Good Morning Manager of Wealth Family. I’ve never seen a topic that garnered so many text messages and inbox messages. I’m glad this conversation about the allocation of money is taking off. For so long people have complained about how they were not being paid enough. They complained about how expensive housing was. They complained about having too much month left at the end of money. But now people are looking for answers because we all know what the problems are.
Here is some good news. Getting to the point that your monthly savings deposits are equal to or greater than your Mortgage payments/rental payments means an incredible future for you and your family. Check out the simple illustration below:
$300,000.00 loan balance @ 6% equals a $1798.65(taxes and insurance not included)
over 30 years that amounts to $647,514.57 in mortgage payments
* This is the same rent you would pay for an average 3 bedroom townhouse in many suburbs.
If you allocated the same monthly payment to your investment accounts and got an average return of 6% over the same time period you would have achieved the following:
Savings deposit $1789.65 per month @ 6% for 30 years
account value in thirty years – $1,877,245.97
Even better news is that the choice is not one or the other. The house or the great future. You can have both easily but the money makes the house possible in the opposite way that the house can make the great financial future impossible. If your current monthly debt service is making it hard to save its time for a change.
The rewards for paying your investment account first are incredible. Not only will you have a much better retirement but you will also be more secure everyday for the next thirty years. If done properly your income from your savings can come to you tax-free in your retirement years and you could leave a multimillion dollar nest egg for your heirs. If you want to see what your mortgage payment could be doing for you go to this link and enter your numbers and think about how you want your future to look.
Simple savings calculator:
The truth is many people bought their first house for $100,000.00 and their second and third for between $300,000.00 and $500,000.00 without considering their savings. They just qualified and committed to the payment. When will we commit to the savings account? Some people retire poor due to forces beyond their control but many others have been their own worst enemies. The good news is that the power to spend is in your hands.
What will you purchase with your hard-earned dollars? A big house or a grand future? There is nothing that can keep you from success if you follow this advice except you choosing to save your money in the financial instruments. Here are a few things to insist on in a saving vehicle:
1. Not subject to market forces
2. Tax advantaged or tax-free
3. Supported by a firm with a history of paying out profits for the last 100 years or more
4. Has no possibility of loss
5. Meets all your income needs and still allows you to leave a financial legacy to the next generate
6. Pays your savings payments for you if you ever become disabled and are unable to work
7. Focuses on income rather than simply a lump sum of capital
If you want to get this wealth building thing right you have start with this $7 book.http://readthebigpayback.com/3-matrix. I promise you will learn a lot.
Feel free to contact me at firstname.lastname@example.org
Wealth Wellness and Wisdom
Manager of Wealth