A bookkeeper with a two-year college degree retires with more than five million in his investment accounts. A renowned surgeon is shocked to discover that he doesn’t have enough to retire. Based on real people, the two stories and one decade to make millions prove that anyone can retire wealthy and anyone can go broke. The only question is how much attention you decide to pay to your finances and when you decide to start.

If you start saving in you early 20s and apply a few basic principles to your personal finances, you’ll set yourself up well for retirement. Maybe even early retirement without any financial worries for the rest of your life. On the other hand, if you spend money as fast as you make it, even a million-dollar salary won’t get you where you need to go. So, if you want to retire early with the possibility of a multimillion-dollar nest egg, you don’t need a medical degree, you just need one decade to make millions. 

This is The Author Hour Podcast, and I’m your host, Frank Garza. Today, I’m joined by Jeff C. Johnson, author of a brand-new book, One Decade to Make Millions: A Strategy to Maximize the Power of Your 20s.

Jeff, welcome to the show.

Jeff C. Johnson: Thanks for having me, been looking forward to speaking with you.

Frank Garza: Yeah, me too. To start, I just love to hear a little bit about your background and how that led to you writing this book?

Jeff C. Johnson: So, I’ve been in the financial business in different capacities for just about four decades. I’ve done some writing off and on. I wrote white papers and have written a couple of short how-to books, more to enhance my business opportunities as a financial adviser. About 15 years ago, I started teaching personal finance at the University of Nebraska and that caused me to write another book about the very basics of saving investing that I have learned as an advisor over the years, and I really enjoy teaching. 

It got to be a bit of a grind so I stopped teaching. When I quit teaching, I started getting calls from former students that started asking me questions, then sharing their experience and their successes and there was some really phenomenal financial successes of students. For example, one student was in his 30s and he and his wife would save $700,000 just using some of the things that they both took my class separately, and it really motivated me to write a book about the things that I taught them and condensed it down into a real readable version for young people.

So, my motivation is simply to help young people that are either high school graduates or in their 20s to learn how to accumulate wealth and save money.

Frank Garza: Is that the target audience you wrote this book for is people in their 20s or can you just talk more about who you had in mind as you wrote this book?

Jeff C. Johnson: I wrote this book really for people in their 20s, that’s who most can use the book. However, I have found from sharing some of the manuscript with others that it has also motivated some people that maybe missed the opportunity to save and invest in their 20s, to really redouble our efforts and, very possibly, that would be a follow-up book for people that maybe are just getting a little bit of a late start, because there’s some things that they can do to shore up their finances and still get caught up.

I’m not sure how that’s going to come off and what the title would be, but to answer your question, this book really is ideally for somebody in college or just graduated from college that has most of their 20s in front of them and can accumulate and save as an opportunity, as time to save and really gain the full advantage of compounding over their lifetime.

Frank Garza: So, in the intro and then in chapter one of the book, you tell the story of the bookkeeper and the surgeon and how retirement worked out differently over each of them. Could you share a summary of their two stories?

Jeff C. Johnson: These are really prototypes of clients. I mean, I have some specific people in mind of these characters but I’ve known quite a few people like the bookkeeper that had good but not super-high earning jobs, that either had been raised with skills to save and invest, just had that natural ability, there are some people that do just have the natural ability to accumulate wealth.

In my story, the bookkeeper didn’t make lots of money but started saving early in life, continued to accumulate and save, rebalanced, lived a comfortable but not excessive lifestyle and retired maybe not really early in the 60s, able to live comfortably, raised children, had a happy life, minimal financial stress.

I’ve also known many people that were high earners and really successful and lived big lifestyles that when I got to the end of the road and they came to me as a financial advisor, we had to develop what I call, a “Plan B” because they had overspent their whole life and still had indebtedness, and the money that they accumulated wouldn’t allow them to live comfortably for life. 

So, that’s the — my example as a surgeon, because I do know many high-income professionals, not necessarily physicians or surgeons but many high-income professionals thought the income would just keep coming and hadn’t save enough early on in life, and been frugal or, at least, reasonably frugal in the way that they lived.

Frank Garza: Yeah. You talk about how important it is or how much of a difference that can make, starting your saving plan at 20 versus even waiting until 30, which is still relatively young age. I know you probably don’t have exact numbers in front of you but is there any type of example or illustration you can give me that just shows how big a difference it can make, starting at 20 versus late 20s or early 30s?

Jeff Johnson: Sure, without using statistics, I can talk conceptually about it because there’s a story in several of my books that I call, “The Doctor-Nurse Story”. It’s a story about two twins and one of the twins goes to college in medical school and the other twin becomes a nurse. The nurse twin saves money from age 20 to age 30 and then never saves money again. The physician twin starts saving exactly on a same day that the other twin stopped saving and begins saving the rest of his or her life. 

At the end of the day, if you assume the same saving rates and the same investment return, the one that starts in their 20s and never invests again has more money than the person that starts in their 30s. It’s an incredible story, but the math holds. So, just think of the opportunity if someone did both of those things, started saving in their 20s and have the 30s beyond. The money is incredibly more and so this is what in my story, “The Bookkeeper and The Surgeon” this is what the bookkeeper did.0

Financial Foundations

Frank Garza: Later in the book, you introduced the five financial foundations that you have. Maybe we don’t have time to go into each of these, but could you pick at least one of those to share and give us some details around it?

Jeff C. Johnson: Yeah, sure. First, let me tell you how I created the five financial foundations. When I started as a young stockbroker/financial guy in the early 1980s, I have to tell you, I didn’t really know very much when I look back but, as I would talk with clients, I would ask them, “What was your key to success, how did you build your wealth?” And I started taking notes. 

After a period of time, I had this thick file of notes from meeting with people that were obviously successful, and were my best clients. They have these five common traits. The first one is they always saved when they got money. They always put some money away, what I call putting wood in the shed, and they just were compulsive about it. 

Every time they got money, whether they were young and when they were a server, a bartender, they save a little bit every time they got, took money home from the job to people that started working at reasonably good paying jobs and after college and just started always saving. So that’s number one.

Number two is they always had little cash reserves so that they were never caught off-guard or had to make foolish decisions with money, or imprudent decisions with money, because they always had at least some amount of cash.

The third thing was, they always used a tax advantage retirement account to the maximum, and this is in this book I talk about, this is the place where most people have really have accumulated the most money. 

Number four is, they have the right size home, never overpurchased, they never had a huge lifestyle, they had a comfortable lifestyle. They had discovered that the difference between living a really excessive lifestyle and living a really comfortable lifestyle is really a lot of money, but it’s not very much different in actual enjoyment.

The fifth thing is they didn’t get caught up in consumer borrowing. They didn’t borrow lots of money for things that lost value or for things that we’re valued less and so they never had that burden of high-cost indebtedness and so that simply is the five financial foundations in which I do cover in more detail in this upcoming book. 

Frank Garza: Yeah, let’s talk about a few of those because in the later chapters, you really dig into these, and chapter six is called “The Smart Housing Decision.” You talk about how you think about these decision of renting versus buying and then, if you do buy, what to buy. Well, talk me through what you think the key points are around those decisions? 

Jeff C. Johnson: I have seen lots of young people encouraged by well-meaning relatives or friends or real estate people, they over commit in housing. The idea is, you have equity build up if you buy a home and for some people that does work, and if you do get into a home and stay there for a long time that does work. 

But I’ve seen so many of my former students that ignore that advice, bought a home, and then within two or three years they needed to move because they had an opportunity in a different town, or their family expanded a little faster than they thought and they just really did need a bigger home, or they just needed a change because they were in the wrong neighborhood or something. 

In most markets, in the last number of years, changing homes really quickly was expensive. The surer way in my view and, again, I am not a real estate expert, I have just observed personal finance tendencies of clients and of former students. I thought the surer way is to keep your housing cost down early on and find a way to eliminate your debts and start building wealth, and get the money working for you instead of having big ongoing expenses. 

Frank Garza: Okay, there is a chapter called “Putting Wood in the Shed” where you talk about having this cash reserve and, I mean, I found personally this is something that’s always given me more peace of mind, is when I’ve had those cash reserves to handle any unexpected things that come up in life. 

For somebody that fits your target audience, if somebody just graduating your college as oppose to their 20s in front of them and they are starting think, “Okay, I want to build up this cash reserve”, how should they think about like what is the right amount? How much do they need to have in that reserve? 

Jeff C. Johnson: It’s a really good question and it is kind of a hard question to answer too, but I think the proper answer is, it’s a very unique answer for each person depending on their needs, depending on what can happen in their life. To your point about how you feel about it, I think people that are financially solvent, financially successful should normally feel somewhat liquid and not leveraged. 

They shouldn’t be feel like they’re just pressed all the time because having that financial press on and having no liquidity, no as I call it wood in the shed, it makes people nervous and it’s pressure on your life, it is pressure in your career, lots of pressure on your family relationships or your marriage. 

Having wealth is not just about having money, it is about living a good comfortable lifestyle that fits what you want, not necessarily what your parents want or what society wants you to have, and I think it is a lot easier to do it. I don’t think it is, I know from observation, that it is much easier to do for those people that actually have some cash reserve. 

Choosing What To Borrow and How Much

Frank Garza: Okay, later on in the book, you talk about the dangers of debt and you talk about how you classify good debt versus bad debt. Could you distinguish between those two or how you think about that? 

Jeff C. Johnson: Let me start with the story of there’s a surgeon that I spoke about earlier in our conversation. There is a story that I call, “The Surgeon’s Son.” I can’t tell you how many people have come to me in this situation where they’re okay. They look like they are doing okay. They have all the signs that they are financially successful. 

But when they come in to me for help, they’ve got 80 or 100 or $125,000 in high-interest debt from credit cards and consumer borrowing. It’s one thing to get a little bit behind but if it isn’t dealt with early on, it’s consuming certainly that it leads to — I mean, I have to imagine it leads to very many bankruptcies or failed financial situations. 

You can imagine what the pressure would be on a marriage or on a family relationships for those people. So, avoiding consumer debt, high-interest, non-deductible indebtedness against things that either lose value or are valueless is one of the recipes for financial disaster or certainly for being unsuccessful. 

Good debt is borrowing money that’s low interest and is deductible against this or that, makes the interest cost lower and is used to purchase things that actually are income producing or can appreciate the values, such as a family home or purchasing a business or paying for an education that’s valuable, this is all good debt. 

I am not saying to not borrow money, although, it would be wonderful to live in a world where we all are debt-free. I’m not sure that that’s practical but choosing what you borrow for and how much you borrow is really an important decision that I think I covered well in this chapter of the book. 

Frank Garza: Later in the book, you talk about how one day you’ll probably need some financial advice or a little bit of help and you go over where to get it. I’m going to just quote something here from the book. It says, “I recommend locating a fee-only advisor who is a fiduciary.” Could you talk about what that is? What is a fee-only adviser and what is a fiduciary? 

Jeff C. Johnson: Well, sometimes I think fee only is an unfortunate term. It sounds like all they do is charge you. That’s not what it is. A fee-only adviser is only compensated by the client on a fee basis that is pre-arranged. They are not paid to sell anything. They are not paid commissions or markups or bonuses to sell any product and, therefore, many people it is widely viewed that this is a more conflict-free approach to getting financial advice. 

A fiduciary is someone that is a financial adviser or any kind of fiduciary is required to do what’s the best interest of the client, without regard to what they want to sell. Not all vendors of investment products are bound by this fiduciary standards. So, in the absence of other information about an adviser, I would certainly want to find out if they’re a fiduciary and if I could predetermine what I was going to pay them. 

That’s what I want anybody to do but very certainly young people that are just getting started out, I don’t want them to make the mistake. If they need help, I think I fiduciary adviser would be a good way to get that first step, but it doesn’t have to be a lot of payment and it doesn’t have to be an ongoing arrangement. It could be just initial setup of an investment counter or an investment plan. 

Frank Garza: You also go over some of the questions that you should ask a financial adviser or candidate. Can you give me a few examples of some of these questions? 

Jeff C. Johnson: I think a really good telling question is early on is just to say, “How did you happen to get into this business and what do you like about it? What was important to you about it?” Some people get in the business because they’re fascinated with stocks and the stock market and that’s all fine, but people that get in the business because they want the thrill of trading, buying and selling or thrill of being in the markets isn’t really who I think of as a really good financial planner, a really good thinker and planner. 

I would rather my students and my readers work with somebody that is really passionate about helping people and was good with money themselves, that made really good choices and were increasing their own net worth and sure, it’s a job. You get paid for it but also, part of their work that they really enjoy is helping other people. I know many financial advisers like this across the country that are members of our association called NAPFA, The National Association of Personal Financial Advisers, very many of those independent advisers are really drawn to do the right thing for people. 

Frank Garza: Well, Jeff, writing a book is such a feat so congratulations on putting this out into the world. Before we wrap up, is there anything else about you or the book that you want to make sure our listeners know? 

Jeff C. Johnson: I hope that the book is widely read and is passed on to young people. I had one common comment by my editors and by people that I had read the book or proofread for me and they said, “Oh my god, I wish I had this book when I was in my 20s.” 

Frank Garza: Jeff, this has been such a pleasure. The book is called, One Decade to Make Millions: A Strategy to Maximize the Power of Your 20s. Besides checking out the book, where can people find you? 

Jeff C. Johnson: They can find the book on Amazon. I do have a personal website, jeffcjohnson.com. 

Frank Garza: Thank you, Jeff. 

Jeff C. Johnson: Frank, thanks for this opportunity.