Simple to being rich… It takes ** hard work and being a good manager of what you make.**
Achilies et al, when I said lookm carefully I mortgage, I didn’t mean that mortgage should be avoided. Sorry if I gave that impression. But that you should be careful of steep house price increase trends (as happened in Southern England a few years back), many people ended up with Morgatges way above their house price when the propperty bubble eventually broke. They had all believed (as is popularly touted) that Mortgage is a no risk no brainer, and sufferd for it. A mortgage to buy propperty is your friend, but treat it wisely and beware of a drop in the housing market. (as has happened hear in Silicon Valley, since I moved here, maybe my presence has spoilt the neighbourhood 
)
Remember two words… Compound Interest. This miracle of modern banking will do wonders for you over the years.
Now, *Things *DeVena ** Learned Watching Her Parents Badly Manage Money
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Financial Managers - never choose one you can’t sue. Your sister’s father-in-law is a day trader? Fuhgeddabodit. No family or friends. Period.
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Saving - Let your bank do it for you. If you have $$ moved at regular intervals from checking to savings (and you never see it) it will add up.
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Banking - Credit Unions Only. And this from a woman whose husband works for a Bank! Credit Unions don’t have all the perks that regular banks do, but most of them have free checking. Why pay $5-10 per month when it’s free across town? (BONUS: Several CUs also have interest on savings accounts!! Yeah 0.49% interest may not sound like much, but every penny adds up)
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Credit Cards - Only have 1 card. And keep it paid off each month. Use it as if it were a checkbook, keep up with what you spend, and pay it off when the bill comes in. This keeps your money in your bank up to 30 days longer - where it’s earning interest! But consider it evil and not to be trusted. Remember the miracle of Compound Interest?? It works *against * you with credit card debt.
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Live simply. Eat at home more often, buy underwear at Wal-mart, shop the mark-down aisle, don’t go on wild long vacations and if you do, save up for it before going!
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Investments. If it sounds too good to be true, it is. Get-rich schemes are only good if you are the wolf, not the fleeced naked poor sheep. Invest simply at first - when you double your money, take your initial investment and move it to something a little more radical. Keep doing this and you develop a well-diversified portfolio over time.
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Be well - stay happy - and take care of yourself.
And don’t forget your sweater.
You’re young, so you still have plenty of time to acculate plenty of money. The best thing I can reccomend is setting aside $100ish dollars a month(more is better) and placing it into a mutual fund - talk to a financial planner about which mutual fund would be best for you - I reccomend one that simply tracks the market as a whole - that is a reasonably safe bet. If you keep doing this, by the time you retire you will have over a million dollars sitting there ready for your use, assuming the markets perform as well as they have over the next 40 years as they have historically.
Thank you for all your advice. You’ve given me a lot to think about, much to read, and many people to track down and question.
Thanks again, I really appreciate this.
P.S. This doesn’t need to be the end of the thread. Keep the greatness coming, I just wanted to thank you all before the thread sunk into obscurity.
Well my dad loves Rich Dad so I think I have something to say about this.
My Dad makes only about 40,000 Dollars a year net (my mom is on a pension of about 800 dollars a month).
Together they have amassed about 300,000 dollars in savings (investments rather) and this is during this current recession.
They also invested for me since I was young, enough that the collapse of Enron lead to me losing about 70,000 dollars and I’m still doing fine.
We’re preferred customers at the Bank (that is more than 25k in accounts with the bank) and you can really tell the difference.
We live humbly.
And my dad LOVES Rich Dad.
I think (though I’ve not read it) that my Dad knows enough to know a good book and so I trust that Rich Dad does give some pretty good advice.
Investing though can sometimes be frustrating, just learn not to regret.
I know … I have to regret that my parents bought tech stocks and not bank stocks…
If they bought for me in Wells Fargo what they bought for me in tech stocks…I’d be a millionaire right now and be making 20,000 dollars off of dividends alone.
But they didn’t realize that Banks were the way to go, I do realize it…and don’t plan to make their mistake.
I mean come on, Banks practically make money out of thin air, it’s not like they are selling any real services, hell you can keep your money under your floor-boards 
I am not being literal but really, Banks generate money and are insured from losses…so they are really a good way to go…nothing is certain, but they are pretty stable these days.
I think though your hardest thing in becomming wealthy is it is a generational step…it’s hard to make it big unless a part of our economy sky-rockets.
Like Microsoft.
Investments take a lot of your capital and give out only moderate returns. Day trading is very stupid it takes a lot of money in commissions. (My brokrage takes a significant less cut in my trades than AOL would or such, and even more so now that I’m a preferred customer).
Bonds and such, good stuff, but slow … some having maturity rates of 30 years.
Saving money in the bank, safe…but almost no returns.
I’d say investments is the only way to become wealthy. At the least you are an owner and not a “slave”.
One share gives you one vote in a company! Heh.
I guess I’ll give my list since others have given theres.
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Invest. Put significant money into stocks. I personally say Bank Stocks…Wells Fargo, Chase Manhattan (I hear their customers are not well treated though), Citi Bank so forth…these are pretty good banks.
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Use Banks, not Credit Unions. Higher interest rates when times are good and I’m not sure if the Credit Unions are FDIC insured.
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Don’t pay in credit what you can pay upfront. It’s a loan, you have to pay through your teeth to get.
TheQuagmire, I don’t think Rich Dad Poor Dad says Realty is an “expense” considering it is that chain of books that really makes my dad want to get into the realty business.
Which my mom and I must constantly tell him no…
Ignore Realty. Let others own the shit hole land, land does’t generate money, it simply leaches money from whoever the hell is renting the land to opperate their business.
You want stakes in the actual businesses.
First order of business though is for you to cut your costs…obviously if you take in 0 after expenses you can’t save or invest anything.
You should make a habbit of investing 200-1000 dollars a month at least. That doesn’t sound like a lot…and it isn’t, but it’s a good steady flow.
I’d say if you buy stocks, focus on stocks with dividends at first.
Also stocks that have split repeatedly.
Like Wells Fargo, it’s price shot up to about 400 and split 10 for one, and is now back around 50-60 dollars a share I think.
That’s incredible…if you had 1000 shares in that company before the split you’d now have 10,000 and thus about 500,000 dollars.
But more importantly, Wells Fargo pays about…is it 1.8? or 2.8 dollars per share.
So you’d have 10,000 shares meaning 18,000 dollars a year coming to you for nothing more than owning a part of the company.
So if you focus on a solid company that looks like it splits a lot and has a good dividend yeild, you’ll get the most bang for your buck assuredly.
You might miss the stock that goes from 1 dollar a share to 1,000 dollars a share then splits 100 for 1 and goes back up to 500 dollars a share and splits 25 for 1 and then hovers around 100 dollars like Microsoft sort of did…but hey, those days are over. There is not going to be such a technological revolution in our life times as the computer revolution was…ever again.
Your focus should be family security, money that will stay with the family and constantly build upon itself.
Well my dad loves Rich Dad so I think I have something to say about this.
My Dad makes only about 40,000 Dollars a year net (my mom is on a pension of about 800 dollars a month).
Together they have amassed about 300,000 dollars in savings (investments rather) and this is during this current recession.
They also invested for me since I was young, enough that the collapse of Enron lead to me losing about 70,000 dollars and I’m still doing fine.
We’re preferred customers at the Bank (that is more than 25k in accounts with the bank) and you can really tell the difference.
We live humbly.
And my dad LOVES Rich Dad.
I think (though I’ve not read it) that my Dad knows enough to know a good book and so I trust that Rich Dad does give some pretty good advice.
Investing though can sometimes be frustrating, just learn not to regret.
I know … I have to regret that my parents bought tech stocks and not bank stocks…
If they bought for me in Wells Fargo what they bought for me in tech stocks…I’d be a millionaire right now and be making 20,000 dollars off of dividends alone.
But they didn’t realize that Banks were the way to go, I do realize it…and don’t plan to make their mistake.
I mean come on, Banks practically make money out of thin air, it’s not like they are selling any real services, hell you can keep your money under your floor-boards
I am not being literal but really, Banks generate money and are insured from losses…so they are really a good way to go…nothing is certain, but they are pretty stable these days.
I think though your hardest thing in becomming wealthy is it is a generational step…it’s hard to make it big unless a part of our economy sky-rockets.
Like Microsoft.
Investments take a lot of your capital and give out only moderate returns. Day trading is very stupid it takes a lot of money in commissions. (My brokrage takes a significant less cut in my trades than AOL would or such, and even more so now that I’m a preferred customer).
Bonds and such, good stuff, but slow … some having maturity rates of 30 years.
Saving money in the bank, safe…but almost no returns.
I’d say investments is the only way to become wealthy. At the least you are an owner and not a “slave”.
One share gives you one vote in a company! Heh.
I guess I’ll give my list since others have given theres.
-
Invest. Put significant money into stocks. I personally say Bank Stocks…Wells Fargo, Chase Manhattan (I hear their customers are not well treated though), Citi Bank so forth…these are pretty good banks.
-
Use Banks, not Credit Unions. Higher interest rates when times are good and I’m not sure if the Credit Unions are FDIC insured.
-
Don’t pay in credit what you can pay upfront. It’s a loan, you have to pay through your teeth to get.
TheQuagmire, I don’t think Rich Dad Poor Dad says Realty is an “expense” considering it is that chain of books that really makes my dad want to get into the realty business.
Which my mom and I must constantly tell him no…
Ignore Realty. Let others own the shit hole land, land does’t generate money, it simply leaches money from whoever the hell is renting the land to opperate their business.
You want stakes in the actual businesses.
First order of business though is for you to cut your costs…obviously if you take in 0 after expenses you can’t save or invest anything.
You should make a habbit of investing 200-1000 dollars a month at least. That doesn’t sound like a lot…and it isn’t, but it’s a good steady flow.
I’d say if you buy stocks, focus on stocks with dividends at first.
Also stocks that have split repeatedly.
Like Wells Fargo, it’s price shot up to about 400 and split 10 for one, and is now back around 50-60 dollars a share I think.
That’s incredible…if you had 1000 shares in that company before the split you’d now have 10,000 and thus about 500,000 dollars.
But more importantly, Wells Fargo pays about…is it 1.8? or 2.8 dollars per share.
So you’d have 10,000 shares meaning 18,000 dollars a year coming to you for nothing more than owning a part of the company.
So if you focus on a solid company that looks like it splits a lot and has a good dividend yeild, you’ll get the most bang for your buck assuredly.
You might miss the stock that goes from 1 dollar a share to 1,000 dollars a share then splits 100 for 1 and goes back up to 500 dollars a share and splits 25 for 1 and then hovers around 100 dollars like Microsoft sort of did…but hey, those days are over. There is not going to be such a technological revolution in our life times as the computer revolution was…ever again.
Your focus should be family security, money that will stay with the family and constantly build upon itself.
Oh I should say since 300,000 dollars doesn’t seem like much. My parents actually started investing for themselves after they started for me, I think my Dad began truly investing when he was about 48 or such…maybe even in his 50s, and he’s only 63 now. He makes about 9,000-11,000 dollars in Dividends…
So it’s definately a way to go in Investments. And the best outlook you should have is hey…whatever penny you suffer to save, makes it THAT much easier for your future kids and grand kids. I’m pretty much set when my parents croak, I’m looking at a 10k stipend to whatever income I have and a solid 300k and 10 Acres of land…plus what I personally have currently from current investments.
OOOH OOOH OOOH!!! LET ME WARN YOU!!!
NEVER EVER GO DIVIDEND REINVESTMENT PROGRAM.
That is a load of DOG SHIT.
Basically it takes what dividends your stock earns, and reinvests it into that stock.
This may sound good because your stock in a company increases like a trickle…it’s not good because in the long run the company might not do as well as others even though it pays a nice dividend.
You want the hard cash given to you, so if you want to reinvest you can focus it all into a temporarily good stock or into another stock for instance.
Also it makes selling a lot easier since street shares are far less paper work involved.
Dividend Reinvestment shares need all the statements from when you first bought it to the present and that becomes a HUGE file load very quickly.
I’d just like to point out the reason Rich Dad Poor Dad’s author considers one’s mortgage a liability. Kiyosaki defines assets and liabilities as the following: an asset generates positive cash flow; a liability is something you pay for on a continuous basis. The house you live in sucks money out of your pocket in the form of mortgage payments, property taxes, repairs, etc., and generates no cash flow. It’s a place you live. Yes, most people expect to sell their houses for more than they paid for it, but it’s not an asset or, really, a great investment. A sum of money placed in a well chosen stock pick will likely return much greater gains than the appreciation of your house’s value.
Well many of the people i know who are trying to become rich are involved in real estate. ie, they get mortgages on real estate, rent it out to cover costs and use the equity to take out more mortgages. Right now they aren’t rich but if everything works out in 15 years they will have a few million in real estate.
Thats assuming everything works out. if not, then bankruptcy i guess.
Yeah, if you aren’t including tuition in that $1500 a college student spending 1500/month net income isn’t very good. I know some students who get by on $400-500 a month.
Do you need advice on frugality or investing?
Wesely Clark Real Estate is just too much a hassle legally and in many other ways. One is that most Real Estate is governed by large families and they’re not just going to let you become “competition”. Sure you can buy homes and rent them out, but that’s a far cry from owning an active and booming commercial or industrial zone.
Also real estate opens you up for law suits by bastards who do that for a living…I personally do not think it the wisest way to secure funds.
After all, the Rothschilds did not go into real estate…they went into banking.
Agreed, day trading especially is foolish, opperate through a Broker they are generally very level headed. But they aren’t hand-holders, they won’t walk you through to glory.
I’ve never heard of that as an automatic option but it is often important to save 25-50% of your income.
All the Banks I know about give interest rates on savings accounts that are currently at .8% about. CD’s are pretty good usually though right now they are slumping. My Grandmother had a substantial sum in the bank in the form of a CD (ask your local bank about that, basically you get a higher interest rate but can’t withdraw the money without penalties), and she got almost 18,000 dollars a year off of interest alone. Because at that time the CD she had had a marvelous interest rate.
Yeah just realize, credit means “pay more later”.
If anything use a Debit Card and have over-draft protection with your Credit Card, using your CC for only the most payable of things so that you can build up good credit rating.
This mode of life I find tends to make you go nuts and become very angry…but sadly is necessary 
I love investments.
Another good one is Franklin Templeton Growth Fund, it is tax free. (Imagine if all your wealth was in that…no taxes MUHAHAHAHA)
Yes…remember, material things are not the source of happiness!
Anyways, sorry about that above double post back there.
Not tuition, but every few weeks I end up dropping from $50 to $300 on educational workshops. That, combined with an apartment I can’t really afford but initially thought was a good idea because my old (cheaper) place was really scummy… money’s fleeting.
I’m adopting more and more spendthrift mannerisms as the days go by, though.
Hey Scurvy,
I saw it alluded to above, but I think it should be said more blatently. I do not believe that more money results in more happiness. Sure, you can buy more stuff with more money, but does that make you happy?
I suggest you meditate for a day or two and visualize your life running around fixing up houses, or following a career or whatever and think about what you want to do.
I drove a cab for a couple of years until I realized–figured out–what I wanted to do, then I went back to school, got a degree to get a job and have been happy ever since.
Wealth can be measured in many different ways, the size of your bank account/stock portfolio/retirement account is one way to measure wealth. Living with a woman (or man, or whatever) that you are in love with and loves you is another way. Being healthy in mind an body is yet even another way. Being able to spend you days doing something that makes you happy is another way.
Money is easy to come by if you focus on it, however you may be passing up life’s other pleasures.
I suggest you watch the movie Office Space. It’s funny, but there are some underlying themes in there that really speak to the whole “making money” deal.
“If you had a million dollars, what would you do?”
“If you say work on old cars, then become an auto mechanic.”
“It breaks down because no one would ever be a janitor because no one wants to clean shit up all day.”
“Heck, you don’t have to be rich to do nothing all day. hell my brother in law does that now.”
“Peter, seems you’ve been missing a lot of work.”
“Well, I wouldn’t say I was missing it, Bob!”
Anal first let me say kudos to you for being aware of something like this at your age. Bravo.
When I was 23 and talked to my friends about investing they looked at me like I had three eyeballs.
Anyway, you have lots of good advice here already. The one thing you must realize is that time is your friend. Anything you can do now is better than nothing.
Since you are leaving college (university) now, I hopefully assume that you will be professionally employed soon. When you get your first job, don’t fall into the trap of spending everything that your new job “allows”. Pay yourself first - meaning invest. Do this the way you pay taxes - have it taken out of your paycheck before you see it. Have the mutual fund, broker, bank, etc, withdraw the money from your account when you get paid. Count your paycheck as what you get AFTER this deduction, and you are on your way to success.
How much to invest? Determine this yourself, but use a simple guide. When you start your new job, try to keep your same liefstyle. Budget some money for needed expenses (suits, dry cleaning, etc), but after that see if you can survive on $1500/month. Invest everything else. From then on, invest half of every pay raise you get. That way you pay yourself (by investing), but you also get to enjoy a higher standard of living earned from your hard work. This makes investing MUCH easier after over the long run. You see rewards now for the hard work, but you also plan for your future. After all, if you are surviving on $1500/month and you get a $1000/month raise, do you really need to spend it all?
Good luck - by planning this now you have overcome the largest obstacle.
My path started by reading The Wealthy Barber, by David Chilton. I have passed it on to several other since then, all have found it excellent and gotten a great deal of useful information out of it. I really can’t think of enough good things to say about it. I was making $25K at the time, and even on that small salary was able to dramatically increase my financial well being.
The Millionaire Next Door is also excellent. Note that it descriptive, not prescriptive. You have to read any “what to dos” yourself between the lines. It simply presents the statistical and anecdotal evidence, and leaves you to draw the conclusions.
Rich Dad, Poor Dad was interesting, but clearly written by someone who was marketing their own products. I would say the worthwhile content was 2%.
There are some great books about the stock market also, but those are not germane here. It is vastly more important to understand your own personal financial situation and plan than understanding finer points how to play the market.
This is really good advice. I know several people who when they were in college lived on $600/month and said they spent everything tney made on ‘needs’. When they graduated and made $1600/month they spent everything they made on ‘needs’. After a few years when they took home $2200 or so a month they spent everything they made on ‘needs’. Its a really bad trap, finding newer ways to spend everything you make then deluding myself into thinking you ‘have’ to spend it on needs. I know people who make 20k, 40k, 60k, etc who spend everything they make and i have known 2 people who made $1600/month combined net and saved $500/month of it. You have to determine what your needs truly are, and what is a want. I prefer to look at it as the only ‘needs’ i have are basic nutrition and some kinds of healthcare. Everything else is a type of want although some wants, like a car and a house, are strong wants. But at the end of the day they are still wants.
The rich people i’ve talked to say money only buys luxury and freedom (it also buys influence but were talking about what it buys yourself, not others). I guess its up to you how much of each you want.
The ‘best’ (ive read about 7 so i dont know if that makes me an expert or not) book ive read on personal finance was ‘financial self defense’ by charles Givens. in it he talks about things that i always considered to be common sense like getting a car when its 3 years old instead of new (it only costs 1/2 as much that way and the quality is the same), or getting a 1k deductible on insurance. Some of the info is outdates because the book was written in the 80’s when the stock market grew at 13% or so a year and mortgage rates were 10%, but overall its got several good tips. After reading it I realized that even though a 30 year mortgage will offer a lower monthly payment it will have 2x as much in interest payments as a 15 year loan.
This is more a matter of opinion and advice than straight facts, so I’ll move this thread to IMHO.
bibliophage
moderator GQ
It’s impossible to overstate the beauty of the book “The Millionare Next Door.” It completely changed the way I looked at how much I earn and how to best spend my money. There may be other books out there, but it’s the one I can guarrantee will be valuable in managing your finances. Its short on specifics, though. The charts and stats are amazing and I think the author is a genius for deciding to look at the statistics he did.
A few summary point from the book are : Your best bet is to own your own business, but not necessarily a "glamorous" one. The whole book is about how in this day and age the best thing you can do is find your niche or area of expertise in life and become the BEST person out there at that particular niche. The author uses himself as an example of this. He is not a great writer. He is not a genius. However, his niche is research in the way the rich live and how they manage their money. His expertise in that area, which is a very small but lucrative area, as he has found out, has made him good money in his lifetime.
Buy quailty products that will last, but don't spend extravagantly. For example, Mercedes and Toyota make great cars. Which do you choose? The smart buyer chooses the Toyota because they are cheaper and, though less of a luxury, will probably hold up just as well, or close to it, in the long run. Same applies to clothes, home products, etc. Buy nice, quality products that will last. Think "Consumer Reports best buys."
Choose a SPOUSE that is frugal and has similar ideas as to how to manage money. This is probably the most important factor, if you plan on getting married, in wealth accumulation. If only one person is making the effort, it just won't work.
Also, from a practical standpoint, The Millionare Next Door is an indispensable book. Skip wasting money on The Millionaire Mind (follow up by same author). Doesn't add much to the whole concept.
Invest early in life and let compounding interest work for you.
Finally, don't believe any informercial than mentions "Tiny, Tiny little adds." That one does always crack me up, though. I always imagine that guy that does those with a "tiny, tiny little penis" that he is overcompensating for.