The Way to Wealth - 04 (Budgeting and investing in Assets)

Greetings Friends…

Today we will talk about something most of you HATE. If you thought that becoming rich would be easy… hahahaha … think again. You must be fit to be rich. It is just like going to the gym :)

Some of you are wondering how will I build wealth if I am barely paying my bills?? Well answer is simple your Expenses MUST decrease and become less than your Income

In order to do that, we should look into budgeting…

You can use a simple technique. I have built an excel sheet to count your weekly, monthly and annual expenses that you can download here. I have filled this sheet with numbers simply as an example. In order to adapt it to your needs, to change the numbers in the “Yellow” section only and the system will calculate your Net Income (See The Way to Wealth – 02 and The Way to Wealth – 03) to understand what that means

In our example, I have taken an average dual family income and expenses. This Family is creating what in Financial Words is a Deficit, which means that they spend more than they earn… it adds up on their credit card, line of credit, etc… which in other word is DEBT. That means that this family is increasing its debt by $1,347.67 per month or $16,172 per year.

In order to start the way to wealth, they need to decrease their expenses by $1,694.98 per month or $20,339.80 per year… the reason why they need to decrease more than the actual deficit is simple…

They need to start making money and travel on the Way to Wealth…

The steps they need to follow are:

1. Decrease their Expenses! They need to site down as a family and look at the expenses and find a way to DECREASE their EXPENSES by $1,694.98 per month… That may be to sell one of the cars, maybe move into a less expensive house, etc… This is very hard to do but most important Step!!!

2. Gather all their debts! (Credit Cards, Line of Credit, etc…) under one umbrella with the lowest interest rate possible

3. Start buying Assets! Some people will tell you to pay down your debt… I believe that it will take TOO long in this case more than 4 years!!!

If you buy one asset, say stocks or even a condo that you can rent out, the increase in capital over time in addition to the rental or dividend income you will receive will pay down your debt and start creating wealth for you…

As per the The Way to Wealth - 03; Assets generates income, therefore, buying you even more assets which will eventually pay for your liabilities and/or expenses in the long term and star.

So it is extremely important to follow the three steps above. The time is NOW! TODAY! Because the more you wait, them more money you lose based on your expenses and the less money you make from your assets