In part one, we discussed how time is by far the dominating factor in investing, but we only have a limited amount of time and time is not easily doubled. We also learned that interest rates are somewhat of a moving target, unless they are fixed, but no high-return investment is ever fixed. This leads us to the last factor of investing or the amount of money you can afford to invest.



The amount of money you can contribute is the only factor that can be significantly changed, without taking on uncontrolled risks. I know what you are thinking, ?What if I don't have that kind of extra cash flow to invest? The answer to this question is: How much do you spend per month to service your debt? How much do you pay each month for your home mortgage and other consumer debt (i.e. credit cards, line of credit, etc)? And what about auto loans, don't forget to include your spouse's car or truck too?

The average American family spends around $2,000 per month servicing their existing liabilities, or debts, and if they don't add any additional debt they are likely 25 to 30 years away from being debt free. Now think about the amount of money that you pay each month? What if you didn't have debt payments each month? What if you were completely debt free? Now how much money would you be able to invest? If the average person were to really stretch their finances, they could afford to invest about 1/10 of what they pay each month towards debt elimination. For example, if you were paying $2,000 each month towards debt elimination, then a $200 monthly investment would be about all you could afford. Now consider if you have $2,000 in debt payments per month and an average interest rate of 15 % plus working against you for the next 25 to 30 years? And how can you even hope to outpace that kind of leverage with a $150-$200 investment at 6, 8 or even 12 %? The answer; YOU CAN'T!

There is hope! If you use the wealth knowledge you've just gained then watch what you can do. The average household spends approximately $2,000 per month in debt elimination and we will assume that this family is currently investing $200 per month. Now, follow along on the graph and keep this in mind as our starting point: $200 per month at 6 percent interest for 30 years is about $200,000. Not a bad return. But what if you first eliminated your debt in 15 years and invested the full $2,200 for the remaining 15years? That's over $640,000. That's a difference of $440,000! Now, what if you eliminated your debt in 10 years and invested the $2,200 for 20 years? That's over one million dollars and a difference of $800,000! Now you can invest with confidence, security and substantial leverage.

Please visit www.idealfsi.com to learn more about building wealth and eliminating debt.