The way most Americans build wealth is no secret: Save, invest, repeat. How average people keep their wealth, though, gets a lot less attention.
It boils down to how they handle risk. It’s hard to accumulate wealth without taking some risks, but there are perils that “next-door millionaires” seem to avoid.
Next-door millionaires weren’t born into wealth. They haven’t invented killer apps or won the lottery, exercised a pile of stock options or played professional sports. They’re the majority of millionaires, and they include teachers, small business owners and professionals who accumulate wealth gradually over time. They’re often in their 50s or 60s before their net worth ticks over to seven digits.
In my latest column for the Associated Press, how to apply the secrets of next-door millionaires to your own finances.
Boy you could have gone further and further with that article!
I/we (wife and i) became “millionaires” in time, mainly thru a lifestyle of budget or deferred vacations, not buying everything we think we need, and judiciously exploiting local thrift stores. Do it yourself projects along with driving a basic car for more than 10 years all seem to help. Similarly simply cooking our own lunch or dinner 25 times a month adds up. But I suspect the largest impact was from always paying extra to the mortgage. “in the beginning” we also started paying lump sums ahead on the credit cards – then fully paying them off each month. The concept of making 13 payments a year on the mortgage is extremely easy and can pay off a 30 year mortgage in simply 15 years. We did roll from one house to another but that was mainly driven by job changes (I’m an engineer and manufacturing has done poorly the past few decades). But the equity roll over always insured approval on the next home’s loan.
Now I have a “larger” tax bill but only because I didn’t contribute to a 401K this year. The current company doesn’t have a plan but will soon. Being over 55 I can jump on the maximum contribution of $24,000. Which really isn’t much more than what I used to pay for the mortgage.
Keep plugging away Liz!