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Your Money

Switzer's rich guide

The first question you have to ask yourself is: “Do I want to get wealthy?” I don’t mean Frank Lowy rich, though it would be nice. I mean to live in a house you are proud of, to be able to help the kids, take great holidays and retire comfortably.
Fix yourself
If that sounds like you, then let’s start with the ‘thing’ that you have to fix up first – YOU.
Psychology magazines say 95 per cent of us are procrastinators. We look for diversions, such as spending time on personal emails, cleaning the house, reading newspapers or watching DVDs. And around 15-20 per cent of us are chronic procrastinators!
Set daily goals
The great sportspeople I’ve interviewed say you have to see your goals every day to ensure you make them happen. Use the screen saver on your computer, write them on your daily diary’s front cover or use the old toilet door trick.
Try these ones
Write a simple note, which could read: “Work out what you want. Find out the price. Pay the price.”
You could make it more direct: “I want to get wealthy. I need a wealth plan. I need to stick to it.”
So, what are your goals? They have to be written down. The big sweeping ones might be to buy a house, bump up your super, buy an investment property or have overseas holidays every three years. Whatever they are, they should be written down, costed and compared to your expected income and cash flow over time. This is why a plan is so good and essential to making wealth outcomes happen.
Set your sights high
Here is a list of money goals you might have:
  • Buy a house
  • Get married
  • Buy a car
  • Crush your debt, especially your credit card
  • Take an overseas holiday
  • Manage school fees
  • Cover for insurance
  • Buy an investment property
  • Borrow to put a share portfolio together
  • Start a small business
  • Build up your super so you retire on $100,000 a year in retirement, adjusted for inflation
  • Retire at age 50
  • Sail around the world with your young family.
Where’s your pen?
I might have missed your money or wealth goal, but my best advice is to write it down. Tom O’Toole, the guy who started the Beechworth Bakery chain, always says: “If your goals are not written down, they aren’t on the planet.”
And remember, they must be where you see them everyday so you keep focused on it.
Help is at hand
The next step is to understand where you are now and the first step is to do a budget. Go to the FIDO budget planner on the ASIC website and you will find a template for doing a budget.
This will tell you if you’re saving or going deeper into debt. It really can be scary and many people run away from it. Face the truth if you want to be wealthy.
 Make it real
Now you should work out what your dreams or goals will cost.
Let’s imagine it is to buy a house. Then you need to pick an area, get a price, check out how much you can borrow and if need be, pick a cheaper area. Homework is essential to find an area that you can afford and where you want to live.
If your income and lifestyle, as shown by your budget says: “This house is not going to happen!” then rethink your goal. You could get a second job or you could stay with the folks and buy a house to rent out and cop the tax deductions.
A positive story
I came across a 30-something army officer, who has army-provided accommodation and has five rented properties. He pays no rent and he learnt how the tax system can help him own a house or two or five!
This could only happen if you know your cash flow position and you then talk to an accountant or a financial adviser or you do some reading on the tax advantages for landlords.
Get on top of you!
Early on, I advised that YOU are your greatest threat to getting wealthy. The great Aussie runner Herb Elliott says that we have a “little voice” that wrecks all self-improvement goals. It stops you from doing diets, going for runs or to the gym on cold mornings and doing the really hard jobs.
It’s inside your head and it has to be silenced to get ahead.
Switzer’s guide
This is my guide for killing the little voice:
  • Write down your goals
  • Cost the goal
  • Do the budget to see where you are at now
  • Draw up the plan to make it happen
  • Make the changes to ensure your goals come true
  • Put the goals in a place where you see them every day to make sure you stick to your plan.
You have to stop being a chaos merchant and a procrastinator. If you do your plan, it will put you on the road to riches.

 

Published on: Saturday, July 18, 2009

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