Reaching the 1M$ net worth is actually a very simple game and most people in America
could achieve this goal. There are almost 10M of those millionaires in the US alone! When you make it to 1M$, you become part of the top 10%.
But much more importantly, you’ll be welcomed to the J.Money Million Dollar Club and be part of this 163 members strong Club. The Double Comma Club.
To give myself the most chances to join the Club, I need a plan. And a commitment.
The Pledge : In order for me, Nick at TheMoneyMine, to become a millionaire, I pledge to stick to the following game plan
The 1 Million $$ Game Plan
To reach the 1M$ mark only requires a simple strategy, even if it is not easy, but with time and perseverance it is definitely within reach of many many people. Here’s my plan:
1. Tame those expenses
My wife and I recently got married and one of the first steps we are taking as a married couple is to merge all our finances. We already know that 80% of our spend goes into 4 categories that are : housing, travel, restaurants and groceries. If we can focus on those categories, we should be able to generate great results quickly (the 80/20 rule).
We’ve already cut on restaurants by not going out to lunch every day, which has increased our needs for groceries. We buy them in bulk from local organic producers, which is much cheaper and interestingly, more convenient for us. Our costs have been cut in half, which is amazing. The housing and travel buckets are next.
To manage those expenses, we track our Savings Rate. It currently stands at about 50% but we will need to wait until the end of year to get a reliable 12-month baseline. We’ll set our 2016 goals based on that baseline.
As long as this Savings Rate remains between 50% and 70%, we’ll be on track with our plan.
2. Set Investments on Auto-pilot
Our jobs offer some great opportunities in terms of investment: a 401k with an employer match, a Company Profit Share, an Employee Stock Purchase Program at a discount and an individual performance yearly bonus.
So much free money, we cannot NOT max-out everything! Our goals here are the traditional:
- Max-out 401k contributions,
- Max-out Company Stock purchases,
- Invest 100% of our bonuses.
With our post-tax accounts, we plan to deploy our remaining cash into :
- index funds with Vanguard (mainly VTSMX),
- diversify with Prosper / LendingClub now that they are available in Texas,
- potentially more real-estate investments.
This year is the first that we have started maxing out everything and I am pretty happy with the results so far. Our cash flow took a hit, but it forced us to reconsider some expenses. Another example that we strive under constraints.
3. Grow income
Even if the (vast) majority of our current income comes from our day jobs and that the Oil & Gas industry is going through a crisis, we have several opportunities for income growth:
- Side hustle is one of the leads we are following and we might have found an opportunity to start growing our income. Maybe $100 – $200 / month at the beginning, it’s something we want to pursue to see how far this can go.
- Real-estate is another source of income that should grow, as we have recently re-financed our investment home.
- Day work is still where the main growth is and we could grow our income by getting an international assignment in the next few years when the industry recovers.
This is definitely where we have the most potential and the most work to do (and the most fun!), as the first 2 steps are mostly on auto-pilot now.
Stairway to the Club
I am very optimistic with this Game Plan. If we get a stock market crash in the next 12-months, as it is due to happen, this should even help us long term as we’ll invest in the dip.
With a combination of high Savings Rate, investments mostly on auto-pilot and opportunities to generate more cash, I feel confident that I’ll reach the Millionaire Dollar Club in
2020, when I will be 39 (2016 update) 2018, when I will be 37. But to be sure, I’ll track progress once a year, as I track my progress towards my Financial Independence Day.
There are currently 163 members and 4 millionaires in the Million Dollar Club. Join us! Who’s dreaming big? 🙂