MtoM #163: 74 Year Old Woman Becomes A Millionaire and Finance 101: Choosing a 529 Plan

This is the White Coat Investor Podcast Milestones to Millionaire Celebrating stories of success along the journey to financial freedom.

This is Milestones to Millionaire podcast number 163. 74 year old lady becomes a Millionaire.

Do you ever find yourself wishing there was somewhere to go to ask your finance, insurance or investing questions? The White Coat Investor community is a great place to turn. We have a thriving community across all of our social Facebook, Twitter, Instagram, Reddit and our WCI forum. We've been discussing solutions to your money problems since 2011. Join the Conversation with thousands of other White Coat investors. Follow WCI on your favorite social media platform for financial resources, tips and strategies. Just head to your platform of choice and search for the White Coat Investor. You can do this and the White Coat Investor can help.

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Thank you very much Jim. I'm flattered to be here.

Tell us what you've done for a living during your career and kind of what career stage you're at now.

Thank you for asking. During my career I founded and grew a 30 year old consulting business and right around the pandemic I closed it and I continue to be re fired, not retired. My goal is to help people create their own success through writing books.

How many books have you written?

I've written 11 books. My 11th one is coming out April 1st and they all have one common denominator to teach people how to create their own success.

Very cool. I understand you recently became a millionaire. I don't actually know how recent. How long has it been since you became a millionaire?

It hasn't been long. It has not been long at all actually since I retired I became a millionaire and I did it in many ways between real estate which I've had over the years, however between a new acquisition and between focusing on Investments.

Well, tell us what's on your balance sheet here. Tell us about the assets and then about the debts.

Well, we have a mortgage by choice. We moved to another city and during the pandemic we saw that we were not renting anymore and throwing money away. We had owned, we had both owned for many, many years. And it was time since we are in New York and so we bought at a very good time and we bought a whisper sale, which means that the real estate was not on the market. And it's been the best thing we've done. It's grown 20% and more than that. It's our home and we love it. So that is one thing that has done very well for us over and above that, as I said, my balance sheet, the other 50% is on investments and I have focused. I wish I would have known about this as I was growing my business. I would never have worked as hard. I would have worked much smarter.

So what do you invest in? Are these in retirement accounts? Is this in a taxable brokerage account? Are they investment properties? What do you mean when you say invest?

They are in stocks. There are three ways to invest and it depends. At this point, my only responsibility is me. My children are out of college. I don't have people to worry about short of the dog. And so my partner and I have separate funds. And what we've, what I decided with my funds is that I would do based on what I did as an entrepreneur. I do growth funds and because I'm a high risk person, I don't gamble, I invest. And what I believe is anything that I invest in, whether it's real estate or whether it's stocks, I follow Warren Buffett's role. If you're not going to keep a stock for 10 years, don't keep it for 10 minutes. So that might not be right for everyone. It's right for me.

Tell us, how far are you out of school and what's been your range of income throughout your career?

My range of income has gone from 11,000 when I was in my, when I started my business in 1987 to 350,000 when I was in the thrusts of my business. And it took a long time to get there. And what I did is I made sure I was through my accountant and my pension administrator. I was in an age weighted pension program. And so what that meant is based on the two other people that I had on my team, they were much younger than me and I was probably good 20 years older than them. And so I was able to build my retirement. I hope this gives your listeners inspiration because I know it's not easy starting a business and I actually did not invest until I was 42 years old. I didn't feel like I had the money I really needed to put everything toward my business. And I never borrowed. I always borrowed from myself. And so whether that's right or wrong, this is my path. And it did. And then I maxed out my pension every year. 35,000.

Very cool. What lessons do you have for others who want to build wealth as they go through their careers and do what you've done?

Well, what I would say is I don't have the highest iq, but I have a very, very high EQ emotional quotient. And what I tell, what I recommend to your listeners and I tell anyone else who is in the thrust of beginning a business is number one, if you can, I did not have it have a minimum of two years of savings. I did not have that. Be persistent. Never look back. Surround yourself with people you want to be like and by doing that you have stretched goals. Be realistic, however, persevere. I will tell you if I were not a person who were persistent, politely persistent, and continue to help others. It wasn't financially. Often it was an ear. It was giving people a format for how to do things. Persistence and staying focused and surrounding yourself with people you want to be like pays. Those are the three qualities attributes that I strongly recommend and I still do it.

Now, you don't come from one of the traditional professions that usually draws people to the white coat investor. How did you get involved with the white coat investor?

Well, I will tell you, I'm an eternal optimist, Jim. And what happened was a year ago. A year ago exactly. I broke my wrist and I went to a doctor. As my sister would say, you go to a doctors until they tell you what you want to know. And I said, you darn well bet. Well, this doctor, whose name is Dr. Ayalan, I love him, is a wrist surgeon, hand surgeon. And I went to him and he said, oh, you don't need surgery at this point. And he knew about my book because I always take people a gift. And he said, do you know about the white coat investor? I said no. And that's how it happened. So what a blessing to break your wrist. And yes, I use both hands.

Yeah, it's fascinating because it usually goes the other way around. It's usually other people telling their doctors about the white coat investors. So we appreciate that. Shout out from that doc. All Right. So what advice do you have for somebody that wants to build a business? Right. Maybe they don't want to take on a bunch of debt to get started. They want to bootstrap. And you mentioned being persistent and how important that is. But what about financing? You mentioned that you borrowed from yourself, which means you saved it up really well, sort of. How did you decide that? When to borrow, when to not borrow, when to bootstrap, et cetera?

Yes, actually what happened was I had a focus. And when I had a focus, believe it or not, it was customer service, it was etiquette. Who would have given me a nickel for etiquette? And I would never have taken even a penny from someone. What I say is decide what you want and never turn back. And I will give a perfect example. I did everything through sweat equity. I worked 90 hour weeks for a few decades. And a perfect example is when you want something, first of all, write down your goals and manifest them. If you say, my goal is to be with this practice, my goal is to own a building because oftentimes owning a building is going to be first an apartment building or condo, condo building, that business. And this happened to me when I owned the building that my company, which my company was housed, it actually made more money than my business that particular year. So what I say is go slow and sure, set your goals. And they can be stretch goals. They don't have to be immediately. However, think long term and then think short term. Ask yourself the direction you want to go in. And as I said before, you know, I always had brain trust advisors. My brain trust advisors or guides were books. I was always surrounding myself with Claude Bristol, with Napoleon Hill, Think and grow rich with later in the game, Rhonda Byrne. It's so essential to surround yourself with people who know, who knew they could do it and they did it. I always did that. I surrounded myself with a woman who most of you won't even know called Dr. Eden Ryle. Her mantra was, you have to risk failure to experience success. And so the most important thing is keep your eye on the target, know you can do it and anytime. And I have many people say this to me, you can never make a business out of that. I said, thank you, you will never be my competition. And I made it. I went around the world for American express. I got six figure piece of business from a large organization, 950 stores, teaching the art of wowing people on the phone in person. Because patient relations, call it whatever you want of our people relations is the name of the game. And with that said, never be on time, always be early. And the reason for that is people who can manage their time can manage their money. That is essential. You can be the best doctor. However, you're not perceived as the best if you keep people waiting. And that all has to do with an operations manager, the person who takes the care of you. And so when starting a business, it's professional. You always. I always make sure I was kept waiting rather than keeping my prospects and clients waiting. And when somebody told me no, I never accepted it. I always sent them a thank you and said to them, what will it take to earn your business? And if you work with Joe Schmo, Dr. Schmo, then when you're ready, I would like to work with you. And meanwhile, I'm going to follow up with you on your A year and see how XYZ is doing. I did that many times and turned it into a yes. So no means not now, not the right time, too busy. Keep that in mind. Set goals.

Yeah. Awesome. Well, congratulations to you on your success and becoming a millionaire. Thank you for being willing to come on the podcast and inspire others to do the same.

It's my honor. Thank you very much for having me.

All right. Enjoyable interview there. A few lessons to learn. One, I think, is the lesson she pointed out the importance of being persistent in whatever you do, whether it's starting your own business, whether it's reaching your financial goals, whether it's saving, whether it's paying off debt, whatever. Right. Being persistent and sticking with it for years and years. And you can get there. Some of us become millionaires, as you'll learn in some upcoming milestones that you haven't listened to yet, but that we've recorded. Some people become millionaires, you know, within a year or so of coming out of school and training. That's not the case for most people. Most people really have to work at this sort of a goal. In her case, she had to work for four plus decades. She had many 90 hour weeks. Right. It takes a lot of work for most people to become financially successful. So don't be surprised if it isn't. Just put on a platter and hand it to you. For most people, there's, there's a lot of work behind the scenes that maybe you're not seeing. It takes people 10 years to become an overnight success. So don't beat yourself up if it's taking you longer than you think it may need to. All right. I wanted to talk with you a little bit about 529 plans. It doesn't have much to do with this interview, but part of what we're trying to do with the Milestones podcast these days is to include some, I don't know if back to basics information is necessarily it, but just include some additional information. And one question I get a lot is what 529 plan should I use? And the first point I want to make about 529 plans, right? These are college savings plans you're saving for your kids college, usually by using a 529. The first thing I see people making a mistake on is they start these things too early. And what do I mean by too early? It's fine to start it when your kid's one year old. That's not a problem. That's not necessarily too early. What is too early, in my opinion is if you're still trying to pay off your own student loans, right? You can best help others from a position of strength. And it's very hard to do that if you don't have your own financial ducks in a row. So I think you got to take care of yourself first, right? It's the same thing when you're on a cruise, right? And they tell you, well, put on your life jacket first or you're on a plane, right? They tell you if the oxygen drops down, put yours on first, then help your child. There's a reason for that. You can just help others much better from a position of strength. So make sure you got your things taken care of before you start thinking about others. And the 529 plan by definition is for others. So you need to have your retirement going, you need to have your own debt under control, those sorts of things. But once you're decided you're going to save some money for your kid or your grandkid or your niece or nephew or whatever, and you've decided you're going to use a 529 plan, there is some consideration you should take. For example, every 529 plan, the money grows in a tax protected way. And so long as it's spent on legitimate educational expenses, when it comes out, it comes out tax free. So in that respect, it basically functions like a Roth ira, right? It's an education Roth ira. But in many states there's an additional tax benefit when you contribute money, and it's highly variable. Some states don't give you any benefit at all. Some states will give you a benefit no matter what state's 529 plan you contribute to. Some states only give you A benefit if you contribute to their 529 plan and then only on state taxes in that state. In some of those states it's a deduction, in other states it's a credit. And the amount that they give you is highly variable. Some states are much more generous than others. So when you are considering doing this, the first place to look is to look at the rules for your state. And I would say the majority of states, you're going to need to contribute to your state's plan at least some portion of what you're putting into a 529 in order to get that upfront tax benefit, whether it's a deduction or a credit. So oftentimes the state that makes the most sense for you is your state. Unfortunately, not all 529 plans are equal after that point. Some offer better investments and lower fees and less hassle and better features. You know, when you hear about the 529 plans that are the top ones, typically the list will include Nevada, Utah, New York, Ohio sometimes. And then it varies, right? It's different every couple of years. The list moves around a little bit. And there are actually quite a few good ones. I'd say there's 10 or 15 good ones these days. But even if you're not in a good one in your state, it may very well make sense, sense to still use your state up to the amount that you're going to get a state tax break. However, there are a few states that don't have a state income tax at all, right? We're talking about Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, et cetera. If you're in a tax free state, you can use whatever 529 you want, right? Because you're not going to get a state tax benefit from it because you don't pay state income taxes. There are also a few states that don't offer any tax deduction or credit at all. And we're talking about California, Delaware, Hawaii, Kentucky, New Hampshire and North Carolina. So if your state's not going to give you squat, you can use whatever state you want. And then there's a few states that give the same tax deduction or credit no matter what plan you contribute to. And we're talking about Arizona and Kansas, Minnesota, Missouri, Pennsylvania and Arkansas actually gives you a certain benefit for using an out of state plan, but they'll give you a bigger benefit if you use the in state plan. Anything else, you probably want to use your state's plan at least up to the amount that they're going to give you a benefit of. And if you really don't like your state's plan, you can put the rest into a Utah 529 or Nevada 529 or whatever you think the best one is. But then you got to manage two 529s, which is. Which is kind of a pain, especially if you got a bunch of kids or you're starting these for all your nieces and nephews like I did. You know, if you're managing 30 of these accounts, simplicity matters quite a bit. You probably want a pretty simple investing solution inside them, and you probably want to keep them all at one place. But that's kind of how to think through which 529 plan to use. I hope that's helpful to you.

Do you ever find yourself wishing there was somewhere to go to ask your finance, insurance or investing questions? The White Coat Investor community is a great place to turn. We have a thriving community across all of our social Facebook, Twitter, Instagram, Reddit. In our WCI forum, we have been discussing solutions to your money problems since 2011. Join the Conversation with thousands of other White Coat investors. Follow WCI on your favorite social media platform for financial resources, tips and strategies. Just head to your platform of choice and search for the White Coat Investor. You can do this and the White Coat Investor can help.

All right, thank you so much for listening to the Milestones to Millionaire podcast. We'll have another episode out next Monday. Until then, keep your head up, shoulders back. You've got this. We can help.

The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.