Have you ever wondered how an everyday person can become a young millionaire?
That's why I'm starting a series called “How To Become a Millionaire in your 30's”. This will be an ongoing set of interviews with millionaires ($1M+ net worth) or “millionaires-to-be” ($750k-$999k net worth) aged 30-40. The goal is to learn how they've done it so we can all better our financial situation and build our wealth.
Our first interview is with Devin.
How old are you? If you have a family, tell us about them and their ages.
I am 35 years old, married and have two young boys. They are four years old, and two months old. Man! They really know how to keep me busy and I miss my sleep :)
What part of the country do you live in?
I am living in Seattle, Washington.
What is your current net worth?
Currently, my net worth is about $950,000. The majority of my net worth is from my two properties.
What are your current sources of income? If married, does your spouse have other income sources?
My household used to be a dual-income family. However, after my second baby, my wife decided to become a stay-at-home mom. For about three months now, my income, as a web engineer, is the only income source.
I also have three blogs that make an average of $300 a month.
What has been the single best thing you’ve done to increase your income up until this point?
One of the best things I've done to increase my income is being frugal (or living below your means) and always saving.
Being frugal was the biggest reason that I was able to purchase my first house. I bought my house when the housing market was down in 2010. Even though house prices were very low at that time, getting a mortgage was very hard. Banks were afraid to give out mortgages because too many loans had defaulted. So I had to pay more than a 20% down payment to get the mortgage.
If we hadn’t saved, I would have never able to able to afford the down payment and purchase that house. This house has increased in value ever since we've owned it and has really jumpstarted our net worth!
That doesn’t mean that our family has no life. We can still eat at the restaurants, hang out with friends, have family vacations and do fun activities with the kids. We are just being smart with our money.
Related Post: Finding Life Balance with the 50/20/30 Savings Rule
What ways do you invest your money?
I invest my money in my 401k accounts first to avoid paying taxes and take advantage of my company match, which is 6%.
Then, I invest in a Roth IRA and my mutual funds, about $300 and $400 respectively.
I also own my house and my rental, which I bought when the housing market was down in 2010. Now, their value has nearly tripled.
Besides investments, I also transfer about $700 from my checking into my saving account. I don’t have a plan for that money yet, but I think it is good to just save money and have it in reserves. This way, I will have the capital to invest later, maybe expanding my house or a new property.
With that being said, the single most important investment I made is investing in myself. When I I graduated from the university with an art degree, like a lot of graduates, I had a lot of student debts. To make matters worse, I wasn’t able to find a job, so I decided to go back to college for a visual communication design (basically it means graphic design) degree. As a result, I ended up with even more debt.
Luckily with the design degree, I found a job in a small design firm as a graphic/web designer and the salary was decent. While I was working as a designer, I started to attend web development classes at night and watched tutorials online. After three years of working hard, I became a web developer engineer at a big tech company. My salary was significantly increased, and I was now a major step ahead toward my financial goals!
What debts do you have (if any)? If so, what are they? Which have you paid off?
I used to have my student loan and my first car, about $12,000 and $15,000 respectively. I paid them off by holding off with friends, not buying fancy new things (basically being frugal … You start to see a theme here) and used the differences to pay off the debt first.
At the beginning of this year, I purchased an SUV. I took out a loan, however, I am paying it aggressively by paying extra every month. Currently, I already paid off half of the loan, and I only own less than $7,000. After my auto loan, I will focus my effort to pay off my house mortgages.
However, the one type of debt I don’t have is credit card debt. With credit cards, it is very easy to overspend. This is because credit cards are too convenient, just a swipe of the card or click of a button. It doesn’t feel like spending money, and the bills don’t come until the end of the month. Instead of credit cards, I use the debit card. The difference is the money is withdrawn directly from my bank account, so I have better control over my spending.
Do you own your home or rent?
I own my house, and I also have a rental property.
How do you track your net worth?
One of the problems with tracking my spending and investments was I had too many accounts in numerous locations. Such as, saving accounts, checking accounts, brokerage accounts, car loans, house mortgages, retirements and cryptocurrency accounts (yes, I had bitcoins). At first, I used excel to track my cash flow. In reality, to monitor all of them manually took me a lot of time. Every time there was a change in my accounts, and I had to create an entry manually. That was too much work and, unsurprisingly, I gave up tracking very quickly.
I knew the excel method didn’t work for me! I needed a central location to track my account, and I needed them to sync automatically. With a single secure login, across all of my devices. I needed things to be simple and easy for me to use!
There are many cash flow tracking apps, and personally, I use Personal Capital because I like the user interface and the tools it provides. This tool automatically updates my accounts in real-time and provides automated analysis and charts. Have I mentioned that Personal Capital is entirely free?!
Do you budget your money monthly?
I don’t really do my budget. Instead, I've automated my savings, investments and my other retirement goals. In fact, if my financial plan is not automatic and requires me to take manual actions every couple of weeks it's a recipe for frustration and failure!
Making my financial plan automatic is the one step that guarantees me to accomplish my financial goals. This prevents me from making excuses for not doing it or forgetting to do it. Automation takes me out of the equation, so I don’t need to be disciplined (a nice way to say I want to be lazy). Set it up, move on and not spend the time to think about it. Let’s face it!
I believe that a human’s willpower is limited! So we shouldn’t be wasting it on disciplining ourselves when there are tools can be leveraged.
I learned this by reading the book Automatic Millionaire, and I highly recommended it.
Millionaire in the Making
What is one financial mistake you’ve made along your young millionaire journey?
One financial mistake I had made is not investing in my retirement accounts early enough because the most important secret to becoming a millionaire is time. I was young and retirement sounded like a lifetime away. So I didn’t contribute to my retirement until my late 20s.
According to Vanguard, my retirement savings by age are below the average.
However, if I had invested in my early 20s, according to Vanguard, my retirement would be closed to double when I retire. This sounds like a hard pill to swallow.
How do you plan to become a young millionaire?
I didn’t really plan or dream of becoming a millionaire at all.
My financial goal initially was to become debt free and be able to retire somewhat comfortably. So my wife and I are just being frugal and saving all the time, and this was really my nature. In the process, I amassed more money and became what I am right now.
What does “millionaire status” mean to you?
I really don't pay much attention to the “Millionaire Status,” so it doesn’t really mean much to me.
I will maintain my lifestyle and continue being smart about money.
Where are you in your net worth journey?
Please let me know in the comments below!
Track your net worth today for FREE with Personal Capital. It’s the first step on your journey to becoming a young millionaire!