I’ve been calculating net worth for about a year. The last day I began to analyze the numbers and I was very surprised to see the rise that my wife and I had obtained.
My relationship with the world of personal finance began with the book “Rich Dad, Poor Dad.” I do not share all the ideas of the author but I do share the ones you find in that book. They are basic and common sense concepts but they made the chip completely change. 18 months after reading the book we bought the first floor. Today we have three flats in Spain financed with mortgages but that generate a small positive cash flow every month.
Net worth is not something I did right away. It took me a lot longer to get to that point. In fact, I’ve been doing it for just over 13 months. It was worth it.
Having a number every month motivates you to move in the right direction
Calculating my net worth (or rather that of my wife and mine) has been one of the key factors in increasing it month by month. If you are aware that you are losing in equity, you have an urgency to act. If you see it go up, you want to make it go higher. In case of not doing this follow-up, this effect is completely lost.
It has also helped me to create reservations and set aside money for travel, taxes and contingencies. My goal is to create a cushion for myself and my companies to be able to survive without income for a while without having to throw anyone from the team out on the streets. The lean cows will come again and you have to be prepared for it.
Find new and better sources of income
It’s funny but since I started recording net worth every month I have also seen my income increase. It can be said that it was / is a kind of game to see how far you can go. Going faster than the rest also requires opening more and better sources of income than the rest. If you read this blog frequently, you already know mine. I don’t have just one but several. Also, I always plan to have a plan B and C. These last few weeks I have been a bit relaxed and I have to put more batteries in this aspect because I am relaxing too much. When things are going well, they can be better. That is the attitude that has helped me get here and that I have to go back to.
Have less costs than the average
When you increase your income, it is easy to be tempted to spend more. Someone who tells you tells you and makes that mistake. It is also true that the old sofa was already 15 years old and the TV that just broke even more. In this case my wife and I have not opted for the cheapest option to replace them. In fact, we have been wanting to buy a sofa with more space for more than a year so that now the five of us can sit comfortably. The little ones are no longer so small and those who have children at home know that a child can easily occupy 2-3 the space of its volume in cubic meters. They have a talent in this regard. Other than that we live a modest life: rental house, 5 year old Kia Carens, etc. Of course, the Netflix subscription is not taken away by anyone.
Reinvest better than average
From time to time I sign up for webinars that they promote on YouTube. I saw one the other day about how the rich invest compared to the poor or something similar. It is curious to see that sales strategies have not changed much in recent years: advertisement, landing, webinar and emails.
What I was going to. One of the things that stood out was that “a rich man” did not have his money in the bank. A basic aspect that is not a big problem for the majority of Spaniards, so I understand that it is more of an issue for Germans since compared to us they are a more thrifty people. As investment options, he presented art and land with trees since the price of wood had recently exploded.
In that aspect I have seen myself reflected. In October of last year I had more than one argument with my wife for wanting to reinvest practically all the available capital in product for Christmas. Logically he took me for crazy because once you have some money in the bank you don’t want to see it come out again. It was worth the fight looking back because that investment was well made. I knew it would be. I’ve been selling on Amazon for years and the only thing missing was some capital to make a profit. I wasn’t going to stand still now that I finally had a chance to exploit that asset.
One thing that I have noticed is that the main increase in our net worth has been in the last six months. In the first half it was rather slow compared to now where it has been accelerating. Now all you have to do is continue down that route. In the past one of the mistakes I made was to change routes when things were going well because I was bored with what I was doing. I hope this time I don’t make the same mistake.