25 years left to be a millionaire.

Since last year, as I started to have a steady income by having a real job instead of applying to graduate schools, I decided to read more about finance so I bought some books: the automatic millionaire, smart couples finish rich, and the millionaire next door. Obviously you could tell that I want to be a millionaire and unlike my dad, I can’t become a millionaire by buying those lottery tickets every week.

First of all, please don’t think I have a greedy side that I want to become a millionaire. It’s because I want to be finanically independent so that I don’t have to work well into my sixties. Life is way too short for that. Besides, I’m fascinated by this idea that you don’t have to be earning six figures to be able to become a millionaire. You can earn as little as 40k to achieve a million dollars in your savings.

After reading those books, I learned quite a number of things. Most of them are pretty common sense like don’t put yourself in debt. Good thing to know that the only debt I have is my car loan, which I hope to pay off in about 2 years. I learned that being rich and being wealthy aren’t the same. They are two different things. Another thing I learned was to always pay yourself first, which means money goes into your savings immediately after you receive your paycheck. The author, David Bach, suggests that you save 20% of what you earn and you’ll be well on your way to being finanically sound. “The Next Door Millionaire” author said he found that what set them (the millionaires) apart from millon other people who are in debt more than 10k is because they simply track their money and keep a cash flow spreadsheet. After reading those words, I decided to keep a spreadsheet of my cash flow—how much I earn and how much I spend. It may turn to be the best move I have ever made in my whole life.

In the past, I thought I had a pretty good idea of where my money was going and thought I was doing a pretty good job at saving my money but I was completely wrong. After putting a large sum of my savings on buying a new car, paying off all the outstanding transactions that my college had billed me before they would send me my diploma, and moving into a place far from my hometown, my savings was pretty much blown. It didn’t help much that I was in my “college guy” mode that I thought if I’m going to get a job in the future, I’ll spend this money now and I’ll get it back later when I get a job and put it into savings. Nope, it didn’t exactly work out like that.

So, I started a spreadsheet about a year ago and I thought I would have abandoned it a long ago but thanks to online banking, it was actually easy to track my money and record every transaction in my spreadsheet. A year passed, my spreadsheet begins to look like, well, a spreadsheet, instead of a blank empty white spreadsheet. I could have sworn that it was done by a CPA, not someone like me. Maybe it’s just me but I find it fascinating to look at my spreadsheet and see how much I spent on electronic stuffs, foods, gas, clothes, etc. And realizing the mistakes I’ve made, which is a lot.

This is how my 2005 budget looks like:

  • In the foods category, I spent about $3,000 or about $250 a month on groceries and eating out. Shit, I’m a hungry man with an expensive palate. (how do buffets and sushi sound?)
  • I’ve withdrawn a total of $2,150 dollars out of ATM. Anyone wanna rob me?
  • I paid $830 on gas. Could have been a lot worse if I owned a SUV.
  • Being a golf avid player (and a wanna-be pro), I spent $855 on course fees, equipment, etc.
  • I enjoy reading books, so I spent $160. Education sure comes with a price. And dammit, I need to sell these books.
  • I spent $370 on clothes. Not too bad for a guy, don’t you think?
  • I read somewhere that someone put “stupid mistakes” category for not paying bills on time, fines, fees, or penalities he has to pay, so I thought that was a good idea and it was a very costly one.

    So, in bank fees, I had to pay $170 and this next one, I’m not very proud of myself, I paid a whopping $825 dollars in parking tickets (lots of them), stupid speed camera tickets, and traffic tickets (for failing to stop completely and among others). I guess that’s what you get for living in DC your first year. That comes to almost one thousand dollars that I could have avoided to pay if I followed the sign, pressed on the brake more, and eased off the gas pedal a bit more. This year, my goal is to pay zero. My right foot, please behave.

  • For us who own a sidekick, I paid $386 in subscriptions and extra programs like games. I can’t wait when my employer will cover my sidekick. Hehe.

Even all with those expenses I had to shell out, I was still able to save 20% of my total earnings in 2005 and I wouldn’t have done that if it wasn’t for my precious spreadsheet and by paying myself first. Now that year 2006 has started, my goal is to save 30% (large part of that will go toward housing down payment wherever I decide to settle down), pay nothing in “stupid mistakes”, and perhaps reduce my ATM withdrawls but I’ll never ever reduce my food budget. :-)

Anyone up for some sushi?

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6 Comments, Comment or Ping

  1. Nate, you are lucky you can continue to increase your food budget and remain skinny! I think I need to increase my activity budget so I can get skinny! :)

    I have the Millionare Next Door book and another book that my father gave me, I cannot remember the exact title, but it is something about saving money without sacrificing much by I think John Talbot.

    I am finally back at using my computer, hope you had a great holiday and new year eve!

    oneninefive

  2. Pam

    Check out my blog savvywolf.blogspot.com. It might help you :-D

  3. sano

    I can’t wait when my employer will cover my sidekick. Hehe.

    I sincerely hope that you’re joking. If there isn’t a business need for Google to pay for your pager, then you shouldn’t be asking them to do so. There’s nothing more I hate than deaf people who use their disability to mooch free service off their companies.

  4. natech

    Ah no, I wouldn’t want to do that. It’s for the on-call duty and at any time that my co-workers need to reach me. And I wouldn’t want to carry two devices with me all the time.

    Speaking of working, how’s it going? You have been working at Microsoft for some time now, right?

  5. Companies pays their employee for their cell phone, laptop, etc so there’s nothing wrong with having them paying for pagers.

    The companies would want to do that, so it would be a tax write off thus it’s a win-win situation so what’s wrong with that?

    Having them to pay for our pager is a good reason, yes it’s due to our deafness. Since most Deaf people cannot hear, like the announcement, need to contact the worker while you are out of the office, or an emergency meeting. There are many reason that we can use the pager for working related.

  6. Naim

    You must be kidding if you think that it takes 26 years to be a millionaire. My 300 year old grandchild (joke) could do that in 26 years! Well, excuse me, this maybe true if all you have in your possession is two pennies.

    I have read David Bach and some of the other “sell you a book” millionaire authors. Yes, some of that stuff work, but ask them if it took them 26 years to become a millionaire from their book sales. Write them and ask them. If the answer is NO, then ask them to tell you how they really became a millionaires. You need more than a book that send you 26 years into the future just to make a million. They should just tell you the whole truth and give you a very viable, workable, short-term (1-5 years) and a long-term plan (10-15)! Worst-case scenario 20 years Starting with only $100.

    If your plan cannot get you there in the time frames that I have stated, you are probably reading the mass-friendly version of becoming a millionaire.

    I wrote a book that I know will help you, but I will not mention it here. I have given you some clues right here that may help you on your journey.

    Naim

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