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#238 - How I Built Wealth Without Debt · Money Grows on Trees

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  In fact, I think the stats are about 13% of the Australian population
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  are considered millionaires, meaning they've got a net worth over a million dollars. But
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  I would say almost all of them did it through property. And how
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  they did it was they bought a property many years ago and did nothing. Well,
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  they didn't do nothing. They didn't sell it, which is good. But the growth in the property from
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  the immigration and the lack of land supply created that million dollar net worth,
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  right? So I did it differently. I didn't do it with property. Back when I started, I
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  firstly, I knew that I had to underspend my
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  income. Without a doubt, that's the only way you can build wealth.
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  I don't know anyone that spent more than their income
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  and built wealth. This is not possible because there's a delta. There
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  has to be some money left over for you to then buy assets
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  or invest in a business or whatever it might be. So that's what I started to
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  do first. Rented a cheap car, rented out my rooms, room
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  shared. didn't go on lavish holidays, didn't buy lavish clothes,
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  and I just underspent my income to save money. I saved about $40,000 to
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  $50,000. I repatriated back to Australia, got into business with my dad in property. I
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  was selling houses, so I was making more money, but
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  it was still a job for me. It was six days a week, and of course, I continued to
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  underspend my income. And what I decided to do was that extra bit of money I
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  was saving, it allowed me to go into that new career without borrowing
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  any money. It allowed me to buy happiness, so to speak, and I talk about it in that book, Money
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  Buys Happiness. and I decided I need to put the
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  money away. So I could have bought real estate, but I didn't know where I was going
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  to live. I didn't want a mortgage to be anchored to. I
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  felt like it was going to corner me and hold me down,
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  having all that debt. And I don't like stress in my life. I don't like worry.
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  So I'm like, well, that's just going to create more of that. So I'm going to avoid that. What should I do is
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  I picked up this book by Warren Buffett, or it's actually by Alice Schroeder called
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  The Snowball, and it's about Warren Buffett's life. Fun fact, I'm going
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  to see Warren Buffett this week. I'm flying out Thursday to
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  go and see Warren Buffett. So that's cool. Anyway, I read this book and he was investing in
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  shares. And it really gave me this, like the penny dropped
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  for me that I understood that straight away. I was like, I get this concept. This makes sense for
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  me. Buying pieces of undervalued businesses. Ha ha, this is
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  better than buying a house. So I took some of that extra cash I was saving
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  from my job initially and then into the property game where I was marketing and
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  selling property, running a small business with my dad and I would always, if
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  I did a settlement or did a deal and got paid, I
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  would get paid about $10,000 or $12,000 back then each time I did a
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  real estate settlement and I'd take half of it and pay myself and
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  I'd take half and buy shares. And I did that, deal
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  in, deal out, deal in, deal out, deal in, deal out, deal
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  in, deal out. Every time I got paid, pay myself some, bought shares, pay
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  myself some, bought shares, pay myself some, bought shares. And
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  like I just played that game for quite a while, I still underspent
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  my income. So whilst my wife Alicia and I could go on holidays, she
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  was working full time as a paralegal, I was working six days a week. We
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  didn't go and buy Range Rovers. We still live in the same apartment
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  that we did 12 years ago. We still haven't left it. And there's a real secret
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  there with wealth creation, which is pretty much the sameness of sameness of
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  same. So the way that I invest my money
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  now is the same as what I did 15 years ago. The same place we live
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  in is the same we did 12 years ago. The same, the same. You would see
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  me in these episodes, I'm wearing the same t-shirts. The same cut, the
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  same, the same, the same, the same, the same, the same, the same. There's a lot of...
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  magic with wealth building, which is the same. Once
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  you figure out what works, why change it? And that's
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  what happens to people a lot. They'll change direction so
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  much. They just don't get any traction. And you see this in how many times
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  they shift where they live, what car they drive, what
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  clothes they're buying, what type of investments they're buying. They
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  do it over multiple businesses. Oh, there's another shiny business. I'll go there.
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  And they get no traction. So what happened to me when I was in the property industry and buying
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  these shares, I started to see my portfolio grow. And
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  my portfolio was probably at about $300,000 by then in 2014, maybe
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  $250,000. It wasn't massive because remember, I didn't buy a house. So I had the equity
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  that would have gone into a house and I was paying about $550 a week rent.
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  But I was also splitting it between my wife and her sister who was living with us at the time. So
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  my rent was like $200 a week. When you think about it, that's crazy low,
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  right? So I've always tried to keep my costs low It's just
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  the most effective way to almost guarantee you're
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  gonna get ahead It's easier to manage the
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  cost than it is to increase your income in my opinion. You have
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  more control over that and so 250,000 roughly
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  in the portfolio working six days a week in property and I
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  remember one day I sat down and thought oh I
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  want to become a millionaire. Now I want to do it. What
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  do I have to do? How long is it going to take me? And I remember sitting in the office at 7 o'clock
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  at night. I pulled up an Excel spreadsheet and I put in 250,000, whatever
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  the portfolio was. I'm saving 25 grand a year, buying stocks.
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  I have no debt. This is my income. I think it's probably going to stay very
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  similar. Hopefully it goes up if I can do more deals. And I
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  realized it was going to take me like 15 years to become a millionaire. And
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  at the time, I was probably about 30, 31. I was like, oh my god,
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  I want to be a millionaire at 45, 46. Like, what am I going to do?
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  And I realized, I can't cut them anymore. I
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  still want to have a reasonable life. But I was
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  like, well, I need to increase my income. So how was I going to do that? And
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  then my sister introduced me to a business model called network marketing, accidentally
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  fell into it. And I tried the products, got in shape, actually went on to win a
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  bodybuilding competition using the products, which is really life-changing for me. And then
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  I helped other people get the products and use them. And so
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  my wife and I with my sister built this network marketing business on the side with
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  the objective to increase my income by $25,000 a
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  year, which is, by the way, only 500 bucks a week. It's not like heaps.
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  It's like, what if we could keep doing my real estate deals six
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  days a week and then make an extra 500 bucks a week network
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  marketing and take the extra money and invest it into shares. And by doing that, I
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  was doubling my saving rate and doubling my investing rate, which means I was going to
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  cut the time in half. So I was going to be a millionaire when it's seven
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  and a half years instead of 15 years. It was simple math.
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  So I was like, this is going to be the strategy. This is my strategy. This is
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  it. So we got after it, right? I stayed working. I
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  didn't jump out of my job. I would do appointments in
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  the office and go downstairs and get on the phone, do network marketing, go back upstairs, do an
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  appointment, do network marketing. It's just boom, boom, boom. On weekends,
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  we'd drive and fly to Sydney to learn more about network marketing. We would do things
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  on the weekend. In the evenings, I'd pick Alicia up from work, go home, sit in the car, do
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  the work, do the work, do the work. And we did that for four
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  years from when we started in 2014, 2018. And in that
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  timeframe, we reinvested a lot back into building that business, but
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  what we developed is about $180,000 a year of extra money
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  on the side while we're in our jobs. And I realized at
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  that point, we were able to add about another half a million dollars to
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  the portfolio, maybe 400,000. And by the time
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  I left my job in the property business in 2018, the portfolio was at about 650,000. And
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  as I left that in 2018, by
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  the time 2020 rolled around, the portfolio had lifted from
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  650 to 700,000 up to a million dollars. So
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  I left my job, went full-time in a network marketing business in
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  2018. The portfolio was at about 650,000, was paying as passive income
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  from dividends, which is what allowed us to get out of our jobs as well. It wasn't just the side
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  hustle, it was a combination of that for me to pay my rent and everything, and
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  then also the side hustle of 180 grand a year. Alicia left her job.
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  So we're basically financially independent. And the portfolio then grew as
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  COVID hit. And I remember picking up my phone one day before I wrote this book. I
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  was like, I really want to write a book about how we did this. Because if you think
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  about it, we became financially free out of the rat race in
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  our 30s. completely free, which is
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  unbelievable, really, when you think about it. And back then, especially. And
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  I had a million-dollar portfolio. I was like, well, this is interesting. Didn't own any
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  property. I'd like to be able to get it to a million bucks before I write this book.
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  And I remember before we launched this book down in Corumban, I
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  looked at my phone, pulled up my portfolio, and it was like $998,000. It was
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  just sitting there. I was watching it.
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  I was watching it and watching it. I was like, oh my God, I want it to be a million bucks. I want it to be a
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  million bucks. I scrolled the phone down, hit the record button, and
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  I recorded. I'm sure if I pull up the recording now on my phone and go back
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  far enough, I could find it. And I recorded it as it clicked over
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  to a million bucks. And I remember sending the video to my little sister and saying, look at this, it's
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  a million dollars. And at that time, it's like you kind of, you
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  have this fantasy of what happens when you become a millionaire. You're like, oh, my life's going to change
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  and it's going to be amazing. And then the marching band never came
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  in. And I
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  was like, oh, we're millionaires. That's it.
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  No debt. Million dollar net worth. Free.
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  And then I wrote that book about it, about how other people
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  could do the same thing. And I've been helping people ever since to do the same thing, following
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  the same system, the same strategy as what we've done. And
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  it's in that book. And then beyond that, we do other things. We're
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  now multimillionaires. But what's interesting is the strategy really changes.
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  Underspend your income, find ways to add extra money with a side hustle
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  or business, invest the proceeds consistently into the same sort
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  of asset class that you understand, and be patient. And it will grow
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  over time. Those three steps of underspend your income, find
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  ways to make extra money, and invest in assets that you understand are the three components
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  and steps that I talk about in this book. And they're repeated in this book.
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  There's two extra steps in here for mindset and mentorship, which speeds things
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  up. But the concepts remain
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  the same. And that's where the sameness comes into
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  wealth building that people really underestimate that gets
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  them in a lot of trouble because they get bored. And one of the
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  things you got to do when you're trying to build wealth is keep the mundane exciting.
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  So all that stuff kind of compounds over time, but it started with
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  that decision to make the first million. But
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  you see when I did it, there was an actual measurable like,
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  shit, I need to increase my income here. Okay, now we need to invest it. Now
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  we need to not do anything else. And I think it's in the not doing anything else
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  and sticking to your knitting and focused on what's working and
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  repeating it, that's where the magic lies. That's the
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  story of how we became millionaires initially. That's a
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  real-life story. It's in our books. Thanks for listening to Money Grows on
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  Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts
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  and Spotify and subscribe to us on YouTube so you never
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  miss an episode. And if you're serious about building wealth, make sure to
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  check out the links in the show notes and follow me on all social media
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  platforms at LloydJamesRoss for more. See