My views on software, programming, Linux, the Internet, government, taxation, working, and life.

Saturday, December 30, 2006

My Wealth Strategy

Of course, I need to follow my own strategy more religiously, but in general these are the steps I plan to take to increase my wealth or are already taking them. Perhaps they can work for you.

1. Start by saving up about $4,000 to always have on hand each year for an emergency. If you deplete it, then you need to slowly replenish it the next year over a 3 or 4 month timeframe.
2. Stick all your credit cards in a ziplock bag filled with water and stick in your freezer.
3. Sell the boat. You probably weren't using it much, anyway, right?
4. Keep the SUV parked at home for those family rides when you actually need it. Get a cheap, used Nissan Sentra with great gas mileage and drive that back and forth to work.
5. Quit smoking or any other expensive, meaningless habits.
6. (USA Only) Over a three year period, evenly make the transition from an HMO or PPO health plan and into a Health Savings Account + high-deductible health plan. When you look at the numbers and the risks, more than likely you'll come out ahead unless you're just plain sick all the time.
7. Avoid going to the movies. Get a Tivo and fast-forward through the new movie commercials. Get a Netflix account and do that kind of entertainment on weekends, instead.
8. Get a second mortgage or equity line of credit with a reasonable interest rate and don't get more than about $20K per $200K of your house cost. Pay off credit cards and then pay this line of credit down. Oh, and if you don't own a house, consider it because it can give you great financial leverage against taxation and credit card debt.
9. Pay down high-interest credit card debt first, then low-interest credit card debt.
10. Save up your money monthly so that you can purchase groceries in bulk from SAM or Super-Walmart or some other discount grocery. Use coupons, look for deals, and don't purchase something that has a price that doesn't feel right.
11. Over time, reduce your meal count from 3 or 4 meals and snacks, down to 2 meals and perhaps a small snack or two. Do this only as long as you need unless it just feels right to you.
12. Eat smaller portions of food, but phase it in over time. Don't go anorexic or bulimic or get sick, though. Also, eat a daily multivitamin and some kind of fruit.
13. Cook (or purchase food in a restaurant) only for what you need. If you have too much excess in one meal, then curb it back the next time you prepare that same dish again.
14. Do a quick budget check on your particular dinner plans each night and compare it from you fixing it and cleaning it up (including electricity), and you eating out at a restaurant. If it's cheaper to eat out, and you don't mind, then do so. However, I still recommend at least 3 home-cooked meals a week.
15. Get a computer and do a budget analysis each month with a spreadsheet so that you act smarter with your budget.
16. Do a small wealth-building project, usually as an experiment at first, that can operate in the background when you're doing your day job. My choice, because I have fairly strong web development skills, would be S.A.M. (Super Affiliate Marketing). This is nothing more than websites on a particular topic + a forum + RSS news feeds + some unique content you can think up + Google AdSense. This is also called "becoming an AdSense Whore", but that's actually a good thing! Host the sites at because they have a good mix of Linux PHP services and permit you to affordably scale the sites well over time. Get your SAM tips and advice at but be prepared for those with a sharp tongue and just don't reply back to anyone rude. Always start with about 3 SAM project websites and if one starts to take off, reinvest some or all of the profit back into the plan so that you can move up a notch in HostGator's hosting plan. If the profits continue to increase, make 3 more sites, and so on. Eventually you may end up with hundreds of sites that bring in a large sum of money.
17. Do a large wealth-building project that can occupy some of your nights and weekends for the next 4 years or so. For me, I'm building a web software startup company, building a web application that I plan to release in 2007, and then focus on other, smaller software applications after that.
18. When you see something you want to purchase, and it's over $500, consider doing something extra that gives you the cash to snatch that up, or waiting and saving rather than doing impulse-buying with a debit or credit card. You could use a tax refund, or a bonus check from your employer, or wait until that thing you want goes on discount to the point of being reasonable, or mow a bunch of extra lawns for cash, or something else rather than pulling on your own cash.
19. Get your spouse to help out by acting independently of you on wealth-building as well.
20. Some are crazy about 401Ks, but I'm not because most of us these days move between jobs at least every 6 or 7 years, often not getting our joint-vested income out of them. I think it's sensible to get one, but not to max it out like others talk about. Instead, take some of your paycheck and deposit into a savings account until you have the opportunity to purchase 4 kinds of investments that you will hold at the same time and for at least 10 or 20 years: a money market fund, a real estate fund, an oil futures fund, and a couple stock market funds. And whatever else you have saved up, stick in a Roth IRA (or whatever tax retirement savings plan works in your host country).
21. If you work some place stupid where you earn less than $30K, knock it off because you're getting nowhere fast. Save these jobs for the retirees who discover they don't have enough cash at retirement. Go take some classes or get another college degree so that you can earn more. And if you can get your employer to pick up the education bill, do so.
22. Get your kids to get several scholarships and grants for college, not bleeding you dry. That means you might need to purchase a used Nissan Sentra for them when it is necessary and force them to focus on grades, not getting that food service job.
23. Avoid expensive wrecks -- Plan your driving route carefully, look for signs carefully in places where you might not expect them, and quit speeding. Also, put your teens on notice that you've told all your neighbors, relatives, and friends that they are to watch your children's speed limits too. Let them also know that the world isn't fair and to expect the worst driving habits to be on the road and drive defensively around these people.
24. Instead of purchasing a new computer, ask your employer if they're throwing any old ones away and that you might be able to purchase them or take them off their hands.
25. When you balance your checkbook's deposits, round downwards to the nearest dollar. When writing a payment into your checkbook, round up to the nearest dollar and add a dollar. Eventually you'll be amazed how you can actually save money this way over a 10 year period.
26. Drop loose change into jars and save the jars.
27. Watch your energy consumption. The next time a major appliance breaks in your house, look very carefully at getting an appliance that isn't the highest cost and has reasonable kilowatt usage. Turn down the heat and A/C and change your clothing appropriately.
28. On your next vehicle purchase, go visit about 3 mechanics you trust and ask about something used that they recommend you purchase. Stop purchasing new vehicles and get ones that are 1 or 2 years old that have a good cost. Drive the vehicle to your mechanic to have it checked out before purchase.
29. Get a account and use it for small loans or for some small wealth building when you have extra cash you can loan to others.
30. Some times a spouse can go nuts waiting around on a weekend or evening while you're focused on saving money. That spouse either needs to join you on the program or take up a productive habit like painting rooms, small home improvement, working out, reading, getting more education online, watching Netflix movies, or some other habit that saves you from having to expensively entertain this person. But don't be stupid about it, either -- go out on a short trip occasionally and try to not be so frugal on that trip at least every 4 or 6 months.
31. Purchase Christmas gifts throughout the year and especially in the late summer, but finish before mid-October. Avoid gift cards and try to stretch your dollars, especially on deals on clothing and electronics. I say late summer because if you purchase clothing past that point, it just might not fit on some children by Christmas time if purchased earlier. And I say mid-October because after that point the retailers run up their prices again.
32. Consider the savings of purchasing more items online, and do it safely with special credit cards that give you guarantees against identity theft.
33. Fight illegal immigation with political activism. Illegal immigration drains the financial well-being of a country and drives up taxes and insurance costs.
34. (USA Only) Through campaigns you can join and letter writing or personal visits, continually encourage your congressmen and the President to be fiscally conservative where it makes sense and slash the dumb pork barrel projects that rip Americans off. Oh, and don't forget your state legislators too -- they can often be the worst offenders.
35. (USA Only) Through letter writing, encourage your congressman and the President to sign smart welfare legislation that tries to get workers off of welfare and into the workplace, such as the WTW and WOTC programs. From no matter what political party you align yourself mostly, it's easy to see how these programs make sense.


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