About My First Million

How hard is it, really, to make a million dollars?

I’m not a financial expert, which might seem strange since I’m writing this blog about how I’m planning on making a million.  But that’s just my point – I want to see how well I progress, keeping on track with advice of financial gurus of today.

A normal person should be able to learn and implement the advice of financial experts, until one day – I have a million in the bank!

On the other hand, I’m not money hungry.  And I certainly wouldn’t pimp myself out to make a few dollars.  What I am willing to do is work hard.  Harder than most, I think.

The most important part, in my opinion, is the plan.  It’s pretty obvious that unless you win big in the lottery, it takes a lot of effort,  dedication and focus to get your goal.  I certainly won’t get there with my eyes closed, hoping for the best.   Here it is:

THE MILLION DOLLAR PLAN:

Background

I am 25 years old with a university education, a lot of professional training, and a few assets.   I’m a mid-level Human Resource Manager with a really stable job, and I make just under $60,000 a year.  My husband is in the aviation industry, and gross’ just under $65,000.  We’ve got no kids – that’s a HUGE cash bonus.  We are established in our careers, but we don’t have any cash in the bank…

Home Ownership

My husband and I just bought a house for $254,500 with 5% down, and we expect the value of our home to increase in the next few years.  We know we will move within 5 years, so we don’t have the advantage of a really long-term mortgage pay down, but we hope to sell for a tidy profit. That said, in the spirit of Robert Kiosaki and Sharon Lechter of Rich Dad Poor Dad, I don’t really consider the house an asset.

Why not?  Well, we haven’t paid much down on our mortgage, so we don’t really own it yet.  We’ll own it in another 20 years, if we keep paying every 2 weeks.  To me, it’s the ultimate example of an “asset” that you have to keep shoveling money into to own.  You only make a profit from it when you don’t own it anymore!

Business

Home-Based: I started it myself 6 months ago, and it’s not making a profit right now. That sucks.  But my overhead costs are non-existent, and clients are snowballing in.  So, I can honestly forecast a profit of $15,000 – $25,000 extra income a year, within 18-24 months.

Other:  I plan on investing in business ventures that are profitable, and low-risk.  Franchise opportunities are very interesting to me, and they appeal to the businesswoman in me.   This will have to be a future project, because franchise fees, and the capitol required to start one is above what average earners can afford (or borrow).

Rental Property

With either the profits from my home-based business, and/or my personal savings, I will invest in rental properties.  My ballpark figure is a $125,000 – $140,000 duplex, the dividends from which will be used to pay the mortgage on our current home.

Investments

Current investment portfolio is zero. This will grow with every paycheck.  For the longest time, I didn’t see the difference between this, and my RRSP investments.  Then, I re-read Smart Women Finish Rich, by David Bach. Now I know, the difference is critical.

RRSPs

Automatically withdrawn on payday, 12% of my basic pay. It’s the smartest way, it’s really the only way.  But alas, all of the savings I had accumulated through my RRSP contributions over the last 3 years were used to make the down payment on the house. So now I start again.  But if I could do it once, I can do it again.

In short, I don’t necessarily want to be making $1,000 000 a year income, but once I make it to that $1 million mark, the residual income will be enough to grow exponentially.

All thanks to the phenomenon of compound interest.

Yours Truly,

J.