| It's entirely possible for a wage earner to become a millionaire in the USA. Anybody with a middle class income can do it. It's not even complicated or hard to figure out. The problem is that it requires discipline and living under your means. The first step is to eliminate debt and don't make stupid purchases. Debt includes credit card, personal loans, car loans, and mortgages. Stupid purchases are things like expensive vacations, eating from restaurants all the time, or buying new cars, or buying boats. That sort of thing. Pretty much: if you buy a brand new car you are a moron if your goal is to increase wealth. You want to do things include living in inexpensive neighborhoods, having secondary sources of income, having no adult 'children' and so on and so forth. Woe is to parents that are still paying for their 20-somethings. If you go drive around your city and you want to see were "middle-class millionaires" live you need to avoid the 'wealthy' neighborhoods. Look for the 50-something living in a older neighborhood driving older economy cars around.
These people are going to have very low credit scores, as well. The best of them are going to have a credit score of 0, which means no credit history for several years. Do you calculate the cost of purchases by how many payments can afford in a month? If so you are doing it wrong. Instead you should only ever pay cash. If you don't have money in the bank to pay for it you can't afford it. The S&P 500 has, historically, provided a 12% return over average 20 year period. If you start off at age 30 and invest 500 dollars a month at that rate it would take you about 26 years to make your first million dollars. 6 years after that would be your 2 million dollar mark. 3 years later would be your 3 million dollar mark. By retirement you would have just under 4 million dollars. If you make $50k dollars a year then that amounts to about 12% of your income. You think that is too hard? The average car payment in the USA is at $550. The average credit card debt is $4,717. At 15% interest and doing minimum payments at $189 that card is going to take 10 years to pay off and $22,869 in total. That means that for every 1 dollar you spend the bank makes 4. If you can afford to make banks rich you can afford to make yourself rich. Just can't do both at the same time. |
> Anybody with a middle class income can do it.
This seems obviously false to me. Let me construct a reasonable case for someone who is middle class income but who I do not believe will be able to meet your savings goals.
Let's assume a single parent, at the median income level of $31,000/year living in Seattle. That gives them $2,500/month to cover food, housing, clothing, childcare, medical care, etc. Rent and health insurance probably eats 1,500 of that alone. To say nothing about saving for a kid's education, buying them school supplies, etc.
Even if you scrimp on food, clothes, etc. you are going to have a real hard time consistently setting aside $500/month.