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I have been working since I've been 18 (63 now and LONG retired from having to work..although I always do stuff...some that makes money)....
We have been saving money since we were about 24.
When I look at my SS printout I notice that we never made a lot of money. I wouldn't say "low income", but I would say middle class income. And yet we sold our main mom and pop shop and I stopped needing to go to work at 46 years old.
Definitely am in the spirit of the "Millionaire next door".....
Saved $100 a month, then $200 per month - then had $500 per month put in a Vanguard fund. It averaged 10% compounded over many many years. After the kids were through college we started fully funding and IRA with as much as $12K per year. It all adds up.
I have a friend who always made more than I do - sometimes twice as much. He never invested in the stock market do only made 2-5% on his money. Ended up with maybe 1/2 of what we have.
For those interested in the secrets - here are some of them....
For those who want the secrets, some of them are obvious.
1. Don't drink (a lot). (why do you think Mormons are so wealthy?).
2. Don't go to "fine" eateries (they aren't really fine anyway).
3. Don't buy "up-trimmed" cars and trucks. Buying a 45K Audi which is effectively the same as a 26K VW is just ridiculous - especially if you lease or finance)
4. Do most everything yourself - this is BIG one. In 42 years owning homes I've rarely had a contractor do anything.
5. Be a slob - since I worked for myself in retail and construction I probably never spent more than $200 a year on clothes.
6. Don't sell yourself short - getting a job with a 2 hour commute each way that you have to dress up for - and the resulting expense for child care, etc. will eat you alive.
7. Avoid paid child care (sure, we all need a break, but don't spend the big bucks).
8. Avoid any "paid for" primary schools - at 20-30K per year, they can drain your account quickly for little or no return.
9. Same with college...state schools are often as good or better than high priced.
10. DO NOT avoid the stock market. Invest constantly - out of your paycheck monthly.
11. Do not commit adultery
12. Do not go to jail - nor get close enough where many lawyers are involved.
13. Avoid lawyers at all costs.
14. Avoid partnerships
15. Enjoy your work (you'll do it more and therefore make more $).
16. Read - work on continuous education. Don't specialize (doesn't apply if you are a surgeon!).
17. Don't make completely ignorant mistakes....you can do a lot of things right and then one BIG thing wrong, and all is lost.
18. If you are losing money you can't make it up in volume.
19. Buy Life Insurance - Have health Insurance.
20. Money should be easy coming in and hard going out! This is a retail example - but we always collected money due for jobs or products on completion. When we paid our bills, we made sure to scour the invoices, take advantage of early pay discounts and watch for errors.
Good Luck to all attempting this! If you go out to dinners, concerts or even movies regularly you probably won't make it. If ou are in debt for high amounts (more than, for example, twice your yearly salary), you probably won't make it unless that debt covers properties creating income.
What a great list! I do have a disagreement with #13, though. There are times when spending money on a lawyer will pay off big time in the long run.
I'm surprised nobody has posted here accusing you of making this up. I know they are all out, full of venom when I posted something similar.
I believe him. The problem is, this isn't something everyone can do. There's only so much real estate to go around, so everyone else is stuck at where they're going to be.
I believe him. The problem is, this isn't something everyone can do. There's only so much real estate to go around, so everyone else is stuck at where they're going to be.
There's that same negative "I can't" mindset.
If you believe you are stuck, you are, if you want to keep that mindset, fine, just don't complain about your poor choice.
My friend, who is 66, makes $12.50/hr. It's the highest wage he's ever made.
Work :
He's worked at the same place, a junkyard, his entire life. He started out pulling auto parts and worked his way up to managing the parts counter. He works 9 hrs a day and 4 hrs on Saturday mornings. He gets 3 weeks of vacation which he doesn't take and gets paid for instead. His employer (a family business) feeds their employees breakfast and lunch. He had medical insurance (no dental) which cost him $5/wk - he's on Medicare now.
Personal :
He was married and divorced in his 20's. He has a daughter and paid child support. He owns his home, a used car, used truck, a collectible hot rod, and a boat. He doesn't eat out and only buys clothes and shoes when needed. He has a large garden in his backyard and grows vegetables. His largest yearly expense is probably property taxes followed by dental work. His largest monthly expense is cable, because he loves movies, and vitamins. He has a very active social life and goes dancing five nights a week (salsa and country).
Finance :
He has managed to save $150,000 for retirement without investing (passbook savings account)! He never had a savings goal or a specific amount he saved every month - he just spent what he needed and saved the rest. He also has containers of coins all over his house and I have no idea how much money that would total! He finally allowed me to help him invest some of his money six years ago when he started thinking about retiring. He has put the maximum in a Roth IRA for five years at Vanguard and we built him a five year I bond ladder ($10,000/ yr). He not sure if he wants to invest anymore money going forward. He decided not to retire this year but wait until age 70 and get the maximum SS payout.
He's an awesome guy!
Sounds like a lot of locals here. Some people learn to get by on very little.
My grandmother did. Because she always found ways to live beneath her means. She did not turn on the heater in Ohio. IDK how she kept her pipes safe, but no heat. She slept under 18 blankets and stayed clothed inside the way one does outside.
She died with a half a million dollars and 3 propertyies and she had never bought a plastic bag for anything. She used the plastic bags that bread come in and vegetables and fruit from the grocer.
She never bought anything that wasn't on sale AND had a coupon. When you stock up like that, you don't run out and find yourself having to pay full price.
She did not use anything electric that could be avoided. I remember crawling with my cousins over three floors of carpet to pick up anything visible to the naked eye so as to avoid using the vacuum at my Aunt's house when g'ma was visiting. We had to keep it a secret that we used electric blankets while the heat was on 50 or something for her visit.
She raised three children during the depression and never gave up any of the habits she had taken up to survive and keep her kids fed.
It CAN be done, people just don't WANT to. There are things now showing how you can grow food in tiny spaces.
My stepmother rolled her eyes at my g'ma which is big because SM was pretty close to her in frugal. But when g'ma said 'don't throw that milk out, it's still good for cooking' I realized how every few pennies she had to stretch before.
My stepmother has not purchased paper since the kids left the house. Because every part of the paper has to get used, front and back.
I bought a fixer-upper condo but I won't fix it up until the mortgage is paid. That's many many thousands saved on interest.
Most people who think it can't be done aren't willing to. Would I like floors? Yes. But my mortgage is half what rent would be for an apartment with everything normal in it. Or to spend to fix mine.
I only fix or replace what I have to and the rest will be the way it is until there is no mortgage. HTH
People can always point to these unusual, extreme examples and claim "well, they did it, so can you!" Technically, yes, it's probably possible, but most people want some baseline of comfort.
To me, refusing to turn on the heat in a northern state like Ohio is stubborn, maybe borderlining on mental illness from the extreme frugality.
Someone keeping the heat at 62-65 instead of 72-75. Someone refusing to turn it on at all during the winter is being stupid.
My friend, who is 66, makes $12.50/hr. It's the highest wage he's ever made.
Work :
He's worked at the same place, a junkyard, his entire life. He started out pulling auto parts and worked his way up to managing the parts counter. He works 9 hrs a day and 4 hrs on Saturday mornings. He gets 3 weeks of vacation which he doesn't take and gets paid for instead. His employer (a family business) feeds their employees breakfast and lunch. He had medical insurance (no dental) which cost him $5/wk - he's on Medicare now.
Personal :
He was married and divorced in his 20's. He has a daughter and paid child support. He owns his home, a used car, used truck, a collectible hot rod, and a boat. He doesn't eat out and only buys clothes and shoes when needed. He has a large garden in his backyard and grows vegetables. His largest yearly expense is probably property taxes followed by dental work. His largest monthly expense is cable, because he loves movies, and vitamins. He has a very active social life and goes dancing five nights a week (salsa and country).
Finance :
He has managed to save $150,000 for retirement without investing (passbook savings account)! He never had a savings goal or a specific amount he saved every month - he just spent what he needed and saved the rest. He also has containers of coins all over his house and I have no idea how much money that would total! He finally allowed me to help him invest some of his money six years ago when he started thinking about retiring. He has put the maximum in a Roth IRA for five years at Vanguard and we built him a five year I bond ladder ($10,000/ yr). He not sure if he wants to invest anymore money going forward. He decided not to retire this year but wait until age 70 and get the maximum SS payout.
He's an awesome guy!
Gee, does he want a 62 year old girlfriend who is always taken for much younger and does not need him for his money? :=)
Craigiri, that is a great list and items 1-3 and 8-14 can be done by anyone, even the most frazzled. I seriously doubt the under 30K crowd even have to consider #8.
Jencam, I think you've figured that grandmother had mental health issues. The story is amusing but it's not one to emulate.
I believe him. The problem is, this isn't something everyone can do. There's only so much real estate to go around, so everyone else is stuck at where they're going to be.
Of course it's not something everyone can do, but one poster accused me for making it up or something similar when I said my secretary made $57k and had $125k savings. Absolutely in denial.
If every person in a community all lost everything they had. Their homes, their clothing, their jobs, their savings, all gone in an instant. If you gave every person a sum of money, each was the same sum. And if you left them alone for 10 years. In a decade some of those people would be destitute. Others would be wealthy.
When we were both in college, I got $550/month from the GI bill. We were both taking 18 credits in classes [fulltime was 12]. My Dw was working as a waitress in a truck stop for $3.50/hour [plus tips] and I was working as a stone mason for $5/hour. We were both working fulltime and we were both fulltime+ college students. That was when we bought our first 'home'. My parents co-signed, nobody helped us with the closing costs. That 'home' was a property in California with 3 houses on a single lot. We then lived in one house and we rented out the other two houses. Our rental income covered the mortgage escrow payments, so we were able to live there for free and we made monthly principal-only payments. We had our first child in that home.
After we finished college, I went back into the US Navy. At our next duty station we bought a second property. That property has five rentals.
Years went by, at each duty station we bought another set of apartments. Until after I retired we never made a single monthly mortgage payment from my salary income. We always used rental income for the monthly mortgage payments. Or as some people say Other-People's-Money [OPM].
I have never had a high salary income. I have never really even had a middle-class salary.
Though we collected four properties with rentals.
The Navy forced me to retire at 20 years. At that time, I figured out our Net Worth. We had done pretty well for having been Minimum-Wage workers / enlisted sailor.
Today given the current economy. I can see where a burger-flipper could still do pretty good for himself, if such a burger-flipper decided to.
Our eldest son was working at McD's flipping burgers [BTW, he hates it when I use that phrase] when he bought his first apartment complex.
Of course it's not something everyone can do, but one poster accused me for making it up or something similar when I said my secretary made $57k and had $125k savings. Absolutely in denial.
How is that unbelievable? How old was your secretary? I don't find that amount really impressive considering she made 57K a year.
Some people do not realize how minimalistic lives people can lead. No car, no vacations, no dating, no friends, no eating out, no hobbies. It's no wonder some save a huge amount on a low income.
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