This month the focus of Planting your Wealth Tree Part 2 is eliminating your long term money worries and further generating that ‘feeling’ of financial security.
Hopefully by now you have set up your ‘90 Day Reserve’ account that we discussed last month and started your direct debits to start building your ‘cushion’.
Just to recap.. Last month we opened up one transaction account that will grow your money on auto pilot and serve the purpose of creating a ‘cushion’ and the reason we do this is so you will start generating a ‘feeling’ of financial security.
Planting Your Wealth Tree Part 2
This month’s Planting your Wealth Tree Part 2 is all about continuing to build on eliminating your long term money worries and further generating that ‘feeling’ of financial security. The vehicle this month is your Debt Detonation, Dreams & Projects and or your Money Mastery accounts.
Planting your Wealth Tree Part 2 cont
The 70/30 Money Management Rule
This rule goes back to the Ancient City of Babylon some 5,000 years ago which back then was one of the richest cities in the world. It basically said for all money flowing into your household 70% would be allocated to your lifestyle/living expenses. As a result, 30% divided up into your 10% Pay yourself first account (90 Day reserve for now). The balance of 20%, into to debt reduction which we will call ‘debt detonation’. In other words were going to BLOW Up your debt!
What happens when you have completed that you ask? Well with 70% to live on and 10% for paying yourself which we want you to keep building your ‘Mastering your Money’ account. Then we need to allocate something towards things that inspire you. Perhaps, Dreams and Special Projects you wish to plan for. As such allocate that 20% evenly across dreams and special projects. For those that want to allocate something towards dreams and special projects regardless of debt reduction lets meet 50/50 and allocate at least 10% towards debt detonation and 10% towards your dreams and special projects.
I understand totally that debt reduction is flat out boring. I also get that you have to have inspiring things to work towards but there is something special about having no debt. Debt in all forms such as loans, credit cards, mortgage.
It is wise to work on your smallest debt first (obviously pay your mortgage whilst doing this). When that is extinguished, work on your next debt. This could be another credit card or personal loan or extra mortgage repayments. And if you choose, adding funds towards ‘dreams and special projects or your money mastery’ fund at the same time.
Planting your Wealth Tree Part 2 – TIP 1:
Once you have reached the no debt status, you can go and tell your bank manager thanks for the loan but I don’t need you anymore. Thanks for trusting me to repay my debt!!
Some may refer to it as the ‘ARGO’ status, telling their bank manager to ARGO ‘%#@!’ themselves. If that feeling of complete freedom has taken over and gratitude was forgotten for a moment… just remember to grab your title for your home first before doing this, if you decide to take this course of action though! ;-))
So let’s look at what we have here. A Lifestyle/Living Expenses Pot for 70% of your Income, in addition to your ‘90 Day Reserve’ (cushion) account.
Planting your Wealth Tree’ Part 2 – TIP 2:
Choose 1-2 of these to start working on:
Debt Detonation Pot for 10% of your Income.
Dreams and Special Projects Pot for 10% of your Income.
Money Mastery Pot for 10% of your income working for you – Re-Inspirement lifestyle.
Remember, this is all about Focus and Discipline. Having a PLAN. But it must be made easy by automating the action through your set and forget direct debit function. This takes away any emotional ups and downs that may come up while putting money away.
Ok, that is Planting your Wealth Tree Part 2 complete. Decide what accounts need to be set up and it’s your job this month to open your new accounts to ‘detonate debt, or set up your ‘dreams and special projects or ‘money mastery’ account.
P.S. Once one account becomes obsolete (you have reached your goal) then that account gets transformed to accelerate your next reserve account – eg Dreams and Projects or your Money Mastery account further feeding your opportunity for a fun and ‘stress free’ retirement.
Q: Can you share it?
A: Yes, but… only with the friends and colleagues who care.
My mentor taught me, “Have conversations that matter with people who care.”
THIS is a conversation that matters.
Now you pick the people you think care.
Send those special people here