The actual way to get rich (enough)

Recently I shared a parody post on how not to get rich – and it made me think if I’d share this advice with you. Because I tried to explain it to friends and people I’ve met and often they lost interest halfway. It is a bit of a secret though and it will actually work, and make you rich (enough). But it does involve things people really hate, like discipline, some hard work and investing in yourself (instead of worthless nonsense). So, ready to learn the secret about how to actually get rich? Allright, here we go!

What does rich mean to you?

First a note: If you want to become superrich and own a superyacht I’d suggest you buy lottery tickets and hope for the best. Or go back in time with the knowledge you have now and buy bitcoin. Rich is a subjective definition and I will go with the idea of having as little financial worries as possible, living a life where you can reasonably do whatever you like. You’ll probably work, but because you want to and because it helps you get more free time and comfort in your life. You could probably do without for a while if you wanted to. A personal note: I see being rich mostly as having time – as the most valuable good.

Invest to get rich

If you’re active on any social media platform it’s virtually impossible not to see advertisement, or influencers, telling you to ‘invest’ to get rich. The outlook of having wealth so you can afford luxury is appealing to many and the social concensus apparently is that you can only be happy if you’re wealthy. This investing thing implies you have money and use it to make money. This is basically a skilled job – investment, where many companies hire expensive experts for to do it. Assuming you can become a successful investor in commodities, stock, crypto or let’s say real estate this advice is somewhat amusing. And if you dive a tiny bit deeper you’ll see that the people telling you how to get rich, are not rich themselves. They’re selling a dream they don’t believe in, but achieve by asking for your money instead.

Investing in my boring success story is about you. Invest in you: learn, read, try and fail. We must study, get better jobs or even take the leap to become self employed. But only if we know what we’re doing. Risk taking is nice, but our live is not a zero sum game – and by dosing the risk and changing the odds to your favor is giving you way more chance of success then just blindly trying to do what other people that probably just got lucky did.

So find out where you can actually improve your financial position with by investing in yourself rather then setting hopes on some scheme you found online. I studied quite a lot in separate instances and got my master while already working fulltime. It was then that I realized that being a student is actually pretty awesome 🙂 Studying paid off for me, for example. I just finished paying my study debt after 15 years – talking about investing.

Make a plan, plan, plan…

A lot of younger people (I’m just over 40) tell me that they feel like they have no chance in this world: high housing prices, relative low salary increases, a world with inflation, climate change, the wealthy getting wealthier – pretty grim and negative. My starting point was not that different, but not the same either. What is the same is that you should realize that without a plan, you will achieve little. Use time to your advantage. Start small, use your gains to your advantage. Don’t get distracted by expensive bullshit, like branded stuff or things you’ll buy to impress people you don’t even like. Live a nice comfortable life.

My plan focusses on lowering the cost of living for starters. I’m a strong believer in a debt-free live. This goes against all the influencers and wealth-guru’s who claim you should have a lot of debt, use the money to invest and get better return on investment. I’m going to be honest with you: I’m not an investor. I do not have the stomach for it and I do not have the skills for it. I might even suck at it. So lowering my monthly costs has been my goal for the last decade. The 10 years before that I had no plan and made little progress, most was done in the last 10 years for me. So even if you start today, there is always a plan.

Find out your biggest monthly costs and figure out how to lower those. I did a lot of down payments on my mortgage to lower monthly costs and use this money to do more down payments. Every time your mortgage becomes smaller, your costs go down. I’ve done this for a lot of my costs – switching insurance, getting a better deal on the internet connection, you should enjoy saving money. 5$ a month is 60$ a year. I always congratulate myself with saving that after spending 15 minutes on renegotiating a year extension for something. Not often I earn 60$ in 15 minutes.

After doing this for a decade I have change my Loan To Value (LTV) from 120% to around 40% and lowered the montly costs for the mortgage with around 75%. And I have renewed my mortgage for another 30 years with the current superlow interest rates so I know I can afford this house for decades to come.

In theory I can now afford a much larger house and move to a even spacier place, with a higher mortgage. But I won’t. I explained earlier that I like time. I don’t need to work as much as I did, and I improved my positions the last decade with becoming self employed. Something I do have the stomach for, and makes it a bit easier to get to my goals. But if I wouldn’t do it like this, I could have the same plan but take longer to get to my goals.

Basically my plan is to reduce cost of living, so I won’t need a lot of income. A lot of advice would be to find ways to invest so I can have more income based on investments, but like I said – I’m not that great in this and I will keep my eyes open and learn about it, but my approach is simple, effective and safe. No risk involved, low mortgage, costs of life and I can do with like 2 days of work a week to have a nice life. That’s rich to me.

Easy does it

I’ve read several books on this topic and even from people that went all-in and saved everything, never got on a holiday, just to get all of their debt out of the way. I’m not against debt, I even think it can help in getting a better lower cost of living and be part of the plan. And let be honest, who’s going to buy a house after studying with their savings. One of the things that I think made the difference is the concept of ‘easy does it’. I lost a dear friend when I was around 20 and it made me feel vulnerable. Impermanence, life will end, and you’ll never know when. So living your live right now is more important then focusing on savings for later. My plan did allow me to go on holidays, go out, have dinner with friends, buy stuff I don’t need sometimes and drive a car. I did however drive cars from around a decade old from a premium class. I don’t do a lot of mileage and I like a premium car, even if it’s old. After 4 years of being self employed I bought a pretty three year old second hand car, and I still have it (it’s now 7 years old). Driving a newer, expensive car, would not help me in any way. I don’t care, the write-off is always much higher then I have on maintenance and even worse, many people choose to get a lease increasing their monthly costs even further. My cars where bought by money I saved.

So the two outliers: saving all vs spending all – find your way, easy does it. Enjoy lowering costs and enjoy life.

Stick to the plan

The truly wealthy self-made people always come up with the same few things they always did: invest in themselves, make plans and stick to it. They often own little: Musk selling his house, Warren Buffet still living in the house he bought in 1958. They don’t care about what people think of them. They don’t need to own expensive crap. Imagine that: having ALL the money in the world, but not in need of buying more, bigger, better. They know it does not make them happier – something many people won’t find out in a lifetime. Even though they where able to acquire this amount of wealth in a lifetime, most probably won’t get that either. I don’t expect me to get that rich. And why should I. Owning little, having time, becoming rich was never so cheap. So stick to your plan, let it work for you, use time in your advantage. It took me a decade to come here and I’m now in the process of thinking about my next steps. I’m not sure yet, but I’ll figure it out. I think I might retire in 10 years. Or be in the position I could if I wanted. Imagine that. Dream. I’m gonna be truly rich – by having all the time in the world.

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