Home Credit report Who Wants to Be a Millionaire? The 6 money tricks you need to make millions

Who Wants to Be a Millionaire? The 6 money tricks you need to make millions

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YesYou know those videos where something you didn’t know existed blew your mind?

My experience was exactly the same when I discovered some basic money hacks that led me to become a millionaire. Unfortunately, I had to learn these money hacks the hard way.

The good news is that I’m going to share them with you so you don’t have to make the same mistakes again. As a result, these six money hacks will help you save money, build wealth, and become a millionaire.

So what are we waiting for? Let’s dive into it.

1. Understand compound interest.

My first money hack is to understand compound interest.

Maybe you don’t consider compound interest a financial hack. However, those who understand its power truly understand its significance. If that describes you, then you’re already on your way to millionaire status.

How powerful is compound interest? According to Albert Einstein, one of the smartest people of all time, compound interest is the eighth wonder of the world. According to Einstein, “Compound interest is the eighth wonder of the world. He who understands it deserves it; whoever does not, pays for it. The math behind this quote shows that it’s not an exaggeration at all.

What if I gave you the option of an immediate cash payment of a million dollars or a magic penny that doubled every day for 30 days?

It’s natural for people to jump on the first million dollar contract they see. However, if you double your penny for 30 days, you will be surprised that on day 30 your penny will be worth over $5,000,000.

Let me give a more specific example.

So we have brothers named Jack and Blake.

Jack started investing when he was 21 and contributes $2,400 a year. At the age of 30, Jack decides he no longer wants to invest, so he stops contributing.

Blake, on the other hand, is a bit of a procrastinator. As a result, he begins investing $2,400 per year at age 30. However, he does so for the next 37 years until he turns 67.

I’m going to assume they’re making an 11.6% return, which is in line with the S&P 500. To recap, Jack started at 21 and stopped at 30. So he invested $21,600 of his own money. Keeping up the pace, Blake invests $91,200 to make up for lost time.

Who has the most money at 67?

At first you might think it’s Blake. After all, he’s saved over $91,000 in 37 years. And, in total, he has $1.48 million. Jack, however, has over $2.5 million. How? Because he started earlier than Blake.

And that my friends, that’s why Albert Einstein was in love with compound interest

2. Set a reminder to check your credit report.

Another money hack I wish I had known about was setting reminders to check my credit report. But it’s stupidly easy to set a reminder these days. All you have to do is say Hey, Siri, Google or Alexa, remind me to check my credit report.

Why are reminders so important? According to reports, 34% of Americans have errors on their credit reports. We are talking about one in three. And I was one of them once upon a time.

Back when I was living in California, I joined a gym. It was costing me about $20 a month. I then moved to the Midwest where this particular gym doesn’t have a franchise. Apparently I thought moving from California meant I no longer had to pay for gym membership. No harm, no fault, right?

It was a costly mistake.

The gym marked me as delinquent on my credit report. Unfortunately, I wasn’t aware of this until I checked my credit report. If you don’t know, you can destroy your credit report by not paying a bill.

Due to my delinquency, my credit rating suffered. In fact, it was in the lower 600s. Yeah, that was so bad.

Please set a reminder on your phone to go to annualcreditreport.com to check your credit report. Before the Covid-19 pandemic, you could request one free report per year. You can now check your credit weekly through the reporting agency.

Does that mean you have to check your credit report every week? Of course not. The exception, however, is if you have some sort of identity theft or you know you have trouble with your credit. But, for most people, you’ll have no problem checking your credit report once or twice a year.

When you have a good credit rating, you can get lower interest rates on credit cards, mortgages, and student loans. Plus, a lower interest rate means lower payments. You can then throw that extra money into your savings or investments like a Roth IRA, stocks, bonds, ETFs, or real estate.

How to fix your credit score.

What can you do to improve your credit rating? I’ll give you some pointers to get you started;

  • Keep your bills up to date by paying them on time.
  • Maintain an open account. The longer you keep your accounts, the better your credit rating will be.
  • Use less than 30% of your credit.
  • Your score will improve if you keep serious inquiries below 1 every 12 months.

3. Have your rate checked.

My third hack? Have my price checked.

Let me break this down for you.

You receive verified approval when an underwriter reviews and approves your income, assets, and credit. It is often used when making major purchases, such as a house or a car.

It’s a fairly simple process. Some of the items you need to submit include your W-2s, tax returns, pay stubs, and bank statements. If you want to know exactly what we need for your situation, please speak to a mortgage expert.

If you qualify for verified approval, you can be confident that your loan will close once it’s been reviewed. After everything has been checked, the sellers and their agents can also be sure that your loan will be closed. Having this advantage can make a big difference in a competitive market.

But having your rate checked is also important when you want to refinance. For example, I had a friend who was going to refinance his mortgage with the bank he had been doing business with for over two decades. Fortunately, before signing the documents, he checked the competitors’ rates.

His bank was not offering him the best rate. In fact, he found someone else who was going to give him a quarter of a percent less. You might think that’s not a lot. However, we are talking about a mortgage of half a million dollars. That’s about $20,672 in savings.

So if he hadn’t had that checked out, he would have paid $20,000 more.

A refinance could save you hundreds or even thousands if you have the lowest rate on anything. So it’s definitely worth doing some homework before you cross your i’s and t’s.

4. Do a savings challenge.

In high school, I desperately needed number four in money hacking. As a student, even more so. In this case, I’m talking about doing a savings challenge.

There are different types of savings challenges. However, let’s first identify the importance of this. Every year, the Federal Reserve Board conducts this study, and in 2021, they found that 35% of Americans could not afford a $400 expense. As a result, they had no cash to cover contingencies. Their only option was to borrow money or use a credit card, or simply not be able to afford the expense.

Sounds amazing, doesn’t it? Unfortunately it’s the truth. There are many people who don’t have enough money to make ends meet.

One way around this problem is to make saving fun. And a savings challenge does just that.

Here is a story for you. I used to balance my checking account by withdrawing $20-40. Once I got my ATM receipt, I checked the balance to see what I had. Honestly, I probably couldn’t cover a $400 expense either. And it wasn’t really an effective way to stay on top of my finances.

Suffice it to say, I was all over these money saving challenges. As soon as I heard about the 52 Week Savings Challenge, I was hooked.

So how does the 52 Week Savings Challenge work? It’s really very simple. The first week, you save a dollar. The second week you save $2, the third week $3, and so on. You’ve saved $52 by the 52nd week.

Sure. Maybe that sounds hokey to you. I’ll tell you something, though. By the end of the challenge, if you stick to it for the full 52 weeks, you will have earned over $1,378. What could be sweeter? This does not take interest into account.

And guess what else? Let’s say an expense of $400 appears. Carefree. You can swing it by withdrawing that money from the $1,378 you have set aside.

5. Unsubscribe from retailers.

This is another hack that I definitely could have used back then. Chances are you need it too.

So why is this an amazing hack? It’s just a matter of unsubscribing.

What am I talking about here? Getting things out of sight and out of mind.

According to reports, 87% of Americans make impulse purchases. No. It’s not you, is it? Well, think about your last trip to the grocery store. There is no doubt in my mind that you made an impulse purchase. Whether it’s a BOGO deal or that candy bar at checkout.

Many factors influence your decision to make impulse purchases, but one of the most important is getting it in the face. In other words, keep it out of sight if you don’t want to make an impulse purchase. It just means unsubscribe. After all, the average person receives over 100 emails a day!

So let’s say you bought something from a retailer in the past. They will keep bombarding you with sales and promotions. And some offers can be terribly tempting. It is possible to opt out of receiving these messages by reporting spam or unsubscribing from all marketing emails.

How about subscribing to an SMS service? You are also taxed on the latest offers. So go ahead and block this number.

I understand. It seems like a lot of work. But, many free services will automatically unsubscribe you from all marketing and spam emails you receive. Some of these services Unroll.me, Sanebox or Clean Email.

Bonus hack: Follow the SJSP principle.

What is the SJSP principle? Well, it’s something I made up. And that means stop justifying your stupid purchases.

So what exactly is considered a dumb purchase? Passives are like designer sneakers, jet skis, or McMansions.

New cars also fall into this category. Why? As soon as you take a new car out of the lot, its value begins to decrease. According to Carfax, which records automobile histories, their value depreciates 20% in the first year of ownership.

The smart thing to do is to buy assets instead. Real estate, insurance policies, cash, stocks and bonds are examples of things that increase in value over time.

By Jeff Rose for Due.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.