Wealth Accumulation

[Gumby]

Maybe I'm kinda thick, but it took me awhile to fully understand that the author was talking about a very specific type of wealth. IMO, the language was much broader than that - or at least a lot of people interpreted it to mean something much broader than what might have been intended [real millionaires are low key, people acting rich are just pretending]. Ordinary people not born to wealth can also be millionaires - AND - engage in conspicuous consumption. The two things are not mutually exclusive. They don't have to be "really rich" just really high income. Is there really anything morally wrong with that if it doesn't endanger their financial stability? I just think that MND (and others of the same genre) are more about a certain cultural anti-materialism narrative than they are about facts.

As I have always said, here and elsewhere, it's your money and you can do what you like with it. But for an ordinary guy from the trailer park like me, it took an awful lot of hard work and LBYM to become a millionaire and I don't intend to piss it away by spending frivolously now.

 

[Kings over Queens]

I think it was Woody Allen who said that "90% of success is just showing up." I would add that another 9% is attributable to not being a sissy. Only about 1% is due to talent. Nothing I've done in my life required me to be a genius. It just required dedication and perseverance. I tolerated conditions others weren't willing to tolerate, took on challenges that others weren't willing to take on and devoted the time to succeed that other people wouldn't devote. That's it. That's my recipe for being "fortunate".

Amen.

Great post, and I bolded this section because you described our oldest son. Today he's a merchant marine but growing up as a kid he would tolerate work conditions that his peers wouldn't, and graduated high school with 100k in the bank, all made with his back.

He's 26 now and closing in on 300k, granted, he finally let me start investing his money a little (QQQ and high interest savings).

 

[LateToFIRE]

As I have always said, here and elsewhere, it's your money and you can do what you like with it. But for an ordinary guy from the trailer park like me, it took an awful lot of hard work and LBYM to become a millionaire and I don't intend to piss it away by spending frivolously now.

I too lived in a trailer park for part of my youth, as well as some other less than desirable housing situations. So we have humble beginnings in common. Which is why I closely identify with a lot of what you've written - about the hard work, about being willing to do things that would break most people, about the perseverance and determination and putting one foot after the next and plowing through. Then one day kinda looking up and realizing that you ran a pretty good race, maybe better than just good, and you don't have to keep running. And I too, do not want to squander my good fortune.

But, I don't judge the guy driving a big fat Range Rover or a speedy Maserati and I do feel that MND-type literature would have us believe he is squandering his money or engaging in morally objectionable behavior. Maybe he's squandering. Maybe not. Maybe cars are important to him and that's his passion. Maybe he's got plenty to squander. Have no way of knowing. If he's happy, I'm happy for him (so long as he's not asking me to spot him a few bucks until payday).

 

[Gumby]

Absolutely correct. We have no idea what that Range Rover driver's financial situation may be or what his passion is. And it is his money, not ours. Sometimes I think that there actually may be a touch of envy within those who do scold the "spendthrifts". If I'm being honest with myself, I have seen a number of expensive cars that strike my fancy and thought how much fun it would be to drive one, but I still can't justify to myself spending that much of my own money.

 

[Kings over Queens]

I have seen a number of expensive cars that strike my fancy and thought how much fun it would be to drive one, but I still can't justify to myself spending that much of my own money.

I feel this.

Circa 2015-6, I had just merged my company, taking a new leadership role, and my car was shot. It was embarrassing. I had money in the bank, but we had taking an income hit (living off new salary v. when I owned the company) and were adjusting to the new normal.

"I can't afford it!" I would say.

She actually flicked me in the forehead and said "you're a ****ing executive, go buy a new car!"

Harumph!

I actually called my CPA, who is a friend, "Pete, can I do this?" He literally sighed over the phone.

I bought a 2013 MB S550 with 23,000 miles on for $52,500. Sticker price on the car was 110,000 when new in 2013. I got the car I wanted at what I felt was a 50% discount. Smart money.

 

[LateToFIRE]

...If I'm being honest with myself, I have seen a number of expensive cars that strike my fancy and thought how much fun it would be to drive one, but I still can't justify to myself spending that much of my own money.

Same, we must be twins separated and shipped off to separate trailer parks.

 

[LateToFIRE]

Interesting thread and thoughtful responses.

I commented recently, after contemplating how or why I'd been so "fortunate," (I suffer imposter syndrome) and said "I got up and worked, every day." It's really that simple.

Started working as a teen, then into the family business 2 weeks after gradating HS in 1985. Bought it (with partners) in 1993. Purchased my first IRA at 19 but really didn't start saving in 401k until early 30's. Hit 100k at 35.

Bought partners out in 2001. Refi'd house to purchase office building for business. Now I own the business and the real estate. Took modest salary, put wife on payroll for 401k (we both maxed out) and paid myself rent. Saved as much as we could and lived lean, no vacations (I was always working), didn't eat out (raising 3 kids) and did the best we could. Frugal.

Sold/merged business in 2015 with an emerging company and insisted on stock instead of all cash. The company has grown exponentially and is now international and my 185k investment is valued (internally) at 1.8 and who knows what happens if/when we go public.

Steady work, steady savings, some ballsy investments, and time. Didn't happen overnight.

No inheritance.

I like your formula - fits mine (with some qualifications):

(A) Steady work - once figured out career direction
(B) Steady savings - once got LBYM religion
(C) Some ballsy investments - base on huge amount of research and prep
(D) And time - the power of compounding

Would add:

(E) Married the right partner in this journey - and the sense to listen to her
(F) Education and lifelong learning
(G) Adaptability - ability to morph, pivot & reinvent to where the oppty was greatest

P.S. Inheritance f/in-laws, yes, but only well after established own HNW with nothing but own bootstraps

 

[Badger]

I understand the gist of the articles. Just like most of us here who "got rich slowly," the featured millionaires saved regularly and lived like the Millionaire Next Door.

Top of the 2nd article suggests that teachers do better than doctors at becoming millionaires. My first thought. Teachers have one of the strongest - most plugged in unions on the planet. Doctors generally are not unionized. So teachers receive amazing pensions while doctors, generally, do not. YMMV

Not everywhere and some like in Florida have no teeth and teachers can't strike. They pretty much have to accept what they are given.
Again not every educational system has amazing pensions. When you work for low pay and pensions are a percentage of that it is often just adequate.

Cheers!

 

[athena53]

Maybe he's squandering. Maybe not. Maybe cars are important to him and that's his passion. Maybe he's got plenty to squander. Have no way of knowing. If he's happy, I'm happy for him (so long as he's not asking me to spot him a few bucks until payday).

Or wants help from taxpayer-supported programs for low-income people if he runs out of money.

 

[LateToFIRE]

Something I wrote above triggered a thought/memory.

My in-laws were perfect examples of the Millionaire Next Door profile. In the early years of marriage I often found their behavior puzzling. They did not act like what I thought people with money acted like. They clearly had solid incomes but could be excruciatingly frugal except for certain things like holiday gifts. Spending money was just something they took very seriously and did not like to do.

In parallel, early in marriage, I just could not understand how worked up DW would get about budgeting, paying off credit cards, etc. When I started a new job with a MegaCorp that offered one of those strange new 401K accounts, I was very suspicious - why exactly would I want to keep money in an account with my employer DW and FIL of course, ganged up on me and insisted we start contributions asap.

You see, I came from a hand-to-mouth environ. I thought, hey I'm makin good money now and what is the point of makin good money if you can't spend it. And once it's spent, so what, I'll just make some more. Well, DW was having none of that and she always got her way, sooo....

So, I got a firsthand lesson in MND, both from my in-laws and from the daughter they indoctrinated in MND habits, well before the actual book ever hit the shelves.

Our progression has been more of a combo of both good defense on savings, and really strong offense on investing and generating a strong income. As a result, we certainly have not been deprived in lifestyle (other than deprived of the time and energy an intense career takes).

 

[NW-Bound]

Interesting study from Dave Ramsey about, among other things, the top 5 careers for millionaires. In order, they are engineer, accountant, teacher, management, and attorney.

https://cdn.ramseysolutions.net/med...x1SHhtOFJpTm5WSzc1V05HQ0ExMHJpN2s5ZXclM0QlM0Q.

Hear, hear ...

Most of my cohorts at past megacorps should be millionaire, except for a few crazy ones.

Thinking about most of them, the only question is how many are close to the 8 figures. I suspect that the majority are in the mid 7 figures.

 

[indiajust]

Seems I am a contrasting story. Saving in IRA's and max 401k's during employed times, generally frugal spender kept me on course. I did well selling the house. But that came of using my years of unemployment with house deductions that allowed me taxfree rollovers from IRA to Roth, while spending down my savings on historical renovations that made the sale fruitful.

I kept trying to get into MegaCorp saddle, but the horse got shot out from under me 6 times. The miniCorps died more natural deaths. A bit of family help smoothed the ride, and now I return the favor.

Frugal, early and steady saving, and investing are the biggest parts of my landing here.

 

[NW-Bound]

Interesting study from Dave Ramsey about, among other things, the top 5 careers for millionaires. In order, they are engineer, accountant, teacher, management, and attorney.

https://cdn.ramseysolutions.net/med...x1SHhtOFJpTm5WSzc1V05HQ0ExMHJpN2s5ZXclM0QlM0Q.

My wife is a millionaire by herself. I read Ramsey's study again, and it fits her.

My wife's income was 1/2 of mine. She stopped working at 50. Still, her 401k is now low 7-figure, not including her IRA, Roth, Treasury Direct. She never made as much as $100K.

Of course it helps that being a couple with dual incomes, we were able to save more than a couple with only one worker. Not everyone was able to contribute the max of $10K each year (the limit is higher now), and get maximum employer matching. And not everyone had savings to put in taxable accounts.

We did what most people in Ramsey's study did: practicing LBYM, not carrying credit card balance, not spending a lot of money in restaurants, shopping frugally, etc...

I know that all of my siblings are millionaire, although we don't share our exact wealth. Same story here. LBYM. 401k. 403b. Decent pay. Stable jobs. Keeping one's nose to the grindstone.

The pay off for us is retirement at 50 for my wife, 55 for me. And I would have done better if I spent more time at megacorps than the 15 years that I did, and not spent 15 years trying to do things on my own. I would have a much larger 401k, and with pension to boot.

Still, at this point, we are spending less than 1/3 of what FIRECalc says we could. And that's still with the default 30-year run, which borders on ridiculous at our age now.

Lucky? Yes. I am glad Ramsey's study shows that we have a lot of company.

 

[street]

Absolutely correct. We have no idea what that Range Rover driver's financial situation may be or what his passion is. And it is his money, not ours. Sometimes I think that there actually may be a touch of envy within those who do scold the "spendthrifts". If I'm being honest with myself, I have seen a number of expensive cars that strike my fancy and thought how much fun it would be to drive one, but I still can't justify to myself spending that much of my own money.

Yep, same thought same action. I have been keeping my eyes open for a different truck but not willing to pay the price for a new one. Used ones are way over inflated also. I now am looking at trucks with over 150K on them in hopes of finding me one that will last me another 4 to 5 years.

That frugal disease never gets better. Lol No medicine will cure it.

 

[Stormy Kromer]

[/B]

Yep, same thought same action. I have been keeping my eyes open for a different truck but not willing to pay the price for a new one. Used ones are way over inflated also. I now am looking at trucks with over 150K on them in hopes of finding me one that will last me another 4 to 5 years.

That frugal disease never gets better. Lol No medicine will cure it.

You're not alone. I drive my 2012 Silverado (base model) that I bought new in 2012. 138,000 miles and runs like new. Some rust and character scratches, just like me. At the time it was the cheapest one on the lot. Just like me.

I had planned on buying a new one in 2022 but can't get myself to consider paying what new pickups are now. Its hard to find a simple pickup anymore.

 

[retire48in2018]

As a financial helper - via church, mentoring,etc - I have been involved with a great number of people in various occupations. Many were executive level.

There are a great number of these very high earners living on the edge, financially. Many living paycheck to paycheck, or month to month. LAYM.

Spending next RSU, bonus, etc before it is available via credit, 2nd mortgages, HELOC, etc.

As I worked as project lead on some IT/HR projects that went across 10,000+ employees, there were surprising findings (to me) - A larger percentage of top 10% of earners took 401k loans and/or stopped contributing on matching funds than any other percentile group. I don’t know if this is indicative of these groups or more general across US.

These are all anecdotal with some large data subgroups - so it is definitely YMMV…

I have read MND, and listened to a lot of Ramsey.

I am saying that to say - when I see external signs of high spending - I don’t think they are rich (high NW) or not rich. I have learned to appreciate making no assumptions.

I have looked for studies that look at median NW at various income levels to try to get a more data based view - to no avail. Averages mean nothing - as outliers can bias the average too much.

I think - IMO - in US - the invest rate probably does not go up too much, if at all, from, say income 30? percentile to 99 percentile. Can’t really analyze that last 1% (0.1%) as each has a story. The lowest percentiles are greatly statistically affected by welfare/disability/etc and its rules. I am saying this group has a lot of disproportional adversity in its population, so there are lots of threads/subgroups to make any singular statement or correlations between income and investment.

So - I don’t think visual displays of high spending are strongly connected to those being the highest NW.

 

[retire48in2018]

Just as I should add - visual displays - like shopping at thrift or goodwill stores - indicate low net worth.

 

[dmpi]

Interesting study from Dave Ramsey about, among other things, the top 5 careers for millionaires. In order, they are engineer, accountant, teacher, management, and attorney.

It's been said that engineers are the ONLY ones that actually keep track and learn from their mistake. Also they tend to obsess over optimal solutions. Number one rule for accumulating wealth: You actually have to care about it.

 

[Gumby]

I was an engineer first, before I became a lawyer, and I have always kept track and tried to improve. Only what gets measured gets managed (attributed to Peter Drucker).

 

[NW-Bound]

Many of you millionaires are still afraid of buying a new car. Come on! It's not a big deal.

The first new car I bought was a 1985 Chrysler Voyager minivan to haul my first born. The minivan just came out, and there were no used ones on the market, else I might not spring for a spanking new one.

I have bought more new vehicles since. However, I kept mine for a long time, because I am not a car lover and look at them as transportation. Mine also are generic and do not cost much.

So, go ahead and splurge if you salivate over a certain model. It's late in life. Go ahead and permit yourself to do it.

 

[NW-Bound]

By the way, other than a couple of books by Andrew Tobias, I never read other popular books such as MND, although I knew about them from the media. In addition, I only learned about some other gurus such as Dave Ramsey after coming to this forum.

I don't need anyone to tell me to be frugal, it's so natural to me. I instinctively knew about "The Nest Egg Principle" even before watching the movie "Lost in America". Heh heh heh...

 

[twirler]

For those who to care to share, retired or not, how did you accumulate your wealth? (Use your definition of wealth) Working for the man at (mega corp(s), owned your own business, inheritance, gifts, investing, lottery , etc.. Or some combination or other source.

For me, even though I received a rather large inheritance well after I retired, I accumulated the majority of mine simply working for a mega corp "and" contributing/investing the max amount to the companies matching 401k for ~30 years. Pretty simple, IMO.

So for the younger folks on this forum, you can accumulate a good chunk of money (even millions) as a worker bee, as I did. I don't think I'm an exception or a rare case. Just steady work, saved, invested (conservatively), took advantage of things like a companies matching 401k, (that is a big deal over 30 years), etc. Of course getting a well paying job helps.

Anyone else care to share their wealth accumulation story?

Saved, fixed and flipped houses, while working over time, and invested DCA indexes, earned a pension, became disabled. Wasn't how imagined arriving here, but here I am.

 

[Badger]

If I'm being honest with myself, I have seen a number of expensive cars that strike my fancy and thought how much fun it would be to drive one, but I still can't justify to myself spending that much of my own money.

For years I drove air-cooled VWs of all kinds. Then it was a Toyota Tercel if you remember those. Later I bought a '78 Alfa Romeo for fun. After getting married most everything were used cars that we drove for a couple of decades. Once retired we bought new cars for each of us. Now we drive Hyundai Santa Fes and like them enough to keep them for many more years. Do I like more expensive and exotic cars and can we afford them? Yes, but most of them I would have difficulty getting in and out of, they are not as carefree as my Hyundai, or I wouldn't want to pay for the upkeep.
When they come out with any car that is self-driving, has a good track record, and reasonable repair costs, then maybe I will buy another car. I have a feeling that I will be planted by then.

Cheers!

 

[jazz4cash]

I’d like to add that I never, ever maxed out 401k. Almost always did 10% and sonetimes 12% for brief periods. DW was not working or modest income about 1/3 of my 35 yr career at Megacorp. 3 ki

 

[youbet]

You're not alone. I drive my 2012 Silverado (base model) that I bought new in 2012. 138,000 miles and runs like new. Some rust and character scratches, just like me. At the time it was the cheapest one on the lot. Just like me.

I had planned on buying a new one in 2022 but can't get myself to consider paying what new pickups are now. Its hard to find a simple pickup anymore.

It is hard to find a basic truck these days! I've been casually looking. It seems you have to target models intended for commercial or government service and like the color white! I live within an easy drive of several Ford dealers and only one keeps a few of these in stock.

I'm still driving my 1999 F150 XL I purchased new. It's got features like an AM/FM radio, vinyl floor (no carpet), 5 speed manual transmission, crank windows (grand kids had to be taught to use them!), standard cab, short bed, and a V8. They don't come much more basic than that!