By Nick Hodge
Wednesday, May 2nd, 2012
I had a kink in my back from fishing all day, so I put myself on a Russian masseuse's table.
Little did I know Yuliya would start revealing the secrets to financial prosperity, independence, and happiness...
"First of all," she started, "buy a house. How can you ever be truly independent if you live in someone else's?"
She had a point.
Try convincing the person you pay rent to that owning isn't the way to go.
Home ownership is at a 15-year low. Three-bedroom houses in some of Maryland's best school districts are going for less than $100,000.
I've heard of condos on the water in Florida selling for less than $20,000. And if you have some know-how and patience, fixer-uppers in big cities are available for under $10,000.
You can even get a rate below 3.75%. Mine is.
"If you already have one," she went on, "buy another one."
Now she had me thinking...
After asking if the pressure was alright, she went on to tell me about the next step to financial freedom.
Avoid Debt, Be Stingy
"Don't buy anything you can't afford," she began, with further emphasis on the evils of credit cards.
She was still working my shoulders as she told me to pay cash for everything - and to only get a credit card with a beneficial rewards program if I could pay off the balance in full every month to avoid paying any interest.
"Don't buy stuff you don't need or that's trendy. Use coupons. Fix things that break. Don't hire people to do things you can do yourself."
Yuliya explained that this was the Russian way. She's only partially right; my mom came off the boat from Italy in the mid-1960s, and she and my grandparents are the same way.
I think it's more of an Old World or immigrant mentality...
It's certainly not American, with our $5.00 lattes in throw-away cups and name-brand ibuprofen.
You'll never find Advil in Yuliya's closet. You won't find it in my grandfather's either, and he pays cash for oceanfront property.
Now, don't misunderstand the insight. Buying store-brand medications alone won't make you rich.
It helps, but it's the philosophy that's important.
That same attitude is beneficial in minor purchases and major acquisitions.
If you must carry debt - for education or an essential purchase - Yuliya says to get the lowest rate available and pay off a little extra principle each month.
She was on my lower back when she got around to telling me the secrets of actually making money...
Be Patient, Be Ready
Once you've got the spending and mentality under control, it's time to start growing your coffers.
"First thing is do what you love," she said, omitting the preposition and highlighting her accent.
"How can you be successful if you hate where you go and what you do every day?"
I could tell by the stress melting away that she loved her job.
"You Americans all want to get rich quick and easy," she continued. There's a time and a place for that, Yuliya went on to say. But first you have to start slow...
Make investments that save you money first.
Yuliya told me she has a retirement plan through work and keeps a separate IRA for additional tax advantages.
"One saves me tax money now and the other later, plus I save for retirement. What is better than this?" she asked me. It was hard to argue with her logic.
"Then," she continued, "start buying things that pay you."
Being from Russia, Yuliya had a soft spot for energy and commodities. She told me about energy trusts that own land and charge companies to drill for oil and gas and to mine other natural resources. They then pay her a dividend between 5% and 15% from what they charge in rent.
I also learned how individual companies pay her quarterly based on the profit they make. Gazprom, the largest Russian oil company, pays her 2.27% every year. Her bank's only offering 0.81%.
"Once you have this good set-up, then you are ready for big winner," she said as our session came to a close.
"You save and grow slow, and then you can act on good opportunities."
Yuliya said the current North American shale boom is one of the best 'good opportunities' she's ever seen.
Call it like you see it,
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.