I think another mindset that holds people back is a paid by the hour mindset compare to paid by results mindset. In other word, consciously focusing on the most valuable activities on the job instead of just filling the day. This mindset switch reduces work stress and the number of hours required to finish important work.

The paid by results mindset also positions you for easy pay increases over the life of your employment.

Wow. Just….wow.

1st of all, my income has always been highly variable (heavily bonus and/or commission based). And 2nd of all, I have always sought some form of equity participation in my work (i.e. profitsharing, stock options, etc.). That way, I can reap some of the profit upside from my own efforts.

Since I never know exactly what my income or employment situation will look like from year-to-year, this has forced wife and I to live as much as 50% below our means. It also forces us to do a lot of advance planning and always have a Plan B for the worst case. We set a budget at the beginning of the year, track it semi-monthly, and update it mid-year. This requires tracking expenses, but not income. So, if you asked me what my paycheck is, I might have to look it up. But, if you asked my how we’re doing against certain budget items, I would have a pretty good idea.

Also, as part of the wealth mentality, I think its important to always think about maximizing your own worth. What I mean is that you should be maximizing your income generating ability via higher education, new work experiences, etc., things that make you more valuable to your employer, your clients/customers, and to the job mkt. And/or if you have the temperment for having your own business, then you should be thinking in that direction (and make sure you have the capital set aside to take advantage of opportunities). For example, we own income property and wife has her own home-based business. These have enhanced our income and NW over the years and provided some great tax bene’s.

All in all, I think the wealth mentality is a valid concept. You have to have good habits and an open mind for opportunities. You also need to have goals, discipline, and a strong work ethic. And you also need to cultivate solid family and friend relationships (because they gives you the strength and support to do everything else).

I certainly know what I make every paycheck (since I’m salary), but I couldn’t actually tell you my salary without checking a stub for the gross and doing the math. It comes up fairly often (many of my relatives obsess about other people’s money), and I usually just take a lowball guess.

And the greatest feeling was when I was 26 years old was paying off my bought-new car. I’m now wiser and wouldn’t finance a brand-new car again, but to carry that off was tremendous. I still get that feeling with every loan paid off, every extra mortgage payment. On the other hand, when the stock market goes up or down, I don’t care. I didn’t actually do anything, I just stuck my money somewhere and hoped for the best. It’s just a well researched lottery ticket.

Good article!

Yet another thought-provoking article. Thanks!

Here’s a suggestion for those of you who use
Microsoft Money & want to see the income versus outgo trend Trent. Under “Reports” choose “Income and Spending Over Time”. In seconds, you can have a lovely yellow and blue bar chart that tracks your montly income and expenses. You can set it for any time period you wish.

We call it the “Living Below Our Means” chart and it’s rewarding to watch the gap grow between income and expenses. (Especially when our net worth is actually falling due to current market conditions).

That type of thinking is destined to cause you to work for the next 10, 20, 30, +++ years.

Bottom line: there’s a lot less stress (a huge reward in itself) when you’re in net worth and not leading a paycheck-to-paycheck lifestyle.

However this is counter to your articles and tone just before and when you first started full time writing. You were very concerned about ensuring you were sustaining a certain income level (though you were pretty sure you had an idea that you could). Only now that you have already tested the waters and are reasonably confident that this minimum level of income is actually coming in, even if you don’t know it to the penny every month, can you respond like this.

Secondly, had a friend responded like you did to me, I’d be all over them to get their act together and know their income because they have quarterly tax statements due and they’d better get those right or they might be in for a rude surprise come tax time next year :-).

Comment 11 – feeling rich is easy, I want to BE rich! :-)

Comment 21 – Whew! That certainly was . . . evangelical.

Anyway, I love your idea. This happened to me about the time hubby stopped driving to work. We no longer had to pay 240 dollars a WEEK for him to get to and from work. We built up a few thousand and then he lost his job. We have since had to dip into the savings. Either way it was nice to know we had a cushion. Now I am employed, self employed, and building up our cushion again. It’s nice to know we might actually have that again.

If I were you, I’d spend a lot more time raising my current income (try cutting TSD back to weekdays only, and work an outside weekend job) – one that offers a 401(k).

Spend a lot less time postulating about why your “new found” approach is better. You will need at least $2 Million to call it quits (and, more likely, $3 Million). The sooner you earn $$ and invest it, the sooner you can focus on your new approach. The time value of money is hard to argue with. For those that haven’t played with MS Excel’s FV function, learn it, live it, and love it! Start today, retire sooner.

Skip Sharebuilder and purchasing individual stocks (it’s a total waste of time), and establish these three goals for yourself:

Achieve Vanguard Voyager Status (100k in VG assets) within five years.

Achieve Vanguard Voyager Select Status (500K in VG assets) in xx years.

Achieve Vanguard Flagship Status ($1 Million) in xx years.

You fill in the xx blanks, depending on your income, ability to raise it, and your ability to save.

These are real goals worth working achieving. This is the stuff that really matters. Period. What kitchen stuff to buy is preaching to the converted. Get religion around earning and saving money like your life depends on it.

It has been so ingrained it would be tough to shed.

Regards,
Flea

Even though I did something unusual today, and DIDN’T read TSD till late, I was surprised/happy to find that your other post today applied as well; I put back a $17, 12-piece rubbermaid food storage set for their lower-end stuff, 10-pieces (which are more useful sizes!), for just $4.44 total! I don’t know enough about what kind of containers are good or not, and the ones I have work fine, I’m just augmenting, so the frugal way was the best way today!

So the logical response is to minimize and religiously track consumption expenses.

That’s exactly what the successful small businesspeople profiled in the book “The Millionaire Next Door” made a habit of doing.

And by doing so, most were able to build a net worth to the point of having a “walk away from it all” (I think the book calls it a “go to he**”) fund.