How We Went From Earning a Living To Building Wealth

We live in a society that takes pride in hard work. We look up to the person who rolls up their sleeves and puts in the long hours. While handling stress well and putting in long hours may correlate with success in our careers, stress and long hours are not a prerequisite to building wealth.

The average American works longer hours than their counterpart in other developed countries.

While I was in public accounting, I could probably count the number of weekends I didn’t work on one hand.

It was expected, that if we want to succeed, we need to put in the long hours.

As a result, we find ourselves with less time for family, less time for relationships, and less time for ourselves. As our time becomes scarce, we often skip over opportunities that can lead to long term success. We opt for the short term fix to help us NOW, instead of planning for the future.

One of my many takeaways from The Millionaire Next Door, was from a chapter discussing how people who become wealthy approach their finances. The key phrase here is ‘who become wealthy’, not to be mixed up with people who were already wealthy.

“People who become wealthy allocate their time, energy and money in ways consistent with enhancing their net worth.”

If we spend two to three thousand hours per year to earn money, then it makes sense to spend a few hours to learn what to do with our money. The problem many run into is finding the time to develop this skill set.

The book builds on this point that while people who are building wealth spend their time on developing their financial situation, people who are not building wealth spend their time worrying about money.

This acknowledges a simple fact that we all share the same 24 hours in a day. No one has a special privilege on more time.

The analogy of a runner is used in the book. When we see someone who is physically fit and out for a run, we might think, “She doesn’t need to be running. She’s already fit!”.

It is not uncommon to see someone’s public victories without having noticed the numerous private victories they had to earn along the way.

Having seen the same discussions pop up time and again from having witnessed people struggle or succeed with their finances, I’m now convinced:

We’re either spending our time and energy on developing our finances or we’re spending our time and energy worrying about money.

Either way, the time and energy is spent.

When we find ourselves drifting into negative thoughts and becoming concerned with money, we ask ourselves, “What can we do right now to improve our financial situation?” Have we taken the initial steps toward investing? Have we utilized all our saving opportunities by squeezing out even those 1% changes that will have a significant impact down the road?

One of the goals of this blog — and a personal journey I have had — is to distill all this information down to the most fundamental truths.

Developing our new money habits can be a slow and tedious process, but it doesn’t have to be. When I began to realize how much student loans my girlfriend had, the bigger realization was understanding how she simply blocked it out of her mind. I think that is how too many people handle it.

Even though she tried to avoid thinking about her loans, her financial situation still caused an enormous amount of stress.

To her, student loans were an insurmountable mountain of debt. In her mind she would spend the rest of her life paying off her loans and so spending another $100 here and there didn’t matter in the long run. Six figure debt was an infinite void with no way out. She took a tremendous step towards financial recovery when she learned that her debt, with 100% certainty, will be paid off. Her actions immediately shifted away from worrying and she began to take actions to improve her finances.

Unravelling our financial situation leads to clarity. Only once we start to peel away the layers, can we identify where to begin.

What are some of the key takeaways you took when you started to shift away from worrying about money and started to develop practical steps towards managing your money and building wealth?

As always, leave a comment below and share your thoughts!

Master Distiller

12 comments… add one
  • Kyle Mar 11, 2016, 9:20 am

    I remember the first time I really worried about money I was 19 or 20 and I had bought an 2 year old Buell sport bike. I made decent money at Geek Squad but I ended up quitting because of a manager that I really didn’t like, nobody liked. So I ended up with this $6k pretty high interest loan on a motorcycle and originally I was throwing a lot of money at the principle, but now I had to play financial games because I was unemployed. For a few months I was stressed about money.
    After that I was more about making sure I had plenty of money in the bank for situations like that, avoid high interest loans like the plague. I was already a DIY guy, but it became even more important to me because my time wasn’t worth much money. I make sure my expenses are pretty far lower then my income. It’s been about 10 years now and I haven’t really stressed about money since. When you manage your money easily it’s not hard not to stress. If something came up you’d know a few area’s you could cut instantly instead of stressing wondering what you should do. Managing kind of infers planning and some basic planning is key.

    • Distilled Dollar Mar 11, 2016, 6:36 pm

      Ouch, sounds like a tough spot back in the day. Nice to hear its been 10 years since you’ve really stressed about money.

      The big stress in my life was the student loan debt between my girlfriend and myself (120k). It WAS a stress, but now we’ve accepted our situation and we’re taking the right course of action to move forward.

      As for planning, I always like to think of the emergency fund as when you need it instead of if you need it.

  • Gerald Apr 6, 2016, 12:34 pm

    This was an intentional decision for me. I like how you talk about being in action is really the only way to start to address the problem. I know what it feels like to sit and stare at a mountain of debt and feel totally helpless. That payday loan can be the answer or another credit card will get me through. Especially if you are well educated, you always assume you will be making incrementally more money and that will address the problem.
    “Unraveling our financial situation leads to clarity.” And this can be applied to any problem in all reality.
    Until you examine all aspects of the problem, can you begin to change the triggers that enable you to make the same mistakes day in and day out. And worry will not solve the problem.

    • Distilled Dollar Apr 7, 2016, 6:48 am

      I’m glad you identified triggers as that’s been something I’ve focused on lately, after learning more about habits.

      The interesting thing is we will go through the steps of a habit, even if it has a negative result, simply because it is just that, a habit. It is very difficult to stop yourself after the trigger occurs. Afterwards, if you can take a moment to identify the trigger, just as you mentioned, then you can remove the trigger(s) in your life and avoid the habit.

      I talk about taking action vs dwelling on it largely due to being (relatively?) young. I feel the path to figuring things out when we are younger is to take action. As we get older, and hopefully a bit wiser, I imagine there being a personal store of knowledge that can be tapped into to find the right answer. Since I’m young, I basically need to seek out that knowledge from an external source.

  • Patrick Apr 19, 2016, 2:00 pm

    My biggest turning point, was when I realized I was making a mountain of cash…and subsequently blowing it…without paying myself at all. I was married, in the military, pulling what I felt was a great paycheck…no real debt(had toyed around with the Dave Ramsey method a bit). But we wanted to go places and buy things, and eat sushi all the time.

    10 years later, divorced, relatively broke, and a large mortgage payment…I realized that I was getting nowhere in this lifestyle…just barely paying the bills with a little coming out of my emergency fund every month just to stay afloat. Thank God for that fund. I finally got a promotion, and was starting to see light at the end of the tunnel. I realized that I needed to make a few more frugal changes…sell the truck, buy a car without a loan and good gas mileage/insurance. Take on a roommate for a while. I built my Emergency fund back up, hacked my taxes with some 401k contributions and deduction changes, and in less than 2 years, I’m now maxing out my 401k for the first time this year, working on the IRAs, and saving about 53% of my take home pay in various ways. Money is no longer a worry, it’s mostly on autopilot, and watching numbers in Personal Capital hit big milestones. (next Net worth Milestone is 100k, and Next total invested milestone is 50k). I’m still able to save for regular things like trips and home repair and the like, and I’m still comfortable, which is amazing. It’s amazing the level of stress that is relieved when you quit paying the IRS 2k/month, and start putting that 2k/month away elsewhere.

    • Distilled Dollar Apr 21, 2016, 8:27 pm

      Selling your truck and opting for roommates is probably a decision the vast majority of people wouldn’t even consider, but you valued your financial situation more than a nicer car and a nicer place. As you put it, now that area of our life is on autopilot.

      That’s an incredible turnaround!

  • Curtis M. Alexander Apr 29, 2016, 12:27 pm

    My wife and I started out our lives together saddled with $70,000 worth of debt. About half of that student debt and the rest unsecured consumer credit. Ugh.

    It sucked. We buckled down even though we had two small mouths to feed.

    Three years after that the debt was paid off. It was a great feeling which was only magnified because we did it ourselves.

    • Distilled Dollar May 2, 2016, 9:42 am

      Props to paying off that much debt so soon! That’s impressive!

      We still have ~119k for student loans, but luckily the overall interest rate is not terrible at ~5%. It will be a nice feeling one day to see those accounts reach $0!

  • Thias @It Pays Dividends Jun 8, 2016, 8:02 am

    The Millionaire Next Door was the book that first got me started on my finance journey. It opened my eyes to a new world – one that showed success without needing to show the world that I made money.

    I was on the public account track for about 3 years before I finally decided I needed to take back my life. If we are going to work hard for our money, we also need to work hard to keep that money and to create a life that we can enjoy.

    • Distilled Dollar Jun 8, 2016, 12:33 pm

      We sound very similar, since I also was in public accounting a few years before going private. I had an opportunity come up that was too good to pass up, but if things change, I could see myself back in public accounting.

      The way I view frugality now, is that I’m constantly finding ways to invest in myself instead of spending on consumption items. The same approach is what is advocated in Millionaire Next Door. I love playing the defensive game within the framework of personal finance.

  • Keith "Shin" Schindler Jun 8, 2016, 8:06 am

    “If we spend two to three thousand hours per year to earn money, then it makes sense to spend a few hours to learn what to do with our money. The problem many run into is finding the time to develop this skill set.”

    Great thoughts. Finding the time to develop the money skill set was not the issue, it was knowing that I needed to, in order to move from worker to wealthbuilder.

    • Distilled Dollar Jun 8, 2016, 12:29 pm

      Yep, that’s a good point! I have a similar thought process in my Four Phases of Financial Independence article. Basically, the first phase is before we even realize the benefit associated with learning about our earnings.

      After people start to see some type of benefit, I think a lot of people get stuck in paralysis by analysis. Even after we learn what we need to do, it can be tricky to take that first step into investing, or into creating a budget, or whatever it might be.

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