How a Broke Farmer Became a Millionaire

Subscribers get two chances to win a free audio copy of Jim Collins's The Simple Path to Wealth in December. Mr. Money Mustache reads the Forward. Don't miss out. Subscribe today!

1978: It was hot and dry the summer of 1978 in northeast Wisconsin and I hated it. My fourteenth birthday was around the corner and I was recently out of the hospital from heart surgery. The doctor said I needed to sit still as I healed over the next six months and my grandmother did her best to enforce the rule. I was having none of it. I wanted to run, bike and play.

It was the best of times as long as you ignored the building storm clouds on the horizon. Inflation was a problem, but interest rates hadn’t risen enough yet to reflect the new reality. The government encouraged borrowing by farmers through Land Banks.

We were dumb farmers and dumb farmers were soon to learn they had no place in the new world order. Yes, farm prices were high due to inflation while interest rates were lower. Unfortunately, these situations don’t last for long.

Ground was broke on the new milking parlor within an hour of the moment I went under the knife. I was young and innocent and full of faith. As I recovered in the hospital those two weeks I decided to fill my time reading the Bible to other patients less fortunate than me. God had plans for the Bible-thumper.

1980: The hot wind from the storm clouds began to blow. Interest rates climbed as the first recession of the 1980s was about to begin. It was only a warning shot.

Healed from heart surgery, it was learned my surgeon was deathly ill from AIDS, except it wasn’t called AIDS back then and blood wasn’t screened either. The surgeon may have nicked his finger from an infected patient or he may have been gay. I never found out. All I know is I survived without infection. A few years later the man who saved my life was dead.

The World’s Luckiest Man went about life as if nothing were wrong. But plenty was wrong. The family farm tilled by our blood for five generations was in deep trouble and we were all in denial. The debt burden had continued growing and rising interest rates coupled with the first crack in agricultural prices brought us to the edge.

Deep down I knew the farm was in trouble. Some family members started gambling in futures looking for the big score to solve the farm’s money problems. Too young to really understand and enjoying my first real girlfriend distracted me from the truth. These were the last good days of my childhood. A nightmare was about to begin that would scar me so deep I would never again forget the fear.

High school wasn’t a high priority for me. I assumed my life would be filled as a farmer, as my father, grandfather and great-grandfather before me. Excluding my senior year, the only thing that stuck with me is a lesson from Social Studies: the 1929 stock market crash. We spent one day only on the event, but I was completely hooked. I had to understand why things happened the way they did back then. The lust to understand the crash follows me to this day. This is the very moment I decided my career if farming didn’t turn out: stock broker.




1982: The winter of 1981/82 was the cruelest. The farm’s coffers were depleted and heavy snow caused the free stall barn roof holding the milk cows to collapse. The insurance was delayed and there was no money to fix the problem. The barn cleaner froze tight and manure piled up. Those animals suffered like nothing I’ve seen before or since. I shiver from the memory now 35 years old. Another scar was created.

The family farm was gone. The collapsed barn roof hastened the inevitable. Maybe God was merciful to me after all. But those beautiful animals paid a dear price.

Spring came and the clean-up began. Lawsuits flew as a last desperate hope was cast to cling to a past no longer possible for our future.

It was only four years ago I left the hospital excited to see our new milking parlor. Gone were the grand emotions of seeing our farm grow with cutting edge modern technology. The cows were now gone. My uncle and I were the last to clean up the mess. My dad started an agricultural repair business he runs to this day and is very successful. You can’t keep a good man down. My mother sold Tupperware to pay the bills as my dad’s business struggled for traction during those early days. My mother sold a lot of burping bowls; so many in fact she earned a company car.

The second recession of the early 1980s was biting deep as I graduated from high school with the barest of margins between passing and failing. I still held hope I would be a farmer as illogical as that looks in hindsight.

Some young stock remained and the fields still required planting and later harvesting. Still, most days that summer I spent playing a card game called Rummy  with my uncle and throwing darts at a dartboard with a picture of the Ayatollah Khomeini.  (Remember the American hostages in Iran?) The summer went on forever.

I discovered a love for reading my senior year in high school. The summer of 1982 was my first opportunity to dig deep into the knowledge books had to offer.

Back then they had something called Value Line in the library. They’re still around, but nothing like it was back then. Value Line was a treasure trove of information on publicly listed companies. I reached the age of majority in June with no real future before me while I invested heavily into myself without even knowing it.

The family was broke, the farm damaged beyond repair. I was broke, too, in a manner of speaking. The first 18 years of life I spent as close to nothing as you can without saying nothing. Money from my birth went into a passbook savings account. Money from birthdays, confirmation (church) and high school graduation added to the stack.

Passbooks actually had a reasonable return back then and I loved watching that puppy grow. The passbook wasn’t computerized. They stamped the numbers in a real, honest-to-God, passbook! I was thrilled each quarter when I could hitch a ride to town to the State Bank and have them stamp the accumulated interest since the recording of last quarter’s interest.

Added to my passbook was income from working on the farm. My wage for seven day work weeks of fourteen hour days was $40. Yup, ten bucks a week. I didn’t complain much; I now realized how bad things were. I was more concerned what I would do when the bankruptcy of the farm was finalized.

In November the farm was gone. The homesteads were preserved, but most of the land and all the cattle and machinery were part of history. It was cold that winter. We had no money to heat the rickety farmhouse. At least we had a place to stay.




1983: I went to work for my dad’s agricultural repair business once the farm was wrapped up. The pay wasn’t any better, though I was earning $400 a month by the time I quit. We struggled to survive.

My passbook was a beacon of hope for me. Nearly $10,000 had accumulated over my years of youth.

I hated every moment working for my dad. The work was hard and did not thrill me. I wanted a different life. There were no other options in the deep recession of 1982. There were no jobs available in my community. None. It was work for dad or starve. I worked.

My investing research brought me to my stock first purchases. Philip Morris was one of my first buys and has clung to me like smoke in a bar. I played with other ideas to learn more about investing. Most of my passbook money was cashed in shortly after my 18th birthday and placed in growth and income mutual funds. The timing couldn’t have been better. August of 1982 was the launch of one of the biggest bull markets in history.

I still own my FFA jacket. Those were fond days.

By the time the farm was gone and I was turning a wrench in my dad’s company I knew I needed another source of income. In high school I was in the Future Farmers of America (FFA). To raise money for our group we sold light bulbs. This is when I learned I could sell an Eskimo an ice cube.

Every year I was in FFA I sold more light bulbs than anyone else by a large margin. When the group decided to sell seeds, I topped that list as well. I could sell anything!

By the time 1983 arrived I found a company called Specialty Merchandising Corporation (SMC). I think they’re still around, but they have a lot of complaints online.

SMC was different in 1982-85. I was able to buy junk, ah, I mean stuff through them mostly made in China (yes, it’s my fault China ever got a foothold in our economy (sorry)) at wholesale. My selling skills from high school did not work as well as an adult. People will waste money on stuff sold by the school without question. (Did I say that?) When an adult goober like me showed up they questioned.

My advantage was persistence. Okay, stubbornness. I didn’t give up not because I was smart or energetic; I was desperate. The profits were thin, but added up as time went by.

One more side gig appeared at this time in my life. In 1982 I prepared my first tax return. (Later, a client with several unfiled tax returns, would give me the chance to prepare tax returns back to tax year 1978.) Let me be clear; I prepared a tax return. I consider it my start date. (Laugh all you want; it’s my story.)

1984: The economy was improving in the Rust Belt, but it did a certain neophyte accountant no good.

The good news was my mutual funds and individual stocks were tucked in for the ride to the moon with the stock market. Profits from tax returns and SMC added to my meager wages working for the family business. In 1984 I was a poor farmer with no debt, no bills (living at home with my folks) and over $50,000 invested.

The spring of 1984 I made more money preparing tax returns than I did working all year, 90 hours a week, swinging a hammer. Thank God, business in the ag repair industry was slow during tax season. Thank God the repair business was slow over the holidays so I could sell like a Wildman for the Christmas holiday. It made a difference.

1986: My investments reached $200,000; it was time for vacation. I quit working for dad (it was a minor family crisis), bought a mobile home in Forest Junction and read books all day and drank coffee. The amount of information I consumed during this gap year was immense.

I was starting to grow up, but there was a bit more to go.

1987: The most fantastic thing to ever happen to me happened in 1987; I met Mrs. Accountant! (You thought I was going to say I made a pile of money in the stock market crash of ’87, didn’t you?)

A respectable man I am, but finding an awesome woman like Mrs. Accountant only made me consider getting a “real” job.

That would all change one year and six days from the day I met her.. Mrs. Accountant forced me to marry her and she wasn’t even knocked up!




1988: One year and six days from the day we met we were married. While going through orientation with the minister it was brought up I do not work. Good husbands work and the church had an open position for a janitor.

I took the job. It paid $7.65 an hour. Not much even in 1988, but honest labor.

1989: I hated swilling toilets for a living about as much as I enjoyed turning a wrench and swinging a hammer for dad. A year and bit later I quit. Good for nothing husband!

SMC was history by now, too. Tax work paid the real bills. And I found another profit engine: real estate. We bought our first home (mobile homes don’t count) and investment property.

My net worth was climbing slowly now. I estimate my net worth hovered around $300,000. The ’87 crash had recovered and I was still adding to the stack. However, a woman entered my life and for the first time did some spending as part of my mating ritual. Thank the powers that be it worked or I’d still be single!

We tend to remember the good times of our youth and forget the rest. As long as we learned the lessons we’ll be fine.

1996: The first years as a full-time tax practice were difficult. I made money when my costs were zero and I did returns by hand. As a “real” business I automated and computers and printers were ungodly expensive. It took three years before I turned a profit. My buffer of investments was my only comfort (and a friendly snuggle from a certain young lady nursing our first child).

To keep the finances in the black, Mrs. Accountant and I took in foster kids until our daughter was born. They paid $1,000 per month to take foster children back then because we took high schoolers. It was a challenge to say the least.

Real estate’s best days were in the 1970s. High inflation meant leverage amplified gains by several magnitudes of order. Tax law changes in 1981 and 1987 reduced some of the benefits of investment property ownership and real estate inflation was back to normal levels while interest rates remained historically high.

Real estate was still profitable for collecting rents in our locality. My dad, brother and I formed a partnership so we could by more properties. Without going into details, all I can say is we owed a lot. I mean a real lot!

Around this time the bank demanded a personal financial statement because we had a modest loan on our investment properties. When I added all the numbers and subtracted the small loan on our primary residence and my portion of the loan for the rentals, it tallied to $1.2 million. I was stunned.

The mutual funds and stocks were worth close to $850,000. Our personal residence had maybe $30,000 of equity (it was a small home worth maybe $70,000). LuK Enterprises, the family partnership for the rentals, was worth approximately $350,000 for my pro rata share of ownership; the original investment was $105,000. The business was still in the home so I valued it at zero. In reality, the tax practice was worth $200,000 to $250,000, I estimate.

The next year I bought the office building my tax practice currently runs out of and the farm I currently live at. We sold our home in town for a $40,000 profit.

 

And that is how a broke farmer became a millionaire He never quit trying; he never gave up.

As Dickens said: It was the best of times; it was the worst of times.

And I wouldn’t trade them for all the money in the world.



The Wealthy Accountant and ADP partnership gives you top notch payroll service and support and a 20% discount. Click this banner or contact ADP by phone or email. Mention The Wealthy Accountant so you get your discount.

Keith Schroeder

13 Comments

  1. white collar red neck on October 13, 2017 at 7:54 am

    It really shows the time-value of money.
    I don’t doubt that Mrs. Accountant has been a major blessing – the women in our lives keep us grounded and help us soar.
    This is really well written, you may just have met your wish of becoming a writer.
    The “death of the family farm” is heartbreaking for any agrarian, memories of my bucolic childhood are sweet but moving steadily further away.
    Thanks for the encouragement to chase dreams. Your determination and forthrightness are hallmarks I wish to posses myself.

    • Keith Schroeder on October 13, 2017 at 8:00 am

      The journey is the important part. Sometimes people only see the current snapshot without knowing the background. If it help others achieve their goals and FI, all the better.

  2. Mr. Freaky Frugal on October 13, 2017 at 8:32 am

    Wow, that is quite a story!

    “That would all change one year and six days from the day I met her.. Mrs. Accountant forced me to marry her and she wasn’t even knocked up!” I’d like to hear the story behind that story. 🙂

    I’m just a little older than you and I remember the late 70s and early 80s. I grew up in a middle-class suburb of Detroit and those were hard times. I graduated college in 1982 and there were no job prospects for a Psychology Major in the Detroit area – unemployment was over 10%. I did meet the future Mrs. Freaky Frugal as a senior though. So not a total loss.

    Anyway, I moved to North Carolina, got an MBA and married, moved to Philly for a job, got a Master’s in Comp-Sci and spent the rest of my career as a programmer of one sort or another. Now I’m FIREd.

    • Keith Schroeder on October 13, 2017 at 8:55 am

      I’ve alluded to this story in the past, but here is the Reader’s Digest version, Mr. Frugal.

      About six months after Mrs. Accountant and I met I mentioned it would be nice to get engaged for Christmas. Mrs. Accountant says, “When do you want to get married?” I mention the one year anniversary of our chance encounter. She goes, “Well, if we’re getting married then we need to book a hall, talk to the minister, hire a DJ, get the cake, order invitations. . . ” The next thing I know the preacher is asking me if I’d like to stand here. I said, “I do.” “I now pronounce you man and wife.”

      What! I never proposed yet! Been married 29 years to that woman and I’m still waiting for a chance to ask for her hand in marriage. Someday. I swear, someday I’ll get the courage to take a knee, hold her hand and say, “Will you marry me?” I’ll be nervous as all get-out. What if he says no?

      You may think I ad lib, but I’m not far off the mark. When I said I was thinking about it, she wasn’t letting a sucker, ah, I mean me (a live prospect) get away. Mrs. Accountant and I have an awesome relationship. We both love joking about this story even if I embellish just a wee bit.

      A wee bit.

  3. FullTimeFinance on October 13, 2017 at 11:40 am

    Quite a winding path. I always find it interesting reading people’s financial paths. The common theme for self made folks often seems to be some financial hardships on the road motivating them to not relive it or there kids not to do so.

  4. Hard L on October 13, 2017 at 3:08 pm

    “…and I took in foster kids until our daughter was born. They paid $1,000 per month to take foster children back then because we took high schoolers. It was a challenge to say the least.”. Nice turn of a phrase, to say the least, and funny! (Come on, honey…how hard can it be? We were teenagers not that long ago and we turned out okay, right? Honey? Honey, it’s one thousand dollars!)

    • Keith Schroeder on October 13, 2017 at 4:40 pm

      Mrs. Accountant and I had foster kids on our bucket list, Hard L. Only once we agreed to take these kids in did we learn the stipend was so large. Best is that foster care stipends are tax-free.

  5. TPL on October 13, 2017 at 4:29 pm

    Thank you for this article (and all others)

    Ever since I started reading your blog a couple of months ago I have quickly developed deep respect for your discipline since you were young, and how you have embraced your past and how you have converted it to your strengths. You have demonstrated that persistence, hard work and a will to learn will push a person to anywhere he or she wants to be.

    I forwarded this article to a friend as I believe it will encourage him just as it has encouraged me.

    • Keith Schroeder on October 13, 2017 at 4:38 pm

      Thank you for the kind words, TPL, and for passing my work along.

  6. Patrick on October 13, 2017 at 10:31 pm

    Hi Keith,
    Your life-story is similar to mine. I’m a chartered accountant/tax agent. What surprises me is that you managed to attract a lot of clients even though a) you were not a qualified accountant, b) you had little tax experience and c) the clients had to find you out in the country! Here where I practise, it is mandatory a) to be a qualified accountant and b) to have at least two years experience. And if you do not operate from a shop-front in a major shopping area, you are at an extreme disadvantage.

    • Keith Schroeder on October 14, 2017 at 8:00 am

      There is no competition out in the boondocks, Patrick. It started with one person asking if I could do his return. Word spread. Once I knew I was on to something I offered my services to everyone I met. I tell my story a lot because it shows you can do the exceptional in an unusual way.

  7. Joey Graziano on October 17, 2017 at 11:54 am

    I really love this story. I grew up in the rural eastern part of the Carolinas and our backgrounds are very similar. Like you, I prospered throughout the years saving and investing in small businesses that I created like computer repair and landscaping. All throughout my life I have invested even to the point that I had to eat two meals a day when times were bad. However, by the time I was 30, I was able to pay cash for my home and college using the dividends from my childhood investments. I am only 32, and I can actually see early retirement around the corner (although I plan to work till I die, I love what I do).

    I am now inspired by your story. I think I may write a long-form post like this or perhaps a small ebook. I feel a true calling to deliver stories like this to my local community and help the economically depressed societies. Thank you very much for sharing!

  8. This Is All an Illusion | The Wealthy Accountant on October 18, 2017 at 7:16 am

    […] lessons in finance growing up on a farm where the family is bankrupted just as I entered adulthood still didn’t stop my progress. Go […]

Leave a Comment





%d bloggers like this: