Ed Mamula.com

There are two parts to the net worth growth equation.

Net worth = Assets – Liabilities

Assets / Income: My assets are my day job income and forex trading income. I suppose, to be more formal, my assets are my job skill set and my forex trading system, and those assets produce two income streams.

Liabilities / Expenses: I don’t carry debt of any kind and I live a simple, frugal lifestyle. I am 28 years old, single, and I live in a rented condo with a roommate. I’ve been very careful to keep my “status symbol shield” up. I know that as I get older, my wants increase, and as I buy things to fulfill my wants (bigger place to live, nicer car, nicer clothes, cool electronic gadgets), my sense of what is normal will be ratcheted up, and new wants will appear. Luckily, I rarely buy anything impulsively, and I’m able to control my wants and improve my lifestyle at a pace that trails my income. Put more simply, I pay myself first in the form of savings and I use whatever is left over for lifestyle improvements. I get much more excited about the prospect of achieving true financial freedom within 5 to 7 years than I do about the prospect of owning a BMW or HDTV today. Frugality is not perpetual self-denial. It is a recognition of ones means, and a mindful decision to live efficiently within them.

401K Contributions

I’m in the happy position of being able to max out my 401K contributions at work. That will be $15,500 this year. I know that this is pre-tax money and maybe I should deduct taxes and early withdrawal penalties from my liquid net worth total. Rather than worry about that, I’ll put a little * by my results that says “before taxes” when I make it to a million. When I get that far, the after tax millionaire part will easily follow.

Additional savings from job income

After I’ve funded my 401K and paid all of my bills, I’ve got a couple thousand per month left over. I plan to direct this money into mutual funds, money markets, or my forex accounts as dictated by my asset allocation plan.

Forex Trading System – now officially known as the Cable Glider, traded by me, Eddie the Cable Guy (ahem) — ?????? per month

Here’s the ace in the hole! I run an automated forex trading system that has produced a 58% compounded return over the course of the past 3 months. If this system continues to perform well for another 12 months, and I’m able to scale it up properly, it will do the lion’s share of the work toward my goal.

To stay motivated and focused, I will set mini-goals that are attainable, and celebrate each one wholeheartedly. Since my forex capital represents about one third of my total liquid net worth, I’ve set goals in terms of my overall net worth first, and my forex trading capital second.

$100,000 liquid net worth

$100,000 in FX trading capital

$250,000 in FX trading capital

$750,000 in FX trading capital

$1,000,000 liquid net worth

$1,000,000 FX trading capital

$2,000,000 liquid net worth

Financial Freedom (passive income great enough that a day job becomes optional)

Wealth accumulation is fun for me. I know that many people have emotional hang-ups about money, status, and class identity…rich, middle class, poor. For me, becoming a millionaire and achieving financial freedom at a young age are important enough that I will do it first and examine the consequences afterward.

After I read Steve Pavlina’s article 5 Wealth Lessons From 20 Percent of a Millionaire , I decided to conduct a race to a $1,000,000 liquid net worth with Steve.
Steve’s site is phenomenal, and he has a big lead on me in both net worth and monthly income.  Perhaps my only advantage in this race is that Steve doesn’t know he’s participating in it.

It’s fun for me to state the goal this way, because I’m sure Steve will make it to a million, and I’m sure that I will too. 

My approximate liquid net worth at the end of January 2007 is…drum roll please….$74,000 

It’s on, Steve!  I’d use a tortoise/hare analogy here, but I’m not sure which one of us is which.  I also want to say that I’ve been hurting my chances of winning the race by buying products that Steve endorses.  and lining his wife’s pockets by booking intuitive readings!  That’s like running for class president and voting for the other guy.