Secrets of Self-Made Millionaires

Secrets of Self-Made Millionaires

They’re just like you. But with lots of money.

By Kristyn Kusek Lewis

Success Stories

pileofmoney.jpg When you think “millionaire,” what image comes
to mind? For many of us, it’s a flashy Wall Street banker type who
flies a private jet, collects cars and lives the kind of decadent
lifestyle that would make Donald Trump proud.

But
many modern millionaires live in middle-class neighborhoods, work
full-time and shop in discount stores like the rest of us. What
motivates them isn’t material possessions but the choices that money
can bring: “For the rich, it’s not about getting more stuff. It’s about
having the freedom to make almost any decision you want,” says T. Harv
Eker, author of Secrets of the Millionaire Mind. Wealth means you can
send your child to any school or quit a job you don’t like.

According
to the Spectrem Wealth Study, an annual survey of America’s wealthy,
there are more people living the good life than ever before—the number
of millionaires nearly doubled in the last decade. And the rich are
getting richer. To make it onto the Forbes 400 list of the richest
Americans, a mere billionaire no longer makes the cut. This year you
needed a net worth of at least $1.3 billion.

If more people
are getting richer than ever, why shouldn’t you be one of them? Here,
five people who have at least a million dollars in liquid assets share
the secrets that helped them get there.

1. Set your sights on where you’re going
Twenty
years ago, Jeff Harris hardly seemed on the road to wealth. He was a
college dropout who struggled to support his wife, DeAnn, and three
kids, working as a grocery store clerk and at a junkyard where he
melted scrap metal alongside convicts. “At times we were so broke that
we washed our clothes in the bathtub because we couldn’t afford the
Laundromat.” Now he’s a 49-year-old investment advisor and
multimillionaire in York, South Carolina.

There was one big
reason Jeff pulled ahead of the pack: He always knew he’d be rich. The
reality is that 80 percent of Americans worth at least $5 million grew
up in middle-class or lesser households, just like Jeff.

Wanting
to be wealthy is a crucial first step. Says Eker, “The biggest obstacle
to wealth is fear. People are afraid to think big, but if you think
small, you’ll only achieve small things.”

It all started for
Jeff when he met a stockbroker at a Christmas party. “Talking to him,
it felt like discovering fire,” he says. “I started reading books about
investing during my breaks at the grocery store, and I began putting
$25 a month in a mutual fund.” Next he taught a class at a local
community college on investing. His students became his first clients,
which led to his investment practice. “There were lots of struggles,”
says Jeff, “but what got me through it was believing with all my heart
that I would succeed.”

2. Educate yourself
When
Steve Maxwell graduated from college, he had an engineering degree and
a high-tech job—but he couldn’t balance his checkbook. “I took one
finance class in college but dropped it to go on a ski trip,” says the
45-year-old father of three, who lives in Windsor, Colorado. “I
actually had to go to my bank and ask them to teach me how to read my
statement.”

One of the biggest obstacles to making money is
not understanding it: Thousands of us avoid investing because we just
don’t get it. But to make money, you must be financially literate. “It
bothered me that I didn’t understand this stuff,” says Steve, “so I
read books and magazines about money management and investing, and I
asked every financial whiz I knew to explain things to me.”

He
and his wife started applying the lessons: They made a point to live
below their means. They never bought on impulse, always negotiated
better deals (on their cars, cable bills, furniture) and stayed in
their home long after they could afford a more expensive one. They also
put 20 percent of their annual salary into investments.

Within
ten years, they were millionaires, and people were coming to Steve for
advice. “Someone would say, ‘I need to refinance my house—what should I
do?’ A lot of times, I wouldn’t know the answer, but I’d go find it and
learn something in the process,” he says.

In 2003, Steve quit
his job to become part owner of a company that holds personal finance
seminars for employees of corporations like Wal-Mart. He also started
going to real estate investment seminars, and it’s paid off: He now
owns $30 million worth of investment properties, including apartment
complexes, a shopping mall and a quarry.

“I was an engineer
who never thought this life was possible, but all it truly takes is a
little self-education,” says Steve. “You can do anything once you
understand the basics.”

3. Passion pays off
In
1995, Jill Blashack Strahan and her husband were barely making ends
meet. Like so many of us, Jill was eager to discover her purpose, so
she splurged on a session with a life coach. “When I told her my goal
was to make $30,000 a year, she said I was setting the bar too low. I
needed to focus on my passion, not on the paycheck.”

Jill, who
lives with her son in Alexandria, Minnesota, owned a gift basket
company and earned just $15,000 a year. She noticed when she let
potential buyers taste the food items, the baskets sold like crazy.
Jill thought, Why not sell the food directly to customers in a fun
setting?
With $6,000 in savings, a bank loan and a friend’s
investment, Jill started packaging gourmet foods in a backyard shed and
selling them at taste-testing parties. It wasn’t easy. “I remember
sitting outside one day, thinking we were three months behind on our
house payment, I had two employees I couldn’t pay, and I ought to get a
real job. But then I thought, No, this is your dream. Recommit and get
to work.”

She stuck with it, even after her husband died three
years later. “I live by the law of abundance, meaning that even when
there are challenges in life, I look for the win-win,” she says.

The
positive attitude worked: Jill’s backyard company, Tastefully Simple,
is now a direct-sales business, with $120 million in sales last year.
And Jill was named one of the top 25 female business owners in North
America by Fast Company magazine.

According to research by
Thomas J. Stanley, author of The Millionaire Mind, over 80 percent of
millionaires say they never would have been successful if their
vocation wasn’t something they cared about.

 
4. Grow your money
Most of us know the
never-ending cycle of living paycheck to paycheck. “The fastest way to
get out of that pattern is to make extra money for the specific purpose
of reinvesting in yourself,” says Loral Langemeier, author of The
Millionaire Maker. In other words, earmark some money for the sole
purpose of investing it in a place where it will grow dramatically—like
a business or real estate.

There are endless ways to make
extra money for investing—you just have to be willing to do the work.
“Everyone has a marketable skill,” says Langemeier. “When I started
out, I had a tutoring business, seeing clients in the morning before
work and on my lunch break.”

A little moonlighting cash really
can grow into a million. Twenty-five years ago, Rick Sikorski dreamed
of owning a personal training business. “I rented a tiny studio where I
charged $15 an hour,” he says. When money started trickling in, he
squirreled it away instead of spending it, putting it all back into the
business. Rick’s 400-square-foot studio is now Fitness Together, a
franchise based in Highlands Ranch, Colorado, with more than 360
locations worldwide. And he’s worth over $40 million.

When
extra money rolls in, it’s easy to think, Now I can buy that new TV.
But if you want to get rich, you need to pay yourself first, by putting
money where it will work hard for you—whether that’s in your retirement
fund, a side business or investments like real estate.

5. No guts, no glory
Last
summer, Dave Lindahl footed the bill for 18 relatives at a fancy
mansion in the Adirondacks. One night, his dad looked out at the
scenery and joked, “I can’t believe we used to call you the black
sheep!”

At 29, Dave was broke, living in a small apartment
near Boston and wondering what to do after ten years in a local rock
band. “I looked around and thought, If I don’t do something, I’ll be
stuck here forever.”

He started a landscape company, buying
his equipment on credit. When business literally froze over that
winter, a banker friend asked if he’d like to renovate a foreclosed
home. “I’m a terrible carpenter, but I needed the money, so I went to
some free seminars at Home Depot and figured it out as I went,” he
says.

After a few more renovations, it occurred to him: Why
not buy the homes and sell them for profit? He took a risk and bought
his first property. Using the proceeds, he bought another, and another.
Twelve years later, he owns apartment buildings, worth $143 million, in
eight states.

The Biggest Secret? Stop spending.
Every
millionaire we spoke to has one thing in common: Not a single one
spends needlessly. Real estate investor Dave Lindahl drives a Ford
Explorer and says his middle-class neighbors would be shocked to learn
how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why
anyone would buy bottled water. Steve Maxwell, the finance teacher,
looked at a $1.5 million home but decided to buy one for half the price
because “a house with double the cost wouldn’t give me double the
enjoyment.”

It’s not a fluke: According to the 2007 Annual
Survey of Affluence & Wealth in America, some of the richest people
“spend their money with a middle-class mind-set.” They clip coupons,
wait for sales and buy luxury items at a discount.

No kidding!
Talk show host Tyra Banks calls herself the Queen of Cheap and keeps
perfume samples from magazine ads in her purse for quick touch-ups.

Sara Blakely, founder of the $100 million shapewear company Spanx, gets her hair trimmed at Supercuts.

And
Warren Buffett, the third richest person in the world, according to
Forbes, lives in the same Omaha, Nebraska, home he bought four decades
ago for $31,500

 
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