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Achieving Your First 100K
Jun 29, 2024
Achieving Your First 100K
Introduction
Focus on earning your first 100K before aiming for a million dollars
Two reasons why this is crucial and four strategies to help you
Critical Mass Threshold
Money compared to a nuclear bomb: chain reactions
Compounding returns need critical mass (100K) to be effective
Example: Investing $15K/year in S&P 500 with a 7% return
Reach 100K in 5.66 years: 85% cash contributions, 15% returns
Milestones after 100K achieved more rapidly
Going from 900K to 1M: 62% comes from compounding returns
Psychological Barrier
Personal story: Emotions upon seeing account hit 100K
Financial habits formed by age seven
Changing mindset to believe wealth is achievable
Seeing 100K can break mental barriers and limiting beliefs
Strategies to Reach 100K
1. Creatively Live Below Your Means
Emphasis on "creatively" to avoid deprivation
Compare to dieting: Deprivation leads to failure
Use Pareto Principle (80/20 rule)
80% expenses from 20% categories (housing, transport, food)
Reduce big expenses rather than small purchases
2. Automate Your Finances
Reduce decision fatigue
Create automations for saving, investing, and bill payments
Personal automation example:
Income split to high-yield savings, emergency fund, investment accounts
Credit cards paid off automatically
Run a free challenge on July 1st for automating finances
3. Increase Your Savings Threshold
Your savings max out at your income
Increase earnings to save more
Tips for raising income:
Prepare for performance reviews (keep "win" folder)
Biggest raises often come from switching companies
Explore high-income side hustles based on personal strengths
4. Learning New High-Income Skills
Ideas for side hustles based on skills (social media, cooking, finance)
Tips on monetizing talents or learning new skills
E.g., tutoring, classes, Google free courses
Conclusion
Feeling stuck: stop certain middle-class habits preventing wealth
Link provided for further learning on this topic
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