Top 10 Things I Did Right with My Money

I will retire as a millionaire.

Now before you start getting ideas that I come from a rich family, I’ve received a huge inheritance, or I’ve won the Lotto, let me quash that right now. None of those things are true.

In fact, my average salary over the span of my working life has been just $27,108. I’m not counting the seven years that I worked part-time while I was a student, and I’m not counting the last three years where I’ve made nearly zip as a full-time writer and speaker. During the two decades when I worked full-time in jobs and in my businesses, my average salary was less than $30,000 a year.

Still, I will retire as a millionaire.

Hard to believe?

Sure is.

I still pinch myself every time I run one of those online retirement calculators and that amazingly large number pops up. I’ve tried many different calculators just in case the last one was a fluke. After trying five of them, I finally believed that big ol’ number to be true.

I’m 47 and will “officially” retire 23 years from now when I’m 70. I say “officially” because I don’t plan on ever retiring. I hope to keep writing, teaching, and helping people reach their goals until my dying day. So, even though I don’t plan on retiring, age 70 feels like the right time to start withdrawing from my retirement account.

How did I get here?

Well, I’m not smarter than you. I’m not luckier than you. I’m just an everyday person who did lots of things wrong, but some key things right.

Here are ten things I did right with my money.

1. I stopped paying retail (most of the time).
When I was younger, I bought everything retail. If I wanted a shirt, I went out and bought a new one. If I wanted a book, I’d buy it new. But over the last decade or so, I’ve become savvier with my money. For example, I’ve discovered that I can usually borrow the book I want at the library for free, or I can buy it used for a fraction of its retail price. If I want new clothes, I hit my local Goodwill instead of the mall. Last month, I bought a pair of like-new Citizen of Humanity jeans at Goodwill for $20. Guess how much they retail for? $208. Yep, I saved myself $188. It’s worth it to shop around.

2. I spent more on things that I loved.
I’m a frugal person, but I’m not cheap. If I see something that I know I will love and use for a long time, I will buy it. For example, I have a beautiful purse that I bought on sale for $250. Now, that doesn’t sound frugal, does it? Actually it is. I’ve used that purse nearly every day for the past ten years. That works out to just $25 per year. It’s a fantastic purse—I get compliments on it all the time—and because this is my prime purse, I didn’t buy hardly any other purses for ten years. Buying the thing that I loved helped me save money over time.

3. I spent less on things I didn’t care about.
There are lots of things I don’t care about so I spend little to no money on them. For example, I’m not a drinks person so I spend zero money on flavored drinks or alcoholic drinks. When I’m entertaining, I provide the food and ask guests to bring their favorite drink. When I eat out, I order water (tap, not bubbly or bottled) for free. Speaking of eating out, I’m not into fancy food so I don’t go to fancy places. I’m a burgers, fries, and tacos kind of gal. My husband Marcus and I eat out two or three times a week and our bill is usually never more than $20. We want to use our money on good produce, seafood, and meats rather than spend it on expensive meals out. Over time, I’ve learned to spend more on the things I value and less on things I care less about.

4. I started a retirement account when I was 25.
I read a bunch of personal finance books in my 20s and they all said, SAVE FOR RETIREMENT AS SOON AS POSSIBLE. After you’ve saved money for an emergency fund—that’s 3+ months of expenses stashed in a savings account in case you lose your job—start socking away money into your company-sponsored IRA or 401K. If you’re self-employed, open a SEP-IRA. When I was 25, my job paid me $11.23 an hour for 32 hours a week. I was earning only $1557 per month. I had little money to sock away, but I did it with every paycheck. When I left that job after seven months, I had saved $600 in my retirement account ($86 per month). That $600 has grown A LOT in the last 22 years. Which brings us to the next tip…

5. I paid myself first.
This is my most important tip. PAY. YOURSELF. FIRST. That means if your job offers a retirement plan, take advantage of it. Don’t wait. Sign up and start contributing NOW. Even if you can only save $50 a month, do it. Every bit matters. Having a percentage of your paycheck deposited into your retirement account will not only help you on tax day, it’ll also help you years from now when you’re ready to retire. Set it and forget it. Another thing that helped me a ton is I took advantage of the employer match. This means that if my employer was going to match my contribution of 5%, then I sure as heck put in 5% of my income. That’s FREE MONEY, people. Pay yourself first, then live off what’s left. It’s simple, yet so many people don’t do it.

6. I used my wedding money to buy a house.
I have to give my ex-husband Erik and his mom credit for this one. His mom said that any money we receive when we get married should be saved for a down payment on a house. Don’t use it to pay your wedding bills or buy new stuff. Save it. My parents and relatives gifted us money on our wedding day and we did what Erik’s mom advised. We saved it, saved more, and a year later, we bought our first house with that money.

7. I used my divorce money to buy a house.
When Erik and I got divorced, he wanted to keep our house. So we refinanced the mortgage so he could buy me out of my share of the house. I wanted to take the money and do something I’d always dreamt about: move to New York City. I started researching MFA programs in NYC. But, several months later, I met my-now-husband Marcus and everything changed. I stayed in Seattle and built up my savings. A year later, I bought my first house on my own. Ten years later, rent in our neighborhood is now triple our mortgage payment. We couldn’t afford to live here if we didn’t own our house.

8. I bought used cars instead of new ones.
You’ve probably heard that a new car depreciates in value the minute you drive it off the lot. Well, I’ve also read that cars lose up to 30% or more in value after being driven for just one year. Add to that that many new cars cost as much as a down payment on a house and you can see why I’ve only bought used cars. I didn’t grow up this way. After being burned by used cars that turned out to be lemons, my parents always bought new. But for me and Marcus, we scan the ads on Craigslist for months to find the perfect used car, and instead of $35,000, we pay $5000 (the most we’ve ever paid for a car).

9. I swapped homes to go on vacation.
I could write a whole post about the benefits of home swapping, but for now, let me just say that when Marcus and I started exchanging homes with people around the world, we were finally able to take the long, relaxing vacations of our dreams. Lodging is often the highest expense of a vacation, but by swapping homes (and sometimes cars too), we don’t pay for any of that. The annual fee we do pay ($150 at the time of this post) to use an exchange service is tiny compared to the money we save. For example, a few years ago, we spent three weeks in Iceland. We calculated that if we had paid for a hotel and rental car for three weeks, we would have spent $6500. Instead, we paid $0 for a three bedroom flat in downtown Reykjavik and the use of a 4WD truck. Cool, huh?

10. I never touched my retirement money.
Remember all those personal finance books I read in my 20s? Well, in addition to recommending that I save for retirement as soon as possible, they also said, DON’T TOUCH YOUR RETIREMENT MONEY. When you take money out of your retirement, you destroy the amazing compounded interest you’ve built up over time—that’s money that your money has produced and then reproduced. As you know, I’ve made a modest salary for years. I often didn’t have much money to put into my retirement. But what I did put in, I knew would grow and grow as long as I didn’t touch it. So, that’s exactly what I did.

Now you know my top ten money secrets. Thing is, they aren’t really secrets–you’ll find some version of them in most personal finance books or blogs. You may not agree with all of them, but I hope you’ll try the ones that intrigue you. And if you want to have a comfortable retirement, I hope you’ll take my story to heart and start saving for your future NOW. You CAN make a modest salary and still retire as a millionaire. I’m living proof that it’s possible.

Disclaimer: I am not a financial advisor, accountant, tax professional, or attorney. My tips should not be taken as professional advice. This post is for entertainment and/or informational purposes only.

March 2020 UPDATE: Thanks to the kudos I received from readers, I took this post and expanded it into a book called Rebel Millionaire: Get Rich on Your Own Terms.

Peg Cheng is the author of The Contenders, a novel that asks, can enemies become friends? Peg is also the creator of Fear & Writing, a workshop for procrastinating writers from all walks of life.

Money photo by Alexander Mils.