#238 - How I Built Wealth Without Debt

In fact, I think the stats are about 13% of the Australian population are considered millionaires, meaning they've got a net worth over a million dollars. But I would say almost all of them did it through property. And how they did it was they bought a property many years ago and did nothing. Well, they didn't do nothing. They didn't sell it, which is good. But the growth in the property from the immigration and the lack of land supply created that million dollar net worth,

right? So I did it differently. I didn't do it with property. Back when I started, I firstly, I knew that I had to underspend my income. Without a doubt, that's the only way you can build wealth.

I don't know anyone that spent more than their income and built wealth. This is not possible because there's a delta. There has to be some money left over for you to then buy assets or invest in a business or whatever it might be. So that's what I started to do first. Rented a cheap car, rented out my rooms, room shared. didn't go on lavish holidays, didn't buy lavish clothes, and I just underspent my income to save money. I saved about $40,000 to

$50,000. I repatriated back to Australia, got into business with my dad in property. I was selling houses, so I was making more money, but it was still a job for me. It was six days a week, and of course, I continued to underspend my income. And what I decided to do was that extra bit of money I was saving, it allowed me to go into that new career without borrowing any money. It allowed me to buy happiness, so to speak, and I talk about it in that book, Money

Buys Happiness. and I decided I need to put the money away. So I could have bought real estate, but I didn't know where I was going to live. I didn't want a mortgage to be anchored to. I felt like it was going to corner me and hold me down, having all that debt. And I don't like stress in my life. I don't like worry.

So I'm like, well, that's just going to create more of that. So I'm going to avoid that. What should I do is I picked up this book by Warren Buffett, or it's actually by Alice Schroeder called The Snowball, and it's about Warren Buffett's life. Fun fact, I'm going to see Warren Buffett this week. I'm flying out Thursday to go and see Warren Buffett. So that's cool. Anyway, I read this book and he was investing in shares. And it really gave me this, like the penny dropped

for me that I understood that straight away. I was like, I get this concept. This makes sense for me. Buying pieces of undervalued businesses. Ha ha, this is

better than buying a house. So I took some of that extra cash I was saving from my job initially and then into the property game where I was marketing and selling property, running a small business with my dad and I would always, if I did a settlement or did a deal and got paid, I would get paid about $10,000 or $12,000 back then each time I did a real estate settlement and I'd take half of it and pay myself and

I'd take half and buy shares. And I did that, deal in, deal out, deal in, deal out, deal in, deal out, deal in, deal out. Every time I got paid, pay myself some, bought shares, pay myself some, bought shares, pay myself some, bought shares. And like I just played that game for quite a while, I still underspent my income. So whilst my wife Alicia and I could go on holidays, she was working full time as a paralegal, I was working six days a week. We

didn't go and buy Range Rovers. We still live in the same apartment that we did 12 years ago. We still haven't left it. And there's a real secret there with wealth creation, which is pretty much the sameness of sameness of same. So the way that I invest my money now is the same as what I did 15 years ago. The same place we live in is the same we did 12 years ago. The same, the same. You would see me in these episodes, I'm wearing the same t-shirts. The same cut, the

same, the same, the same, the same, the same, the same, the same. There's a lot of... magic with wealth building, which is the same. Once you figure out what works, why change it? And that's what happens to people a lot. They'll change direction so much. They just don't get any traction. And you see this in how many times they shift where they live, what car they drive, what clothes they're buying, what type of investments they're buying. They

do it over multiple businesses. Oh, there's another shiny business. I'll go there. And they get no traction. So what happened to me when I was in the property industry and buying these shares, I started to see my portfolio grow. And my portfolio was probably at about $300,000 by then in 2014, maybe $250,000. It wasn't massive because remember, I didn't buy a house. So I had the equity that would have gone into a house and I was paying about $550 a week rent.

But I was also splitting it between my wife and her sister who was living with us at the time. So my rent was like $200 a week. When you think about it, that's crazy low, right? So I've always tried to keep my costs low It's just the most effective way to almost guarantee you're gonna get ahead It's easier to manage the

cost than it is to increase your income in my opinion. You have more control over that and so 250,000 roughly in the portfolio working six days a week in property and I remember one day I sat down and thought oh I want to become a millionaire. Now I want to do it. What

do I have to do? How long is it going to take me? And I remember sitting in the office at 7 o'clock at night. I pulled up an Excel spreadsheet and I put in 250,000, whatever the portfolio was. I'm saving 25 grand a year, buying stocks. I have no debt. This is my income. I think it's probably going to stay very similar. Hopefully it goes up if I can do more deals. And I realized it was going to take me like 15 years to become a millionaire. And

at the time, I was probably about 30, 31. I was like, oh my god, I want to be a millionaire at 45, 46. Like, what am I going to do? And I realized, I can't cut them anymore. I still want to have a reasonable life. But I was like, well, I need to increase my income. So how was I going to do that? And then my sister introduced me to a business model called network marketing, accidentally fell into it. And I tried the products, got in shape, actually went on to win a

bodybuilding competition using the products, which is really life-changing for me. And then I helped other people get the products and use them. And so my wife and I with my sister built this network marketing business on the side with the objective to increase my income by $25,000 a year, which is, by the way, only 500 bucks a week. It's not like heaps. It's like, what if we could keep doing my real estate deals six days a week and then make an extra 500 bucks a week network

marketing and take the extra money and invest it into shares. And by doing that, I was doubling my saving rate and doubling my investing rate, which means I was going to cut the time in half. So I was going to be a millionaire when it's seven and a half years instead of 15 years. It was simple math. So I was like, this is going to be the strategy. This is my strategy. This is it. So we got after it, right? I stayed working. I

didn't jump out of my job. I would do appointments in the office and go downstairs and get on the phone, do network marketing, go back upstairs, do an appointment, do network marketing. It's just boom, boom, boom. On weekends, we'd drive and fly to Sydney to learn more about network marketing. We would do things on the weekend. In the evenings, I'd pick Alicia up from work, go home, sit in the car, do the work, do the work, do the work. And we did that for four

years from when we started in 2014, 2018. And in that timeframe, we reinvested a lot back into building that business, but what we developed is about $180,000 a year of extra money on the side while we're in our jobs. And I realized at that point, we were able to add about another half a million dollars to the portfolio, maybe 400,000. And by the time

I left my job in the property business in 2018, the portfolio was at about 650,000. And as I left that in 2018, by the time 2020 rolled around, the portfolio had lifted from 650 to 700,000 up to a million dollars. So I left my job, went full-time in a network marketing business in 2018. The portfolio was at about 650,000, was paying as passive income

from dividends, which is what allowed us to get out of our jobs as well. It wasn't just the side hustle, it was a combination of that for me to pay my rent and everything, and then also the side hustle of 180 grand a year. Alicia left her job. So we're basically financially independent. And the portfolio then grew as COVID hit. And I remember picking up my phone one day before I wrote this book. I was like, I really want to write a book about how we did this. Because if you think

about it, we became financially free out of the rat race in our 30s. completely free, which is unbelievable, really, when you think about it. And back then, especially. And I had a million-dollar portfolio. I was like, well, this is interesting. Didn't own any property. I'd like to be able to get it to a million bucks before I write this book. And I remember before we launched this book down in Corumban, I looked at my phone, pulled up my portfolio, and it was like $998,000. It was

just sitting there. I was watching it. I was watching it and watching it. I was like, oh my God, I want it to be a million bucks. I want it to be a million bucks. I scrolled the phone down, hit the record button, and I recorded. I'm sure if I pull up the recording now on my phone and go back far enough, I could find it. And I recorded it as it clicked over to a million bucks. And I remember sending the video to my little sister and saying, look at this, it's

a million dollars. And at that time, it's like you kind of, you have this fantasy of what happens when you become a millionaire. You're like, oh, my life's going to change and it's going to be amazing. And then the marching band never came in. And I was like, oh, we're millionaires. That's it. No debt. Million dollar net worth. Free. And then I wrote that book about it, about how other people could do the same thing. And I've been helping people ever since to do the same thing, following

the same system, the same strategy as what we've done. And it's in that book. And then beyond that, we do other things. We're now multimillionaires. But what's interesting is the strategy really changes. Underspend your income, find ways to add extra money with a side hustle or business, invest the proceeds consistently into the same sort of asset class that you understand, and be patient. And it will grow

over time. Those three steps of underspend your income, find ways to make extra money, and invest in assets that you understand are the three components

and steps that I talk about in this book. And they're repeated in this book. There's two extra steps in here for mindset and mentorship, which speeds things up. But the concepts remain the same. And that's where the sameness comes into wealth building that people really underestimate that gets them in a lot of trouble because they get bored. And one of the things you got to do when you're trying to build wealth is keep the mundane exciting.

So all that stuff kind of compounds over time, but it started with that decision to make the first million. But you see when I did it, there was an actual measurable like, shit, I need to increase my income here. Okay, now we need to invest it. Now we need to not do anything else. And I think it's in the not doing anything else and sticking to your knitting and focused on what's working and repeating it, that's where the magic lies. That's the

story of how we became millionaires initially. That's a real-life story. It's in our books. Thanks for listening to Money Grows on Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts and Spotify and subscribe to us on YouTube so you never miss an episode. And if you're serious about building wealth, make sure to check out the links in the show notes and follow me on all social media platforms at LloydJamesRoss for more. See