The Million Dollar Roadmap: The Path from Zero to Wealth | Tom Hegna

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Welcome back to the One of a Kind Financial Show Daily. This is your host, Mike Milligan. It is December 5th. It's Friday. Today I'll be doing a little traveling because my daughter Grace, who works at Grace Klein Community in Birmingham, Alabama, has decided that she's going to run basically an ultra marathon on Saturday, December 6th. in Pelham, Alabama. My daughter was a 4-year college soccer player. I love her immensely. But oh, oh my gosh, the youthful exuberance she brings to life is so intoxicating. Imagine you waking up tomorrow, running 51 miles over 23 hours from 7:00 AM until you finish in elevation, a little bit of elevation. 51-degree temperature, overcast. How many people does that really sound good to? Well, not me, right? What people really enjoy are things like optimistic hopes and like they think, man, I really want to be a millionaire. I really want to do things. That's why you come to the show is to get tips like that. And so recently on the Ideas by Mike podcast, I welcome back Tom Hegna, who wrote the book Who Wants to Be a Millionaire? He was previously on episode 32 of the Ideas by Mike podcast, but then he came back for episode 38 because we wanted to talk about some tips and strategies to go from zero to retired, zero to $1 million. Because as you'll hear in the podcast segment that we brought out, anybody, when they see $1 million, knows the path to get there. And it's not enough, but the first million is easier than the second million. And so I want you to sit back and enjoy kind of this segment. It's about a 10-minute segment from the Ideas by Mike podcast. It's episode 38. If you want to listen to the whole episode, and you could find that where you find podcasts, Apple, Spotify, Amazon, and many other streaming services. So enjoy that. And if there's anything I can do to help you, I encourage you to text ideas, ideas, ideas to 600-700 so that we can connect with each other. Be one of a kind.

Hey guys, welcome back to the Ideas by Mike podcast. We are fortunate enough to have Tom Hegna back. for kind of a round 2. If you have not listened to episode 32 yet of our podcast, he went very much in detail about what you can do as a retiree to safeguard your retirement, to live happier and live healthier through that time. And now we want to talk about his newest project, Who Wants to Be a Millionaire? Tom, welcome back.

Thanks. Thanks, Mike. There's the COVID right there, Who Wants to Be a Millionaire?

So, uh, This is your latest project, right? You wrote this just a couple of years ago. What was your inspiration to write this book?

Well, here's the deal. I got asked by a number of companies to develop a presentation on financial wellness. That's kind of the buzzword. And so, I did a lot of research on financial wellness. And what I was shocked at is how financial wellness is tied to physical wellness, is tied to emotional wellness, mental wellness, spiritual wellness. They're all tied together. And you kind of see that. You go to somebody's house, their yard is is immaculate. You walk in the house, it's all spick and span. You say, hey, I need your tax return from 2021. They go, oh, we got it right in the file right here. They have everything organized. 2 houses down, the yard looks terrible. The inside looks like a hurricane went through it. They have no organization. They can't find anything. These things are all tied together. But financial wellness sounds boring, so I changed the title to Who Wants to Be a Millionaire? Now, I've spent my entire time working with baby boomers. My entire career was with baby boomers. So why did I do this for young people? 'Cause this is for, Generation XYZ, millennials, 20s, 30s, 40s. It's because I got 4 kids and I've watched them do things with money. I watched their friends do things with money. And these are the lessons that I taught my kids about money. And I just said, hey, why don't I teach the world's kids about money? Because I think a lot of kids don't, don't have a good idea of what they should be doing.

Well, okay, so let's get a lesson from the book, right? Or a couple lessons from the book, right? So you talk about the 3 phases of wealth: building, protecting, and distributing. So, talk to us about some common mistakes people make in the building phase and how they can avoid it.

Well, I mean, they go in debt, they get divorced, they spend way too much money on their cars. I got a whole list of things that they do wrong. But what I try to do is show them specific examples. See, the problem is 80% of Americans think they're never going to become wealthy. And unfortunately, they're right. 20% of Americans know they're going to become wealthy. And you know what? They're right too, because to achieve something, You first have to believe it. But here's what I found. Most people have to see it to believe it. See, if you believe something without seeing it, that's called faith. Very few people have faith. Most people have to see it to believe it. So what I learned very young in this business is if I could put their name on a piece of paper with $1 million, something changed in their mindset. They— once somebody can see their name on a piece of paper and say, yes, it is possible. Now you gotta remember, this was 40 years ago. ETFs did not exist. Crypto did not exist. There was one product that could illustrate, and that was life insurance. So what I would do is I would solve for $1 million at that person's age 65. And I, I use an example: 25-year-old female would have to put away about $7,700 a year, and when she's 65, she'll have $1 million. Well, I wasn't there to sell her a big life policy, and I don't know how many 25-year-old females can save $7,700, but I wanted to have her name on a piece of paper. Then I would take her over to a time value of money calculator and say, look, if you could get 6% on your money You only have to put away about $500 a month. If you get 9% on your money, you only have to put away $250 a month. If you get 12% on your money, you only have to put away $100 a month. Well, now she says, I can do that. I can do that. I might be able to do that. Now, I was no longer a salesperson. I was on her wealth-building team, and we were going to focus on helping her become a millionaire. And that's kind of how this started. This way I ran my career. You know, when people said, Tom, what do you do? I didn't say I'm a life insurance agent. I said, I help people become millionaires.

You tell me how many million you want, I'll show you what you need to do to get there.

And that style worked for me when I was in the business.

Well, the interesting thing about that right now is people's like, oh my gosh, that sounds so simple, right? How do I do that, right? You can literally go to sec.gov, the Security and Exchange Commission site, sec.gov. They have a calculator on there called Savings Goal Calculator. You can literally put like how much you want to have. Maybe it's $1 million, maybe it's $3 million, maybe it's $5 million. You could put in there how much you have now. You could put the years on there, and then you could put the expected return. And you know what it'll show you in the answer? How much per month you have to put away. It's the same thing that you were talking about, Tom. And it's right there. I mean, we, we always say our government doesn't do anything for us. We just don't know the tools they have. Can you imagine the, the government actually giving us a tool that shows us actually how to get there? It's amazing.

Yeah.

Right?

You emphasize it's not how much you make, it's how much you keep in the—

Yeah, because here's the deal. If you make $50,000 a year, you're going to earn somewhere between $3 and $6 million over your lifetime. But if you can get to $100,000, you're going to earn somewhere between $7 and $11 million. If you can get to $250,000 a year, you're going to get somewhere between $18 and $28 million. And it's a lot easier to save $1 million if you got $28 million coming in than if you got $3 million. Now, normally at this time, Mike, somebody raised their hand and said, Tom, $1 million is nowhere near enough. I don't disagree with that, but I'll tell you this, it's the first million that's the hardest. The second, third, and fourth come a lot quicker because now you got money working for you. You got to work for that first million.

Yeah, that's so true, right?

The first million is by far and away the toughest, right? And it's just, it's the one that takes the most amount of time. And like, if you want to, if like, use that calculator, folks, to see that, put $1 million in, you know, change, find, find, find your answer how much you need to save to get to $1 million, then use that same calculator and change the top number to $2 million. And see, and see what you need to put away. And you're gonna realize it gets— it's not that big. It's not that big of a difference. It's not as much money difference. It's not double the money, right? Because over time, that money grows faster, right? When you have, when you have $1 million earning 9% a year and you're putting money in, that 9% is earning $90,000 per year.

Right.

Right. It's just, it's just an interesting tool, right? So when you, when you say, when you say pay yourself first, right, we— there's a lot of people that say this right out there in the financial planning space. They'll say pay yourself first. You know, some people say, you know, people of faith say, give first, pay yourself second. It's all about money for you first in the grand scheme of things. What percentages do you put toward how much you should pay yourself first?

Well, I believe people should give 10%. All right. My wife and I, we now supertithe, we give 20%, but I believe at least 10% you should give. And then they used to say, you know, 10/10/80. You give 10%, you save 10%, you spend 80%. I don't think 10's enough to save anymore. I think you got to save at least 15 and you want to shoot for 20%. So try to live on 70% of your income, give 10% away, invest 20% for the long term. That's what— that's my recommendation. I mean, I typically save 30 to 40%. And I, you know, people— somebody asked me, if you could go back, what did you do wrong? And I said, well, maybe I tried to save too much. Maybe I should have spent a little more along the way. But, but now We're benefiting from all those sacrifices. I'm— we are having the time of our lives right now. And so, you know, I, I wouldn't go back and change anything, but that's kind of my philosophy on that.

One of the interesting things about like maybe the 10-10-80 rule is so many people today have 401s where they're— where the company will actually match, right? So if you save like of your dollar, right, if you put 10 cents of your dollar in there, maybe they're adding 5 cents to it. Right.

Probably. Yeah.

Yeah, 4 or 5. And that's where a lot of people— there's a lot of— Tom, I know you're not talking to people every day that are still working, but there's a lot of people wasting money because they're missing the match and they just don't see it. You know, it just because, you know, maybe the rule is 10/10/80 or 10/15/75. One of the things you can't do is give away free money if you want to, if you want to get there. Um, so if, if people are struggling to kind of save that amount, what are some habits they can do and stick with them?

Okay, I say almost all Americans could be millionaires except for 2 simple things. Number one, they spend way too much money on their cars. And number two, they get divorced. So the moral of the story is drive a used car and stick with your first spouse. Now, I say that a little tongue-in-cheek, but anybody who's been through a divorce— I haven't, I've been married 42 years to the same wife, but I've had friends get divorced. I've seen them get just wiped out financially. And so divorce is a big bad thing financially. All right. But it's the cars that cause most people. And, you know, I use 2 examples. One is me. I had a chance to buy a brand new pickup for $65,000, or I could buy a 2-year-old pickup with 13,000 miles on it for $30,000. Well, anybody who knows me knows I bought the 2-year-old truck. It looked brand new to me. It had Sirius Satellite Radio and leather seats and everything I wanted. All right. And then I took that $35,000, I invested. Well, if I just get 6% interest, that's worth $697,000 in my retirement days. And if I got 8%, it's worth $1.8 million. That's one vehicle. Now I'm married, 4 kids. We're probably on our 22nd, 23rd, somewhere, probably 21, 22 is the over-under. I don't know. You start multiplying those numbers and it's crazy. But most people don't pay cash for their cars. They do car payments, which I think is crazy. They're paying interest on a depreciating asset. And so I list the 200. My favorite slide is this one. A $250 car payment, a $500 car payment, a $1,000 car payment. That $250 car payment's going to be worth one— if it was invested at 7% instead of sent to the car company, it'd be $1.36 million. The $500 a month car payment would be $2.7 million, and the $1,000 a month car payment would be $5.4 million. And I know couples where both the husband and the wife have $1,000 a month car payments. Do you honestly think they know they're driving their $10.8 million retirement down the road? It is crazy. Stop spending that kind of craziness on cars. And just a good rule of thumb, never pay interest on a depreciating asset.

Again, I would like to thank our good friend Tom Hegna for again joining me on the Ideas by Mike podcast. We now have over an hour's content plus from Tom sitting on our content and Ideas by Mike. And again, after I recorded with him on Financial Freedom that aired on CNBC and Fox Business, we really have Many, many hours of this amazing jewel of a retirement expert economist that's here to help you take control and build a one-of-a-kind financial plan for your one-of-a-kind life. I'd like to, uh, I'd like to just highlight one wisdom point he gave on that episode. And, uh, it's that we didn't highlight today on the One of a Kind Financial Show Daily. He, uh, he encouraged his kids. You'd find this on the full podcast. He encouraged his kids. And when they got a job, to show up early and leave late. Not to do that forever, not to burn out, not to overstress yourself, but to be fully present in what you're doing in the job, um, that has been placed before you. He says in the segment I shared with you, if you're a UPS driver, be the best on time. He gave other examples too, but he gave a lot of examples there of what to do for young folks today. And if you're listening to this and you have, uh, young 20, 30-year-olds, I would encourage you to not only maybe get Tom's book, Who Wants to Be a Millionaire? But also to have them listen to that podcast. So if you need help with that, if you want one of our advisors to meet with either you or your grandkids, text to 600-700, text IDEAS, I-D-E-A-S, I-D-E-A-S. Until next time, enjoy your weekend. I'll be in Alabama, probably watching my daughter finish the finish line, hopefully around 3:00 AM in the morning. Until then, I'll give you an update on that next week on the One of a Kind. Financial Show Daily. Mike Milligan is an investment advisor rep with Advisory Alpha LLC. Ideas by Mike, doing business as One Oak Financial and the One Oak Collective, are unaffiliated entities of Advisory Alpha LLC. All opinions expressed and the guests on this show are just the opinions of those, not of Advisory Alpha LLC. Please consult with a professional financial advisor before making any financial decisions. Remember, you are one of a kind, and One Oak Financial is here to build one-of-a-kind financial plans for your one-of-a-kind life.

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