From Debt to Wealth & Mobility

A couple years ago I was in a lot of debt. (Maybe $35k is not a lot for you, but was a helluva lot for me!) Since then I’ve been lucky enough to have decent work and to pay off all my credit cards, tax penalties, vehicle loan, etc. I’m very grateful to have had my best financial year ever last year, when I paid the last of it all off.
I’m not rich yet. But I’m working my way there, and making measurable progress. Making progress requires that you:
  1. know specifically what you’re working towards
  2. can tell when you’re going off track
  3. know when you’ve arrived
This is my guide to help with that. I made it myself. I hope it inspires you to make your own if you haven’t yet. I put together from a variety of sources that I didn’t take the time to link to here. I’m happy to answer any questions you may have for clarification purposes.
And if you don’t like something, please just change it. No arguments or permission needed from me! Admittedly, even I have skipped around a bit, though I’m happily cranking away at stage III now 🙂
This assumes that the reader is a healthy, American, renter who drives a car and has a job, has 5 or less dependents, and has the minimal government required healthcare & automotive insurance. If not, it may be easier/harder for you, please adjust as needed.
PRE-REQ set retirement trigger
retirement = 25x annual spending (aka “Safe Withdrawal Rate”) In other words, once your living expenses are 4% of your savings, you win! You don’t have to work anymore unless you want to.
  • $20k/yr living expenses = $500k invested
  • $30k/yr living expenses = $750k invested
  • $40k/yr living expenses = $1M invested
  • $50k/yr living expenses = $1.25 invested
  • $60k/yr living expenses = $1.5M invested
  • $70k/yr living expenses = $1.75M invested
  • $80k/yr living expenses = $2M invested
Above that, you either have a very loose definition of living expenses, more than 5 dependents, or you’re already rich enough not to need this guide. In any case, if you can multiply by 25 then you too can do the math. Once you know your baseline number, you’re ready to get started.
FIRST get to current
  • Reduce/consolidate expenses until living on 50% of take-home pay (yes, you can! and you’ll learn a ton when you do, even if it’s just temporary.)
  • pay off all debt
  • pay all taxes & bills on time
  • switch from big banks to local credit union
SECOND get in front of life’s surprises
  • keep one month’s living expenses in savings
  • keep one month’s living expenses in stashed cash
  • automate all possible bills
  • get line of credit for overdraft protection
  • build/repair credit score
  • revisit existing insurance plans (enough?)
  • get disability/rental/life insurance
  • fix or release anything that’s broken
  • establish Health Savings Account (HSA)
  • if employer has matching savings plan, sign up and max out
  • upgrade job/income/skills
  • re-optimize annual living expenses
  • have valid passport
THIRD get peace of mind
  • max out HSA
  • keep 3x monthly living expenses in savings
  • keep 2x monthly living expenses in stashed cash
  • keep 1x monthly living expenses in coins/metals
  • create legal will & healthcare directives
  • get advice on legal tax deferral strategies
  • secure digital presence
  • refine all possessions, keep only what makes you happy
  • make job/living changes for maximum happiness
FOURTH get diversified
  • open Self-Directed IRA / Solo401k
  • have company for asset protection purposes
  • overflow income
    • low-cost index funds
    • qualify to buy home (20%)
    • overseas coins/metal storage
    • blockchain currencies
    • foreign bank account (keep under $8k for now)
  • apply for e-residency in Estonia (very easy)
  • apply for residency in another country (less easy)
FIFTH get invested
  • more into overflow income listed above (must report when total foreign holdings are over $10k on any day in a year)
  • also additional overflows to
    • income-producing property or business
    • foreign brokerage account
  • apply for second citizenship (dual)
  • open more companies as needed for asset protection
    • $50k = get premiere-level foreign bank account
    • $100k (and 3+ active companies) = start captive insurance company
    • $500k = start private offshore bank
    • $1M = start private offshore trust
I’m sure there’s more I’ll add as I get further along (right now I’m just in phase 3, myself). If you have other stuff that I maybe forgot or didn’t get to yet, do tell! 🙂