Hello Sophisticated Spenders!
Are you building wealth or collecting a paycheck?
I want you to look at last months paychecks. Now tell me where all of your money went.
I’m on a path to building wealth and here is a snapshot to where my paychecks go!
1: No credit card debt-I pay off my credit cards in full every month. If I don’t have the cash to cover it, I’m not buying it. Bottom line! And I earn awesome rewards while doing so.
2: TSP and Roth tsp-This is the government employee’s version of a 401k and Roth 401k. I want to be comfortable when I retire. I receive a matching contribution of up to 5% of my pay. So I ALWAYS make sure I contribute enough to get the full match! (Find out if your employer matches any retirement contributions and sign up ASAP!)
3: Stocks-right now I’m pretty random with my stock picks. I may join some type of investment club soon!
4: Savings account-I have a few savings accounts that have goals attached to them. For vacations, gifts, etc.
5: Emergency fund-It is VERY necessary to have money socked away in case of an emergency. $10,000 is the minimum amount I keep stashed in my E-Fund!
6: FSAFeds-This is the government employee version of a health savings account. A way to pay for all medical expenses pre-tax!
7: Insurance-I carry insurance on my homes and car. I totally need to step up my life insurance game tho!
8: I pay an extra $500 toward mortgage on piece of investment property. Why? Housing is the biggest expense in retirement. I’m planning on knocking both of my mortgages off by the time I retire.
9: Student loans-I need to double up on these payments so that I pay this off in a shorter amount of time too, especially since the interest that I’m paying is no longer tax deductible. **update** I don’t think I had my car loan or TSP loan when I originally wrote this post. I need to double up my payments on these two items too. I believe I have 2 more years of payments to go!
10: Passive income generating ideas-Passive income is money earned while you are sleeping (or the money is coming in on auto-pilot or without constant effort). An example would be rent collected on a piece of investment property. Or money earned from a business that you own (assuming you have employees who do all of the work). I have a few in the works. I’m also saving up to possibly get my real estate license here in the DMV (DC, Maryland, Virginia) area. **I am NOT going to get my real estate license** It’s always smart to invest in yourself!
I’m not perfect either. I’ve made some stupid purchases too! A newer car that I totally didn’t need, a low interest tsp loan to pay off one of the mortgages on said investment property because I did the no money down thing
U can’t build an empire by giving away all your money!
What are you doing to build wealth???