When Will I Be Rich?

A young cabinetmaker wonders when (if ever) he will be "well off." Well, young feller ... April 29, 2012

For those of you lucky enough to do well in the industry, at what age did you become well off and stop worrying about making it? I am 30 and feel as though I should have a lot more than I do.

Forum Responses
(Business and Management Forum)
From contributor A:

From contributor B:
You become well off and stop worrying about it when you have about 4m in the bank, without a lot of regard to your age. Until then, you will either need to work or have a profitable ongoing business - either of which can go away rather quickly these days. So, the answer for most of us is the struggle never ends.

From contributor S:
Yeah, I'm 40 and feel as though I should have a lot more than I do. We all work hard, long hours, etc. Accept that you will most likely be working most of your life, just like the rest of us.

From contributor J:
60, found a niche, starting all over again, trying to pay off debt after 3 years of recession, and from what the news is reporting, 8 to 10 more years of this. Best advice, find another line of work.

From contributor L:
Can't give an age because I haven't reached nirvana yet. I figure I will be working until I'm 70.

From contributor N:
I am sorry to say, I think the percentage of people who become wealthy doing what we do is quite small. You may reach a level of comfort that you can live with, but rich? I don't think so. We have been in business for 27 years now, and there have been some very lean years, and some very profitable ones as well. You like to hope they balance out so you can always cover your debt, and pay your bills. When you have a good year, you decide to upgrade your CNC or put in a paint booth. There go the hard earned profits, but it is a means to an end.

I really like what I do, and if I have to do it in some form into my seventies, so be it. If you get caught up in the trap of measuring success by what you have accumulated, you may be disappointed. I am 55 and comfortable, but in this business things change quickly, so you have to always be on your toes just in case.

From contributor R:
Typical "I want it now" attitude. Today's society is based on entertainment and instant gratification. You want instant success? Create something new and unique that a lot of people have to have at low cost. Otherwise you are going to be like everyone else. If you own your own business, make a decent wage, and have no debt, then you are way ahead of most people, especially if you are only 30.

From contributor Z:
You need to tell us what number would make you comfortable. Otherwise this is a dead thread.

From the original questioner:
A number is irrelevant since we all live in different places that have different costs of living, etc. I don't expect to retire early - I am much too greedy for that. I don't think I should be rich at 30, but I am looking to find out what age most people that become successful do it at. For me it will be my early forties.

I expect there is a point for most who are successful that we stop and think "this is great, not much to worry about now." No payments, enough cash to live off of for X number of years, home paid for, nice vehicles if desired, well known businessman in your community, etc.

From contributor L:
What is success? Is it making a name for yourself and having a large staff of workers that you provide a welcome, safe and dependable place to work? Is it making lots of money? Is it getting to a point where the business is self-propagating and you have workers doing most of the work while your input is small and you can relax and vacation while still getting a nice paycheck? Is it making a name for yourself, but still having to work because you like to do what you do? Is it making a company that someone else wants to buy so you can become rich overnight? Many more scenarios. There are so many ways to define success, so which one are you talking about?

From contributor D:
It all depends on your priorities. I moved to a country where life is a lot more relaxed and money goes a lot further. I gave up luxury cars and a certain amount of what I will call "public luxuries" for a life where I have a maid, nanny, fulltime office manager, bookkeeper and driver. I also take frequent vacations with my family and play with my kids whenever I want. I go out and listen to live music, eat at nice restaurants and enjoy a nice social life. If I want to retire at the age of 50 that should be easy. I will likely keep working because I enjoy the challenges of building my business.

If your definition of wealth includes boats, BMWs, giant TVs and fancy shoes, cabinetmaking is the wrong gig. Try working in the financial sector where you can make money even while others lose theirs.

From contributor V:
People generally consider themselves well off when they feel they are doing better than their neighbors. Then you move to a more upscale neighborhood, and you don't feel so well off! And people stop worrying when their debt is low, they have a large positive cash flow, and they are easily able to put a bunch of money into savings on a regular basis. So there. Live modestly and be happy.

From contributor Y:
To me, anyone making enough money to enjoy their lives (whatever that may be) and putting away enough for retirement is doing pretty well.

From contributor Q:

Money is one thing. Most important is happiness. What makes you happy? If you're pursuing money, which job will make you happy? The next one? The one after that? The one after that?

You need to look deep inside and figure out what makes you happy. If it's money in and of itself, there's a good chance you'd be happier as an investment banker or something. Before Social Security, people just assumed you'd be working until you died, more or less. My grandfather recalls working for the railroad, looking at the employee bulletin board. It explained that your retirement started at 65, how much money you'd get then, etc. Right next to it was a bulletin showing average life expectancy for a male at the time - 65 years, 3 months. That was the day he quit.

From contributor U:
This isn't the business you should be in. Security and good money won't typically be found here. Become a Congressman - that seems to be a sure way to fame and fortune. One two year term and the rest of your life a good income, even if you were a total failure.
To survive in this business you have to keep a considerable cushion of funds for the bad years. Always keeping it in reserve and not feeling free to spend it on personal things. What is spent is used to improve the business. It can be a great hobby.

From contributor E:
As soon as I reach that point, I will let you know. I am 53, been self-employed 25 years. I am better off financially than I have ever been, but I would not say I am even modestly wealthy. I have had some serious attitude adjustments over the years as to what defines wealth. The biggest adjustment is I no longer let how much money is in my bank account determine the following:
1. Is today a good day or a bad day?
2. Will I be a good person and treat others with respect?
3. Will I continue to enjoy my work?
4. Will I look for opportunities or whine and moan all day?
5. Will I grow a little more today, or be content with what I used to be able to do?

This could go on, but you probably get my point - too often we let money define who we are. I am actually thinking of adding another line of work as I type this, a framing shop. I have a 5:00 appointment this afternoon. I do not actually have the money for this purchase, but I believe I can work this out. If I get the order I am waiting on, take a small percentage from the deposit, take the balance from the job we are fixing to install, take a portion of the future sales and reapply to the new business.

From contributor K:
Well off, and stop worrying... The two rarely if ever go together. One or the other, but almost never both. This work is manufacturing. It is fairly easy to make an honest living and have some security in your reputation and repeat business so you can continue indefinitely. This was considered successful until the last 10-15 years. Fabulous wealth and early retirement are very far from the norm.

Stop worrying will likely never happen until you make a simple attitude adjustment and determine your good fortune today is far more valuable than some undetermined gain in the future.

If money is success, and success is that important, you need to consider parasitic industries like banking, politics, preaching or pimping. These industries do not produce a product, yet they easily take from the customers at every chance, and customers are very willing. Often customers will line up, nice and orderly. The margins are almost unlimited when there is no product, unlike woodwork.

From the original questioner:
Yes, the banking industry is what I should be in, but I don't have the education or math skills, so I will have to settle for what I can make in the manufacturing business.

The success I am looking for would be making enough to eat out in restaurants, drive a low-end luxury vehicle, live in a 3500 sqft home that is paid for, and not worry about my retirement or maintaining that lifestyle. What I am looking for isn't anything out of the way, and is definitively obtainable.

From contributor Z:
You are asking an open ended question. There are about 6 different costs of living in the US. If you said you were trying to attain a yearly taxable income of 100k in the Northeast or the West coast, we all understand that is about the same as 75k in the middle of the country.

At the end of the day you should be able to meet all of your bills, take 5 weeks (4 weeks of holidays + 1 week of sick/BS) off per year, and put away a minimum of 15% of your income per year into savings or retirement. Most people are content with how much income they have.

From contributor L:
I am 49. I own my own home. No, it's not 3500 sq ft; it's about 1200, but it is mine. I don't drive a low end luxury vehicle but was able to afford to buy a new GMC 2500HD extended cab that I use for business and, on occasion, pleasure. It is pretty luxurious to me considering all the other vehicles I had were purchased for under $8000. I eat out in restaurants but not very often; I like my wife's cooking. As for retirement, my savings right now are going for my two sons' education. I have one in college and another that will be there in 5 years. It is probably going to be college for my sons or retirement for me.

My wife works and will have a nice pension and retirement plan. Between mine and her savings, we should be able to retire and relax. I don't see us having an exciting retirement. But I do expect to live modestly and enjoy the end. It takes a while and you have to save instead of buy.

From contributor D:
I will say this about our industry... Most (I guess all) of the really good shop owners I have known were not good businessmen. They were good cabinetmakers, good bosses, good problem solvers and good at selling their work, but not good businessmen the way Sam Walton was. I have read about shops that were started and run by business guys with MBAs and such. They all made a load of money. I read in Cabinet Maker about these shops that open their doors and are grossing 1 million a year after two years. Looking at the details of these guys' businesses, I would say they are making serious money. So it is definitely possible to make lots of money in the cabinet industry. But most of us never will. I am a carpenter. It does not mean I am a bad businessman, but it does say something about the way I think. I am not good at focusing on the dollars in the way a CEO of a furniture retailer is. I do love what I do and I try to remind myself that I need to make money or it is not worth it. It seems like a lot of us fall into this category.

From contributor V:
I am not much older than you, so I sometimes have the same question. As far as the "this is manufacturing, son, get used to it" attitude goes, I say BS. I consider myself a businessman who sells design, not a cabinetmaker who sells wood products. Big difference as far as market viability in this brave new world we live in.

"Furniture" is out, "Design" is in. My clients routinely spend hundreds at Ikea at the same time they're spending thousands with me. Never mind it's all still the same old custom furniture industry - sell the design aspect, not the furniture (or cabinetry aspect). That's my trajectory to attain similar goals to yours.

From the original questioner:
I feel as though the "get used to it" attitude comes from people who really love what they do and are content with making a living. Everyone in my area with a nice shop and a storefront is doing exceptionally well. Those working from a home based shop are getting by doing what they love. There seems to be good money in manufacturing for those that want to make it and are willing to reinvest in their company.

I am not complaining about how much money I am making. This is more about how long it takes to make it. I have had my fair share of toys and have had nice vehicles in the past, but I am focusing on making money now, not payments. If I want a fifty thousand dollar vehicle, I want to sign a check, not sign a lease. I make enough I could buy anything I want, but I need to make payments and that is no longer the road for me.

From contributor O:
I became successful at age 17 (41 years ago) because I started doing what I love to do. The rest has followed.

From contributor H:
Take a sheet of paper and on one side write assets and the other liabilities. The assets should outnumber the liabilities.

Honestly look at savings. When you are dropping in 2K a month, you are making some headway. When you do, don't brag and don't drive it or live in it. Work to save and be ready for anything life throws at you. I have three kids and can write a check for the oldest's college and will be ready when the next two are ready. No, I don't live like a pauper, I just had a plan, stuck to it, and made adjustments along the way.

I stopped worrying about success and what others had when I watched the growth of saving 10% of everything we make and then some in savings each and every time I get some money, including mowing a neighbor's yard for 20 bucks or cutting a counter down for a quick 50.

From contributor X:
I noticed a big change in my lifestyle once I got a touch of gray hair. I was carded way into my late thirties. Appearances gave me the look of success. Had I known that, I would have touched my hair up with that dash of gray. Now it's silver and I'm proud of it.

From contributor C:
You have to plan your career to meet the lifestyle you want. It's sort of pointless to say "I'm not happy where I am." You need to figure where you want to be and how to get there. How you get there will require sacrifices.

It sounds like you need about a 120K yearly income, give or take. You're not going to make that as an employee in this industry (I'm guessing you're an employee). You can, however, make that as a business owner. So if you choose to stay in this industry you need to figure out how you're going to start your business. Are you going to save up and buy someone out? Are you going to start your own and eat macaroni for two years until your biz is up and running? There is no easy/fast answer, but you're never going to get where you want to be unless you start planning now.

My former career was in finance and trading. I was a millionaire at 32. I never felt secure… full of horrible, backstabbing people that will throw you under a bus to take credit/bonus for what you accomplished. I left that industry in my late thirties and bought a cabinet shop someone else had shut down. I work just as hard these days but am much happier even though I make a lot less. My retirement/house is pretty much paid for and my kids 529's are fully funded. I make enough to fund my current lifestyle but not enough to add to savings. I still cannot stop worrying about it. If my business fails, I will be out of luck. Strangely enough, you have to consider that if I didn't have to worry about it, my business probably would fail. We worry, therefore we produce, the economy grows, and people have jobs.

From the original questioner:
I have been self-employed for 5 years now. First three were flipping houses and the last two were furniture manufacturing. The last two were not as great as the first three, before the housing market went down the tubes. The last two have made me realize it's time to get serious about making money and stop pissing away my earnings. The last six years I have made over 100k each year. This year is not looking so well, but it's a little early to tell. I think if I had one or two good years I could be where I want to be, but it looks like it won't happen anytime soon with this economy.

From contributor F:
I guess you need to define what you mean by well off, first. Having made over $100K (assuming that is net, not gross) for the last 6 years, you are in the top 10-15% of income earners. That means you made more than 85-90% of the US population. According to the US Census, the average income is $46K, and New Hampshire has the top average median income of just shy of $67K.

It is not how much you make, but how much you keep, although the more you make, the more you keep if you don't get caught up in the financing trap. I could give you countless examples of people who make half as much, who retire with no mortgage and money in the bank.

At 30 years of age, it is very easy to retire a millionaire. But is that what you mean by well-off? With 30 years to invest, saving only $500/month and averaging a 10% ROI, you will retire a millionaire. If you had started 10 years earlier, you would have had to save half that amount each month. Tell the average 20-year-old that they could retire a millionaire by saving as little as $180/month and (just as with the general population), they will all want to know how, but about 10-15% will follow through on it (I was one of those who didn't follow through). They are sold on newer cars, credit cards, vacations - things that have very little long-term value (except to the bank that is collecting the interest).

The main reason to accumulate assets is for future sale. Don't own your shop? Something to think of if you plan on selling a business at the end of a career versus piece-by-piece. Do you want cash reserves for your business so you can make better decisions or weather a financial crisis like the one we are in now?

"Well off" means different things to different people. But it all comes down to lifestyle. Do you want to live a lifestyle that has you paying other people (banks, etc.) for the things you want, making you beholden to them monthly for the rest of your life (borrower is slave to the lender) or do you want to be able to buy what you want for cash (and usually at a better price because it is cash)?

My biggest change was when my mindset went from what everyone else was doing and to the opposite. This meant saving for things instead of borrowing, owning instead of renting/leasing, etc. Delaying gratification until we could afford it. Funny thing is, that's the way it used to be. If you couldn't afford it, you saved for it. It is much more liberating knowing that the only reason you use a credit card is to collect the miles or other rewards, knowing you will be paying the bill in full at the end of the month.

Get rid of your debt, then throw that money at your mortgage to pay it off early, then start making that money work for you, not the banks. Your life decisions will be more based on what's best for you and your family and not so much the financial pressure.

In business, the first time you buy that expensive piece of equipment with cash, knowing you will not have any monthly payments to follow, and that means your ROI begins immediately, you will start to understand this. In your personal life, buying that car with cash works the same. You'll begin to ask yourself, why did I give so much money to the banks?

Instead of veging in front of the next episode of your favorite TV show, use an investment calculator to play around with the numbers. Put the amount you spend on your mortgage each month into the investment calculator and see how much you are giving away to the bank and hopefully it will light a fire under you.

What lifestyle could you and your family enjoy if you had no debt? What price are you willing to pay to get there? Once you are on the right track, train your kids on this and change their life and future generations. Get them in the habit of saving versus spending and teaching them how to make money off their money and they will be asking much different questions at age 30.

From contributor G:
Well said. I hate to be the bearer of bad news, but as one of the older guys on here, I can tell you that as a self-employed person, you will never feel like you have a house on easy street even if that's where you park your car at night. Sleepless nights, business worries and responsibilities, and employee problems come with the job.

The most important thing you can do at age 30 is save money and make moderate, low risk investments. Your current business is only a means to an end. You'll never build enough cabinets to be rich. Real financial security comes from having investments that pay you just for owning them.

You also have to have a life plan as well as a business plan. Don't live beyond your means. Pay cash. A typical $25K car will cost you almost 40K by the time you pay the last payment. A 20 ft boat on payments cost the same as a 40 ft yacht paid for in cash.

Plan for how long you will build your business (meaning putting almost all money into better and more efficient equipment); and when to switch to sucking every cent out of the company for investments.

Buy a building for your business. My building cost me $365 in 1987. Now someone pays me $50K a year to use it. Imagine that, $50K and all I have to do is deposit the check every month. It's not impossible to do, but you do have to give up $5 cups of coffee at Starbucks. A $30K pickup will get you to the jobsite just as well as a $60K 4x4 with tons of chrome. You have to make choices. That $30K difference on the truck alone, properly invested, will be over $100K by the time you retire.

I'm not sure about the peace of mind, but you can have all the toys and financial security if you plan for it. You will find that as you get older and more financially set, customers won't mess with you as much, which makes life a lot easier.