ben Stein. Eventually I realized this, so I started to speak with more energy — and it did WONDERS.

    Try taking whatever level you’re at when you normally talk, and add 50% more energy into your voice. What feels weird to you is NORMAL to everyone else.

Action step: Implement the Perfect Words 3x/day for a week

I want you to use the three phrases above every day for seven days on different strangers. It can be your Amazon Prime delivery guy, your barista, the checkout lady at the grocery store, whoever!

As you use the phrases though, keep in mind the different ways you can change up how you deliver your words (smiling, slowing down, and changing your tone).

A few other things to remember:

  • They’re called social “skills,” and like any skill, you can get better at them. We’re starting small on purpose. As you get more used to it, you can start to scale and open conversations with more people.
  • Most people you talk to are bored all day long. This means you’ll be doing them a favor by engaging with them just like my friend was with the cashier at the coffee shop.
  • Note their reactions and your reactions. Did the person you’re talking to start smiling and laughing because of your energy? Or did they retreat because you made them uncomfortable? How did you feel while you were smiling or talking slowly? 

Don’t worry if this doesn’t feel comfortable right away. It’s not supposed to. Just trust the system.

How to talk to people system #2: Make a Story Toolbox

I’m a firm believer in the idea that telling a story is the best way to engage someone. It doesn’t matter if you’re with friends or if you’re trying to sell a product. A good story can make a world of difference when it comes to building a good first impression (notice the beginning of this very post…).

That’s why you always want a large well of great stories to draw on.

You can create your Story Toolbox using any tool you prefer, such as:

  • Google Docs (what I use)
  • Microsoft Word
  • Microsoft Excel
  • Evernote
  • A physical notepad

It doesn’t matter what you record them with as long as you ARE recording them. These stories could be funny, entertaining, or serious — and you might actually want to organize them as such.

Action step: Create your Story Toolbox 

Designate a place to put your stories, and start by adding five of them.

If you can’t think of five good stories, think back to the last time you hung out with your friends or family.

  • What did you talk about?
  • What made everyone laugh?
  • Every family has an embarrassing/hilarious story. What is it for your family?

Hang out with your friends or family in the next few days, and write down the things you naturally talk about. This will help seed your Story Toolbox for the first time.

How to talk to people system #3: Make a Question Toolbox

If you want to keep the other person you’re talking to engaged, there’s no better way to do it than with a thought-provoking question. It helps you always have something to say and talk to someone you don’t know.

Of course, depending on the context of your conversation, you’re going to want to have different questions for different scenarios.

I remember once, my friend noticed me checking this girl out at a bar, so he goaded me into talking to her. So I approached her and this exchange went down:

Ramit: Hi, I’m Ramit.

Woman: Hi, I’m [whatever].

Ramit: You look like a vodka soda girl. (I know, I know. I don’t know where this horrific line came from.)

Woman: …no.

I was surprised by how she just shut me down, so I decided to have some fun.

Ramit: Aw, c’mon. I’ve been right 100/100 times for the last 5 years. How are you going to break my streak like that?

Woman: I’m a recovering alcoholic.

Shortest. Conversation. EVER. But a funny story now.

If instead, I came in with my question toolbox filled with questions that weren’t awful pick-up lines, I might have had better luck. That’s why you’re going to want to craft different meaty questions for different scenarios.

Action step: Create your Question Toolbox

So the next time you’re making small talk, take note of great questions you hear and ask. Save them in your Question Toolbox for later.

Here are a few good sample questions to get you started:

Networking events/industry conventions:

  1. What made you decide to do X?
  2. What are the biggest challenges when it comes to your industry?
  3. If you had to do X again, what would you do differently?
  4. As you gained more experience in X, what became more important and why?
  5. What would make today/this event successful for you?
  6. What still surprises you about X?


  1. What are your biggest goals right now?
  2. How do you spend your time?
  3. Playful questions like: Which do you like more — pancakes or waffles?
  4. What do you hate most about dating? (This question is both interesting and can help you avoid doing the thing they hate.)
  5. What’s your favorite restaurant in the city? Why?
  6. Which Spotify playlist is the soundtrack to your life?

Baristas/wait staff:

  1. What’s your favorite thing on the menu? Why?
  2. What’s the craziest thing someone tried to order this week?
  3. Have you ever written somebody’s name wrong on purpose because you didn’t like them?

BONUS: If you really want to exercise your social muscle, check out my video on improving your social skills. It’s less than 30 minutes.

Enhance your small talk

Small talk is a CRITICAL part of life and building relationships — it’s what helps people get to know each other, establishes meaningful connections, and lays down the foundation for great long-term relationships.

The term “small talk” is actually a complete misnomer because of its HUGE impact on forming relationships and developing unshakable confidence. As such, it takes a lot more care and nuance than just getting right down to the point.

If you walked right up to a CEO you admired at a mixer or convention and said, “I REALLY LIKE YOU. GIVE ME A JOB, PLEASE!” how do you think she’d react? She probably wouldn’t give you that job.

But if you went in with some care, and drew her into an amazing conversation and THEN asked her for a job (or better yet just advice or a coffee meeting), she’d be a hell of a lot more susceptible to it.

The key is realizing that confidence and the ability to carry a good conversation are skills — and like any other skill they can be learned, honed, and mastered.

I used to feel uncomfortable and out of place during social events too — but over time, I’ve developed hacks for confidence in new situations.

I’ll show you exactly how I do it in these 3 short videos. Just enter your email for instant access.

How to talk to people (even if you don’t know what to say) is a post from: I Will Teach You To Be Rich.

How to calculate your debt to asset ratio (+ check if it’s good)

sourced from:

Here’s what debt to asset ratio means:

When you’re a business (i.e. you have your own business or side hustle), your debt to asset ratio represents the total amount of debt you owe compared to your total amount of assets.

This determines how much lenders will be willing to give you AND helps you be aware of how much you owe to creditors.

If you’re an individual, the debt to asset ratio won’t be as relevant to you…but your debt to INCOME ratio will be. That’s the number representing the total amount of debt you owe compared to your income.

Mortgage lenders, bank loans, and anyone giving you credit will take a look at your debt to asset/income ratio in order to determine how much they’re willing to lend to you.

Your debt to asset ratio (or debt to income ratio) could mean the difference between securing a loan for your business or home, and not getting a single dime from a lender.

To help you get a better understanding of it, let’s break down what debt to asset ratio might look like in real life.

Explain Like I’m 5: Debt to asset ratio

Let’s say an unemployed acquaintance of yours, we’ll call him Jeff, asks to borrow $10 from you.

What do you do?

Immediately, with your $10 in your hand, you’ll ask yourself a bunch of questions about Jeff, including:

  • “Do I trust Jeff?”
  • “Will Jeff pay me back?”
  • “Whoa, why is the guy from Hamilton on the $10?”

Hard to answer these questions, right? Now pretend a third person, your mutual friend Mary, tells you that Jeff borrowed $100 from her last week and hasn’t paid it back. Now what do you do?

You slip your $10 back in your pocket and move on.

In a nutshell, this is debt to asset ratio.

However, that’s not the only debt ratio you need to understand. In IWT fashion, we’re going to give you the rundown on three debt ratios that are going to matter the most to you, your life, and/or your business. They are:

It’s so important to keep these numbers in mind to be aware of your debt (if you have any that is), because when they’re out of whack they can stifle your ability to make some big purchases.

Debt to asset ratio: Important for businesses

(NOTE: If you’re not a small business owner or don’t run your own side hustle, you can skip down to debt to income ratio.)

Like your credit score, your debt to asset ratio is a number. One that shows you how much of your assets — things like your cash, investments, inventory, etc. — were paid with debt, including:

(Pretty much any instance that you owe money to someone.)

The way you calculate your debt to asset ratio is simple: Take the amount of debt you owe and divide it by the value of the assets you own. Then, take that number and multiply it by 100 so you get a percentage. That’s your debt to asset ratio.

It’ll look something like this:   

Dollar amount of debt you owe ÷ Dollar amount of assets you own =
Debt to asset ratio

And then:

Debt to asset ratio x 100 = Debt to asset ratio percentage

It’s really that simple.

What is a good debt to asset ratio?

The higher your debt to asset ratio is, the more you owe and the more risk you run by opening up new lines of credit.

According to Michigan State University professor Adam Kantrovich, any ratio higher than 30% (or .3) may lower the “borrowing capacity” for your business. That’s why it’s so smart for you — especially if you’re a business owner or freelancer — to know your debt to asset ratio.

However, the amount your debt to asset ratio affects your business will vary from industry to industry.

For example, businesses that offer internet services generally don’t require a lot of debt up front to start. That means they’ll typically have lower debt to asset ratios on average.

However, industries such as production or retail require a LOT of debt up front in order to get started. As a result, it’s not uncommon to see higher debt to asset ratios among them.

Check out the chart below to find out the average debt to asset ratio in a few different industries.

Industry Average debt to asset ratio
Internet services and social media 25%
Consumer electronics 34%
Energy 108%
Technology 110%
Utilities 228%
Retail 289%

From CSI Market (a market analysis organization)

“Holy crap, Ramit! Why are businesses like utilities and retail so high?”

Businesses like utilities and retail require a whole lot of initial capital up front to cover initial costs of things they need to run their business (infrastructure, products, manpower, etc.). As such, the average debt to asset ratio for those businesses will be higher.

Many lenders such as banks and mortgage companies may take this into consideration when they’re lending to you and your business.

Say you’re a small business owner looking to get a new loan for your venture. After totaling everything up, you find that you owe about $25,000 in debt and own about $100,000 in assets.

After dividing your debt by your assets and multiplying that number by 100, you discover that your debt ratio is 25% — which is just about the average if you work in internet services and stellar if you work in retail.

However, if those numbers were flipped (you owe $100,000 in debt and own only $25,000 in assets), your debt to asset number would be 400% — which is just awful no matter what your business does.

A note on debt to equity ratio

Sometimes, lenders will look at a business’s debt to equity ratio instead. Chances are this doesn’t apply to 99.999% of you. But so you know, debt to equity looks at a company’s debt compared to shareholder equity (the value of the shares) and is calculated the same way as debt to asset ratio:

Dollar amount of debt you owe ÷ Dollar amount of shareholder equity =
Debt to equity ratio

And then:

Debt to equity ratio x 100 = Debt to equity ratio percentage

Like debt to asset ratio, your debt to equity ratio will vary from business to business.

However, general consensus for most industries is that it should be no higher than 2 (or 200%).

“But Ramit, I don’t have a big company or business. Does any of this matter to me?”

Yes! Because there’s a formula that creditors and lenders use to assess the risk of individuals like you.

Debt to income ratio: Important for individuals

If you plan on ever getting a mortgage for a house, you need to make sure your debt to income ratio is in check.

This number compares your gross monthly income to your monthly debt. Banks and other lenders look at this number to determine how much of a risk you are to lend to. The more of a risk you are, the less of a chance they’ll lend to you at all.

Much like your debt to asset ratio, calculating it is simple:

Dollar amount of monthly debt you owe ÷ Dollar amount of your gross monthly income = Debt to income ratio

And then:

Debt to income ratio x 100 = Debt to income ratio percentage

Let’s run an example scenario:

Say you owe about $1,000 in debt month-to-month and make $75,000 a year ($6,250/month). We’d then take 1,000 divided by 6,250 in order to get our debt to income ratio, like so:

1,000 ÷ 6,250 = .16

Multiply .16 by 100 and you have 16% for your debt to income ratio….but what does that number mean?

What is a good debt to income ratio?

The lower the number is, the better. According to Wells Fargo, the ideal debt to income ratio is 35% and below. That said, most lenders will provide you a loan up to 43-45%.

So if your debt to income ratio amounted to 16% like in the example above, you’d be in good shape for a home loan.

If your debt to income ratio is a little higher and you want to lower it, though, I’d like to help you out.

After all, being in debt is the #1 barrier to living a Rich Life, and not only is it a financial burden, but it can also be a HUGE psychological burden as well.

For example, a while back I ran a survey of my readers who were in debt, asking them a seemingly simple question: How long until you’re out of debt?

Take a look at the results:

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34% (the majority) of respondents DIDN’T KNOW how long it would take until they were out of debt.

Debt is just as much of an emotional issue as a financial one. That’s why throwing a personal finance book at someone in debt or showing them a debt calculator produces little to no change.

If someone’s too afraid to even open the envelopes that will tell them how much they owe, “information” is not what they need. Instead, that person has to be willing to take action THEMSELVES before anything will change.

If you’re reading this now, and you’re ready to take action against your debt, I want to help you.

In fact, you can start getting out of debt TODAY through a 5-step system I’ve developed.

Just check out my popular article on how to get out of debt here.

Get out of debt and live a Rich Life

So that’s your debt to asset ratio. It’s a good way to keep an eye on your personal finances and an element to consider if you want to get a loan.

But eliminating debt is just the first step on the journey to living a Rich Life.

If you want to learn my best strategies for creating multiple income streams, starting a business, and increasing your income by thousands of dollars a year, download a free copy of my Ultimate Guide to Making Money below.

ug making money 1

Just enter your name and email below to get instant access to the Ultimate Guide to Making Money.

How to calculate your debt to asset ratio (+ check if it’s good) is a post from: I Will Teach You To Be Rich.

How to make a million dollars (with advice from actual millionaires)

sourced from:

We spoke with two millionaires who were able to earn their money through a powerful combination of two things:

  1. Investing and saving
  2. Earning more money through side hustles

And we’ll show you exactly how to do both. But first,

Introducing: The real millionaires we talked to

Our millionaires are…

Luisa Zhou

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Luisa had a great job with a healthy six-figure income, but she decided one day that she wanted more.

That’s when she started her first side hustle consulting people in digital advertising, and now teaching aspiring entrepreneurs how to launch their own business the right way.

She’s since scaled her business and was able to earn a whopping $1.1 million in sales in less than 11 months. You can read about her journey here, on our sister site GrowthLab.

Shannon Badger 

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With three kids to take care of, Shannon knew she had to really learn the art of the grind in order to quit her job and take her freelancing seriously.

That’s how she was able to grow her freelance CPA consulting hustle into a full-fledged business (Badger and Badger CPA) that she runs with her husband. It’s helped earn her her first million dollar year in 2017.

“It was a huge mentality shift to how much can I ramp it up while still working full time in my other job,” she says. “There’s a quote by Dave Ramsey that goes: ‘Live like no one else, so you later can live like no one else.’ My husband and I were really disciplined when we got started, and it made the process less difficult.”

And now, these two millionaires are going to divulge their strategies on how they got to where they are — and how you can do it too.

How to make a million dollars

Remember, our two millionaires were able to earn their money through a powerful combination of two things:

  1. Investing and saving
  2. Earning more money through side hustles

Though you can actually make a million dollars on investing and saving alone, you can watch your net worth explode if you combine them both — which I suggest you do.

Part I: Investing and saving

Step 0: Get out of debt

The number one barrier preventing people from living a Rich Life is debt.

That’s why this is Step 0. Before you even think about investing, saving, or earning more money, you need to take steps to get out of credit card debt.

“A [freelancing business] is not the solution to your money problems,” Luisa says. “If you’re struggling to pay your bills or are in debt, the first thing you want to do is get a job that can help you. That’s the easiest way to really help you first.”

That’s why getting out of debt was also a priority for Shannon when she and her husband/business partner first got married.

“When my husband and I were first married, we were really disciplined about getting out of debt and saving,” Shannon says. “We paid off all of our debt out of college. We paid off all of our car debt. And now we’re paying off our house.”

Paying off your credit card debt is one of the most important investments you can make into your Rich Life. I’ve written extensively about this before, both on the blog and in my New York Times bestselling book.

If you’re in debt and want to learn more about my system, I highly suggest you read my article on how to get out of debt fast.

Step 1: Save money for when you need it most

By saving money, you give yourself the freedom to earn more money.

That’s why it’s important to set savings goals.

To find out how much you need in your emergency savings fund, you simply have to take into account three to six months worth of:

  • Utility bills (internet, water, electricity, etc)
  • Rent
  • Car/home payments
  • Food/groceries

Basically, any living expense that you have should be accounted for.

You should also start an account exclusively for your emergency savings fund. Most banks allow you to create a sub-savings account along with your normal savings account. (You can even name them too!) So create one for your emergency fund.

And you can start putting money into the account through my favorite system: Automating your personal finances.

The process only takes one to two hours at the most, but once you set it up, you don’t have to worry about it again.

AND it’ll save you thousands of dollars over your lifetime.

Here is a 12-minute video of me explaining the exact process I use below.

Step 2: Invest in your future

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Investing your money is the best way to guarantee you become a millionaire. In fact, I promise you, if you follow the systems below you will eventually become rich.

Shannon knows that too.

“My husband and I have been putting 10 – 15 percent of our earnings into our retirement accounts for a while now,” she says. “We also have a 529 plan for each of our kids.”

When it comes to accounts for retirement, you have two options:

  1. 401k
  2. Roth IRA

These are retirement accounts. That means you’ll be able to accrue gains with big tax advantages with one caveat: you promise to save and invest long term. That means you can buy and sell shares of almost anything as often as you want as long as you leave the money in your account until you get near retirement age.

Let’s take a look at each one.

401k: Free money from your employer

A 401k is a powerful retirement account offered to you by your employer. With each pay period, you put a portion of your pre-tax paycheck into the account. That means you’re able to invest more money into a 401k than you would a regular investment account.

But here’s the best part: Your company will match you 1:1 up to a certain percentage of your paycheck.

Say your company offers 3% matching. If your yearly salary is $150,000 and you invest 3% of your yearly salary (~$5,000) into your 401k, your company would match you that amount — doubling your investment.

Check out the graph below that illustrates this.

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This is free money!!! If your company offers a match, you should ABSOLUTELY take part in their 401k plan.  

For more on 401k’s, be sure to check out my article on how the account is the best way to grow your money.

But 401k’s are only one part of the equation when you want to start saving for retirement. The other account you should get is a Roth IRA. And ideally, you have both.

Roth IRA: The best long-term investment

A Roth IRA is simply the best deal I’ve found for long-term investing.

Remember how your 401k uses pre-tax dollars and you pay income tax when you take the money out at retirement? Well, a Roth IRA uses after-tax dollars to give you an even better deal.

With a Roth, you put in already taxed income into stocks, bonds, or index funds and pay no taxes when you withdraw it.

For example, if Roth IRAs had been around in 1970 and you’d invested $10,000 in Southwest Airlines, you’d only have had to pay taxes on the initial $10,000 income. When you withdrew the money 30 years later, you wouldn’t have had to pay any taxes on it.

Oh, and by the way, your $10,000 would have turned into $10 million.

That’s an exceptional example, but when saving for retirement your greatest advantage is time. You have time to weather the bumps in the market. And over years, those tax-free gains are an amazing deal.

How to open a Roth IRA account

To open up a Roth IRA, find a brokerage account. There are many out there, so I highly suggest shopping around and taking a look at the options out there.

Certain factors you want to consider when looking at brokers can be:

  • Minimum investment fees
  • Customer service
  • Investment options
  • Transaction fees

A few brokers I suggest, though, are Charles Schwab, Vanguard, and E*TRADE.

These brokers offer fantastic customer service and are well-known in the investment community for their great stock options.

Special note: Most brokers typically have minimum amounts for opening a Roth IRA, usually $3,000. Sometimes they’ll waive the minimums if you set up an automatic payment plan depositing, say, $100/month.

Also, it’s worth noting that there’s currently a yearly maximum investment of $6,000 to a Roth. (This amount changes often so be sure to check out the IRS contribution limits page to keep updated.)

Once your account is set up, your money will just be sitting there. You need to do things then:

  1. First, set up an automatic payment plan so you’re automatically depositing money into your Roth.
  2. Second, decide where to invest your Roth money; technically you can be in stocks, index funds, mutual funds, whatever. But I suggest investing your money in a low-cost, diversified portfolio that includes index funds such as the S&P 500. The S&P 500 averages a return of 10% and is managed with barely any fees.

For more, read my introductory articles on stocks and bonds to gain a better understanding of your options. I also created a video that’ll show you exactly how to choose a Roth IRA.

NOTE: After you invest in your retirement accounts, you can actually stop right there. After many years, your money will compound and earn you well into the millions if you continue investing.

Say you’re 25 years old and you decide to invest $500/month in a low-cost, diversified index fund. If you do that until you’re 60, how much money do you think you’d have?

Take a look:

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However, if you want to be able to hit a million dollars sooner than that, there’s only one really good option: Earning more money through a hustle.

Part II: Earning more money

The reason earning money is one of my favorite ways to get to a Rich Life is simple:

There’s a limit to how much you can save, but no limit to how much you can earn.

If you’re willing to put in the work and develop a hustle that’ll scale and grow, you can earn as much money as you want. And while there are a lot of ways you can make more money, my favorite way is by starting a freelance hustle.

That’s what Shannon and Luisa did, and they’re going to show you how.

Step 3: Find a million dollar business idea (it’s easier than you think)

One very common misconception about starting your own freelance hustle is that you need to come up with the “perfect” idea to do it — when that couldn’t be further from the case.

“People think that they need a cool crazy idea like the next Facebook to make a significant amount of money,” Luisa says. “But what most people don’t realize is that they already have the skills to make a million dollars.”

I know it’s difficult to imagine that you might have profitable skills already — but you do. In fact, Shannon has a perfect solution to find out those skills: Look at what your friends ask you to help them out with. That’s how she got her start as a freelance CPA consultant.

From Shannon:

“I had a colleague who needed help sorting through her finances. She asked me to help her out, and she became my first client. Then I had another friend who started a law office and needed help, so I helped them out with all of their accounting. I’d meet with them to make sure that they were still compliant and help with their tax returns.

It just started with helping people as a hobby, but then my husband pointed out that I was getting clients without even trying. Eventually, I was able to start a freelancing business from it.”

That’s not the only way you can find a profitable freelancing idea either. There are actually 4 questions you can ask yourself right now to find an idea you can leverage for your hustle.

  1. What do you already pay for? We already pay people to do a lot of different things. Can you turn one of those things into your own online business? Examples: Clean your home, walk your pet, cook you meals, etc.
  2. What skills do you have? Now, what do you know — and know well? These are the skills you have that you’re great at — and people want to pay you to teach them. Examples: Fluency in a foreign language, programming knowledge, cooking skills, etc.
  3. What do your friends say you’re great at? I love this question. Not only can it be a nice little ego boost — but it can also be incredibly revealing. Examples: Workout routines, relationship advice, great fashion sense, etc.
  4. What do you do on a Saturday morning? What do you do on a Saturday morning before everyone else is awake? This can be incredibly revealing to what you’re passionate about and what you like to spend your time on. Examples: Browsing fashion websites, working on your car, reading fitness subreddits, etc.

Find an answer to those questions and I promise you you’ll find a great freelancing idea.

ACTION STEP: Find a profitable idea.

Spend about 10 – 20 minutes now writing down five answers for each of the four questions above. Once you’re done, congratulations — you now have 20 potential business ideas that you can grow into a flourishing side hustle.

For now, just choose one business idea. It’s okay, you can always change it later. For now, we’re going to just try one out and try to find a client with it.

Step 4: Find your first client

In order to start earning money, you need to find the people who will give you money for your ideas.

But the question is…how? Where do you find these people?

For Luisa, that meant going online and finding out where her clients lived.

“I spent a lot of time on Facebook groups talking with potential clients answering their questions about advertising,” Luisa says. “That’s when I found my first client.”

You can do the same thing.

Ask yourself:

  • Who is my client?
  • Where do they go when they want to look for a solution to their problems?
  • Where are they ALREADY looking for solutions to their problems?
  • How can you connect them to your service?

At this point, you’re also going to want to niche down your market in order to really tailor your services and draw in customers.

“Stay in your niche,” Shannon suggests. “We had a few instances where we veered from the niche and we paid for it dearly. It might feel cheesy to sit down and figure out what your target market is or what your goals are for the company, but you have to do that. All that legwork needs to be done upfront. It’s just practical.”

So think about who’s an example of a client who might want to buy your product.

A few questions to jumpstart your research:

  • How old are they?
  • Where do they live?
  • What are their interests?
  • How much do they make?
  • What books do they read?

Using this information, find out what your clients need by going to the places they go.

For example:

  • Want to pitch to moms that blog about children? Go to The Mom Blogs and start with the ones under “Popular Blogs.”
  • Looking for physical or massage therapists within 50 miles of your house? Yelp should get you started easily.
  • If you want to do large dog grooming and sitting, well there’s probably a local pet store or dog park near you where owners are all congregating just waiting for you to offer them a solution.

Here are a few suggestions of some other great sites freelancers can use to find business online:

Once you find a potential client, you’re going to want to reach out to them and pitch your services.

ACTION STEP: Find a client and email them (with scripts).

Find your client using the information, I’ve outlined above. Once you’ve done that, you can reach out to them using this handy script:


I saw your post on X and visited your website. I noticed that you’ve recently started using videos too.  

I’ve been doing video editing for three years and I’d like to offer to help you edit your videos and get them optimized for the web.

That would make them look more professional and load faster, which is important for your readers. And you’d free up time that you could use to create new content.

We can discuss the details, of course, but first I wanted to see if this is something you might be interested in.

If so, would it be okay if I sent you a few ideas on how to help?


Ramit Sethi

A few takeaways:

  • There is zero fat in the pitch. Every word counts and is needed to help really sell the benefits of working with you.
  • Don’t mention payment. There’s nothing that will kill a potential client’s interest in you more than pushing prices on them before they’re ready.
  • Stress the benefits. This email shows the client why it would be in their best interest to buy from you in the third paragraph.

Once you get a client using this email, congrats! You just secured your first client — but it doesn’t end there. You need to actually do the work for them, and that means continually adding value.

Step 5: Invest again — but this time, in yourself

Investing takes many shapes. It’s not all stocks, bonds, and retirement accounts. Investing can also be in yourself — and it’s something you need to do if you want to earn a million dollars. Be continually curious.

From Luisa:

“I’ve always been big on investing [in myself]. Even in my previous businesses it’s been a lot of me putting in the cash into my business. I invested in my site. I invested in a copywriter to teach me how to make copy. I invested in someone to teach me how to make sales calls.

Thankfully, I knew what I didn’t know, so I invested heavily in those things. I’m not a big risk taker. But I do believe in calculated risk. After all, I am my best asset. My top priority is myself or my business.”

I love this. It hits on an idea that all IWT readers should embrace: Be continually curious.

Ask questions when you don’t understand something and don’t be afraid to seek out more information through books, courses, or schooling. It’s only then that you can hope to truly live your Rich Life.

That’s why my team and I have worked hard to create a guide to help you invest in yourself today: The Ultimate Guide to Making Money.

In it, I’ve included my best strategies to:

  • Create multiple income streams so you always have a consistent source of revenue.
  • Start your own business and escape the 9-to-5 for good.
  • Increase your income by thousands of dollars a year through side hustles like freelancing.

Download a FREE copy of the Ultimate Guide today by entering your name and email below — and start blowing up your net worth today.

How to make a million dollars (with advice from actual millionaires) is a post from: I Will Teach You To Be Rich.