Federal $6,834

DC: $921

Home State: $24

Cost: -$21.10

Total = $7,757.90

Millionairehood

Departure: 2008 – Age 24 

Arrival: 2028 – Age 44

Speed: Aggressive.

 My blogging friend Don and I decided to buddy-up and join J. Money’s Millionaire’s Club.  It is an e-club for prospective millionaires.  The only requirement is that you make the committment and list the steps you will take to achieve your goal. Right now, since I haven’t landed a job yet I have no idea about my earning power but I am going to estimate conservatively and give myself 18 more years to achieve my goal.  I plan to become a millionaire by doing the following things:

1. Develop multiple income streams.
2. Diversify my career.   
3. Invest wisely for retirement.
4. Live below my means.
5. Give back to the community.  

Develop multiple income streams

I will develop multiple income streams that will increase the amount of money that I bring in. 

• Start a business before 30
• Open a Roth 401(k) or other another tax advantaged retirement plan available to the self-employed. 
• Identify and consistently develop five income streams before 2011.  
• Use the “snowballing” technique to keep track of all the small amounts that come in. 

Diversify my career. 

Basic fundamentals of supply and demand tell me the legal field is doomed until the ABA wakes up.  I must diversify my career.   

• Get a job with an organization I can see myself staying at least 5 years. 
• Attend night school or go back to school and obtain a degree in another field where the supply/demand ration isn’t so out of whack. 

Invest wisely for retirement

I will invest wisely for retirement by using every tax advantaged retirement vehicle available to me and by always getting my 401(k) match.

• Max out my Roth IRA as long as I am eligible.  If I cross the eligibility territory then max out a regular IRA.
• Max out or place 20% of my income yearly into a 401(k) before 30.  After 30, I need to max out the 401(k).

Live Below My Means

I will resist the urge to keep up with my cousins.  I will not buy possessions in order to impress other people. I will live on 50% or less of my salary.

Give Back to Family & Community

In my zeal to become a millionaire, I will not forget the importance of staying connected to my family and giving back to my community. 

• I will either give my time or money to worthy causes that match my values. 
• I will stop being a safety net for Bum my parent and help Bum make wise financial decisions to the best of my ability.
• I will look into opening a Vanguard Foundation to best maximize any donations that I wish to make. 

 Don’t forget to head over to Money Reasons to see Don’s list. 

Is a million what it used to be or should we be aiming higher?  Do you believe you can become a millionaire?  What are you doing right now to achieve that goal? 

Financial Goals for Fall 2009 – Update

 I had several personal finance goals for this fall semester and here’s how I fared on them.

Goals:

• Goal #1: Correct my social security earnings statement
• Goal #2: Open a Health Savings Account
• Goal #3: Start a personal finance blog
• Goal #4: Get a holiday job for my winter break
• Goal #5: Set a budget

 Goal #1: Correct my social security earnings statement

 Issue: What I saw on my paystubs and income tax statements did not correlate with what I was seeing in my social security earnings statement.

 Status: Done but…  

 Comments: I went to the social security office and they went through the paperwork with me and they determined that my earnings statements were correct.  Turns out that my undergraduate college, my previous employer, did not pay take social security out of my paycheck.  Following the social security administration’s suggestion, I emailed the university.  I will have to wait until they open up in spring to follow up on this matter more.  While I was reviewing my records in the office I also came across a short term job I didn’t have any information on.  It was taking notes for a student with disabilities for one semester.  For some reason in my mind I came to believe this was volunteer work but it was paid work.  I need to get some kind of record from the institution for this work as well. 

Goal #2: Open a Health Savings Account

Issue:  A few months ago I became ineligible to be on my parent’s insurance because of my age.  I get a one size fits all and covers virtually nothing insurance through my university.  I needed an alternate way to save for health care expenditures.  The Health Savings Account would be a perfect way to meet the gap. 

 Status:  Ineligible for the HSA

Comments: I knew that one problem with opening a Health Savings Account would be the fact my university student insurance wouldn’t really qualify as a high deductible insurance.  But, still I went to my bank to see if there was any way my university student insurance which has many of the characteristics of a high deductible health insurance would allow me to open up a HSA.  The answer was no. 

 Goal #3: Start a personal finance blog

Issue: I was expecting to land a job with the law firm that I was working for this summer but that did not happen.  With the disappearance of the six figure job I realized that I need to take charge of my finances right now to ensure the kind of financial security I wanted to have. 

 Status:  Started online blog and I am continually posting to it.  This has made me more accountable about my personal finance decisions.  It has also exposed me to 500 and counting spam comments per day.   

 Goal #4: Get a holiday job for my winter break

Issue:  I need money because (1) this year I do not have any parental support for my living expenses and (2) I have a huge spring tuition bill looming because all my outside scholarships were used for my fall tuition bill. 

 Status: In the process of completeing. 

Comments:  I am currently working a holiday job.  The earnings will be just under $1K.  This is really tiny when compared to my living expenses and my tuition bill, however, I am glad that I was able to make some money during the break. 

 Goal #5: Set a budget   

Issue: I am spending much more money than I think I am because there is no monthly budget or record keeping going on. 

 Status: Struggling.

 Comments:  I am currently revisiting several ways to find a budgeting method I would like to try for 2010.  I think using all cash would be the easiest but then I worry about building a credit history.  I will provide an update later on about my budgeting adventures.

I was so excited to see my paycheck that I immediately opened it up to see how much I had made working. It was a whopping $161.29. What! No way! I know I am working for peanuts but that’s even smaller than peanuts. So, I started scanning my paycheck to see why the heck my paycheck is the size of a mustard seed and that’s when I noticed my big fat 401(k) contribution. So, here’s how my first paycheck breaks down.

Total Earned Paycheck: $515.12

Now, subtract the following:

401(K) Contribution:-$257.56

Hours: 15.90 Retail at $8 per hour = $127.20 39.30

Jewelry at $7.25 per hour & commission = $387.92 ($284.93 hourly total + commission 102.99)

Taxes: $76.27

Total After Taxes and 401(k) Contribution = $161.29

 So, What’s Up With the 401(K)?

 I had the option to opt in to Big Department store’s 401(k) plan and I elected to contribute 50% of my paycheck. There’s no special reason to do this and keeping up with it, closing it and transferring will probably take more effort for such paltry sum. But, I opened it because this was the first job where I had the option to contribute towards a 401(k) and I was of age to do so. This was my first chance to open one and I just couldn’t let the opportunity pass.

I first focused on the legal sector, then narrowed it down to those with their doctorates so as to exclude paralegals.  Then I gathered all the data for the 25-29 age group.  I came up with 20 young lawyers between 25-29.  They all have decent to really good incomes.   Of the 20 young lawyers, 9 were making six figures.  The highest income was in the $250,000+ range while the lowest was in the $40,000-49,000 range.  And the average networth was…drum roll please…   -$22,651.  Yes, that is a negative netowrth.     Yikes.  Only 4 out of 16 or 20% of attorney’s actually had a positive networth. 

• Total young attorney’s with debts:  16 of the 20 or 80%
• Average Income:  Between $101,000 and $126,499
• Average debt: $84,942.93
• Average networth: -$22,651

This is quite a small sample size so, this is not exactly a scientific examination of the networth of young attorney’s.  But, it is very clear that young attorney’s are burdened with a lot of student loans (according to several of the profiles).  If their networth is the negative then after going to school for a very long time it is difficult for them to move onto other adult life stages such as purchasing a home, starting a family, saving and investing for retirement etc…

This little exercise reinforces my decision to go to a school from where I believed I could graduate without debt.  I wouldn’t want to have a debt load of even $22,651 to carry just as my career is starting.  Graduating into a recession means that I will be looking for a job past graduation if I want to hold out for something that I am actually interested in.  It’s good to know that when I graduate I will be with the 20% and will actually have a positive networth.    

 NetWorthIQ: Networth of Young Lawyers

I can spend money from my fun account without guilt such as buying nonessentials or use it for travel.  One of my friends will be going to Senegal in March and I am thinking about joining him on the trip.  My fun account balance of $1,300  won’t be enough to cover the trip.  But, I won’t have to pay for lodging for one thing since we are going to visit my friend’s friend.  And I am pretty sure there won’t be another chance for me to go to Senegal.  I am really thinking about this. 

2009  1,406.92
2008   460.62
2007   320.35
2006   685.28
2005   384.91
2004   45.47
2003   461.13

Total: $3,764.68