| Imagine going to sleep each night and waking up in the | | | | can work for you. Once you have the $73.00 in a 5% |
| morning to find a crisp, new, 100 dollar bill on your | | | | interest account it is doing the work for you. You won't |
| bed-stand. Multiple this by 365 days in the year and it | | | | actually wake up with a shiny penny each morning |
| will amount to $36,500. Multiple this by ten years and | | | | unless you (or a loved one) places one there, but |
| you will have $365,000. | | | | through the course of the year you will earn the $3.65 |
| Few of us are positioned today to make $100 each | | | | of interest. Oh yeah. Compound interest (good thing) |
| day using the formula I describe below, but by | | | | and taxes (bad... er... good patriotic thing) improve the |
| understanding the formula, applying it, and staying true | | | | formula. |
| to it your money will grow - slowly at first and then | | | | Wow (said sarcastically). Again. A penny a day does |
| quickly accelerating. | | | | not motivate me. It makes me just feel worse. |
| A few notes: This is very basic information that we | | | | So, let's do some more math: |
| tend to forget about. We get so absorbed in the | | | | $730 at 5% = $36.50 interest per year - 10 cents per |
| random nature of the stock market, the fleeting | | | | day |
| opportunity for a quick buck via the lottery, and | | | | $7,300 at 5% = $365.00 interest per year - $1.00 per |
| reward-type credit cards, and free checking accounts | | | | day |
| that we forget about the simple math. I am intentionally | | | | $73,000 at 5% = $3,650.00 interest per year - $10.00 |
| leaving out compounding and taxes. If you need to pay | | | | per day - getting more interesting |
| more taxes because you are making more money it's | | | | $730,000 at 5% = $36,500.00 interest per year - |
| a good thing - you are doing your patriotic duty! | | | | $100.00 per day - our goal |
| So, the secret? | | | | Gee, I only need $729,990 more and I can make $100 |
| Interest. | | | | per day in interest. Depressing, right? |
| Let me explain. | | | | Simple as this seems, if you can get your money to |
| Let's say I want to wake up each morning with a | | | | work for you it gradually changes from peanuts to |
| penny on my bed-stand. Assume for this discussion | | | | something you can really get excited about! Just like |
| that I can earn 5% interest on my money (even though | | | | watching an oak tree grow, it seems to take forever |
| money markets and savings accounts are much lower | | | | until years later when you look at it and realize how |
| right now). To wake up with a penny each morning I | | | | quickly it has grown. |
| would need to earn $3.65 per year in interest. Apply | | | | So, start with $73.00 in a 5% (or the best you can find |
| the simple math (remember Ms Jones or Sister Ann | | | | right now) interest account and earn your penny per |
| Marie) as such: | | | | day. Each time you double the amount you are saving |
| $10 at 5% = 50 cents interest per year - too low | | | | you also double the amount of interest you receive. |
| $100 at 5% = $5.00 interest per year - too high | | | | Which in turn makes your money grow even faster. |
| $73 at 5% = $3.65 interest per year - my goal for a | | | | Get motivated by starting small and celebrating that |
| penny per day | | | | penny you earned today without having to lift a finger, |
| Wow! $73.00 is needed to make a measly penny per | | | | and increase your celebrating as your balance grows, |
| day? That's a lot of work! | | | | and grows, and grows. |
| Actually, it is not work. The work is earning the $73.00 | | | | And soon the day will come when you wake up to |
| and keeping away from the temptations long enough | | | | find a fresh, crisp, new, 100 dollar bill next to your bed. |
| (hang on, my latte is ready) to put the money where it | | | | |