Monday, April 16, 2007

Let's Talk About Money

Now that you realize it's possible to increase your income in a relatively short period of time, let's talk about money. Suppose you had a million dollars in the bank. Let's assume the bank was willing to pay 5% interest on their time deposits known as "CDs".

5% on one million dollars is $50,000.00 a year; which is approximately $4,166.00 a month. Sure, you might be able to get a higher interest rate in various bonds, mutual funds, stocks, or other investment instruments; but not much more, and even so, your risk of losing your million rises proportionately.

So, How are you ever going to stop working? A million after taxes gets you $4,166.00 a month, and that's not taking inflation into account.

10 years from now, that $4,166.00 will seem like nothing at the current rate of inflation, which is much higher than the government says it is. Social Security and company pensions might not last. Medical expenses can eat up whatever savings you do manage to accumulate even if you are lucky enough to have insurance!

What do most people end up doing to protect themselves? Absolutely Nothing! Do you really want to know the truth. After 30 years of studies, 95% of working people still end up dead, or dead broke.

This is the hard core reality of living and working with the 40-40-40 Plan. 40 hours a week, 40 years of work, and $40.00 in a savings account when you retire. What are you going to do to prevent this from happening to you?

Don't think you are too young not to think about this. There are really only 2 things that are going to happen. You are either going to live, or you are going to die, and that's a fact. How old are you right now? Are you saving any money? If you are, how long will it take you to save a million after tax dollars?

What will a million dollars be worth at that point in time? Let me tell you. If you manage to save $1,000.00 a month, it will take you 83 years to save $1,000,000.00. The interest on the money while you are saving it will be eaten up completely by taxes and inflation.

The reason why you need to earn more money is because making large amounts of money is not enough. Your income must be continuous and come from several different sources if you want real financial security. Why? No matter how much you earn, you have to keep on working, or the money stops coming in.

Continuous Income is What You Need: You see, what we are really discussing is continuous income aren't we? You want the million in the bank because of the income it represents. A single mother on welfare in some states, gets $1,139.00 monthly in the form of a check, food stamps and other benefits.

Working people, like us, would have to save $273,000.00, after taxes, at 5% interest to receive $1,139.00 a month in interest payments. mean... you don't have $273,000.00 in the bank? haven't saved up enough money yet, to reproduce the non-working income that a welfare mother gets from the government?

Please understand, we are not writing this post to pick on welfare mothers. They are going to have enough trouble trying to find a decent job. This post is written to illustrate how much money you would have to save to have a welfare class income.

As you earn more money, unless you are just into having status symbols, the cars you drive become more expensive; as well as the clothes you wear, your home, and the food you eat. The vast majority of people that earn more money, spend more money. Even if you do manage to save a million after tax dollars, and live off the interest, your new lifestyle requirements will eat it up.

Remember: We are not talking about getting rich. This is just an illustration to demonstrate how rapidly you can run through a retirement income of $4,166.00 a month. If you don't believe you can run through this income in a relatively short period of time, ask any good doctor, lawyer, college president, or small business owner. Most of these professionals earn about this much a month or more. And while you are at it, ask them what would happen to their lifestyle and quality of life if the money suddenly stopped coming in?