The $7 Million 7 Years Wealth System

My Chevy’s got a 401k block …

I couldn’t think of a way to both wrap up the previous week’s set of posts on cars and begin this week’s series on retirement savings, hence the ‘punny’ title! 🙂

And, it wouldn’t be fair for me to lecture the 7MITs on their cars if I didn’t recount mine:

My first car was a 3 year old Chrysler Galant (a little 4-cylinder car available in Australia … I’m not sure if it ever made it to the US?)  that I bought for 100% cash, 2/3’s sourced from my after hours jobs while I was studying and 1/3 from a nice present from my Grannie. I had just got my licence and my parents were about to go away on an overseas vacation, so they didn’t want me driving it until they got back “just in case something should happen to me” …

… so, the minute they left the house, I backed the car out of the driveway.

Unfortunately, we lived on a very steep street and I let the car roll into a lamppost across the road. I put the car back in the garage, where it sat (bruised) until my folks got home 🙁

My second car was a brand new Toyota T-18 (a cute little hatchback) that was brand new to the market … when it arrived, I had to sell my only investment – a 5 ounce gold ingot – for a $50 loss, so that I could raise the extra cash for the car.

I’m sure you heard about the first gold boom , when gold hit $850 an ounce … yep, you guessed it: that was the week AFTER I sold my gold! Talk about selling an appreciating asset to buy a depreciating one …

I bought the T-18 1/4 from the trade-in value of Car #1, 1/4 from my ‘gold cash’, 1/4 from a gift from my folks (not bad, huh?), 1/4 from a car loan that I paid off quick-smart.

I then traded the T-18 on my beloved 10 year old, 1972 Porsche 911S in ‘gorgeous’ lime green (yuk!) … that one was all impulse purchase funded 100% by the trade-in and another car loan. Not my smartest purchase, in some respects because it cost me an arm and a leg in mechanicals … but, I had a helluva lot of fun racing it (on and off the streets) and actually made a huge profit when I sold it to a sucker … I mean friend-of-a-friend.

That was the last car that I ever had to buy myself until the Maserati (all the rest were company cars from places that I worked or through businesses that I owned) which I paid for in cash … talk about depreciation: I paid about $35k less than sticker (which was circa $125k) for a 6-month old car with only 1,700 miles on the clock. My two other cars were essentially rentals, I worked out a deal that was better than owning or leasing …

Of course, shifting countries meant new cars, and I simply paid cash for the Lexus SUV Hybrid for my wife and the BMW M3 Convertible for myself … do I meet the 5% Rules? I’m pretty sure that I do, but one of the advantages of Making Money 301 is that you can stop counting 🙂

Did I do the right thing with my cars until now?

If I did, it was largely by accident … at the time, I didn’t know about the rules that I’m giving you here … funnily enough, the older I got – in looking back – the more that I found I met these rules by accident (i.e. the 20% Equity Rule for my house, and the 5% Rule for cars/possessions). I was happy to go without the fancy cars until I could afford it … and, lucky enough that I eventually could 😉

Now, let’s shift gears and look ahead, towards the next stage of this ‘grand experiment’ in Millionaire-Making … your retirement savings:

Assess what you have you got in your retirement accounts.

Take a look at how it all got there … did your employer do all the ‘hard work’?

Did you actively work on building your retirement savings?

How is it invested? And, why?

And, how badly have you been hit over the last year or two? And, what are you going to do to recover?

Also, how much $$$ and % of salary do you invest and what is the employer match?

Easy!

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