How I became a millionaire while working in my pajamas

This article was written by 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).


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, websites, 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.

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