developing a millionaire mindset
When I stated my goal a while back to have $2 million dollars within just a little more than 9 years, I realized that I had to make a few changes in my thinking. I am still working on most of these changes, but I have come up with a few targets.
1. I can’t keep all of my savings in retirement accounts. I have a lot of money in IRAs (for myself and my wife) and my 401(k) that aren’t touchable without penalty until we reach age 59 1/2, and that’s too late if we retire (in my case) more than 10 years before that. Even though we have a fair amount saved in non-retirement accounts (about 30% of our total savings) we probably will need more than that.
2. We’ve got to say goodbye to the expensive metropolitan New York area. Paying almost 6% of my income in property taxes every year is not a good way to build wealth. The cost of living hits you nonstop in an area like this: from $15 per day in commuting costs to $50 monthly water bills, living near New York is just too expensive.
3. My wife and I need to be firmly on the same page. As I’ve pointed out in a guest post elsewhere, I mentally flip flop from goal to goal. Bubelah is a lot better at staying fixed on a goal, but she still changes her mind from time to time, too. We have to continue to stay focused on a very definite set of goals, and not suddenly decide this week that we should look into alpaca farming in Mexico, because it’s just not compatible with our goals, our skills or our interests in the long run.
4. We have to find a place to live with a solid school system. I have realized that sending children to a private school is a recipe for financial disaster. For some people private school may be the only choice, for religious or personal reasons. I would rather identify an area with great public schools rather than send my children to a private school simply because of the area I live in. I would rather change the area than spend an additional $12,000 per year on a school that – most likely – is no better than a good public school in a different area.
5. My mindset has to change from “save more” to “make more.” I have done very well for the past few years, with Bubelah’s help, at saving more. However, if you make $100 the most you can save is $100. If you want to save $110, the only way to do it is to make more money. I need to find more ways to identify alternative income. I need to quit thinking how to save an extra $50 per month and start putting that effort towards making an extra $50 per month.
6. I need to identify (and maintain) a master mind. I first became aware of this concept by reading Napoleon Hill’s book “Think and Grow Rich.” Wikipedia has an excellent article which includes a discussion of the master mind, but at its core, to me it means that you have to associate with people who have the same mindset and goals as you do. You need people whose interests complement yours, but whose skills fill the gaps between your own. A good example of this would understanding taxes. I know just enough about taxes to think I could be an expert, but I’m not. Should I learn more about taxes, or get someone in my master mind who already knows more? You can’t know everything. You should have a firm grasp on the basic principles of any subject important to your goals, but you should also have a team to rely on for assistance, and also be there for them when they need to rely on you.
I feel that reading blogs and forming connections with other people over the Internet is one part of this effort – I like to consider most of my blogroll as part of an online master mind. Another part of the effort is taking a cold, hard look at people who don’t add to this effort. Anyone who belittles your goals or disparages them cannot, by definition, be part of your master mind. Spending time with them has to be considered to be in opposition to your goals. I’ll talk more about that in future posts, but that is a scary concept that most people aren’t in a hurry to embrace: people who are close friends and family may be keeping you from achieving your goals, and you have to distance yourself from them if you want to achieve your goals.
I think all of these steps are doable. In 2007 Bubelah and I formulated our plan and started taking steps toward achieving it; in 2008 we plan to make even more substantial progress. What the mind can conceive, you can achieve.
(photo by Citizen L)