How To Become Wealthy | The Frugal Millionaire

Many people don't realize that frugality is an amazing tool how to become wealthy. Being frugal can actually make you more money and can help you become a millionaire. I’m actually a millionaire a couple of times over and I am very blessed!

AND, I became a millionaire faster, because I was frugal.

However, I wasn’t always frugal — my wife has really helped me! Now, my frugality has helped me make me even more money. I am going to get into all of that and the mindset, philosophy, practical steps, and how being frugal can actually be costing you money.

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If you were with me last week, I talked about how I am currently figuring out where I am going to move, whether to Idaho or somewhere else. I live in Phoenix, but I am originally from California, and I can move anywhere I want, because I don’t need a job. I make money while I sleep, when I travel, and anywhere I am, because I have other people doing the work for me.

If you want to learn about real estate rental property investing, I want to give you a free course. Go to www.masterpassiveincome.com/freecourse. This course will show you everything you need to get started investing in real estate, the benefits, and even how to invest with little to no money down.

Benefits of Being a Business Owner – Travel Expenses And Taxes

Currently, I am in Salt Lake City, Utah and it is beautiful. I have family here and I am also enjoying all of the sights, while my properties are making me money. Eventually, we are going to move to Idaho, or at least that is the plan, but right now we are living in Phoenix.

Right now we are on a two-week vacation and we are checking out places in Idaho to figure out where we want to live. Once we find a place, I am probably going to rent an AirBNB and take my family for two months to see if we actually like living there and to see what it is like.

If we don’t like it, we will just move back to our house in Phoenix. This will allow us time to find a church, meet people, find some homeschooling groups, work out at a gym and get a feel for the area. While we are here, I am also going to look at potential rental properties.

If you remember last week’s podcast about the top 15 tax deductions, travel expenses can be deducted on your taxes. As I am continuing to build my business, the travel expenses I incur on this trip can be a write off. I keep all of my receipts and give them to my accountant and he takes care of everything.

Obviously, I can’t write off food expenses for my children, but I can write off the room I rent, because I need someplace to stay. I am able to write off most of this trip on my taxes, because I am building my business at the same time.

The Frugal Mindset – How to Become Wealthy

This brings me to what I want to talk about today: the frugal mindset. This is something I had to learn. I was never taught to save money, but I was taught to never keep a balance on my credit card. Before, I invested in real estate, I lived paycheck to paycheck and I had a J.O.B.

That stands for Just Over Broke.

If you have a job, your boss is paying you just enough to keep you working and not make you want to quit, so they can keep the profit and keep the business running. I got tired of doing that!

My wife is extremely frugal and when we got married I was the opposite. I lived paycheck to paycheck and had a couple thousand dollars in credit card debt that I paid off every month, but I didn’t have any savings. When we got married, we used the money we got from the wedding and some she got from her parents and we bought our first rental property.

My wife helped me realize that being frugal was the best way to go. We aren’t talking about being stingy! It is all about being wise with your money. Now, after 13 years of being frugal, it is a part of me and I can’t help but be frugal.

I am a millionaire and a steward of what God has blessed me with. I also realize that this is not my money and these are not my properties. They belong to God and I need to manage them well! Everything I buy and everything I do, I do it through a lens of being frugal.

Frugal Millionaire and How to Become Wealthy

Wealthy people can be frugal too!

Not all millionaires buy airplanes and yachts. My neighbors don’t know that I am a millionaire. I currently live in a 1,250 square foot house and my wife and I have four kids — can you believe that?!

Before moving to Phoenix, I lived in California. 

We sold our house and moved into one of our rentals in Phoenix when our tenants were moving out. We knew this would be temporary, because we want to move to Idaho and buy some land.

Today I am going to share with you a few different areas of being frugal, including the frugal philosophy of a millionaire, how being frugal can actually lose you money, and how being frugal can make you more money.

CAVEAT: What is right for me may not be right for you! What I like to save money on, you might not like. I want you to walk away with the principles, like time versus money. Think about how you, as an investor, can be frugal and become even wealthier, eventually becoming a millionaire.

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Step-by-Step Process On How to Become Wealthy

Pay Yourself First

If you have a job, or if you have rental properties, save money for future investing. You already know your money is going to be spent on food, cell phones, and other expenses, so make sure you take at least 10 percent and save it for future investing.

Live Below Your Means

I could easily go out and buy a 3,500 or 5,000 square foot house, but I don’t need it. That would be huge! Eventually, we will buy a big plot of land, but right now, this 1,250 square foot home is all we need. Also, I still drive my 2007 Honda Odyssey. I don’t overspend, and I make sure to live below my means.

Always Consider Your Time

Always consider how much your time is worth. If you make $20 an hour at whatever job you are working, and it takes you an hour to save $5, is that worth it? Think about how much time is taken up for that savings.

Recently, I needed a notary to sign some paperwork and I knew it was free at my bank. However, the location I was at was going to charge me $10 to get it notarized. I thought about it for a minute and ended up getting it notarized at my bank, because I knew it wouldn’t cost me $10 of my time. It took me 15 minutes to save $10 and that was worth it to me.

Be Frugal On Things that Save You Money But Not Sacrifice Time

If you can make $50 an hour working, instead of spending an hour to save $10, it is worth it to work, because you gain $40. If it takes you three hours to cut coupons to save $5, is it worth your time? It might be, but make sure you consider your time.

Buy Assets, Not Liabilities

An asset is not a home that you live in — it is a liability. Assets put money into your pocket, liabilities take money out of your pocket. If you buy a new car, that is a liability, because it isn’t making you any money. If it is a rental car, then it is an asset, because it is making you money.

If you buy assets instead of liabilities, you will actually have both at the same time. For example, in January, I bought a car. I had the cash to pay for it, but I decided to get a loan at 4 to 4.5 percent interest and make the loan payment every single month.

I took the cash I had for the car and used it to buy a rental property that makes me money. I am basically getting a loan from myself to buy a property and all of the money I make from that rental property will pay for my car loan.

After that loan is paid off by my tenant, I have the car AND the rental property.

Spend Money On Experience Not Things

We buy things that we like, but millionaires that are frugal do things that enrich their lives. You can buy things, but Wealthy people put more emphasis on experiences and being with their families.

Teach Children to Be Wealthy

My wife and I have done this with our children since birth. Every bit of money that comes in from birthdays, Christmas, chores, etc., we teach them how to save. For everything they make, we have them do the following:

• 50% to savings: It seems like a lot, but it is a great habit
• 20% to Mommy: This is to help pay for household expenses – we all pitch in
• 20% to spend: They can spend this any way they want
• 10% to God: This is the minimum my kids give, and sometimes they give more

Being Frugal Can Lose You Money

When you are learning how to become wealthy, something you can't miss is that you can actually lose money by being too frugal.

There are things that will get in your way from becoming rich if you don't watch out for them. It makes it much harder to how to become wealthy if you do not catch these things that will take money away from you.

Opportunity Cost

What other opportunities are you forfeiting by being frugal? What else can you do with your time?

Some examples include:

• Doing yard work: This is a great way to save money, but I can make more money buying rental properties. For example, let’s say in one month I spend $80, $20 a week, to have someone take care of my yard. It would take me two hours to do this. That is eight hours every month to have someone else do my yard work. It takes me three hours to buy one rental property from beginning to end. If I add one more hour to the yard work example, I could buy three different properties and make money hand over fist every single month, instead of mowing my yard.
• Installing Ceiling Lights: In my house, I would like to install recessed lights. I can do that myself, but I found someone who will do it for $100. That will save me three hours! When I look at how much I make versus how much money I save, it doesn’t pay off, because I would rather be working ON my business instead of IN my business.

Not Performing Maintenance

If you put off doing maintenance on your car that will cost you $800, maybe it will break down and cost you $5,000. If you have a leaky faucet in a rental property, just a drip, what would cost you $25 now might cost a couple thousand dollars if the water breaks the pipe and it floods the house. If you don’t fix a leaky roof, that could cause problems to your ceiling, walls, and floors. Take care of things before they become problems.

Know The Difference Between Value And Price

You want to buy for longevity, not just the lowest price. For example, I bought a microwave and it makes a loud noise. It was one of the cheapest ones available and after about six months it started making this really loud noise. Maybe if I had bought a better one it wouldn’t make that noise and it would be better. Another example is couponing.

This takes time!

How much money you save cutting and using coupons better save you more per hour than you can make anywhere else. What if you drove for Uber instead?

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Be Frugal To Make More Money        

Think Of The End Goal

The end goal of frugality for a millionaire is to have more money to invest. The more money I have to invest, the easier it is to buy properties and grow my business. Every penny I save is another penny to buy another property.

Negotiate Everything And Never Pay Full Price

My wife hates negotiating, but I love it. I think of it as a game. My business makes more money when I negotiate and bring down the price of things I buy. I negotiate on anything from $10 to $100,000.

Be Willing To Walk Away

If you are negotiating on a rental property and the seller is not coming down enough on price to where you will make money, you need to be willing to walk away. To learn more about negotiating, check out podcast episode 014.

Spend Other People’s Money To Make Even More Money

If I can buy a house for $5,000 and make $300 a month in passive income, I am going to do that as opposed to buying a house for $100,000. I am able to do this by getting a loan. Instead of paying $100,000, I pay $5,000 down and my tenants pay off the balance of the loan while I still make at least $250 every month. Use the bank’s money to buy the property and the tenant’s money to pay off the loan!

Practical Tips to Be Frugal

• Make food at home: We save so much by doing this
• Shop at Walmart: They have really low prices
• Drive old vehicles: I drive a 2007 minivan
• Cut my kids hair: I enjoy this and even cut my own hair
• Wife knits beanies, scarves, and presents: She loves it and it is practical
• Mow my own lawn: I have a small yard!
• Research prices: Compare prices online when you need to buy something
• Manage Expenses:
  • Do you need everything you pay for? For example, TV?
  • Question every bill
• Always ask for lower interest rates, discounts, etc.
  • Recently, I was at Home Goods and I wanted a piece of furniture for my house. I saw an item with a drawer falling out, something I could fix, and I asked them if they would come down on the price. They took $70 off the price! I took it home, fixed it with a screw, and it was good as new. Always ask!
  • If you are nervous about negotiating, all you need to say is “Can you come down on the price?”. That’s it!

Being frugal is fantastic and I love it! I make so much money by being frugal and this is how I became a millionaire. I save money and buy properties that make me even more money. Get out there and be frugal so you can start buying properties and change your life forever!

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