Millionaire Teacher shows how to build a strong financial future today. Andrew Hallam built a debt-free, million dollar portfolio on a middle class salary before he was forty years old. He has shared his simple, evidence-based investment strategies on CNBC, in MoneySense magazine and with his columns in The Globe and Mail and Canadian Business magazine. He also writes a column for AssetBuilder, an online US-based investment firm. He and his wife are digital nomads. They travel the globe to explore new places. They often couple their adventures with talks around the world, inspiring others to effectively manage their money. Join the conversation and gain continued financial insight on his blog at www.andrewhallam.com.
Spend Like You Want to Grow Rich
I wasn't rich as a 30-year-old. Yet if I wanted to, I could have leased a Porsche, borrowed loads of money for an expensive, flashy home, and taken five-star holidays around the world. I would have looked rich, but instead, I would have been living on an umbilical cord of bank loans and credit cards. Things aren't always what they appear to be.
In 2004, I was tutoring an American boy in Singapore. His mom dropped him off at my house every Saturday. She drove the latest Jaguar, which in Singapore would have cost well over $250,000 (cars in Singapore are very expensive). They lived in a huge house, and she wore an elegant Rolex watch. I thought they were rich.
After a series of tutoring sessions the woman gave me a check. Smiling, she gushed about her family's latest overseas holiday and expressed how happy she was that I was helping her son.
The check she wrote was for $150. Climbing on my bicycle after she left, I pedaled down the street and deposited the check in the bank.
But here's the thing: the check bounced-she didn't have enough money in her account. This could, of course, happen to anyone. With this family, however, it happened with as much regularity as a Kathmandu power outage. Dreading the phone calls where she would implore me to wait a week before cashing the latest check finally took its toll. I eventually told her that I wouldn't be able to tutor her son anymore.
Was this supposed to be happening? After all, this woman had to be rich. She drove a Jaguar. She lived in a massive house. She wore a Rolex. Her husband was an investment banker. He should have been doing the backstroke in the pools of money he made.
It dawned on me that she might not have been rich at all. Just because someone collects a large paycheck and lives like Persian royalty doesn't necessarily mean he or she is rich.
The Hippocratic Rule of Wealth
If we're interested in building wealth, we should all make a pledge to ourselves much like a doctor's Hippocratic oath: above all, DO NO HARM. We're living in an era of instant gratification. If we want to communicate with someone half a world away, we can do that immediately with a text message or a phone call. If we want to purchase something and have it delivered to our door, it's possible to do that with a smartphone and a credit-card number-even if we don't have the money to pay for it.
Just like that seemingly wealthy American family in Singapore, it's easy to sabotage our future by blowing money we don't even have. The story of living beyond one's means can be heard around the world.
To stay out of harm's way financially, we need to build assets, not debts. One of the surest ways to build wealth over a lifetime is to spend far less than you make and intelligently invest the difference. But too many people hurt their financial health by failing to differentiate between their "wants" and their "needs."
Many of us know people who landed great jobs right out of college and started down a path of hyperconsumption. It usually began innocently. Perhaps, with their handy credit cards they bought a new dining room table. But then their plates and cutlery didn't match so they felt the pull to upgrade.
Then there's the couch, which now doesn't jibe with the fine dining room table. Thank God for Visa-time for a sofa upgrade. It doesn't take long, however, before our friends notice that the carpet doesn't match the new couch, so they scour advertisements for a deal on a Persian beauty. Next, they're dreaming about a new entertainment system, then a home renovation, followed by the well-deserved trip to Hawaii.
Rather than living the American Dream, they're stuck in a mythological Greek nightmare. Zeus punished Sisyphus by forcing him to continually roll a boulder up a mountain. It then rolled back down every time it near