A fun little thing that J. Money over at Budgets Are Sexy started was the Million Dollar Club. Essentially all you have to do to join the club is write a millionaire “to do” list. This should include realistic goals that will help your net worth reach a million dollars.
If someone told me they didn’t want to be a millionaire, I’d tell them they are lying. A million dollars isn’t what it used to be, but it’s still a lot of money to most people (I know it is to me!). As someone who on paper has a negative net worth (those dang student loans!) a million dollars is as good as any goal to reach for.
When I think of being worth $1 million, It gives me a sense of security that I have money behind me to deal with unexpected (and catastrophic) situations. I may be a bit more paranoid than most (which is why I make a great accountant), but I think everyone wants to have that kind of security.
So here goes nothing…
In order for me, DC, to become a millionaire, I pledge to do (and/or work towards) the following:
- Contribute 10% of my income to my 401(k)
I’ve been doing this for about a year and half now and I’m glad I did. If you start at 10% or higher from the get-go you really don’t feel the pain of a lower paycheck. It’s nice to know I have money set aside for when I no longer am able (or want) to work.
- Pay off student loans consistently
This is the big item on our list. It’s a large chunk of our monthly expenses and the reason we have a negative net worth right now. The day we have all our school loans paid off we will be having a HUGE party.
- Make (on average) $1,000/month on the side
Making money is not the only reason I started this blog. In fact, if you start a blog solely to make money you are almost certain to burn out before you turn a profit. It is true, however, that blogging can bring in side income. Beyond that I also have done some Excel/Google Docs consulting work for a small business. I enjoy doing that and hope to be able to do some more side projects of the sort. I’m not opposed to making money on the side doing something like delivering pizzas, but if I can do something where I can learn and refine skills I will always choose that route. Overall $1,000/month side income is a realistic goal and this is where student loans serve as an excellent motivator ; )
- Max out my HSA
I’ve advocated the HSA before and I’ll do it again: it’s an incredible tool that I recommend people take advantage of if given the option. I hope to put in the pre-tax maximum starting next year (I only did about half the pre-tax max this year…) to gain the full tax benefits the HSA offers. This is similar to the 401(k) for me, in that if you start putting money in as early as possible in your career you won’t miss the funds.
- Participate in Employee Stock Purchase Program
So this is how my company’s Employee Stock Purchase Program (ESPP) works: before the six month accrual period begins you pick what percentage of your paycheck you want to go towards the program (maximum of 10%). At the end of the six months (for simplicity let’s say January 1st to July 1st), they take the accrued amount and purchase the lesser of the two stock prices at a 15% discount. You are guaranteed to make a return of 15%, but if the stock rises your gain is basically unlimited. It’s amazing that some people opt out….but that rant is for another post.
- Buy a house so that we can start building equity instead of paying rent to a landlord
Until recently, my wife and I did not plan on getting into the housing market. Our reasons were that she may end up going to graduate school in a state other than Minnesota. After evaluating a number of things, we decided it’s best to get in the market now before rates are hiked and values start rising (I’m more worried about the rates; personally I think values could stay stagnant for at least a few years). The plan is to rent out the house if we have to move, and we are confident if we have this possibility in mind when finding our first home that we should be able to do just that. Anyway, the real benefit of home ownership is that we can start building equity instead of paying a landlord.
- Open up an IRA
Been meaning to do this for a while, but we have house and car purchase coming up and not a lot of cash to spare. Similar to the logic of the 401K, HSA, etc.: stash away money, watch it grow.
At a later date I will provide an update on how we are doing, but for now I’m interested in hearing: do you have a plan to become a millionaire (or some other predefined or not defined savings goal)? What are some of the steps you take to move towards that goal?