how to become a hoe

The fact is that if there was one great way to unlock the secret of how to become rich, we'd all be doing it.

There are no "secrets" to getting wealthy overnight. But there areproven systems to get rich — and they taketime. Let's get into the steps you can start taking today to increase your income.

7 no-brainer steps to get rich (and some of them are faster than you think!)

Before you jump into step 1, it's time to prep yourself and understand that what you think about money might be wrong. Somehow, we manage to attach strange notions and thought processes to money that make it out to be something it's not.

We're going to walk you through some of those psychological traps and show you how to avoid them. Starting with your money mindset.

Step #1: Your money mindset – Start thinking like a rich person

Here's where you have got to get out of your own mind and start evaluating the way you think about money. Does it make you uncomfortable to think or talk about money, and if so, why?

I remember visiting a friend who was housesitting her parents' house. This was the first time I'd been to the house and dare I say, it was exquisite. The parents definitely had some financial savvy. I was admiring their choice of furnishings when my friend blurted out, "Oh I know the house is big, but they worked very hard for their money." I remember wondering why she felt she needed to apologize for her parents' wealth.

So what if they won it all at a horse race? Their money is their money! It's important to know that hard work doesn't always lead to wealth. Anyone working a 10-hour shift in an Amazon warehouse will tell you that.

But it highlights a social flaw. Everyone wants to be rich but those who already are sure as heck have to apologize for it!

We're not going to do that anymore.

Common money mindset traps to avoid

The hustle trap:The more I work, the more I earn, right? Wrong. You may be able to add an extra hour of overtime to your workday or pick up extra shifts, but at what cost? Living a rich life is also about your lifestyle. You'll want to set up your income sources so that you can earn money in less time. Adding a passive income stream is a great way to do this, but be warned – passive income still requires up front work. But, it's way more effective than picking up an hour or two of overtime every now and then.

The less I spend, the more I'll have:Technically that's probably true, but it also leads to a very dull life. While there is some merit to cutting back on expenses, it's what you cut that matters. Cutting back that $12.99 you spend on Netflix every month might seem like a good start, but not if it's your only source of entertainment.

Spending less on things you love, for instance, that $3 Starbucks coffee, is not going to make you rich. It might increase your bank balance incrementally, but what about the quality of life?

What if you're just a little more conscious of the things you don't actually enjoy, and cut back on that instead? For instance, finding a smaller apartment at a better price because you spend too much time cleaning and too much money on heating. Frugality might have a few merits and make you appreciate your resources, but can also zap the life right out of, well, life.

The goal is to spend less time faffing over $3 questions and more time asking the $30,000 questions.

There isn't enough money out there:If you've grown up in a household where there was a lack, it's possible that you might attribute this quality to money too. Here's the thing though, rich people know that money is as bountiful as the sands on the shore. Adopting an abundance mindset will help you realize that there's enough money to go around in the world – even for you.

Step #2: Pay off debt

Debt is expensive. Also, it affects your net worth. If your assets are worth $1 million, and your debt is at $700,000, your net worth isn't $1 million, it's only $300,000. Let's take a look at what debt might mean for your finances.

Mortgage:If you're looking to buy a $330,000 house with a $30,000 downpayment, you're still looking at a loan amount of $300,000. At an interest rate of 3.8% per annum (which is considered low) and a term of 30 years, the total interest paid would be $203,233.94. Pick that interest rate up by a percentage and you're looking at tens of thousands more. If you have a mortgage, increase your installment and pay it off faster. Not only is there the satisfaction of owning an asset outright, but also that you're saving on interest.
Car Loans:This is a quick debt trap that can bleed you dry of potential. I say this because it's so easy to jump from a $30,000 car to a $60,000 if the bank decides you can afford it. But here's the thing: over the period of 5 years at an interest rate of 4.35%, you're looking at total interest paid of $3,434.80 vs $6,869.60. Imagine what nearly $3,500 can do in a good investment product or to your retirement?
Student Loans:Get rid of them, and quickly. Don't wait for the possibility that they might be forgiven. You need to make headway on it as soon as possible or you'll still be paying off your student loans when your kids go to college. The quickest way to get this figure down is to throw money at it. $50 extra per month may not seem like much, but gradual increases like those go a long way.
Credit Cards:Credit cards are great if used well. The rule of thumb is not to use more than 30% of the available credit limit and to always pay your balance in full every month. If you can't, you'll end up paying very high interest with most cards. If you're stuck with a high balance, consider a 0% credit card and pay off the balance before that interest-free period runs out.

Step #3: Invest your money (the smart way)

You're going to avoid the strange flyers in the mail promising big returns on minimal investments into some company or scheme you've never heard of. Instead, you're going to learn about index funds, mutual funds, exchange-traded funds, and all the other types of investments out there and discover what works best for you.

If you're new to investing, allow us to introduce you to The Ladder of Personal Finance.

Each new rung on the Ladder is a level, and while they may increase in difficulty, they're not impossible to beat.

Read about the Ladder below, and also check out this video where I discuss it on Good Morning America:

Rung One – 401(k)Optimize your employer's matched contributions if available. Your 401(k) is a means to a rich end, provided that you make the investment effort.

Chart of 401k investment earnings over time

Rung Two – DebtIf you still have lingering debt, check out our methods to pay it off quickly.

Rung Three – Roth IRALike your 401k, you're going to want to max it out as much as possible. The amount you are allowed to contribute goes up occasionally. Currently you can contribute up to $6000 each year.

Rung Four – Max Out Your 401(k)Retirement savings are cost-effective, given that accounts like the 401(k) offer tax advantages. Before you invest anywhere else, make sure you make the most of these benefits.

Rung Five – Other InvestmentsThis is where you diversify – after you've surpassed the other rungs on the ladder, rung five allows you to use extra money for investing in mutual funds and other long-term options.

Bonus: Want to turn your dream of working from home into a reality? Download my Ultimate Guide to Working from Home to learn how to make working from home work for YOU.

Step #4: Automate your finances

At IWT, we're big on automation, and with good reason. If you work a typical 9-to-5 and still want to have some decent family time or downtime, why on earth would you sacrifice part of that time to pay bills and do financial admin?

Your time is valuable and thanks to technological advancements, you get to keep more of that time for yourself.

You can set up automated transfers for bill payments, savings, and investments. Then, after your auto-payments are deducted, you can spend the rest of your money guilt-free on whatever you want. Even items you might have considered splurge items before. This is called a Conscious Spending Plan and it will allow you more financial freedom than a budget ever will.

Pay yourself first. This means to save and invest before you go to Pottery Barn's seasonal sale.

Step #5: Earn more by negotiating your salary

Getting a salary increase has the potential to cause a ripple effect on all your future earnings. More income means more retirement contributions and extra funds for investments and savings.

If this seems too good to be true and the mere thought of asking your boss for a raise gives you sweaty palms, we have the ultimate script for negotiating a raise.

Just think about it, a one-time salary increase of $5,000 invested and compounded over a 40-year period can be worth over $1 million!

graph showing the effects of a $5,000 raise over time

Step #6: Save money by negotiating your bills

If you have a longstanding relationship with a provider, whether it's your local gym or a national bank, you already have the leverage to negotiate your fees.

Other things that might count in your favor are competitors offering you a better deal, you have a rocking credit score, or your provider makes a lot of money off the products you have with it.

Our founder, Ramit Sethi, jokingly tells us that he was bred to be able to negotiate thanks to his heritage and shares the fruit of those skills with us in his negotiation scripts. All you have to do is clear your throat, pick up the phone and earn those extra dollars.

Step #7: Build multiple income streams

Something you need to know about the rich is that they always have more than one source of income. Whether it's passive income streams through investments, dividends or rental incomes, or returns on real estate, they hardly ever rely on just a salary.

Additional income streams can take the form of:

Side hustles such as blogging or photography
Income from investments such as the stock market
Starting a small business and becoming self-employed
Rental from an investment property, and more

The bottom line

Getting rich is not reserved for a select few out there. It's available to anyone who has the gumption to give it a go. Future you only has one ace in the bag, and it's the decisions you make today.

Instead of waiting for the proverbial ship to come in or banking your rich life on imaginary winnings, you can make small but indelible changes to your finances that will shift your financial future. You deserve financial freedom.

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