RPF0640-The_Accidental_Millionaire
00:00:00.000 | - Big Boyz Comedy Kings is coming to Yamaha Resort and Casino
00:00:03.200 | Saturday, December 9th with D.L. Hughley.
00:00:05.840 | - That sweater so tight, it look like a snap between the legs.
00:00:08.240 | - Cedric the Entertainer.
00:00:09.540 | - Once we stop running, I'll find out what it was we was running about.
00:00:13.080 | - And Paul Rodriguez.
00:00:14.340 | - What is it about old Mexican men?
00:00:15.980 | They could be missing a leg, they still want to get into a fight.
00:00:18.480 | - Hosted by my man Eric Blake and a special performance by Mario.
00:00:21.880 | Big Boyz Comedy Kings, December 9th at Yamaha Resort and Casino.
00:00:25.320 | Tickets can be purchased at AXS.com.
00:00:27.920 | This is a 21 and over event.
00:00:30.800 | Welcome to Radical Personal Finance, a show dedicated to providing you with the
00:00:33.360 | knowledge, skills, insight, and encouragement you need to live a rich
00:00:36.840 | and meaningful life now while building a plan for financial freedom in 10 years or less.
00:00:41.840 | Today on the show, I'm going to tell you a story about a man I think of as the
00:00:45.920 | accidental millionaire.
00:00:47.720 | This story comes from my background and experience working as a financial advisor.
00:00:52.520 | One of the great benefits of that business is you wind up meeting with hundreds and
00:00:56.560 | hundreds of people and talking about money with them.
00:00:58.960 | And if you talk to enough people about money and you keep your ears open, you can
00:01:02.260 | quickly find out what works and what doesn't work.
00:01:05.260 | But every now and then, somebody will surprise you.
00:01:08.120 | Usually, you get pretty good as a professional of pegging people.
00:01:12.200 | You start to see a couple of clues or hear a couple of clues and pretty quickly, you
00:01:16.280 | start to put people into boxes.
00:01:18.080 | But the accidental millionaire was a man who didn't particularly fit into any of my
00:01:23.680 | preconceived boxes.
00:01:25.960 | I met him on a Friday.
00:01:27.560 | He came into my office for a meeting and I had never known him.
00:01:31.320 | Somebody referred me to him.
00:01:32.320 | I called him up, asked him if he wanted to meet with me and he said sure.
00:01:35.520 | And he wound up coming into my office.
00:01:37.660 | And so he came in.
00:01:38.680 | He didn't know me.
00:01:39.680 | I didn't know him.
00:01:40.680 | And we went through the standard procedure, which was basically a conversation.
00:01:44.660 | We would call it in the business a fact-finding interview.
00:01:47.200 | And I would ask him about what his goals were for the future.
00:01:50.080 | I would ask him about all of the things that he'd done, ask him about his money and his
00:01:53.720 | income, etc.
00:01:55.600 | And interestingly, he didn't have a lot of specifics on his situation.
00:02:00.680 | He didn't remember a lot of the numbers.
00:02:02.840 | He wasn't 100% sure about how much money he made.
00:02:06.040 | He wasn't 100% sure about how much money he had.
00:02:09.120 | But as we start going through the numbers, they just started climbing and climbing and
00:02:13.160 | climbing.
00:02:14.160 | And by the time we got to the end of his statement of financial condition, where we calculated
00:02:19.180 | out his net worth, we both discovered that he was a millionaire and I'm pretty confident
00:02:25.160 | that he was well on his way to being a multimillionaire.
00:02:28.080 | And he sat there and he looked at the paper and he kind of scratched his head and said,
00:02:32.240 | "Huh, I didn't know I had that much money."
00:02:34.720 | And it struck me because very rarely do you ever find someone that looks at a paper with
00:02:40.520 | how much money they have and they say, "Huh, I didn't know I had that much money."
00:02:46.740 | And he actually didn't know that he was a millionaire.
00:02:50.120 | It wasn't something that he knew right off the bat.
00:02:53.120 | He may have guessed that he was a millionaire, but he hadn't just thought about it.
00:02:57.680 | He hadn't looked at it.
00:03:00.720 | That's very unusual.
00:03:02.960 | If you work with people with money, most of the time you find that the errors are in the
00:03:07.080 | other way.
00:03:08.520 | People usually understate their expenses and overstate their assets.
00:03:13.240 | They think they have more money than they do.
00:03:14.760 | They think they spend less money than they do, but unfortunately they have less and spend
00:03:18.320 | more than they think.
00:03:20.040 | It's very rare to find somebody who counts it the other way.
00:03:23.520 | And I tried to figure out what was it about this man that led him to be in this situation.
00:03:30.940 | Now what most stood out to me was the fact that he didn't really want to spend much time
00:03:35.040 | in my office, not because he didn't like me, but because he had other plans.
00:03:40.860 | He had weekend plans and he was leaving for his hobby on the weekend, which I later found
00:03:47.240 | out was mountain biking.
00:03:50.680 | That was basically his one hobby that he really enjoyed, was mountain biking.
00:03:56.840 | And it stood out to me because I thought about it and I asked him about, he was heading to
00:04:00.200 | a mountain bike tournament, and I just asked him about what he was doing and what it looked
00:04:04.680 | like and what he would do at the tournament.
00:04:06.600 | What stood out to me was how modest that hobby expense was for him.
00:04:11.520 | He had I think a Toyota Matrix or some Toyota hatchback or sedan or something like that.
00:04:16.920 | And he would just take his mountain bike and he would go to mountain bike tournaments.
00:04:20.280 | He wasn't particularly good at it.
00:04:21.760 | It wasn't like he was doing it professionally.
00:04:23.080 | It was just his hobby.
00:04:25.120 | But I later really thought about that and I realized what a great hobby it was.
00:04:29.280 | Now I'm not sure it was the best hobby for someone who lived where we lived in South
00:04:33.560 | Florida.
00:04:34.560 | He'd have to get a good mountain bike tournament.
00:04:35.800 | He had to go up to North Florida at the very least to find any hills.
00:04:39.940 | But it was a very modest hobby.
00:04:41.520 | He had a bicycle and he rode it.
00:04:43.680 | And the great thing about that hobby is it didn't cost very much to get into.
00:04:47.680 | It didn't cost very much to do.
00:04:50.120 | And it had other benefits like keeping him in great shape.
00:04:53.000 | Here's this man who's in his mid to late 50s and he's in great shape.
00:04:56.360 | Well it's because he enjoyed mountain biking.
00:04:59.600 | Now as I thought about the accidental millionaire and later with hindsight considered his situation,
00:05:04.760 | I came to understand some of those basic things that were true in his situation that led to
00:05:10.480 | him being wealthy and on track for a very wealthy life without even paying attention.
00:05:16.960 | That's my point is he didn't even pay attention and he was getting great results.
00:05:22.320 | I think it's worth paying attention to things like that, us.
00:05:25.960 | Because when somebody just gets great results and they don't even have to pay attention,
00:05:29.280 | they're probably doing something that would serve the rest of us well to pay attention.
00:05:33.160 | So let me explain.
00:05:34.920 | The first thing that he had that led to him being an accidental millionaire, a millionaire
00:05:38.160 | that didn't even know he's a millionaire, was a good income, a strong income.
00:05:43.640 | In his case he was an engineer.
00:05:45.800 | And he did kind of an interesting kind of engineering.
00:05:48.280 | He didn't work at a big company, he worked at a small company, but he did engineering
00:05:52.480 | work.
00:05:53.480 | And engineering is one of those occupations where if you're competent with it, there's
00:05:57.920 | no reason why you shouldn't be able to earn an upper middle class income.
00:06:03.040 | In his case he was earning a six figure income.
00:06:06.540 | The other great thing is he'd been an engineer for a long time and he really liked the work
00:06:10.480 | of engineering.
00:06:11.520 | He was well suited to engineering.
00:06:13.440 | He liked the challenge of it.
00:06:15.600 | He worked at a small company where he had quite a bit of autonomy and he enjoyed the
00:06:20.260 | actual work of engineering.
00:06:22.520 | He didn't get involved in management, he didn't get involved, he wasn't chasing a big career.
00:06:27.120 | He just liked doing his particular version of engineering.
00:06:31.840 | And that strong income gave him the ability to live well without thinking about it.
00:06:38.100 | The next big structural thing was that he had a structurally modest lifestyle.
00:06:44.140 | He lived in an ordinary house, a reasonable house.
00:06:48.200 | It wasn't particularly expensive except for the fact that it was located in South Florida,
00:06:52.500 | which by definition is more expensive than other places in the country.
00:06:56.520 | But it was a reasonable house.
00:06:58.140 | Just an ordinary suburban house, ordinary suburban neighborhood.
00:07:02.940 | Ordinary size, everything was ordinary about it.
00:07:05.840 | But it was a modest, reasonable house.
00:07:09.080 | And he and his wife had lived there for a long time.
00:07:12.220 | They had bought the house decades earlier.
00:07:15.260 | They had gotten a mortgage.
00:07:17.120 | They had just simply stayed there.
00:07:18.860 | They'd raised their two daughters in that house and they continued to live in the house
00:07:22.320 | and they had no reason why they wanted to move anywhere else.
00:07:25.680 | One of their other hobbies was just simply fixing up the yard.
00:07:28.320 | They enjoyed gardening, working on their house, making sure that it looked nice and having
00:07:32.520 | the yard and the plants and all those things.
00:07:34.560 | That was something that they enjoyed doing together.
00:07:37.460 | So they had a reasonable, comfortable, normal house that they lived in.
00:07:41.460 | And they had modest hobbies.
00:07:43.520 | Didn't have any particularly expensive tastes.
00:07:45.520 | He had a reasonable car, but a modest car.
00:07:48.720 | He had the modest hobbies of gardening with his wife and mountain biking.
00:07:52.880 | He didn't have any major vices.
00:07:54.760 | He didn't drink.
00:07:55.760 | He didn't gamble.
00:07:56.760 | He didn't race fast cars or anything that would be expensive.
00:08:01.060 | He just had a fairly ordinary approach and he had his couple hobbies that he enjoyed.
00:08:05.520 | His wife wasn't into the mountain biking.
00:08:07.560 | She would stay home when he would go.
00:08:08.800 | He would go to the mountain bike tournaments and he would come home.
00:08:11.120 | He had a modest lifestyle.
00:08:13.840 | Now if you combine those things, a strong income and a modest lifestyle, then there
00:08:19.200 | should be excess money available, which goes into investing.
00:08:23.200 | In his case, that was the case.
00:08:24.600 | He didn't have a budget.
00:08:25.600 | He didn't know how much money he spent, but what he did have was retirement accounts and
00:08:30.520 | he would automatically have transfers into retirement accounts and savings accounts.
00:08:34.660 | And those retirement accounts weren't anything special.
00:08:37.800 | They were just an ordinary 401k, but they were good enough.
00:08:42.960 | He had good enough investments.
00:08:45.840 | Just good ordinary mutual funds.
00:08:49.200 | And he didn't touch them.
00:08:50.720 | He just left them alone, which of course is the key to successful investing.
00:08:55.080 | Buy good investments and don't sell them.
00:08:58.040 | Very simple.
00:08:59.240 | In this case, his carelessness, meaning his lack of paying attention, really serves him.
00:09:04.720 | And it serves most investors who buy stocks.
00:09:07.740 | If you buy good stocks, buy good mutual funds, and just simply ignore them and leave them
00:09:12.760 | alone to compound for decades, they'll compound and they'll do really well.
00:09:17.140 | Probably better than if you look at them every day.
00:09:20.420 | Now there were two other factors that led to his success.
00:09:25.680 | The first of those two factors is he didn't have any big errors.
00:09:30.360 | He'd lived an ordinary life, a mainstream life, a decidedly non-radical life, if we're
00:09:35.840 | talking about doing weird, crazy stuff that is fun to tell stories about, but he had avoided
00:09:41.000 | the big mistakes.
00:09:42.000 | He and his wife had a successful and very long lived marriage.
00:09:46.480 | He never went through divorce, never had to pay alimony, never had to pay child support,
00:09:49.760 | never lost the use of their money.
00:09:51.640 | So they had the benefit of their assets building together, their expenses being minimized by
00:09:55.500 | being together, and then they just continued to grow together.
00:09:59.120 | He had the satisfaction that came from that long and successful marriage relationship
00:10:03.500 | that provided both of them with the emotional stability to be okay with who they were, to
00:10:07.240 | enjoy gardening together in the backyard and riding a mountain bike and not to have to
00:10:10.920 | go out and try to compensate for some emotional deficiency by spending money.
00:10:15.800 | They had successful and healthy children.
00:10:18.200 | Now we can't control necessarily the health of our children, but they had done a good
00:10:22.680 | job with their children, so their children weren't a financial drain on them.
00:10:26.320 | They weren't worried about how to get their children off of drugs or how to bail them
00:10:29.640 | out of prison or how to figure out how to make sure they get a job.
00:10:32.960 | Their children had successfully been raised and had successfully launched out on their
00:10:36.840 | own.
00:10:38.120 | So he had avoided all the big errors.
00:10:40.320 | He'd never faced a lawsuit, never, just had avoided all the big errors.
00:10:44.760 | And then the last component was plenty of time.
00:10:48.340 | He was in his mid to late 50s.
00:10:51.120 | He'd had plenty of time to work.
00:10:52.520 | He'd been an engineer for decades.
00:10:55.080 | He just simply set up these structural things in place, and there was plenty of time for
00:10:59.680 | investments to compound, plenty of time for income to go up, plenty of time to enjoy the
00:11:04.740 | fact that that mortgage was paid off with inflated dollars over time and then it was
00:11:09.880 | eventually eliminated and you could enjoy the time of the house and save those house
00:11:13.600 | payments instead of paying them, etc.
00:11:15.720 | He had plenty of time.
00:11:17.760 | There was nothing radical about his lifestyle except that he was radically wealthy because
00:11:28.240 | he got a few of those big rocks right.
00:11:34.520 | If you're the kind of person who is well suited to this approach to life, I want you to be
00:11:39.080 | confident in your decisions.
00:11:41.360 | I want you to feel confident about the fact that you don't have to do anything wacky.
00:11:47.240 | I talk a lot about wacky weird stuff on this show because I enjoy it.
00:11:52.640 | My personality is not the accidental millionaire's personality.
00:11:57.640 | I thrive on the craziness, on the change.
00:12:00.440 | I enjoy doing the wacky weird stuff.
00:12:03.700 | But that's not necessary for you to live a very satisfying life.
00:12:11.860 | That's not necessary for you to live a rich life.
00:12:16.780 | That's not necessary for you to enjoy financial freedom.
00:12:19.540 | You don't have to do wacky stuff.
00:12:22.900 | You just need those factors I discussed.
00:12:27.220 | Think about them.
00:12:28.860 | You need a strong income.
00:12:31.100 | You're not going to become wealthy if you don't have a strong income.
00:12:35.260 | You need a strong income.
00:12:37.080 | But you don't need a million dollars a year necessarily.
00:12:40.340 | You just need to be in the perhaps upper half, preferably upper quartile, top quartile of
00:12:45.820 | income earners.
00:12:47.960 | This will change with inflation, but target at least six figures.
00:12:51.900 | You can do six figures with your interests and your abilities in a job that you will
00:12:58.460 | enjoy doing.
00:13:00.140 | You can take satisfaction in doing a job.
00:13:04.500 | That's the thing about that accidental millionaire.
00:13:06.320 | He enjoyed the work of engineering.
00:13:08.820 | I worry a little bit that we focus so much on the things that we don't like about work
00:13:16.220 | that we minimize just the satisfaction of doing work well.
00:13:19.980 | I really appreciate craftsmen and tradesmen who just do work well.
00:13:24.100 | It's satisfying to do work well.
00:13:26.620 | All of us can find a type of work that we're well suited to that we get satisfaction from
00:13:32.020 | the actual doing of it, the actual work.
00:13:36.300 | Sometimes this is with ideas.
00:13:39.040 | Sometimes it's with things.
00:13:40.620 | But you can find a job that will allow you to earn a strong income and do work well.
00:13:47.420 | Now the great thing is if you can find a job that will allow you to work a long career
00:13:52.340 | where you're not physically beat up.
00:13:54.460 | For example, the accidental millionaire wasn't particularly interested in retiring.
00:13:58.420 | Why would he?
00:13:59.460 | He had a reasonable job in a low stress environment where he made good money doing work that he
00:14:04.060 | enjoyed.
00:14:05.060 | Why would he want to quit that?
00:14:06.380 | He liked riding mountain bikes and he liked gardening but he didn't want to do that 100
00:14:09.420 | hours a week.
00:14:10.420 | So why would he quit that?
00:14:11.420 | He had plenty of time to leave early on Friday, go to a mountain bike tournament, come back
00:14:15.220 | in and do his work on Monday.
00:14:17.620 | Why quit that?
00:14:19.380 | That's one of the most powerful wealth building tools.
00:14:21.460 | Don't quit.
00:14:22.460 | Don't retire at 65.
00:14:24.300 | Build an income from a job that you enjoy that you can keep doing into your 70s, into
00:14:28.700 | your 80s, etc.
00:14:31.820 | Build that modest lifestyle.
00:14:34.000 | You don't have to live in an RV.
00:14:36.740 | You don't have to live on a boat.
00:14:39.020 | You can live in an ordinary house.
00:14:41.340 | I'll tell you what, there's something really great about a house.
00:14:46.300 | A comfortable house with comfortable furniture, a nice table that you can gather your family
00:14:52.140 | and friends around.
00:14:53.540 | You don't have to worry about all the weird stuff that comes from living weird.
00:14:57.620 | A great house really works well.
00:15:00.420 | You can buy a comfortable house, make it beautiful, make it nice, make it your own and you can
00:15:04.940 | do that without spending inordinate amounts of money.
00:15:09.420 | You can develop an interest in reasonable hobbies.
00:15:12.700 | Hobbies that give you dual benefits like mountain biking where it gave him the benefit of enjoyment
00:15:17.860 | of something he enjoyed doing while not costing all that much money and it gave him the benefits
00:15:24.260 | of the physical exercise.
00:15:25.260 | The fact that he was in great shape and he had this thing that he enjoyed doing that
00:15:28.300 | gave him a lot of joy and satisfaction and kept him in great shape.
00:15:32.100 | A simple decision to pursue mountain biking instead of motorcycle riding could make a
00:15:37.540 | big difference in your financial situation and in the size of your belt.
00:15:43.460 | Just one simple decision.
00:15:45.600 | Both are fun.
00:15:47.300 | Mountain biking is fun.
00:15:48.300 | I love riding a Harley.
00:15:49.940 | But the Harley costs $20,000 to $30,000 out of pocket and depreciates and costs maintenance
00:15:54.980 | and care and upkeep that's often hard to do yourself.
00:15:58.060 | And the Harley encourages sitting on it for hours at a time, getting no exercise, hanging
00:16:02.860 | out with lots of other fat bikers and going out and eating greasy meals as your target
00:16:07.220 | destination.
00:16:08.220 | That was very different than mountain biking.
00:16:10.980 | What does a great mountain bike cost?
00:16:12.140 | A thousand, a couple thousand bucks for a really nice one?
00:16:15.860 | Buy a great mountain bike, you can much more easily do the work yourself and it lends itself
00:16:20.580 | to hanging out with an active young sort of crowd which kept the accidental millionaire
00:16:24.500 | young and kept him in great shape.
00:16:27.860 | So choose carefully the hobbies, the lifestyle that you choose.
00:16:33.100 | Make good enough investments but put those structural things in place.
00:16:37.500 | Anytime somebody is really good at something, they tend to get dogged on.
00:16:40.300 | I always feel bad for David Bach who wrote the book The Automatic Millionaire.
00:16:43.580 | He gets dogged on for his latte factor.
00:16:45.540 | Well, good for him.
00:16:46.900 | He made a lot of money with that brand and I'm glad for him.
00:16:49.780 | But he was right about the idea of the automatic millionaire.
00:16:53.980 | If you just simply set up some basic structural things, buy some decent investments and then
00:16:59.180 | invest in them over time, you'll do fine.
00:17:02.980 | You don't need to have the best investment.
00:17:04.860 | It's got to be good enough and then stay invested and avoid the big errors.
00:17:09.740 | That's why if you get those basic structural things right, a well-chosen mate, a well-chosen
00:17:16.300 | job, a good geography, etc. so you're not constantly moving across the country, you're
00:17:21.060 | not bailing your kids out of prison, those kinds of things, just avoid the big errors
00:17:25.560 | and then add time.
00:17:27.900 | Add enough time for the income and the expenses and everything to work out.
00:17:33.220 | Time is one of the most magical factors.
00:17:35.480 | Time fixes almost any major financial problem.
00:17:39.520 | If you're in debt, well, you need some time to earn income and pay off the debt.
00:17:43.540 | Even if you make big, see air quotes in your head, big errors with money, time will fix
00:17:49.900 | those errors.
00:17:50.900 | Let's say that you buy a new house and you have to go out and fill the house with furniture.
00:17:56.820 | You do the classic thing of going to the furniture store and filling up the whole house with
00:18:00.500 | brand new furniture all purchased at 0%, no money down, monthly payments for 48 months.
00:18:07.300 | That's something that I can't imagine any financial person would recommend to do.
00:18:13.500 | It's a very expensive way to do it, risky way, etc. so nobody would recommend it.
00:18:19.940 | But you know how you fix that error?
00:18:23.260 | You just make those monthly payments on time, pay it off in four months and then keep the
00:18:27.900 | furniture for at least a decade or two.
00:18:30.600 | And the longer you keep the furniture, the lower the monthly cost of the furniture amortization
00:18:36.020 | schedule actually winds up being and the more reasonable of an expense it winds up being.
00:18:41.620 | If we could predict our lives with enough certainty so that we didn't have to make big
00:18:47.740 | changes, the best plan would be buy a new house, spec house from a builder, but a reasonable
00:18:54.140 | one, fill it with new furniture, reasonable furniture and just live there for 50 years.
00:19:04.580 | It works if you had time.
00:19:07.460 | Now we usually don't have time and there's other points of the conversation.
00:19:11.700 | But remember the story of my accidental millionaire.
00:19:14.380 | If you get annoyed by the radical stuff or if that's not you, don't think it has to be
00:19:20.020 | you.
00:19:22.500 | Recognize that the ordinary stuff might not make for super compelling podcasting, but
00:19:30.140 | it can make for wealthy people.
00:19:33.100 | I can't create a podcast every day on this kind of ordinary financial plan, but you can
00:19:40.140 | live really well on this kind of ordinary financial plan.
00:19:44.900 | It works and it's not a bad life.
00:19:50.700 | There's nothing that has to be run away from in the story that I described.
00:19:54.700 | It's not a bad life.
00:19:57.180 | It's a great life.
00:20:00.740 | That's the story of the accidental millionaire.
00:20:03.860 | As I close, I want to invite you today to simply just come by radicalpersonalfinance.com/store.
00:20:08.300 | Check out the store, see the courses that I have in there.
00:20:11.100 | The course that I think would be really applicable to you today is the career and income course,
00:20:15.240 | the radical personal finance guide to career and income planning.
00:20:18.660 | Whether you buy the course or not, just recognize that in these basic pillars that have to be
00:20:23.660 | there, one of those big ones is income and figuring out how to build a strong income
00:20:29.220 | in a way that's suitable for you, in a way that's agreeable for you, where you're not
00:20:33.980 | groaning about going into work on Monday morning.
00:20:37.140 | I wrapped up my best ideas for that in a course called the radical personal finance guide
00:20:40.740 | to career and income planning.
00:20:42.140 | Come on by radicalpersonalfinance.com/store and check that out.
00:20:45.180 | I hope it helps you.
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00:21:14.580 | Flying direct with Fiji Airways.
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