Imagine in just ten years you could have one million dollars socked away in a high-yield savings account, spinning off enough interest to live comfortably for the rest of your life .  Short of hitting the lottery or receiving a lofty inheritance from a long-lost uncle, this might seem an impossible goal.  Well, it nearly is, given the short time frame.  However, if you are willing to make an incredible sacrifice, and catch a nice wave from a rebounding market, you just might enjoy becoming a millionaire in less than a decade.

$996 a Week for 10 Years

That is roughly the amount you would have to invest to save one million dollars in ten years, assuming an average 12% earnings rate.  Historically, 12% is a realistic figure, albeit optimistically on the high side.  Here is a look at how your $996 weekly contributions to your favorite investment account (Ive used Scottrade, Sharebuilder and TD Ameritrade with good results) would add up each year:

source:  DinkyTown.net

Carving Out $996 a Week

I nearly laughed out loud when I typed that heading.  I often read topics like carving out $50 a month or shaving $20 off weekly expenses, but rarely do we hear someone suggest carving out $996 a week!  That is nearly $4,000 a month!  If you are like me, that is more than I have to carve!  So how does the average person go about contributing nearly $1,000 a week to savings?  Using the principles discussed in books like I Will Teach You To Be Rich . you can discover ways to cut your expenses significantly while boosting your income.

Get a Side Hustle

A reader once wrote in that a friend told him everyone needs a side hustle, something to supplement their full time job. Thats great advice! It could be a small, home-based business opportunity that generates a few hundred dollars a month, an investment opportunity with a great passive income, such as peer-to-peer lending. or a substantial part-time career that you can cultivate in your off hours.

Either way, this side hustle could represent the majority of that $996 you have to come up with to make a million dollars in ten years.  Obviously, some of the profits from this side gig will have to be reinvested to help it grow, but for the most part, your goal should be to try to save as much of those profits as possible.

Pay Off the Mortgage Early

If you have a $1,000 mortgage payment, paying it off early buys you one weeks worth of savings each month towards your millionaire dream.  Eliminating a $2,000 mortgage provides two weeks.  Pay off the mortgage early, and instead of sending a payment to the bank each month, send a deposit in that same amount.  This step alone will put you on the fast track to building significant wealth.

Two Income Households-Save One, Spend One

In households with two working spouses. make an effort to live on one income and invest the other .  Open a high-interest online savings account at one of the best online banks . and point one spouses direct deposit there.  All further investments, such as transfers to a top online brokerage can be automatically deducted from that account.

If one spouse brings home $4,000 a month you just found the source for your $996 a week contributions.  Living on one income may require downsizing homes and cars, and living way below your means, but the payoff is well worth it in the long run.  Invest some of this money in equities, either in single stocks or in broader mutual funds.

I dont mean to trivialize the amount of sacrifice (and luck) required to make this plan work.  $996 is a significant amount of money, and at this phase in my life I could barely afford to contribute half that amount on a weekly basis.  But it is a goalsomething to strive for.

It is also important to point out that there is nothing magical about the one million dollar mark.  You may find that you could live quite comfortably on the interest generated from $750,000, or even $600,000. Your number is a personal choice, but figuring out how to make a million dollars provides most of us a stretch goal.

About the Author

Jason had the foresight to understand that people can’t continue to live beyond their means without unpleasant financial consequences. Jason’s wisdom became apparent several months after the site launched, when the world economy saw its worst downturn in a century.

Comments

I think this is a good thing to strive for when you are nearing retirement (say 50 or so) and you can cut back substantially as you have already paid off your mortgage, etc. and are debt-free.

Yep, that would be a stretch since the $996 is after tax dollars!

$996 a week is $4316 per month or $51,792 per year. That may be a tough target for most people, since the median annual income of a US household was $48,201 in 2006 according to wikipedia who cites the US Census Bureau. The same statistics says that 19.26% of households had incomes above $100,000 who I would imagine belong to the group who could save that much money. (The income numbers are before tax, the savings number is after tax.) But saving money especially saving lots of it is always a good idea. Better to aim high than too low in this case.

3A%2F%2F1.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D45&r=G /% August 19, 2008 at 9:12 am by CCGAL

Note to previous poster, Daniel: very few 50 year olds I know have paid off their mortgages and are debt free, and I include myself in that number. My generation is caught between the needs of our parents (I spent 12 years providing care in my home to my mother in law until her passing) and the needs of our children (I have a 30 year old disabled son who just moved out for the first time, and a 26 yr. old daughter who just came home) and many of us are also facing health challenges, my husband being included in that number.

The thing about life is that excrement occurs and sometimes even the best plans, and the most frugal living and saving isnt enough to cover all the bases when a triple whammy sends you soaring out into left field like a baseball that just met the Babes bat in a head on collision.

My personal opinion, having lived through more than you would believe possible in America, is that the best investment is in your own ability to do things for yourself, followed by developing a wide network of people you love and who love you back. Oh, and having good health insurance helps.

Saving money is important, but sharing can sometimes save your bacon better than saving, because you can run out of money a lot faster than you can run out of love.

Janelle the CCGAL

3A%2F%2F0.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D45&r=G /% June 6, 2012 at 6:22 pm by Tony