3 Time-Tested Ways to Get Rich Now! (Part 3)
Image sourced by Jakub Żerdzicki @jakubzerdzicki
Diving back in from Part 2 in this series on how to get rich now, we’ll reveal steps four, five and six ways to get rich now!
That will pave the way for you to build lifetime wealth.
Let’s get going.
Again, the secret to creating lifetime wealth is to create more free cash flow and more money – cash flow and grow your pile of money.
Not like governments that can seemingly print money out of thin air, but building a pile of money – cold hard cash.
3 More Time-Tested Ways to Get Rich Now!
4. Reduce Your Debt – the amount of money you owe to third parties.
Needless to say, when you borrow money you have to pay interest on the amount of money you borrow – your debt. And the interest expense adds up, no matter how low your interest rate might be.
I purchased a Honda CR-V in February 2019 for approximately $29,000 and borrowed $26,775.29 from Honda Financial Services. The interest rate on the automobile loan was 2.9%, an attractive interest rate at the time. Over three years, I paid off the loan and incurred (paid) $1,553.11 in total interest expense.
To be candid, I hadn’t realized how much interest I paid until I added it up.
The interest expense added 5.4% to the cost of the car. That’s a lot.
Of course, automobiles and other capital goods, for example houses and home appliances, are typically expensive – they cost more than we can afford to pay at the time of purchase so it often makes sense to borrow money. While borrowing money may be necessary and practical, borrowing is costly.
To reduce your debt:
Save up money, even a portion of the purchase price, before you make a major purchase. Build up cash for a down payment. A down payment reduces the amount of money you have to borrow.
Think twice before you borrow debt on your credit cards – credit card debt. As you may know, credit card loan interest rates are typically over 20% per year. Ouch!
Defer your purchases to give yourself time to save more money towards the purchase price and therefore borrow less. Kick the can down the road.
Increase your loan payments – pay more than your required loan payment. This reduces your outstanding loan balance and therefore reduces your interest expense. If you’re researching this, be sure to analyze your loan agreement and confirm with the lender that your extra payments will reduce your loan balance and therefore lower the amount of interest you’ll pay.
5. Reduce Your Taxes.
At least in the United States, you can take steps to reduce your taxes.
Spend less; buy less, which reduces the amount of sales tax you pay. In my County, the sales tax rate equals 7% on most purchases.
Enroll in your employer’s Flexible Spending Account (FSA) or Health Savings Account (HSA), which reduces the amount of your out-of-pocket healthcare costs.
Participate in a ‘Transit Check’ program. Transit check programs subsidize your cost of using public transit. Participants contribute money from their paychecks on a pretax basis; receive a reloadable debit card; and can use the money to purchase commuter rail tickets, bus tickets, subway passes, and commuter parking passes. Be sure to consult your employee benefits department to learn more about these programs, see if you are eligible to participate in the Transit Check program and whether such a program is right for you.
Contribute money to a tax-deferred retirement plan, for example a 401(k) Plan or 403(b) Plan. This lowers your taxable income in the year you contribute the money and could bring you into a lower income tax bracket. Which means you pay income taxes at a lower rate. In my experience, it’s a wise move to contribute at least enough money to capture 100% of your employer’s matching contribution. There are many factors involved in deciding to participating in these retirement plans and how much money to contribute. In addition, retirement planning requires careful planning. Be sure to consult your employee benefits department and your financial advisors.
6. Invest Your Money Wisely!
Once you have money in the bank, invest your money wisely to earn money on your money.
Meet with your financial planners to develop the best investment plan, portfolio construction and asset allocation to maximize your lifetime wealth and manage your risk.
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These six steps increase your cash flow and create more money for investment. Money that you can invest to build wealth.
When you implement these wealth-building techniques, you’ll create more cash flow and more money for investment, with more free cash in hand and investing wisely, you’ll accumulate more and more money over time and enjoy lifetime wealth.
Enjoy the ride!
Arthur V.
P.S. To Save More Money and Create More Free Cash, click here.
Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!
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