Our Pledge For The Million Dollar Club

I am writing a pledge to join the Million Dollar Club founded by J. Money at Budgets Are Sexy.

What’s it like to be a millionaire?

Prior to reading about personal finance a couple of years ago, I had the following (mis)conception of millionaires:

— They make lots of money (i.e. six-figures and above).

— They have prestigious jobs (i.e. doctors, lawyers, hedge fund managers).

— They fly in their private jets or at least business class, have vacation houses, own a series of rental properties, and maybe have at least one private island.

— They drink expensive wine and eat caviar every day (I hope it’s not unhealthy).

— They only hang out with other millionaires and billionaires, and party at country clubs.

— They always stay at 5-star hotels when traveling.

— They wear brand-name clothes (i.e. Versace, Gucci) and drive luxury cars (i.e. Mustang, Mercedes).

— They vacation in Europe and go to exotic resorts multiple times a year.

What a life!

The reality

It wasn’t until I started reading personal finance blogs and listening to Dave Ramsey that I realized such perceptions were misguided. I’m pretty sure I got those images of the perfect millionaire life from TV shows, magazines, and my own imagination.

In learning more about frugality and early investment, I realized that anyone of us can be a millionaire if we work hard, live below our means, and invest wisely.

As Mr. Tako at Mr. Tako Escapes, Joe at Retire By 40, and Michelle at Making Sense of Cents show on their blogs, a millionaire can be someone who lives a simple life with their family.

They cook simple yet delicious meals at home and even live in an RV (instead of mansions). They write passionately about money saving tips.

They are diligent about making the right investments early on in their lives. They wear old clothes that have holes in them instead of worrying too much about looking sharp and classy all the time.

And most importantly, they show me that I too can be a millionaire one day.

Why become a millionaire?

Of course, the millionaire dream won’t happen to me overnight. I have to establish specific plans, stick with them, adjust them when needed, and always remind myself why I need to forgo short-lived temptations.

If you ask me what my ultimate goal in life is, I won’t say “becoming a millionaire.” In fact, I never gave it much thought until I saw Lily’s post where she pledges to join the Million Dollar Club.

What does it mean to have a million dollars? Will it make me a happier person? I’m not sure what the answers are. But I can tell you one thing: I won’t stop saving and investing even when I see the $1 million in my bank account.

If I were to disappear from the earth tomorrow, I’d ask myself the following questions:

— What have I done for my family?

— Have I spent enough time with them?

— Have I tried to help my extended family to the best of my ability?

— Have I explored my own potential by starting my own business and figuring out what I’m really good at in life?

— What am I going to leave for my children and future grandchildren?

— Have I made any impact on other people’s lives, including those I have never met?

But I am not an idealist. In order to provide satisfactory answers to many of the questions above, I need to be on a sound financial footing first. I can’t help others in the best ways I can unless I’m financially self-sufficient.

By acquiring wealth and being responsible with our finances, both Mr. FAF and I hope that one day we can have the resources and foresight to establish a foundation like what Bill and Melinda Gates have done to make a positive impact on other people’s lives, including our own.

It might be just a dream. But what’s life without hopes and dreams anyway?

Our pledge for the Million Dollar Club

In order to reach our lifelong goals, Mr. FAF and I pledge to do the following:

1. Contribute to Roth accounts

Mr. FAF has been in a PhD Program in Computer Science for the past 6 years. I have been the bread-winner of the family for almost two years. We have been saving up for a down payment, aggressively paying off our mortgage, and saving for emergency all this time.

I have a retirement account with Vanguard through my employer. I haven’t made any contribution to it, but my employer has been great about growing it for me at an X% match of my annual income.

Once Mr. FAF settles down at his new job as a Software Engineer in DC later this summer, we each will contribute $18,000 of our annual post-tax income to our Roth accounts. We are thinking about Roth instead of 401k since we expect our income and tax rates to increase in the future.

2. Contribute to Roth IRA

In addition to growing our Roth accounts, we will each contribute $5,500 to our Roth IRAs until our income surpasses the $196,000 limit. When it does, we will consult with a financial advisor to see how we can continue to contribute.

3. Pay off the mortgage early

We will try to pay off the mortgage on our primary residence as soon as possible. We are risk-averse and hate debt whether it’s good or bad. It gives us peace of mind knowing we won’t be homeless if there’s an economic downturn or if both of us lose our jobs.

4. Save 20% for a rental property

Once we pay off the mortgage on our house, Mr. FAF and I will save up for at least a 20% down payment on our first rental property. We don’t want to pay unnecessary money if we don’t have to. And that’s how we feel about the private mortgage insurance (PMI).

5. Pay off our credit card balance each month

Mr. FAF and I make almost all of our purchases with our credit cards (some Asian restaurants only take cash). We pay off the balance at the end of each month to build our credit and avoid consumer debt. We will continue this habit on our way to the millionaire status.

6. Invest in ourselves and our children

The best investment we can make, in my opinion, is in ourselves and our children. Mr. FAF and I will continue to invest in our health and career development. I think I’m done with school. But Mr. FAF wants to pursue an online MBA in the future. I will support him in his endeavors.

We will also invest in the education of our children since you never know what amazing return you can get on it. It is our responsibility as parents to provide Baby FAF and his future sibling(s) the best tools they can access to explore this world.

7. Be generous to family and good friends

In saving up and investing, we will not ignore the loved ones that have helped us through the most difficult times in our lives. We will be generous to the ones that we care about and who show us that money cannot buy us true love and true friendship.

8. Stick with Frugal Asian Finance through thick and thin

I will stick with my blog, Frugal Asian Finance, even when I feel like giving up is the only option. It took me 12 years to finally set up the site. I have learned so much about personal finance (PF) and gotten to know so many amazing PF bloggers.

I will stick with my blog through ups and downs because it shows me what it means to be frugal and supportive of other like-minded individuals.

9. Continue our frugal habits

Mr. FAF and I will stick with our frugal habits no matter if they’re weird or not:

— Wearing free T-shirts

— Using grocery plastic bags to line the trash can

— Getting hand-me-down clothes, toys, and books for Baby FAF and our future children

— Eating mostly at home

— Using used furniture that’s still in good condition

— Flying economy class

— Staying at cheap motels/hotels or Airbnb when we travel

— Using toilet paper as napkins

The list goes on.

10. Always stay humble

At the age of 30, I’ve realized that people tend to show off or put others down when they feel the most insecure about themselves. I know because I’ve been there.

Whether we’re are millionaires or not, Mr. FAF and I pledge to always stay humble and true to ourselves and our values.

The friends who have helped us out when we are poor and have next to nothing are the ones we value the most.

When you are wealthy and successful, people will rally around you. Some of them are well-intentioned and genuinely interested in you as a person. Some look up to you and want to learn from you. And some will look for opportunities to take advantage of you.

I’m sure and hope that Mr. FAF and I will make a lot of good friends in the future. But we will always remember those who want to be with us for who we are, not what we have.

Conclusion

In our journey to financial freedom, Mr. FAF and I will continue to be a frugal couple. We will save as much as we can to the extent that it doesn’t hinder our relationships and our pursuit of a happy life.

And lastly, I want to thank J. Money at Budgets Are Sexy for coming up with this amazing idea that enables us, personal finance bloggers, to get together and make a pledge that will change our lives and our family trees.



42 thoughts on “Our Pledge For The Million Dollar Club”

  • Awesome pledge! I like #10… always a good reminder to stay humble regardless of our current status or situation in life.

    I’m with you, before I read “Millionaire Next Door”, I had similar misconceptions about millionaires. It really did seem to be the unattainable fantasy number that would never be a reality. Now, with hard work and sticking to the plan, I can see hitting $1MM as a reality for us someday. Crazy!

  • Awesome pledge. I need to get over there and join the club. Your plan sounds spot on. Happy and wealthy!

    Once your income exceeds the Roth IRA limit just do a backdoor Roth. Contribute to your traditional IRA, don’t invest but leave it as cash (no taxes or 10% penalty), the next day transfer it to a Roth IRA. I thought this would be a really tricky process but on Betterment it took three clicks.

    • Hi Grant, you should join the Million Dollar Club with us for sure!

      Thank you for the great advice on a backdoor Roth! I’m such a newbie when it comes to retirement investment. It’s always great to get guidance from other fellow PF bloggers like yourself! 😀

  • Nice! I’ve never heard of J Money’s million dollar challenge but I’ll be sure to check it out.

    With respect to retirement account optimization, send me a message on Twitter and I can get you started on some of the strategies that people use so you can do your own research and make the right decisions.

    And if you have any questions about the CS job market, let me know. I have 2 CS degrees and have been working on research, industry and consulting for the past few years.

    Good luck!

    • Thank you, David! You should join the Million Dollar club with us! Thank you so much for the offer! I will message you on Twitter. ^.^

  • This pledge kicks mine off the cliff. My favorite is #10. It’s poignant and you are a fantastic writer. I feel the same about PMI too. I think we put down 22% for our rental because we didn’t want to deal with PMI.

    I 1000% agree you have to stick with Frugal Asian , hell I’ll bug you about it :p how am I supposed to bug you if you don’t blog anymore. You’re stuck with all of us!!!

    P.S. thanks for the shout out too ♥?

    • Noo Lily! I wrote this post after I saw your pledge! It’s amazing that you and Jared were able to put 22% down for your rental. That’s what we’re aiming for as well.

      Haha I will stick with Frugal Asian so that we can bug each other on Twitter every day : p I told Mr. FAF I talk to you maybe more than to him sometimes heh heh.

  • I have no doubt you’ll do it, Mrs. FAF! Yes, isn’t it crazy what true millionaires actually do versus what we think they do?! We had next door neighbors when we bought our first house who were millionaires next door, and they had many of the same behaviors you list–using plastic bags to line their garbage cans, eating at home, wearing free T-shirts! 🙂 Looking forward to your updates along the way!

    • Wow it’s great to know and live near real life millionaires! I don’t know any millionaire in person. Some of my neighbors might be, but they don’t tell me heh heh. Will keep you posted on our progress! 😉

  • Congratulations on committing to a new goal. You guys can definitely handle this. I’m sure it will be extremely helpful having double incomes again as well. Is Mr. FAF completely finished with his degree?

  • Way to really commit yourself! This is an interesting club I’ll have to look into. I know you can make it Ms. FAF, just stay disciplined! Oh, and I really like the new look of the site (hope it really is a new look and I’m not just going crazy…).

    • Aww thank you, Matt! You should join us in the club as well! The layout of the blog’s stayed the same since I started it. But thanks for the compliment! 😀

  • Thanks for sharing. I think with all of us, we need to ask the “WHY” of what we’re doing. Because what’s the point of being a millionaire just to be a millionaire? I was just writing a post on Sam’s site and was saying the same thing. There’s not much incentive to being the richest person in the graveyard :/

    • You put it really well! There’s no point in accumulating wealth and keeping it in the graveyard. I think that’s why a lot of wealthy people give away part of their wealth. After they pass, most of their money will either go to the government or to a foundation they set up. Here’s an example: https://givingpledge.org/. I think it’s fascinating.

  • Hi, Asian here, so I can relate to using grocery bags to line your trash can. I like how u use toilet paper as napkins, I use them as tissue lol. However, I’ve just switch from using paper napkins to cloth napkins; got some brand name ones on clearance for $1 each, great quality. I look forward to reading more of your posts. Do u congrat someone on a pledge? Oh well, congrats.

    • Hi Serenity, welcome to the blog! I use toilet paper both as napkins and issues (multi-functional) lol. Thanks for the congrats! 😉

  • Thanks for the mention! This is a great challenge and I’m sure you can do it. It’s not that hard if you just stay frugal and invest as much as you can.
    The misconception comes from the ultra rich. Those people can live luxuriously and still have plenty of money left. Regular people like us can become a millionaire, but we need to be smart about it.
    Good luck!

    • Thank you for your encouragement, Joe! I think you’re right. Those are the super uber rich who seem to have unlimited disposable income. I don’t know if I’ll ever be there, so saving and investing is the way to go! 😀

  • Just discovered your blog! Really enjoy reading your posts! It’s funny that we seem to have a lot in common (though I’m a single guy), and I reside in the DC area as well. I’ve been hoping to meet more aspiring FIRE individuals in DC metro. I like that overall you are down to earth — a rarity here in this area.

    Do you personally know many people looking to retire early? Is there a local FIRE chapter here that I should know about? LOL.

    • Haha I don’t know any FIRE local chapter. But you can always join Twitter and add personal finance bloggers in the DC area to meet up and hang out. I think it’s a great way to meet like-minded people. 😉

  • Congrats on joining the pledge for the million dollar club 🙂

    Awesome list!! One of the things I’m most thankful for is my parents helping pay for my education. It gave me a huge leg up on my peers and I hope to be able to afford the same advantages to my children if I’m able to.

    • Thank you, Mr. MSM! I’m also grateful for my parents for a lot of things that I have right now. They didn’t/couldn’t afford to pay for my college education, but they invested in me so that I could get a scholarship to attend college. I’m super grateful for that and hope that we will be able to do that for our children in the future! 😀

  • Wowwww 12 years to finally set up your blog??? Glad you pulled the trigger! It’s so much fun here, right? 🙂 And Welcome to the $1 MIL club. Going now to add you to the list and make it *official* – woo!

    • Yes, it took me 12 years to figure out my way and to overcome my own fear >_< I'm SO glad I started Frugal Asian Finance. It's been awesome getting to know and interacting with other PF bloggers like yourself. Thank you so much for adding me to the list! Yay!

    • Great point! With inflation and such, being a millionaire maybe doesn’t mean much these days. But I think it’s still a nice goal to have. Being a billionaire would be awesome! I think I’ll try to get to the millionaire status first hehe.

  • Love your blog, Ms. FAF.

    I would recommend you and Mr. FAF reconsider not contributing to your pre-tax 401k in favor of the Roth IRA.

    First, your assumption that your tax rates will go up after retirement is probably unlikely. Given these are retirement accounts, you will only be selling and withdrawing after you stop or decreased your work, and therefore at a lower rate than in your accumulation phase.

    Jeremy and Winnie from Go Curry Cracker have retired early and document their taxes and tax strategy every year, resulting in almost $0 in taxes in early retirement
    http://www.gocurrycracker.com/go-curry-cracker-2016-taxes/

    An overly simplistic example:
    Imagine your current tax rate is 20% and in retirement it’ll be 10%

    If you contribute $100K of salary to your 401k and the market doubles by the time your retire, you will have $180K ($200K-10%) after paying taxes on the withdrawal

    If you contribute $80K ($100K of salary after 20% tax), you will only have $160K since you’re starting from a lower base.

    Lastly, the Roth IRA has contribution limits of $5,500 per person, per year ($11K total) and phases out as your income rises. As a PhD software engineer, you two may immediately not qualify for a Roth IRA once Mr. FAF starts working.

    The 401k employee contribution limit is $18K per person, per year ($36K total) and does not phase out with income.

    • Aww thank you so much for the great advice and example! I’m a total newbie when it comes to retirement investment. You comment def made me think I need to look more closely into 401k before ruling it out altogether. ^.^

  • Interesting pledge and I wish you well in the pursuit of it. I think if you have the opportunity to contribute and max out your 401K and Roth accounts, that’s awesome and take advantage. There are many people who can’t, but even the smallest of amounts can add up over time.

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