When it comes to money, one thing we're all subject to is math. This is especially true when it comes to our income. Our income is the largest source of money available to us for all of life's needs. From food and clothing to housing and transportation, our income is what provides the necessary funds for these things. They're all items we utilize on a daily basis, and it's second nature to spend on them.
There's another role for our income that, although not as front and center in our day-to-day life, is equally as important as our everyday needs - wealth building for our future. Whether we want to admit it or not, none of us are getting any younger. We're all going to reach an age where we want to stop punching the time clock and start living a life where we own all of our day - not just the hours before and after work. For some this will mean being able to spend more time with kids and grandkids, and for others it will be traveling and vacationing more. No matter what each of our dream retirements look like, they all have one thing in common: the need for a source of money that's not dependent on us trading hours of our life (work) to get it. So, how do we attain that?
Our income is the the largest wealth building tool we have. Period. To be able to save for our future and have the dream retirement we want, a portion of our income must be invested consistently. Month after month, year after year, that money needs to be set aside so it can grow and eventually be waiting to fund our retirement dream. Here is where most of us run into a problem though. At the end of the month after we've made our car payment, credit card payment, student loan payment, furniture payment, and every other "fill in the blank" payment, we have no income left to invest. If our income is our largest wealth building tool, but we're spending all of it to cover debt payments we've signed up for, how will we ever be able to save and invest for our future? We've just hit the nail on the head.
We have to stop sending our income to the bank in the form of debt payments. They don't need it, we do. Debt is a wealth killer because it takes our largest wealth building tool away from us. Not only are these debt payments keeping us from investing and growing wealth, most of them are for things that are going down in value! We're paying interest (a financial penalty) on things that are losing us even more money. It ends up being a double hit to our financial future. Let's put some real life context to all of this. According to Nerdwallet.com, the average used car payment in 2018 was $381. What if the 30 year old version of us instead invested that $381 each month until we retired? How much wealth would we have to fund our retirement dream? Well, here it is: at age 65 we'd have $1,033,675.33. Over one million dollars, and that is assuming we earn a 9% rate of return (less than the historical stock market average). Look at what just car payments alone are costing us. What if we added up ALL of our debt payments each month and were able to invest even half of that entire amount???
Our dream retirement is attainable, we just have to fundamentally change the way we think about money and debt, and start being intentional for the sake of our future. If you're sick of being in debt and fired up to change your life for the better, we can help. The time to change is now. Message, email (contact@baselinefs.com), or call us at 605-252-5972.
