You are now shooting like an arrow for Financial Independence. This is a battle, and there will be winners and losers. Let’s take a look at the field.
First, The Losers:
- Credit Card and Consumer Finance Companies. This one is obvious. The first order of financial business is always to pay off any high-interest loans. Once that’s done, these firms won’t suck you dry charging double-digit interest rates. They will still make money, however, just on the transactions fees they charge when you make purchases (and rack up cash back or points).
- Car Companies (And Car Company Financing Arms). You will not likely be buying a new car for a while, and that hurts the car companies’ bottom lines. Also, these companies often make money by encouraging you to finance your purchases. Wonder why they always try to talk you into taking a five-year loan directly from the company–even offering $1000 off if you take the loan? Because they make lots and lots of money over time off of those loans.
- Lame Bosses and Crappy Employers. Once you build out your financial buffer, you will have a lot more flexibility in your life. You won’t have to stick with sucky jobs beyond when it makes sense for you.
- Overpriced Financial Advisors. Advisors charging two percent just to manage your assets will lose if you simply shift over to basing your portfolio on index funds. [Note, I do recommend that most people (once they have at least $100,000 in assets) to meet with a fee-only financial advisor from time to time, but this should be based on a straight hourly fee or very low percentage of assets managed.]
- High-end Fashion Companies. When you stop trying to buy status, the high-end fashion companies lose. Especially as you build your emergency fund and financial buffer, you will exude confidence. Having some other rich person’s name on your purse will become irrelevant.
Now, The Winners:
- You! What can I say? Your confidence will zoom.
- Your Work Life. You will focus on your professional theme, think strategically, and make moves focused on the long-term.
- Your Health. Study after study shows that the wealthy tend to have better health. With an emergency fund and financial buffer in place, you experience less stress. Also, if a major medical emergency does arise, you will have the resources to deal with it.
- Your Family. You will never ever ever ask your family for financial assistance because you won’t need it.
- Your Kids. They will learn the pragmatic skills of managing a career and money, and they will model your behavior that leads to massive wealth.
- Your Community. You are much less likely to become a ward of the state, living off of whatever Uncle Sam is willing to spare you.
When you end up with seven figures (or more) in liquid net assets. That money comes from several sources. First, your ability to create value and earn significant income. Second, it stems from a return on investments. Third, the assets you accumulate come straight out of the bottom line of car companies, consumer finance companies (like credit card firms), and high-end brand name firms. So be it. You deserve a fantastic life.