What Does Your Financial Path Look Like? 
Steps to Debt Freedom.


​Steps

  1. Budget
  2. Insurance/Will
  3. Fast emergency fund
  4. Pay off debts
  5. Emergency fund
  6. Retirement savings
  7. College savings
  8. Home payoff
  9. Investing
  10. Be gracious and generous



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Details

  1. Setup a monthly budget with STUF first: Shelter, Transportation, Utilities, Food.
  2. Get up to date on all payments. If you can't, get a second job and sell everything (cars, boats, electronics, books, clothes.)
  3. If someone depends on your income, buy long term life insurance 10-12 times your yearly income. Think "what will it take to live if the spouse passes away." You have to replace that income to live comfortably. Stay far away from Whole Life Ins...you don't want to mix investing and insurance in a single product. Fees are ridiculous and you can pick a better mutual fund to invest in.
  4. You must have a Will, whether you are single or married. Make it simple for your heirs. Mamabear legal forms
  5. Save a quick emergency fund: the smaller amount of $2000 or 2% of your household income.
  6. Now, pay off all your consumer debt. You can make a list with highest interest first, or if you like quick wins list your debts smallest to largest. Also sell your cars with debt if you can't pay it off in 2 years. Everything you own with a motor should not total more than half your yearly household income.
  7. ​Once debt free, save 3-6 months expenses for emergencies. What if there's a worldwide pandemic!
  8. After that is complete, start saving 15% of your salary in a (Roth) 401K for retirement. Invest in an even mix of mutual funds types (Large Cap, Mid Cap, Small Cap, Small Value, International). What funds? See below. Find the funds with low fees and 10 year track record with 10-14% return rates. The longer the history, the better.
  9. Time and Compound Interest is your friend, so start young and save as much as possible. If you save $200 per month for 40 years you will have over $1M.....$1000/mos for 40 yrs=$5.8M. 15% of your income will give good returns if invested well.
  10. Start a 529 College fund when your child is born. This was one of the smartest things my family did with money. With college bills taken care of you will have options when you become an empty nester: new car, home, etc. I recommend $300/month if you start the day your child is born (2021). If you already have children then it is time to catch up. 
  11. Now it's time to focus solely on paying off your home early. When buying a home be sure to have 20% for the down payment and don't take out a mortgage larger than 25% of your family monthly income. 15 year mortgage is recommended so you can pay it off quicker.
  12. Once the home is paid off and you have zero payments, you can add to you investments: buy paid for rentals, investment properties, mutual funds, etc.
  13. Retire wealthy and be generous. Money will typically enhance your personality, so be open handed. If you always have a clutched fist holding your money, sometimes you will miss when someone is trying to give you some.

How to find the best funds?

Jump over to Fidelity.com and click on News&Research, go to Mutual Funds.
Fund Type is US Equity, 4 Star Rating, Above Avg Returns, Below Avg Expenses.
Find the best funds with at least 10 year returns.

It's not timing the market, it's time in the market.
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But I'm not comfortable investing.

Knowledge is power when it comes to being comfortable investing your hard earned money into the stock market. That is smart and makes perfect sense. Many will buy a home not even thinking twice about the investment because in most cases real estate goes up and down but will usually normalize and grow in value. Now let's get you comfortable with mutual funds in the market.

Take a look at the mutual fund symbol FMAGX (Fidelity Magellan Fund.) This is considered a Large Growth mutual fund because it invests in large companies like Apple, Microsoft, Amazon, Google, etc.

I don't invest in any fund without at least a 10 year track record, but prefer 20 years or more. If you look at this funds 10 year track record, the yearly return on investment is over 14%. While 10 years is good, I would like more information to be truly comfortable.

How about a 58 year track record? Average annual return on your investment would be over 16% per year.
Now that should be knowledge that helps you feel comfortable investing in the market.

Retirement Strategy

Save 15% of your income as young as possible. Compound interest is amazing. Your money makes money making more money on top of money. Try the retirement calculator below.

The Grandparent Giving Fund

  • Would you like to be a legend to your grandchildren? Here is a simple way to leave them millions at retirement while teaching them the power of compound interest. 
  • After they are born, invest $1000 per year for 10 years into a proven mutual fund.
  • Leave it invested until they are 65 years old.
  • Assuming 10% annual returns they will have $3.8M.
  • Try the same technique with $5000 and you will end up with $20M....LEGENDARY!

                                                    Proverbs 13:22: “A good man leaves an inheritance to his children’s children.” (NKJV)
My success stems from my family, friendships, and compound interest....mostly compound interest.

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