There really are only six things you must get right when creating a financial plan:
- Set your goals
- Protect against bad things
- Prepare for the future
- Enjoy the journey
- Give back to society
- Execute your plan!
Each step is important and I encourage you to do them in order. In this article, I will focus on step 4, which is enjoying the journey.
Enjoy the journey
Until you hit $250,000 to $1 million of assets, your financial life can be extremely simple.
- Follow my path to building wealth.
- Strive for a perfect credit score.
- Rent or lease the things that you want and need (home, car, boat, etc.).
Maximize your life
As long as you are saving 20% of your income, you should enjoy the rest. I can guide you to get the most out of your money.
- Renting is a great way to enjoy most anything, have limited downside, and tremendous flexibility.
- Sometimes we prefer to own. As long as you are borrowing the right amount the right way, borrowing is a powerful tool to help you get the things you want and need.
Read below to learn more about how to use borrowing as a tool in your financial plan.
For those who prefer to own or are already borrowing money
The key to feeling wealthy is to live in a smaller house than you can afford. Consider no more than 35% debt to income ratio. Once you select a conservative house, follow these steps:
- Minimize your down payment.
- Only make the required payments.
- Save the rest.
This assumes your interest rate is under 5% and you are following the rest of my plan. Avoid paying down a mortgage and then taking on other, more expensive, forms of debt.
For those who prefer to add in a sophisticated approach
Wealth management loan
All of your borrowing outside of a mortgage should be through a wealth management loan, which is a line of credit against your investment assets. Part of the benefit of building up an investment portfolio is the ability to access this low-cost form of borrowing.
With a wealth management loan you can buy most anything at rates under 3%. I cover the power of this solution extensively in my guided path.
For more information on how you should use borrowing as a tool in your financial plan, check out my guide to borrowing.
Continue on to learn the importance of giving back to society.
How may I help you?