Millionaire by 40 and How you Did it?

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Simple Simon
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Re: Millionaire by 40 and How you Did it?

Post by Simple Simon » Wed Jan 30, 2019 7:43 am

^^ if those numbers don't add up - may have doublecounted dividends

alfaspider
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Re: Millionaire by 40 and How you Did it?

Post by alfaspider » Wed Jan 30, 2019 9:45 am

Simple Simon wrote:
Wed Jan 30, 2019 7:41 am
In the last 5 years we earned 894,232, paid 319,748 in taxes and pension contributions, and kept 574,484.
We spent 407,652. This left 166,832 to invest or repay debt.

Over this same 5 years our net assets increased from 468,395 to 894,327, an increase of 425,932

The increase in wealth was due to:

increase in value of house: 203,393
money earned and invested: 94,125
money earned and used to reduce mortgage: 72,707
increase in value of existing investments: 55,607
dividends and interest: 20,402

Although I'm not a millionaire, this is the level of detail I'd be interested to see from anyone who is & who feels like sharing -thankyou
General estimates only:

Over the last 5 years, we earned ~1.7MM, with about $400k to taxes (including property tax). We spent around $600k. Over the same 5 years, net assets increased from zero to approximately $1.1MM. Besides contributions, increase in wealth was mostly capital appreciation on equities, and about $100k in home appreciation.

taxlady74
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Re: Millionaire by 40 and How you Did it?

Post by taxlady74 » Wed Jan 30, 2019 11:37 am

Worked hard and advanced up the corporate ladder relatively quickly. I avoided massive lifestyle creep and made savings a priority over buying. No one big thing that got me past that millionaire hurdle. Money kept > money spent.

2Birds1Stone
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Re: Millionaire by 40 and How you Did it?

Post by 2Birds1Stone » Wed Jan 30, 2019 11:47 am

We are more than half way there, and projected to crack that magic 7 figure mark around age 35/31.......this is through frugal living and regular investing. Income is decent, but not super high. Under $100k combined averaged over 10 years.

SarahS
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Re: Millionaire by 40 and How you Did it?

Post by SarahS » Wed Jan 30, 2019 12:14 pm

Question: when determining net worth, what do folks do or recommend doing with regard to dealing with the tax status of different accounts/assets, specifically pre-tax accounts. After all, typically 10-30% of that is the governments.

12gage
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Re: Millionaire by 40 and How you Did it?

Post by 12gage » Wed Jan 30, 2019 12:17 pm

In August 2012, I was up late and watching Suzie O. She mentioned net worth, so I decided I would figure mine. I was 33 and it came out to $41,000. I felt like a loser. I was living with my then girlfriend now wife.
Fast forward to August 2018, my wife and I passed the 1M threshold. Now some of that, I estimate $200k was brought in from my wife who was way ahead of me on the thriftiness part, we were married in 2015. I also benefited from some promotions at my government job and my wife having a decent paying job as well. In total this year we will gross about 180kish.

Nonetheless we did the normal stuff, cut down cable and other expenses. Concentrated on paying off all our debt. We benefitted from the recent increase of housing in the past few years as well. However, I would say for me the biggest thing we did was track our progress and track our spending. On the first of every month we calculate our new net worth to track the progress. I have done this every month since 2013. We also track our spending. We have tracked and categorized every dollar we spent each month since 2014. The data is impressive. We call it Net Worth Day and it is a holiday at our house. It also forces us to talk about finances every month.

I know many on here will find it a bit obsessive, but I feel it made a big difference for us and kept us on track.

bltn
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Re: Millionaire by 40 and How you Did it?

Post by bltn » Wed Jan 30, 2019 1:54 pm

azanon wrote:
Tue Jan 29, 2019 9:22 pm
NextMil wrote:
Sat Jan 12, 2019 7:32 pm
People’s heads may explode, but I have to credit Dave Ramsey, as I started my career with a bunch of debt. Anyone else finance an engagement ring? :oops:
Most everyone usually acknowledges his ideas for getting out of debt are great.

And despite so many people hating on his portfolio recommendation, his recommendation of 100% stocks with US stock bias has been golden for the last 10 years. I wish I could go back to 3/2009 and implement that plan vs. what I actually did. Now don't get me wrong, I don't recommend that and still disagree with him, but certainly since 3/2009, that portfolio has destroyed what I've been doing.
Dave Ramsey espouses a method for accumulating wealth, which I think may not be optimal, but it has its merits and certainly works. He emphasizes the psychlogical benefits of writing off debts as soon as possible (paying off the smallest debts first regardless of interest rates). He encourages total commitment and aggresively paying off the debts. Once one is used to this commitment, it becomes easier to save more aggressively later. His asset allocation of stocks and rental real estate is like everyone elses, in that it makes him happy and he s comfortable with it. I personally couldn t follow anything close to that plan of AA.
Last edited by bltn on Mon Jul 15, 2019 9:48 pm, edited 1 time in total.

Frank Grimes
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Re: Millionaire by 40 and How you Did it?

Post by Frank Grimes » Wed Jan 30, 2019 3:03 pm

--Started professional careers after school with good earnings tracks. Minimal/no student debt (thanks to families)
--Saved consistently in IRAs for a while and 401ks since the beginning, which happened to coincide with a down market in the great recession of 2008. Market has been largely sunshine since then. Big props to spouse in this - I think they saved a higher % than me early on and also had some of their contributions going to company stock which was at rock bottom then.
--Never had credit card debt or other consumer debt outside of mortages/cars
--LBYM with housing and vehicles even as incomes have considerably improved over time.
--Both of us are fairly frugal by nature, we probably spend money on some things we shouldn't but don't make huge mistakes in that department like boats.
--Reading this forum has helped a great deal. Learning so much here has helped focus all the good habits we already had into a more intentional and organized investing and saving strategy.

djscal
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Re: Millionaire by 40 and How you Did it?

Post by djscal » Wed Jan 30, 2019 5:22 pm

bigtex wrote:
Fri Jan 11, 2019 11:39 am
I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?
It's really not that difficult if you have an above average paying job (our professions are me I.T. and her lawyer) and have a higher than average savings rate. For my wife and I it was a combination of all of the above in terms of your question. We made it by around age 30.

Higher than average income, semi-frugal habits, significantly higher than average savings rate is how we did it. We are not Mr Money Mustache frugal - we have newish nice enough cars, eat at restaurants frequently and have a nice home in a high cost of living area.

We have saved anywhere from 15-50% of our gross income per year depending on the year and the expenses that we have had that year. Once your balance starts growing and the compounding returns kick in - your savings balances grow much quicker. What also helped was higher than average company 401k matching. The 401k matching in just my account is already in the six figures and I'm only in my early 40's.

Lastly we had some luck with real estate purchases.

One thing that also worked in our favor was 0 student loan debt for me and only a little for my wife (this was back when schooling was much more affordable).

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jotun
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Re: Millionaire by 40 and How you Did it?

Post by jotun » Thu Jan 31, 2019 7:57 pm

I recently became a millionaire at the age of 33, combining investments and cash (no real estate). Of course that could change if the market tanks.

Mostly, I got lucky and have been disciplined.
  • Worked through high school and college to save money.
  • Graduated college without debt.
  • Got a STEM degree, and ended up working in tech.
  • Started investing at the bottom of the market in 2008/2009.
  • Have always lived well below my means.
  • Experienced a low 6-figure windfall when my company went public.

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AnalogKid22
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Re: Millionaire by 40 and How you Did it?

Post by AnalogKid22 » Sun Jul 14, 2019 11:39 am

Became a millionaire last Friday at age 41, before my goal of age 42. I've always been a saver, but only started investing seriously in the last 6 years or so. Before that, I only made small contributions to my 401Ks, which I invested in mutual funds. I've always rented and have bought all my cars new, driving them until they're close to dying (my current car recently turned 10 and is still going strong), then trading them in. My next car will most likely be used condition. I've always lived way below my means and typically question most purchases, but I do splurge on occasion. Like many others, the long bull market allowed me to reach my goal, but, starting with significant savings to invest made it possible. Saving is key no matter your investment timeframe.

Laika
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Re: Millionaire by 40 and How you Did it?

Post by Laika » Sun Jul 14, 2019 5:05 pm

Oooh, another opportunity to humble-brag! This board is a goldmine! :happy

The usual, in my case: Working like mad (modest career plus consulting gigs), saving like mad (50% per year, typically), some luck, and some (non-financial) help from others.

People sometimes fancy the words "self made" when describing themselves and their fortunes. But that's rarely reality. We are all contingent on one another. So say thank you to those who saved you from that would-be disaster, or who gave you a leg up along the way. :D

rascott
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Re: Millionaire by 40 and How you Did it?

Post by rascott » Sun Jul 14, 2019 8:43 pm

We've done it through a combo of RE and traditional BHs investing....crossed over when I was about 36/37ish.

Bought my first home + rental property within my first year of starting work post-college at 23. Added to the rental portfolio during the recession. Looking at my NW, it's roughly 50% equities, 50% real estate equity. Taking out our current personal residence equity we are right at that number today.

Didn't get married until 33. Wife's share of this was about $150k NW....we are dual income, but with 2 kids, childcare eats up almost half her take home pay.

I was making $45k starting out.... doubled that within 4 years out of school. Mainly slightly higher than COLA increases since then. Didn't feel like I did anything fancy.....found good deals on homes and invested 10%+ match into 100% equity index funds. Got lucky that my income jumped up big starting in 2008.

We were both fortunate to start at $0... in that we neither had college debt. Still feel miles away from FI.

FRT15
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Re: Millionaire by 40 and How you Did it?

Post by FRT15 » Sun Jul 14, 2019 9:00 pm

A high savings rate, living very basically, and career progression.

Owning a home right after college and having roommates for 12 years made a huge difference. This is a sacrifice most people don't enjoy , especially after 30, but it really moves the needle.

Until I created an account on personal capital I never did a full accounting of what I had. That tool makes it very nice to get a quick update.

Unfortunately I have missed a ton of market return by lack of participation so I can't say that helped me much on the journey.

nall
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Re: Millionaire by 40 and How you Did it?

Post by nall » Mon Jul 15, 2019 1:02 am

AnalogKid22 wrote:
Sun Jul 14, 2019 11:39 am
Became a millionaire last Friday at age 41, before my goal of age 42. I've always been a saver, but only started investing seriously in the last 6 years or so. Before that, I only made small contributions to my 401Ks, which I invested in mutual funds. I've always rented and have bought all my cars new, driving them until they're close to dying (my current car recently turned 10 and is still going strong), then trading them in. My next car will most likely be used condition. I've always lived way below my means and typically question most purchases, but I do splurge on occasion. Like many others, the long bull market allowed me to reach my goal, but, starting with significant savings to invest made it possible. Saving is key no matter your investment timeframe.
How much did you have before the past six years? Sounds like a short period to make a pretty significant gain.

Pattray
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Re: Millionaire by 40 and How you Did it?

Post by Pattray » Mon Jul 15, 2019 6:45 am

I came to this country in 1982 age 19 with $158.00 in my pocket. Started a business in 1989 and hit 1mm in worth in late 1996 at age 34 ish, retired in Jan 2016 at 52 and hit 8 figures this year, still pinching myself !

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AnalogKid22
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Re: Millionaire by 40 and How you Did it?

Post by AnalogKid22 » Mon Jul 15, 2019 7:19 am

nall wrote:
Mon Jul 15, 2019 1:02 am
AnalogKid22 wrote:
Sun Jul 14, 2019 11:39 am
Became a millionaire last Friday at age 41, before my goal of age 42. I've always been a saver, but only started investing seriously in the last 6 years or so. Before that, I only made small contributions to my 401Ks, which I invested in mutual funds. I've always rented and have bought all my cars new, driving them until they're close to dying (my current car recently turned 10 and is still going strong), then trading them in. My next car will most likely be used condition. I've always lived way below my means and typically question most purchases, but I do splurge on occasion. Like many others, the long bull market allowed me to reach my goal, but, starting with significant savings to invest made it possible. Saving is key no matter your investment timeframe.
How much did you have before the past six years? Sounds like a short period to make a pretty significant gain.
I had a little over 600k after ~15 years of saving. No inheritance or windfalls. Put the majority in index funds, around 75/25 (stock/bond), and started automatic contributions every two weeks. All 401k contributions go into bonds, previous 401ks also in bonds, but moved to a rollover IRA. All other contributions are total stock index funds in a taxable and Roth IRA. I make over 100k, single, no kids, no debt, so investing has been a top priority. I got serious about maxing 401k and stock purchase plans, always exercising the options, with each employer. I was laid off twice in the last 4 years, fortunately with severance packages, but quickly found work, so I invested all severance funds. The bull market accelerated my goal - without it I’d be a few 100k behind.

RJC
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Re: Millionaire by 40 and How you Did it?

Post by RJC » Mon Jul 15, 2019 7:58 am

100% stocks, 100% US for the last 10 years.

DirtyBottles
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Re: Millionaire by 40 and How you Did it?

Post by DirtyBottles » Mon Jul 15, 2019 8:17 am

Biggest thing outside of having a solid income is starting early. I got a job as a teller at a bank when in college (age 20) and started contributing to my 401k right away.

Once i finished college and got a full time job (payng a whopping 18k a year!). I did a few things:

1) Started saving $50 a month into mutual funds even when barely making enough to get by. Would increase this every single time I got a promo or raise.
2) set up my 401k to auto increase by 1% every year (minimum). As my career started to take off i'd increase by 2 or 3% each year and quickly got to max.
3) Lucky enough to marry someone who is frugal and also earns a solid income.

The biggest mistake I see younger folks making is no ability to delay gratification. They want the big house, nice cars and fancy trips right away, often at the expense of savings. Time is your friend (or enemy).

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CyclingDuo
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Re: Millionaire by 40 and How you Did it?

Post by CyclingDuo » Mon Jul 15, 2019 8:34 am

DirtyBottles wrote:
Mon Jul 15, 2019 8:17 am
The biggest mistake I see younger folks making is no ability to delay gratification. They want the big house, nice cars and fancy trips right away, often at the expense of savings. Time is your friend (or enemy).
Yes, you are correct for the "average" younger person - or in Ramsey parlance he would call them "normal". Spenders vs. savers set their habits early. And far too many have poor habits.

Consumerism plus entitlement is a recipe for those very bad financial habits (living paycheck to paycheck, living beyond one's means and taking on CC debt, auto loan debt, on top of student loan debt).

Everyone has to learn (there certainly is no shortage of information available!!!). Best if one is a parent to continue the education of your children - even through their younger working years - to help them reign it in and live within their means as well as save. It's tough when they all want to live in HCOL big cities, have a car, travel on weekends, eat out, drink, attend events, etc... . We, as parents, are still continuing the education of our children who are now out in the working world in HCOL cities through all of that. I don't let the resistance or push back any of them give me deter me in the least as I continue talking to them about their habits. Eventually it will stick...
"Everywhere is within walking distance if you have the time." ~ Steven Wright

FI4LIFE
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Re: Millionaire by 40 and How you Did it?

Post by FI4LIFE » Mon Jul 15, 2019 8:37 am

I was blessed to have parents who set the example of working hard and investing. They get most of the credit.

My career is not necessarily really high paying, but you move to top pay early. I started saving for retirement at 20 and was able to increase that savings early due to my career choice.

At times in my 20s and early 30s, I was working 70-80 hours a week including overtime and second job. This was before kids and I loved the hustle. My wife also works and has a a standard salary for a college educated professional. We lived in a one bedroom condo together for several years and saved up $200k for a down payment on our first house in our HCOL area. This was on top of decent retirement savings at the time. We bought half the house the mortgage company said we could.

We continue to save and max out retirement accounts. Current household NW at 39, not including my pension is $1.1 mil. With current pension it's probably closer to $1.7. I drive vehicles that cost no more than $10k. My wife gets the nicer vehicle which we also bought used.

Hopefully will reach FI by 48. Time will tell.
Last edited by FI4LIFE on Mon Jul 15, 2019 8:44 am, edited 2 times in total.

FI4LIFE
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Re: Millionaire by 40 and How you Did it?

Post by FI4LIFE » Mon Jul 15, 2019 8:42 am

Pattray wrote:
Mon Jul 15, 2019 6:45 am
I came to this country in 1982 age 19 with $158.00 in my pocket. Started a business in 1989 and hit 1mm in worth in late 1996 at age 34 ish, retired in Jan 2016 at 52 and hit 8 figures this year, still pinching myself !
8 figure club. Congrats!!

protagonist
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Re: Millionaire by 40 and How you Did it?

Post by protagonist » Mon Jul 15, 2019 8:48 am

I think another question worth asking (though rather ambiguous to interpretation), and perhaps a more salient one (if advising other young adults) is....

Of the 40 year old (or younger) millionaires who did not inherit their money or otherwise obtain it without working for it, how much of your youth did you have to sacrifice to achieve this goal?

And was it worth it? And why?

woody86
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Re: Millionaire by 40 and How you Did it?

Post by woody86 » Mon Jul 15, 2019 8:53 am

Paul's Principles for Prosperity


Always be a saver.

Chose a profession that you like, hopefully love. Work hard and give it your all.

Chose the right spouse. One with the same beliefs and life goals.

Live within your means. Never spend more than you make.

Stay out of debt. Only exceptions are mortgage and vehicle, but remember that a house is a home and a vehicle is transportation. NOT a status symbol! Also, keep both for long periods of time.

You can dress sharply without “designer” labels.

Make credit cards work for you. Chose one that has no fees and pays rebates. Pay in full each month, never pay interest.

Never trust a broker, investment adviser, financial planer, banker or any other “crook”.

Put your faith in God and your money in mutual funds.

Retired High School Principal (retired at 54)

mak1277
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Re: Millionaire by 40 and How you Did it?

Post by mak1277 » Mon Jul 15, 2019 9:48 am

protagonist wrote:
Mon Jul 15, 2019 8:48 am
I think another question worth asking (though rather ambiguous to interpretation), and perhaps a more salient one (if advising other young adults) is....

Of the 40 year old (or younger) millionaires who did not inherit their money or otherwise obtain it without working for it, how much of your youth did you have to sacrifice to achieve this goal?

And was it worth it? And why?
I like this question.

Personally, I didn't sacrifice any of my youth. I consciously chose to spend instead of save in my 20s. I didn't contribute a cent to retirement until I was in my 30s. I pretty much lived exactly the life I wanted to live in my 20s and have no regrets.

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snackdog
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Re: Millionaire by 40 and How you Did it?

Post by snackdog » Mon Jul 15, 2019 10:04 am

Assuming you are a wage slave and not a business owner, it all depends on how much you save, earn and how many years you are doing it. It took me a bit under 15 years as a typical corporate wage slave, including paying off student loans. At that time it was about equal thirds home equity, 401K and after tax savings. Didn't really make any sacrifices on travel, homes or vehicles but also didn't spend like a drunken sailor either.

cureious
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Re: Millionaire by 40 and How you Did it?

Post by cureious » Mon Jul 15, 2019 10:18 am

My wife and I had a negative NW at age 31. Eclipsed a million in net worth a few months ago at age 34.

Got a good job and worked extra hard. Did the geo arbitrage thing.

Investments 750K

Equity in house ~350K


Most of this was massive brute force savings, and good income. Key is to stay disciplined and get aggressive with making money.

Bb073084
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Re: Millionaire by 40 and How you Did it?

Post by Bb073084 » Mon Jul 15, 2019 10:29 am

My wife and I are not quite there but given expected value of employer vested private equity I expect we have passed this number fairly recently.

We are 35 (H)/38 (W) and this was largely accomplished by diligent savings and a good amount of luck in career.

We both started off with minimal college debt thanks to generous parents as well as taking on jobs to pay for graduate school (I paid for masters and mostly covered cost by being a TA).

We both work in accounting/finance and were fortunate enough to hold jobs through the recession and then leverage our skills to move fairly quickly from entry level to fairly recently Director/Senior Director levels. The move from manager to Director was primarily earned due to good reputations and a bit of luck (I went to risky start up that ended up growing significantly and wife became a key leader after a large divestiture). While our lifestyle did increase along the way, we have always been fairly careful to save the majority of our pay increases and all of our annual bonuses. These habits have helped us maintain a fairly aggressive savings habit even with two children and fairly demanding/stressful careers.

Reaching this milestone really does not change how we feel or live our life.

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AnalogKid22
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Re: Millionaire by 40 and How you Did it?

Post by AnalogKid22 » Mon Jul 15, 2019 10:42 am

CyclingDuo wrote:
Mon Jul 15, 2019 8:34 am
DirtyBottles wrote:
Mon Jul 15, 2019 8:17 am
The biggest mistake I see younger folks making is no ability to delay gratification. They want the big house, nice cars and fancy trips right away, often at the expense of savings. Time is your friend (or enemy).
Yes, you are correct for the "average" younger person - or in Ramsey parlance he would call them "normal". Spenders vs. savers set their habits early. And far too many have poor habits.

Consumerism plus entitlement is a recipe for those very bad financial habits (living paycheck to paycheck, living beyond one's means and taking on CC debt, auto loan debt, on top of student loan debt).

Everyone has to learn (there certainly is no shortage of information available!!!). Best if one is a parent to continue the education of your children - even through their younger working years - to help them reign it in and live within their means as well as save. It's tough when they all want to live in HCOL big cities, have a car, travel on weekends, eat out, drink, attend events, etc... . We, as parents, are still continuing the education of our children who are now out in the working world in HCOL cities through all of that. I don't let the resistance or push back any of them give me deter me in the least as I continue talking to them about their habits. Eventually it will stick...
Preach! Discipline is certainly another key and it's not easily learned. I'm tempted all the time by the latest gadgets, stylish clothes, the convenience of eating out, etc., but I also know that money I don't spend now is money that will grow over time. You spend the money now and it's gone. For a fleeting moment you get some satisfaction from your purchase, but, in the long term, it doesn't come close to the feeling of watching your portfolio grow year-after-year. All of sudden you have more money than you expected while other people are still spending and struggling to keep up. Of course, I haven't faced the hardships that many people have to deal with, at least not yet anyway. I stay healthy, exercise, and settle for good-enough instead of the best.

MD66
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Re: Millionaire by 40 and How you Did it?

Post by MD66 » Mon Jul 15, 2019 11:05 am

Hard work.

My husband and I both came from lower-income families. We got scholarships to college and graduate school, but we both still had to take out loans to cover living expenses. (I think between the two of us, we owed 85K in loans when we left school, including undergrad and graduate. His graduate school was free, mine was not).

We bought a small house in the DC-area after graduate school (with a 40K down payment that took us three years to save), and worked very hard on paying-off the student loans. It took about five years to pay them off. We moved to California for a few years, and sold the DC house for a 100K profit. We lived in San Francisco for four years, then sold that house for 250K profit and moved back East (California real estate is insane).

We were millionaries by 40 by a combo of real estate + salary (straight salary, no stock options for either of us) + starting in our 20s with a 10% contribution to 401K's (he has a very generous company match, mine is only average) + living frugally.

We're now in early 40's with a somewhat pricey home in Potomac, MD. It's 70% paid for, and we're hoping to pay-off the mortgage in the next three years. Then we will be debt free, and we'd both like to retire in our 50's, if possible. (Not sure it's possible, we'll see).

Note: We don't have kids. That makes a huge difference in your ability to save. There's not right or wrong judgment to this statement, it's just a fact. Our friends who on average have two kids and a comparable lifestyle to ours, seem to have household incomes closer to 500K to 600K. We're closer to 400K household income.

Alex GR
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Re: Millionaire by 40 and How you Did it?

Post by Alex GR » Mon Jul 15, 2019 11:34 am

Most people won't believe me but at one point I was saving 92% of my gross income. Lived a pretty boring life though...don't do it! :mrgreen:

BTW, does primary residence count? I only qualify if it does :wink:

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DanMahowny
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Re: Millionaire by 40 and How you Did it?

Post by DanMahowny » Mon Jul 15, 2019 11:42 am

1) Saved 20%-40% of income.
2) Market timing helped get there faster than buy and hold.
Funding secured

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AnalogKid22
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Re: Millionaire by 40 and How you Did it?

Post by AnalogKid22 » Mon Jul 15, 2019 11:56 am

Alex GR wrote:
Mon Jul 15, 2019 11:34 am
Most people won't believe me but at one point I was saving 92% of my gross income. Lived a pretty boring life though...don't do it! :mrgreen:

BTW, does primary residence count? I only qualify if it does :wink:
Technically, yes. Your net worth is the value of everything you own, minus anything you owe (debt). I have $997,000 in investments/cash and a 10-year-old car worth ~4K. I haven’t taken the time to add up the value of all the other crap I own. I suppose that means I became a millionaire much earlier than last week, but I'm more interested in investments, cash, and valuable assets, such as cars, precious metals/stones, or real estate (I have none), rather than basing wealth on owning a bunch of random stuff.
Last edited by AnalogKid22 on Mon Jul 15, 2019 1:42 pm, edited 5 times in total.

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czeckers
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Re: Millionaire by 40 and How you Did it?

Post by czeckers » Mon Jul 15, 2019 12:47 pm

Combination of high income, frugal spouse, and aggressive saving early on combined with the good fortune to start career in 2008 around the market crash so have had a nice tail wind with the investment portfolio.
The Espresso portfolio: | | 20% US Total Mkt, 20% Small Cap Value, 10% US REIT, 10% Developed Int'l, 10% EM, 30% Inter-term US Treas | | "A journey of a thousand miles begins with a single step."

DirtyBottles
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Re: Millionaire by 40 and How you Did it?

Post by DirtyBottles » Mon Jul 15, 2019 3:24 pm

FI4LIFE wrote:
Mon Jul 15, 2019 8:37 am
I was blessed to have parents who set the example of working hard and investing. They get most of the credit.
Funny, my parents too get most of the credit but because they set terrible examples and so I was determined not to make the same mistakes. My dad asked me a few years ago: where did you learn your financial habits? I told him that I learned what didn't work from you guys and decided to go the opposite direction!

I saw all the stress in their marriage over money and was determined to try my best to avoid that...

stoptothink
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Re: Millionaire by 40 and How you Did it?

Post by stoptothink » Mon Jul 15, 2019 3:30 pm

DirtyBottles wrote:
Mon Jul 15, 2019 3:24 pm
FI4LIFE wrote:
Mon Jul 15, 2019 8:37 am
I was blessed to have parents who set the example of working hard and investing. They get most of the credit.
Funny, my parents too get most of the credit but because they set terrible examples and so I was determined not to make the same mistakes. My dad asked me a few years ago: where did you learn your financial habits? I told him that I learned what didn't work from you guys and decided to go the opposite direction!

I saw all the stress in their marriage over money and was determined to try my best to avoid that...
+1. It took me a little time to understand some of the concepts, but I'm not sure I would have become as financially responsible if it wasn't for the terrible example provided by my parents. My wife has an even better (well, worse) example from her parents; a bankruptcy in her mid-20's and her parents less than broke in their 60's led her to completely change how she thought about money. Every time my MIL asks my wife for an advance (we pay her more than going daycare rates to watch our son) because they are behind on the mortgage or are about to get their car repoed, she becomes even more diligent. Learn from the mistakes of others.
Last edited by stoptothink on Mon Jul 15, 2019 3:36 pm, edited 1 time in total.

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AnalogKid22
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Re: Millionaire by 40 and How you Did it?

Post by AnalogKid22 » Mon Jul 15, 2019 3:31 pm

DirtyBottles wrote:
Mon Jul 15, 2019 3:24 pm
FI4LIFE wrote:
Mon Jul 15, 2019 8:37 am
I was blessed to have parents who set the example of working hard and investing. They get most of the credit.
Funny, my parents too get most of the credit but because they set terrible examples and so I was determined not to make the same mistakes. My dad asked me a few years ago: where did you learn your financial habits? I told him that I learned what didn't work from you guys and decided to go the opposite direction!

I saw all the stress in their marriage over money and was determined to try my best to avoid that...
Sorry, but you knew this would spark the old Just Say No PSA from the 80s: https://www.youtube.com/watch?v=Y-Elr5K2Vuo

Dad: "Who taught you how to do this stuff?"
Son: "You, alright?! I learned it by watching you!"

Congrats on choosing your own path!

Pattray
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Re: Millionaire by 40 and How you Did it?

Post by Pattray » Mon Jul 15, 2019 4:09 pm

FI4LIFE wrote:
Mon Jul 15, 2019 8:42 am
Pattray wrote:
Mon Jul 15, 2019 6:45 am
I came to this country in 1982 age 19 with $158.00 in my pocket. Started a business in 1989 and hit 1mm in worth in late 1996 at age 34 ish, retired in Jan 2016 at 52 and hit 8 figures this year, still pinching myself !
8 figure club. Congrats!!
Thank you.

mancich
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Re: Millionaire by 40 and How you Did it?

Post by mancich » Mon Jul 15, 2019 7:00 pm

Didn't reach it until 45, unfortunately. But have since enjoyed a higher income, wife has a good income, and while we aren't super-frugal, we do live well below our means and invest a lot every month. Now we're at $1.7MM and I feel very fortunate. :beer

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TxAg
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Re: Millionaire by 40 and How you Did it?

Post by TxAg » Mon Jul 15, 2019 7:07 pm

AnalogKid22 wrote:
Mon Jul 15, 2019 3:31 pm
DirtyBottles wrote:
Mon Jul 15, 2019 3:24 pm
FI4LIFE wrote:
Mon Jul 15, 2019 8:37 am
I was blessed to have parents who set the example of working hard and investing. They get most of the credit.
Funny, my parents too get most of the credit but because they set terrible examples and so I was determined not to make the same mistakes. My dad asked me a few years ago: where did you learn your financial habits? I told him that I learned what didn't work from you guys and decided to go the opposite direction!

I saw all the stress in their marriage over money and was determined to try my best to avoid that...
Sorry, but you knew this would spark the old Just Say No PSA from the 80s: https://www.youtube.com/watch?v=Y-Elr5K2Vuo

Dad: "Who taught you how to do this stuff?"
Son: "You, alright?! I learned it by watching you!"

Congrats on choosing your own path!
I remember that video from my youth. That was a while ago haha

sg13
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Re: Millionaire by 40 and How you Did it?

Post by sg13 » Mon Jul 15, 2019 9:03 pm

Be an employer, not an employee.

RogerWilco
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Re: Millionaire by 40 and How you Did it?

Post by RogerWilco » Mon Jul 15, 2019 9:33 pm

1) Worked through JR High and High school and contributed to IRAs based on guidance from parent who was willing to match whatever I was willing to contribute.

2) Went to a University and earned a degree in a profession that was reasonably lucrative at the time

3) Married someone who had the same degree and who balanced out my savings habits but was willing to save as well.

4) Joined the military and had 2 children. Maxed out TSP and IRAs each year. DW worked full time for 3-4 years and also maxed out 401k and IRA during this time then went part time or less when children were young. Now back to full time and starting to max out IRA and 401k again.

5) Recently Reached $1M in retirement accounts between age 41 and 42. Still driving the cars we had in college/bought used when 1st married 16 years ago.

gd
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Location: MA, USA

Re: Millionaire by 40 and How you Did it?

Post by gd » Tue Jul 16, 2019 7:07 am

Seems to me the most common component here is luck. Lucky sperm club (inheritance, race, all aspects of upbringing), happening on a complementary spouse, location, fortuitous timing in career, RE, stock market. Not trying to diminish anyone, just noting that lots of people work hard and are frugal, but without that luck.

And it does make a difference *when* you were 40-- a million today isn't quite what it was when I was 40.

rascott
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Re: Millionaire by 40 and How you Did it?

Post by rascott » Tue Jul 16, 2019 7:18 am

Simple Simon wrote:
Wed Jan 30, 2019 7:41 am
In the last 5 years we earned 894,232, paid 319,748 in taxes and pension contributions, and kept 574,484.
We spent 407,652. This left 166,832 to invest or repay debt.

Over this same 5 years our net assets increased from 468,395 to 894,327, an increase of 425,932

The increase in wealth was due to:

increase in value of house: 203,393
money earned and invested: 94,125
money earned and used to reduce mortgage: 72,707
increase in value of existing investments: 55,607
dividends and interest: 20,402

Although I'm not a millionaire, this is the level of detail I'd be interested to see from anyone who is & who feels like sharing -thankyou
I don't have my income vs spend numbers available.... could reverse engineer them if I had to but would take a lot of work. I do know we went from $400k to $1.2m in the last 4.5 years, made $170-$190k during this period....and didn't have a particularly aggressive savings rate. Did add one distressed property to the rental portfolio that is a positive approx $100k+ equity vs total investment purchased in 2015.

rascott
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Re: Millionaire by 40 and How you Did it?

Post by rascott » Tue Jul 16, 2019 7:22 am

bltn wrote:
Wed Jan 30, 2019 1:54 pm
azanon wrote:
Tue Jan 29, 2019 9:22 pm
NextMil wrote:
Sat Jan 12, 2019 7:32 pm
People’s heads may explode, but I have to credit Dave Ramsey, as I started my career with a bunch of debt. Anyone else finance an engagement ring? :oops:
Most everyone usually acknowledges his ideas for getting out of debt are great.

And despite so many people hating on his portfolio recommendation, his recommendation of 100% stocks with US stock bias has been golden for the last 10 years. I wish I could go back to 3/2009 and implement that plan vs. what I actually did. Now don't get me wrong, I don't recommend that and still disagree with him, but certainly since 3/2009, that portfolio has destroyed what I've been doing.
Dave Ramsey espouses a method for accumulating wealth, which I think may not be optimal, but it has its merits and certainly works. He emphasizes the psychlogical benefits of writing off debts as soon as possible (paying off the smallest debts first regardless of interest rates). He encourages total commitment and aggresively paying off the debts. Once one is used to this commitment, it becomes easier to save more aggressively later. His asset allocation of stocks and rental real estate is like everyone elses, in that it makes him happy and he s comfortable with it. I personally couldn t follow anything close to that plan of AA.
He also has one aggressively pay off the house after doing 15% retirement savings into 100% equities. As such, the AA is much more bond heavy than it appears at first glance. And only paying cash for rentals is conservative as well.....and is very bond-like.

cwademba
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Re: Millionaire by 40 and How you Did it?

Post by cwademba » Tue Jul 16, 2019 9:09 am

I see this post has been around awhile, but wanted to share our experience because becoming is a millionaire that you cannot share with most and it is a milestone that feels great to hit. It felt so great that I sat at my desk with shock and text my wife and her response was "wow that's great". No fancy dinners or elaborate purchase, as now we want to grow this money to help God's kingdom by giving more away and making sure our kids have enough money to chase their educational dreams. Maybe take a Disney vacation or two?

I checked our numbers yesterday and we now have a net worth of $1,069,750 and I will turn 40 this October and wife is 37. We was able to hit this milestone by saving into IRA Roth's from age 24 until our income exceeded the limit, adding 1% to 401k's each pay raise a year, being blessed with careers that offered a generous match to our retirement, and purchasing real estate at the right time and selling at the height of two different booms in our area. Also, a major aspect was knowing what we wanted to do with our lives and education from an early age made this goal more obtainable and possibly the most important trait that allowed us to hit the 2 comma milestone, was a strong marriage with both of us on same page of saving and working hard at our careers. It feels great to hit the milestone, but we do not feel any different than before because now we moved the goalposts to replacing a 1 with a 2 on the front end.

Blessings

gator15
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Re: Millionaire by 40 and How you Did it?

Post by gator15 » Tue Jul 16, 2019 10:47 am

I truly believe in the quote “make hay while the sun shines”. My wife and I have had good incomes for the last 9 years and we’ve used that time to really boost our savings. Sure I started saving modest amounts at age 18 but my portfolio really took off in my 30s when we increased our incomes. We now save more in one year than my wife and I saved between the ages of 18-29 and we saved a decent amount between those ages. Find ways to boost your income and save a good portion of that income. That’s how you become a millionaire at 40.

Patent Guru
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Re: Millionaire by 40 and How you Did it?

Post by Patent Guru » Tue Jul 16, 2019 9:06 pm

Ten plus years of income above Social Security threshold. Savings rate target of at least 15%, and rising home value in high cost of living area. Hit the m mark in 2007.

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CyclingDuo
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Re: Millionaire by 40 and How you Did it?

Post by CyclingDuo » Wed Jul 17, 2019 9:00 am

protagonist wrote:
Mon Jul 15, 2019 8:48 am
I think another question worth asking (though rather ambiguous to interpretation), and perhaps a more salient one (if advising other young adults) is....

Of the 40 year old (or younger) millionaires who did not inherit their money or otherwise obtain it without working for it, how much of your youth did you have to sacrifice to achieve this goal?

And was it worth it? And why?
Yes, one wants to find balance in their life that includes "experiences", but also allows for saving. Saving 15-20% of one's household income as a bare minimum is not exactly what I would call sacrificing your youth to reach the goal of accumulating wealth. You can have a lot of fun and enjoy life in your 20's and 30's without falling trap to debt and consumerism. Nobody should beat themselves up if they have not reached a two comma portfolio by the age of 40.

Driving a new car with an auto loan, living in accommodations that cost too much of your income, spending too much on food and dining out too often are all items that upsot the apple cart in terms of building wealth in your first two decades of your working career. Way too many fall into that trap early.

You can drive a car you can afford in cash, live in acceptable accommodations (cheap) while getting going in one's career, and eat well (with the occasional dining out experience) without sacrificing your youth as you are saving at least 15-20% of your money. Saving even a higher percentage is possible for all without missing out on enjoying life. Accumulating things (stuff), and spending too much money on food/drink/dining out, and driving something that you cannot afford is what is more of a sacrifice in the long term. In other words, far too many front load their life with too much, too soon, before they can afford it thinking it will make life more enjoyable. Some get into that trap later. Be wise and realize what you are doing in various stages of your career as you adjust and control your spending & saving.

Pick your "experiences" and really weigh your choices and decisions carefully in the first decade or two of your career. "Normal" is getting in too much debt, buying too much "stuff", living in too nice of a place, taking expensive vacations, and falling for the trap of entitled consumerism in the early decade or two. Strive to find a balance, avoid debt, and realize the power of delayed gratification. Your friends and family might think you are odd or weird, but ignore them and stick to a plan of saving and building your wealth.

When you are in your 50's and 60's, you'll remember very little of what you did in your 20's and 30's in terms of eating out, drinking, experiences, going to concerts, hanging with friends, etc... while spending money. You will remember what you paid for rent/housing, how much you spent on cars, and what your habits were with regard to spending vs. saving. How do you want those memories to be viewed in your 50's and 60's? :mrgreen:
"Everywhere is within walking distance if you have the time." ~ Steven Wright

mak1277
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Re: Millionaire by 40 and How you Did it?

Post by mak1277 » Wed Jul 17, 2019 10:01 am

CyclingDuo wrote:
Wed Jul 17, 2019 9:00 am
protagonist wrote:
Mon Jul 15, 2019 8:48 am
I think another question worth asking (though rather ambiguous to interpretation), and perhaps a more salient one (if advising other young adults) is....

Of the 40 year old (or younger) millionaires who did not inherit their money or otherwise obtain it without working for it, how much of your youth did you have to sacrifice to achieve this goal?

And was it worth it? And why?
Yes, one wants to find balance in their life that includes "experiences", but also allows for saving. Saving 15-20% of one's household income as a bare minimum is not exactly what I would call sacrificing your youth to reach the goal of accumulating wealth. You can have a lot of fun and enjoy life in your 20's and 30's without falling trap to debt and consumerism. Nobody should beat themselves up if they have not reached a two comma portfolio by the age of 40.

Driving a new car with an auto loan, living in accommodations that cost too much of your income, spending too much on food and dining out too often are all items that upsot the apple cart in terms of building wealth in your first two decades of your working career. Way too many fall into that trap early.

You can drive a car you can afford in cash, live in acceptable accommodations (cheap) while getting going in one's career, and eat well (with the occasional dining out experience) without sacrificing your youth as you are saving at least 15-20% of your money. Saving even a higher percentage is possible for all without missing out on enjoying life. Accumulating things (stuff), and spending too much money on food/drink/dining out, and driving something that you cannot afford is what is more of a sacrifice in the long term. In other words, far too many front load their life with too much, too soon, before they can afford it thinking it will make life more enjoyable. Some get into that trap later. Be wise and realize what you are doing in various stages of your career as you adjust and control your spending & saving.

Pick your "experiences" and really weigh your choices and decisions carefully in the first decade or two of your career. "Normal" is getting in too much debt, buying too much "stuff", living in too nice of a place, taking expensive vacations, and falling for the trap of entitled consumerism in the early decade or two. Strive to find a balance, avoid debt, and realize the power of delayed gratification. Your friends and family might think you are odd or weird, but ignore them and stick to a plan of saving and building your wealth.

When you are in your 50's and 60's, you'll remember very little of what you did in your 20's and 30's in terms of eating out, drinking, experiences, going to concerts, hanging with friends, etc... while spending money. You will remember what you paid for rent/housing, how much you spent on cars, and what your habits were with regard to spending vs. saving. How do you want those memories to be viewed in your 50's and 60's? :mrgreen:
I think you might be underestimating the impact of student loans on freshly minted grads. I didn't have a huge amount of loans when I graduated in the late 90s, but it still had a serious impact on my bottom line. I didn't buy fancy cars or live in expensive apartments, but I still had to make a decision about whether I wanted to fund my 401k or live alone as opposed to with roommates...or if I wanted to save vs. going out on a regular basis. There was no thought of saving 15% of my income, that's for darn sure.

I chose to live alone, to go out, to have fun...I don't regret those decisions in the slightest.

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