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7 Common Mistakes On The Journey To Being Wealthy

7 Common Mistakes On The Journey To Being Wealthy

Wealth has often been used synonymously with being rich. However, the two are not the same. Being rich is only a small element of your overall wealth. When we talk of wealth in this context, we are speaking about the passions, freedoms, experiences, relationships, desires and actions that money can’t buy.

There are so many people in our society today who die in the pursuit of riches, never realizing that they were some of the wealthiest men on the planet. It is obvious that money should be saved, invested and not wasted. However, there is also a certain degree of self-awareness that must be reached to attain wealth.Below are seven mistakes many individuals make in their pursuit of wealth.

1. They spend time on things that don’t align with their true wealth.

According to author Bronnie Ware, one of the top five regrets of the dying is, “I wish I’d had the courage to live a life true to myself, not the life others expected of me.” It’s easy to get caught up in what society defines as wealth: successful businesses, money, power, prestige etc.

In reality, wealth is whatever you value most. That could be family, travel, solitude, adventure etc. However, you have to be self-aware enough to understand what your true wealth is and prioritize that over the labels and definitions of popular culture. No two people will have exactly the same wealth, because not everyone wants the same things out of life. The wealthy will not spend so much time, money and resources on something that is not an absolute passion.

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To redirect your life and focus, take a few minutes to actually write down your wealth like you would a budget. Make sure you are writing down thing you love to do (ACTIONS) and not material things like boats, planes, fancy cars etc. that most people put on their vision boards.

2. They have too many goals.

One major money mistake people make on the road to wealth is having too many goals. In other words, having too many things you want to accomplish is actually a distraction. Mike flint, is a pilot who has flown four United States presidents. He was also the personal pilot of Warren Buffet for ten years.

He asked Buffet for tips on prioritizing his career and building wealth. Buffet told Flint to write down his top 25 goals and then circle his top 5. As flint confirmed that he would start working on his top-five list right away, Buffet inquired about the second list. “It’s not as urgent, so I ll get to it later” He said. To which Buffet replied, “No Mike, you have got it all wrong. Everything you didn’t circle just became your avoid it at all cost list.”

Take a few more minutes and clean up the distractions that you have created for yourself by setting to many goals. Write down your top 25 life goals and circle your top 5. The remaining twenty just became your distraction list. They should be set aside without attention until your top 5 have been accomplished. If not, your lack of focus will cost you in the long term.

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3. They don’t know how to live “Sophrosyne”

To live Sophrosyne is to have a healthy state of mind, characterized by self-control, moderation, knowledge and balance with a deep awareness of one’s true self, resulting in true happiness. Sophrosyne is simply living simply, knowing the difference between wants and need. It can also be reflected in the two most famous saying by the philosopher Plato; “Know thy self” and “Nothing in excess.”

Spending too much on wants is a money mistake seen in the poor and middle class. Most people chase wealth as an excuse to live in excess. They display their insecurities in lavish homes and cars. These things aren’t wrong, but they shouldn’t be the driving force. Sophrosyne should not be confused with self-denial. Make a goal to set aside some money for a splurge in moderation.

4. They don’t pay themselves first

When trying to create monetary wealth, the obvious first step is to create a budget. However, most people don’t truly understand how to write and follow a budget that will create wealth. Most people create a budget either by calculating how much they need to pay for all their needs, wants and bills and still make it to next month, or, they figure out how much money they have to spend that month and budget to spend it all on their bills, needs and wants.

This budget ensures survival, not wealth. To really get ahead you have to create a budget that pays you before it even considers paying a bill or buying a want. You must then pretend that money doesn’t exist. It’s not vacation money or new car money. This is your nest egg and you are going to have to sit on it awhile and watch it grow before it is ready to hatch.

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5. They don’t take risks

So, you have saved a hefty sum and your nest egg is ready to hatch. This is where you are going to have to be very strategic in trying to turn your rainy day savings into a stockpile you could retire on. While saving and not overspending are good habits to have, they can become money mistakes if you don’t eventually put your money to work for you.

Any great capitalist will tell you that the key to creating great wealth is being willing to take a risk. Men like Vanderbilt, Rockefeller and Carnegie are perfect examples of risk-takers. They saw the possibility of a need and even though they knew it came with great risk, they had the vision to know that the reward was greater. These men were driven by a resolution greater than money. For them, creating wealth meant creating a legacy. Money was only a consequence of the actions they took in the pursuit of purpose and passion.

Any investment you make is going to be a risk. However, you can offset some of that risk by learning and gaining knowledge.
“Risk comes from not knowing what you are doing” – Warren Buffett.

6. They don’t understand the value of a reputation.

The dynamics of commerce in our culture today is quickly changing and the wealthy are quickly beginning to realize that your reputation and integrity is legal tender. Gone are the days of stomping on the little guy or back stabbing people on your way to the top. This old way of thinking is a big money mistake.

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In today’s online world, individuals and Businesses rely on reviews and rating when choosing a product or service. When people want to know about the services you provide, they automatically take to the internet to find out what people say about you. In this sense, your reputation is legal tender. One bad review could mean ten lost customers. Two bad reviews could mean twenty lost customers, etc. This means you have to consciously work to develop and sustain good relationships if you want your business or brand to succeed. While you must focus on your daily task to deliver quality products, do not forget that people will go where they feel the most valued. Take some time to build great reviews for your brand or business. Also take the time to work on mending broken relationships.

7. They don’t know how to delegate.

Many people open businesses to make money and be rich. However they never learn how to delegate work. This mistake can tend to be very costly. The wealth that is the freedom of owning your own business is replaced with the stress of thinking that the business cannot run well or smoothly without you.

This way of thinking will ensure that you burn out from stress. Do not confuse delegating work with micromanaging your employees. You must be able to trust their abilities to lead. Find out what the passions of your team are and see if there are any problems within the business that they are inspired to take action and lead change. This system helps you delegate work without ever having to delegate it. You will begin to see more work being done and accomplished around you.
If not addressed, the sum of these mistakes will begin to add up in cost. Take this moment to reflect on your perceptions .Are you on a path to wealth, or have you just trying to be rich.

“The joy and fulfillment found in the process of achieving your dreams and living with passion is often confused with the result of being rich. Do not measure your life’s journey to success with the fickle accompaniment of monetary and riches. Your journey should be measured by the memories gathered, not the receipts; the moments spent in passion, not cash; and happiness shared, not bought.”

Featured photo credit: https://www.google.com/search?q=wealth&biw=1024&bih=455&source=lnms&tbm=isch&sa=X&ei=N_PFVOnkDsSpNsOzgMAK&ved=0CAYQ_AUoAQ#tbm=isch&q=warren+buffett&imgdii=_&imgrc=EzFApNykGWqXWM%253A%3BTDFlL1x4wJ60-M%3Bhttp%253A%252F%252Fonthemoneyradio.org%252Fwp-content%252Fuploads%252F2014%252F10%252Fotmr_warren-buffet_II.jpg%3Bhttp%253A%252F%252Fonthemoneyradio.org%252Ftag%252Fwarren-buffett%252F%3B3000%3B2000 via google.com

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Last Updated on August 21, 2018

How to Pay off Debt Fast Using the Stack Method (A Step-By-Step Guide)

How to Pay off Debt Fast Using the Stack Method (A Step-By-Step Guide)

Whether it’s consumer debt on credit cards, student loans or a mortgage, most people find themselves weighed down by debt at some point in their lives. This can keep us working jobs we hate just to pay the bills and keep our heads above water. By learning how to pay off debt fast you can release this burden and remove some of the stress from your life.

Today I’m going to show you how to pay off your debt fast using the Stack Method:

Step 1: Stop creating new debt

Most people do not receive training in handling money and how to live within their means. If you’re in debt then you’re probably one of these people and it’s time to bite the reality bullet.

It’s going to be impossible to get out of debt unless you retrain your financial habits right now.

You must make a stand against all the marketers trying to take your hard earned money or offering easy finance. You don’t need more stuff to make you happy. What you need is financial peace of mind.

So cut up your credit cards or freeze them. I mean this literally. Put them in a container of water and stash them in your freezer. T

hen when there’s an opportunity to spend, you have time to thaw out (you and the credit cards) and really decide if you need that purchase.

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Step 2: Rank your debt by interest rate

Make a list of all your debt with amounts and the interest rate. The highest interest rate should be at the top as this is what you’ll pay off first.

Paying off your high interest debt is the key to the Stack Method and paying off debt as fast as possible.

Interest is a powerful weapon and right now the bank or other financial institutions are using it against you. Interest significantly increases the amount you need to pay back and often we’re completely unaware of how much that is.

For example, if you have a $10,000 credit card debt at 20% interest where you pay a minimum payment of $200 a month, you will end up taking 9 years and 8 months to pay off the actual amount of $21,680 including $11,680 in interest!

Step 3: Lower your interest rates

You can often lower your credit card interest rates by doing a balance transfer. This means moving your credit card to another bank and they will lower the interest rate to get your business.

Shop around and try to get the lowest interest rate for the longest duration (preferably until it’s paid off completely). Just make sure you’re reading the terms and conditions carefully so you don’t get stung by the new bank in other ways.

Once you’ve done this you can order your list of debt again if things have changed.

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Step 4: Create a strategic spending plan

This is where we improve your financial control from Step 1. Take a piece of paper and write down your income after tax and all the expenses that you have. This will include the minimum payments on all your debt.

Look at your expenses and then rank them in order of importance to you. Look at the items on the bottom of your list and decide whether you’d rather have them or be financially stable. The objective is to create a Strategic Spending Plan where your expenses are lower than your income.

You also decide how much you are willing to spend on each area of your life. You can allocate amounts for rent, groceries, eating out, buying clothes and other activities however realize that once you’ve spent your allocated money there’s no dipping into other areas.

It also helps to have a Fun Account that you can spend on what you like and an Emergencies Account in case your car breaks down etc.

You also want to include in your Strategic Spending Plan as extra amount you’re going to use to pay off debt.

Can you afford $20 a week? $50? $100? $200 or more? It’s important that you get a realistic number that you can commit to each week without fail and this is your Stack Repayment.

Step 5: Create a repayment schedule

The first part of the Stack Method is to cover the minimum payment on every single debt you have. Any time you miss a payment, you incur fees and these add up quickly. This also includes making the minimum payment on the debt with the highest interest rate.

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Then for the debt with the highest interest rate (your Target Debt) you’re going to add the Stack Repayment from your Strategic Spending Plan. You apply this Stack Repayment and the minimum payment until that debt is paid off in full.

As your official minimum payment decreases, you add that extra amount to your Stack Repayment. So as your minimum repayment drops, your Stack Repayment increases equally. This will compound how fast you pay off the Target Debt by adding even more to the repayments you’re making.

Step 6: Reward your progress

You want to track your Target Debt so you can see your progress along the way. You can also decide on milestones that you’re going to celebrate and reward yourself on.

A reward doesn’t have to cost money but if it does then it comes from your previously allocated Strategic Spending Plan.

This is an important step as it will keep your motivation going when you feel your willpower fading.

Just like you’ve trained yourself to brush your teeth and shower, you can train yourself to manage your money. Feel great that you’re now entering the 10-,20% of people who are actually responsible with money.

Step 7: Compound your results

Once you pay off your Target Debt, you have a huge celebration and congratulate yourself. Then you move the Stack Repayment (which includes the previous minimum payment as well now) to the next debt with the highest interest rate.

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This becomes the new Target Debt and you are using your Stack Repayment amount plus the minimum payment for the new debt.

This is why the Stack Method is so powerful. As you decrease a debt you actually increase your Stack Repayment amount. This means the second debt will get paid off even faster, the third even faster than that, and so on and so on until you are completely debt free.

Step 8: Be kind to yourself

During this process, your resolve is going to be tested multiple times. Maybe you’ll have an emergency like your car breaking down or the need to travel for a sick relative. The important thing is to not throw up your hands in despair while going back to your old habits.

Life will test your commitment to your new responsible money attitude and it’s up to you how you respond. When things go wrong (and I guarantee they will) you need to shrug it off and get back on track.

Show compassion when you accidentally go over your Strategic Spending Plan and decide to do better next week.

The bottom line

The Stack Method is a powerful tool but it’s up to you whether you use it.

If you really want results, then bookmark this article immediately and start working through the steps.

It’s only by the decision you make right now that you will enjoy a debt free future and live a financially responsible life.

Featured photo credit: Unsplash via unsplash.com

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