Before you begin any financial strategy, you must realize that there is a vast difference between what you earn, what you own, and what you’re worth. The amount of money that you earn from going to work everyday is known as your income, and has relatively little to do with your financial status. The sum of value of all of your possessions is known as your wealth, and is a closer guideline. Net worth is real gauge of how close you are to becoming a millionaire, as it is value of all of your assets, subtracted by your total debt. Now that you see that having a large income is not end all guarantee of financial security, let’s move quickly to what you can due to get that million dollars that Mr. Martin so accurately described as first step to being a millionaire.

The first phase in your journey involves understanding that time is of essence. For those who start investing at an early age, power of compound interest turns time into their greatest ally in wealth-building. Once you have been investing for long enough, your investments will begin to consistently, and eventually rather impressively, outperform your paycheck. This is true no matter what level of income you have already achieved. If you have an annual salary of $50,000, and invest only 10 percent of that each year, earning a 10% annual rate of return on your investment, in 25 years you will have amassed over half a million dollars. At this point you will be earning over $50,000 each year in interest. Continue saving at that rate for another 10 years and you will find yourself earning $150,000 annually in interest. 10 percent of your income may seem like a lot, but if you can find an investment which directly debits money from your paycheck each week, you will be surprised to find yourself able to live without it. Another way to ease pain of that 10% decrease in take home pay is to use part or all of it as an excuse to lower your tax burden, which I will discuss later. Now that you’re salting away 10 percent of your income each week, and can’t possibly imagine affording anymore, let’s talk about how you can make one of your largest living expenses work for you rather than against you. I am of course talking about money that you spend providing shelter for yourself and your family.

If you haven’t found time to refinance your existing home mortgage, it’s time to take action—like yesterday! Every time Alan Greenspan, Federal Reserve Board Chairman, opens his mouth, you can bet that federal funds rates will rise by at least a quarter of a point, or by 25 basis points in investorese. What that means to you is that home mortgages will rocket as well.

A quarter of a percentage point may not seem like much, given that federal funds rate currently stands at 2 ¾ per cent, but a reality check quickly reveals that you, personally, have probably never seen 2 ¾ per cent interest on anything in your lifetime. Take a look at your credit card statements. Are you paying 2 ¾ per cent on your credit? What about your home mortgage? Without getting technical, there’s little correlation between federal funds rate and home mortgage rates except direction in which they travel, and right now that direction is headed to sky.

You’ve already missed opportunity of a lifetime to lock in lowest rates you’ll see for foreseeable future, but you have a little more time to get your hands on relatively cheap money. The window of opportunity is rapidly closing, so if you’re going to refinance, you must do it as soon as possible.

Things you may not know about refinancing:

A small rate cut can pay off handsomely in smaller monthly mortgage payments.

Smaller monthly mortgage payments will decrease your tax deduction, because you will no longer be paying as much interest as you’ve been paying. Factor this in, because it’s total savings that matters.