There are seven secrets in this series to accumulating gold. This is the fifth secret found in The Richest Man in Babylon a great little book written by George S. Clason in the early 1920’s. I highly recommend reading this book as there is a certain benefit from reading the stories and hearing the language. It's old, but timeless, and can help put things into a perspective that comes from a time past, where people were literal slaves, not just financial slaves like today.
You will need the previous articles before you continue, as they build upon one another.
ReCap First Four Secrets to Accumulating Gold
"If a man setteth aside nine parts of his earnings upon which to live and enjoy life, and if any part of this nine parts he can turn into a profitable investment without detriment to his wellbeing, then so much faster will his treasures grow" So spoke Arkad to his class at their fifth lesson
The reason I quoted from the book was to give you a flavor for the thinking in the book. It is much different than our modern thinking. This is important to note as we discuss the fifth secret.
Own your own home.
In todays world people take out loans for houses and consider them an investment that they own. This could not be further from the truth in most cases. The reason is most people will also sell their home to buy a bigger one and they never intend to pay off the 30 year loan. They never have the benefit of no payment, and since they are not renting the house out but living in it, it does not make them money. Another thing that people do is use the equity in their home like an ATM.
When the market goes up and they have equity they decide to use the equity to do some home improvements, or they need money for medical bills or any number of reasons. The next thing you know the market drops and they are stuck in a house that is upside down, meaning they owe more on the loan than they can sell the house for.
Owning your own home for the purpose of wealth accumulation has to do with not spending the money you would otherwise have to spend to have a roof over your head.
A mortgage should be viewed as a temporary measure to reach a goal, and it should be paid off just like any other debt. Did you know if you pay your mortgage over the life of the loan you will end up spending nearly three times the amount your financed? There are ways to pay off your mortgage in 15 years instead of 30, saving yourself nearly one and a half times the amount of the loan. All you have to do is pay double the principal amount every month. This is easier at the start than it is at the end since you pay most of the interest at the front end and most of the principal at the back end.
Another way is to make one extra payment a year, which should all go to principal. One way to do this is to pay half of the loan every two weeks. If you are paid every two weeks and you can sync your loan payments with your paycheck, the extra paychecks you get each year could go to the mortgage payment. It's up to you to decide what works best for your situation.
No matter what you do though, you need to adopt the mindset that the mortgage is a temporary loan that will be paid off ASAP. It is only then you can truly enjoy the rewards of owning your own home. Until then, the bank owns it and you can lose it any time.
Do you have debt you want to pay off? I have an idea for a project to start a debt elimination support posting/group, but I need to know if there is interest. Please let me know in the comments if you would like to participate in something that could help you get out of debt. It would be structured in such a way that you would not be putting up your personal details, but using percentages instead. I want people to be able to track their progress publicly and set goals and have accountability, but not be exposed in a personal way. Comment if you are interested!
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