Mark’s Market Update – 9/17/2021
Last week – I talked about step 1: To be wealthy – you must own a home. Every single rich person I have ever known owned Real Estate (with no exceptions) while a lot of not-so-rich people I’ve met over the years – haven’t. That’s a telling statistic.
BUT, if you really want to get wealthy – you also have to protect yourself – and that’s where Step 2 of the Wealth Generator kicks in.
Having pulled over 40,000 credit reports in my day – I’ve learned some valuable lessons on how people have great credit and how credit can get compromised – so, here are the truisms:
1) I’ve never seen anyone have late payments when they didn’t owe anything.
AND
2) I rarely see people with derogatory credit when they had a ton of money in the bank.
In other words – cash availability – protects you. Not like insurance (which you must also have) – but by allowing your resources to draw upon to stop a drain-circling event. The car breaks down. Large health care deductible. The HVAC system goes out. Death in the family requiring sudden travel. All of these have happened to me – and if you’re not prepared for the possibility – the recovery from the event could be more painful than the event itself.
So – the second RULE of the Wealth Generator is to have $25,000 in liquid cash available but put in an account that you only access IF NECESSARY. This is your “emergency reserves”.
If you don’t have it – how do you get this started? The same way you eat an elephant. Most everyone has direct deposit for their payroll – you simply call or log in to your payroll provider and set up a 1% distribution from your paycheck into a separate account (one that you never touch, AND is not connected to your checking account in any way). Each paycheck.
Then, every three months – increase it by 1%. Once you get to the $25,000, you’re done…and you move on to the next step (which we’ll talk about next week).
Having this $25,000 in emergency funds is critical – because too many people watch their good financial situation get wiped out because they didn’t have enough money set aside to deal with “life getting in the way”.
Whoever said “money doesn’t buy happiness”…was never poor. While money in and of itself isn’t a tool to create happiness – LACK of resources at the wrong time can absolutely create misery.
Fortune…favors the prepared.
Cheers – and to your wealth generation!