How I became a millionaire while working in my pajamas

This is a guest post from the Millionaire Mommy Next Door. At her blog, MMND shares her recipe for success, happiness, and financial freedom. This piece originally appeared on her site in a slightly different format.

When my husband and I married (at age 23), I was working as an office assistant at a veterinary hospital earning $7.50 per hour. Unsatisfied with my low wages, I brainstormed ways to generate extra income.

Going to the Dogs

I had worked as a volunteer dog-trainer for the Humane Society since age 14, so I combined my experience and youthful exuberance into a part-time side business. I offered dog-training classes and taught them in the veterinary hospital's backyard. It was a win-win situation: my employers had a new service to offer their clients, and I was self-employed, with very low operating expenses.

I soon added home- and pet-sitting to the services I provided. Within about a year, my part-time business was earning more than my full-time wages at the veterinary hospital, so I quit my job. Over the next few years, I expanded my business and hired a few part-time employees. It was at that point that I discovered the joys of working from home in my pajamas.

In the Pipes

Meanwhile, my husband served as a company-employed plumber working for hourly wages, earning $30,000 to $35,000 a year.

At age 30, I sold my dog-training and pet-care business (for about $75,000) and we launched a plumbing and heating business of our own. My husband served as the project estimator and plumber; I was the business manager and bookkeeper.

Our customers quickly spread the word about our new plumbing company. Within our first year, we had generated enough business (via personal referrals) to keep us busy and profitable. Building a business based on personal referrals completely eliminated the need for us to spend a dime on advertising.

Doing the Math

We soon faced an important decision. Should we expand our services by hiring other plumbers? Here are the two options we considered:

Option A:
Continue to manage a small in-home business operated by:

  • 1 full-time plumber (my husband; 40 hrs/wk)
  • 1 part-time apprentice (20 hrs/wk)
  • 1 part-time bookkeeper (me; 5-10 hrs/wk)

With this model, we could earn $250,000 annual gross revenue with 50% net profit (low overhead expenses means a higher percentage of revenue remains as profit).

~or~

Option B:
Manage a storefront business operated by:

  • 5 full-time plumbers (200 hrs/wk)
  • 2.5 full-time apprentices (100 hrs/wk)
  • 1 full-time bookkeeper (40 hrs/wk)
  • 1 full-time manager (40 hrs/wk)

Under this scenario, we would earn $1,250,000 annual gross revenue (5 times more revenue, with 5 plumbers, than Option A above) with 10% net profit (higher overhead expenses means a lower percentage of revenue remains as profit).

Which business would you rather own? At first glance, most would likely say, “I'll take the business that makes one-and-a-quarter million dollars each year!”

Whoa now, let's slow down and do the math:

  • Option A: Small in-home business brings in $250,000 gross revenue and nets 50% profit = $125,000 annual net profit.
  • Option B: Larger storefront business brings in $1,250,000 gross revenue and nets 10% profit = $125,000 annual net profit.

Now that you've checked the math, which would you choose?

My husband and I chose Option A. Option A comes with fewer expenditures of time, energy and capital, as well as reduced risk. Option A nets the same profit as option B. As a bonus, option A allowed me to continue working at home in my pajamas.

Of course, if we hired 10 plumbers, we might make significantly more income. However, upon evaluating our priorities and values, my husband and I decided that we already made enough. We made the choice to work less rather than grow our business. In other words, a balanced lifestyle was, and still is, more important to us than money.

Learning to Invest

Since our plumbing business required only 5-10 hours/week of my time for bookkeeping tasks, I decided to learn how to invest on my own (without assistance from our broker). I dedicated almost two years to the study of equity investing via books, web sites, and conversations with investors. Once I had acquired the knowledge, confidence and skills necessary to invest successfully on my own, I fired our broker, saving us thousands of dollars in commissions and fees.

Once we reached our crossover point (the average annual return from our investment portfolio exceeded our annual expenses, plus inflation), we scaled back on our business. My husband currently works only two or three days a week. Now, he can be selective in the projects he accepts. For instance, he no longer unplugs toilets, but he still enjoys creative remodeling projects. If he chooses to retire or to do something completely different, we'll sell our plumbing business.

Achieving Financial Freedom

Before traveling to China to bring our new daughter home, I hired a bookkeeper to replace me so that I could focus my time, energy and attention on parenting and pursuing my hobbies. Additionally, I've learned how to effectively manage our investment portfolio in such a way that this task requires just one or two hours per month of my time.

We have truly attained freedom, financial and otherwise. Whether it be work, parenting, or play, we wake eager to spend each new day doing whatever we choose. What a gift!

Recommended reading:

Want to learn my recipe for success, happiness, and a million dollars? Start here: Baby Steps to Financial Freedom.

More about...Side Hustles

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others
guest
102 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Tom
Tom
12 years ago

What a motivating post. This almost sounds like the path I’m on. I’ve come to realize that you’ll never make a lot of money with corporations. Instead, you should create a path or your own that involves a lot of risk buts also includes a lot of rewards.

I think a lot of people don’t take this route because they don’t like the idea of having an inconsistent income.

Matt Haughey
Matt Haughey
12 years ago

This is great, but how did she go from “making $125k profit from a small business” in one paragraph and the next one was simply “learned to invest and hit our crossover point”.

That’s a very big deal and it’s kind of glossed over. How long did it take? How was it accomplished? How much investing did it take to amass all that income? Was this during the tech boom when stocks were going nuts?

I’d love to know more about how that is actually done.

Michael
Michael
12 years ago

It’s quite motivating but what she describe is job not an income.

I would like to see the investing step 🙂

Honest Dollar
Honest Dollar
12 years ago

Come on, guys. She can’t give away all her secrets. If she found a way to beat the market and she told everyone, that opportunity would probably no longer be there or work as well. 😉 It sounds like, though, she simply took the time to educate herself about investing, how to find undervalued securities or truly sound funds that can generate a relatively stable income while growing her principal. I think the information is all out there; very few people, however, have the dedication and discipline to study and act on what they learn. (Of course, very few people… Read more »

Aaron Davidson
Aaron Davidson
12 years ago

I always like hearing other people’s success stories. Great job.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

I have no qualms whatsoever sharing my “secrets” to wealth. In fact, I do so on a regular basis on my blog. The reason I spend time sharing with anyone who cares to learn is because I’m at a point in my life where I’d like to give back. I’m on a mission – I’m passionate about empowering others through financial education so they can experience the same lifestyle I enjoy. Nothing in it for me, other than it feels good. I have to head out of the house right now, but when I return, I’d be happy to answer… Read more »

Danny Tsang
Danny Tsang
12 years ago

Great post. Sometimes a bigger business is not always better. Sure you have the potential to make a bit more money, but you pay for it via headaches, more risks and yea, headaches. Bogle said performance is never guaranteed but expenses are, and that applies to businesses as well. Should something happen and revenue decreases, those fixed overhead expenses are always going to be there.

Great post, great story and very motivating. I’ll likely live my life in a very similar way. Except currently all my income comes from the internet and I plan to keep it that way.

luis
luis
5 years ago
Reply to  Danny Tsang

hello i was wondering how do you make money online, you don’t have to tell me in detail but could i possibly have some tips? thanks

Roger
Roger
12 years ago

I made a similar decision, though I’m nowhere (nowhere!) near as successful as the poster. To run a big company, you have to enjoy the actual running of the company, not just the money. I worked for a guy when I was in high school who was a successful small businessman, and he constantly related that to me: it didn’t matter to him what he did, it was the running of the company itself that was the challenge he enjoyed.

bryan
bryan
12 years ago

heres the problem with this story. the way it was published makes it seem as thought it was easy and happened overnight. to develop a plumbing business that grosses $250,000 a year by word of mouth alone would have taken YEARS. that figure would also assume that her husband is working either more than 40 hours a week or is charging $125 (OF BILLABLE HOURS). something is wrong with this story. i live in new jersey, and plumbers are not charging that much here yet alone billing that at 40 horus a week consistently with a 1 man operation. another… Read more »

Cheryl
Cheryl
12 years ago

Another problem – and this is one that I see. She says “they” have achieved financial freedom. WRONG. Despite the fact that our dear friend here only works 2-3 hours per month, except her blogging and taking care of her kid(s), her husband is still working. 3-4 days a week, if I remember correctly. How is this financial freedom? Sure, its freedom for HER – but at the expense of her husband. Now, if she were to work 2 days per week and generate equal income to his, then he could work 2 days per week – they would have… Read more »

Kris
Kris
12 years ago

To me, financial freedom is more complicated than merely not working for income. Sure, we’d all like a chance to try being independently wealthy, but I define freedom as being able to make your life choices without being severely constrained by the economics behind them. This couple has successfully defined their wants/needs and how to achieve them without the typical “rat race”. They sound as though they find the work they do rewarding and satisfying. I think they’ve made it a long way down the road to financial freedom!

Stacey
Stacey
12 years ago

Ditto Cheryl. This is a story similar to the corporate wife story- plan a few dinner parties, do a few late-night strategy sessions, and reap the financial rewards of your husband’s long work days. The moral appears to be this: become a millionaire by latching on to someone with a decently profitable skill set and then invest as much as you can. It’s great for her, but for those hoping to achieve financial independence independently it’s just not. that. interesting.

Quinsy
Quinsy
12 years ago

Why do you guys have to rain on this parade? Clearly, this woman worked hard to get to the place she’s at, despite the fact that her blood, sweat and tears can’t be fully detailed in this short article. Her husband works a few days a week by choice, from what I recall of her blog, I don’t think he is forced to since they already have plenty of money. It sounds to me like this woman was the financial mastermind behind the couple’s plan to become wealthy. It is true what they say that women really are hard on… Read more »

Jason
Jason
12 years ago

You people (the couple of you criticizing her for her position in life) have got to be kidding me. I don’t understand how you can read this and come away with the idea that she’s the stereotypical bon-bon eating millionaire housewife who lets her husband do all the heavy lifting. First of all, it seems pretty obvious that they’ve discussed the division of family duties and have come up with something that seems equitable to them. Bravo to them for that. Second of all, she put in her hours working, and even running her own business, for quite a while… Read more »

Concerned
Concerned
12 years ago

I’m bothered by her analysis as it seems tortured. I’m hard pressed to see a situation in which the 5 teams of plumbers don’t do significantly better than the one team, even adding the cost of storefront rent and the two additional salaries. Just looking at the supposed profit of $625k/yr, you should be able to handle the additional costs and salaries. This doesn’t even take into account the economy of buying larger quantities from suppliers, the potential power of branding, etc.

harry
harry
12 years ago

Everyone has forgotten the most important part of the equation: what if the husband gets hurt on the job???? and can no longer make her the millionaire mommy????? Does he have disability insurance? Do they pay themselves through payroll or do they draw a salary? Payroll will give them unemployment benefits, disability, social security etc. Draw means they either write it off loans or yada, yada, yada. I’m not getting into accounting now. It all sounds very fine and dandy till the husband gets hurt or is sued or whatever. I’d take every single thing this woman says with a… Read more »

TheMightyQuinn
TheMightyQuinn
12 years ago

ONE full-time plumber bringing in $250k? It should be obvious why people hate plumbers.

fivecentnickel.com
fivecentnickel.com
12 years ago

The statement that Option A is lower risk than Option B really depends on your definition of risk. What if the husband is injured or otherwise has to stop doing the work? Everything will come to a grinding halt. By hiring others, you’re less dependent on any one individual’s health and welfare. This isn’t to say that Option B is a better choice. Just pointing out another aspect of risk that seems to have been glossed over. Of course, you can mitigate this risk with insurance (AD&D, life, whatever).

RipeMango
RipeMango
12 years ago

I haven’t had the chance to check out her own blog. But I hate the fact that her own contributions to her family like her own start-up business, being the secretary, the investor, and taking care of their children, is being dismissed as not a real job.

I choose to work outside the home, but her contributions sound like difficult choices to me.

limeade
limeade
12 years ago

It’s interesting how so many can be so negative about this story. It’s usually people who can’t or won’t do something similar themselves. Take the story for what it is, learn what you can from it, and go from there. I’m sure there is plenty that everyone could criticize in each of our lives.

Jason
Jason
12 years ago

Harry (#17) and fivecentnickel (#19): perhaps you missed the bit about the crossover point. Their investing now brings in more than their expenses, so if the husband gets hurt, presumably they have an emergency fund, and if they need to they can live off of their investments. That’s the whole point: they aren’t beholden to the paycheck. If you’ve missed that, then I question your ability to really achieve financial freedom, at least without a real change in your perspective. Oh, and TheMightyQuinn (#18)? If you think $125k/yr net for a plummer is more than their work is worth, then… Read more »

harry
harry
12 years ago

I’m already a millionaire. That’s why I have a problem with this woman AND her website. She doesn’t post all the comments. If she doesn’t like what you’ve said, she omits them. You only get to hear one side of the story: HERS!
People, you’d be better off actually reading the book: The Millionaire Next Door.

Frugal Duchess
Frugal Duchess
12 years ago

@ Harry:

Many blogs screen comments to avoid trolls, spammers and commercials.

I find her story inspiring and yes, I would like to know more about the difference between Option A and Option B. ( I agree with Nickel’s comment).

But overall, it’s helpful and a good read.
I also agree with Ripe Mango.

Susy
Susy
12 years ago

I completely understand where she’s coming from. DH and I own a business and we reached the point 3 years ago where we could hire 5-10 extra people and do more jobs, but we’d have more headaches and stress and our bookkeeping would be much more complicated. We decided to keep it small and sell that as asset. This has worked for us and we’re now earning more than we would have if we had hired people because we can sell ourselves, not just our product. We offer something special. Because we kept our business small we can invest a… Read more »

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Reply to Matt Haughey (#1): I went from $125k/yr, to learning to invest, to crossover point over the span of a few paragraphs in this post simply because I’m not writing a book (yet, anyway). With 99 posts published on my blog in the first 4 months, I’ve covered a lot of the “in-betweens”. Despite this, I still have plenty of stories to write. Inquiring minds need to be a bit more patient — I’m telling my story as quick as I’m able. You asked, How long did it take? I started my first part-time job at age 14, first… Read more »

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Reply to Michael:
Michael says, It’s quite motivating but what she describe is job not an income.

I’ve had jobs, I’ve managed businesses, and now I manage my investment portfolio. All three provide income. Not sure I get what you mean.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Honest Dollar: Like I said in an earlier comment, I have no problem sharing my wealth building “secrets”. If I did, I certainly wouldn’t be blogging my whole life history…

Yes, I took the time to educate myself. Yes, the info is available for anyone willing to look for it. No magic. And I think you’re right, very few people think or act like I do. I admit, I think and behave differently from the crowd. Here’s a post I wrote that addresses my thoughts on this:
Is The Key To Wealth Found In A Book?
http://millionairemommynextdoor.blogspot.com/2007/09/is-key-to-wealth-found-in-book.html

fivecentnickel.com
fivecentnickel.com
12 years ago

Jason: Yeah, I saw the bit about the crossover point, but they made the Option A over Option B decision *before* they reached the crossover point. Clearly, it worked out for them. I was just responding to the statement about reduced risk.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Reply to bryan: My husband never worked more than 40 hours a week (usually about 30 billable hours plus office time). Living a balanced lifestyle has always been a high priority of ours. His hourly rate varied from $65 to $85 an hour. Added to his labor charges, he sold plumbing parts and fixtures to his customers and homebuilders, so he made a profit on the sales of materials, too. $250k annual gross revenue generated from one plumber is pretty standard/average. The difference lies in how much the plumber gets to keep (net income): As an employee = $30-65k As… Read more »

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Cheryl: My husband just read your comment and you should see the disgusted expression on his face… You must have missed this part in my post: “My husband currently works only two or three days a week. Now, he can be selective in the projects he accepts. For instance, he no longer unplugs toilets, but he still enjoys creative remodeling projects. If he chooses to retire or to do something completely different, we’ll sell our plumbing business.” Cheryl, we are financially free. This means we no longer need to work. But we can work if and when we… Read more »

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Stacey: Ditto what I said to Cheryl. When I married my husband (at 23), he was making $30k per year and had zero savings. I wouldn’t say that made me a “latching on” lazy gold-digger, would you?

Besides, why are you poo-pooing my “ late-night strategy sessions” and my “investing as much as you can”? If you think these are worthless endevours, you could be waiting for your crossover point for a very long time.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Quinsy: Thank you for your thoughtful and insightful comment. I think some people try to “rain on my parade” because misery likes company. Thankfully I have enough confidence in myself, am happy with who I am, and am proud of what my husband and I have managed to achieve. Rain or not, my parade marches on!

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Jason (#15):
What is a bon-bon? ;>)
You get it. Thank you. Some people make excuses and throw blame around, which I believe limits what they’re able to accomplish. The fact that you make no excuses indicates to me that you’re well on your way to financial freedom — because your mind is already free.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Concerned (#16): Please check your math. As I stated, 5 plumbers can bring in 5x the gross revenue, but rather than net (keep) 50% of gross, our net would drop to 10% due to higher overhead – and we’d have 9.5 salaries (not the two you mention). 1 plumber or 5 plumbers, we’d net $125k/yr.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to harry (#17): We’ve always carried insurance for disability, life, health, personal and professional liability. We pay ourselves a minimal salary (so we have unemployment insurance, medicare and social security). We take the rest of profits as draws. Our biz is set up as an S-Corp.

Besides covering our assets with every type of insurance, you’ve apparently missed the point about us being financially free — we no longer need to work. If either of us gets sick or disabled, we’d live off the income our investments provide, just as we do currently. No plumbing needed!

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to TheMightyQuinn (#18): Do you hate your plumber enough to forgo running water in your home? Our customers rarely complain about their bill. In fact, we get thank you cards and phone calls all the time. Why? Because we make it a practice to go above and beyond their expectations.

Seriously, consider becoming a plumber yourself or suggesting that your child(ren) learn the skill. A skilled plumber with a good work ethic, strong morals and people skills will always find work. Outhouses are, well, stinky and cold and so outdated.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to fivecentnickel (#19): We’ve always protected our assets with insurance (see my comment #36). Additonally, we always have a contingency plan – too long to discuss now, so perhaps I’ll cover this concept in a post on my blog.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

RipeMango (#20) and limeade (#21): Thank you. For you, I repeat what I said to Jason above:
Some people make excuses and throw blame around, which I believe limits what they’re able to accomplish. The fact that you make no excuses indicates to me that you’re well on your way to financial freedom — because your mind is already free.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Jason (#22): You are correct, we built a substantial emergency fund before launching our own businesses. And yes, once again, you get it. You have the perspective necessary for reaching financial freedom.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to harry (#23): I delete comments submitted by trolls, spammers and nasty-negative-not-nice people that aren’t contributing anything useful to the discussion. I don’t want to waste my time or energy with those that attempt to make others feel as miserable as they feel. I choose to carry on my conversations with folks that are civil and constructive.

Harry, if you want your comments published on my blog, then you’ll need to be civil and constructive. If you don’t like how I moderate my blog, then please go elsewhere.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Frugal Duchess (#24): Thanks. I hope my responses here have clarified A vs B more for you. I will also expand on the differences between the options in a future post.

Millionaire Mommy Next Door
Millionaire Mommy Next Door
12 years ago

Response to Susy (#25): Your insight deserves repeating:
“we’re now earning more than we would have if we had hired people because we can sell ourselves, not just our product. We offer something special. Because we kept our business small we can invest a lot more time into each project. And we don’t have to worry about other people not meeting our high standards.”

This has been our experience, too.

Stacey
Stacey
12 years ago

Just to be clear, I’ll be 42 at my projected cross-over point– a mere 14 years from now. I’m not discounting the value of investing. I am discounting certain aspects of your post. Apparently that means I don’t have what it takes to reach financial freedom? First, your post simply doesn’t apply to most single people. Most of us can’t sit in our pajamas and reach the crossover point. You seem very proud of your stay-at-home millionaire status, but you married someone who went out and earned money so that you could keep your pj’s on. Second point, highly related… Read more »

Frugal Duchess
Frugal Duchess
12 years ago

MMND:

It’s 1:27 am on Sunday night and I understand why you are so successful. I’ve watched you respond to the different comments with thoughtful insights and well-deserved attitude, when needed.

If you handle your business and investments with the diligence that you have handled the comments, well then –Yeah– you’re going to be successful.

Good night. I am tired of watching you type.

Matt Haughey
Matt Haughey
12 years ago

“So despite reaching my crossover point (financial freedom) at age 40, my life is not a get rich quick story.”

Ah, that’s good to hear. It sounds like it took about ten years of $125k/yr income to invest enough to get above a million. In the post, it was so brief I was wondering how someone gets from making six figures to having seven figures in the bank without saying how.

Thanks for the additional info and I wish you continued good luck.

michael brito
michael brito
12 years ago

i am at a fork in the road right now in my life. do i take the easy one (become an employee) or the hard one (start my own business or freelance)? i have recently been fired (jerk offs, but i’m not mad or anything, i just never really liked the owners from the beginning) and have really been struggling with what to do. i’m a graphic designer and all the positions available pay really low. i know that the company i worked for charged $100 an hour for the design work i was doing, so why not go out… Read more »

yp
yp
12 years ago

Well defended MMND, I agree with the Frugal Duchess last post! However I have to mention one weakness I feel you have – not letting negative comments on your blog. Yes some people can troll, be nasty and generally poisonous. But some people can be negative yet insightful. Pointing out valid flaws and weaknesses that can need attention. If your ideas and stories hold water you should be able to defend and argue them. A lot of the negative posts on the comments here have good points and by your responding to them you have clarified and (I believe successfully)… Read more »

Desirae
Desirae
12 years ago

To #44: I find it very disappointing that you seem to dismiss MMND’s contribution to the family’s prosperity. From her post, it seems she was an essential part of their business success. She may not have been the one to do the actual plumbing, but her financial choices and her bookkeeping can’t be discounted (think of the money she saved the business by being the bookkeeper and the money she’s earned by being their broker). Even if she had been “just” a stay at home mother, her contributions to the household would be no less valid. I am a single… Read more »

Martijn
Martijn
12 years ago

Thanks for the great introduction — I will keep track of your blog as well.

We don’t spend much beyond what is required to keep a healthy lifestyle — and income from the business with my wife is growing steadily. Time to focus a little on what we can / should do with our extra income.

alicia
alicia
12 years ago

The problem with this woman is that she thinks she discovered something new that hasn’t been done before. Sweetie, there have been countless husband and wife teams, with the hubby going out and manually earning the money while the wife stays at home and does the bookkeeping. And the two of them make tons of money and the woman invests it, etc. etc. Me being one of them. Husband and I are both millionaires. I stopped working 5 years ago. He still works but only 2-3 days a week. yawn! What this woman has so casually forgot to mention to… Read more »

shares