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May 19, 2014

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That's interesting that "figure out your net worth" is #1 on the list. I usually don't see that but I personally put it there too! In fact, it's at the top of my "to-do" list for future clients of my money coaching :) Now to go check out YOUR 30 steps!

That IS a great list.

I agree that figuring out your net worth ( and constantly working to improve it) is probably the most important step anyone can take to become wealthy and financially stable.

Think about it-- working toward improving your net worth guides you to (i) increase your assets (bank, brokerage, real estate business etc) and (ii) decrease your debts.

That is the core of what I have done-- and it has served me very well. I started tracking my net worth in my early 20's. I am sure it was negative at that point- burdened with student loans and car payments. Over the years I have always made decisions that were most likely to improve my net worth. I started investing. I was careful about debt. I refinanced to lower rate & shorter term mortgages. I squirrelled away bonuses and lived below my means.

Today my net worth is about $3 Million and I am not yet 50 ( close though...)

I started my first real job in 1951 when I was 17 and became an apprentice at England's best known aircraft comany which was called DeHavilland, established in 1920. My pay was miniscule at that time and even when my apprenticeship ended in 1956 when I was 22 my pay was only 8 pounds/week, which amounts to about $13. I got married in July 1956 and we had plans to emigrate to Canada in the November where I had a job offer at AVRO Canada working on an aircraft designed to intercept Russian aircraft should they be heading towards Canada and the USA. We had $400 between us when we stepped off the boat so figuring out our net worth wasn't a big deal. That $400 was our emergency fund and after buying a few essential furnishings it wasn't even enough to get us back home if that became necessary.

Most of the items in the list were thus inapplicable for us. We had a great time in Canada but then came the "Bombshell". The US government offered the Canadadian government the Bomarc missile system at a dirt cheap price. A few days later the government cancelled the AVRO Arrow aircraft project and AVRO was forced to close up shop. Fortunately at that time the USA was desperately short of aircraft engineers and the recruiters were all there for us with job offers. That's when we moved to the USA where jobs were waiting for us. All I had to do was to sign a declaration of intent to become a US citizen in 5 years and I got my green card.

This what could have been a disaster turned into a fantastic opportunity. That's LUCK, pure and simple.

We were both big savers and from there we went on to save lots of money but even when we retired in 1992 our total savings were only $320K. We hit our first million in 1997 and today we're debt free and at $7.6M, excluding the value of our home and condo which would add about another $3M.

I attribute our success to:
1) Being great savers
2) Learning how to be a smart investor
3) Taking advantage of the once in a lifetime DOT.COM bubble
4) Arriving in the USA at a great time when the USA was desperate for missile & aircraft engineers

I'll definitely take a look at it. Books targeted at certain ages are really targeted at achieving certain levels of financial stability (20s - how not to starve, 30s - how not to live paycheck to paycheck, 40s - how to get to a place where the need for money is not completely controlling your job/life, 50s - so you wanna retire someday?) Many people in there 50s need to start with the 20 something books and many in their 20-30s can skip ahead a decade or two...

Hard to argue with any of the ten items on that list.

It is very important to understand what is personal budget and how to deal with is. Saving money and buying a house are good deals but I think it is way more important to be aware of how to deal with financial institutions. People are used to take advantage of lending money and now it is more easy as they can use the service of http://northandloans.ca/ But it is necessary to evaluate the cost of dealing with lenders against the personal budget.

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