Getting Wealthy By Swimming to Shore.
Yesterday’s post: Defend Your Financial Fortress Against Spending Temptations!, prompted Sandy from First Gen American to ask the following question: “I’m interested which budget categories you beefed up since your mortgage got paid”? So in this post, I attempt to explain my position and answer Sandy’s question!
Originally, I wrote: Stop Drowning in Debt, Start Swimming To Shore. In that post, I compared being deep in debt to being underwater trying to breathe.
When you are underwater, you only focus on one thing, and that is to get our head above water so you can breathe again! In the financial world, you try to get out of debt so that is your goal and what you primarily focus on!
When you are deep underwater, it’s a battle to get to the surface to breathe air! When you are in massive debt, your primary goal is to claw yourself back to the financial free air.
I broke the surface of the water, but instead of getting wealthy by swimming to shore, I’ve been treading water, trying to catch my breath, and then determine which direct to swim.
Getting Wealthy
Now that I’ve caught my breath, I’m going to start to swim towards the financially independence island/goal by going after the expenses that are like debt!
So I decided to start swimming by buying stocks with dividends, so someday the dividends could cover my Real Estate taxes and homeowner’s insurance payments. I think the key is to start swimming and stop just treading water!
I’m going to start to research which stock(s) to purchase, and then in a later post, I’ll identify which one(s) I have chosen.
The Decision
While I haven’t saved a lot of money since paying off my house, I still have a few thousand to play with, and that enough to start to swim towards shore.
So to answer Sandy’s question above, I’ve been putting the extra money from the payment from my former mortgage into cash, fixing things and a mild lifestyle inflation spending. I’ll probably purchase the investments partially through a Roth IRA and partially through my regular online brokerage account.
Other than retirement, what ways are you planning on using to getting wealthier?
-MR
Right now we can save something like 72K/year in retirement accounts. (Or… we could if we had that kind of money and weren’t using it to prepay the mortgage.)
Other than that, we’re keeping the general index funds and a couple of the interest bearing individual stocks and mutual funds that we bought back when we didn’t have retirement accounts.
Wow, that would be an impressive sum to lay down every year!
Since I’m kind of the main breadwinner in the family, we aren’t even close to that number. If my wife was back in the accounting business, we would be close… but alas, it’s just me 🙂
I think whenever you have 2 decent incomes, it’s very easy to sock most of the 2nd income into non-expense related categories, such as investments or house payments.
We’re not putting 72K away… we don’t have that kind of income. That’s just the amount that we could put away if we had that money because we’ve both got access to a bunch of different tax-deferred options at work. Unless we got to that point there’s not much point in using non-tax-advantaged vehicles.
Okay, gotcha!
I was going to say, wow that’s pretty impressive!
In our dreams!
Great post MR! I think when my house is paid off, I may enjoy a little lifestyle inflation myself. How could you not?
You are doing a great job. Keep us informed how you swimming goes!
Thanks 🙂
I’m just starting to swim, and it’s a looooooong way to shore… 🙁
Once my online empire kicks in that… oh wait that’s Sam… my bad!
At this point, I’m just happy it’s Friday!!!
That’s right Money Reasons: show everyone how it is done!
Back when I was paying off consumer debt (excluding the mortgage), I paid a very substantial sum every month. Now I have two incomes, which definitely helps, but even during a period where my wife was between jobs, we still managed to invest pretty aggressively just due to the discipline we learned becoming debt-free.
P.S. Just for transparency sake, we did have some lifestyle inflation (Cancun, Jamaica, going out more, season tickets to the theater etc.). However, we still were/are living way below our means.
Anyway, I just want to say rock on man!
Thanks, and it sounds like you are doing a spectacular job Shawn!!!
That is what I want to do too, invest, but still have enough to spend on better vacations, and to spend a bit more on my kids.
For me this is both an exciting time but also a frustrating time! It’s exciting because I’m making traction and investing. It’s frustating because it’s not happening as quickly as I initally planned… Baby steps for me, at least for now 🙂
Sounds like you are really make great progress!!! 🙂
Thank you for making a whole post out of my question.
I plan on having extra income in 2011 for investing, but since I’m already maxing out my pre-tax investments, I am struggling what to do next. Do I fund the kid’s 529’s, do just get a standard brokerage account, do I buy treasuries?
I guess the first thing I’ll do is save for plan-able unplanned expenses..like next car fund, appliance + electronics fund, etc.
I also plan on spending more on travel next year.
Yes, I’m looking forward to traveling more next year! If I do it right, I’ll be able to take a vacation in either Hawaii or Europe. Of course that all depends on the economy…
We’ll see, I’m keeping my fingers cross!
Funny how I got an idea from Shawn 2 days ago, and you yesterday! Kris also fueled an idea, but I’ll wait a while to release that one!
Pingback: Tweets that mention Getting Wealthy By Swimming to Shore | Money Reasons -- Topsy.com
We’ve been overpaying our mortgage since the beginning and will be hitting it even harder next year. I think our extra money after that will also probably lead to lifestyle inflation once again (which I’m okay with, lol) and more retirment savings. 🙂
That is exactly what has happened to me! My retirement savings has increased substancially, and after fixing a few important things (car, lawnmower) lifestyle inflation came a knocking!
But lifestyle inflation is a good problem to have as long as you continue to save 🙂
Pingback: Link Round Up – Time to Read! | Everyday Tips and Thoughts...
I like your analogy with treading water vs. swimming to shore. I really need to look at all of my expenses and see where I could trim them, then I can start focusing on getting to that shore!
I feel I’ve been treading water way too long. I need to dust off my old trust spreadsheet and start number crunching!