Who wouldn’t enjoy having a cool million to their name? J. Money over at Budgets are Sexy is one of the most entertaining personal finance bloggers that I regularly read, and has established a “Million Dollar Club” for anyone who has “dreamed about becoming a millionaire – and actually want to DO SOMETHING about it.”

I’ve been thinking about joining for some time now and thought, “what the hell, why not today.”

From what I can tell, it looks like J. is only counting cash, thus leaving out the value of his home.   (Maybe you can clarify when you get some time J.?)   My only problem with not including our home in the calculation is that my new million dollar goal is going to compete with another important goal of ours, to be completely debt free including the house in 7 years.  Because I value the peace of mind that debt freedom brings over obtaining $1,000,000 in cash and investments, it will just take a little longer before officially reaching J’s million dollar mark. I guess it’s really a moot point since I’ll eventually reach the “Million Dollar” goal (God willing), regardless of how it’s calculated.  So with that in mind, drum roll please…

My Millionaire To-Do List:

1. Continue to Contribute 15% of our Gross Income to Retirement Accounts (until #3 is completed)
2. Completely Pay Student Loan Debt by 4/1/2010 Leaving $0 in Consumer Debt!
3. Completely Pay Home Mortgage by 12/1/2016 – DEBT FREE!
4. Max Out Roth IRA For Both of Us After Contributing Enough in 401(k) To Receive Match – beginning 1/1/2017
5. Max Out My 401(k) – beginning 1/1/2017
6. Establish Multiple Streams of Income Through Rental Property or other Part Time Ventures – starting now!

To be honest, I’m not sure I can even guestimate the day I’ll officially complete the million dollar goal.  But I know it will be sooner rather than later thanks to J. providing an open forum enabling me to post my goals for all to see!  Feel free to track my progress at The Broke M.B.A. under the networth category.

Would you like to drive free cars for the rest of your life?  And what if I told you that you could become a millionaire while doing so?  According to a plan entitled, "Drive Free, Retire Rich" on Dave Ramsey's website, you can do just that.  Interested?  If you are like me, then I bet you are.  Who wouldn't want to drive a different car every 5 to 6 years without ever making another payment?

The first time I viewed this video I was so excited and inspired that I made my wife watch the video with me.  I sent the link to my family, and I even posted the link on my personal finance class discussion board for my classmates to view.  The video assumes that by making a car payment to yourself every month for 6 years and investing it in a mutual fund earning 12% each year, you will be able to purchase new cars off the interest earned in the fund.  It assumes that after the first 6 years of payments, you will never again have to touch your principal investment, or have to make another payment and still purchase an $18,000 vehicle every 6 years.

I first viewed this video during the summer of 2008, almost one year ago to the date.  Things sure have changed since then.

Although it appears we have rebounded from the market's bottom, the majority of investors watched their portfolios lose 50% of their values during the past 6 months to a year.  What if you had begun paying yourself that car payment, let's say $500, every month beginning in January, 2003?  You would have invested $36,000 by January, 2009.  Now if your investment had actually grown 12% for 5 1/2 years, then your total investment would have grown to $46,423!  Awesome.  But we all know what happened during the fall of 2008.  For the sake of simplicity, let's assume like many, your portfolio was roughly sliced in half by January 2009, the time when you are supposedly able to make your last car payment and drive free cars for the rest of your life.  Your balance would have fallen somewhere in the $20,000 to $25,000 range.  Now this would enable you to purchase your next car, and you will never have paid a dime in interest to the bank.  However, you would have been sorely dissapointed once you realized that you would have to continue to make car payments to purchase your next vehicle, even if the payment is to yourself. (Assuming your purchase price is near $20,000 as illustrated in the video.)

I do think this is a great idea, and one that my wife and I are working to implement.  But you must keep in mind that if something sounds too good to be true, it probably is.  This video totally ignores the risk involved when investing in stock mutual funds.  Many financial experts recommend keeping any money you will need in 5 years out of the market, because of the risk involved.  This is something to keep in mind when considering if this plan is right for you and your family.

What are your thoughts on this idea?  I would love to hear what others think regarding this one!  You can view the video here.

Why does society begrudge those that are successful and wealthy?  After all, the majority of the wealthy are first-generation rich.  In other words, they did not inherit their money, they earned it.  You might also be surprised to learn that the wealthy are often compulsive savers and investors.  They did not just wake up rich one day, the majority sacrificed for years to accumulate their wealth.  The truth is, anyone with a steady income and a little luck can become wealthy one day.  It is not complicated.  In fact, it is very simple.  Here are three basic steps that will set you on the path to financial freedom.

Spend less than you earn
Above all else, you must adhere to this one.  It will be impossible to accumulate wealth if you are spending more than you bring home each month.  The only way to spend more than you earn is to borrow money. If you have ever listened to Dave Ramsey or been in significant debt, then you know the dangers associated with borrowing. 

Invest 15% of your income for retirement
There is no better time to begin investing than today.  The more time you have on your side, the greater effect compound interest will have on your savings.  Be sure to take advantage of any retirement vehicles and matches that might be offered by your employer.  You should also check out a recent post by G.E. Miller at twentysomethingfinance.com to brush up on a change about to take place regarding your 401(k).

Save 10% of your income in an "I made it big fund"
As long as you are spending less than you earn and saving 15% of your income for retirement, you should strive to invest another 10% of your income into an "I made it big fund."  I first read about this concept in a great book entitled, "The Wealthy Barber."  This is the fund that you are supposed to tap to buy your dream home by the lake or vacation property in the mountains.  Make sure you invest this money for the long term by placing it in a mutual fund or possibly even real estate.  The main point is this, by taking 10% off the top of your income now, you should have a nice fat sum at your disposal one day, hopefully well before you are ready to retire.

Of course, you will need to make sure you are following a written budget in order to figure out where your money is going.  But once you have control of your spending and income, it really is quite simple to build wealth. There are two well written books that cover this topic in detail.  I reviewed the first book, "The Millionaire Next Door" by Thomas J. Stanley and William D. Danko, as part of my book review series.  The second is "The Wealthy Barber" by David Chilton.  I'm looking forward to reviewing this book in January so please be sure to return soon!