I was fortunate enough to learn about the number “72” when I was in high school taking a college preparatory math class. Although it was not part of the curriculum, my teacher spent a few minutes every Friday talking about real life and how to not only survive, but also succeed in the world once we graduated high school. He explained to us that with his modest income, and his wife also working at a modest income, he was going to retire in five years and he and his wife would be a millionaire. He was not sharing this information to brag or boast, but to make his students aware that with proper money management, we could also become independently wealthy.

This was back in 1978 when no one in my class knew a millionaire personally. I was excited to hear everything he could about how he achieved this goal. His basic knowledge and teaching myself about the “Power of 72”, helped me after I graduated from high school to manage my money and realize that wealth was achievable.

Now that I have your attention, I will explain why 72 is a very important number. With any rate of interest, whether it is in CD’s, stocks or bonds, or real estate appreciation, if you take the rate of return you are getting on your investment, and take 72 divided by this number, you will be able to see how long it will take you double your money.

An example of this is if you have $10,000.00 invested in CD’s that are earning 6% Interest per year, you would take 72 divided by 6 and get 12 as your answer. This means that it would take 12 years to double your money. If you could get an 8% return on your money, your investment would double in 9 years (72 divided by 8).

Many ask why that is important. If you can invest early in your age, and get a good return on your investment, you can become a millionaire without investing a huge amount of money. Again, take this $10,000.00 investment. If you are 20 years old when you make this investment, and you decide to put it in safe CD’s earning 6%, your money will double and you will have $20,000.00 at age 32. If you continue at the same rate of return, you will then have $40,000.00 at age 44. At age 56 you will have $80,000.00.

Take that same investment of $10,000.00 and earn 8%, you will have $20,000.00 at age 29. At age 38 you will have $40,000.00. At age 47, you will have $80,000.00 and at age 56 you will have $160,000.00. By the time you reach the age of 65, you will have earned $320,000.00 on a $10,000.00 investment.

Compare the 6% return versus the 8% return. Although 2% does not seem like a lot of money, it can amount to hundreds of thousands of dollars if accumulated over many years. If you start early enough and invest properly, you will be well on your way to becoming a millionaire.

With everyone using the Internet to shop and bank, our personal information including credit card and bank account numbers are being sent over the Internet. And for this reason, there are many thefts of this information occurring on a regular basis. Scammers are sending out E-mails that look legitimate asking to update your information over the Internet or phone. You have to be extremely careful when giving out this information. Never give out account numbers or other personal financial information, unless you can validate the authenticity of the requestor.

A way to help stop Identity theft is to check any statements you have mailed to you as soon as they come in. If there are any discrepancies, report them immediately. Always shred personal and financial information before discarding it.

Every year, you should review your credit report. Your credit report helps credit card companies, mortgage companies and others issuing credit to you decide on the interest rate and amount of credit you will be receiving from these financial institutions. If your credit report has items that are incorrect, (and many do), you need to report it to the three main credit bureaus. It may take a long time to correct the error, but don’t give up on it until it is corrected. Errors can cost you thousand of dollars over the course of your life.

Below are the three main credit bureaus and their contact information. You should call all three once a year to get a free credit report and also to report any errors on the report.

Equifax
Phone: 800-525-6285
www.equifax.com

Experian
Phone: 888-397-3742
www.experian.com

TransUnion
Phone: 800-680-7289
www.transunion.com

Although Identity Theft and Credit Reports are not on everyone’s mind with the busy schedule we live, you should address these as often as possible to insure you do not fall into a nightmare that can block your progress. Keeping up on these can help insure your financial security.

A smart person will realize that to be several steps ahead of everyone else, all you have to do is to live within your means. What is this definition? To live within your means you must be spending less money than you are earning. That is, net earnings after taxes. Most people are not doing this, which causes major debt. The more debt you find yourself in, the less likely you will ever reach your dreams of being a millionaire.

When I was in my early twenties, I owed very little, and I was enjoying life. If I wanted something, I would buy it. That is to a degree. Even though I thought I spent money as I wished, I always had it in me to be a little on the conservative side. By the time I reached my mid twenties, I decided to start doing some serious investing. I had seen a television show on wasting money and it focused on taking inventory of what you have not used within six months to a year. I gathered a pile and calculated, and was amazed at what I was buying and not really using. I had a tendency to be a compulsive spender. So I took the shows advise and would not purchase anything until I walked away from it and thought about it for a day or two. If I then wanted it, I would go back and buy it. This helped me to cut my spending on non-necessary things by two thirds. The money would be invested, and I could start to see an investment portfolio that was growing.

Buying your first car or home can be an extremely stressful time. Years ago, only the wealthy youth would purchase a new car. My first car cost me $1500.00 and I paid cash for it. I’ve only financed one car in my life because there are no tax deductions from doing so. Everyone wants a new home to live in. But if you can buy a home that fits your needs, but may be less expensive, you can save thousands of dollars and be able to invest in your future. The average person lives in their first home less than eight years before moving to something different. Give yourself a goal for something to upgrade to. You will find yourself less stressed out and you will have more money available to work on your goal.

Once you take a hard look at what you earn and what you spend, you will be surprised at how much money you can save buy cutting out the “Wants” versus the “Needs”. Take the extra money and start investing for your goal to be a Millionaire!!!

Before taking your idea and turning it into realty, your first step should be to plan out how to take your brilliant idea and turn it into reality. Planning may take time and money, but having a plan in operation when you start will help you transition your business with little problems. There are many tools to help you start this plan.

Your local municipality is a great start when planning out your strategy for your business. Officials can help you with many of your questions concerning the feasibility of your plan, low interest loans, other monies available for new businesses, ordinances that may prohibit certain businesses or the location of them, and many other questions whom the experts will have the answers.

You may also want to contact the small business association. This non profit organization is available to take a look at your plan, help you calculate start up cost, find options for loans, lead you in the direction of accountants, lawyers, and other professionals you may need advice from to help you with your new business. Most of this information is provided at no cost to you.

Take your business plan, along with cost and sales projections and talk with a professional to confirm that your plan will work. If you need to borrow money for your business, banks are the best source to go over your projections. If they are going to loan you the money, they will make sure your plan has the ability to succeed before giving you the loan. This is also a free opportunity to allow a professional to help you.

Once your plan has been confirmed, the next step is to implement it. With discipline, patience and self determination, you will be on your way to becoming your own boss and there is not limit to how successful your business will become.

Financial statements are not difficult to do. When you can see what your net value is on paper, and watch your progress, this gives you an incentive to achieve more and the feeling of this achievement will help you keep on the road to financial success.

To start your financial statement, you only need to know a few basic accounting principals: Your assets minus your liabilities equal your net value. Assets are anything that you own that has a dollar value. To make your asset list simple, you should use only items that have a value over $1000.00. The most common assets include your home, bank accounts, retirement accounts, investment accounts, cars, jewelry, and any other items that have a monetary value.

Liabilities are any bills you owe that will not be paid off within a month. The reason for not including small monthly bills is to simplify the financial statement. The more simple the financial statement, the more likely you will spend the time to update one. Examples of liabilities are mortgage payments, car payments, credit card bills, and any other bills that amount to over $100.00.

Once you have your assets and liabilities compiled, it becomes a simple addition and subtraction process. You first list your assets and total them. Then you list your liabilities and total them. Once this is completed, you take the total assets and subtract the total liabilities and your total will be your net value. This process should only take fifteen to twenty minutes of time and the rewards are priceless.

An example of a financial statement is listed below:

Assets: 1/01/0000 6/01/0000

Home $200,000.00 $204,000.00
Cars $20,000.00 $19,000.00
Checking Acct: $1000.00 $1200.00
Pension $24,000.00 $24,500.00
Investments $15,000.00 $16,000.00
Jewelry $2000.00 $2000.00

Total Assets: $262,000.00 $266,700.00

Liabilities: 1/01/0000 6/01/0000

Mortgage $120,000.00 $118,000.00
Car Payments $5000.00 $4000.00
Credit Cards $1500.00 $1000.00

Total Liabilities: $126,500.00 $123,000.00

Total Assets: $262,000.00 $266,700.00
Total Liabilities: ($126,500.00) $(123,000.00)

Net Value: $135,500.00 $143,700.00

Net Increase: $8,200.00

By using the example above and adapting it to your situation, you can do a simple financial statement and watch your value grow. My suggestion is to create at least two financial statements per year, which will also allow you to adjust your spending or savings to help with the growth. You will find yourself getting excited to see where you are and how much closer you have come to financial security.

One might ask how this debt happens. Credit card companies pride themselves in getting consumers hooked on the plastic card at a very young age. Colleges across America allow credit card companies to set up promotional tables, send enormous mailings, and advertise anywhere college students are present. They offer large credit lines and entice students to charge now and pay later. Credit card companies teach the young that it is normal to spend more than you can afford, and pay off the debt over a long period of time. It is the “American” way.

I’ve prided myself on using several credit cards, but my credit cards are my friends, not my Foe. Using them in a positive manner can help you become more organized, save you money, and receive free products.

To consider a credit card your friend, you have to abide by the most important rule: PAY IT OFF IN FULL EVERY MONTH!!! This is the only way you will actually benefit by having credit cards.

I own four major credit cards. Three are Visa and one is Master Card. The four cards have four different purposes. My first card is for my business. Everything my partner or myself purchases for the business, we use the credit card if we can. This allows for one monthly on line payment, and the statement helps with the accounting. We pay no yearly charge, and we earn dividend points that accumulate for purchases we may need in the future.

I have a Credit card that is used strictly for a popular convenience store that also sells gas. This card gives my wife and I a four percent credit on every purchase that can be used in the store, including gas. My wife travels approximately one hundred miles per day to get to and from her job, so the gas bill accumulates fast. Over the course of a year, we save approximately $300.00 by using this card. This is $300.00 tax-free dollars, which amounts to almost $400.00 if we were earning the money as a salary.

A third credit card we use is for medical expenses. The main reason for this is because our medical insurance requires us to pay for Doctors visits and prescriptions up front, and then we are reimbursed 80% by the insurance company. There is a cap where the coverage then becomes 100%. The reason for this card is to help us keep our medical expenses separate and to insure we submit all of our medical expenses. This card also gives points to purchase items in the future. On an average year, we earn about $100.00 worth of merchandise.

The last card, and most used card are for all other expenses. Everything we can put on this card, we do. We pay our insurance, utilities, groceries, dining, entertainment, and every other expense we incur. Again, this card has no yearly expenses, and at the end of the year we get an itemized list of how our monies were spent. The points we receive on this card are used towards vacations. We either trade them in for airline tickets, hotel stays, or rental cars. Depending on which works best for us, we usually receive about $800.00 worth of merchandise per year.

If I combine all four credit cards, I earn about $1300.00 tax-free dollars per year and the cards help me minimize my accounting. This $1300.00 amounts to approximately $1800.00 in taxable salary.

I personally get excited about using my credit card. They can be your friend or foe. The decision is yours as to what relationship you may want to have with the plastic industry!

The two IRA’s that most will encounter in their lifetime are the Traditional IRA, and the Roth IRA. These two accounts have different tax consequences and both have advantages that will encourage you to invest, step back, and allow your investments to grow until you are at or near retirement. The monies will help you live your golden years with more monetary security and you will be able to enjoy some of the finer things that you have earned.

The Traditional IRA allows you to invest and your money will grow tax deferred. What this means is that as your investment grows, you do not have to pay federal taxes on this growth until you start to withdrawal the funds. To encourage you to keep the funds growing, the federal government penalizes you a 10% fee is you take monies out of your account prior to age 59 ½, plus you then have to pay the percentage of taxes owed on this income. The penalty helps to encourage individuals from removing funds from the IRA, which in return allows the funds to grow for a substantial amount of time. Depending on your income, some individuals may not be allowed to contribute to a traditional IRA with tax deferred dollars. You must first consult a professional such as a financial advisor, or bank to get the updated details.

A simple example of contributing to a Traditional IRA and the advantage of doing so is if you wanted to contribute $1000.00 to the IRA account, if you qualify to do so, you would be allowed to deduct $1000.00 from your total income when paying federal taxes. If you fall into the 25% tax bracket, you would be saving $250.00 on your taxes at the end of the year. This allows you to put more money away at the very beginning of this investing. Once the money starts to grow, you do not pay taxes on the earnings until you start to withdrawal the funds, which again have great tax advantages.

A Roth IRA takes monies that you have already paid taxes on, allow you to invest this money with no federal tax consequences, and no penalties as long as you leave the money invested until the age of 59 ½ years of age. You can watch your money grow, and at your retirement, you can take the money out tax-free. What a great opportunity!

The Federal government also allows for some withdrawal of this investment with no penalty. After a set number of years, you can take out your original taxed investment that you have already paid taxes on, without penalty. There are rules and regulations involved in the early withdrawal, and you would have to get the advise of your tax accountant or financial advisor.

If you want to be a millionaire, you want to start investing in IRA’s. Your money will grow much faster, and it is a safe way to get started on the road to financial success!

Roth IRA: Contributions are made with after-tax assets and all transactions within the IRA have no tax impact. Withdrawals are usually tax-free.

Traditional IRA: Contributions are often tax-deductible, and withdrawals at retirement are taxed as income.

SEP IRA: A provision that allows an employer (typically a small business or self-employed individual) to make retirement plan contributions into a traditional IRA established in the employee’s name, instead of to a pension fund account in the company’s name.

SIMPLE IRA: A simplified employee pension plan that allows both employer and employee contributions, similar to a 401(k) plan, but with lower contribution limits and simpler and less costly administration costs. Although it is termed an IRA, it is treated separately.

Self-Directed IRA: A self-directed IRA that permits the account holder to make investments on behalf of the retirement plan.

IRA’s all have tools that help you make more money on your investment by deferring or eliminating taxes, but they have rules that penalize you if the investment is withdrawn before a certain age. The Federal government established these IRA’s to encourage citizens to save for their retirement, which would help individuals once they become seniors and may be on a limited budget. Taxes on early withdrawals make you think twice before taking the money out of the IRA accounts.

Now that you are aware of Individual Retirement Accounts, you will want to decide which one works best for you and try to maximize on this investment. You will be amazed how much more money you will have and the earlier you start, the sooner you will reach your Millionaire goal!

I paid $17,000.00 for this land, and what I thought was going to be my new home someday, ended up being a great investment. Within six years from my purchase, I was married, had purchased a home, and decided that I would no longer need the land to build on. I had acquired my real estate license and sold the property for almost double what I had spent. Using “The Power of 72”, I received an 11% return on my investment, which made me very happy.

Next, I took the monies from the land, and purchased an investment property at the shore. The real estate market was down, and prices had been falling for a year. This is the best time to buy real estate. Many think the best time to buy a property is when the market is up. Just like the stock market, the best buys in Real Estate can be made when the market is low.

The property I purchased was rented for the summer and my wife and I could not have access until the fall. This disappointed us, but I was excited that we would be receiving the rental income for the summer, which was substantial. I took the rental income and applied it towards paying off my primary home. Within three years of purchasing my primary home, it was paid off. I still owed a mortgage on my investment property, so I started to pay that down also.

I rented the shore investment property for two more years and my wife and I decided that we were spending more time at the beach and this was where we wanted to liver permanently. We sold our primary home and made living at the beach a dream come true.

By 1998, our primary home was almost paid off and we decided to buy another property at the shore. The investment idea behind this was to purchase a property that we would allow us to open a business at the shore, but also have a few rental income units. The real estate market was just starting to pick up. Interest rates were about 9%, so we purchased a property that would allow me to chase a dream of being my own boss, and also have some rental income.

We owned and operated a business for three years and found that the market had skyrocketed to a point where we found we could make substantially more money by developing the business property than to run the business. We developed the business property, sold off one half, lived in the other side, and sold off our primary residence. By doing so, we made more money than I had my whole career. Just by investing in Real Estate.

Real Estate has been very good to me. With wise choices, real estate can get you to the “Millionaire” status and help you achieve your needs and goals!

I started investing in the stock market when I was twenty-one years old, back in 1983. At that time, I did not know a lot about the stock market and most people had no investments in the market. It was just about that time that pension plans started investing in the market and mutual funds started to be formed.

If I had known then what I know now about the stock market, I would have invested everything I could in the market. At age twenty-one, I was very conservative and young, and the stock market did not mean much to me. I would occasionally purchase some stock, but most of my money went into CD’s because I knew they were safe. At that time, CD’s were earning about 6%, which I thought was fantastic. Little did I know that the stock market over many years would average several points higher than my CD’s, and with the knowledge of “The Power of 72”, this would have made a significant difference.

I spoke with my first financial advisor in 1987, which convinced me to invest on a weekly basis with some stocks that had a great history of paying out conservative amounts of money and had the potential to grow. Being young and leaning towards the conservative side, I started investing and watched my money start to grow, but not enough to get hooked on investing in the market.

It was not until 1993 that I talked to another financial advisor who had called me from an inquiry I had made about investing on the TV. At first I did not want to be bothered, but the advisor convinced me to spend an hour with him so he could explain what “American Express Financial Advisors” could do for me. My wife and I agreed to meet with him and after an hour, he me not only convinced to invest with his firm, but also had me excited in doing so. He re-introduced to me the “Power of 72” with many examples and felt comfortable that with our age and salaries, we could become financially secure before our retirement. That was the starting point where I would track my investments and do financial statements quarterly to see how our assets have grown.

Since 1993, I’ve been with the same financial institution and have been very satisfied. I allow the professionals to make well-educated suggestions on where my money should be invested and how to make the best of these investments. Because my portfolio has grown to a substantial amount, my advisor now works on a commission of a percentage of my growth per year versus receiving money on buying and selling. This gives my broker an incentive to make as much as he can for his clients because that is what pays his salary.

The bottom line here is to use the stock market as one of your tools towards being a millionaire. What percentage is totally up to you and your comfort zone, but I strongly advise you to get a financial advisor that has your best interest at heart.