How I Slowly Became A “Middle-Class” Millionaire

Learn the rules of the game

Sixteen years ago, I had no job, no income, less than $1,000 in savings, and debts totaling $22,000. My one shot at entrepreneurship put me in precarious financial and professional jeopardy.

Today, I’m what you’d call a middle-class millionaire. When I add up assets and subtract liabilities, the net balance exceeds the mythical threshold, but you’d never know it from my lifestyle.

My house looks like a generic old home you’d find in Anytown, USA. It needs more work than we can afford, and not a day goes by that I wish I had resisted the drama of home-ownership.

The rest of my life mirrors common middle-class challenges: paying a mortgage, worrying about college for my kids, and nervously peeking at my credit card and bank account balances once a week.

Middle-class millionaires still worry about money since most of their net worth exists in untouchable assets: home equity and retirement accounts. This wealth exists on paper, but you can’t spend it, and it always runs the risk of disappearing due to market conditions.

Despite the illusionary aspects of paper wealth, I consider myself fortunate. I make enough to pay the bills and save for the future. My kids go to good schools and never worry about finding their next meal.

Still, it’s not easy, and you may not think it’s worth the sacrifices.

In previous generations, one parent could stick out the same job for forty years and retire in relative comfort. Those days are gone.

Today, you need to approach your career as if it could disappear at any time. You’ll also have to generate multiple income streams. And finally, you must accept that you’re never going to become a gazillionaire entrepreneur or crypto lottery winner.

Learn the rules of the game 🔗

A year after my near financial collapse, my manager told me about an open position, two pay grades above my level. When I told him I wasn’t qualified, he said it didn’t matter. I needed to demonstrate my commitment to advancing my career.

We argued back and forth until he said something that finally clicked with me. “If you want to get ahead, you have to play the game they want you to play.”

Every industry has its own unwritten rules, as does every business. Some seem pointless, purely for show, and often just unfair. But it’s humans who run businesses, and humans play games. Understand the game they want you to play, and follow the rules.

But wait, you say. Shouldn’t advancement depend on performance and results? In revenue-producing positions, like sales, it often does. Money has a way of rewarding performance. Even then, politics plays a role. But if you’re in an administrative or expense role, it’s full-on game theory.

Commit to continuous reinvention 🔗

I left my full-time job in 2003 to move out west. That’s when I kicked off my entrepreneurial effort. When it crashed, I re-entered the job market, but I had been out of my previous role for over two years, leaving my skills a bit stale.

Several hundred résumés later, I had landed a total of zero interviews. That’s when I decided on a radical strategy change — reinvention.

I had been a software developer in my previous life, a decent one at best. Rather than continue to look for a position in that role, I packaged my experience as a programmer and my experience selling mortgages as a failed entrepreneur, took a few courses on project management, and leveraged all of that into a role as a Project Manager for mortgage processing software.

It’s the kind of job title that makes people squint as if doing long division in their head.

That’s the point.

That extreme specialization enabled me to position myself as the only person even remotely qualified.

Five years later, I again reinvented myself. No doubt, I will repeat this strategy several times before I hang up my work pants for good.

Continuous reinvention is a way of life. Fair or not, you cannot depend on your skills remaining relevant. Nor can you assume your skills are good enough to keep your job safe from poachers, structural changes in your industry, or declining economic fortunes.

Start a side hustle 🔗

When I secured that miracle job in 2005, my salary barely covered the hefty price tag of living in New York City. I’ve since left, but my modest salary increases eventually lost ground to the rising cost of living and raising two kids.

Five years ago, I started a side hustle to bring in extra money. That extra cash allowed us to divert money into savings and investment. We also made a few improvements to our home, increasing its value.

Today, my wife and I maintain three income sources. It’s stressful and time-consuming, but it’s also necessary. A side gig is no longer a luxury but a necessity. A family of four shouldn’t need multiple incomes to maintain a middle class lifestyle, but that’s the reality.

There’s a reason why the 1926 book, The Richest Man In Babylon, still tops the charts of wealth-building books. It offers simple yet practical and timeless advice such as this: “For every ten coins thou placest within thy purse take out for use but nine.”

For most of my working life, saving ten percent was impossible. Today, we manage it thanks to our multiple income streams. Even with enough money coming in, saving requires discipline.

Tucking loose change under your mattress won’t cut it. If you have access to a 401K with matching, take advantage of it. If not, setup another automatic deduction plan.

To build wealth, you need to save and invest. Your salary alone, no matter how impressive, won’t secure your long-term future. Start with 1% if you must, and then build from there.

Consider strategic homeownership 🔗

When we shopped for our house, the lure of new construction intoxicated us. Those homes, however, were considered the exurbs — outside the traditional metropolitan area. Historically, these neighborhoods rarely held up in price appreciation.

That turned us off, and instead, we followed the advice of a real estate expert friend.

“Buy the best piece of shit you can afford in a neighborhood with a strong history of price appreciation.”

That’s what we did. We approached it strategically, buying a piece of junk in a nice neighborhood we plan on staying for twenty years.

On paper, buying a home is a terrible idea. The maintenance costs alone eat up much of your equity. A saner plan would be to rent a cheap house and then put your savings towards investment.

But that requires a discipline few people possess, myself included.

For all the negatives of homeownership, if you buy in a neighborhood with a history of price appreciation, you’ll at least keep up with inflation while paying off your mortgage balance.

Fini 🔗

That’s one method of nabbing a million-dollar net worth, not an exciting one, and perhaps, not a worthwhile one. But for me, striking it rich with a billion-dollar startup was never a realistic possibility.