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As we have been working on our plan to become financially independent, it has included not only debt reduction, but building wealth. That being said, we have run across a few tools that have really helped us in this endeavor so far. Seeing as there are so many options out there, we figured it was time to share just what we are using and how they have helped us.
Debt Reduction
This is usually the first step when trying to build wealth because it is the biggest hindrance to saving/investing money. Therefore, this is what we started tackling first. The easiest way we found to see exactly what we had outstanding was to pull our FREE annual credit report.
This report doesn’t give you your current credit score, but it does give you any debtors that you may still have, how much you owe, your credit history and your current information. It is always good to check it annually to make sure that everything still looks accurate.
After we finished with that, we decided upon Credit Sesame to help us monitor our credit regularly. This is a free service, which is my favorite, and very easy to navigate.
As soon as you log into the site, it gives you your current credit score along with the 5 categories that make up how your credit score is determined. Those are:
- Payment History (35%) – I have an A here because I have NEVER been late on anything.
- Credit Usage (30%) – I have an A here because I am using under 10% of my available credit.
- Credit Age (15%) – I have a C here because my oldest account is almost 7 years old but my newest is only 2 months old. It likes to see an average of at least 3 years old for an A rating and mine not quite there.
- Account Mix (10%) – I have a C here because they apparently hate the fact that I only have a mortgage and revolving credit cards that are paid off monthly. BOO!!!
- Credit Inquiries (10%) – I have an F here because of too many inquiries in the past 12 months.
My worst category is #5 because of too many hard inquiries on my credit right now. This is due to us buying a house last year and also getting started with real estate investing. Luckily, a good chunk of them will drop off this month, so that should boost my credit score back up to almost 800.
Savings
Once we figured out the debts we needed to attack, setting up savings was next. Because the interest rates aren’t really that great for any savings accounts right now, we don’t put too much energy into this area. However, we do need to keep some liquid cash on hand for emergencies. Hence an emergency fund!
But since the interest rate for our savings accounts at NCSECU is at .75%, it is not really gaining us that much in the way of interest. This is an area we are still working on though because we want to have a total of 6 months income, just in case of life happening. Right now, we are closer to 2-3 months, so we obviously have to beef it up.
Investments
Now this is the category that we have started to really dive deeper into with regards to building wealth. And quite frankly, I really like it! I realize that I am a complete nerd most of the time, but stick with me here.
Not too long ago I heard about this awesome website called Betterment for investing. Since I have zero background in investing and really don’t have the time or desire to study the market to the degree that I would need to in order to be successful, Betterment is a fantastic tool. They are robo advisors that do all of it for you. And by all of it, I mean all of it!
Upon creating an account, they ask you some questions about you, your life and your retirement goals. Once that information has been entered, they then set up a good mix of stocks and bonds based upon your risk tolerance and expected age of retirement. All you have to do after that is make your first deposit.
Once we did that, we set up automatic drafts monthly so that we didn’t even have to think about it regularly anymore. I can tell you that the amount we contribute has changed, and they make it really simple to change it whenever you want to. There are also a few different types of accounts that you can enroll in.
We personally have both Roth IRA’s and Traditional IRA’s that we contribute to regularly. The trick here is to continue investing and don’t stress about the market fluctuations. By doing so, I made 16.71% on my investments last year!
But if you start to stress about the fluctuations and pull money out, that is where most money is lost with investors since you will be losing the magic of compounding.
So set it and forget it is our motto!
Real Estate
Our other, and much newer, form of investments is with buy and hold real estate. Even though we only have one property currently, our ROI (Return on Investment) is 14%, which is pretty darn good!
One of the best places we have found to get the information we need is on Bigger Pockets. They are the go to for anybody seeking to get into real estate investments. Whether it is through buy and hold (like us), wholesaling, fix and flip or syndication, this is the place to go.
When we are really wanting to connect with people locally though, we have found our local REIA (in our case it is TREIA) group to be the place to go. This is a nationwide association for all real estate investors. They have local chapters, so check them out and see if there is one near you if you are looking into this avenue for building wealth.
Monitoring
Sometimes things can get lost in the fray when there are too many things going on. This includes managing debt, savings accounts, and different forms of investments. So we have found a great tool to help us keep track of all of it that is very simple to use.
Personal Capital has been a complete dream for us, especially when it comes to determining our current net worth. This website also has an app, which I use at least weekly to check on things. Not only does it give me the current balance for all of my accounts (debts/savings/investments), but it has more in depth tools available if I want to see if there may be a better way to handle everything.
As odd as this may sound, this app has actually helped me out a lot with lenders in the real estate investment world because they want to know my net worth. I literally just have to log in and I can tell them right off the bat what it is. I have blown many lenders away with my quick response and as a result, have turned a few of them onto this little gem of a tool.
Increasing Income
This can be the most difficult part to change when building wealth for some of us. Especially those of us that are part of the entrepreneurial sect. Since our income can fluctuate all over the map sometimes, I have found some great tools to help regulate that.
Money Relationship
The first one is absolutely brilliant! Leisa Peterson, of the Wealth Clinic and the Art of Abundance Podcast, focuses on helping people figure out their money story. For me personally, it has been about learning to be comfortable with the idea of receiving money, as opposed to just giving all the time.
If you are an entrepreneur who has a desire to change your relationship with money for the positive, then you have to check out Removing Your Inner Money Thorn. It will really change your perspective and your life!
Freelance Writing
If you happen to be a freelance writer, like me, or have ever had an interest in pursuing writing as a side hustle, then you have got to check out Holly Johnson. She is a kick butt freelance writer and created the Earn More Writing course to teach the rest of us how to actually earn an income freelance writing. I have taken her course and it really helped my writing career, thereby increasing my income.
VA Work
And last, but certainly not least, I started getting into some VA (Virtual Assistant) work, which I love. This type of work is great for anybody who is good with organization, spreadsheets, Word docs, herding cats, etc. There is a full time VA who is the Queen of all VA’s in my book, Kayla Sloan, who has started a course also. Her course, $10k VA, is absolutely awesome! Her tips and tricks helped me bring in more income.
So without these 3 brilliant ladies, it would have been much more difficult for us to begin building wealth.
Building Wealth Takeaway
We are far from done at this point. But we are much closer to financial independence because of the vehicles we have chosen for building wealth.
At this rate, we plan to be completely financially independent by the time our youngest leaves for college. This plan includes having around 17-20 cash flowing rental properties by that time. That gives us about 12 1/2 years to really kill it! And at this rate, we have the determination and the faith to get the job done.
What vehicles have you found to really help you build wealth faster?
