Here is a quote by Charlie Munger, vice chairman of Berkshire Hathaway, Warren Buffett’s business partner.
“The first $100,000 is a bitch, but you gotta do it. I don’t care what you have to do—if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”
To have a portfolio of $100,000 has always been a professional goal. I have been in Canada for 18 years. The first 5 years don’t count as money making years because I was going to school, so it has taken me 13 years to go from $0 to $100K.
Most people, even those earning $100K per year, will never accumulate this amount of money. I feel extremely privileged to have arrived at this milestone.
How to accumulate $100K
The fast track: If you are a high earner or a successful small business owner, and you save 20% of your income or more, you could probably accumulate $100K in about 5 years or less.
The slow track: If you are a low earner, like me, you can only get there through a lot of discipline, sacrifices, perseverance, etc.
Since I arrived in Canada, I have been a janitor, a busboy, a waiter, an Uber driver, a cleaner, a dance teacher, an insurance salesman, and lately a money coach.
I buy most of my clothes at Walmart or any other discount store. I buy second-hand books and furniture. I buy automobiles which are 5 years old or older. I usually don’t go to bars. I mostly go to restaurants where the plates are $15 or less. I don’t consume much alcohol. I don’t smoke or have other expensive vices. My pleasures are simple. I like reading and writing, I like going to the park. I watch Netflix instead of going to the cinema. And specially, I like giving speaches at my local Toastmasters club.
In spite of my frugality, I live in a cool neighborhood (le plateau), I travel once per year, I have an apartment which I love, I have a car, a windows laptop, and an android phone. And more important, I have a great community of friends. I have very little and yet I feel wealthy.
I am the kind of person who believes that wealth is available to all of us. If you want it, you can get it. Canada is full of opportunities. There are hundreds of courses a person can take, almost for free, on the Internet. Even a dance teacher like myself has the means to accumulate $100K
The next $100K
If I don’t do anything else to increase my wealth and if my investments grow at the rate of 8% per year, this is how long it will take me to get an additional $100K
To get from 100 to 200: 9 years
From 200 to 300: 5 years and 3 months
From 300 to 400: 3 years and 9 months
From 400 to 500: 2 years and 10 months
These are not real numbers because I have not included the effect of taxes, but you get the idea – money can work harder for me than I can work for myself.
The first step to accumulate wealth is to have a true desire to do it. Saying to yourself “it would be nice to have $100K” is not enough. Don’t listen to advertisers. Fight the urge to buy gadgets and expensive clothes, get a bicycle instead of a car, spend less on housing and frequent less expensive restaurants. If you set your mind to it, you can do it.