P a g e | 3

The

Modern Day Millionaire

Financial Planning Meets Lifestyle Design

Mark Durrenberger, CFP®, EA

First Edition

Chicago, Illinois

6| P a g e T h e M o d e r n D a y M i l l i o n a i r e

“Too soon we grow old, too late we grow wise.”

P a g e | 7

Contents Introduction 13 Financial Planning Meets Lifestyle Design The Millionaire Ideal – What It’s Really About 21 Hint: it’s not what you think � The 5 themes of the millionaire lifestyle Retirement Redefined 31 A brief history of retirement as we know it � Financial Independence as retirement is the latest phase Step 1: Save Something 49 How to save even when you feel broke � How to handle credit card & other debt � How to determine where your current savings rate will get you Step 2: Find Your Bearings 63 Determine out how much you’re spending in less than two minutes � Learn what makes a budget actually work � Estimate how much your ideal lifestyle would cost Step 3: Plot Your Course 79 Define your financial freedom goal � Owner versus Employee income � Estimate how much income you can get from a big ‘ol pile of savings Step 4: Make More Money 93 Why the Suze Ormans of the world don’t focus on increasing your income � “Save more later” as a way to painlessly increase your savings rate Step 4.1: Make More Employment Income 107 Maximize your productivity to maximize your value � Best practices to negotiate a higher salary

8| P a g e T h e M o d e r n D a y M i l l i o n a i r e

Step 4.2: Make More Business Income 123 The value (and tax advantages!) of business income � Finding something to sell & executing on it

Step 5: Don’t Waste Money 143 Why wasteful spending to one person can be money well spent to another � How serious do you need to be about cutting expenses � Budgeting that works – and lasts Step 6: Make Your Money Make More Money 161 Investing vs. Trading: vampirical transaction costs � Invest like Warren Buffett � Diversification & mutual funds: the beauty of low-cost, long-term investing Step 7: Live Your Life 187 Focusing on what you can do as a stress release � Five Truths to change your perspective on financial planning � How to Keep Calm & Enjoy Life

The Beginning 211 The end of this book is just the beginning of your plan Additional Resources Check out The Modern Day Millionaire section of www.markdurrenberger.com for up-to-date online tools and resources to help you at each step along the way.

T h e M i l l i o n a i r e I d e a l P a g e | 21

The Millionaire Ideal:

What It's Really About

"Money is the instrument, not the end."

Millions of dollars in the bank isn’t what being

a millionaire is really all about.

Who Wants to Be a Millionaire?

he gold-standard of financial success in America is the millionaire. Our music, movies, and popular culture idolize wealth. A question

we love to ponder is, "What would I do with one million dollars?" Books with "Millionaire" in the title tend to sell well1: The Millionaire Next Door, a 1996 book written by Thomas Stanley and William Danko discussing how millionaires in America reached that level, has sold over three million copies. The idea of being a millionaire is clearly romanticized. But why?

There isn't any magic in having one million dollars. It doesn’t guarantee you’ll reach your financial goals. I've worked with clients whose net worth is several million dollars but were not able to retire, and I've worked with clients with only

1 Fingers crossed!

T

22| P a g e T h e M o d e r n D a y M i l l i o n a i r e

$100,000 who retired at age 60 without a financial worry in the world. But still we obsess over becoming a millionaire.

When you ask people why they want millions, they don't get excited talking about the money itself; no one says, "I would be so excited to look at that money in my account!" The excitement comes when discussing what that money could do. What you'll hear from people are comments like these: "I would spend all of my time with my family (or friends or softball team or iguana)." "I would pay off all my debt." "I would tell my boss to shove it." "I would stop worrying about my bills." "I would buy my dream house (or boat or motorcycle or saxophone)." "I would write that screenplay (or paint that masterpiece or catch that world-record bass)." "I would backpack across South America.”

These comments are all over the place, but if you look closely, you'll notice several recurring themes: control, security, joy, freedom, and status. Being a millionaire is a financial dream not because of all the commas on your account statement, but because it supports these themes. Based on personal preferences, people live these themes in different ways, or prioritize one over others. However, the fact remains that these themes underpin the allure of being a millionaire.

Let's take a look at these themes.

T h e M i l l i o n a i r e I d e a l P a g e | 23

Five Themes of the Millionaire Appeal When you read the responses about what people

would do with a million dollars - or think about what you would do personally – it’s clear that the attraction of being a millionaire isn’t the money itself, but what you can do with it. The things that excite us may differ in specifics, but they all fall along the same general lines.

Control

A huge draw of millionaire status is having control

over your time and day-to-day schedule. The ability to work when you want, doing what you want, has universal appeal. Related to that is the desire to spend time with people you love, doing activities you enjoy. At its core, control is about being able to place your priorities first, ahead of the priorities of others, such as an employer. We want to be in charge of our lives and not at the mercy of a boss or job.

This isn't to say that we expect to always do exactly as we please, whenever we want. Having obligations to others is a part of life - whether it is working for someone else, caring for a family, or, as a business owner, being responsible to your customers and employees. A life completely free of commitments to others is not fulfilling.

When we completely depend on our job for financial support, we feel compelled to compromise other, higher priority, relationships for our job due to fear of losing it – and losing the income it provides. With control, you’re able to ensure your most meaningful relationships take priority. You can call it a day early and make it home to surprise your significant other with a date night and not worry about the repercussions at work. We envision millionaires having this ability to relegate financial pressures to other priorities as needed.

24| P a g e T h e M o d e r n D a y M i l l i o n a i r e

Security

For the next millionaire theme, we go to Abraham Maslow's hierarchy of human needs. Maslow, a psychologist in the early 20th century, is best known for his research into human needs. He describes needs as a “progressive hierarchy.”

We focus our attention on meeting certain needs. When those are met, we focus our attention on the next higher level. One level of need must be fulfilled before an individual turns his or her attention to the next higher level.

According to Maslow, the first, most fundamental level of human needs is physical: food, water,

T h e M i l l i o n a i r e I d e a l P a g e | 25

shelter, etc. Once those needs are fulfilled, the next level is safety. This refers to both personal safety - not being physically harmed - as well as the more modern idea of economic safety - having the ability to support oneself.

In our world, satisfying these two levels of human needs requires money. Understandably, then, money will consume some of your focus until you reach a point you feel certain your bills will be covered. This is financial security.

It's popular these days to push the "money doesn't matter" mindset. It's especially prevalent among those with more than enough money to pay their bills. It's easy to say, "Don't worry about money" when you have enough money not to worry about it. Money will always be a concern to the extent that it's lacking. The millionaire appeal comes largely from eliminating this concern. To truly be free from financial worry, you need to know with certainty that your bills will get paid no matter what you do.

Joy

For our next millionaire theme, we're going way

back to Aristotle, the Greek philosopher. Aristotle's writing and teaching covered everything from ethics to physics to medicine to psychology. He was a monumentally influential thinker, to the extent that many of his ideas are still relevant today.

A central tenant of Aristotle's thinking about humanity was his idea of Eudaimonia - the notion that the primary aim of human endeavors is to seek happiness. Ultimately, our actions are simply intermediate steps on the route to happiness; happiness is the one thing we strive for, in and of itself.

My youngest brother - a philosophy buff, and the person who introduced me to this line of thought -

26| P a g e T h e M o d e r n D a y M i l l i o n a i r e

likes to illustrate it with a story. Suppose you’re questioning a student about her plans for life. It may go something like this: "Why do you work so hard in school?" "So I can get a good job." "Why do you want a good job?" "So I can make a lot of money." "Why do you want a lot of money?" "So I can travel with my friends." "Why do you want to travel with your friends?"

"To experience new things, see the world and spend quality time together."

"And why do you want all of that?" "Because it makes me happy."

Asking “why” enough times eventually boils our motivation down to that core. It doesn't make sense to then ask, "Why do you want to be happy?" That is a ridiculous question.

Having millions doesn't bring happiness on its own. It does, however, allow us to afford the things and experiences that bring us joy. It also gives us the ability to pursue our interests and passions - you know, because you aren't chained to your desk all week. Freedom

The fourth theme, Freedom, is a variation of the

first theme, Control. Control is about mastery of your time; Freedom is about mastery of your physical environment. The millionaire ideal is often stylized as jet-setting around the world, or working remotely from the beach, with cocktail in hand.

This image was popularized with Tim Ferriss's New York Times bestseller, The Four-Hour Workweek. While not the sole focus, one of the book's core tenants is that, in the Internet age, where we work is

T h e M i l l i o n a i r e I d e a l P a g e | 27

becoming less relevant. An entire section of the book is devoted to strategies for building an online business that can be managed from anywhere in the world so you can be anywhere you please.

Originally published in 2007, the reprinted version includes success stories of people who read the book and used it to build such a business. One reader tells his story of creating an Internet business that allowed him and his family of four to sail the ocean for months while keeping the business running. That certainly is mastery of one's working environment!

Now, of course, not everyone strives to travel the world or work from a beach. Freedom could mean having a beautiful, inspiring view from your office window. It could be the lovely home office you customized, just to your liking. We idealize millionaires, in part, because we picture them having the freedom to choose their surroundings and strive for that ourselves. Status

For our final theme we return to Maslow's hierarchy of needs. The first level, as we discussed, contained physical needs. Then comes safety. These are manifested in our earlier theme of Security.

Higher up his hierarchy, Maslow lists the need for esteem. As social creatures, we desire to feel valued and respected, by both ourselves and others. Status is how we think of that today and is certainly one aspect of the millionaire appeal; we want to feel successful and have others think highly of us.

However, striving for status is a double-edged sword, particularly in our modern society. With the proliferation of Instagram and other visual social media channels, we can be tempted to place an extraordinary and improper emphasis on impressing others with material wealth. This can lead to harmful

28| P a g e T h e M o d e r n D a y M i l l i o n a i r e

feelings of inferiority if we can't keep up with the Kardashians of the world.

We work in jobs we hate to buy stuff we don’t need to impress people we don’t like.

While we shouldn't buy a bunch of crap simply to

impress others - even if we could afford to do so - achieving millionaire status makes us feel that we are doing something right - that, by our society's standards, we are “winning.” It's certainly easier to have higher self-esteem when you feel like you're succeeding financially, which is how we perceive millionaires.

T h e M i l l i o n a i r e I d e a l P a g e | 29

Whether it's morally "right," or psychologically healthy, I'll leave to you, but the feeling of societal status is clearly one part of the millionaire appeal.

There you have it. The true appeal of being a millionaire is that it provides you with the foundation needed to fulfill the above themes. This is why people work for years and years, restricting their spending so they can save and save, with the ultimate goal of accumulating a million dollars so that they can feel financially secure, control how they spend their time, free themselves to work on their terms, impress themselves and others, and, of course, be happy!

The Modern Day Secret Understanding the underpinnings of the

millionaire appeal reveals something exciting. When we look at the world in which we live - a world in which the Internet has broken down information barriers across all walks of life - we see that, with proper planning and foresight, these themes can be achieved without waiting until we've acquired millions!

Prior generations had to work for decades to accumulate enough wealth to be able to bring about the millionaire lifestyle. These are traditional millionaires. The proliferation of the Internet has caused drastic changes to our modern life –

culturally, economically, and technologically – changes that provide our generation with the ability to achieve the lifestyle of a millionaire without actually being one. Instead of waiting to become a traditional millionaire, we can become (drum roll please) a Modern Day Millionaire.

Coincidentally, that’s the title of the book.

30| P a g e T h e M o d e r n D a y M i l l i o n a i r e

“Never give up on a dream just because of the time it will take to accomplish it. The time will pass anyway.

- Earl Nightingale

What Next?

Head on over to Amazon or your favorite book retailer to pick up your copy.

Inside, you’ll discover:

• The single most important step to building wealth.

• Achieving financial independence is closer than you think.

• You can confidently negotiate a five-figure raise without

confrontation or stress.

• How to turn your passions into income.

• Low-cost investing tips that will save you tens of thousands of

dollars.

• Why extreme budgeting fails, and what to do instead.

• How to productively tune out the “noise” of modern life.

Here’s What Others Are Saying

Really practical advice. This book takes a very modern approach to financial advice. It works whether you are in a traditional nine-to-five job working your way up the career ladder, working gig jobs while trying to build a business, or anything in between.

- Seth B.

This book was fantastic! It's a great primer for getting started on a financial plan, but also is perfect for someone looking to get better at budgeting, investing, planning or simply improving at managing your money. The advice is really accessible. The book lays out seven steps to achieving financial freedom, each of which is broken down into both bite-sized actions you can take immediately and bigger, long-term things you can to to really make a change in your life. It has helped me immensely already!

- Mitch N.

Fascinating perspective on how people can accumulate wealth and yet enjoy life participating in the valued activities of importance to them! Easy read with simple steps to follow in the execution of wealth accumulation! Recommend as a great gift for the baby boomers generation to give to their children! Five stars!

- Thomas H.

About the Author

Mark Durrenberger, CFP®, EA Mark Durrenberger has been working as a financial advisor since 2010. Professionally, he has helped many clients define and achieve their goals, including recent graduates in their first jobs, multimillionaire Fortune 100 executives, and others in between. He works for a fee-only wealth management firm with over $3 billion in assets under management, located outside of Chicago, Illinois, but works with clients throughout the country.

Mark is a Certified Financial Planner™ (CFP®), Enrolled Agent with the IRS (EA), as well as being a Chartered Financial Consultant (ChFC®) and member of Mensa.

Mark believes a strong financial foundation is one of the keys to an empowered, fulfilling life. This isn’t because financial success brings happiness itself, but because it allows us to focus our energy on personal goals and giving back – instead of worrying about our fears. Find resources mentioned in this book, learn more about Mark, and see his current projects at:

www.markdurrenberger.com