Your only security is the money in the bank (or investment).
Even if your house is paid off, you still have to pay your property taxes, insurance (home and auto), food, water, power or you will lose that home.
Here is what I wish I knew 10 - 15 years ago...you can learn from my mistake (I am successfully doing this today as you should be.):
Follow Jim Cramer's Homework and Buy method of investing. Watch Mad Money Monday through Friday on CNBC at 6pm EDT. Pay $199 for his Action Alerts and follow along until you learn how. Read two of his many books: 'Sane Investing in an Insane World' and 'Get Rich Carefully' and follow his method of investing and you should be able to retire by year 8, 9 or 10 even with a minimum wage job. (And as a Programmer, you better be making more than minimum wage!)
No more fears of age discrimination by age 35 to 45 any longer as they need you, but you do not need them. That is real power and real stability, how much money you can generate each and every year for the rest of your life. As long as you are dependent on others, you will be at risk to become a laid off programmer that many will not hire. Heaven help you after 45 if you still have to work...our society does not want you to receive a retirement any more. And if that 401K is not managed by YOU...the reason its not growing are the hidden fees sucked out each and every year by whomever manages it for you. Waht a farce.
Here is how I got the $140 per week:
$14,336.00 = ($7 per hour * 2048 hours per year) (takes out vacation, sick, etc...) = $14,336.00 per year in salary.
- $5,160.96 ($14,336.00 *
$ 9,175.04 ~ (after tax yearly income on a job paying $7 per hour, should you get taxed at the max rate of 36%)
$ 176.44 ~ ($9,175.04 / 52 weeks)
$ -140.00 ~ saved each week to be ready to invest and not touch for at least 8 years....
$ 36.44 ~ what you have left over to live on, after taxes and saving $140 to be invested.
$ 140.00 ~ If the minimum wage is raised to $11 per hour, you will be able to invest $140 and have $140 per week to live on. Perhaps if your car is paid off and you have no mortgage or rent payment you can do this...good luck if you do not do this while you are programming and making better than a minimum wage. Still would be hard if you have to many monthly revolving expenses above and beyond mortgage or rent...do your self a favor and limit any and all revolving charges.
Assumption: You save $140 per week in an account ready to be invested. When that account reaches between $750 and $2,000 you buy 20 - 25 shares of a stock costing between $30 and $80 per shares (see break out below). If you do this for 8 years, you will be close to $125,000.00 in your stock portfolio and earning more than $20,000 each and every year for the rest of your life.
Here is how it could work for anywone, even with a close ot minimum wage or minimum wage job.:
$140 per week ~ minimum in an investment account, when that account gets up over $750 dollars, buy 20 - 25 shares of a lower priced stock that you have personnally done the homework on.
- When you reach the following levels of savings in your stock market investment account you can purchase at least 20 shares of stocks at the following price levels:
- Savings ~ The number of shares at what
- to Invest ~ dollar amount you can invest:
- $750 ~ 20-25 shares in the $30
- $1,000 ~ 20-25 shares in the $40s
- $1,250 ~ 20-25 shares in the $50s
- $1,500 ~ 20-25 shares in the $60s
- $1,750 ~ 20-25 shares in the $70s
- $2,000 ~ 20-25 shares in the 80s
$125,000.00 ~ Takes 8 - 10 years if only investing $140 per week. Faster if you invest more per week. Assuming you reinvest all the proceeds, assuming a 20% return (extremely conservative, I am over 30% and have a shot at 50% return this year) within 8 years you will have amassed this level in your stock investment portfolio.
$20,000 per year ~ The amount you can be sure you will earn on your $125K portfolio for the rest of your life. Probably more, this is very conservative. You will never fear that you will lose your paid off home because of property taxes, cost of insurance, etc...
$250,000.00 ~ Amount of your portfolio, 2 or 3 years after it reached $125K. Compounding is your friend and helps you amass wealth faster the more you have. At this level ($250K), you will never have to work at anything you do not want to again. You will never lose your home if its paid off. You will be able to afford vacations multiple times per year.
$50,000.00 per year ~ The amount you can be sure you will earn on your $250K portfolio for the rest of your life. Probably more, remember I am being extremely conservative.
. . . It only gets better from here, because you learned the value of deferred gratification and the compounding effect of money / investments.
This only works if you follow Jim Cramer's Buy and Homework method of investing talk in to the two books mentioned above. There are no short cuts, the more you make and put in investments, the faster you will reach true financialy independence.
Yes the market is rigged (google 'Flash Boys' its all true, and you can get ahead in spite of it) for those that trade in large volumes, however individual stock pickers can get ahead by following Jim's advice.
Investment income is taxed at a 15% rate, lower 10% if you have a great accountant and are very wealthy. Its how Mitt Romney managed to get a 10% tax rate that everyone talked about in the last presidential election.
Don't let those that have benefitted from our system, pull shut the gates behind them and hurt the rest of us, never let them raise the tax rate on investment income. After all in most cases, you have already paid tax once (sometimes twice) on that income, so why pay more a second/third time. Enough is enough.