It took 31 years of my life to reach the first million invested.
I reached the mark of R$ 1 million reais invested or (U$303,000). House and car cleared, no mortgage.
For many, many years, working, studying, contributing, living with much less than I could, renouncing the small pleasures of life to achieve a greater goal. This mark was not easy.
I finished college in 2009 and now only 8 years later I reached this mark.
Dividing into simple account are R$ 125 thousand reais (U$ 37,878) of contribution per year or R$ 10,416 per month without interest (U$3156).
The truth is that I came to a million more with work than with investment income, today seeing was only 10% interest and 90% work.
First of all, I write this post to show with an ordinary person and poor family can become a millionaire. My parents never had a car until I finished college. We almost always live for rent. We never traveled on a family vacation or even to another municipality. The situation in my house has always been difficult, as difficult as sometimes not have the money nor to buy a yogurt. It was coffee and bread/margarine.
It is necessary to say this to put an end to the false idea that those who come from below can not rise, that it is necessary to have rich and/or middle-class parents to grow in life, that it takes educated parents, a caring family, good food, internet, car, leisure, language courses, sports, musical instrument, ballet …
At college, I lived with less than one minimum wage per month, I used to ride a bus, I had lunch with 8 reais (U$2,5) and free juice or at my friends’ house.
If you, like billions of people in the world wanted to know the “secret” to become a millionaire, I could tell you that there is no secret, you’re going to have to make your way. Each person is a unique creation of nature with its set of experiences, beliefs, attitudes, dispositions and values. And each of these attributes blends in with others and shapes the person you are.
Five things helped me a lot on this journey, it may seem like a commonplace, things you read about, but it’s not:
1 – Optimism
2 – Virtuous life
3 – Study and work
4 – Investing and learning Finance
5 – Simple and frugal life
For the last thing. Understand once and for all that there is no sum in the real world. Everything is multiplication.
The beauty of mathematics is to have only one operation.
5. Simple and frugal life
You may find that personal spending makes no difference in the way of the million, but they do YES.
You get rich with what you DO NOT SPEND. Every dollar spend is a soldier lost in battle.
I’ll tell you how I made a LOT of money in not having certain things or not spending on certain things:
I DO NOT HAVE A CAR OF R$ 100,000.00 (U$30,000) (people who earn much less than I do, have very expensive cars and still pay interest for this). If in case I had a car of 100 thousand, I would have 900 thousand invested today and not a million.
I DO NOT HAVE A CELLULAR OF R$ 4000 (costs of an iphone in Brazil), my cell phone cost me R$ 999,00 (U$300). And it looks great. People change an average of 36 months a cell phone. It would be 2.5 iPhones in 8 years, it’s R$ 10,000.00 (U$3300) of cell phone and stupid accounts.
DO NOT TRAVEL 2x per year abroad. Each trip of these costs at least about R$ 5000 (U$1515) per person on average. If you spend R$ 10,000 (U$3030) per year traveling in 8 years would have spent R$ 80,000 (U$24,240)
I AM NOT A RETURNED TOURIST FROM INSTAGRAM AND FACEBOOK.
I DO NOT BUY ANYTHING OF LUXURY OR GRIFE. All mine is the best cost. Grife does not add anything to your equity.
Only up there gave more than R$ 190,000.00 (U$57,575) just to illustrate the situation.
I kept my costs low during this time.
Nowadays my standard of living is almost the same as in university time, with the difference that I do not pay more rent and have a used car, besides almost everything the same, I usually say that I am a “university plus”
You have to understand the cost of things in life (money spent that does not earn you interest). Every lost dollar is a soldier in the war. Every penny saved is a penny earned with interest.
Money has a value in time, R$ 100 today investing in a fixed income for 25 years is worth about 350 reais at the end, in today’s terms, it is a pure and simple multiplication of money catalyzed by compound interest, the eighth wonder The world according to Einstein.
I went from 18 to 24 with no cars (I did not have the money to buy one, it was not an option I did not have).
When I bought it (for work’s sake) it was a popular basic one and used for 9 years.
Another situation: when you are 18 years old and get a ZERO km car.
COST: Value of the car (in today’s values) R$ 35 thousand reais (U$12,000) (paying in cash and without interest)
Annuity: Insurance, taxes, gasoline, parking, washing, toll = R$ 10 thousand a year or U$3,300)
In ten years = 35 + 10 (first year) + 9 × 10 = R$ 135 thousand (U$40,900) to have a car from 18 to 28 years, put another 10 thousand reais (U$3,300) for each year ahead (rough calculations).
Meals outside the home:
Put in today’s values: Breakfast R$ 8 + Lunch R$ 20 per working day x 5 x 4 x 12 x 10 = R$ 67.2mil (U$20,300)
Spending R$28 reais a day away from home with food, were more than R$ 67,200 (U$20,300) in ten years (if you add up with the car gives $ 200 thousand already)
Gym R$ 100 (U$33) (few people NEED to do this, I did only 6 months and never again), cable TV (I never had, nobody NEEDS) R$ 150 (U$30), paid cellular phone (R$ 130) (U$39)= R$ 43,600 (U$13,212) in ten years (Consider inflation = zero)
Adding the car + meals out + gym + cell phone + cable tv = R$ 243,000 (U$76,363) in ten years (no interest) or 1/4 of a million for abandoning certain middle-class vices would be in your account (actually much more than that).
Obviously, you would also spend with public transportation or buy food to do at home, but it would be much less. Cellular can have a prepaid plan and pay as little as possible or a control of R$ 50 (U$15) a month and settle for the wifi of places (nowadays there is much more place with wifi).
Health plan: I will not tell. I think everyone should have at least one ward covering surgery and ICU. You do not have to plan TOP apartment, that’s stupid, it’s expensive, you almost do not use it (in this age group) and almost never have a free apartment (and bullshit not staying in an infirmary with two or three people in a private hospital).
Designer clothes: No need to talk, do not buy. Buy Target, Riachuelo, Renner and C & A at the most (if you think it will look good and of good quality)
Cinema at the mall: Swap for Netflix or pirate bay + torrent or youtube.
Some people will give you best gift brand clothes.
Just by saving or refusing to pay for some useless services you would reach 1/4 of a million by age 28, which was simply distributed to the businesses of others.
You could trade your car for a bike this whole time to go to college and maybe even work on it (the best of the worlds).
Another option is to live near college/work and simply walk, even if it takes 40 minutes, is your daily gym for free (in the early morning it is cold up to the northeast and late afternoon as well).
Did you disagree with all this? Your choice. The overwhelming majority of the population also disagree. If you want to belong to the majority forever, keep thinking like her.
Most of it is an untruth.
60% of Brazilian families are indebted and less than 5% of people save for their own retirement.
Most of the population is poor, or the middle class is low, they do not save, they do not contribute, they do not act to retire (they wait for the government), they live today, they pay interest all their lives, they support governments, banks and insurance companies.
I write so that if you are one of the majority, you can change. If you live in a medium / small city, you may as well ride a bike and stop toasting money with gas.
The bike is your gym, your leisure, your transportation, your health, your contributions, your million in construction, all in one thing. A bike may be the best thing that ever happened in your life.
The motorcycle I find extremely complicated and dangerous, it may be cheap but the risk of your life do not think it pays off.
I spoke and I repeat: buy wholesale, cook at home, take a pot for work, wear cheap clothes, use cheap cell phone and cheap plan (EVEN IF YOU HAVE “CONDITIONS” to use better things), live below your standard of living, cancel Cable TV, move around near work or college.
One of the keys to getting rich and independent (of everything) is to save, to really save, taking useful measures in every sense of your life, from waking to sleeping.
Pretending that saves will leave you poor and dependent. Living a simple life is far more useful and liberating than you think, and much more peaceful.
And finally, read a lot, I have a kindle since 2010, it helps me to pass the time, to grow, to evolve, to study, to be in peace, and practically for free (I take hundreds of books in PDF or buy cheap on amazon).
Reading is also leisure, it is peace, it is sobriety, tranquility, growth and you become a better and more educated person, more gentle and virtuous. Plus it’s practically for free and you’re taking your time with something very good and very productive in a myriad of meanings. For those who do not have a kindle, buy.
Your life can turn out to be better after that and you will go on to read much more.
I will continue with the other four topics in the next posts.