Inside The Millionaire Mind of Mush—How We Became Millionaires

This was originally a guest post at Free Money Finance, one of the great and leading personal-finance blogs. Please check it out where and how it was originally published, on March 31, 2008, by clicking on this link: Inside The Millionaire Mind of Mush—How We Became Millionaires. The discussion in the comments are well worth the click! Also, please do visit Free Money Finance, early, often, and repeatedly.

I first started this post by writing, “Now that we’re millionaires,…” But then I couldn’t stop laughing. I guess I find it hard to take myself all that seriously just because our net worth has gone over $1 million.

Hitting the million-dollar mark still seems to be a big deal in many of our cultures. Think how much the words “million” and “millionaire” are used in media and publicity. A quick search of any bookseller website turns up tons of titles—5,891 on Amazon. Books like The Millionaire Next Door, The Millionaire Mind, Secrets of the Millionaire Mind, and The Automatic Millionaire were all mega-sellers. Television shows span the gamut, from the Who Wants To Be A Millionaire game show to The Millionaire Inside personal-finance advice show. (And let’s not forget The Six Million Dollar Man—though with inflation, he’d probably cost over $16 million dollars today.) And it took me no time at all to turn up over 10 personal-finance blogs with “million” or “millionaire” in their titles. There’s at least a mild obsession with getting inside the minds of millionaires, presumably to unlock the hidden secrets of how to become one.

Looking inside my mind, unfortunately, revealed a big ball of mush.

The most interesting thing about our net worth being over $1 million is that there was and is no secret to unlock. Our net worth progress has been remarkably boring. The entirety of it can be attributed to: how much we saved and invested.

Most of our personal-finance plan revolves around automating how we save money and get it into the stock market. And the stock-market piece is made up mostly of index-based ETFs and blue chips. And as much as I’ve strayed and taken a big hack here and again, we’ve hit no home runs.

There’s no one stock in our portfolio that makes up more than about 3% of our net worth. The equity in our home makes up over 20%—but if you excluded it, our net worth would still be over $1 million. We have one investment property, and our equity in that might make up around 4% of our net worth. We never started, ran, bought, or sold a business. We never had stock options in a company that got acquired or had an IPO.

We’re in our late 30s and early 40s respectively. We live in an expensive area of the country. Our incomes are pretty good. We’ve been in our careers for about 10-15 years respectively—and did not start saving and investing regularly until quite a few years in. We’re decent savers. But the more blogs I read, the more I would rate us as average to mediocre on the frugality scale.

So if I had to break down the top few financial steps that we took to get here:

• We stopped and made a plan. Not a complicated plan, not even a written plan. Just a plan. This may seem rudimentary, but until we stopped and focused on our finances, they were pretty scattershot.
• As the #1 feature of that plan, we automated much of our saving and investing. We certainly did a lot in our respective retirement accounts. But we also piled on top of that with automatic investments in non-retirement accounts and also in 529s.
• We splurged here and again. I don’t think we (meaning I) would have been as good about controlling our spending overall without building in some more ephemeral rewards.
• We also did “manual” saving, setting aside some money each month that did not automatically go into investments. It just sat in high-yield savings accounts. This was a hedge for cash flow, splurges, and unanticipated expenses. And at the end of each year, there was usually some amount left, which we could then invest in a lump sum.
• We advanced our careers, which led to increases in our income.

When I think about it now, our very boring story is pretty exciting. Because it means that lots of people can replicate it. Because it means that the advice on this and other blogs (like in Free Money Finance's posts on how to become a millionaire or how to become wealthy) worked.

You too could have a millionaire mind of mush.

Thanks again to FMF and the Free Money Finance blog!