Investing in stocks can seem overwhelming, but it doesn’t have to be. With a few simple steps, you can start your journey toward building wealth and securing your financial future. This guide will walk you through the basics of stock investing, from understanding what stocks are to choosing the right investments for your goals. Whether you’re a complete beginner or just looking to brush up on the fundamentals, these easy-to-follow steps will help you confidently enter the stock market and begin growing your money. Let’s dive into the simple steps to start investing in stocks.
What are stocks?
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Stocks represent shares of ownership in a company. By buying stocks, you can own a part of a business and potentially grow your wealth as the company grows. They are a popular way to make money and increase your net worth over time.
Learning stock market basics
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Understanding the stock market is key to successful investing. Learn the basic concepts like how stocks work, what affects their prices, and how you can start investing to grow your wealth and secure your financial future.
Investing in stocks for beginners
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Investing in stocks can be a great way to make money, but you need a solid strategy. This guide offers simple tips for beginners to help you start investing, grow your wealth, and work towards financial independence.
To learn more: How To Invest In Stocks For Beginners: Investing Made Easy
Is Now a Good Time to Buy Stocks? The Real Answer
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The stock market is on the rise. Is now the right time to buy stocks? If you want to make money, learn the proper steps to start investing today and take advantage of market opportunities to grow your wealth.
To learn more: Is Now a Good Time to Buy Stocks? The Real Answer
Waiting to Invest?
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Why wait to invest in the stock market? Delaying your investments means missing out on passive income. Consistently investing, rather than trying to time the market, will lead to long-term, stable returns and increase your net worth.
The power of compounding
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Compounding can significantly boost your investment returns. By reinvesting your earnings, you allow your money to grow faster, leading to greater wealth over time. It’s a powerful strategy for anyone looking to increase their net worth and secure a comfortable retirement.
Can you Make Fast Money in the Stock Market?
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Can you make money quickly with stocks? As a day trader and long-term investor, I know how fast I can see returns. Learn how day trading or swing trading can increase your financial freedom and help you grow wealth.
To learn more: How Fast Can you Make Money in Stocks? The Real Answer
Know Your Risk
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Understanding the risks involved in stock investing is crucial. Know your risk tolerance and make informed decisions to protect your investments and achieve financial success.
Avoid These Trading Mistakes
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Avoid common trading mistakes that can cost you money. Learn how to improve your trades, minimize losses, and increase your profitability in the stock market.
To learn more: Day Trading Mistakes: How To Avoid Trade Errors And Win More
Dive into an Investing Education
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Education is key to successful investing. Trade and Travel is a course that teaches you how to make money in the stock market. Read my personal review as a profitable student and see how an investing education can help you grow wealth and achieve financial goals.
To learn more: Trade and Travel Reviews – Join the $1000 in a Day Club
Start Your Investing Journey
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Ready to start investing? Learn the basic steps to begin your investing journey, grow your wealth, and secure a comfortable future. It’s never too late to take control of your finances and work towards financial independence through smart investments.
To learn more: https://moneybliss.org/investing/
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The precarious outlook for home insurance, the report said, poses a “systemic risk” to the US housing market as one in 13 homeowners across the United States opt out of insuring their homes. What do homebuyers need to keep in mind about home insurance? Spiraling insurance premiums and the growing headache they cause for homebuyers … [Read more…]
Borrowing against home equity can put cash in your hands when needed. But how soon can you pull equity out of your home after purchasing it?
You might be surprised to learn that there’s no minimum waiting period to access your home equity. You’ll need to meet a lender’s other conditions and requirements to qualify for a loan against your equity, but you can decide when it makes sense to borrow against your home.
What Is Home Equity?
How is home equity explained? Equity is the difference between your home’s value and the remaining amount due on the mortgage. In simpler terms, equity represents the portion of the home that you own.
Home equity accumulates as your mortgage balance goes down and your property’s value goes up. As of March 2024, the average equity value among 48 million U.S. homeowners with mortgages was $206,000, according to the ICE Mortgage Monitor.
It’s possible to have negative equity in a home. That scenario can occur when you owe more on the mortgage than the home is worth. This is also referred to as being upside down or underwater on the mortgage. That’s important to know if you’re calculating how home equity counts in your net worth.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
Ways to Access Home Equity
There are several options for borrowing against your equity. The most common are a home equity loan, a home equity line of credit, and a cash-out refinance.
Home Equity Loan
A home equity loan allows you to withdraw your equity in a lump sum. Home equity loans typically have fixed interest rates and your repayment term may last up to 30 years. A home equity loan is a type of second mortgage that doesn’t affect the terms of the loan you took out to purchase the property. Your home serves as collateral for the loan. If you default on the payments, the lender could initiate a foreclosure proceeding against you.
Home equity loans offer flexibility since you use the money any way you like. Some of the most common uses for home equity loans include:
• Home repairs and maintenance
• Home improvements
• Debt consolidation
• Medical bills
• Large purchases
Interest on a home equity loan may be tax-deductible if the proceeds are used to “buy, build, or substantially improve the residence,” according to IRS tax rules. This rule applies through the end of 2025.
Home Equity Line of Credit
A home equity line of credit (HELOC) is a revolving line of credit that you can draw against as needed. HELOCs tend to have variable interest rates, though some lenders offer a fixed-rate option.4 When you take out a HELOC, you have a draw period in which you can access your line of credit and a repayment period when you pay it back. You pay interest only on the portion of your credit line that you use.
HELOCs can be used for the same purposes as a home equity loan. A HELOC may offer a lower interest rate than a home equity loan, depending on the overall rate environment. However, your payment isn’t always predictable if you have a variable interest rate.
Cash-Out Refinance
Cash-out refinancing replaces your existing mortgage loan with a new one while allowing you to withdraw some of your equity in cash at closing. A cash-out refinance loan isn’t a second mortgage; it takes the place of your original purchase loan. The balance due is higher to account for the amount of equity you withdraw in cash.
A cash-out refinance loan may have a fixed rate or an adjustable rate. Fixed-rate loans typically have repayment terms extending from 10 to 30 years. If you choose an adjustable-rate mortgage (ARM), you might be able to select a 3/1, 5/1, 7/1, or 10/1 ARM.
The first number represents how long you have to enjoy a fixed rate on the loan; the second number is how often the rate adjusts on an annual basis. So, a 10/1 ARM would have a fixed rate for the first 10 years. Then the rate would either increase or decrease once a year annually for the remainder of the loan term.
Requirements to Tap Home Equity
Qualification requirements for a home equity loan, HELOC, or cash-out refinance loan vary by lender. In most instances, you’ll need to have:
• A credit score of 660 or better
• At least 20% equity, though some lenders may go as low as 15%
• A debt-to-income (DTI) ratio below 43%
Essentially, lenders want to make sure that you have sufficient income to make the payments on a home equity loan and that you’re likely to pay on time.
Lenders use your combined loan-to-value (CLTV) ratio to measure your equity. Your loan-to-value (LTV) ratio measures your home’s mortgage value against the property’s appraised value. The current loan balance divided by the appraised value equals your LTV.8 Combined LTV uses the balance of all loans, including first and second mortgages, to measure equity. This number can tell you how much of your equity you can borrow. Most lenders look for a CLTV in the 80% to 85% range, though it’s possible to find lenders that allow 100% financing.
Recommended: Understanding Mortgage Basics
Factors That Impact Timing
How soon can you get a home equity loan? Technically, right away. But the more important question to ask is whether it makes sense to access your equity sooner or later.
If you’ve just purchased a home, you may not have much equity built up yet. You may need to wait a few months for some equity to build up before borrowing against it. Your choice of lender could also make a difference. If a lender requires a home equity waiting period, you might have to wait until it ends to borrow.
Here are some questions to ask when deciding if the time is right to withdraw equity:
• What will you use the money for?
• How much do you need to borrow?
• Which borrowing option makes the most sense?
• How much can you afford in additional monthly mortgage payments?
Risks of Borrowing Too Soon
Just because you can get a home equity loan or HELOC right away doesn’t mean you should. There are some risk factors to consider if you’re thinking about an equity withdrawal.
• Having less equity in the home can mean a higher LTV, which could make it harder to qualify.
• Should your home’s value drop after borrowing, you could end up underwater on the mortgage.
• If you only recently bought the home, you may not have a firm idea of your maintenance and utility costs, which could make it difficult to estimate how much you can afford in additional mortgage payments.
• Your credit score may need time to recover so you can qualify for the best rates if you just signed off on a purchase mortgage loan.
Using a home equity loan or HELOC calculator can help you estimate what your payments might be. You can then add that to your existing mortgage payment to get an idea of what you’ll pay overall and what’s affordable for your budget.
Alternative Options
If you need to borrow money for home repairs, home improvements, or any other purpose, your equity isn’t the only option. You might consider these alternatives instead.
• Personal loan. A personal loan allows you to borrow a lump sum and repay it with interest over time. Personal loans are typically unsecured, meaning you don’t need collateral and your home isn’t at risk if you’re unable to pay for any reason.
• Credit card. Credit cards can be a convenient way to pay for large purchases, home improvements, or emergency expenses. Choosing a card with a 0% introductory APR on purchases can give you time to pay them off interest-free.
• 401(k) loan. If you have a retirement plan at work, you might be able to borrow against it. However, that’s usually not ideal since any money you take out won’t benefit from compounding interest, which could shortchange your retirement.
• Home equity conversion mortgage (HECM). Eligible seniors 62 and older can get a home equity conversion mortgage to withdraw equity. You can also use an HECM for purchase loan to buy a home. A home equity conversion mortgage requires no payments as long as the homeowner lives in the property, with the balance due when they sell the home or die. Compare an HECM vs. reverse mortgage to see if you’re eligible.
You might also ask friends and family for a loan or sell things you don’t need to raise funds. Taking on a side hustle or part-time job could also bring in extra income so you don’t need to borrow.
The Takeaway
Withdrawing equity from your home can give you access to cash when you need it. In addition to getting the timing right, it’s also important to shop around and find your ideal lender. Comparing rates, terms, credit score requirements, and CLTV requirements can help you find the best loan for your needs.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 95% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit brokered by SoFi.
FAQ
How long after purchasing a home can you pull out equity?
There’s generally no set period for how soon you can take equity out of your home after purchasing it. Your ability to borrow can depend on your credit scores, debt-to-income ratio, and how much equity you’ve accumulated in the home.
Are there fees to tap home equity?
Home equity loans, HELOCs, and cash-out refinance loans can all have closing costs just like a purchase loan. Some of the fees you’ll pay can include appraisal fees, inspection fees if an inspection is required, attorney’s fees, and recording fees. You’ll need to pay certain fees out of pocket but your lender may allow you to roll other closing costs into the loan.
How fast can I get a home equity loan?
It’s possible to get a home equity loan as soon as you purchase your home. You’ll need to meet a lender’s minimum requirements to qualify for home equity financing. Getting approved may be challenging if you have a low credit score or only a small amount of equity in the home.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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²To obtain a home equity loan, SoFi Bank (NMLS #696891) may assist you obtaining a loan from Spring EQ (NMLS #1464945).
All loan terms, fees, and rates may vary based upon individual financial and personal circumstances and state.
You may discuss with your loan officer whether a SoFi Mortgage or a home equity loan from Spring EQ is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit brokered through SoFi. Terms and conditions will apply. Before you apply for a SoFi Mortgage, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and loan amount. Minimum loan amount is $75,000. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria.
SoFi Mortgages originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org). Equal Housing Lender. SoFi Bank, N.A. is currently NOT able to accept applications for refinance loans in NY.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Imagine you’re a gardener. You spend a weekend building a few raised beds, planting sunflowers and corn, etc. It’s a nice little hobby. Your first summer gardening ends up successful and fulfilling.
You come back for Year 2 with vigor! You want to expand. You spend a month preparing your beds and double the size of your garden. You plant new veggies and a few flowers, and all goes well.
You rinse and repeat for a few more years. Not only is your garden blooming, but its size is blooming. After years of doubling in size, it occupies a couple acres in your side field (we’re putting you in the countryside).
Eventually, you grow so big that an annual doubling size is no longer feasible. You don’t have the time or equipment to build twice as many new beds. You don’t have the resources to water and fertilize the full area. You don’t have the patience to weed the weeds and scare away the hungry deer and rabbits.
Growth, in other words, cannot be exponential forever.Eventually, size becomes the enemy of growth. Growth is easy when you’re small. It’s much harder when you’re big.
We see similar “rules” all over the natural world. Small children grow and learn unbelievably quickly in their early years. They “grow like a weed” – how punny. But eventually, that child becomes a “full-grown” adult who, if they’re learning at all, certainly is no longer learning at an exponential pace.
While the governing rules might differ (Mother Nature vs. something economic), a similar phenomenon applies to the business world and thus to the stock market: growth can’t be exponential forever, and growth becomes harder the bigger you are.
Forward Growth, Backward Growth
Let’s go back to the garden.
Imagine I have a bed of fully grown sunflowers —10 feet tall, giant heads, full of seeds.
Next to that, I have a bed of corn. The corn is only halfway grown—3 feet tall, barely a sign of any “ears” yet.
If I wanted to see which crop has the bestgrowing potential, how should I measure it?
The natural tact to measure backward and say, “It’s the sunflowers – look, they’re huge! They’ve grown like crazy this past month!”
But I could also measure forward and say, “The sunflowers are ‘exhausted’ – fully grown! The corn, though, still has a huge potential in front of it.”
The same idea applies to the stock market.
If we measure backward, the best-performing stocks of the past 5 years are the biggest stocks right now (kind of like our sunflowers). Ben Carlson shared this idea and data in a recent post. The right-most columns below show that today’s largest stocks are also the best performers of the past 5 years:
The biggest stocks (on the right) have also had the best recent performance.
But as investors, is it good for us to “measure the sunflowers” after they’re fully grown?!
The wise skeptic would retort, “Jesse – you don’t know if those large stocks are fully grown or not.” It’s true. For all we know, those “sunflowers” could double in size again. We’ll come back to this idea later.
Still, I think it makes more sense to measure from the beginning and ask, “Which stocks will grow most in the future?” The problem is that we don’t have crystal balls. We don’t know what the future will hold.
The middle ground, then, is to combine the past and the present. For example: what if we took the stock market’s values from 2019, ranked the size of those companies at that time, and then tracked their performance from 2019 until today?
That’s exactly what this chart shows:
If we measure forward instead of backward, we see that smaller companies have been the best performers of the past five years (not that large companies performed all that poorly).
Here’s another terrific way of visualizing that idea. I’ve been using the following chart with some clients recently, especially when they ask questions about Apple, Microsoft, or NVIDIA, etc.
The data examines companies when they reach the Top 10 largest companies in the U.S. stock market. The left side of the graphic shows companies before they reach the Top 10, and the right side shows companies after they reach the Top 10. The left shows “future world-record sunflowers as they’re growing” and the right shows “world-record sunflowers once they’ve set those records.”
The chart pulls together our various ideas today.
It’s hard to grow forever. Instead, growth has an upper limit. Once a company has become “one of the largest companies in the US, or even the world,” odds are that its growth is tapped out.
While investing in “full-grownsunflowers” might be appealing – after all, look how tall they are! – the smart money knows investors don’t make money on past growth. They make it on future growth.
I’m not guaranteeing it. The future might be different than the past. Maybe NVIDIA will continue taking over the world. But get this:
In the five years from July 2019 to July 2024, NVIDIA’s market cap grew from $100 billion to $3 trillion, a 30x increase.
If NVIDIA did the same thing from now until July 2029, its then-$90 trillion market cap would be:
as large as every other publically traded company in the world, all combined.
about 2x the rest of the entire U.S. stock market, combined.
about 3x the annual GDP of the U.S.
and roughly ~$90 trillion more than my personal net worth. Ouch.
Uncle Warren, Cousin Rubin
In 1995, Uncle Warren Buffett wrote to his investors:
The giant disadvantage we face is size: In the early years, we needed only good ideas, but now we need good bigideas. Unfortunately, the difficulty of finding these grows in direct proportion to our financial success, a problem that increasingly erodes our strengths.
When you have one garden bed, it’s easy to double in size. Just build one more bed. It’s not so easy when you’re running an entire farm.
Buffett’s company, Berkshire Hathaway, is in the business of buying other companies – great companies, ideally, at fair prices.
But Berkshire is worth $900 billion dollars. They can’t afford to buy a $1 million company that they think will double to $2 million – it’s a tiny drop compared to their $900 billion value. Instead, Berkshire is looking to acquire multi-billion dollar companies. But those companies aren’t flying under the radar. They’re well-known and accurately priced. The opportunity for large investment gains simply isn’t there.
A similar idea comes from Rubin Miller, writing about Nvidia. Rubin said:
The stock market has averaged ~ 10%/year over the last 100 years, so if that continued while NVIDIA averaged 32% (which it has since its IPO in 1999)….
In 10 years, NVIDIA would be ~ 27% of the U.S. stock market.
In 15 years, NVIDIA would be ~ 68% of the U.S. stock market.
In 25 years, NVIDIA would be ~ 420% of the U.S. stock market.
But nothing can be more than 100% of something that it’s a part of.
That’s the impossibility (meaning if anything like this remotely occurred in reality, the entire market’s return would of course be pulled higher than 10%, simply by NVIDIA’s weight and return).
But this is the rub. You cannot compound returns at high rates forever.
On an infinite timeline, anything compounding at a higher rate than something else will eventually completely subsume it.
Rubin Miller
Eventually, in other words, NVIDIA would be so big and the rest of the market so small (comparatively) that “market returns” wouldn’t tell us anything about “the market” – they would only tell us about NVIDIA!
This is not poo-poo’ing on NVIDIA. It can still be a great company. But that’s different than being a great investment. You can be a good company, but a bad stock..
Or, back to our sunflower analogy, here’s a fact: a sunflower grows 100x in height over ~70 days. Then it withers and dies. But if it didn’tdieand instead continued 100x’ing its height every 70 days, that sunflower would reach the Moon in just over 1 year.
You tell me. Maybe we’ll soon see a sunflower reach the moon.
But I’m not betting the farm on it.
Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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Ready to achieve millionaire status without a cent to your name? Let’s kickstart your journey with these 15 genius strategies. Each step brings you closer to your goal, building wealth through dedication and strategic moves. It’s not just about money, but the lessons learned and connections made along the way that pave the path to financial success.
Create a Financial Plan
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Craft a financial plan that charts your path to millionaire status. It’s not just a dream but a calculated strategy based on your goals and timeframe. Establish clear objectives and a roadmap to reach financial independence.
Positive Mindset for Success
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Cultivate a positive mindset to unlock financial success. By fostering optimism and clarity, you empower yourself to manifest your aspirations with confidence. Maintain a can-do attitude to navigate challenges on the road to wealth.
To learn more: 125+ Money Affirmations to Attract More Money into Your Life
Start Saving – Even Small Amounts
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Kickstart your savings journey with small but consistent contributions. Embrace mini-saving challenges that gradually accumulate wealth without disrupting your daily life. These incremental savings lay the foundation for financial independence.
To learn more: 15 Mini Savings Challenge Printables To Save More Money
Pay Off Debts ASAP
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Prioritize debt repayment to accelerate your journey to financial freedom. Eliminating debt releases resources for wealth-building endeavors and boosts your net worth. Experience the transformative power of debt freedom on your path to millionaire status.
To learn more: How to Get Out of Debt in 5 Easy Steps
Find High Income Skills
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Discover lucrative skills to boost your earning potential. In today’s dynamic economy, capitalizing on your abilities can open doors to additional income streams. Invest in developing valuable skills that align with market demands for long-term financial success.
To learn more: Top High Income Skills Without a Degree to Learn
Grow Your Income with Side Hustles and Entrepreneurship
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Expand your earning capacity through diverse income streams. Side hustles and entrepreneurship offer flexible opportunities to leverage your talents and time, paving the way for financial abundance. Explore avenues to grow your income outside traditional employment.
To learn more: Find The Perfect Side Hustle for You
Learn Investing 101
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Master the fundamentals of investing to build wealth over time. Unlock the power of compound interest and passive income by venturing into the world of stocks and investments. Equip yourself with the knowledge and skills to navigate the financial markets effectively. Don’t delay!
To learn more: How To Invest In Stocks For Beginners: Investing Made Easy
Adopt a Growth Mindset
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Foster a growth mindset and learn from successful individuals. Embrace opportunities for personal and professional development to accelerate your wealth-building journey. Surround yourself with mentors and peers who inspire and challenge you to reach new heights.
Pick Your Community
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Surround yourself with like-minded individuals committed to financial success. Build a supportive community that encourages wealth accumulation and mutual growth. Engage with peers who share your aspirations and values to stay motivated on your path to millionaire status.
Stay Debt Free
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Maintain financial stability by avoiding debt traps. Free yourself from debt burdens to enhance your ability to save, invest, and accumulate wealth. Embrace a debt-free lifestyle that propels you toward financial independence and long-term prosperity.
To learn more: 7 Simplistic Habits Needed for Debt Free Living
Avoid Lifestyle Inflation
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Resist the temptation of lifestyle inflation to safeguard your financial future. Balance increasing income with disciplined spending habits to maximize savings and investments. By curbing lifestyle inflation, you preserve resources for wealth-building endeavors.
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Take Advantage of Compounding Interest
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Harness the power of compounding interest to grow your wealth exponentially. Let your investments generate returns that fuel further growth, accelerating your journey to millionaire status. Start early and leverage the magic of compounding for long-term financial success.
Focus on Your Long Term Vision
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Cultivating a long-term vision is important to know what you are striving towards. Develop a comprehensive financial plan that encompasses savings, investments, retirement, and estate planning. Stay committed to your vision and adapt your strategy as you progress towards millionaire status.
To learn more: Host a Vision Board Party: Plenty of Ideas for Success
Take Immediate Action
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Seize the moment and take proactive steps towards financial success. Avoid the pitfalls of procrastination by prioritizing saving, investing, and debt repayment. Embrace immediate action to overcome inertia and propel yourself towards your financial goals. Then, you will become a millionaire.
To learn more: How to Become a Millionaire with No Money
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
The mortgage origination industry has long made use of an operational strategy that relies on “staffing up” during cycles of high volume and then making staff reductions, sometimes en masse, when origination volume declines. While this was once a necessary business strategy, the technology now exists to implement a much more efficient approach. In order to achieve this, lenders need to take a thoughtful approach to the implementation of technology, and the very highest decision makers need to push their orgs to adapt processes to fully realize technology’s benefits.
Some credit is due to the mortgage industry for having made real progress in a few short years with regard to making automation a priority. Structured data sources, automated underwriting tools, and task and workflow-based systems can automate and accelerate many of the functions traditionally performed by human employees. The technology to do this is possible and in many cases, has even been built – it just hasn’t been properly implemented. We have the means today to shift lenders to far more efficient staffing and personnel models.
The problem lies in a simple insight: cost and labor doesn’t come out of the process when you automate a step, but rather when the person stops doing that step.
While we have adopted technologies and “turned them on” across the industry, so to speak, we have not re-architected our processes around them. In order to do that, I suggest 3 truths that lenders should keep in mind:
There are some things that technology can simply do better than humans – that work needs to be moved to technology.
There are other things that humans still need to do, but the more that companies can make those tasks “lower skill” and easier to train around, the more scalable and nimble the organization can be as the market changes.
It is very easy to add steps to a process, and overwhelmingly difficult to subtract them.
Moving workloads from people to technology
As an industry, we need to start by establishing a basic acceptance that technology simply does many things better than humans can. For example, technology is more reliable at making sure a flood report is ordered as soon as a loan is moved to processing than a human with a checklist is – it’s a simple rule that fires every time. This is an easy thing to agree on when technology does things “perfectly”, but what about when the technology has an error rate? For example, does OCR have to be 99%, 99.9%, or 100% right in extracting the first name off a driver’s license before we decide we can have people stop doing it? While a simple solution might be to compare the computer’s error rate to the human’s, and switch when computers make fewer mistakes, we all know this is difficult in practice – one only needs to look at the regulatory backdrop around self-driving cars as a prime example in another industry. Regardless of whether a company is willing to take a more cutting edge approach (switching as soon as the technology is “good enough”) or would rather be a later adopter, it is critical that lenders have a strong framework and strategy around when they shift work from humans to technology.
If we assume for a moment that we are willing to move work to technology once it can do it better than humans, the next step is to survey the market and understand what “automation” capabilities exist, and to what extent they can replace the entire task a human is doing, not just a pretty demo. This requires not just a deep understanding of the technology, but also an understanding of the current human process – is the same person ordering flood reports and reviewing the results? Is that person also troubleshooting when the flood vendor is unable to return a successful result because the property address hasn’t been verified yet? For many mortgage lenders, either very robust automation capabilities are necessary to replace these large, complex tasks their operations people are really doing, or their process needs to be simplified and broken down significantly into smaller “jobs to be done” so that simpler automation solutions can take those jobs on.
Making the work people still have to do more efficient
Once we’ve looked at work that can be moved to technology, the state of the industry today suggests that there surely will still be work for people as well; how can we make that as efficient as possible? There are two vectors lenders should think about when they think about the efficiency of their people: how much “work” (measured in loans, or ideally in tasks) one person can get done in a unit of time when fully ramped, and how long it takes to ramp them.
Work per user per unit of time is measured all over our industry: how many files can an underwriter review a day? How many loans can a processor manage in their pipeline at once? When thinking about improving the efficiency of work that people are doing and that can’t be moved to technology, lenders often focus on allowing those people to focus (there are elaborate solutions, like workflow systems, and simple solutions, like not letting your loan officers instant message your underwriters). Continuously re-evaluating how your technology is serving or hindering your team’s ability to work efficiently (system latency, easy navigation) is critical.
Less obvious, though – for work that still needs to be done by people, it’s also worth asking how we can make that work more intuitive, easier to train on, and split in a way that the bulk of it can be done by lower skilled workers. Making the work “simpler” or “easier” allows for improved elasticity in the business; rather than hiring specialists, lenders can move more general workers around to cover bottlenecks in their manufacturing process, or even slide employees between origination and servicing if the jobs and systems are really made simple enough. When a mortgage business employs a strategy that decreases the need for skill, the next market boom will require that business to simply flex 10 or maybe 20 people from other areas of the business into production to assist with the sustained volume. Instead of having to hire (and later, lay off) 100 new people and train them, the business can accommodate demand without artificially bloating its workforce.
Actually changing the process with subtraction, not just addition
One of the hardest things to do in any organization is to subtract things – adding a weekly meeting is almost frictionless in most companies, but removing it requires a brave individual to speak up, and then near-total consensus from the attendees. Similarly, in loan manufacturing, lenders add steps (things to check, documents to collect or send out) often, but almost never inventory all of the work their teams are doing and figure out what doesn’t need to be done anymore.
Compounding this, “redundant work” is actually commonly employed as a strategy in mortgage origination to ensure that files are high quality – if 2 people each have 10% error rates on missing a document in the file, for example, making sure that one checks it, and then the other checks the first person’s work, will allow for a 1% error rate. This simple fact often leads to checkers checking checkers.
This means that people in the mortgage origination process often do work on a file, expecting that work to have been done already anyways, and therefore that automating that work upfront doesn’t fundamentally change their behavior. In order to see the full benefits of any kind of work shift to automation and technology, the entire team downstream of that work needs to be retrained no longer to check that step. So how can this be done?
First and foremost, executive buy-in is critical to see any reduction of steps; very rarely do individual contributors feel empowered to remove steps from the process. Tobi Lutke, CEO at Shopify, has a famous quote that “The best thing founders can do is subtraction. It’s much much easier to add things than it is to remove.” Only executives and leaders have the social capital necessary to actually get people to stop doing stuff.
Once an executive has decided to cut a bunch of steps from the process, and ideally continue to revisit and cut steps as a continuous, living process, there are two ways to actually implement this. One is to have an extremely strong operations group that continuously trains and retrains; measuring the effectiveness of the team and ensuring an extremely high degree of compliance with written and documented standard operating procedures.
The second option to implement effective change-management on your automation journey is to encode the standard operating procedure inside of the system being used to originate the loans so that the software manages the process. When that happens, change management becomes something akin to a software update (with which people will comply because they are only doing the work the software directs them to do) instead of a complex and cumbersome re-training. The change management is, essentially, “baked into” the infrastructure itself.
Regardless of whether an operational or technical solution to this problem is employed, all of the automation in the industry won’t save money if each lender doesn’t individually develop a strategy to achieve the all-important goal of subtraction.
Tying these things together
We’ve long known that the mortgage industry struggles with a lack of elasticity and scalability. The market conditions and unique events of the past four or five years have starkly highlighted that problem. As our market has lurched from boom to bust in response to pandemic and high interest rates, we’ve seen an almost continuous parade of hiring and reductions-in-force. That, in turn, has had a broad impact on work culture across the industry, including a reduced level of loyalty industry-wide and a volatility that makes it nearly impossible to plan much further than the next peak or trough in the market cycle.
To actually get to a world where scaling production up and down doesn’t require swings in headcount, the marginal cost of labor inside each loan needs to be as low as possible, and then any need to “staff up” or “staff down” needs to be low training enough to allow the repurposing of existing staff instead of hiring and firing of staff outside the company. Getting to this world requires a careful re-litigation of existing processes, with executive buy-in, to subtract unnecessary steps and simplify the process, and this is an exercise that must be done continuously by lenders. This is not simple – there is no silver bullet solution – and it is hard work, but it is one of the greatest problems mortgage originators face today, and well worth the work.
As CEO at Vesta, Mike leads sales, product development, and implementations as the team redefines origination platforms for modern lenders. Previously, Mike spent 4 years on the early product team at Blend, where he launched key components of the flagship mortgage platform, and later started and ran new business lines such as Blend Insurance. Mike graduated from Stanford University with an MS in Computer Science/AI and a BA in Economics.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: [email protected]
Inside: Becoming financially sound is the first step towards proper money management. Learn how do I get financially sound in the next 30 days.
One of the smartest moves that you can make with your money is to become financially sound.
This is the one concept that should be taught before you even move out of the house or start your first job.
However, most of us wonder what it truly means to be financially sound.
Before we dig in and answer that question, let’s discuss the benefits of being financially sound.
Being financially sound means that you are wise with your money.
You exercise proper money management techniques and consistently save for your future.
While these concepts are very simple in thought, many people struggle to become financially sound. Most of the reason why is people typically start in debt way before they even start to earn an income.
In this post, we will detail exactly what you need to do today to become financially settled. Plus, the good news for you is you can accomplish this quickly – specifically become financially sound in the next 60 days.
Are you ready to become financially sound?
Why is it Important to Be Financially Sound?
One of the things that we constantly stress here at Money Bliss is by having money, the doors of opportunity open up.
When you don’t have money, you are left either going into debt, full of stress, exhausted by worry, and constantly wondering if you can get out of your current situation.
You need to learn how to become financially sound.
Growing up, you may have lived in a household that was constantly broke and far from examples of proper financial management of money. So, the concepts of becoming financially sound are more intriguing to you and important to learn.
On the flip side, you may have had parents who manage their money so well, you never had to worry about it. Yet they never taught you those solid money principles.
The most important reason to be financially sound is to have the money you need to do the things that you need (and want) to do.
Whether that is paying your bills, going on vacation, or giving back to a charity.
The other reason is more is a feeling of being financially sound. By becoming financially sound, these types of situations will be your life:
Not constantly stressed about money.
Do not have to worry about stretching money to your next paycheck.
Actually have money at the end of the month.
You can sleep at night knowing your finances are in order.
To be financially wise with your money, you need to prioritize your personal finance situation.
Over time, you can slowly adapt and improve your money position over time.
How do I get Financially Sound?
The good news is you can become financially sound in less than 60 days.
Becoming financially sound helps you understand why things need to happen and what needs to be done, and then put the steps in place to accomplish them.
At this stage, it is more of a money mindset change than it is about reaching specific financial goals.
1. Emergency Fund in Place
An emergency fund is just that – money set aside for an unplanned, unknown, catastrophic event that you need money for.
Ultimately, the goal is to never touch your emergency fund. But you have money set aside, just in case.
The “just in case” you want a new pair of shoes, or you want to take that vacation with friends; that is not an emergency.
A true money emergency is when you have not established a sinking fund available and you need to have unplanned maintenance done on your car. Another example is one of your loved ones is sick, and you need to take time off work to help care for them.
An emergency fund is money set aside for an unplanned, unknown situation.
By having an emergency fund in place, you can weather the storm and get through it without hurting your monthly finances.
2. Stop Living Paycheck to Paycheck
Living paycheck to paycheck means you have to wait until the next paycheck to take care of your bills and obligations. That comes with a lot of stress and worry.
By quitting a lifestyle of living paycheck to paycheck cycle, you can get ahead of your bills by at least one month.
Can you imagine the possibilities if you break the cycle of learning how to stop living paycheck to paycheck?
One of the best ways to do that is to actually have a spending freeze and to track your spending. That will help you eliminate unnecessary expenses while you get your finances on track.
To be able to get ahead by one month of a paycheck will make you financially sound.
3. Spend Less Than You Make
This concept is very simple…
Your expenses are less than your income.
However, many of us live a bigger lifestyle than we can afford and this will cause you financial detriment.
You must learn how to live below your means! This is different from within your means.
When you live WITHIN your means, you are spending exactly what you bring home in pay.
By living BELOW your means, you can save money and increase your savings percentage each year.
If you spend more money than you make, you are absolutely financially unsound.
4. Insure Yourself Properly
One of the biggest financial mistakes is not having the proper insurance that you may need.
Yes, the purpose of insurance exists as a security blanket in case something were to happen; you never know when your insurance may come in handy.
For example, you might have a horrible windstorm come in and a tree falls over onto your car. Well, that would be covered under your car insurance policy (or possibly the homeowner’s property where the tree fell).
Maybe your loved one got sick unexpectedly and did not survive, there would be a life insurance policy in place to help the heirs financially move forward with that loss of income.
In order to be financially sound, you need to review your insurance policies at least yearly.
You need to make sure that you are properly covered with insurance. Various types of insurance you may need include home, auto, life, health, disability, or long term care.
Always review your policies to see if another carrier is cheaper, you need to increase your insured levels or see if there are any more discounts that you qualify for now that you have not qualified for before.
5. Invest Time in Learning More about Finances
You need to become a constant learner with money.
If you put learning about money on the back burner, you will never reach your money goals that you have for yourself and you are guaranteed to never have a net worth of millionaire dollars.
You must invest time and energy into learning about personal finances.
The great thing is free to go down to a local library, and check out some of the top all-time best personal finance books available. Make it a goal to read one book a month. And if that’s too much, then make a goal of reading one money management book every quarter.
Here are some of the best ways to become a constant learner:
Join our email list for Money Bliss. We constantly send out great tips to help you advance your situation.
Listen to a podcast.
Choose one of the best finance books and find unparalleled success with money.
Find somebody on YouTube that you want to watch and learn.
Invest in the top investing course and learn how to win in the stock market.
Here’s my challenge to you… If you are willing to spend an hour, two, or more hours entertaining yourself with Netflix, sports, or YouTube, then you have the time to invest in your financial future.
6. Eliminate Wasted Money Situations
One of the most common mistakes that I see happen over and over is the amount of wasted money that happens in our society.
If you were letting dollars slip between your fingers because you are too lazy to cut out expenses, then that means that you are not financially sound.
Being lazy with your money will leave you financially unsound.
Do you know how you spend your money? Are willing to pay a higher price for something knowing you should actually pay less for it? Do you continue subscriptions because you do not want to call customer service and cancel?
If so, then you are giving away your hard-earned cash.
Start with a money mindset change.You work hard for your hard earned cash.
So, you need to quit wasting money and start keeping as much of it as you possibly can. Learn how to save money fast on a low income.
7. Pay Yourself First
This is the best money management tip I got from financial experts.
Pay yourself first.
That means when you get paid, you instantly move money into a savings account, an investment account, or a retirement account.
Start planning for your future today. You don’t wait until tomorrow. You don’t wait until you have more money.
I can tell you from personal experience… my biggest money mistake was waiting until I thought I had enough money to start saving and paying myself first. And now, thanks to the compounding interest, I have to contribute WAY more than if I would have just started saving money at a younger age and started investing it more aggressively.
8. Get Out of Debt
Make a plan to get out of debt.
I am not saying right now that you need to get out of debt in the next 30 to 60 days. Specifically, start to craft a plan to help you get out of debt shortly.
You are unable to move forward financially if you have debt on your shoulders, it will constantly be dragging you behind. You will not be able to increase your bank account balance and net worth like you would want to when you are in debt.
Figure out ways to get out of step and stick to that plan to pay off that debt.
It may take you three months to pay off your debt, it may take you a couple of years to get out of debt. The amount of time that it takes to pay off your debt does not matter. It is the fact that you were making a plan to actually pay off your debt.
And then later on, when you move to become financially stable, that is when your debt is completely paid off.
If you are reading this and saying “well, I don’t have to worry about this, I don’t have any debt.” Stay that way to be financially sound by saying no to debt.
Don’t go into debt, any more than you already are today.
Debt Resources:
9. Increase Your Income
A great principle to help you with money management is to make more money.
The more money that you have in your income bucket, the more you are able to save. Then, you have money available for other things that you want to do in life.
Find ways to increase your income:
Whatever it is you need to do, you need to find ways to increase your income.
10. Make Smart Financial Goals
One of the steps to becoming financially sound is knowing where you want to go next. And not be satisfied where you are today.
You want to learn to be financially sound and then move towards becoming financially stable, and then, ultimately financially secure. It’s a three-step process to get to where you want to go.
You can start today by making your first smart financial goal.
For me, my first one was starting an emergency fund. Then, I moved on to getting out of debt. Currently, my goal is to increase my savings percentage each year.
My smart financial goals do not have to be yours. You have to do what you want to do and makes the most financial sense for you.
Financially Sound Means Proper Money Management
Money management is not taught. More often than not, it is learned typically through the case of hard knocks.
One of the concepts above that we consistently talk about is making learning about personal finances a priority.
And that’s because you can read everybody else’s stories and not make the same financial mistakes. That my friend is huge.
If you want to maximize your finances the best way possible, then learn from others and do not make the same financial mistakes.
Learn the concepts of money management:
How to save consistently
How to reduce your expenses
Stay clear of debt
Live within or below your means
Become a smart investor and so much more.
Here on our site, Money Bliss, you can find plenty of tips to help guide you.
Imagine Your Life as a Financially Sound Person
For just a moment, I want you to close your eyes and think how life is today for you.
Are you filled with stress, worry, and anxiety? Not sure if you can pay rent the next month or have enough for food? Maybe you aren’t making the progress financially that you want to.
If that is you, think about what your life would be like if you became a financially sound person.
Maybe you’re reading this and you’ve been blessed financially, but your spending is still out of control. Even though you make a six figure salary, you are still scraping by at the end of the month and waiting for your next paycheck.
Imagine what your life could be like if you were a financially sound person.
It all comes down to basic financial money management.
You have to spend less than you make and you have to save money for a rainy day.
You can accomplish anything as long as you put your mind to it.
Now, are you wondering…. When can you say that a person is financially stable?
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Dream about what life could be if you didn’t have a job? If you are in the boat of I don’t want to work anymore, then you must read this post.
The reality is most people have days where they absolutely have no desire to work. Yet, you know deep down that you have to make money in order to pay your bills.
You are thinking… I don’t want a job I just want a life.
So, what happens when you don’t want to work anymore?
Well, if you don’t want to go to work today, you could take a sick day and get away with it. You can do that here and there for a while, but unfortunately, your employer is going to catch up to the quality of work that you are able to do or not do.
At this point you might be saying, you know I don’t want a job, I just want a life.
And that is very understandable if you don’t want to work in a field anymore job that you don’t love.
You want time freedom in your life!!
We will dive into the reasons for not wanting to work and how to overcome them when you need the money.
What to do if I don’t want to work?
The best thing to do is to find a job that you love and want to do on a daily basis!
Something that you can’t wait to go to work to be able to do. A way to make money that doesn’t feel like a job!
Unfortunately, too many of us feel we cannot do what we want to do when we want to do it. Thus, we want more out of life.
In this post, we are going to detail. If you don’t want to work anymore, what steps can you take to quit the job and live the life that you want?
Is it normal to not want to work?
I think each and every one of us has a desire not to work. Maybe you are thinking “I hate my job.”
This desire to work may ebb and flow based on what is going on, how you are feeling, and your current situation.
Especially if you are in a situation where you do not enjoy your boss, your co-workers, the company culture, or the current assignment, it will make going to work harder.
Whatever your job entails, if you are not enjoying what you’re doing, it is harder and harder to go to work on work every day.
As you can read on Reddit personal finance threads, there are plenty of people who have shared their stories about how they don’t want to work, seeking solace from others, and looking for ways to get out of the current situation that they’re in.
Also, if you are thinking that I can never make it until I am 55 then think about retirement. You are just sick of working and you may be in your 20s, 30s, or 40s.
It is okay to dream about not working daily!
Why We Don’t Want to Work
There are several reasons for not wanting to work.
Primarily many people do not feel engaged at their jobs, which makes them less likely to want to continue working. Gallup found that only 15% of employees feel engaged at work.1
In addition, there is an increasing amount of competition in the workforce as well as a lack of clear career paths and advancement opportunities for those who desire more freedom or flexibility with their careers. This can lead someone to think about becoming self-employed or going into a different field.
There are many reasons for not wanting to work.
People on Reddit share their stories about how they don’t want to work anymore. Some are still in school, some are retired, and others have other reasons for not wanting to work.
We all have heard about the Great Resignation with people saying “enough is enough; I don’t want to go back to work.”
1. Burnout
Burnout is when an employee begins to feel exhausted and overwhelmed by their job. They do not want to be there anymore and it negatively impacts the happiness of both the individual and their work environment.
If you want to stop working, it is okay!
Just make sure you can still be financially independent.
2. Not enjoying your job
Many people wake up and say, “I don’t really want to do the work today.” If you are not enjoying your job, it is harder and harder to go in every day.
People don’t want to work because they feel like they’re working more than is necessary, or there’s no meaning behind their job anymore.
If you find yourself not enjoying your job, it might be time to leave. Many people experience dissatisfaction with their jobs and want to retire early.
Many times this is when people leave their jobs and find success is the best revenge.
3. Mental Health
Mental health issues can be caused by outside factors, such as stress and anxiety, and can lead to feelings of wanting to avoid work.
For many, the idea of going to work can feel overwhelming and lead to feelings of anxiety and dread. It is also essential to take a step back and assess the quality of your mental health.
If this is something you have been struggling with, it is important to think about why you are feeling this way and take steps to address it.
If this persists, it is important to seek professional help. Visiting a therapist or counselor can help you identify the root causes of your negative feelings and develop a plan to overcome them. In many cases, your workplace may even cover the cost of therapy, so you don’t have to worry about paying out-of-pocket.
This is one of the good excuses to miss work.
4. Lack of Interest
When you find yourself feeling like you don’t want to work anymore, it’s important to take some time to examine the reasons why and identify potential solutions.
It could be that you’ve been in the same job for a long time and need a change of scenery.
Maybe you’re feeling overwhelmed and undervalued by your current role.
Possibly you have other things that are taking president and you don’t have the same level of interest.
Whatever the source of your feelings, they need to be addressed.
5. Support System
Friends and family can be a great source of support, offering advice and understanding. However, if they do not believe in you, it can make it even harder to find motivation.
On top of that, if you have family obligations such as childcare, it can be difficult to make the time to work or even to access the necessary resources.
Talking to your loved ones about your feelings and concerns is a great first step in getting through this tough time.
One of these family emergency excuses could help you in a pinch.
6. Lack of Appreciation
It can be incredibly disheartening to work hard and not be appreciated.
It’s easy to become discouraged and feel like you don’t want to work anymore if you’re putting in the effort and not being recognized.
When this happens it’s important to remember that you are valuable and your work does matter. It’s also important to talk to someone about how you’re feeling, whether that be a friend, family member, or therapist.
You just want someone to say to you, “I appreciate you!”
7. Thinking of Career Change
If you find yourself in a position where you don’t want to work for weeks on end, it’s important to figure out why. Are you having a hard time at your current job or do you no longer wish to pursue a career? If it’s the latter, it can be freeing to consider all the possible career changes you can make.
Many people don’t want to work anymore because:
they don’t want to pursue a career in corporate America
tired of the same job they’ve been doing for years
don’t want to continue vying for raises, bonuses, or promotions
It’s okay to dream about something else, something fresh and different.
You may find yourself researching other opportunities to put your skillset to use.
9. More Interest in Hobby to Turn into Side Hustle
For many people, having a side hustle is a great way to make extra money, explore a passion, and turn a hobby into something productive and profitable.
If you find yourself no longer wanting to go to work and feeling more fulfilled in your hobbies, it may be time to pursue a side hustle.
You can monetize your hobby and create a side gig to give yourself a new source of income.
This will provide you with the freedom to pursue what you’re interested in and make a living from it. It can also give you the option to quit your job and explore other areas of your life.
10. Wanting to make money passively
Making money passively is a goal that many people desire, but it can be hard to turn into reality.
While it is possible to make money passively in the stock market, real estate, or a small business, one can also earn passive income by doing any type of side hustle.
It is better to find ways to make passive income from something you enjoy.
You need to figure out what should I do for a living that will make passive income.
How do you make a living if you don’t want to work?
If you don’t want to work, you still need to find a way to make a living.
Passive income is the most effective way of making money without working.
It allows you to work on your business or hobby full-time and then withdraw a certain amount every month that helps pay for all of your expenses, including food, rent/mortgage, etc.
So, your first step is to create a passive income source.
If you don’t, then don’t say, “I don’t want to do the work today.”
In fact, there are many good excuses to miss work.
Can I survive without working?
Well, that completely depends on your financial situation. (Since most people are not aware of where they stand financially, here are the Money Bliss Steps to help you.)
If you are lucky enough to be a trust fund baby with somebody else managing your money, you are likely fine and can survive without working.
However, if you are like most normal folk, then you may be able to survive for a little bit without working. But over time, it will catch up to you. Not working is not a long-term solution.
While you may be on unemployment and collecting unemployment benefits, or maybe even disability payments that are not enough to make ends meet. In most cities, you can survive in the short term without working. But in the long term, it is not going to work out for you.
If you are serious about not wanting to work, you need to find the FIRE movement, which means financial independence retire early.
That is a better term for not wanting to work anymore. When you want to quit the job and do something else in life, you have to do what is called FIRE.
5 Simple Steps To Quit the Job
To quit the job or the career path that you were in, you have to take steps ahead of time to make sure that your transition (financially) is as smooth as possible.
The biggest question is how can I make money if I don’t want to work ever.
You set aside money to take care of your obligations and bills while being able to live the life that you want to live. That means you have more types of income than just a paycheck.
These are the exact steps you need to take to quit the job. Obviously, it won’t happen overnight. But, you can see the light at the end of the tunnel.
1. Make an Exit Plan
First, you have to make a plan of how finances will work without a typical paycheck. You need to learn how to FI quickly.
In order to retire early or quit the job, you must be able to financially support yourself without a consistent income coming in from a regular paycheck.
Specifically, it means you need to find ways to make passive income. That could be in the stock market, real estate, small business, side hustle hobby, or driving for Uber. There are a variety of different ways to make money; it is just better to find ways to make money doing something you enjoy.
One of the things you will quickly realize is that to make money passively, you must have money on hand to invest. That is the “Catch 22” of why people get caught in the cycle of it being too difficult to change their financial position and just give up.
If you don’t like your job and you don’t want to work anymore, then you need the mindset that something is gonna change, you are gonna make it a reality.
It will be hard for a short period of time to save up the money necessary to build the steps to be able to quit working or FIRE, but you might be surprised how you can double $10k quickly when you put your mind to it.
Motivation is a great thing, especially given the right circumstances.
Related Answers:
2. Save Money
If you don’t want to work anymore, then you have to save money to cover your bills. Period.
There is no way to get around that situation.
Your friends and family are not going to pick up the slack just because you want to quit your job.
So, you have to find all of the possible ways to save money. A great place to start is with one of our money saving challenges.
Another great way to save more money is by changing your habits.
In order to “retire early,” you must save a majority of your income at an early age to gain the benefit of compounding early. If you are thinking, “Well shoot, I missed that bucket,” then don’t worry … now is better to start than waiting too long.
Things only look up from here!
3. Cut Expenses
You have to be able to live below your means.
If you’re not interested in your job or the career that you are currently in and you don’t want to work anymore, then you need to cut your expenses in order to save more money.
One of the wisest tricks of the FIRE community is becoming a thrifty person. You know when to spend money on quality items as well as you know when to save money on frivolous expenses.
4. Pick a date.
As with any smart financial goal, you need to put a deadline on when you want things to happen.
If you are not happy with your job and your depression isn’t worth it anymore, then you have to find a date to move on and do something else.
Obviously, you’ll need some of these FIRE calculators to learn how much you need to make your dream a reality.
that happen. Here are some of the best fire calculators that you can find, to learn, how much you need to quit your job.
5. Start Hustling
Let’s face it, 2020 changed the workplace as well as our priorities. Honestly, I think it was for the better. We all realize there is more to life than just the constant line of being busy.
In addition, many of us found the extra time that we can now put to work and start to make money.
It is easier to work when you have a target goal in mind of not working anymore. You must start saving money to put to work passively.
Below you will find ideas to help you search out the best serious ways to make more money. The last thing you want to do is learn what happens when you don’t save enough for retirement.
When You Don’t Want to Work Anymore
In this post, we answered the question of how can I make money if I don’t want to work.
The secret sauce is called passive income.
You must earn money on your investments. So, yes, now is a good time to invest in stocks.
There are many ways to make passive income; it could be in the swing trading the stock market, real estate, a business venture, a side hustle, or simply long-term investing.
Unless you are massively independently wealthy and part of the 1%, with millions of dollars that you do not know what to do with, then you will want to make some money on your nest egg that you create over time.
If you are saying, “I just want a life,” then stop waiting for the magic time for your retirement. You don’t have to wait until the retirement age of 65 years old.
You are in charge of your life and can make it happen… if you put your mind to it.
Source
Gallup. “What Is Employee Engagement and How Do You Improve It?” https://www.gallup.com/workplace/285674/improve-employee-engagement-workplace.aspx#:~:text=Based%20on%20over%2050%20years,in%20the%20%22engaged%22%20category. Accessed March 11, 2024.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Despite recent easing, inflation comes in as the top worry for half of American consumers, and it has likely implications for future credit and mortgage borrowing.
Approximately 50% of Americans listed rising prices for daily expenses, including groceries, gas and utilities, as their top financial concern in the next six months, according to the latest quarterly consumer pulse study from Transunion. Meanwhile, 84% ranked it in their top three, the highest mark since the credit reporting and data provider began collecting such data two years ago. The latter share is up five percentage points from one year ago.
Compounding inflation near the top of the list were mortgage costs and interest rates, with 47% and 46% of respondents putting the impact of such costs in their top three.
“Consumers are facing distinct challenges when taking into account today’s high inflation and interest rate environment,” said Charlie Wise, senior vice president and head of global research and consulting at Transunion, in a press release.
“From filling up a tank of gas to making a rental payment to buying groceries, most consumers are paying more today for everyday expenses than they ever have.”
The combined trends of rising prices, housing costs and interest rates may also end up taking a cut out of potential mortgage borrowing. Fourteen percent of likely credit borrowers planned to take out a mortgage in the next year, decreasing from 21% a year ago.
The May Consumer Price Index released on Wednesday could point to some easing on the way, though. Inflation rose 3.3% annually, slowing for the first time in four months. From April to May, the index also showed prices flattening.
For many consumers, any relief will be welcome. Only a 48% share of people in Transunion’s survey said their incomes were keeping up with the rising rate of inflation, but that percentage dropped sharply among the subset of consumers expressing the most concern about price hikes. Just 26% of that group said their wages were able to keep pace with increased costs, while 42% said their finances were worse today than a year ago.
Transunion’s latest research corresponds to other recent consumer polling showing the effects of inflation on the American consumer. Research conducted by Morning Consult for the J. Ronald Terwilliger Center for Housing Policy and National Housing Conference found 23% of Americans struggling to make ends meet, with 30% indicating they were only managing to meet expenses.
The Morning Consult poll also showed one-third of homeowners facing difficulty over the last year in making their mortgage payments. Meanwhile, 49% of renters reported struggling to make rent.
Similarly, insurance firm Nationwide recently said a majority of 64% of consumers viewed their financial situation as only fair or poor, attributing much of that sentiment to housing costs.
Two-thirds of people surveyed by Nationwide also expect housing costs to head higher over the coming year. Meanwhile, 21% said they had tapped into retirement savings or would consider it to help pay for housing-related expenses.
Rising financial worries could be changing consumer behavior toward borrowing and spending beyond mortgages, with 30% intending to refinance or apply for new credit in response, Transunion said. Close to 59% of the group said it would likely be in the form of new credit cards. Among those expressing concerns over inflation, 62% would apply for a new card.
Consumer anxiety might raise warning flags about future borrower performance, with delinquencies increasing
“We have seen over the last couple of years a lot of deterioration in credit performance, and that includes credit cards, personal loans, auto loans,” Wise said in an interview, attributing current delinquency trends to lending trends during the robust pandemic economy of a few years ago.
“Lenders were feeling very good about extending credit now to even riskier borrowers, because their books looked so good. Everybody was spending.”
Although mortgage delinquencies also saw small upticks, performance among borrowers remained relatively strong compared to other credit products, thanks to the amount of equity in their homes, Wise said.
But while consumers acknowledge inflation challenges, Transunion also found a sizable percentage of 55% expressing optimism about their own 12-month financial outlooks, with expectations of rising income countering more pessimistic views on current prices. Approximately 47% said they expected to see income growth in the next year.
Younger generations were more likely to have a positive forecast, with 62% of Generation Z expressing optimism about their finances. By comparison, less than 50% of Generation X and baby boomers held the same view.
The counterintuitive divergence in opinion about current price levels and future financial opportunity may lie in impressions the public has about what expenses should be versus economic realities.
“Their anchor is still set on what prices they think are the right prices from three years ago,” Wise said.
“The situation is getting better, but a lot of consumers don’t see the difference between inflation and prices. They view them as the same.”
Series EE bonds, or Patriot Bonds, were initiated in 1980 as a low-risk way for Americans to save. The money invested is guaranteed to double in 20 years.
They build upon the tradition of Series E bonds, or war bonds, which were introduced by the federal government in 1941. Learn more about this savings vehicle here.
What Is a Series EE Bond?
A series EE bond is a U.S. Treasury bond. It’s considered to be a very safe investment, as it’s backed by the U.S. government. It is guaranteed to double in value in 20 years, even if the government has to add funds to it to meet that mark.
To provide some context, here’s a quick look at what bonds are and how bonds work. A bond is a debt instrument. Bonds are issued by corporations or governments in order to raise capital. The bond market is huge — much larger than the equity markets. (In 2023, the market cap of the global bond market was about $133 trillion, versus $111 trillion for the stock market.) Investors provide capital to companies and governments when they buy the bonds, effectively loaning their money to that institution.
Meanwhile, the bond issuer agrees to pay investors the capital back, along with interest, after a certain period.
There are different kinds of bonds investors can purchase, including municipal, corporate, high-yield bonds, and U.S. Treasuries. A savings bond is a type of U.S. Treasury bond, issued with the full faith and credit of the U.S. government, meaning there’s virtually no chance of losing money. Savings bonds allow the government to borrow money for various purposes while giving investors a reliable and predictable stream of interest income.
Series E bonds, which were created in 1941 to help fund the WWII effort, were replaced in 1980 with Series EE bonds, or Patriot Bonds.
💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.60% APY, with no minimum balance required.
How Do Series EE Bonds Work?
If you’re interested in buying bonds, here are details on how a Series EE bond works:
• Series EE bonds are electronic and can only be purchased and managed online with a TreasuryDirect account. They are available in any denomination starting at $25, up to $10,000 per person named on the bond, per calendar year.
• These bonds are guaranteed to double in value in 20 years, even if the government needs to kick in extra cash. You can hold the bond for up to 10 additional years to continue to earn interest.
• When you purchase a Series EE bond, the interest rate will be stated. Through October 31, 2024, the interest rate is 2.70%.
• Interest is earned monthly, compounding semi-annually, for up to 30 years, unless you cash it sooner.
• Series EE bonds can be cashed in (or redeemed) after 12 months, but early withdrawal can trigger a penalty of partial interest loss.
• Electronic Series EE bonds can be cashed in via the TreasuryDirect site.
• Interest earned on Series EE bonds is taxable at the federal level. Federal estate, gift, and excise taxes, as well as state estate or inheritance taxes, may also apply. If the money is used for qualified education expenses, however, you may not be subject to taxes.
• The TreasuryDirect site also makes 1099-INT statements of interest earnings available annually.
Recommended: Understanding the Yield to Maturity (YTM) Formula
Understanding Series E Bonds
The popularity of Series E bonds may have hinged largely on the patriotic call to purchase them as part of the war effort. Buying bonds served two purposes: It helped the government to raise money for the war and it also helped to keep inflation at bay as shortages threatened to push consumer prices up. Apart from that, there were other qualities that might have made a Series E saving bond attractive.
These bonds were issued at 75% of their face value and returned 2.9% interest, compounded semiannually if held to 10-year maturity. So investors were able to earn a decent rate of return on their investment.
Series E bonds were also affordable, with initial denominations ranging from $25 to $1,000. Larger denominations of $5,000 and $10,000 were added later, along with two smaller memorial denominations of $75 and $200 to commemorate the deaths of President Kennedy and President Roosevelt, respectively.
Series E bonds were redeemable at any time after two months following the date of issue. Bond purchasers could redeem them for the full face value, along with any interest earned.
Interest from Series E bonds was taxable at the federal level but exempt from state and local taxes, adding to their appeal. And because they were issued by the federal government, they were considered a safe investment.
Recommended: Understanding the Yield to Maturity (YTM) Formula
Series EE Bond Maturity Rate
The maturity rate for EE bonds depends on when they were first issued.
Here’s a table showing the maturity dates for Series EE bonds over time:
Issuing Date
Maturity Period
January – October 1980
11 years
November 1980 – April 1981
9 years
May 1981 – October 1982
8 years
November 1982 – October 1986
10 years
November 1986 – February 1993
12 years
March 1993 – April 1995
18 years
May 1995 – May 2003
17 years
After June 2003
20 years
Recommended: 13 Tips for Aggressively Saving Money
Are Series EE Bonds Right for Me?
Series EE bonds can be a convenient, low-risk way to help your money grow over time. Plus, many people like the idea of investing in America and having their investment backed by the U.S. government. However, the rate of return may not be optimal, and the bonds are typically held for quite a long time versus a short-term investment.
Here are two popular alternatives you might consider to grow your money:
Savings Accounts
A savings account is a deposit account that’s designed to hold the money you don’t plan to spend right away. You can find various types of savings accounts at traditional banks, credit unions, and online banks. Savings accounts can pay interest, though not all at the same rate.
High-yield savings accounts at online banks, for example, tend to pay much higher rates than basic savings accounts at brick-and-mortar banks. Currently, they may offer around 4.60% APY (annual percentage yield) versus 0.58% for savings accounts.
Stocks
If you’re unclear about how stocks work, they effectively represent an ownership share in a company. When you buy shares of stock, you’re buying an ownership stake in a publicly traded company. The way you make money with stock investing is by buying low and selling high. In other words, you want to purchase stocks at one price then sell them for a higher price.
Stock trading can be a more powerful way to build wealth over time versus keeping money in a savings account or buying bonds. But there’s a tradeoff since stocks tend to be much riskier than bonds or savings accounts. Buying shares of mutual funds or exchange-traded funds (ETFs), which hold a collection of different stocks as well as bonds, is one strategy for managing that risk.
Recommended: Bonds vs. CDs: What’s Smart for Your Money?
Banking With SoFi
Series EE savings bonds can be a safe way to earn a steady rate of return. However, they aren’t the only way to grow your money.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
When should I cash in EE savings bonds?
Series EE savings bonds are optimally held for 20 years, at which point the money invested will have doubled. If you’d like to keep earning interest, you may hold the bonds for up to an additional 10 years.
How long does it take for a Series EE savings bond to mature?
Series EE savings bonds mature in 20 years. At the end of that period, the initial investment’s value will have doubled. You may hold them an additional 10 years and continue to earn interest, if you like.
Do Series EE savings bonds double after 20 years? 30 years?
Series EE savings bonds double after 20 years. If you don’t redeem them, you may continue to earn interest on them for another 10 years, for a total of 30 years.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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