First Person: Exploring the Real Wealth Gap

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COMMENTARY | A recent study performed by Pew Social Trends shows a 42 percent gap in wealth. Surprisingly that space is not largest between classes, (with all this one-percent talk, you would think it would be) but between age groups. The median net worth of those under age 35 was $3,662 in 2009 and was $170,494 for those over age 65. I did a little digging and found out some reasons for the gap, and in that digging discovered why my gap isn't nearly as large as the "average" 35-year-old.

Real estate is the biggest reason for the difference

When I was working in the real estate sector, most of my clients were moving every five to seven years. Doing this left them with little equity. These clients were also in a cycle of debt, with credit card and auto loan debts they renewed every couple of years. You don't need to be a financial authority to see where these folks went wrong. If you carry high debt loads and have little to equity, your net worth will not be anywhere near what it should be. I live by five simple money strategies and (at 32-years-old) my net worth is soaring.

I buy half a house

When I was approved for my first home mortgage, I could have bought a $300,000 house. I didn't. I bought a house less than half that expensive, for $128,000. I did that so I could pay off the mortgage in 10 years, fast tracking my equity. Maxing out your pre-approval (especially on your first home) is just stupid.

I cut my mortgage repayment time

I got a 15-year note that I am set to pay off in 10. (In case you were wondering, I am on year 7). In doing this, I am saving over $100,000 in amortized interest, compared to your garden-variety 30-year loan, and I will walk away with 100 percent of my equity.

I cut the car payments

I cannot wrap my head around someone sinking $20, $30 or $40 thousand dollars on a depreciating asset. I refuse to do it. I buy my cars in cash, I drive as little as possible (to keep wear and tear down) and I don't replace a car until it dies. I would rather have a lovely place to live, than live in my car.

I don't use credit…at least not like you do

I have one credit card, one debit card and one mortgage. That is it. I made the mistake in my early 20's of getting into credit card debt, until I realized what it would cost me. Now, I charge my bills on my credit card and pay it off with my debit card at the end of the month (avoiding interest). Since both cards are cash back rewards cards, I earn $200 - $300 a month, just for paying my bills responsibly.

I track my money

I use financial planning tools to my advantage. I have my budget with me on my smart phone at all times, I check my bank balances daily, and I make sure that I pay my savings account before I pay a single bill each pay period. I have money freed up for investments and savings, and money in the bank to spend whenever I need it (or want it).

I'm sure you're wondering about my net worth at this point, and it's a pretty easy recipe. At 32 years old, my only debt is my mortgage, and between my equity, savings and investments I am sitting at a exceptionally comfortable $162,800 in net worth. It begins and ends with credit, and how you use it. Spend smart to live better -- at least that's how I see it.

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