John 48, Barb 49
Background
Net worth exceeded $1 Million in November 2013
Education:
John – Indiana University (B.A), University of North Carolina at Greensboro (MBA)
Barb – University of Southern Indiana (BA)
Ethnicity: Caucasian
The Story
Like most people, I started my career in my early twenties. At that young age, I didn’t have a clear plan for who I wanted to be, what I wanted to do, what I wanted to have, where I wanted to be. . . nothing! As a result, I lived without any real direction, and that included the way I managed my finances. Financially speaking, my pivot point came in the second year of my career. April 15th was approaching, and I filled out my 1040 EZ form. To my shock, I owed the government more than $2000. In disbelief, I called my dad, thinking I must have made a mistake. We walked through the form over the phone and realized there was no error—except in my ability to properly set up withholdings. Then he gave me some advice, advice that changed my course forever. He said, “Here’s what you need to do. Find a way to gather $2000 and open an IRA. That will allow you to deduct the $2000 from your income and reduce your tax bill to about $1500.” I remember thinking, ‘I owe $2000 that I don’t have and your solution to my problem is to come up with $3500????’
I don’t remember how I scraped together $2000, but I did. I opened that IRA. I also remember the bitter taste in my mouth for the next year as I paid $1500 to the government in monthly installments. What fun! I got to pay last year’s taxes and this year’s taxes. But as it turned out, that may have been the best $1500 I ever spent. That event was the catalyst that got me focused on saving and investing, and it led me to become truly aware of the compounding power of saving over a long period of time. I started reading books and looking at compound interest growth charts and started to develop a real vision for what I could accomplish, financially speaking, over the course of my career.
From that point on I made saving a priority because I fully understood that the choices I made had a big impact on my financial position 20 - 40 years later. The idea of debt became more and more unappealing and I began to think much more carefully about all my purchasing decisions, recognizing that a penny saved really is a penny earned.
A year or two after my financial awakening, I was presented with a unique opportunity. I knew a wealthy woman who had just bought a huge house with a detached four-car garage—including a small (341 square feet) apartment above it. She asked if I would be interested in renting it. It was tiny but very nice, and you couldn’t beat the neighborhood! Not long after moving in, I began to help with a few maintenance projects here and there. In time, we struck a deal whereby I would maintain her extensive property in exchange for a big reduction in rent. I recognized what a great opportunity that was and I made sure to take advantage of it by really boosting my savings.
A few years later Barb and I met and started dating. While she was never quite as enthusiastic about saving as I was, she nevertheless bought into the idea and shared my vision for what the future could look like if we made good choices and sacrifices in our younger years. Thankfully, she also came to share my sincere aversion to debt. We married in 1999 and, to her credit, she stuck it out in that tiny apartment for another four years before we finally bought a place of our own.
While saving has been a priority over the years, it’s not been the only priority. We have tried to strike a balance between enjoying today, while at the same time always keeping one eye on our vision for the future. Many of our vacations were modest, but we have still enjoyed many fun trips, including a couple of weeks in Europe, two cruises, a couple of Caribbean destinations, trips to Disney, and countless smaller trips to different places around the country.
We drive nice cars. Nice, but not fancy. Instead of a Lexus, we’ve generally opted for a Honda, even if we could “afford” the Lexus. We have a nice home that we both really like but, again, it’s not as large or luxurious as the one we technically could “afford.” And perhaps the best trade-off illustration I can offer is that Barb began working only part-time when our son was born in 2006. She can be home with him and highly involved with his school. Sure, we could earn more, buy more, and save more if she worked full-time, but that’s the trade-off we have made.
Becoming millionaires was a goal for us since we married, and it took us fourteen years to achieve it. We crossed the million-dollar mark in November of 2013. Since then, not much has changed in the way we live. Over time, we have come to derive great satisfaction from continuing the same life choices that brought us here. I still love it when I can repair or build something myself instead of hiring someone to do it. We generally find ourselves disappointed with most restaurants because my wife has become such a great cook (and she loves doing it). In fact, most Saturday nights my wife prepares a fancy gourmet dinner at home that we all look forward to. I call it “Put’n on the Dog” night, an old southern expression. And while we could buy fancier cars, we’re both uncomfortable with the idea of that kind of a status symbol. It’s just not who we are now.
To sum up my advice for anyone wanting to reach their own million-dollar mark, here it is:
Create a vision for your financial future – Prepare your own spreadsheets to see how your savings and investments can add up over time. Something just clicks when you put it on paper, and you need to have that picture in your mind of what it will take month-in and month-out to get there. Without that vision, you won’t be able to muster the long-term dedication it will take.
Avoid debt – When it comes to saving, there is nothing more harmful to your plans than debt. Except for your house, it means you bought something you didn’t have the money to buy. If you want to become a millionaire, you need to make sure debt is out of your financial plan as quickly as possible.
Be willing to make (small) sacrifices – The sacrifices required to become a millionaire are not really that difficult. You can still enjoy fun vacations, terrific meals, and some cool toys, but you must be willing to be happy with “good enough.” If you have a nothing-but-the-best mindset, then you will find it hard to build real wealth.
Lose the desire to make a statement – If you are more concerned with looking like a millionaire than actually being one then you will likely never get there. That’s because your priorities out of place. Becoming a millionaire requires you to make wise choices over a long period of time. In other words, it requires a higher degree of maturity. If impressing others today takes precedence over building a level of security and flexibility for your family in the years ahead, then may I say you still have some maturing to do.
Put your savings on auto-pilot – In conjunction with a willingness to say no to debt, automatic savings is the single most effective way to reach your goals. If you set savings aside (preferably in tax-sheltered vehicles) so that it is never easily accessible, then your odds of following through with your savings plan go up immensely. If it’s not there to spend, then you won’t spend it; and if it happens automatically then you are much less likely to divert the money to something else. In short, automatic savings helps to take the pitfalls of human nature out of the equation.
For us, building wealth has not been complicated, but that doesn’t mean it has been easy. We are both somewhat risk averse, and so for us that meant we were more comfortable taking the long road to wealth. We started early with a vision for what that would look like one day. With that vision always present, we made day to day life choices and made them year after year such that we could achieve the goal. Certainly, there were some days that were more difficult than others (that 341-square-foot apartment got very small sometimes), but both of us look back on our twenty years together feeling that abundance is a much more accurate word to use than deprived.
Finally, it would be a mistake if I ended our story without acknowledging the ultimate reason we have achieved what we have—and that is God’s blessings. I do not believe that God blesses His children just because they are his children, but I do believe that He does bless those who are willing to trust Him and honor Him by making giving a central part of their financial plans. We began tithing years ago. We decided that we would give the first 10 percent to Him as a way of demonstrating that He takes priority over everything else. There is no question in my mind that He has chosen to bless our family in response to our desire to be obedient to Him.
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