After you reach an early saving goal it can be tempting to run out and spend some of that money. It is a good idea to reward your hard work but you must be careful not to fall off your savings wagon. In a recent interview with a self-made millionaire, we learned that even when you reach your goals it is important to remain frugal.
Todd Baldwin makes the majority of his money through the properties he owns. He and his wife have, by most standards, normal jobs, but it is the money they make from these rental properties that allow them to save hundreds of thousands of dollars every year. Together Baldwin and his wife own six properties. However, Baldwin says that it is their approach to life that is the key to the fortune that they are slowly building.
According to Baldwin, he and his wife have a similar outlook on expenses. They don’t spend on anything unnecessary and try to remain thrifty even when they need to spend. He highlights a number of things that he refuses to spend money on.
The first thing that Todd says he will never spend money on is eating out. While he and his wife do enjoy eating out at restaurants like everyone else, he says it is foolish to pay for it. The reality is that these restaurants want to know how their staff and menu are perceived and they are willing to pay people for this information. Todd and his wife are mystery shoppers. They are independent contractors and are contacted by mystery shopping companies when they are needed. Todd says that it simply requires a change in perception of eating out. While some people do it every Friday night, he and his wife do it whenever the mystery shopping company requires. Sometimes it is every month, sometimes more than once a week.
He uses the same approach to the cinema and bars. Basically any form of additional entertainment is something that Todd and his wife feel that they should be paid for. This means that on average Todd spends around $25 per week on entertainment.
The other key finance that many people spend on is credit card bills. While Todd believes that credit cards are useful he says that the extras they charge are too high and easily avoidable. He has 13 credit cards but ensures he is never late on any one of them and meets all of their requirements. Having so many cards also means that he can avail of their loyalty schemes, more money saved.
Todd gave one excellent example of his approach to life. He and his wife plan on starting a family soon, they will need a bigger car. They were looking at SUVs in the region of 60,000 dollars. However instead of purchasing they put that money towards an additional rental property instead. The money that the rental property earns means that by the time their first baby arrives they would be able to buy three or four of these trucks. The advice is simple, spend money when you need too. Often we look at ‘necessary expenses’ and either spend early or overspend at that time. It pays to wait.
Todd says that his wife is even better at being thrifty than he is. While he loves to spend his extra cash on her, she won’t allow it. For her birthday he once bought her a designer bag. She took it back to the store and got a refund. Then she went to a shop nearby and bought a bag that was perfectly fine for 10% of the price.
While it is not easy to become a millionaire, Todd’s advice shows that it is the little things that count. Worrying about the cents means the dollars will worry about themselves.