Blue collar worker and millionaire dream

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aaaa
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Blue collar worker and millionaire dream

Post by aaaa » Sun Aug 30, 2015 4:24 pm

Hi,
My spouse and I are blue collar workers. We have 2 kids and living in Dallas. We are 34 and 35. We are frugal and in a happy marriage. We make 110K together. Can blue collar worker become millionaire? Tell us how. Thanks in advance.

livesoft
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Re: Blue collar worker and millionaire dream

Post by livesoft » Sun Aug 30, 2015 5:00 pm

When we were your age, we did had much lower income than you have. We lived in a state with much higher taxes than Texas, too. What we did: We reduced expenses so that we lived off the income of the lower paid spouse and saved/invested the gross income of the higher paid spouse.

Whenever I write this, folks express disbelief that a family can even do this. They think income taxes would be too high leaving nothing left to live on. If one invested the maxmimu allowed annually into 401(k) plans and traditional IRAs (Roth IRAs were not available for us), then one would not pay any federal income taxes.
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Dimitri
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Re: Blue collar worker and millionaire dream

Post by Dimitri » Sun Aug 30, 2015 5:06 pm

You can certainly become millionaires. Save 45.45% of your gross income (0.4545 x $110,000) in a non-interest bearing account for 20 years and you will have a million dollars. Get a return on your investment and you will do it faster. If you want to have money (i.e. $1,000,000) the answer is to cut your expenses while maximizing your income. It is certainly possible.
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John3754
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Re: Blue collar worker and millionaire dream

Post by John3754 » Sun Aug 30, 2015 5:09 pm

Read The Millionaire Next Door By Thomas J. Stanley‎.

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alec
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Re: Blue collar worker and millionaire dream

Post by alec » Sun Aug 30, 2015 5:11 pm

aaaa wrote:Hi,
My spouse and I are blue collar workers. We have 2 kids and living in Dallas. We are 34 and 35. We are frugal and in a happy marriage. We make 110K together. Can blue collar worker become millionaire? Tell us how. Thanks in advance.
Yes, my in laws were just like you. With pensions and 401ks, they have over $1,000,000.

They worked for 35 years.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair

TMCD75
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Re: Blue collar worker and millionaire dream

Post by TMCD75 » Sun Aug 30, 2015 5:18 pm

I'm about as blue collar as it gets...a self employed house painter. The biggest challenge is living within a budget and living frugal. If you and your wife make 110k per year and live frugally, I see no reason why you can't be a millionaire in 20-30 years. I'm a millionaire on paper but that's including a 250k LI policy, but hey, if I go tomorrow, the wife will come into roughly a cool million.

Independent
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Re: Blue collar worker and millionaire dream

Post by Independent » Sun Aug 30, 2015 5:21 pm

The math is simple.
The average US married couple with children and a house spends about $75,000 per year, after taxes.
Your $110,000 income should generate less than $20,000 in taxes, leaving you with at least $90,000 after tax.
Spend money like the average couple, and you can save $15,000 per year.
$15,000 per year for 30 years, accumulated at 5% will be be just over $1,000,000.
Historic real returns on large cap US equities have exceeded 5%.

I assume you've already done that math. So the real question is ... ?

MathWizard
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Re: Blue collar worker and millionaire dream

Post by MathWizard » Sun Aug 30, 2015 5:27 pm

Most certainly.

My wife and I exceeded $100K combined income only three years ago. We are in our late 50's and expect to
pass $1 million in invested assets with no debt by age 62. There was no inheritance.

Transportation:
We've always bought good used cars, never newer than 4 years old. All but three were bought with cash.
For work, I park two blocks further than most, saving $700/year on parking.

Cars:
We've paid half the total cost of our 2 son's education.

Housing:
We stayed in mobile homes while I was in college until we had enough saved up to pay 20% down.
We bought a fixer upper in a nice neighborhood next to an elementary school so our kids could walk to school.
Of the 16 years we have lived in this house, 13 summers were spent on improvement projects, which improved
the value of our house.

Extra work:
I've had opportunities to earn a few hundred extra. Each time 100% of that money went into savings

Debt:
After the house was bought, I paid extra on student loans to get them paid off early.
When rates fell on housing, I refinance three different times, each time to a shorter term which also gave me a slightly
lower interest rate. This drove the payments up, but I ended up paying lower interest.

Saving:
After the student loans were paid off, I put half of each raise into retirement savings by automatic payroll deduction
before I ever saw it.

My honeymoon was 2 nights in a hotel, but my wife an I spent our 30th anniversary in France, so we will spend when
it is important.

Good luck.

SamB
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Re: Blue collar worker and millionaire dream

Post by SamB » Sun Aug 30, 2015 6:31 pm

I made a bet on the US equity market when I was 30 years old. In other words, I bet that the average return over the next thirty years would make me above average in the long run, and it did. Of course I had to save as much as possible, which meant cutting consumption, and doing most things myself, rather than paying people.

I won the bet, but never the less, it is still a bet. My first dollar invested was with the DOW at 750. You can do the same thing and blue collar does not have anything to do with it. However, luck is a big factor. Being a passive investor is just a way to do deal with the risk of the market. It is not a guarantee of anything. It certainly may not have turned out the way it did for me.

All you need is a decent savings rate, and twenty good years. I got the twenty. The market has not done anything for the last 15 years as far as I am concerned. You have the time to bet on the next thirty years.

LadyIJ
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Re: Blue collar worker and millionaire dream

Post by LadyIJ » Sun Aug 30, 2015 6:49 pm

Yes, of course you can! I don't think it has to do with blue collar/vs. white collar. A lot of white collars are paid less. I don't see an issue with you becoming a millionaire at all, just follow the bogleheads advice and you will most certainly do it. We did, but of course, we sacrificed - don't eat out a lot, not a lot of extravagant trips, etc. Good luck!

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patriciamgr2
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Re: Blue collar worker and millionaire dream

Post by patriciamgr2 » Sun Aug 30, 2015 7:21 pm

Be sure to have your Uncle Sam & your employer help you. Both you & your wife should be maxing out your workplace tax-advantaged savings plans (401k's etc). & opening IRAs as well. If you've paid off all non-mortgage debt, have the bank where you deposit your checks send an investment each payday to a low-cost, tax-efficient fund (Total Stock Market at Vanguard, for example). All pay raises increase your workplace savings & are dedicated to boosting those after-tax purchases at your mutual fund company.

Don't allow lifestyle creep--no fancy cars, boats, bigger house, etc--unless you weigh each purchase against what it "costs" in foregone investments for your retirement dreams. When I was super-saving, I tried to limit my spending to those areas which absolutely mattered to me & to be disciplined about not wasting money on other stuff just because other people were buying it. You & your spouse need to make a game out of finding all the areas where you can cut costs.

The Wiki has lots of good info on getting started. Your local library may have a copy of the Bogleheads' Guide to Investing--that's also helpful. Best Wishes.

mikeast
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Re: Blue collar worker and millionaire dream

Post by mikeast » Sun Aug 30, 2015 7:38 pm

My wife and I went from zero to millionaire in about 20 years on a similar income (less actually). We lived on one pay check and saved the other. It wasn't that difficult. I discovered the Vanguard Diehards through the Morningstar Site around 1998 and started getting good advice from all of the wonderful people here, started reading the recommended books. We just stayed the course with a simple portfolio (age in bonds, the rest in equities). A little slice and dice and some REITS. We did, however, rev up the purchase of equity fund shares like TSM whenever the market seriously tanked. But for the most part, it was just make a plan and stay the course.

bradshaw1965
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Re: Blue collar worker and millionaire dream

Post by bradshaw1965 » Sun Aug 30, 2015 8:11 pm

Independent wrote:The math is simple.
The average US married couple with children and a house spends about $75,000 per year, after taxes.
Is that right? Median household income is less then $45k. Is it something about average vs median? households with children making more?

aaaa
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Re: Blue collar worker and millionaire dream

Post by aaaa » Sun Aug 30, 2015 8:22 pm

Thanks for encouragement. We are frugal but we bought too much house. We love the house and will stay here at least 20 more years. We moved our money to Vanguard 500 Index Fund Admiral Shares (VFIAX) last year. We hope to retire at 60.

Jack FFR1846
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Re: Blue collar worker and millionaire dream

Post by Jack FFR1846 » Sun Aug 30, 2015 8:29 pm

Absolutely.

I didn't hit $100k until I was in my mid 40's. Wife was at home with the kids. Always had a 401k and was frugal with the money. Not meaning always used cars or saving all I could in the 401k, just not buying stupid things like sports seasons tickets or going to 20 concerts a year....and buying 3 of the $12 beers while there. I raced cars for 25 years, was heavily into guitar collecting for a half dozen years and have had a "toy" car for 20 years (in addition to the racecar, enclosed trailer and Suburban tow vehicle). But never paid a dime in credit card interest, put extra money early on into loans, buying savings bonds now and then....to the point I had $400k in them, then mortgage and although I'd buy new cars, I didn't go for the cars that were in keeping with my income or neighbors. You don't have to go extreme, you just have to save, and not be stupid. In my 50's now with a 2 comma portfolio (even during the recent downturn).
Bogle: Smart Beta is stupid

randomguy
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Re: Blue collar worker and millionaire dream

Post by randomguy » Sun Aug 30, 2015 8:35 pm

bradshaw1965 wrote:
Independent wrote:The math is simple.
The average US married couple with children and a house spends about $75,000 per year, after taxes.
Is that right? Median household income is less then $45k. Is it something about average vs median? households with children making more?
http://www.cnsnews.com/commentary/teren ... age-107054

Ignore the commentary and look at the stats. To a large extent these things come down to mean vs average (1 400k and 49 40kers have an average income of 45k) and selection of a sub sample (imagine 2 working parents+kid versus a househould with 1 working parent and 1 kid versus a household with 2 people on SS and make a guess which one has a higher income).


Yeah you can become a millionaire. Bad news is that in 40 years, everyone will be a millionaire.

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market timer
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Re: Blue collar worker and millionaire dream

Post by market timer » Sun Aug 30, 2015 8:42 pm

bradshaw1965 wrote:
Independent wrote:The math is simple.
The average US married couple with children and a house spends about $75,000 per year, after taxes.
Is that right? Median household income is less then $45k. Is it something about average vs median? households with children making more?
The median married household with two children looks very different from the median household. For example, you filter out many retirees by selecting for those with children. People tend to wait until they have solid careers before having kids (not all, of course).

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JoMoney
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Re: Blue collar worker and millionaire dream

Post by JoMoney » Mon Aug 31, 2015 4:28 am

I think it's quite doable, but rather than making the goal to achieve a million dollars in some account, may I suggest aiming at what it is you hope a million dollars will do for you? You might find you can do/achieve it without a million dollars :D ... or maybe that it will take even more :annoyed
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

bradshaw1965
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Re: Blue collar worker and millionaire dream

Post by bradshaw1965 » Mon Aug 31, 2015 8:43 am

randomguy wrote:
bradshaw1965 wrote:
Independent wrote:The math is simple.
The average US married couple with children and a house spends about $75,000 per year, after taxes.
Is that right? Median household income is less then $45k. Is it something about average vs median? households with children making more?
http://www.cnsnews.com/commentary/teren ... age-107054
This is useful. Thanks.

Grt2bOutdoors
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Re: Blue collar worker and millionaire dream

Post by Grt2bOutdoors » Mon Aug 31, 2015 12:24 pm

aaaa wrote:Thanks for encouragement. We are frugal but we bought too much house. We love the house and will stay here at least 20 more years. We moved our money to Vanguard 500 Index Fund Admiral Shares (VFIAX) last year. We hope to retire at 60.
Read The Millionaire Next Door. "Frugal but bought too much house" - hmmm, they call it "big hat, no cattle" in The Millionaire Next Door. With the bigger home comes higher utility bills, more maintenance, higher taxes. You will have to reign in your purchases of consumption elsewhere and focus on accumulating assets that appreciate like equity index funds but in a manner that suits your risk tolerance levels.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

grettman
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Re: Blue collar worker and millionaire dream

Post by grettman » Mon Aug 31, 2015 1:07 pm

The problem is a $1M doesn't mean what it used to. Some say $3M is the new $1M. As someone already pointed out -- in 40 years everyone will be a millionaire. Unfortunately, it won't be enough for many of them.

mindboggling
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Re: Blue collar worker and millionaire dream

Post by mindboggling » Mon Aug 31, 2015 1:12 pm

I have a college degree but spent about two-thirds of my career in "blue collar" hourly-paid jobs, mostly union-represented.
1. The most important thing: live below your means. This is where you get the money to invest.
2. Next, max out your 401k and IRA if you can.
3. Avoid debt as much as possible.
4. Buy and hold low-cost index funds.
5. Keep it simple. A two or three or four fund portfolio is all you need.

I retired in 2013 at the age of 60 with a fixed pension and an investment portfolio of over one million.
In broken mathematics, We estimate our prize, --Emily Dickinson

feh
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Re: Blue collar worker and millionaire dream

Post by feh » Mon Aug 31, 2015 1:23 pm

Blue/white/no collar - it really doesn't matter. Your household income is quite a bit above the median in the US.

LBYM and invest. It's really that simple.

Independent
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Re: Blue collar worker and millionaire dream

Post by Independent » Mon Aug 31, 2015 7:16 pm

bradshaw1965 wrote:
Independent wrote:The math is simple.
The average US married couple with children and a house spends about $75,000 per year, after taxes.
Is that right? Median household income is less then $45k. Is it something about average vs median? households with children making more?
"Households" can have only one person, even one retired person with a very low income.

So, yes, it's mostly about households with two married people and children having more than the average. I also selected only homeowners (figuring the OP probably owned a house). If I had included renters I would have had a lower number.

But, it is also somewhat mean vs. median. The BLS data only supports calculations of means.

mhalley
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Re: Blue collar worker and millionaire dream

Post by mhalley » Tue Sep 01, 2015 2:46 am

While bogleheads don't endorse everything Dave Ramsey does, he has some interesting interviews of normal people that became millionaires on his podcasts. Just to get some inspiration, you might listen to some of them. Remember to not follow his investing advice, come here for that.
Here is a link to youtube with the search for Dave Ramsey Millionaire Hour.
https://www.youtube.com/results?search_ ... naire+hour
Remember what the million dollars gets you: at a safe withdrawal rate of 4%, you get a $40,000 a year income. This plus social security should give you a decent retirement.
Mike

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ofcmetz
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Re: Blue collar worker and millionaire dream

Post by ofcmetz » Tue Sep 01, 2015 3:39 am

I think 2 million is the old 1 million now days. That said, I think 1 million plus social security and a paid off house is plenty for most people. If stocks provide minimal real returns over the next few years of 3% or so, then most working couples who follow the principles taught here should be millionaires by the time they retire in their 60's.
Never underestimate the power of the force of low cost index funds.

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Re: Blue collar worker and millionaire dream

Post by Call_Me_Op » Tue Sep 01, 2015 5:49 am

aaaa wrote:Hi,
My spouse and I are blue collar workers. We have 2 kids and living in Dallas. We are 34 and 35. We are frugal and in a happy marriage. We make 110K together. Can blue collar worker become millionaire? Tell us how. Thanks in advance.
Sounds to me like you are making good money for Dallas Tx. The key is frugality - put a certain amount away each month religiously and put it into a widely-diversified stock fund.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

aaaa
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Re: Blue collar worker and millionaire dream

Post by aaaa » Tue Sep 01, 2015 6:07 am

Our house payment is 2k a month piti with 7 years left on the loan. We are spending another 2k on food and other stuff. We are saving 3.5k a month. We moved 200k to Vanguard not long ago. We have another 100k with our current employers. We hope to retire at 60.

Grt2bOutdoors
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Re: Blue collar worker and millionaire dream

Post by Grt2bOutdoors » Tue Sep 01, 2015 8:06 am

aaaa wrote:Our house payment is 2k a month piti with 7 years left on the loan. We are spending another 2k on food and other stuff. We are saving 3.5k a month. We moved 200k to Vanguard not long ago. We have another 100k with our current employers. We hope to retire at 60.
Just keep doing what you are doing, when you pay off the mortgage in 7 years, do not upgrade your lifestyle - take that mortgage payment and save it. Don't go out and buy yourselves a new Cadillac or F-150 or a trip to Tahiti every couple of years. If you can earn a 5% rate of return on your $300K plus monthly contributions of $3.5K over the next 25 years, you will be able to safely withdraw about $115K pre-tax over the following 30 years with principal left over for heirs. However, if returns are less over that period of time, the only other way to get there is to save more money or spend less money in retirement.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

dbltrbl
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Re: Blue collar worker and millionaire dream

Post by dbltrbl » Tue Sep 01, 2015 8:48 am

YES you can. We were one income family on salary of $27000.00 per year in 1985. As others have said save as much as you can. Spend smart. Use compounding to your benefit. Use TAX Sheltered accounts as much as you can. 30 years later thanks to all stock market bubbles and busts yes in 2 comma club without doing anything fancy. We also drove new cars but kept them for 15+ years. Currently drive Honda Accord from 2015 with 209000 miles.

So You will be millionaires. Good luck.

Grt2bOutdoors
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Re: Blue collar worker and millionaire dream

Post by Grt2bOutdoors » Tue Sep 01, 2015 9:27 am

dbltrbl wrote:YES you can. We were one income family on salary of $27000.00 per year in 1985. As others have said save as much as you can. Spend smart. Use compounding to your benefit. Use TAX Sheltered accounts as much as you can. 30 years later thanks to all stock market bubbles and busts yes in 2 comma club without doing anything fancy. We also drove new cars but kept them for 15+ years. Currently drive Honda Accord from 2015 with 209000 miles.

So You will be millionaires. Good luck.
$27K?? That was a great income in 1985.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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TxAg
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Re: Blue collar worker and millionaire dream

Post by TxAg » Tue Sep 01, 2015 10:36 am

aaaa wrote:Our house payment is 2k a month piti with 7 years left on the loan. We are spending another 2k on food and other stuff. We are saving 3.5k a month. We moved 200k to Vanguard not long ago. We have another 100k with our current employers. We hope to retire at 60.

Keep doing what you're doing. You're doing great!

Plug your numbers in here for a simplified answer: http://www.investor.gov/tools/calculato ... calculator

Rodc
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Re: Blue collar worker and millionaire dream

Post by Rodc » Tue Sep 01, 2015 1:52 pm

Not to be a downer, but remember inflation matters.

One might need* $2.4M in 30 years to have the purchasing power of $1M today.

It helps some that income will tend to go up with inflation (though may not)

* assumes 3% inflation.

FWIW: near as I can tell the best way to get ahead as a blue collar worker is to work for yourself not for someone else as they will take a significant cut.

Best of luck
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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