They call it the double comma club and membership is open to anyone. Well, it’s open to anyone that is willing to practice simple disciplines of saving, investing, and living below their means. Let me clarify that when I say “living below their means”, I am not saying you have to live like a college student, instead you simply need to spend less than you earn and invest the difference. Ideally you should be saving and investing at least 20% of your income (although I recommend saving 50% as you build your income).
J. Money over at Budgets are Sexy has started “The Million Dollar Club” for anyone who desires to become a millionaire can join. It started out of his own desire and pursuit of reaching a net worth of $1M dollars. Then in order to add some accountability and support he opened up the club to anyone else that was serious about joining the double comma club.
As many of you that have been reading for any length of time, I want to join the Million Dollar Club 10 times over with my goal to reach a net worth of $10M by the time I am 48 (I am 28 now). However, you don’t get to $10M without hitting the $1M milestone along the way. This is my official pledge to become a millionaire.
How to become a millionaire
When you break it down to a few simple practices, it’s really not nearly as hard as so many think to become a millionaire.
Here are the 3 activities that will get me to the all coveted millionaire status (and the can get you there too):
- Max out all pre-tax accounts every year: 401K, IRA, HSA
- Pay off the mortgage, following an accelerated plan.
- Save and invest 50% of our gross income less taxes (inclusive of retirement contributions and extra mortgage payments)
That’s right it’s only 3 simple activities and millionaire status is achievable. The time it takes to reach that status will depends on many different variables, both controllable and uncontrollable. But over long enough time-frame you can join the Million Dollar Club by following these 3 simple disciplines consistently over time. Based on the plan I put together to reach $10M following these simple practices, my estimated initiation into the club will be in January of 2020.
You can go read the detailed plan for the details (linked here), but in the meantime let me share with you the outline of my milestones:
Note: My next check in on my journey to $10M is in January of 2016, where I need to be at $301,688, which based on my current forecast is doable. In fact I am actually forecasting a Net Worth of $305,000 by then. The rate of return has not been anything near 8.8% in 2015 on any of our investments, but we have been on fire with respect to increasing our income.
If you want to follow along I am documenting every step of the way right here on the blog. There is an entire page dedicated to tracking all my financial stats and I publish a detailed financial report each and every month (example here). You will also notice the most current net worth reading in the top right corner of the side bar.
Do you want to join the million dollar club? How do you plan to get there? When do you plan to gain entry into the double comma club? Lastly, are your goals bigger than $1M? I would love to hear from you in the comments below.
– Gen Y Finance Guy
PS: Here are my favorite ways to track this stuff:
- The “Financial Stats” spreadsheet – a simple Excel template I created to provide the tables and charts you see in this post as well as on the Financial Stats Page. If you would like a copy of this spreadsheet, sign up for my email list below or at the top of the page and I will send you a copy.
- Mint.com (free) – Mint is great for setting up budgets and automating the tracking of your actual spending habits vs. the budgets you set.
- PersonalCapital.com (free) – This is like Mint, but is geared towards investments and net worth tracking.
Personal Capital allows you to aggregate your entire financial life into one account. All you need to do to see all your accounts in one place is log in to Personal Capital and voila! But it doesn’t stop there. They even automatically classify all your income and expenses for you. You get a FREE and fully AUTOMATED tracking system!