Your First Million
... starts with this
The key to my first million was tracking every dollar earned and spent.
I was 25 years old when I started tracking my finances, and prior to that, most of my funds went to going out with friends for food and drinks.
Despite being a finance major in college, I had never created a budget.
When I moved to Jacksonville in 2014, it felt like a good opportunity to start over and begin a fresh slate of tracking. Every month since, I have tracked my net worth and completed an income statement.
I can look back now and see where every dollar went. I can see both the good and bad decisions I made and reflect back on why I made those decisions.
In the first year of going into business for myself as a real estate agent, my primary goal was to quickly dig myself out of the debt I had put myself in. I had a clear goal.
Here was my approach:
Spend as little money as possible
Pay down my $80,000 in debt (between student loans, car loans, etc) as fast as possible
Find additional ways to increase my income
After my first year working for myself, I had paid off all of my personal debt.
(all smiles in 2017 when I became debt free and started selling luxury real estate)
In my second year, I focused on increasing my income (which was really a function of increasing my personal development), and any extra savings I had, were to be used for investments, rather than paying down debt.
So I ended up purchasing another property and renting out the prior one. I felt that Jacksonville was a small town with a lot of potential and growth opportunities, and real estate was something I was getting to understand. I was very careful to only buy in areas that were safe and had good school systems (this paid off later).
In my third year, I found ways to double my business again (again, mostly by improving myself through coaching and training), and my income lifted me up into becoming a net worth millionaire by age 28.
People say your first million is the hardest, and I couldn't agree more. It’s usually achieved by increasing income, as there’s not enough to invest in the beginning. Though, once you get to your first million, your wealth, as long as you don't increase your spending, starts to work for you.
The financial gravity working against you becomes less and less as you climb.
And — as you climb — new problems arise.
You must learn how to evolve from being a business operator to becoming an investor.
Both are lucrative but they often require different approaches and personalities to be successful. You basically need a brain transplant or else you’ll end up learning the investing lessons the hard way.
For example, in business, it can be great to act quickly and take big risks. Though in investing, that is not necessarily the best method since you often have less control of the outcomes. Think of Warren Buffett, the greatest investor of all time, who sits back and reads books and takes his time to make a select few investment decisions per year. In investing, this is good, but in business, slow decision making can be the death of it.
Frankly, my number one mistake in investing has been in giving up control of my money to others to manage on my behalf. I trusted the wrong people and that cost me big time. There is an inherent principal/agency problem with giving your money to others. And unless the business you are investing in is audited, and even if it is, you are prone to crooks, thieves, and misaligned incentives. Even when you have a powerhouse attorney review your operating documents, things can go wrong, and you can have limited control to fix them or be set up for long legal battles.
Based on my personality profile, which took me time to figure out, I've decided to personally manage my money.
In actuality, I am using the money I've earned to start more businesses that I control and have a competitive advantage in. I've started private lending company for agents to do fix and flips, opened a property management company, and I do my own flips (if you know anyone who needs a cash offer in Jacksonville, let me know).
If you are interested in getting a copy of my profit and loss statement and/or net worth statement, simply shoot me an email (jon@movewithmomentum.com) and I'll shoot it out to you.
Cheers to your wealth building!
You can be the ONE to change your family’s financial future for generations to come.
It starts with one simple first step: tracking.
JB