From Barely Scraping By to Saving $65,000 a Year
Growing up in a small town in West Texas, I never thought it would be possible to be a millionaire.
My family lived on a small 20-acre farm just north of Lubbock, Texas. Dad was a territory sales rep, selling automobile glass to body shops in the surrounding small towns. That wasn’t a very lucrative job, and I can assure you, he had no aspirations to be a millionaire. His only goal was to provide for his family.
After I turned 23 years old, I left the farm and moved to Dallas. Dallas was an interesting place then. It had the Dallas Cowboys, with Tom Landry, a TV show named in its honor (Dallas) and one of the best college football teams in the country (SMU). It was an exciting place to be, especially for a young country boy like myself.
I met my wife, Lori, in Dallas. I had a decent job, but soon after we got married, the savings and loan scandal brought down the real estate industry, collapsed the economy and put me out of work. Times were tough.
But, like most people, I scraped together enough jobs to pay our mortgage, put food on the table and go to an occasional movie. However, after a couple of years of marriage, my wife laid on some truth that rocked my world. She said, “I’m not having kids with you. I don’t think you can support them.”
I convinced her that if we had kids, I would figure out a way to support them.
Over the next six years, we had four daughters. I still had no clue how much money I needed to make, or save, to really provide for my family. Like most, I was just doing the best I could to get by.
So, one day I decided to meet with a financial planner to finally figure out how much it would take to support my wife and kids. I told him I wanted to prepare in advance to pay for four cars, four college tuitions, four weddings and one retirement.
He did his calculations for what felt like the longest 20 minutes of my life. And then he told me I needed to save $65,000 each year, for the next 20 years, if I wanted to do all that.
I was blown away. At that time, I could only save $6,500 a year after all our expenses were paid and even that was a challenge.
Fortunately, around this time in my life, I ran into a guy who was starting a little mastermind group. We studied the book, Think and Grow Rich, together and a few of the key ideas stuck with me, like:
- If you think you are beaten, you are.
- If you think you dare not, you don’t.
- Life’s battles don’t always go to the stronger or faster man, but sooner or later the man who wins is the man who thinks he can.
Before I met with the financial planner, the only real money-related “goal,” (if you can even call it a goal), was to just provide for my family. It was the same goal my dad had. And it’s the same goal that many hard-working producers have. However, now that I had quantified that goal, I had to face reality. Saving $65,000 a year was 10 times more than my current savings level.
I ran the numbers and found I’d have to earn an extra $100,000 gross to net $65,000 after taxes. As I thought about this, I wrestled between two competing thoughts:
a) I could continue making excuses as to why I couldn’t do this… I’m an outsider… I have no college degree… I have no mentor. Or…
b) I could act on the principles I learned in my mastermind group and just do it.
The thought of having to one day look in the eyes of my daughters and say, “I’m sorry, honey. I don’t have money to send you to college or to pay for a nice wedding,” motivated me.
Fast forward 20 years, and I’m happy to report that I accomplished all the things I set out to do for my family back then… well, almost. There haven’t been four weddings yet. But I did pay for four cars, four college tuitions, our retirement is fully funded, and I’ve paid for one wedding so far.
The reason I share this story with you is because I realized my story is not that unique. I’ve gotten to know a lot of producers over the past 25 years, and I see many have the same mindset I had. They tell me, “I just want to provide for my family.” But they haven’t taken the time to look at the numbers to figure out how much they should really be saving.
Financial advisors say we need 22 times our annual expense in our retirement account when we hang it up. That means that if you want a $100,000 lifestyle in retirement, you need $2.2 million in your retirement account. To reach that goal, all you have to do is save $50,000 a year for 20 years at 6 percent and you’ll retire with $2,165,000. You can do it.