MIM — Are You a Millionaire in the Making?

Photo by Arron Choi on Unsplash

Welcome To Our First Installment Of MIM — “Millionaires In The Making”. Here We Provide Highlights and the Top 3 Tips from middle class folks who are on their way to building a million dollar net worth.

  • Tom & Michele plus young child, both in their late 30’s.
  • Currently have approximately $760,000 net worth, including $260k in primary residence equity.

The top 3 practices that are working for them:

  • Bought a house
  • Low cost hobbies
  • Automated contributions to investments

Tom and Michele are your average middle class college educated couple with 1 child. They agreed to let us peek at their finances and do an overview of their situation, what they have done right to date and some areas that could use some improvement. Tom works in real estate as a mortgage broker and Michele has a State government job working in forestry. Tom makes about $120,000/year and Michele makes $52,000. These are good solid middle class salaries, but they do live in a higher than average cost of living area.

Bought a House

Photo by Jean Carlo Emer on Unsplash

Tom and Michele are very happy they bought their home at about age 30. 9 years later they avoided massive rent increases in their area and have built considerable equity. Their millionaire plan is aided by this for a couple reasons. one, their monthly housing expenses are fixed while the price of everything else rises around them. They also own an asset that is building equity that could be leveraged in the future if they so desire.

Low Cost Hobbies

Photo by Charlotte Karlsen on Unsplash

Tom and Michele swear by their low cost hobbies. And this is no small thing. They enjoy hiking, camping, cooking and doing as much outdoors with their young daughter. These hobbies extend into a general aversion to high cost activities, stuff, etc. They will splurge on quality at times (like a Yeti mug), but overall they drive normal gently used cars and steer clear of high end restaurants.

Always Contribute Something

Photo by Visual Stories || Micheile on Unsplash

They have not been able to ever max out their retirement accounts, but they have always at least contributed 7–12% to receive an employer match. We are always shocked when we hear people tell us they have not got around to signing up for their companies 401k plan or have not set up an easy withdrawal account into a company like Vanguard. We have to do this now and let it ride. Tom and Michele have always contributed at least something each and every paycheck. This has resulted in retirement accounts with hundreds of thousands in them, aided as well by the last decade of stellar stock market returns.

Debt Sensitive

Photo by olieman.eth on Unsplash

Finally, Tom and Michele mentioned a “sensitivity to debt” as another secret to their building wealth. They have credit cards, but they religiously pay off the balance each month, no questions and no exceptions. In general, they are “debt sensitive” which means they don’t like it. They do have mortgage debt, but no other besides that.

TOP 5 Holdings

Tom and Michele currently hold the following investment vehicles as part of their retirement accounts:

  • Vanguard Growth Index Fund (VIGAX)
  • Vanguard Russel 2000 ETF (VTWO)
  • Vanguard Real Estate ETF (VNQ)
  • Vanguard ESG US Stock ETF (ESGV)
  • Berkshire Hathaway BRK-B stock

In my opinion this is a very reasonable and growth oriented mix of investment vehicles. Over the long run the companies within these funds should thrive and grow. But, we give no individual stock advice, therefore this is just listed for informational purposes.

Areas of Improvement

They mention a couple areas they could improve. First of all, with a young child, they have failed those far to put together a Living Trust. They are young so it is no fun to think about bad things in the future that could impact a family. But most financial planners will stress the importance of a Living Trust. The nice thing, is that once it is all done, a person can put it away and sleep better at night knowing that their loved ones will be taken care of.

They also mention improving their financial literacy. This is something all of us can continually work on and seek future investment opportunities. They have admittedly benefited from passive investing the last decade as everything pretty much went up. They acknowledge that those gains may be a little harder to come by going forward and will need to seek out alternative opportunities.

If you enjoyed this article, please consider becoming a Money Vikings Premium Member, (use coupon code medium for 50% off your first month) or Joining Medium to help support more inspirational articles like this.

--

--

--

3 Friends raising families, doing what they can each day to build True Wealth, and Conquer Financial Freedom. Real Estate Long Term Investing, Options Trades

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

💡Trade Ideas — $FNSR, $RAD, $GME, $AMGN, $PII, $DSW

Angel investing: using an IRA or not using an IRA?

Paying off credit card question?

What happens if a rental tenant decalres bankruptcy in the state of florida?

How Subscription Lines Evolved from a Funding Tool into a Credit Fund Strategy

Money at 30: Venmo Card Review

5 Principles Physicians Should Live By For A Prosperous Retirement

20mins Forex Trading Course: Legit Opinion

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Money Vikings, LLC.

Money Vikings, LLC.

3 Friends raising families, doing what they can each day to build True Wealth, and Conquer Financial Freedom. Real Estate Long Term Investing, Options Trades

More from Medium

6 Techniques to 1 Million Dollars

Why You Need To STOP Saving Money

A Saturday In The Life of a Single NRI

Money, what is it good for?