Common Roadblocks to Wealth Building (Part 1) by Money Coach CK Tan
Many people will never reach their dreams of having enough money for building wealth, being financially secure, and being able to retire in comfort. The reason is most often a combination of these biggest roadblocks to wealth building.
1. Having a Long Term Mortgage
Most people think nothing of paying for their home mortgage over 30 years, even though the average homeowner ends up paying two-and-a-half times the purchase price of the home by stretching the payments for 30 years. Having a 15-year mortgage instead of a 30-year mortgage can save you large sums of money and help you build wealth. See the below for illustration of how you may be able to save over $100,000 over the life of your mortgage.
30-year $150,000 Mortgage versus 15-year $150,000 Mortgage
$150,000 mortgage at 7% for 30 years = $997 monthly payment
Total interest you pay over 30 years - $359,263
Total amount paid - $509,263 (interest plus principal)
$150,000 mortgage at 7% for 15 years = $1,348 monthly payment
Total interest you pay over 15 years = $242,683
Total amount paid = $392,683 (interest plus principal)
Interest savings on a 15-year versus 30-year mortgage = $116,580
So, where do you find the money to build wealth? Try looking at your mortgage.
2. Not Controlling Spending Leaks
One of the biggest reasons why so many people are in so much debt is because they leaked their money away in small, unnoticeable amounts. Like drops of water dribbling through the hole in the dike, the loss is barely noticeable, but over time the hole in the dike gets bigger and bigger. By the time the water is gushing through, the damage is done. The same is true with spending leaks. It’s a lot easier to plug a small hole than to ignore the drips and look over your shoulder later and see a huge tidal wave of water coming your way in the form of unmanageable debt. If you’re ever going to accumulate wealth, you must control spending leaks.
3. Not Setting Financial Goals
If you don’t know where you’re headed and how you plan to get there, you’ll probably never arrive. To accumulate wealth, you need a plan. To be motivated to save money, you need something specific to save for. To succeed in accumulating wealth, write your goals down and visualize them, whether they’re a comfortable retirement, a mortgage-free home, or an unforgettable vacation.
