To anyone who once had nothing and is now worth 7 or eight figures... (paying, deposit)

[mathjak107]

yep.

folks are to focused and spend to much time and energy on how to accumulate these pennies and then most worship their money so much they fear doing anything with it to grow it.

what makes people succesful at going from nothing to these big numbers is one common theme.

THEY DON'T BELIEVE THEIR OWN BULL-SH*T..

THEY DON'T LET THE FEAR THEIR BRAINS HAND THEM PARALYZE THEM.

others got rich writing books telling you how to scrounge pennies and live frugal lives and that is how the authors got rich but odds are you won't.

[mshultz]

Originally Posted by MichaelOrear

Hello,

To anyone who once had nothing and is now worth 7 or 8 figures:

1. When you had nothing, did it ever seem possible to you to one day have 7 or eight figures?

2. How does it feel psychologically and emotionally to have 7 or eight figures?

3. How long did it take?

4. Any tips on how to achieve such a feat?

Thanks

I became "The Millionaire Next Door" this year, so I just fit into your category.

1. Those days were grim (1980-1982). Shortly after I had started allergy desensitization shots, my employer changed insurance providers. The new insurance did not cover preexisting conditions, so the $40 a week allergy shots meant that in effect, I was working 5 days a week, and getting paid for 4.

When my car was stolen, a rental car was $40 a day, about as much as I was making. My insurance would only pay $10 a day. Fortunately, there was a Rent-A-Wreck where I was able to rent a 1975 AMC Pacer (without A/C) for $10 a day. I rented it for a month, which reduced the amount to $6 a day. No, I did not get a Thank You note from the insurance company for saving them money.

When I would look at my checking account and see that it was not growing, while my car was getting older and rustier, the future seemed bleak. Remember the high inflation rate of that period. The cost of living was rising much faster than my salary. It was getting another job, and moving back into my parents' home while I saved up to buy land and build a house that allowed me to turn my life around.

2. When I started back to college in 1993, I worked much harder than I ever had in the past. I had a 4.00 GPA. In 3 classes, I basically earned every available point. On the other hand, I dropped 2 classes that were not going as well as I liked. I had a 2.063 average my first year of college, and about a 2.9 average for my Bachelor's degree. Compared to my academic past, it was sort of a surreal experience each time I entered the building.

It is the same sort of surreal experience now that I am a millionaire. Because of my past experience, I can empathize with people who are struggling academically or financially. Nor do I object if these people get a financial or academic break that they did not earn. I was there once. I do not envy the 1%; I hope to join them one day.

It is much less stressful to have financial security. They put sewer lines in my neighborhood to replace failing septic systems. While my neighbors were freaking out (the same neighbors who had demanded safe drinking water, until they found out they would have to help pay for the project), I calmly wrote a check for $10,000, no loan necessary. I just replaced my 8 year old car with a 4WD Tacoma; I paid cash of course.

I am convinced that people can tell when you are poor, just like a dog can tell if you are afraid of them, and they treat you the same way.

3. About 34 years.

4. The Only Investment Guide You'll Ever Need by Andrew Tobias.
The Millionaire Next Door by Stanley & Danko.
Financial Peace University by Dave Ramsey.

Although I have yet to read it, Rich Habits-The Daily Success Habits of Wealthy Individuals by Tom Corley sounds promising.

The 6 Don'ts by mshultz: Don't Smoke, Don't Drink, Don't do Drugs, Don't Gamble, Don't Borrow Money, and perhaps the most important of all, Don't Drive more than 6,000 miles a year. I can also add a 7th Don't: Don't get Divorced.

Government pension plans are much better than just Social Security, especially when combined with a 403b Deferred Compensation plan, and a Roth IRA.

Something else to keep in mind: Don't step over dollars to pick up pennies. For example, does turning down the thermostat really save any money, if you are always looking for an excuse to leave home?

[Sunbather]

Started with $200 to my name and $25,000 of student loans when I graduated in 2007. Right now I am on track to reach our (my wife and I together) goal of $1M net worth by 35. We both make good salaries but nothing crazy. Mathjak107 is completely correct that it takes investing (whether equities, real estate, your own business, etc.) of some sort. You don't earn $1M by "saving" $1M unless you just make a ton. You earn it by saving AND investing (or in other words exposing yourself to some risk to attempt to make some gains).

[Huckleberry3911948]

here u go.

this is an old zombie OP same subject comes up every few months. people muse over how they do it.
here it comes, so old man how do u get rich. what is the trick?
i got a friend, even better off than me. i started real poor he certainly started not poor but not rich either.
its a crack up, people ask him how he does it and then they begin to argue with him. same as me. i get the hew haw response posts on CDF like crazy. they all want to know the "trick".
its like anything else hard-- you gota put in the time and sweat and work hard and get good at it, and go thru a lot of baloney and some failure. sure there are mechanics. a steady stream of income, hard skills lots of austerity, no debt, clean living being single, buy small properties pay them off and never sell just keep on buying. do buy backs and roll overs on 401 & 457 on retirement options.
most people dont want to go that road. age of the quick buck artist.
they want it fast and easy and now.

most envy what i have
none envy what i had to do to get it.

please please dont say u just lucky huck real lucky
give me a break. if i were that lucky i would have cleaned out the casinos long ago.

[TuborgP]

Originally Posted by mysticaltyger

I totally agree with you on this.

And the thing is, you don't need to go crazy with risk. You can take a modest amount, such as with those target date retirement funds or balanced funds...you know the ones I always recommend (T. Rowe Price Capital Appreciation, Vanguard Wellington, Dodge & Cox Balanced, Mairs & Power Balanced, et al).

I know you are more of an active investor, but I think we both agree that a balanced or target dated mutual fund is a better place for your long term savings than bank CDs and stable value funds.

Bada Bing, index funds with a touch of any of the four you suggest. I have two of them in different portfolios. For me they help create long term balance and stability. Some MIGHT want to consider a good balanced fund as a core part of their AA.

[Yuptag]

Originally Posted by Emigrations

I agreed with virtually everything in The Millionaire Mind. For most people, there is going to be a stage where you are denying yourself a lot of things (cars, vacations, etc) in order to build wealth.

The biggest thing that I didn't think was emphasized enough in the book is that one really needs a pretty high income to invest the amounts required to become a millionaire. The lower your income goes, subsistence consumes a higher percentage of income to maintain basic needs than a higher income person, and the harder it is to invest, avoid debt, etc. Looking back at my life, the most critical advice I could give anyone is to get your income as high as possible, as early as possible. Frugality is key, but frugality without income is not that helpful.

Good observations.

[synchronicity]

Originally Posted by MichaelOrear

Hello,

To anyone who once had nothing and is now worth 7 or 8 figures:

1. When you had nothing, did it ever seem possible to you to one day have 7 or eight figures?

2. How does it feel psychologically and emotionally to have 7 or eight figures?

3. How long did it take?

4. Any tips on how to achieve such a feat?

Thanks

Well, we're (wife and I combined) not quite at a million but are really close and, lord willing and the market don't crash, will hit that second comma shortly. So...

1) Not really, no. The idea of being "worth a million" or whatever seemed about as realistic as living on Mars. BUT, the idea of retiring my credit card debt and increasing my net worth...THAT seemed easy enough.

I remember running some numbers shortly after my first 401K contribution, and figuring out (given various assumptions) that by age 65 that account could be worth THREE HUNDRED FORTY THOUSAND! And wow, THAT seemed like some ridiculously high amount.

Yeah, well, blew by that marker awhile back. It's like a boulder that just keeps accelerating as it rolls downhill.

2) We've had some life changes recently (new home being the main one) that remind us daily that, wow, we're doing OK, and I've noticed that stuff that is a "big deal" to my less fortunate friends (and make no mistake, my success [our rather OUR success, couldn't have reached this point without my wife's contributions as well] is as much or more due to "luck" as it is to "hard work/discipline", there are LOTS of things which have broken my way while other, harder-working people I know have had curveballs to deal with) is stuff that's minor to us now. Some of it's little things, like spending $20 on a gift for a friend or otehrwise doing something nice for someone and just folding it into the budget rather than worrying if we'll be able to pay the electric bill.

OTOH, we still approach a lot of things the same way as always. Here's our income, here's our outflow. How can we successfully manage the latter. We have more options available to us than in the past but stil want to spend intelligently to maximize the benefit to us rather than frittering cash away. We still channel funds into the retirement accounts as much as we can. We still list out expenses and have organized ways of handling any "excess" income to direct into savings. We still try to figure out how to fold maintenance/repair expenses into the budget. We still scrape the last bit of butter off the paper, still mix some water in with that last bit of shampoo or liquid soap, still attach the last bits of one soap bar to the new soap bar, and so on. We still scan the weekly circulars for sales on groceries and do cost comparisons on laundry detergent and whatnot. We still drive older cars and are deciding how much we'll spend when we finally buy new(-er) cars. It's ingrained habits. Hitting some numerical threshold doesn't change that.

3) It's taken about 20 years to go from a net debt of ~15K to being on the verge of seven figures. The majority of that time has been a team effort with my wife. When we married her net worth was essentially zero, but she's even more frugal than I am. I laugh when I read the "how can I afford a wife" threads, as my wife has been a considerable net positive to our houseghold net worth in many many ways.

Granted, we do have a kid, and that means certain increased expenses (duh. ), but that's the way life is, it's not ALL dollars and cents, in fact it's important to remember that the digits in the net worth file are all about living, not about some game of "who has the most". You accumulate assets to live a more comfortable and BETTER life. Yes, sometimes you "forego" certain things now, but that's to have increased stability and security overall. We all discuss the perils of "keeping up with the Joneses", well, sometimes people have to avoid the syndrome of "keeping DOWN with the Joneses". I mean, you COULD live in an SRO with a bare bulb over your head reading a book from the library huddled in a salvation army coat and save a lot more money during your life, but that's not really the goal, is it?

4) Well, I covered a lot of that above. Have a plan, not necessarily "to be worth a million bucks", but just for living your life. Some thoughts

A) Prioritize. Figure out what's most important in your life and what isn't. Try to focus most of what you spend resources on (time and money) on the important stuff, and minimize resources allocated to the unimportant stuff. Not only does it help your bottom line, it'll improve your life (as noted above)

B) Plan ahead. Start with something as simple as noting your expenses for the enxt few weeks and months and figure out how you'll meet them. Really, even small and simple steps will get the ball rolling.

C) simplify your life. Part of (A) above. Don't fill your life with a bunch of extraneous BS that sucks away time and energy from you. Deal with everything appropriately, but don't clutter your days.

D) positive attitude. I do NOT believe that every problem can be fixed just by putting a smile on your face, but I do adhere to the dictum of "if you think you CAN'T, you'll be right every time". Often the first step in accomplishing a goal is believing you can do it. Then you'll be motivated to put in the work to possibly achieve it. Yes, you may fall short. I aim for perfection every day and fall short within 15 minutes after waking up, but then I try the next day.

I realize this contradicts my first comment about how "no, I never thought I'd be within spitting distance of two commas". But, I DID believe that I could save money and pull myself out of debt and have positive net worth. When that happened, I believed I could save more. And so on. It's built upon itself, and now, well, here we are.

E) Surround yourself with good people. Not "wealthy" people, not "connected' people, but GOOD people, people who will watch out for you and give you the shirt off their back to help you if you need it. Of course, to attract and keep those kinds of people you pretty much have to be one yourself. I always adhere to the mantra that nobody will watch out for you more than yourself and not to expect to depend on anyone else...but if you do surround yourself with good people, you'll be surprised at just how much they'll be there for you, without asking.

Again, to keep those people in your life practically demands that you need to be that way yourself.

F) track your progress, celebrate your successes and then look ahead to greater goals. As the old Nike ad used to say "there is no finish line". You're climbing a mountain - look back sometimes to appreciate how far you've come, then look ahead to the next challenges you face. Don't be daunted by obstacles - once you surmount them that view back down will be even better. This is a fine line to walk, avoiding complacency while still respecting your achievements. That said, as long as you're still alive, things could always be worse, and they could always be better.

G) again, it's really about arranging your life. Increased net worth is usually just a positive side result from getting your life in order. In my case I'm fortunate enough to have a good career that I enjoy, a wonderful wife who adores me for some strange reason, and now a kid who's pretty darn impressive and also thinks I'm All That (yeah, that'll change in a few years. ). As part of that path our finances have fallen into place. It's not perfect, but it's pretty darn good.

Hope that helps. Right now 8 figures seems unachievable and I'm mentally figuring future retirement possibilities (thinking somewhere in the several million range)...but you never know, we didn't expect to be here, so maybe we'll exceed expectations again. Remind me to post again in a decade if we hit two digits in front of that second comma.

[mathjak107]

It took me 50 years to hit a million but only 11 years to triple it. The deals got bigger and the amounts at risk got bigger.

[ncole1]

Originally Posted by mysticaltyger

I totally agree with you on this.

And the thing is, you don't need to go crazy with risk. You can take a modest amount, such as with those target date retirement funds or balanced funds...you know the ones I always recommend (T. Rowe Price Capital Appreciation, Vanguard Wellington, Dodge & Cox Balanced, Mairs & Power Balanced, et al).

I know you are more of an active investor, but I think we both agree that a balanced or target dated mutual fund is a better place for your long term savings than bank CDs and stable value funds.

I don't have a dime of my retirement investments in bonds, because of the Fed still undergoing this unprecedented purchasing program. Bond prices are overinflated to the point of absurdity right now and you're better off with just stocks, real estate, and perhaps a very small amount of cash or gold.

[mathjak107]

Couldn't argue with you unless you were looking to control volatility.

Many folks want to keep the swings within a range they are comfortable with.

To high of an equity position makes them lose sleep at night when things fall.

Because most of the time quality bonds and treasuries rise when markets plunge it takes alot less money in bonds than cash to temper the swings.

One would have to pull alot more money out of equities if they used cash as opposed to used bonds to try to hold to a certain amount of volatility.

As an example in 2008-2009 equities lunged 45% but treasury bonds rose 40%.

If you were trying to avoid owning bonds by using cash instruments you would have needed a ton of cash to try to offset any of that plunge and even then you may not be in your comfort range.

Many found out their pucker factors were far less than they assumed and they eventually bailed ,ran and lost money..

Even at these levels bonds can do alot of good in a portfolio where volatility and pucker factor are a factor. they stand the best chances of flying fighter cover in a downturn of equities.

not perfect, but about as good as you can get without futures or option hedging.