How We Became Millionaires After 5 Years of Smart Financial Moves

The end of 2015 was an exhilarating time for us. We were in the midst of trying to buy our forever home and planning for our dream wedding. But despite already being in our 30s and 40s, our focus was not on our finances. Things changed quickly when we realized the forever home was not easily affordable. So we pulled the plug on the contract and made a pact to make our money a priority. Thanks to some good financial decisions, perseverance, and an unprecedented stock market bull run, we achieved millionaire status in 5 short years. And this is how we did it.

A Skewed Perception Of Wealth

As a kid growing up in a 400 SF trailer, I dreamed of becoming rich someday. Rich to me meant being a millionaire and living a life of luxury. You know, the kind of life you saw people living on TV shows like Beverly Hills, 90210, and the Fresh Prince of Bel-Air. 

Nevermind that I didn’t know that true wealth could be stealth and had everything to do with the value of assets and not just how much money you make. I was clueless. My parents were clueless. And so were most of the people in my immediate circle. 

As a young adult, I knew the fastest way out of the trailer park was a college education. So I did just that. I worked full-time at a factory and took classes at night. I eventually finished my Bachelor’s degree after 7 years and even went on to nail down a Master’s thanks to my employer offering 100% tuition reimbursement. I was also lucky enough to pick a career field that paid well. It’s not a top-paying field, but it’s decent and has served me well over the years. 

At the same time I decided to become the first person in my family to pursue a college degree, I also decided to learn about money. To accomplish this at a time when the Internet was still in its infancy meant I would spend exorbitant amounts of time at my local bookstore crouched in a corner or on a bench, if I was lucky enough to snag one, reading as much as I could before I had to either leave or buy the book.

As a poor student I couldn’t afford to buy many books, but I did manage to consume a bunch for free and even bought a few of the hits. Even though funds were scarce, I managed to snag books like Rich Dad, Poor Dad, and CD sets from The Motley Fool and Suze Orman. I was determined to end up rich…or, at least not poor.

Money And Relationships After College

One of the first real jobs I had after college graduation was 50+ miles from my house so I dedicated my commute to listening to those financial CDs over and over again until I absorbed every little tidbit. 

I must say, I started out strong. I was saving what I could when I could and increased my savings rate to 10% and then 15% not long out of college. I was on fire before FIRE was a thing.

Then, life happened. I made a few not-so-great relationship decisions and got derailed. I wasn’t in a ditch or anything, but by the time I was in my late 20s and early 30s, my passion had been curtailed by the people I had surrounded myself with. Soon I found myself leaving a long-term relationship and starting over, alone in my 30s. 

In order to start over at a time when I thought I would be getting married and starting a family, I needed to stop all savings. It was a devastating time for me and my finances. Everything was halted. What I had saved and invested up until that point was still there, but I didn’t contribute anything else for the better part of my 30s. 

Setting The Stage For Our Amazing Financial Transformation

When my husband and I met in my late 30s, we weren’t starting from zero, but we definitely weren’t starting from a position of financial power. I’d say on the overall wealth scale, we were under accumulators for our ages with a starting point in the low 6-figures. 

So how did we go from a position of financial weakness to becoming millionaires in 5 short years? In short, we got our act together and made it a priority. It wasn’t rocket science and having achieved it, I’m amazed more people with adequate resources aren’t at this level or beyond it.

So in no particular order, let’s look at a sampling of some of the smart financial moves we made that catapulted us firmly into millionaire territory after 5 short years of dedication.

9 Smart Money Moves That Propelled Us To Millionaire Status

1. Living Within Our Means

This seems to be tough for a lot of people but, for whatever reason, my husband and I don’t have a problem living within our means. I think it might have something to do with us both growing up without much money and lower expectations than most.

2. Embracing Frugality

Ahh, the F-word. Yes, we embraced frugality like we never did before. At one point, we went extreme and cut out everything from vacations to clothes to coffee, but it was too much for us to sustain. We realized we weren’t enjoying our lives so we dialed it back to a more suitable level. 

3. Budgeting

We never had to engage a strict budget because we weren’t big spenders, but we did adhere to a loose budget where we paid ourselves first and focused on eliminating debt. 

Any unexpected extra money that came our way was also funneled toward investing and debt. We even went so far as to invest money that we wanted to spend. For instance, if we were dying to go out to eat – and that happened often – we would do our best to curb that desire. Whenever we succeeded, we immediately transferred the funds we would’ve spent on a dinner out into our investment account. It was an easy way to create instant gratification for making the right financial move. And it happened on numerous occasions.  

4. Living On One Income

Despite having two incomes after pairing up with my now-husband, we made the decision to live only on mine. After all, I was a pro at living on my income as a single parent, so we decided it was best to keep doing that in order to build wealth and see our goals come to fruition.

5. Avoided Lifestyle Inflation

Since we decided to live on one income, it wasn’t too hard to avoid lifestyle inflation. It also helped that my husband’s income was unpredictable. It’s hard to allow yourself to get caught up in extra payments or things you can’t easily afford when you don’t know how much money is coming in each month. 

It also helps that I’m not addicted to shopping or getting my hair done or anything else. I’m not saying those things are bad, I’m just saying I don’t spend gobs of money on them. I’m also ok with buying name-brand items secondhand to save a buck. All the money that’s saved by those little things doesn’t get lost either. I actually keep a close eye on those little extras and funnel everything I possibly can into our investment accounts. Believe me, a few bucks here and there add up quickly.

The one thing we did add to our lifestyle was vacations. After a couple of years of incredible progress coupled with burnout from extreme frugality, we started using my annual bonus from work to pay for (or pay a good chunk of) a summer vacation. We have since enjoyed getaways to Disney, the Grand Canyon, and Yellowstone, and we were happy to spend the money. 

6. Maintaining A High Savings Rate

The trick isn’t just to increase your savings rate, the trick is also to maintain it. After committing to our financial plan, I immediately increased my annual 401k contribution to the maximum allowed by law, we threw the annual limit into our IRAs, and we funneled every spare dollar to debt and investments. We have maintained this throughout the last 5 years and have no intention of slowing down.

7. Eliminating Debt

After we pulled the plug on our forever home thanks to some items found during the inspection, we took our returned deposit and applied it directly to the principal of one of our rental properties. 

Other extra money over the years went to knock out my student loan, both of our car payments, and any remaining credit card debt we were still carrying. After focusing our efforts on building wealth, we were shocked at how quickly we were able to become debt-free aside from the mortgages. 

8. Driving Old Cars

Neither of us has ever had a huge interest in cars. We like cars and we like our cars to be nice-ish, but no one would ever call us car people. Currently, we’re both driving paid-off 2012 models with no desire of upgrading before it’s absolutely necessary. In our minds, the more money we don’t spend on cars, the more money we’ll have to invest and build our bottom line.

9. Tracking Our Net Worth

Tracking our net worth was probably the biggest thing we did to stay motivated. By doing so, it didn’t matter if we were paying off debt or savings, our net worth went up either way. We used and still use Personal Capital to track this. It’s easy-to-use and has a great reputation for being secure. I highly recommend it to anyone who wants to see their financial snapshot at the touch of a screen. Word of warning though, it’s addictive. I tend to check it daily. 

Psst…that Personal Capital link is my affiliate link. If you use it I might receive a small payment. But I’d recommend it without getting paid because I truly do love it and use it.

Staying Focused On The Goal

Just for complete transparency, unlike others in the personal finance space that are able to achieve unbelievably high savings rates because their undisclosed incomes are somewhere between extremely high and insanely high, our income varied over the years. I have never actually surpassed the 6-figure mark and my husband’s income is variable and unpredictable. Some years he made substantially less than me while other years he made a little more. 

The one thing that allowed us to achieve so much financial success in so little time was our commitment to our goal and to living on my income alone. Not only did we live on my income alone, but we also saved quite a bit of it too. 

After we decided to chart our new financial course, we craved and consumed financial content constantly. Heck, this blog was born out of that period and was a way for us to stay motivated and on task. It worked!

Related:

• How We Paid Off A Mortgage Against All Odds
• 5 Reasons Ditching FIRE For FIOR Might Be Your Best Financial Move
• How We Increased Our Cash Flow By Recasting Our Mortgage
• 5 Ways To Stay Motivated At Work When You Don’t Love Your Job
• The New FI: Forget Financial Independence, Achieve Financial Improvement First

The Longest Bull Run In History

I would be remiss if I didn’t give this a mention. Let’s face it, having the longest bull run in history as a tailwind was extremely instrumental in this achievement. Although a huge help, without our dedication and sustained savings rate, the stock market’s bull run wouldn’t have made any difference at all.

What We Include In Our Net Worth

For a limited time only, I’m willing to get a little dirty for all the financial voyeurs out there. So let’s dig in. 

First, the equity in our primary home is not included in our current net worth calculation. We also don’t include our cars or collectibles, which are basically non-existent. Aside from that, here’s is the approximate and boring breakdown.

• 50% – Taxable and Tax-Advantaged Investments (Low-cost, broad-based index funds. All stocks. No bonds.)
• 40% – Income-producing Real Estate 
• 10% – Emergency Fund and Other Assets

The Skinny On The Rentals

Thanks to an influx of cash from a project my husband worked on last year, we were able to eliminate the mortgage on one of our rental properties, catapulting us firmly into millionaire territory. On the heels of that, we were also able to substantially pay down the mortgage on another rental property to solidify our newfound financial position. 

And before you think, “Oh, of course they’re millionaires with all of their rental properties”, the truth is that we only have two rentals and it’s only because I have always been obsessed with real estate after having grown up in a trailer. I was also following the principles I learned from reading Rich Dad, Poor Dad all those years ago – buy assets, not liabilities. Here are the deets on the rentals.

I bought the first one at the top of the real estate bubble in 2007 when I was still in that bad relationship with a few extra bucks in my pocket. After we split, I held on for dear life even though I could barely afford it. I bought the second rental as my primary house as a single parent so my daughter could have a backyard. It was a stupid financial move at the time because, again, I could barely afford it. I left the closing table with a mere $200 in my bank account. I wasn’t even able to buy a washer and dryer until a year later. But, I was thinking about the future. I imagined turning the house into a second rental after meeting a great guy and getting married. And that’s what I did. 

How It Feels To Be Millionaires

Having a million bucks isn’t what it used to be. And while that’s certainly true, it still feels pretty darn good to hit this money milestone. We’re looking at this achievement as a great financial start and we don’t plan on stopping anytime soon. In fact, we’re still full steam ahead with investing for our future. We would love nothing more than to give the gift of freedom to our future family. Freedom for them to pursue their dreams that they might not otherwise be able to chase would be a wonderful legacy in our eyes.

So, yes, we feel good about becoming millionaires, but we also feel like we have a long way to go to achieve our lifetime financial target. As for future milestone updates, this will likely be the only time I share our net worth online. We just thought it was important for others to know that, even with a late start, if you put your mind to it, it’s more than possible to become financial rockstars!

How We Celebrated Our Financial Achievement

We ordered pizza! No, really, we ordered pizza. We’re not usually fancy and we truly enjoy the little things. And since it’s still difficult to enjoy our favorite restaurants due to the colossal disaster that was the year 2020, we did the next best thing by ordering in.  

So, what’s next for us? Like I said earlier, we’re going to continue on the same course. We hope to completely pay off the mortgage on our second rental property this year. Once that debt is gone, we’ll likely use cash to pay for some renovations to our current home before tackling the last of the mortgages. In the long run, we’ll keep throwing money into index funds and we might even look into buying more rentals. 

Above all else though, we want to enjoy the people in our lives and a stress-free lifestyle. After all, people and experiences are the most important things in life. Money is just a tool to enhance it. 

What are your money goals?