How To Save $100,000

By Michael Hooper

Today millions of people around the world are suffering from too much debt and no liquidity, no cash, no reserves.

But with perseverance and dedication it is quite possible to pay down debt and save $100,000. This goal requires a lifestyle change. A hatred of debt and a love of savings. A desire to work overtime, or take a second job, to earn more money to pay off debt and save money. A willingness to do without, to sacrifice now, so you will have it easier financially in the future.

There comes a time in everybody's life when they face choices -- tough decisions, a crossroads, a line in the sand. It is at these crossroads we must decide how we want to live. I once came to the crossroads when I carefully examined my credit card bill and realized I was paying $44 per month in interest. This was $44 going to the bankers on a $2,000 debt. A light bulb came on, I decided I'm not going to take this anymore and I sent $200 per month to the credit card, and paid off the debt in 11 months. I vowed then never again to work for the bankers. They are going to work for me. How do we make the bankers work for us? Save money and earn interest on our savings accounts. Indeed, open multiple accounts, checking accounts, savings accounts, brokerage accounts, individual retirement accounts and participate in the 401(k) at work.

The checking account is a temporary holding place for money, it will never grow, somehow all the money in the checking account is spent. So when pay day comes around quickly move money out of the checking account into these other accounts. 

Downsize to upsize. Develop good habits that produce health, wellness and savings, a way to live below your means, the ability to save 10% or even 20% or 30% of your take-home pay.

Here are 10 steps to save $100,000.

1 Take a hard look at your budget and find a way to cut your expenses so you are living within your means, your take-home pay. If your take-home pay is $2000 per month, find a way to live and operate with $1800.

2. Open up a savings account and deposit money into this account every payday. Pay yourself first. Even if it is just $50, this is your personal private paycheck.

3. Open up a brokerage account at Charles Schwab or Ameritrade. This brokerage account will be a tool to achieve  retirement. Save money every month into this account. When you have $1,000, purchase shares in a Standard Poor's 500 Index Fund or ETF, a popular ETF is SPDR S&P 500 ETF Trust (SPY). The S&P 500 index funds and ETFs have low expense ratios and are easily purchased or sold with lots of liquidity. The S&P500 is the standard by which large cap mutual fund managers are measured, but most cannot beat the index. So why not invest in the index?

4. Participate in your company 401K. If the company has a match of 5% of your pay then you should put in 5% of your pay. Because this is a double your money program. You can't beat free money. Put all 100% of your contributions into your 401k into the S&P 500 Index. Its returns average about 10% per year. 10% is a fair return, Using the rule of 72, 72 / 10 equals 7.2 years to double your money.

5. Acquire quality things at fair prices. Don't buy frivolously, never borrow to buy anything, don't binge shop.

6.Don't gamble your money away. Don't waste money on lottery tickets and gambling machines, I never won. Chances are you won't either. I know people who spent hundreds of dollars per month on gambling and could have easily turned that into tens of thousands or even hundreds of thousands of dollars over time if they would have put the money into the stock market at the same regularity they put money into gambling devices and lottos.

7. Live a lifestyle that produces wealth. Live frugally, watch expenses and save money every day.

8. Race to pay off debt. Send extra payments to credit cards to quickly pay them off and never use them again unless you pay them off at the end of every month, to avoid interest and penalties. After all credit card debt is paid off, then send extra payments to your mortgage on your house. Pay off your house quickly, you'd be surprised at how much a little every month will add up to a lot over several years and cut down your term of your loan substantially. We paid off a 15 year loan in eight years by sending extra payments every month.

9. When you finish a series of debt payments, send the amount of the monthly debt payment to your brokerage account. Build up your brokerage account into a substantial amount of investments.

10. Follow these guidelines every day for one year and you should have an increase in your net worth. Do this for many years and you will have $100,000 or more.