$10 Million Isn’t What it Used to Be

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I remember the day I realized I crossed the seven figure mark. The actual moment of crossing was lost because I didn’t know I was doing so well. There was no party or celebration.

The year was 1996, I was 32 years old and the bank needed a personal financial statement for an investment property purchase. The real estate partnership I had with my dad and brother was in full swing, but I wanted to add a few additional properties to my personal portfolio.

The bank asked for a personal financial statement. It had been a while since I filled one out so I was interested in where I would end up.

Don’t get me wrong. I track my finances closely. Each individual investment gets reviewed annually or semi-annually. I don’t always add up all the numbers to see where my net worth is, however.

As I gathered each asset and wrote its value down I could see this was going to be higher than I originally anticipated. My liquid investments had advanced a lot over the years and the real estate in my portfolio was adding a serious number to my net worth.

Once I had the assets added I knew I had crosses the million dollar mark before tallying the liabilities. Debt was low, even with all those rental properties.




When the final number was entered, my net worth stood at slightly over $1.2 million.

Most people would be excited if they discovered they were a millionaire. I was numb. I didn’t know what to think.

I was also depressed. Deep down I expected there would be some kind of positive feeling when I crossed the magical barrier. But, nothing. I was still me. I did not feel rich and certainly didn’t want to sell my tax practice. I enjoyed what I was doing.

And this depressed me the most. When I was a child I always wanted to be a millionaire and now that the goal was reached it didn’t make me feel different. What was I going to do now?

Growing up poor gave me a distorted illusion of what “rich” was. A million dollars was rich in my mind without understanding you can be rich with or without money. And now that I had a million dollars it didn’t change me. Something was wrong.

I shared the good news with Mrs. Accountant. She smiled and said, “That’s nice” as she went back to tending our first daughter, one year old at the time. Even my wife didn’t think it was all that big of a deal.

It became clear quickly why I wasn’t feeling the glory. In my mind the million had to be liquid, as in stocks, bonds, mutual funds and bank deposits. Much of my net worth was in income producing assets: a business and investment properties.

I never quite got my arms around the concept that I had arrived. After a while I found a way to let it go and not worry about it. Money, lots of it, would never give me the tingly feeling I expected it to. And crossing a net worth boundary wasn’t going to be something you feel as you cross it.

Such are the illusions of a young man.

Twenty Years Later

It was time for the mid-year review of my portfolio. Normally I wait until later in the summer, but I had a feeling I crossed another big threshold in my net worth. In fact, I was certain of it.

In the late 1990s my business exploded to the upside. Profits were very high and I was young enough and hungry enough to want to push hard. We started selling real estate holdings in the family partnership. By 2000 my real estate portfolio consisted of my farmstead, office building, and some real estate paper paying some very nice rates of return. No more dealing with tenants for me.




I kept adding excess cash to my index funds. Spending was always low because there wasn’t much I really wanted. I had my family and was completely satisfied with this awesome gift. There was nothing else I needed.

Late last year I was a whisker away from $10 million. With the continuing bull market I knew I crossed the threshold without as much as a twinge. I’ve been down this road before and expected nothing in the way of emotions this time.

Adding the assets always takes some time now. My liabilities are easy; I have a small mortgage of just over $100,000. The end.

Assets are scattered all over the place. I own the obligatory index funds in traditional IRAs, Roth IRAs, the HSA and business retirement accounts. The non-qualified account also uses index funds.

Real estate was next. I still hold a minor amount of paper on property, plus the farmstead and the office building. I estimated the values conservatively. No room for ego when calculating my net worth.

The hard part is the trusts. As an accountant I understand the value of using trusts to carry out my wishes when I leave this green earth. This leads to a number of entities. Gathering all the trust values required the most time.

Once the assets were tallied I sat back in my chair and wondered how my life ever turned out so good.

Remember the old adage: the first million is the hardest? Well, I crossed plenty of those in the last six months. The final number came in at $12,600,200.

Yes, I rounded! Real estate and the business are estimated, as I have said.

My net worth increased over 25% in six months! This is an astounding number to me. I’m sure it is to you too. Part of my luck stems from a solid increase in the index funds. Where I smoked it is from investments I made in the 1980s. Phillip Morris is one of my first individual stock purchases. I never sold. It kept growing and keeps growing. In the early days it was in a dividend reinvestment account so the dividends kept buying more shares. Morris later changed its name to Altria when it spun off Phillip Morris International a few years back. The dividend grows times two now.

A while back I bought some Tesla, Netflix, Facebook and a few other stocks. The “other” stocks did okay, going up with the market. I don’t have to tell you what Tesla, Netflix and Facebook did, do I?

Lost Dream

Twenty years ago I was depressed I missed the magical moment when I crossed from poor to millionaire. I expected something, I’m not sure what. But I expected it!

After the non-moment wore off I went back to doing what I always did. Nothing special. I ran my tax practice, read piles of books and satiated my curiosity whenever I could with a new project.

Since I invested nearly every dime I had in my paw, there were times money was tight. I subscribed to grandpa’s philosophy: Never take off the pile. I invested first and figured out how to pay the light bill later. What can I say? I always lived that way.

I always felt poor; still do. My goal was to return to the farm and twenty years ago we had just moved into the farmstead I still live in. My dreams were fulfilled. The office was out of the home. My business goals were simple: beat last year’s numbers. More clients, more electronically filed returns, more revenue. Always more. It was the only scorecard that mattered.

I drive bank repossessed cars and grow a significant portion of my own food. Mrs. Accountant loves canning and freezing our excess produce for winter consumption.

You want to hear the really sick part? Mrs. Accountant still refuses to buy any clothes unless it is marked waaaay down. And I mean way down! Like $3 pants and $3 shirts. It gets better. Underwear and socks are frequently purchased at Goodwill. You know, Goodwill sells undergarments with defects really cheap. My attitude is if they don’t have defects when purchased, they will about twelve minutes after I put them on. So I wear the cheap stuff.

Scorecard

Longtime readers of this blog know I muse periodically on why people like Warren Buffett and other very rich people still live frugal lifestyles. Buffett spends under $3 for breakfast he purchases at McDonalds on the way to work. Yes! On the way to work. At 86! He even uses coupons!!!

The exclamations points are for you, dear readers. I totally get why Elon Musk keeps starting new businesses and pushing forward even after snagging upwards of $300 million from his portion of the sale of PayPal. I get why Steve Jobs worked until his body failed. I know why Buffett says he skips to work every day at 86. I get why Jeff Bezos keeps building Amazon bigger when he is one of the richest people alive. I get it.




Do you?

Those guys all have more money than me by a massive amount. But once you reach a level where money is no longer a deciding factor or important, it becomes something else. A scorecard.

Working my business is not about more money. It is about providing value; doing something important; making a difference; finding fulfilling activities to occupy my time.

I invest and expect the investment to go up. I work really hard to make good investment decisions. If they go down my lifestyle will not change one bit. In reality, it doesn’t matter what happens.

But it does to me. I want to win. It is all a big game. And I like winning when I play. If I can’t win, or am not allowed to win, then I don’t want to play anymore.

In the office I still track my performance. I track my performance a lot more than I track my net worth that is for sure. I want to always keep growing.

There are things I wanted to do even after I crossed the million dollar mark. I wanted to farm, so I did. For a while. (A twenty year while, actually.) I backed away from the steers, but still have the acreage. Maybe I’ll go back into raising more animals, maybe not. Right now I have another goal I need to satisfy.

Everyone has dreams as a child. My dream was to grow up and be a writer. (I wanted to be a stock broker, too. That dream has also been fulfilled and I moved on.) I wrote my first full length novel in high school.

Earning a living writing is no easy task. Some of my work sold, but it wasn’t steady work and by then I had different plans. Still, the dream never died. I wanted to be a writer. A real writer.

Over the years I published a lot. The internet offered more publishing opportunities than ever before in history. But I didn’t feel like a “real” writer.

Now I have this blog and it is my dream. I write. I love writing and will keep doing so. The goal is to build traffic and profits. I call it ego, but it isn’t. It is a little boy inside me screaming out his dream. The sound is deafening.

My goals are detailed. Without wasting your time on the details, let me just say I want this blog to be a standalone business with employees and not a sidebar of my accounting practice.

Like Buffett, Musk and Bezos, I don’t need more money to make me happy or to put food on the table. My lifestyle will not change a bit if this blog grows to gargantuan size or fails. I just want it. That sounds so selfish and self-centered. It’s not.

Money is the scorecard to keep track of progress. Nothing more. Traffic statistics help me see how many people I am reaching; money allows me to see the difference I am making. I want lots of both.

I’ll spare you the gruesome details on how I plan to accomplish my goal. Sharing valuable ideas is more important. What I want to share is an insight you must have.

If you have already reached financial independence you already understand what I am about to say. For the rest of you, I want to share this one nugget of advice I wish I understood at a younger age: Stop worrying about what your net worth is. Relax. Don’t worry about becoming a millionaire. Live right and it will happen all by itself without any necessary worrying.

I missed the magic second when I went from under a million to over a million. It was only a second and if for some reason it did cause some sort of feeling or euphoria, it would have been short lived anyway and a drug only offered once in life. When I wasn’t looking, there it was. I went from less than a million to $1.2 million. The same happened when I went to eight figures. It still blows my mind. Eight figures? And it makes not a bit of difference in the world.

My frugality is not forced. I am frugal with my money because it is who I am. Impressing the neighbors is something I never did. Let the neighbors laugh. It doesn’t bother me.

Saving half your income is easy once you allow yourself the gift. Investing is easy when you are not trying to shoot the moon. Debts and a low net worth encourages people to gamble with their investments. It’s not necessary. You do NOT have to shoot the moon! It will happen faster than you imagine when you let go. Buying a hot stock tip or a flyer is sure to end badly. Timing the market or your index funds investments usually ends in tears.

The rules are simple. Spend less than you earn and invest in a broad variety of established businesses (index funds). The rest will take care of itself.

One day you, too, will realize you crossed a magic threshold of net worth and missed the moment it happened.

It works that way. Hope you weren’t expecting more.



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Keith Schroeder

38 Comments

  1. Andy on June 19, 2017 at 9:08 am

    I enjoy your articles! I found your site via jcollins. Congratulations on your success and I look forward to reading more of your articles.

    I started with the Boglehead philosophy back in 2007 and it had paid off huge. I was able to retire from the high stress IT career to the semi-retired life of self employment at age 41. My wife still works full time because she enjoys her job immensely. You’re right, lifestyle makes a HUGE difference. It really is that easy to live a frugal lifestyle and be really happy at the same time. For us the formula is not caring what other people think and not keeping up wit the jonses. I know, we’re un-american.

    I am a fellow Wisconsinite up in the Fox Valley area. Hope you’re having a great summer so far with this wet weather lately!

    • Keith Schroeder on June 19, 2017 at 9:40 am

      So you are the one haunting my analytics reports from the Fox Cities. Awesome! Drop me a line. We should have lunch sometime this summer. Warning: I love talking shop. WYSIWYG.

  2. Scott on June 19, 2017 at 11:49 am

    I’m another humble Wisconsinite that has Learned to work smarter instead of just harder because of blogs like yours!
    I’d love to hear more of your thoughts and angles on trusts. I will be working on an estate plan for my accumulations very soon. It looks like it can be a complicated and expensive process.
    Thanks

    • Francis A Vasquez Jr on June 20, 2017 at 7:59 pm

      Yes, I’d be interested in what types of trusts you hold as well and their purpose(s), particularly if any are perpetual trusts.

  3. Renard on June 19, 2017 at 2:26 pm

    Truly inspirational….but I gotta say ‘holy sweet little baby Jesus!’

    • Keith Schroeder on June 19, 2017 at 2:34 pm

      Jesus had nothing to do with it, but I did pray a lot in the early days. If I find the posts with the stories, I’ll link them. Things were bleak when I graduated from high school; there were no guarantees life would be a happy one. I was scared which motivated me to be so frugal. It left an indelible mark on my psyche.

  4. M Bowden on June 19, 2017 at 5:25 pm

    To think you could 10x your spending and still be under the 0.04% rule. Congrats! Exciting.

    Thank you for willing to be open with such a detail.

  5. Gene on June 19, 2017 at 9:14 pm

    I have read thousands of articles just like this article. The question I always ask after reading it. How do these people come across their obsession?

    I like my career, but not to the point of obsession. I think to be 10 + million dollars successful, you probably have to be a bit obsessed with your work.

    • Sarah on June 23, 2017 at 7:22 am

      Agree, I still haven’t found my “work” obsession either… 🙂

  6. Noah @ Money Metagame on June 20, 2017 at 1:42 am

    If you haven’t thought of it already, there’s one easy way to bump your traffic up a little bit. Update your net worth on the Rockstar Finance directory and you’ll take the #1 spot. I know I’m not the only person who decides to sort the net worth column, so getting some clicks should be easy from the top of the stack. (Or maybe that was the hidden purpose behind this post all along!)
    http://directory.rockstarfinance.com/personal-finance-blogs

    And thanks for sharing your net worth, I always suspected you were up there given your habits and personality, but it’s cool to see the wealth that your kind of lifestyle can grow over time. I’m sure it won’t be long before this blog gets huge and you’ll have to adjust that number even higher to account for it.

    • Keith Schroeder on June 20, 2017 at 6:18 am

      Yeah, I recently submitted to RockStar Finance. Also started donating monthly to their nonprofit (lowest level to start but plan on increasing over time). I gave them my net worth (not hidden) but they decided not to list it, nor am I highlighted as a supporter.

      • J. Money on June 22, 2017 at 6:09 am

        Hah – sorry about that! We thought it was a typo as usually it’s either that or someone’s trying to scam their way to the top of the list 😉 Just saw your latest update come through though and personally updated it for ya. Pretty inspiring stuff, brother!

        • Keith Schroeder on June 22, 2017 at 6:24 am

          No prolem, J. I actually wrote the blog post because Rockstar Finance asked for “my number”. At first I disregarded it, but I felt it was time to add everything up and see where I am at. I knew it was going to get big with the massive market rally, but Holy Smoo!!! After I added it up I decided to write this post focusing on the emotions of hitting milestones. Then another comment below pointed out I did well after I reached 7 figures twenty years ago when I was 32 with an 11% compounded return. It’s not as impressive compared to the market when you realize I kept adding to the pile for another 20 years.

          Kind readers, it is about time, not timing. If you start young enough the averages alone will make you very wealthy. After a while it turns into “just a numer”. It’s so anticlimactic which is a bit depressing. And then I keep skipping to work like I have a nervous tic. But I am happy. What else can I say.

  7. Dan on June 20, 2017 at 12:51 pm

    $1.2 M in 1996; $12.6 M in 2017. That works out to roughly an 11% compounded annual rate of return.
    The comparable number for the S&P 500 over that period is about 8.25%. That’s an impressive return on your investment.

    • Keith Schroeder on June 20, 2017 at 1:41 pm

      Remember, Dan, I added money over those years too. I didn’t stop investing! Not all money was in the market either. Some was in my home, some in my office, some in my business and some in other investments. Not all investments worked out. My rate of return beat the S&P index, I know. But that is not the point of my discussion. Money invested for a long time grows really big.

  8. Dave on June 21, 2017 at 8:37 am

    What % of your net worth is business, RE, liquid investments, etc? Which asset class do you attribute to the greatest multiplier to you net worth over the years?

    • Keith Schroeder on June 21, 2017 at 8:45 am

      Dave, business threw off the largest income stream, but I value the businesses low because you never know what they are really worth. Index funds did the best, RE the worst. My farm isn’t worth any more than I paid for it twenty years ago. Wisconsin RE is bad. I paid $120k for my office and it is worth somewhere between $150 and $200. I sold the rental in the late 90s and invested proceeds in index funds. Even with a so-called bad market it did quite well. Phillip Morris stock (and the spin off) blew everything away. My annual MO dividends are about what I paid for the stock back in the mid 80s. I don’t even watch it anymore. I’ll never spend it all.

  9. Physician on FIRE on June 21, 2017 at 8:38 am

    I’m impressed by all the things, but the most impressive is the fact that you remain completely grounded. I’m eleven years younger with 1/4 the net worth, and I feel validated when I read a story like yours. Yes, I use coupons for McDonald’s (the app, actually) and buy jeans at Goodwill, too. It’s part of what got me here and makes me happy. Why change?

    Cheers!
    -PoF
    p.s. if you want to grow blog traffic, add your Net Worth to the Rockstar Finance Blog Directory. People like to find out about #1.

    • Keith Schroeder on June 21, 2017 at 8:49 am

      I rarely dine out, preferring Mrs. Accountant’s home cooked meals. I brown bag every day. If I did eat at McDucks I would use coupons like Buffett.

      I sent Rockstar Finance my net worth, but they didn’t publish it or note that I support their programs on the directory page. My guess is J. Money is busier than all get-out and will get to it when he has time.

      • Physician on FIRE on June 21, 2017 at 1:07 pm

        You can update the directory with net worth yourself. The Giving Fund page is up to RSF, though. E-mail coming your way.

  10. Sarah on June 23, 2017 at 7:28 am

    “one nugget of advice I wish I understood at a younger age: Stop worrying about what your net worth is. Relax. Don’t worry about becoming a millionaire. Live right and it will happen all by itself without any necessary worrying.”

    Thanks, I needed to hear this. 🙂

    Keep following your passions, you inspire me!

  11. Dave K. on June 24, 2017 at 7:17 am

    Awesome post! After reading this article I decided to see what my net worth would be, and being a self employed business owner I’m close to seven figures without my business. Now you’ve got me curious….

  12. […] I’ve let go of my $10 Million Dream. Meanwhile, The Wealthy Accountant has surpassed it! How does he feel about his riches? $10 Million Isn’t What it Used to Be. […]

  13. Finance Patriot on June 25, 2017 at 7:03 am

    Congrats, I am FI at just over a million and retiring soon. We have a fairly sizable position in MO and it has done very well.

  14. Mr. Tako on June 25, 2017 at 6:18 pm

    Great read Keith! Totally enjoyed it!

    Like you my net worth just continues to creep up, and it totally doesn’t matter! My lifestyle is going to be pretty much the same regardless!

  15. Kenneth on June 27, 2017 at 6:25 am

    Hi Keith. Did you know the multi billionaire founder of Ikea buys his clothes at thrift stores, just because that is who he is, just like you (and me). http://www.newsweek.com/ikea-billionaire-kamprad-second-hand-clothes-435460

    My net worth is only $650,000. I am 67 and retired from full time work. Lately I have been driving Uber/Lyft part time. Gets me out of the house and generates some part time income. Even at this low level of net worth, we are able to save decent money and our net worth is steadily increasing in retirement. We just returned yesterday from a wonderful 2 week trip to France and Germany. I love retired life! If you and Mr. Ikea and Warren Buffett are still thrifty, that’s good enough for me!

    • Keith Schroeder on June 27, 2017 at 6:34 am

      Kenneth, you bring up a good point. My frugality isn’t forced. I can spend if the expense makes sense to me. Normally, I just want good value for my money. There has never been a time when I felt deprived.

  16. Financial Samurai on July 1, 2017 at 10:11 am

    Congratulations on getting to $10 million!

    Even though $10 million isn’t what it used to be, it’s still a pretty good net worth. I think when you get to $25 million you’ll feel it is a massive amount of money that will be hard to spend in a lifetime.

    Let us know!

    Sam

    • Keith Schroeder on July 1, 2017 at 10:20 am

      What I didn’t mention, Sam, is how much I’ll really have if I live another 20 or so years. If I make to my mid 70s or 80, my net worth should hit $100 million under “normal” market conditions. Warren Buffett once said he knew he would have a lot of money if lived long enough. Time is the only real factor if you avoid day trading and keep saving. If an old farm boy from the backwoods of Wisconsin can break $10 million, and maybe even $100 million, what excuse can anyone have? Doug Nordman recently said your net worth is a function of your savings rate and fees on your investments. He is right; I am living proof.

      I wish I could share all my plans. The time is not yet right. Soon. There is so much I can do to help make our society better. People will be shocked when I peal back the veneer and reveal what is possible to anyone, even the most downtrodden of our nation. You, FS, and people like you are the solution to many ills afflicting our society. We live in a Gilded Age. Now we need to get people to realize it and feel it.

      • Steve on July 4, 2017 at 11:58 pm

        Hey, I’m in, sounds exciting! Not only have I been travelling the world my whole life (have some connections), I’m also at a point where my significant wealth could be used for good. In other words, I sure could use a ‘wealthy accountant’!

  17. Dividend Growth Investor on July 1, 2017 at 6:20 pm

    Hi Keith,
    I just found this post from an exchange you had with Carl. It is amazing to read your story. It confirms so many of the things I have learned so far:

    1) There are plenty of millionaire next door (MND) type individuals like yourself who look like everyday average Joes. These are frugal folks because they like it.
    2) They have achieved their net worth with high level of savings and investing them wisely
    3) The net worth could be traced to a cash generator activity that the MND type is really passionate about. They love what they do, which makes them successful at it – so they do not want to “retire”. They will keep doing what they are doing, because they are financially independent.
    4) Compounding is truly a magical. Even at 7%/year, and if you never add another dime to your nest egg, you will be worth $100M in 30 years.

    And you know what – a friend of mine shared that a lot of successful investors tend to live for a very long time. Buffett, Munger, Kahn Brothers, Sir John Templeton, Walter Schloss, Ben Graham etc.. Perhaps it is the fact that they keep their minds occupied, engaged in learning, and reasonably optimistic, that keeps them alive for so long.

    Either way, I wish you good luck in your journey. I am sure that you will achieve success in everything you set your mind to.

    Best Regards,

    DGI

  18. Church on August 7, 2017 at 10:26 pm

    I like Grandpa’s philosophy, seems like all of those heroes were forged from the same salt and iron.

    Not sure about your skivvies, but hey, I’ll try anything once.

    Thanks for the reflection thoughts. I, myself, am guilty of getting too caught up with the numbers and sometimes forget to live. This is good to hear.

  19. […] you know what thirty years of investing half your income in index funds can do to you? That’s right! First you blow past a million and before you know it the seven figure account is […]

  20. Happy Frugaler on October 10, 2017 at 6:44 pm

    This has been a great read and is definitely inspiring.

    Like you, I didn’t get too excited when crossing $1 million or $2 million (the market did most of it)…

    The magic $10 million though…I’d be excited by that. It’s the number that would allow me to say “whatever, I am going to focus the next 150 years of my life (science is crazy now) on what I enjoy doing day-in and day-out, even if I make less money doing it”…

    Now that I type that, I realize it’s crazy. You got to $10 million by making that decision first and focusing on the perfect triangle – something you were good at, that you were passionate about, that people will pay for…Maybe it’s never too early to start the dream.

    Thanks for your post.

    Happy Frugaler

  21. whitecollarredneck on October 11, 2017 at 10:56 am

    Great story, thanks for sharing. I am really enjoying your blog.
    I just crossed the 6 figure mark yesterday and I have to say it felt really good.
    It should just get easier from here.

    • Keith Schroeder on October 11, 2017 at 11:07 am

      Woo hoo!!! Awesome work, White Collar!!! Note: It may not get easier, but it does get a lot more fun. (Everything is more fun with money, just ask Mrs. Accountant.)

  22. […] that is how a broke farmer became a millionaire He never quit trying; he never gave […]

  23. Jonathan on November 21, 2017 at 8:51 pm

    I don’t think I’m as frugal as you are, but share a similar philosophy. I don’t want to burn money that’s just gone. I don’t have a problem with spending money on things that could lead to more money, but keeping my monthly expenses low makes me feel a lot more free and powerful frankly. If I was making $20,000/month in passive income and spending $15,000 on a lavish lifestyle with a larger house, nicer car, frequent vacations, etc., I wouldn’t personally feel richer and more “well off” than if I was only spending $6,000/month and still living a very good life (but not a crazy luxurious one) and saving / reinvesting the rest. It feels like a lot of financial flexibility, so that if something happened to one or two investments and my monthly income decreases, I’d STILL be living below my means. Plus, the more that I don’t spend, the more I can invest into new opportunities that increase that number further. Plus, I turn 35 next month, so the value of investing at this point in time is only magnified because I’m still relatively young. If I spent $10,000 on something meaningless versus if I invested $10,000, the difference between each decision is magnified over the next 20 years. One path is $0, the money is gone, the other, who knows how much $10K turns into after 20 years? Depends how it’s invested, but certainly could be a heck of a lot more money.

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