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Millionaires in the Making Ryan and Hope Wells « - Sent Using Google Toolbar

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MILLIONAIRES IN THE MAKING
March 5, 2008

Ages: Ryan, 25, Hope, 23wells.jpg
Occupations: Car salesman, Medical billing coder
Salary: Approximately $56,000 combined
Home and land: $125,000 estimated value
IRA, 401(k): About $22,500
Mutual Funds: $3,000

Utilities: $310 per month
Groceries: About $350 per month
Entertainment: $300 per month
Car payments: $330 per month
Mortgage payments: $570 per month
Credit card debt: $100 per month
School loan payments: $65 per month

Is it possible to retire by 50 with an income under $60,000? Ryan and Hope Wells think so.

Married since 2005, the young Arkansas couple is just starting out. Ryan, 25, works as a used car salesman, and Hope, 23, works as a medical billing coder at a hospital. Together they earn an annual $56,000 – above the national average, yet still not exactly easy street in today's economy.

But with a little discipline, they think they can meet their goal of an early retirement. "I feel pretty comfortable with a target of a little over $2 million," Ryan says.

It may sound ambitious, but the Wellses have a plan: put roughly 10% of their earnings toward retirement, 10% toward bills, 30% toward debt reduction, 15% into taxable mutual funds, and 35% to daily expenses and emergency savings.

The Wellses have a lot going for their finances. They're young and have no kids yet. They live in Pottsville, Ark, an area that has one of the lowest costs of living in the country. And they're aggressive investors for their age, currently putting $530 per month into stock-only mutual funds.

"Right now, I am really trying to build a strong foundation in our portfolio so that when children or anything else comes along, we are in a very strong position," Ryan said.

But their financial picture isn't all rosy. Like many American families, they're saddled with credit card debt: about $4,500. But they continually roll their balances onto new 0% APR promotional credit cards to avoid paying interest. They plan on making steady payments of $100 a month and paying off their debt in less than four years.

They bought a one-year old used Ford Mustang for $19,000 about 4 months ago and put monthly payments of $330 toward the $17,500 left on the loan.

Ryan and Hope think they'll be ready to start a family in about five years, but haven't yet started planning for kids. Meanwhile, they're working to pay off Hope's student loans, which total $5,500.

For the more distant future, Ryan maxes out his IRA, which currently stands at about $22,000. His job doesn't offer a 401(k) plan, but Hope has access to a company-sponsored plan through the hospital. She only contributes the 2% that her employer matches, but sometime in the near future she expects a promotion that could nearly double her salary. When her salary increases, she will also max out her retirement contribution.

"We each have some room to grow based on income potential," said Ryan, who has fairly steady pay despite earning his entire salary on commission from car sales.

Ryan and Hope say their priority now is to replenish their emergency fund, which they recently depleted to pay down some debt, as the promotional period on one credit card was ending. They would like to get their savings up to about $10,000, or six months of expenses.

Our expert's take

With their current plan, Ryan and Hope are on their way to millionaire status, but maybe not as soon as they'd like, according to Diana DeCharles, a Certified Financial Planner with AIG Financial Advisors.

She says that even with an aggressive 9% to 10% annual return on their investments, the Wellses will be worth about $1.3 million at age 50 – no small sum, but probably not enough to retire so young. And that's at their current rate of savings, without any children in the picture. "Kids are pretty expensive," DeCharles points out. Between higher costs and education savings, they might have to pull back on their aggressive saving once they have children.

DeCharles believes that the Wellses are smart to prioritize their emergency savings, which she recommends they keep in a money market fund with no stock exposure.

"Forget the funds for now," DeCharles said. "Especially with the market heading down, they have to build up their cash reserves first."

She also thinks the Wellses are managing their debt well, but they should be wary of opening too many cards. "Although they are moving their balances to new cards with 0% interest, if they continue to open new cards to do this they are bringing their credit score down," she said. "Their credit score will take a hit for having cards that are maxed out, getting inquiry hits, and opening new cards."

To save up, she suggests the Wellses cut into their monthly entertainment expenses. "Cook at home, or get movies from the library – they're free!" said DeCharles.

But overall, DeCharles thinks Ryan and Hope are in a good position, even if they can't retire by 50. "They're doing pretty good, frankly. They did pretty well with their home, and it's great that they're saving so much."

By David Goldman, CNNMoney.com staff writer

Are you on track for an early retirement? Tell us why at millionaire@cnnmoney.com. Include your financial details and your family could be profiled in a future column of our Millionaire in the Making series.

Posted by kpantelides 9:17 am 111 Comments comment | Add a comment

"And where can a couple get by with only $350/mo in groceries? That'd be nice!"

What are you people eating that you can't get by on groceries for less than $300 a month? I live in NE Ohio, wife and 1 kid — we spend maybe $250 per month max on food at the grocery store and maybe another $100 per month eating out. We aren't eating steak and lobster every night obviously, but we don't live on Ramon Noodles either. I understand COL will affect things to a certain degree, but the family of 4 who spends 700-900 per month, holy cow!

By the way, this couple in the article is doing great!

Posted By Brent, Cleveland, OH : March 6, 2008 9:02 am

Kevin from Austin, Texas, your comment was great except for your assumption that they will need childcare if Hope goes back to work after having kids. She seems to be the main breadwinner in the future - what's stopping Ryan from staying home with the kids?

Posted By Maria, Brussels, Belgium : March 6, 2008 7:28 am

Most posters in this forum are hillarious. You talk of education when apparently you have none! The Wells' family is doing a great job in there savings this early. At that age I had nothing but credit card debt. I had no clue what savings was. So Ryan works as a used car salesman. I worked as one through school and made more money working part time there then I did my first 3 years with a "real job".

For the poeple who are comparing the housing prices, take a look at the housing prices in their area to your area. A simple salary comparison calculator online will show that you can make 1/2 as much in Pottsville as you can in just about every other city in the country and have a good home to live in. Try doing research prior to making a post on here and proving to people that you are mindless.

I do think they should have purchased something cheaper then the $19k Mustang. By 3-5 yrs older and he could have saved themsleves probably $8-10k.

Posted By Chris, Denver CO : March 6, 2008 4:02 am

Oh yeah by the way, Do they drive that Mustang or does it just sit in the garage. At $3 a gallon they are going to be spending probably at least another $100 a month on gas.

Posted By E. Devane, Mt. Vernon, In. : March 6, 2008 2:10 am

DOES NOT COMPUTE! This math does not add up. They earn $56,000 is that gross or take home? If that is gross I don't see how he can have $22,500 in IRA at 25 unless they have had help from relatives..also their mortgage payment is $570 on $125,000 what is their rate 4%? What about property taxes and home insurance, PMI insurance, life insurance, health insurance? I bet they have cell phones! Not included on here. Uhmmm yeah, more power to them if they do but I think they are full of it!!!! Oh yeah and back to the math, it says they pay 10% of income towards bills each month.. I added up the bills they have listed here at over $2000 a month even if 56,000 is their take home pay 10% would just be around $400 a month..get real

Posted By E. Devane, Mt. Vernon, In. : March 6, 2008 2:03 am

I think this is an excellent story to be feature in Millionaires in the Making. All the previous stories that I read were about people living in places such as California or Florida, taking out huge loans for a house which appreciated over 50% in less than 2 years and saving very little for retirement. The biggest portion of their networth was the gain on the house they couldn't even afford. They are the ones that caused this subprime crisis that every hardworking person in this country is paying for now. I would like to know what's happening to those people's networth. I think you guys are doing a great job although I agree with the comments about getting more education to boost your earning power. Those who trivialize education are clearly ignorant and out of touch with the reality. You are competing in a much more competitive global market now. Your parent generation may be able to get by with a high school degree, but you can't expect to have the same kind of opportunity with little education in this high tech, fast changing, global economy. My personal experience is that education is the best investment one can make. I took the time to get my education when others were working low paying job, and when I got my first job, I was making twice as much as people of the same age. I'm 35 now, and I have a networth close to 1 million, and a very small portion of it is from the gain from real estate. So value education, otherwise you will regret in the future. Besides greater earning power, education makes you a better person who can appreciate more things in life and live a fuller life, and that's worth more than a million dollar.

Posted By Alex, Omaha, Nebraska : March 6, 2008 1:59 am

Dave from Seattle, WA,

FACT IS HOUSE PRICES ARE OVER INFLATED PERIOD!!! And thats reason enough not to by a house in Seattle. Just today numbers were released for Feb. Seattle house prices down 0.01% YOY. Thats right negative baby. We have officially begun the ride down.

I take any prediction about the increase in population with a grain of salt. You also need than more than just population growth to support these crazy prices. And Seattle has experienced speculation. Wait until the ARMs that were big here 2 years ago start reseting next year. It'll be good.

Id rather miss the bottom and miss a little run up, then get in at the top and crash to the bottom.

I don't think 20% is far off. If prices hold steady where there are now until July, July will have a 10% YOY Drop. Yes thats right -10%. So 20% aint that far off. Active listings are up 61% YOY and pending sales are down 32% YOY. That means way more supply and way less demand, and going back to economics that means prices drop.

But if you look in the Seattle news that call that a buyers market. I call that a losers market. Sellers can't sell, and buyers are paying to much.

Oh and another this to note.
I am 24, my wife is 25. I have my MBA. My wife and I have $90+k in 401k and IRA. We have $15k in savings. Only have student loans as debt.

Posted By Ken, Seattle, WA : March 6, 2008 12:58 am

Sorry, you all miss a point on the Mustang. The Mustang is a necessary for Mr. Wells. Do you think Mr Wells can persuade his clients to buy other pricey Mustangs from him, if he drives a crappy used Japanese car? So the $19,000 Mustang is a great investment for Mr Wells to jack up his sales. Seems that a used car salesman is a lot smarter than a lot of MBAs here. LOL…

Posted By Jeff, Hong Kong : March 6, 2008 12:46 am

That's great to see couples making under $60K per year can still save so much! Wow, totally surprised!

Posted By John, Denver, CO : March 6, 2008 12:04 am

They are young and thinking ahead - which is great. Every fortune begins with a single penny.

Regarding the MBA, I have an MBA from Arkansas, an engineering degree and am a CFA charterholder. If there's a good MBA-level job in Arkansas that can pay what I can make (bottom line, after expenses) in NY, LA or Chicago, I'd be back in Arkansas in a heartbeat. Those jobs just are not there to be found. Can't beat small-town living, clean air, low crime and generally honest folks. I hope they enjoy Pottsville for many years.

Posted By Jerry in Chicago (from Pelsor, Arkansas) : March 5, 2008 11:40 pm

What's a millionaire?

Posted By Billy, Hoover, AL : March 5, 2008 11:27 pm

I think this article glosses over the cost of children. The most recent report that I've seen gave a ballpark figure of $340k to raise a child to 18, not including college costs. So if they were to have two kids they would have to find a way to generate an additional almost $700k, or 70% of millionaire status. Not to mention if they should have a child with even a mild chronic illness they could reasonably be looking at an additional $400 a month for drugs and doctors. So although saving and investing at a young age is admirable, I think it is unrealistic for people of modest income to be thinking of retirement at 50 unless they remain childless.

Posted By William, Bloomington, IN : March 5, 2008 11:10 pm

Well, they are off to a good start but they need to keep their watch on the luxury items. Good Luck!

Posted By Mel. St Louis MO : March 5, 2008 10:15 pm

Just want to say first of all I have never seen this many comments posted. Great job guys!!!! My wife and I make almost twice as much as you guys, and my wife and I are 29 and 26 respectively; however, we only have half as much saved as you two do. We have $50,000 in 401k and, $20,000 in home equity, but we do have 3 kids and no debt. If I do have anything bad to say it is that kids are expensive and the credit card debt sucks, but you guys are very smart for your age!! Our annual savings are $10,000 401K and $6000 Roth IRA, and $2500 cash for my ameritrade account. Like it was stated in a prior comment America would have a much lower national debt, and there would not be as many problems with the commercial paper market/credit crunch if everyone was just like you two.

Posted By William Watson, Indianapolis, IN : March 5, 2008 9:27 pm

Their income is fine for their current needs, but they need to find ways to generate more income for future needs. What about health insurance & life insurance? That could easily ring up to 400-500 per month. If they do have kids and Hope is the main earner (they mention her salary may double soon), then will she stay home with the kids? If so, their income drops dramatically. If she does go back to work, plan on spending ~ 750 a month (per child) for daycare (not including all the additional costs that come along for the ride). Similar concerns over college education costs for the children (save at least 300 a month per child over the next 18 years). Others have also mentioned the obvious ommissions clothing, gifts, charities, etc. I'm not bashing their work, in fact I applaud their saving (they are much further ahead then I was at their age), but the reality is that what they are doing now will in no way scale to a long-term plan because they are missing long-term costs (as stated above).

Posted By Kevin, Austin TX : March 5, 2008 9:22 pm

To add to my last comment. One of the easiest things to do is critize others. One of the hardest things to do is to look inside and do a self-assessment. I'm sure many of the posters on this forum and with regards to this article, smoke cigarettes, drink beer, buy lottery tickets, are addicted to the latest $500 XBOX machine or the lastest expensive computer gadget. Is their $300 entertainment cost, $330 mustang payment or anything else in their profile worse than the cost of your addictions that are taking away from your retirement pipe dreams.

If we had more people with their financial initiatives; we wouldn't have the $600 Billion dollar mortgage write-off dilema we're dealing with today. But it doesn't sound like to me, that they are trying to keep up with the Jones's like the majority of the US population.

Posted By Matthew, Aurora Colorado : March 5, 2008 9:21 pm

Good for you! Don't listen to negative comments…not many people your age can say they have $22,500 in a retirement account. 10 years ago, I made $30K a year…today $85K per year…and I have $270K networth at the age of 30 (doesn't include home equity, only investments in 401K and brokerage). Clearly the people on this website that think you will never make it are the ones that probably have a much higher income but low net worth…hm, wonder who is actually living beyond their means. Recommend you read "The Millionaire Next Door".

Posted By -BG, Chicago, IL : March 5, 2008 9:19 pm

After reading these posts, I have discovered that SOME of the most ignorant of these people are the educated. When I was their age, I had 0 invested and 0 in my bank account. I am now 41 years old, worked my way up in the car business, making in excess of 100k for many years. Transfered to financial industry and now I hire BA's and MBA's. My net worth is over 1M and I did it all on a high school diploma and a tour in the Marine Corp. There are alot more people with degrees working for less than 100K than there are earning more. Education can get your foot in the door. Persistance and determination can knock the door off it's hinges. They are doing a great job…

Posted By Me, Kingstree, SC : March 5, 2008 8:31 pm

I turned 24 in Vietnam with a net worth of about $600, so Ryan and Hope Wells are doing better than I was. However, I agree with the other people who pointed out that it is entirely premature to suggest that a couple with only 25k or so invested will ever become millionaires. I also agree that they should both attend a local, cheap junior college or college. Finally, they should both learn to run outside and get on a low-fat diet so health issues don't derail their plans.

Posted By rob, washington, dc : March 5, 2008 8:30 pm

Hello All-

The first younger poster was from Menasha, WI. I'm from just about 30 miles south of Green Bay, WI.

In the Midwestern small towns you can get a nice 1200 sq. ft ranch home for 100K. The same house in San Diego would be 450K, same with the eastern seaboard.

As a young frugal person, I also think they made a poor choice with the Mustang. They should have purchased something in the 8-10K price range.

As a Boglehead, Ryan & Hope;

Here is a few time for you:
They should be able to save 15-20% (with match) on there income. No big vacations but they can build real wealth. They should read "The Bogleheads' Guide on Investing" by Mel Lindauer & Taylor Larimore.

Their biggest hurdle to overcome is to develop an Asset Allocation Plan. The amount they allocate to stocks vs. bonds will be a huge factor in the risk/reward of their portfolio.

Contribution to her 401K/403B up to the company match. Open Roths for both via Vanguard. Use the Target Retirement Funds and/or Index Funds to develop a well thought out asset allocation plan.

Emergency Fund should be kept in a fund such as the Vanguard Prime Money Market Fund. Good Luck!!

Posted By Eric, Manitowoc, WI : March 5, 2008 8:28 pm

125K doesnt buy anything anywhere in america? what a joke taht person is an idiot i live in oklahoma 125k would buy you a modest to good house easy

Posted By travis coyle, oklahoma : March 5, 2008 7:58 pm

brian from new york - chill out!
this couple is doing great. how many people in their early 20s have 5-digit savings in a IRA? in major cities $56K isn't a lot, but remember they're in a smaller city in AK. if they moved to NY or LA they would be making more money. duh!

Posted By mbb, los angeles, ca : March 5, 2008 7:41 pm

I admire their desire to save and invest, but the Wells are stumbling when it comes to handling credit and debt. Paying off credit cards and student loans is a great investment–trying to simply get around it by "continually opening new cards" is going to bite them hard next time they try to get a loan.

And where can a couple get by with only $350/mo in groceries? That'd be nice!

Posted By David, Kansas City, MO : March 5, 2008 7:03 pm

This couple is doing great! You either live in a bubble or have no concept of how to live a frugal but comfortable life if you think they don't earn enough or their house doesn't cost enough. I hope the couple will ignore most of these comments on this page that say they aren't on the right track. The "need more education" crowd are full of it. I've seen so many "professionals" that don't have a lick of common sense and act like they know but in reality have no clue that I now question every move they make. If they come out of the office you need to keep a close eye on them so they won't hurt themselves or you in whatever ordinary task might be taking place. Almost every post I've seen from NY city or another high cost of living area comes from an idiot that has no concept of life outside their own backyard. Most of the negative response in this blog comes from people that over consume, you know, the average arrogant American. If our grandparents read this blog, I'm sure they would agree with me. Over the last 30 years, America has lost its way.

Posted By Erin Posey, Bryan, TX : March 5, 2008 6:54 pm

Relax with the charities. Relax with the criticism. At least these two aren't out selling drugs to cheat through life and ruin the world your children will grow up in. They are not buying houses they cant afford with no money down to risk foreclosure to just drive our housing market and economy down the drain. I would say these two are educated and everyone should take note. Reading this makes me want to cut my expenses. We will all give to charity when the time is right. If you want to read about people giving to charity visit godiswatching.com. Grow up.

Posted By Go Pats, Boston, Ma. : March 5, 2008 6:52 pm

I think people are posting negative comments because they want to see a MITM where the people live in a metropolitan area (yes like the Bay Area) and did not buy their house 20 years ago, did not start saving for their 401k 20 years ago and does not make $100k per year, and did not save a ton of money buy eating ramen for 20 years, driving an old ford pinto, and foresaking any vacation of any kind at all, while buying clothes at the thrift store.

I mean really, this young couple is supposed to inspire who? Why don't I move to AK, why don't they move to CA? I'll tell you why, because they'd be living in the worst ghetto imaginable.

So is there one person or family out there that is just starting out now? Just starting to save now? Maybe has a little fun every now and then? Lives in a high cost area (yes like the Bay Area)? And owns their own house, now? And has a sizable amount of money in their 401k, now? And is a MITM, now? And makes less than $70K per year now?

You find this person and people will shut up with the negative comments.

But I also want to say that this couple is doing an excellent job. They are WAY ahead of most kids their age. You're only young once, enjoy that Mustang!

Posted By Eric, Fairfield, CA : March 5, 2008 6:44 pm

To Ken in Seattle,

Ken, I suppose you are not wrong to rent if you are unsure of where you will be living in the short term. However, that is the only reasonable reason to avoid purchasing a home in the Central Puget Sound region.

The U.S. Census Bureau forecasts a net polulation increase of nearly 1 million people from 2000 to 2020. That population growth, together with strong market fundamentals (house prices have not experienced the huge increases driven by investor speculation here that other markets have experienced) equals a reliable return on investment. You may pay slightly too much by failing to purchase at the bottom, but waiting to buy at the bottom is just as hard as waiting to sell at the top. Both are only clear in hindsight.

Anything is possible, but hoping for prices to retreat twenty percent from the most recent peak is a tall order. Good luck to you.

Posted By Dave, Seattle, WA : March 5, 2008 6:43 pm

Brian from New York: Your judgmental and snide remarks are uncalled for.
Who says you can't be a millionaire
in 30 years on 56k a year. I've seen
immigrants do it on less working in jobs you may not consider "a career path to wealth". I know your type:
no matter how much you make, you will
be miserable and jealous of others.
Any type of setback in your life, you'll run home to mommy and daddy and
blame the world.

Posted By Steve, New Jersey : March 5, 2008 6:35 pm

I agree with Eric from Virginia. Although I agree secondary education is a good investment for most, it is not for all and throwing an MBA in for a used car salesman probably won't help him much. I would also suspect that even with an MBA and higher earning potential, they would most likely have to move to a higher cost area to find those higher paying jobs.

Many people here are saying how $56K is not much and throwing out numbers for what they pay or earn but you aren't comparing apples to apples. If the average house costs say $50K there as opposed to $750K in San Francisco, then you can't really compare their salary and expenses as well ($12/day for food isn't necessarily poverty level where they live).

If they already have the house & a car, the small dent in their credit from opening new credit cards shouldn't affect them all that much, and (nothing against you Dave Ramsey fans) debt is good, especially at 0%! One thing I would like to say though, is if it is such a low cost area, $300/month for entertainment still seems quite high in my opinion.

They may not be able to retire at 50, but they are doing much better than most people their age.

Posted By Bryan, Old Forge, PA : March 5, 2008 6:34 pm

I find these comments about his occupation to be demeaning. Selling cars on commission is a tough business, and if he can succeed, it is a stepping stone to other great salespositions that pay even more.

Let's not forget that both Bill Gates and Steve Jobs are not college graduates.

I am in my early 40's. About 7 years ago, we had to liquidate our IRA (about $40K). We also had to pay $10K in taxes on it. I've had to start over and only have $22K in my IRA. I wish I was in thaie shoes.

They are on the right track.

Posted By Jim, Bolingbrrok, IL : March 5, 2008 6:34 pm

This is directed at the poster named "Well Informed" from "Anytown, USA" who is obviously negatively biased against civil servants for some reason. Aside from the fact that you've gone completely off topic…you missed a big part of the puzzle when you compared the benefits of government service with those of the private sector. What you don't realize is that many professionals in the federal government (I cannot speak for state, county, or others) are actually public servants who have devoted their career (at least for the time being) to perform a service that many would not perform given the salary that is offered. The reason why federal government employees are offered such attractive retirement benefits is that if we were to pursue a job/career in the private sector, we would be getting a lot more benefits (stock options, higher pay, fringe benefits, etc.) than we would ever get in government. So while I have to wait 20+ years to collect on these so-called "enormous" pension benefits, workers in the private sector are already collecting benefits and investing and earning interest on them as I write this right now.

Posted By Better Informed, Washington, DC : March 5, 2008 6:21 pm

Only $4500 in credit card debt? Unrealistic… I WISH I had that little in CC debt. I'm sitting at $13,000 and I just paid $16,000 off (in less than a year, mind you).

To the person referencing the Seattle housing market, I'm with you–no way it's smart to buy a house here right now. SO EXPENSIVE!

Posted By Anne, Seattle WA : March 5, 2008 6:21 pm

For the record, if an Arkansas tornado threw this couple in Midtown Manhattan or Beverly Hills, I think they would still do better than most because of their INVESTING AND SAVINGS POTENTIAL, even if they were nestled in the big city they would more than likely still be doing great because obviously they would be making more money in NY or LA. And the light of this whole story is they have great potential and they are on the right track to wealth.

I really wish that every one just would just get the most important part of this whole story! And that is the fact that this very young couple is financially mentally headed in the right direction! This couple is way too young for anybody to just flat out say that they are not millionaires in the making!!! They are way too young for anybody to say that. At their age and with their investing and savings potential, who knows what will happen for them between now and age 50 and I'm sure that they will be making more money.

And think about this, even if a person retires with only $500,000, if they are smart and bright enough "which few people are" there is a chance that if they continue to invest wisely that could eventually turn $500,000 into $5mil, but we all know that it's all about the smarts and where you invest and who you invest with. A lot of multi-millionaires started out with far less money or potential, so please just wish this young couple the best and be happy that their a young couples on the right track financially, think about it, where were you at 25??? And to tell the truth, most graduates that do extremely well after graduating had some type of pull from networking or a close family/friend already in the field, that help them with landing a job right away with big bucks, not all but most, so lets be fair

Posted By DeAndrea, Memphis,TN : March 5, 2008 6:20 pm

How about listing liabilities when you do these "Millionaires in the Making" as well? You can't do an accurate assessment without taking account of the liabilities.

For example: the property (Home and land). What is the outstanding balance on the mortgage? The real value is the net of the two (probably near zero since it was recently bought), or negative (underwater) since Real Estate has been taking it in the shins the past year.

In addition, the credit card balance was not listed as a liability. Its balance is greater than the amount held in mutual funds.

Posted By Bruce, San Diego CA : March 5, 2008 5:59 pm

I'm surprised at how many people think $56,000 is a small income. It's well above the national average let alone the AK average. I make $44K per year and feel I get by quite well. I save 15,000 per year in my 401K and max out a Roth IRA and still pay for a mortgage on my 45K condo and add to my emergency fund in a money market account. I have no other debt except my mortgage. I plan to retire at 49 with more money than they are projected to have. I'm 28 right now. I live in the upper midwest.

Posted By Aaron, Menasha,WI : March 5, 2008 5:47 pm

Of course there are areas they can improve on (I'm not a big fan of expensive vehicles, should pay off debt first, look at tax implication of investment vehicles) the main thing they have going for them is time, and compounding interest.
Maybe many people who are posting didn't start saving at their age and are jealous?
I disagree they are not representative; my mortgage is 585 a month and I live in a Southern metropolitan area. No help from Ma and Pa, it's called buying a house you can afford and doing the upgrades yourself. Our monthly grocery bill is around 700-900 for a family of 4, and we eat well on that.

Posted By partgypsy Durham NC : March 5, 2008 5:01 pm

They are absolutely doing well. Look at those smiles! When I was that age, I 20k in student loans, drove a car so rusted you could look in the trunk and see the ground, and had $50 left after expenses.

They are off to a good start. I do think that career planning(training, more education) should be the goal. At this point in their lives, they can really gain the skills needed to continue their success. And this is the best time to make that push, traveling fast and lean.

Keep up the good work!

Posted By David, Herndon, VA : March 5, 2008 4:53 pm

I think it is great they are saving and thinking ahead (instead of seeking instant gratification). However, what I would like to know with these "millionaires in the making", are they only serving themselves or are they helping others as well. It seems interesting that you rarely hear about people who are not only saving for the future but also give to charities and help within their communities. Are these people simply building up their treasures here on earth?

Posted By C. Zabel Rochester MN : March 5, 2008 4:53 pm

I echo some of the previous points. This MONEY profile is completely off - this couple is probably worse off than the average American couple/family and is no where close to being "on their way to being millionaires". This is a couple who makes below the national average, probably lives in a very small house/trailer (125k won't get much in most of this country) and doesn't spend any money on vacations, clothing, gifts, etc. (i.e. basically living at the poverty line). And this is what MONEY terms Millionaires in the Making. Based on the information provided, the couple has a current net worth of less than $20,000 (hardly a wealthy couple even for their age). They have assets of $170,000, but liabilities of $150,000 (including the mortgage on the house). The husband is a used car salesman - hardly a career path to wealth. When they have children and she stops working, it is more likely they will have under $40,000 per year in income and collecting food stamps. This profile is just silly when all things are considered.

What's next, the 16-yr old living at home who mows lawns and earns 10k/year who in 50 years will be "millionaire in the making".

Posted By Brian, New York NY : March 5, 2008 4:33 pm

When CNN reports on people with great jobs, great savings strategies and a net worth already exceeding $350k, people get upset and want to see more stories about an average Joe. When CNN reports on an average Joe that is making the stupid spending mistakes every average Joe made at age 25 but is still saving enough to someday be a millionaire, albeit just barely and a long way off, people complain. Look, there are no two ways about it. The average Joe will have a hard time saving a million bucks and a million bucks won't be much by the time they do, but that is life. Maybe these people really enjoy their mustang. Maybe they really enjoy going to movies and eating out. Maybe they cut back in other areas that you don't. Who knows? The fact of the matter is, what these people are doing with respect to savings is a stellar achievement for people in their income bracket. They aren't living paycheck to paycheck, they aren't investing in the lottery and they aren't living WAY beyond their means. The world is relative, and relative to people like them, they are a beacon of good finances.

Posted By Realist, Reality, USA : March 5, 2008 4:29 pm

Lighten up, everyone. They are YOUNG. Young people will spend a bit on entertainment. I sure spent more than that just for me when I was there age … and older. When you are young, you also don't really know about what it will take to retire. The most important thing in this article is that they are doing SOMETHING. I sure know many young people who have no saving and don't contribute to 401ks/IRAs.

They are so far ahead of most their age, they should be commended. Yes, they have CC debt, yes the car was too expensive. They need to live their lives and enjoy their youth BEFORE the kids arrive. As they age, I'm sure they'll realize retiring at 50 is a pipe dream and will make adjustments accordingly.

Good Luck to them.

Posted By Tom in New Jersey : March 5, 2008 4:18 pm

Given the confirming comments that this couple will need WAY more than the $1.3 Million (in 2008+26=2034 dollars or equivalently, per my earlier post, to roughly $323,000 in today's purchasing power)to retire confortably at age 50, we should consider exactly WHO (besides the rich) WILL be able to retire before age 65 and eligibility for Medicare.

Unfortunately, the answer if TAXPAYERS foolishly allow things continue, are ONLY Fereral, State, County, and Municipal civil servants. These are (with few exceptions) the only workers that still receive the old fashioned traditional Defined Benefit Pension Plans guaranteeing a lifetime annuity base on final salary, length of service and a percentage (usually 2-3%) per year of service. This type of pension formula effectively MORE THAN eliminates the erosion of value due to inflation because the annuity formula is based on FINAL salary, and salary increase (over time) at a rate GREATER than inflation (inflation reflecting "price" not "wage" changes). To add insult to injury, civil servant pensions often include post-retirement cost of living increases (unheard of in the private sector and which increase the pensions "value" by approximately 50%) and VERY rich (often cost-free) retiree health care (also unheard of in the private sector). Granted, civil servants are also taxpayers, but since they represent only about 10% of all workers, this structure represents an ENORMEOUS and UNJUSTIFIED transferrence of wealth from private-sector workers to civil servants. Without doubt, unless the benefits of CURRENT (not just NEW) civil servants are REDUCED to a level more in line with the private sector, all but the very rich private-sector workers will work well into old age to support the early retirements of civil servants.

Posted By Well Informed, Anytown, USA : March 5, 2008 4:17 pm

"By the way, Ken from Seattle, WA, why are you waiting another 2-3 years to buy a house (assuming it would be purchased in Seattle, WA)? Seattle, WA is one of the few markets (overall) going north.
Posted By Jamie, Butte, MT"

Seattle was up 1.3% YOY for 2007. Thats less than inflation. Seattle was slow to follow the run up and just now are starting to see it make its way south. Search for Seattle Bubble Blog.

We rent a place for less than half the cost it would be to own it. Plus its a a townhouse which i would never buy, shared walls is for the birds. Another thing is we don't know where we want to live for 5-7 years.

So we are going to wait for houses to drop. I expect 20%+ from the peak. Plus we will likely head to Portland where house prices are 20% less than Seattle to begin with. And also will buy a house based on just my income and at max 25% of take home with the downpayment we will have.

Posted By Ken, Seattle, WA : March 5, 2008 4:15 pm

Why do people assume that everyone needs to go to college or get an advanced degree? If everyone becomes a doctor, lawyer, engineer, pharmacist, etc., who is going to be left to sell cars, repair things, etc.? Not everyone wants to go to college nor is everyone suited for these "educated" positions.

There is one comment that they can't expect to be middle-aged with children and not have debt. Uh - WRONG! It depends on your lifestyle. This couple seems very grounded to me and I'm betting that they will be in a financial condition to be debt free, except for a mortgage perhaps when they are raising children.

Would I have done everything they did? Maybe not, but I'm not going to fault them for anything. They have a GOAL and a PLAN, which is more than many people seem to have AND they are sticking to the plan. I'm glad they have their Mustang now, too! Mine had to go shortly after my daughter was born since it was no longer practical, so I'm glad the couple has it right now.

Posted By Mar, Catonsville, MD : March 5, 2008 4:09 pm

Yes, its good to see they save, but they sure need to spend a lot less. My wife and I make about twice them, but have 10+ year old cars (long ago paid for), shop at thrift stores, eat out maybe once a week at a favorite hole in the wall for <$20 total, and we're putting $1,000+ extra/month to the house (hope to have that paid for in about 3 years).

Posted By Brant, Atlanta, GA : March 5, 2008 4:03 pm

Look these guys live in rural middle America. A Mustang is what you drive there, not a Prius or some beater Civic. And look, most kids their age do not even have a clue much less a mortgage and 22k in a 401k! They have a long time to wheather ups and downs, career changes, going back to school, kids, health issues, divorce even… so long as they stay in middle America; this scenario wouldn't work in California.

Good job!

Posted By G in CA : March 5, 2008 4:02 pm

Give me a break! These kids are doing fine. Homeowners, savings, and manageble debt. If the rest of Americans could do the same, there'd be a lot less whining going on.

Moving the credit card debt around at 0% interest is smart. I get 0% interest teasers all the time without a balance transfer fee and I take it. Putting/keeping the money in a money market means a guaranteed return. What do I care if Citibank is paying 11% to borrow the money they give me for 0%. Having the credit score drop because of this is minimal. As long as payments are made on time, it can actually increase your score.

I agree that the used car is a bit extravagant. Not a very good negotiation for someone who sells used cars. Will probably cost $50K over time in opportunity cost.

Thanks for being responsible, setting the right priorities, and counting on yourselves first to take care of your future. You're setting a great example for your children when the time comes to be parents.

Good luck kids!

Posted By L Chung, Vienna, VA : March 5, 2008 3:55 pm

It's funny how so many point out that the costs of living aren't realistic somehow.

If you were living in the DC or NY area, doing the same kind of stuff for work, a couple would probably be making more in order to keep up with the cost of living differences from being in DC or NY as opposed to AK.

The mortgages are outrageous? I think not. If you all want the same mortgages, go move to AK. If you want to live in the city or a metropolitan area, guess what, you're gonna pay more for the same exact sized house in NY or DC, MD. Deal with it. Nothing's keeping you from moving to AK and buying a house but yourself.

And bouncing around debt to different 0% promo cards probably isn't the best idea, but hurting their credit is minor at best because what do people get good credit scores for?

That's right, a home, and guess what they already got? THEIR HOME! I really doubt they're planning on moving to the city anytime soon or selling their house and buying a new one if they're just saving and doing everything they can for retirement at this point.

And chances are, by the time they want to move into a new home, the inquiries on their credit reports will have fallen off already.

Posted By Dave, Fairfax, VA : March 5, 2008 3:48 pm

Wow, the sharks are out for blood on this one! — people either moan about Money.com featuring people who make 6-figures, or they complain that it will take these people too long to become millionaires! What do you people want?

Yes, maybe this couples logic is off — but I think money.com is using them as an example of a young couple actually doing what most American's aren't doing; thinking ahead and saving something! (statistically most of those that posted on this article aren't doing that either!)

Who cares if their income has little purchasing power in high cost of living areas like NYC, San Fran, etc? Areas like that don't "reflect most of the suburband US" as one poster put it. Median US home price is in the 200's roughly. As others have mentioned, if you don't like your cities cost of living, move!

Could this couple be doing better in terms of debt, income, expenses? Sure — but all of us could do better. They're still heading in the right direction by thinking about these long term goals at a young age.

Posted By Brent Cleveland, OH : March 5, 2008 3:47 pm

Considering what few assets they have they invested in stocks and real estate in the last two years given their age it is doubtful they are going to get there fast.
In general there expenses are out of wack, buying a car that is almost 1/3 of your gross inccome with a payment of $330 a month is hardly frugal. It is a rapidly depreciating asset and a luxery. Entertainment of $300 a month is also a large total for a frugal couple. Bottom line is he has to increase his salary quickly. If children come sooner rather than later and his wife is out of the workforce for while he will quickly be in dire straights. Used car sales is a dead end job, he should be working towards a career at this stage of his life. The budget you listes skips, medical, clothes, gifts, etc.
Given this couple makes such alow an income and has over a $1,000 each month in debt I am suprised you put them in the millionaire in the making catagory.

Posted By NY, NY : March 5, 2008 3:39 pm

This is exactly why I am going to die at 65.

I am not going to live in squalor just to make it to 90 years old. My diet of cigarettes, double bacon cheeseburgers, beer, and pizza will help me to live a self-indulgant life and die early enough to not be a burden to my kids. As a matter of fact, my family will be doing nicely. I will have a $500,000 life insurance policy that will take care of any problems I leave behind. The money that my family will make from my death is much more important to them than me being alive for a long time.

Posted By Yadgyu, Harkeyville, TX : March 5, 2008 3:36 pm

"Let him who is without sin cast the first stone"

Oh how this verse applies to all these MITM articles……….

Let's just be happy that they have a clue - great work guys!!

Posted By CFP(R), Chicago, IL : March 5, 2008 3:19 pm

Sidharth,

There are plenty of people with MBA's, but the truth of the matter is with an extra couple of lines on a piece of paper (resume), it does not matter until you apply it. It does not sound like they are the higher education type, but they sound like Mary and Joe America that has helped this country grow. They are saavy, smart, and disciplined and after all of the adjustments of inflation and this that and the other, I am sure they will be better of than most when it comes time to retire. This couple is not relying on the government to take care of their lives in the future I can guarantee you that.

In addition, people often equate retirement with no more work, play and live happily ever after. Maybe this guy likes to rebuild cars and wants to turn his passion into a way to make money to supplement his retirement income. Everyone is so fixated on getting to that pinnacle point where they can stop and exhale that they lose the focus on what they actually like doing outside of the J O B. When you get there what are you going to do?? Stop being active, stop educating yourself to be better, sit in front of a TV and play XBOX (or whatever it will be in 25 years) all day. I am not directing this at you but to people in general. Rethink, retool and never be complacent.

Posted By Eric, Virginia Beach, VA : March 5, 2008 3:10 pm

The only comment I have is the part about having a $19K Mustang, putting a good amount into an IRA AND having credit card debit. In the long run paying those cards off at 0% with various cards will still cost the same, but jumping from card to card messes with your credit and leaves you open to identity theft. Sell the Mustang and get a car for cash. Take what you're putting into that IRA and what you were putting into that Mustang and kill that credit card. They could have it paid off in less than 6 months and not have to worry about applying for that next 0% card. Then, go right back to the IRA.

On a side note, How could they have $17500 left on the car loan if 4 months of payments = $1320? That would still leave them $17680 to pay (not $17,500), if they had the loan at 0% interest. I don't know that I've ever seen a 0% interest loan on a used car.

Too many variables (ex. dumb car loans when trying to pay off debt, no kids yet, various 0% Credit cards, etc.) in this "Millionaire in the Making" story to validate it's posting, IMO.

Posted By Jim, Jefferson City, MO : March 5, 2008 3:03 pm

Sidharth hit it right on. I'm 27 yrs old and just graduated with a pharm.d. In 6mo I was able to max out my 40lK and IRA despite owing 210K for school and just buying a new home.

Posted By Anonymous : March 5, 2008 3:02 pm

Luis, Denver, MA,

You misunderstand. First of all, your reference to health is pretty silly. Clearly the kinds of investments we are talking about here are monetary, so that was outside of the context of my comment. Either way, there is a risk/reward component you are missing here. Even if I could only return 10% per year from my education, education is almost a risk-free investment (i.e., compare to t-bills), assuming you don't get ill or die before payback. Sure, you might be laid off, but that could happen whether you have an education or not (and is more likely to happen if not). So the return (the difference between your earning power and job security with and without an education) is fairly certain to occur. I don't know of any other MONETARY return that is quite so safe.

By the way, the average new graduate from law school makes about $85,000 a year at a law firm. The average graduate from undergrad? Less than $40,000. Most people could double their salary by going to law school. That may not be a 30% return, but it will be much higher than the risk-free rate.

Finally, don't assume anything about me. How do you know I didn't graduate with a fairly worthless degree, like philosophy and tripled my earning power because my earning power was $25,0000 coming out of undergrad? You don't. Not all lawyers are rich. I meet accountants and engineers on a weekly basis that make more than I do.

Posted By Mike, Denver, CO : March 5, 2008 2:58 pm

Its great what they are going at an early age.

Newsflash on the MBA/2ndary education talk…not everyone is smart enough to go to med, law, etc.

Posted By LT, Dallas, TX : March 5, 2008 2:57 pm

I would recommend putting 25% into retirement accounts rather than the 15% in taxable accounts. They're just missing out on so much tax deferred savings by not doing so.

Posted By TW, Louisiana : March 5, 2008 2:46 pm

At a withdrawal rate of 4%, they would need about $1.4mm in TODAY dollars to have 100% of their income in retirement ($1.1mm to get about 80%). That's equal to $3.3mm in 25 years! Even at their current income, they would need to be multi-millionaires, not mere millionaires to retire at 50.

Posted By Seattle, WA : March 5, 2008 2:41 pm

To Caleb, Jason,

Let me correct my previous comment. I didn't mean to specifically say that do an "MBA". What I meant was that they should seriously think about higher education (MBA, Law School, Med School, Engineering) in whatever field they like. This couple has their whole life in front of them. They might be feeling satisfied now with their finances, but they cannot be so sure about the future. Especially once you have kids and you are in your mid-life, you could not expect to continue to be debt free.

They might be disciplined now (which is really good), but its only human nature to splurge once in a while. Having more money is not a bad thing. More money + Disciplined Savings is much better. Education is the highest return investment that anyone will ever make.

Posted By Sidharth, Redwood City, CA : March 5, 2008 2:34 pm

According to cnn's expert, they'll have $1.3M at age 50, or roughly 600 grand when adjusted for inflation.

Does anyone actually think you can fund a 30 year retirement on that without massive cuts in standard of living?

Posted By Bob, Chicago, IL : March 5, 2008 2:34 pm

I think it is wasy to sit here nad criticize what they are doing. Obviously they can do better with certain things but they are doing an amzing jiob on the salary they make.

when those speed bumps come they will be way ahead of many people and can tweak and still save with the discipline they currently have.

Good job guys.

Posted By Emeka, columbus, oh : March 5, 2008 2:32 pm

Quoting from the article … "Diana DeCharles, a Certified Financial Planner with AIG Financial Advisors … says that even with an aggressive 9% to 10% annual return on their investments, the Wellses will be worth about $1.3 million at age 50 –
" OK … Since its VERY hard to get a REAL (i.e., inflation-adjusted) long term return in excess of 4% (think of US Treaury "TIPS"), the 9-10% pre-inflation return assumption corresponds to an inflation assumption of 5.5% [i.e. .5(9%+10%)-4%]. Since their average current age is 24, it will be 26 years to get to (average) age 50. Since $1 in 26 years (discounted at 5.5%) is worth 24.86 cents today, the $1.3 Million they will have in 26 years will realy have today's purchasing power of $323,132. Anyone who thinks a couple can retire on that (plus Social Security less the HUGH cost of health care) is being quite foolish.

Posted By Well Informed, Anytown, USA : March 5, 2008 2:27 pm

They are thinking long-term, which is the key to building wealth. Even though a few of their priorities are out of whack (paying 19K for a used car while having 4.5K in CC debt?) they are doing more than most 25 year olds. Too bad more Americans dont have half this couple's discipline.

Posted By Steve, Springfield, Ohio : March 5, 2008 2:24 pm

$570 per month mortgage payment? That is what our property taxes are on a 400k home in southern pa near the MD. border. You can't buy a decent home for under 300k here. Then you have the taxes etc. Bottom rate rents here are about 800 per month for a 1 bedroom. Their cost of living is dirt cheap and does not reflect most of the suburban US.

Posted By Andrew, New Freedom PA : March 5, 2008 2:18 pm

daveramsey.com = Be Weird!! Live life debt free and if you do rich people stuff, well you get to become rich people! Changed my life and helps thousands a day do the same thing by changing your behavior and attitude towards money on his syndicated talk radio show. The mustang was a bad idea…not the end of the world but could have been a little bit more modest. The credit card debt is not acceptable and should be their #1 priority to get out of it. Cost of living is fortunate for them, but they are on an island when compared to most of the country. I applaud their efforts to this point.

Posted By Eric, Virginia Beach, VA : March 5, 2008 2:17 pm

Like a lot of people already mentioned: they are living above their means. The $19k car and the $300/month in entertainment is ridiculous! Something else doesn't compute: with their current cash flow, $10,000 of emergency fund is not 6 months of expenses. Their current montly expenses is $2025.

If they are serious about being millionaires, they should reduce their living expenses and pay off debts. Playing the Credit Card roulette (as I like to call it) will eventually catch up with them.

Posted By Marc, Greenville SC : March 5, 2008 2:14 pm

I love the fact that this couple is planning ahead and being financially smart. One thing I don't understand though is the desire of this couple, and many others, to retire at such a young age. Why not rather find something you love to do, and can get paid to do, and keep doing that as long as you're able? Then your $2m nest egg can last a lot longer and allow you to have a higher standard of living.

Posted By Carl T, Grand Rapids, MI : March 5, 2008 2:07 pm

Good advice about education, selling the car and driving a cheap car while paying off credit. I imagine they pay at least 3% each time they "surf" the balance. I love investing, but if you are paying over 6% interest on anything, paying it down is your best investment.

Posted By Michael, Greenveille, SC : March 5, 2008 2:01 pm

The plan they have to save money is a good one but I wonder how sustainable it will be once children come around. They are young and they need to enjoy themselves and take advantage of their relative freedom even if it mean saving less now. You are only young once!

Posted By Sherman Kansas City, MO : March 5, 2008 1:58 pm

If they are having trouble with growth potential in their careers at this age, their greatest enemy will be their buying power from inflation increases. I agree, a higher education will increase the amount of earning power potential. If they stay at their current lifestyle and only go further in debt from student loans for their education and their combined income doubles, the debt from the student loans would essentially pay for itself the first year after graduation.

Posted By Tony, Dallas TX : March 5, 2008 1:54 pm

Glad to see real people with real lives (and expenses) being examined.

I'm sick of seeing people making $100k/year that spend $0 on entertainment(vacation), drive a 20 year old car, Eat canned soup 365 days a year.

Everyone knocks on the credit cards, but the 0% promo thing works great, and your credit score really only matters if you intend to use it soon.

Posted By david, louisville ky : March 5, 2008 1:51 pm

The best defense is a good offense. They need to do something to position themselves to make more money in the future - and that is either through education and/or gain the knowledge to start their own business. Statistically most millionaires in this country aren't the presidents of some major corporation - they are the people that own the local convenience store, dry cleaners, tire store, etc. Kids will come, the roof will leak, and things will happen that will cause a couple earning 56K to not be able to save much money. "Robbing from Peter to pay Paul" by transferring balances on a card to another card is a bad idea. It will ruin their credit rating and is getting them nowhere. Pay off the card asap and only spend what they can pay off at the end of the month. Their plan looks great on paper but it will require LOTS of sacrifice and impossible luck to make it on their income.

Inflation does eat into the value of money, but I always find it interesting when someone says that $1M won't be worth much in the future. It will be worth exactly $1M more than zero. Of course, it will be worth less than $1M today but it will be way better than nothing.

Posted By Brian Atlanta, GA : March 5, 2008 1:46 pm

Mike from Denver: I welcome your open challenge and argue that one's investment in their HEALTH on both a physical and mental level would provide a far greater return on investment than one's education in life-long monetary and other values.

P.S. I am in full support of getting a higher education. However, it's pretty narrow-minded or even arrogant to think that just because YOU make a lot of money becuase of your attorney profession that it equates to anyone who achieves higher education will reach the same financial rewards. That being said, a return on investment from education will vary greatly by their selected careerpath. But, feel free to pat yourself on the back…. as long as you keep your employment and good standing in check

Posted By Luis, Denver, MA : March 5, 2008 1:31 pm

To those going crazy about their CC debt… did you miss the part about it being at 0%? So much for "guaranteed return" in paying it down. I'd stretch that out as long as possible as that's some "free" money (if you don't get the concept of time value of money, please don't reply lambasting me). Also the advisor's comment about applying for cards is well-meaning and rooted, it's not the end-all be-all. I've personally chosen to take the credit score hit from multiple inquiries (they stop doing damage 6 months in), and no matter what anyone tells you, the number of accounts you have will help more than hurt as your utilization goes down with more available credit. Take all of the above from a guy floating $150k on 0% cards. Yes, the car seems a bit excessive, but looks like their only extravagance really. If everyone else was that disciplined we wouldn't be having all the problems we're having today.

Posted By Dave C, Des Moines Iowa : March 5, 2008 1:25 pm

Is it me or is MONEY scraping the bottom of the barrel for their Millionaires in the Making profiles?

During the housing boom, a new profile ran once a week. Now they run once every several MONTHS and feature people who are nowhere NEAR being millionaires.

The reason? All that "wealth" being created by the housing bubble was IMAGINARY. Their "millionaires in the making" had $750K in "equity" (that has since vanished) and $5K in liquid assets. Makes it a little hard to find folks to profile, now doesn't it?

Posted By Roxy, Goshen, IN : March 5, 2008 1:18 pm

Huge LMAOs…

The fact that it will take 33.3 years at 60k/year to just MAKE 2 million tells me they won't get there by 80, let alone 50.

What?!? They expect to save every single penny made and not have any income taxed for the next 25 years?!?

This is just a plain unrealistic goal that is very, highly unachievable unless they find a great return on investments of 10% annually; while at the same time, not paying any income taxes on the savings, or any capital gains; while at the same time living in virtual poverty on the other 30k (taxed) per year they don't save.

My number crunching states it will take them at least 22 years of saving 30k/year with a 10% return and no taxes to have $2,142,082, as shown in table 1.

table 1:
year savings
1 30,000
2 63,000
3 99,300
4 139,230
5 183,153
6 231,468
7 284,615
8 343,077
9 407,384
10 478,123
11 555,935
12 641,529
13 735,681
14 839,250
15 953,174
16 1,078,492
17 1,216,341
18 1,367,975
19 1,534,773
20 1,718,250
21 1,920,075
22 2,142,082

now, if you factor in ONLY capital gains, that will relieve 15%/year; the table looks more like: (Asvd=actSaved)

yr svngs 10%Ret totSvns cpGn15% Asvd
1 30000 3000 33000 450 32550
2 62550 6255 68805 938 67867
3 97867 9787 107653 1468 106185
4 136185 13619 149804 2043 147761
5 177761 17776 195537 2666 192871
6 222871 22287 245158 3343 241815
7 271815 27181 298996 4077 294919
8 324919 32492 357411 4874 352537
9 382537 38254 420791 5738 415053
10 445053 44505 489558 6676 482882
11 512882 51288 564171 7693 556477
12 586477 58648 645125 8797 636328
13 666328 66633 732961 9995 722966
14 752966 75297 828263 11294 816968
15 846968 84697 931665 12705 918960
16 948960 94896 1043856 14234 1029622
17 1059622 105962 1165584 15894 1149690
18 1179690 117969 1297659 17695 1279963
19 1309963 130996 1440960 19649 1421310
20 1451310 145131 1596441 21770 1574672
21 1604672 160467 1765139 24070 1741069
22 1771069 177107 1948176 26566 1921610
23 1951610 195161 2146771 29274 2117497

not too bad for requiring only the extra year but again, no income taxes which is VERY HIGHLY unlikely.

now, the fact is we problably should factor in at least 50% of the savings taxed at the standard rate income tax (not to mention a 10% return/year for the next 25 years is also very good financial 'finagling' and definately unreachable without investing it all in stocks)

the more realistic look i come up with, 5% return/year, 20% taxed income (no kids), 15% income saved on 60k, look more like:

yr svngs 5%Ret totSvns taxes Asvd
1 9000 450 9450 90 9360
2 18360 918 19278 184 19094
3 28094 1405 29499 281 29218
4 38218 1911 40129 382 39747
5 48747 2437 51184 487 50697
6 59697 2985 62682 597 62085
7 71085 3554 74639 711 73928
8 82928 4146 87074 829 86245
9 95245 4762 100007 952 99055
10 108055 5403 113458 1081 112377
11 121377 6069 127446 1214 126232
12 135232 6762 141994 1352 140642
13 149642 7482 157124 1496 155627
14 164627 8231 172859 1646 171212
15 180212 9011 189223 1802 187421
16 196421 9821 206242 1964 204278
17 213278 10664 223941 2133 221809
18 230809 11540 242349 2308 240041
19 249041 12452 261493 2490 259003
20 268003 13400 281403 2680 278723
21 287723 14386 302109 2877 299232
22 308232 15412 323643 3082 320561
23 329561 16478 346039 3296 342743
24 351743 17587 369331 3517 365813
25 374813 18741 393554 3748 389806
26 398806 19940 418746 3988 414758
27 423758 21188 444946 4238 440708
28 449708 22485 472194 4497 467697
29 476697 23835 500531 4767 495764
30 504764 25238 530003 5048 524955
31 533955 26698 560653 5340 555313
32 564313 28216 592529 5643 586886
33 595886 29794 625680 5959 619721
34 628721 31436 660157 6287 653870
35 662870 33144 696014 6629 689385
36 698385 34919 733304 6984 726320
37 735320 36766 772086 7353 764733
38 773733 38687 812420 7737 804682
39 813682 40684 854366 8137 846230
40 855230 42761 897991 8552 889439
41 898439 44922 943361 8984 934376
42 943376 47169 990545 9434 981111
43 990111 49506 1039617 9901 1029716
44 1038716 51936 1090652 10387 1080265
45 1089265 54463 1143728 10893 1132835
46 1141835 57092 1198927 11418 1187509
47 1196509 59825 1256334 11965 1244369
48 1253369 62668 1316037 12534 1303504
49 1312504 65625 1378129 13125 1365004
50 1374004 68700 1442704 13740 1428964
51 1437964 71898 1509862 14380 1495482
52 1504482 75224 1579707 15045 1564662
53 1573662 78683 1652345 15737 1636608
54 1645608 82280 1727889 16456 1711433
55 1720433 86022 1806454 17204 1789250
56 1798250 89912 1888162 17982 1870180
57 1879180 93959 1973139 18792 1954347
58 1963347 98167 2061514 19633 2041881

Now, with the last scenario it will take 58 years to acheive their goal.

While it is clear that no income increase, higher returns or other additional monetary means have been considered…likewise, the cost of living, standard expenses or unknown expenses have not been considered either.

Bottom line, they should get a financial advisor if they seriously consider ending up with $2 MIL after 25 years on 60k per year and even then it is highly unlikely they'll meet that goal.

Posted By just crunching the numbers, washington, dc : March 5, 2008 1:17 pm

I don't recall seeing any mention of investing in ROTH IRA's. I highly recommend that they do this. Common perception is that tax rates will rise in the coming years, and the ROTH, to my knowledge, is the best way to protect from high tax rates during the retirement years.

Posted By David — Boulder, Colorado : March 5, 2008 1:09 pm

It is nice to see such a young couple start out on the right foot financially. Their lives together will be much less stressful by both being on the right track and following a fiscal displine. By the way, Ken from Seattle, WA, why are you waiting another 2-3 years to buy a house (assuming it would be purchased in Seattle, WA)? Seattle, WA is one of the few markets (overall) going north.

Posted By Jamie, Butte, MT : March 5, 2008 1:04 pm

To Mike in FL -

I assume by your language you're a Dave Ramsey fan?

I'm with you on that one brother!! Debt free and loving it!!

Posted By CPR(R), Chicago, IL : March 5, 2008 12:58 pm

To Mike from Pittsburgh (who had the sarcastic comment about mommy and daddy helping on the home loan):
When you look at the estimated value, 3 years of appreciation (assuming they bought when they first married), and remembering how low rates where in 2005, what is wrong with their mortgage payment? Maybe they did have a down payment, but since they don't live in a place where the average home costs $200 a square foot, their mortgage is pretty fair. Maybe YOU should move! And stop complaining just because you don't have kind and loving parents.

Posted By Eric, Nashville, TN : March 5, 2008 12:56 pm

They have a plan and that is 1/2 the battle. While their plan may have a few flaws (no kids in the picture yet, more car than they need/afford) at least they have started looking at their financial future. They are 23 and 25 and are ahead of most people there age. Most young couples their age would have 2 NEW Mustangs and 15-20K in credit card debt.

Posted By Brian, Columbus, OH : March 5, 2008 12:40 pm

Kudos to them for starting to save when they are young. Unfortunately, their lifestyle and expenses are not representative of MOST of the country. A $125,000 house in most parts of the country would be a closet (I live in NYC and my garage spot alone is $7/month less than their mortgage). Also, $350/month for groceries for two people. For anyone doing the math, that is under $12/day for food and toiletries. They are basically living at the poverty level. What about clothes, vacation, etc? Maybe they get to $1M in 25 years (which is worth about half that in today's dollars), but this is a couple who is basically living at the poverty line for the next 30 years to save enough to continue doing so in retirement. Any they have no children to support. Is this really what we should be striving for? To say they are millionaires in the making is ludricous - anyone who doesn't spend any money can be a "millionaire" in 30 years.

Posted By Brian, New York, NY : March 5, 2008 12:38 pm

Poor example of Millionaire in the Making. Sure this couple has gotten a good start, but Millionaire status type of start? Hardly. Yes, they are saving early and putting away a good chunk of change, which is much better off than those who are starting to invest at 35 or 40. But, they have yet to hit the speed bumps that are fairly common - kids, job loss, health scare. I'd be curious to see a follow up report on the finances of this couple in 10 to 15 years. Then we can assess the "millionaires in the making" title.

Posted By Ryan, Grand Ledge, MI : March 5, 2008 12:32 pm

What a nice story. I commend you both for your efforts, trying to make ends meet these days isn't easy for everyone. I will also add, IF you lived in Ca, you wouldn't survive on 56k. Ca. is a VERY expensive state to live in.

Posted By Jana, Granite Bay, Ca. : March 5, 2008 12:31 pm

It is great to see young adults considering their future. The country would be in better shape if everyone had this couples discipline; however, consider the following. What is the purchasing power of 2 million dollars in 25-30 years. What cost 2 million dollars in 1985 costs 3,943,104.30 today. Is 2 million enough to retire on at 50?

Posted By Tom, Phoenix MD : March 5, 2008 12:26 pm

$300 for entertainment?? Throw some steaks on the grill and rent a movie for $30!! And in Arkansas you can plant a garden and live much cheaper than the big cities!

Posted By Gary S. Houston, Tx. : March 5, 2008 12:25 pm

Yeah right. On that income, they're screwed if she has a couple kids, which sure enough will happen. Plus buying cars like that, and running up credit cards, is dumb on their income. They're typical of the "all flash, no cash" syndrome in America. You profiled the wrong couple.

Posted By Alan, Arlington, TX : March 5, 2008 12:25 pm

The millionaires in the making series has never been very reflective of reality. Until the real estate bubble burst, most people they profiled had horrid savings but huge paper profits in real estate.

I would like to see the numbers on people they previously featured!

Now they have started featuring people living in area that have well below the typical cost of living. Not sure how this is any more in keeping with the idea of "anyone can be a millionaire" then if they featured people earning well into the six-figures.

This couple is making several mistakes, as other commentors have noted, but do save a commendable percentage of their income. However, way way too many assumptions are being made to get them to the $1mm savings level when they are only saving about 10k a year.

Posted By Jacob, Chicago IL : March 5, 2008 12:21 pm

They haven't even had children yet! Everyone can be a millionaire in the making if they never have children, experience health issues, get divorced, downsized, etc. You're also assuming they will get historic returns on their investments. Guess what? Previous performance does not imply future returns….even for stock markets.

Posted By bxcapricorn : March 5, 2008 12:06 pm

The only problem is, that in 25 years that $1 million is only going to be worth $500,000 in todays dollars with 3% inflation.

My wife and I are a similar age, but earn nearly 3x their income, have no debt and rent. We put away a minimum of $40k just for retirement, then another $30k that will eventually be for a house once this bubble finishes bursting in 2-3 years. Putting away $50k per year will leave us with $4.2 million at age 50 (figuring a 8% return), or $2.1 million in todays dollars.

Posted By Ken, Seattle, WA : March 5, 2008 12:05 pm

They're not going to retire at 50 if they spend $300/mo on entertainment and buy used cars with $19,000 auto notes. Here's a plan: sell the car, buy another for cheap with cash. Take the auto payment and entertainment money and focus on the rest of the debt. Forget the IRA until the cards are paid off.

Posted By Dave, Oklahoma City, OK : March 5, 2008 11:58 am

well - they seem to have a good start - BUT - 19k on a Mustang when they have 4500 in CC debt???

Posted By Kyle, Concord CA : March 5, 2008 11:56 am

I have to agree with everyone else on here about getting an education. They are young and have no kids. Now is the time to make that sacrifice. Several studies have shown that the relative earning power of less educated workers is decreasing from generations past. Your best bet for financial security is to get a better education, especially when there are so few barriers and you have many more years of work ahead of you. I know I wish I had gone back to school at an easier time!

Posted By Lisa, New York, NY : March 5, 2008 11:56 am

Give me a break…

Their budget is totally off from the urban areas…Again press spreading B.S…

Posted By NEW YORK CITY : March 5, 2008 11:52 am

It's great they are thinking ahead towards retirement, but how about pumping some more of that IRA money towards paying down that credit card debt? This should be the FIRST priority for nearly everyone out there, as it's a guaranteed return.

Posted By Justin, Seattle WA : March 5, 2008 11:46 am

Education is the highest returning investment I have ever made. By getting a law degree, I tripled my earning power out of college for the cost of tuition and three lost years of working. Even in the worst-case scenario, my higher education will return (increased earning power) well over 30% annualized on my investment (lost earnings and costs of tuition). If I make partner, it will return over 100% per year. I challenge you to find me an investment as safe as education that can provide this much of a return.

Posted By Mike, Denver, CO : March 5, 2008 11:45 am

Their saving plan sounds great until you have children and save for their college and upbringing. And furthering their education is ALWAYS a sound idea.

Posted By Denise S. Houston, Tx. : March 5, 2008 11:45 am

There is no need for an MBA. What people don't understand is that you can live comfortably if you don't spend either all or more than what you make. Seems like fancy cars and clothes are not part of their life style. Therefore they can get along just fine on their income.

Posted By Jason, Grand Rapids Michigan : March 5, 2008 11:41 am

They need to sell the $19,000 car and buy a $5,000 car. $19,000 is WAY to much on an income of $56,000.

Posted By JeffB, Houston, Tex : March 5, 2008 11:38 am

What they are doing shows a certain amount of discipline in financial matters. Most people in this country have no discipline, no money, and broke is normal. While their savings plans are good, they are upside down. Their goal should be to have NO debt, except their mortgage. Their biggest detractors are the car they couldn't afford, credit card debt, and student loan debt. Getting rid of those debts should be their No. 1 priority after fully funding their emergency fund. They should cut their budget on entertainment and eating out and should stop investing and apply every dollar against their debts, ranked smallest to largest. They should also cease moving credit card debt around and opening new cards to avoid interest. It trashes their credit score and serves no purpose. $100 per month toward a $4.5k credit card is unacceptable. They should also considering selling the car and getting rid of the $19.5K car loan. Buy a beater and drive it around Pottsville. Attacking consumer debt and student loan debt should be their first priority, not investing or funding retirement plans. With consumer debt paid, their income will be theirs to build wealth with at a much faster pace. Given their income level and future income level, they should have alla debts paid within 18 months. Living on a strict budget where every dollar is accounted for at the beginning of the month will increrase the focus and intensity of debt repayment and reducingcurrent expenses.

Posted By Mike, Tampa, FL : March 5, 2008 11:37 am

Joe, I don't think they sound like ANY FAMILY. Our savings rate in this country has been below 0 for a while now….This couple is better than most in that they live within their means! congrats to them for showing monetary discipline!

Posted By John, Florida : March 5, 2008 11:35 am

How do they have such a low mortgage payment? Did mommy and daddy give them a nice chunk of change?

I make more money than both of them combined, yet between my salary and my wife's we can't afford a down payment for a modest house.

I'm so happy the real estate bubble is bursting. The more foreclosures the better.

Posted By Mike, Pittsburgh, PA : March 5, 2008 11:34 am

Great job by this couple, I wish more younger people had the same attitude towards retirement and the discipline to do it. Kids will change things but they have the right attitude and that's most important. The expert seems to gloss over her "expected promotion" to double her salary. If they keep the same discipline retiring at 50 in there case is well within reach, of course health care may cost $100,000 per year by then.

Posted By Kevin, Derry NH : March 5, 2008 11:34 am

Why should they get an MBA to get "top dollars"? You know there are people in this world that are happy with what they have and where they are at. Money isn't everything. $56k is a solid income in their city, and they are very very young, they have many of years to earn more. Most people earn the most around ages 40-55.

Posted By Caleb, Des Moines, IA : March 5, 2008 11:31 am

Instead of 35% into mutual funds, let us not forget conservative US savings bonds and notes.
They accru tax free, and are safer than ANY other investment.

Posted By Lars Grapeview, WA : March 5, 2008 11:23 am

I commend the Wells family on a balanced budget and financial success, but don't move out of Pottsville, Ark anytime soon! The Wells family would be renting and on an ultra tight budget if they were living in NY, DC, or LA. They are lucky to enjoy (I assume) life in a small rural town.

Posted By Nick, DC : March 5, 2008 10:32 am

Its good to see a young couple who are not only looking forward but being honest with themselves about their finances.

Very encouraging GOOD news about a younger generation

Posted By Kevin, Philadelphia PA : March 5, 2008 10:19 am

"Forget the funds for now… especially with the market heading down"? This is exactly when you need to be ploughing money in the market, especially when you are 25. This is what I don't like about planners - they are way to conservative.

Posted By Brian, Atlanta, GA : March 5, 2008 10:13 am

Thy are young. They need to stop what they are doing and invest in something really important: Education. At least one of them should get an MBA to get top dollars. $56k combined is nothing if they want to have a comfortable retirement.

Posted By Sidharth, Redwood City, CA : March 5, 2008 10:12 am

These two almost sound like ANYFAMILY. It is nice that regular people were profiled

Posted By Joe, Tampa, FL : March 5, 2008 9:44 am

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