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Wealth Building Techniques That I Learned From the Garbage Man

Written by Neal Frankle - 8 Comments

Wealth Building Techniques That I Learned From the Garbage Man

When I began my career as a financial advisor, I worked in a bank. On my third day on the job, I met one of the wealthiest men I would ever meet. Phil was worth over $10 million dollars – and this was back in 1986.

As if that weren’t enough, Phil never inherited a dime from anyone. And to make his accomplishments even more astounding, he was a garbage man. Even though he was worth millions when I met him, he had no intention of leaving his job.

I was amazed by what Phil had accomplished so I asked how he did it. He was kind and agreed to share his story. We sat together for over an hour.

Here’s what I learned:

1. Real estate

Phil told me that he amassed his wealth by purchasing a piece of real estate every year. He thought of it as his own small business. He bought a single family home every year and rented it out to nice, stable families. He didn’t try to make a killing. He believed in growing his wealth slowly. It was a smart investment strategy.

You might think it would be tough to buy a piece of real estate every year on a garbageman’s salary, and you’re right. Phil grew his wealth during a period of steady real estate appreciation. He refinanced his properties often. He took out equity and purchased another home each year. Of course, because Phil’s income was limited, he couldn’t afford to get into a negative cash flow situation, and he never did. Also, keep in mind, Phil had a large family of 6 and his wife didn’t work outside the home.

While I believe that this could be a fantastic time to follow in Phil’s footsteps, it would probably be a mistake to count on quick appreciation right now. That being the case, it will take more time to build your wealth using real estate.

What would Phil Do Today?

I’m no longer in contact with Phil, but my guess is he’s still buying real estate now. But he wouldn’t pull out equity and take the risk of running a negative cash flow. He’d take it slowly. My thinking is that if it’s good enough for Phil, it’s probably a good idea for you and me.

The lesson is to take advantage of opportunity, but be willing to adapt to current circumstances. I meet lots of people who want to build wealth quickly. They want to make up for lost time or past mistakes. That’s a huge mistake because the risks pile up when you take that approach.

If you want to buy real estate right now, it might be a great move. But don’t get in over your head, and don’t get into a negative cash flow situation. If you do, and then find that you lose your job, you could end up on the very wrong end of the stick.

2. Methodology

Phil told me that he always invested before doing anything else. His number one priority was investing. If he didn’t have the money to go on vacation, he and his family stayed home. If he didn’t have the money to buy a new car, he stuck with his old jalopy. But he never failed to invest every year.

You’ve probably heard the expression “pay yourself first.” It’s really smart advice. In fact, if you do this, I can see how you might not even need to track your spending. But above all else, make investing your priority.

If Phil were just starting today, he might not be able to buy a rental home every year. But he’d put something aside no matter what and build on it. You may not be able to put down a huge stash of cash each year right now. But start with some amount and make sure that you put that money aside no matter what.

3. Use time

As I said above, Phil wasn’t in any rush. And he understood that he had no real reason to rush. He liked working. He thought of real estate as his retirement plan.

The lesson here is to make sure you’re not taking on too much unnecessary risk. If your time frame is 20 years (for example) make investments consistent with that period of time. Don’t worry about short-term valuations because they just don’t matter.

4. Family man

Family was really important to Phil. He stayed married to the same woman for 35 years. Much has been written about the financial devastation of divorce, and Phil seemed to intuitively understand that.

But he also involved his family in his financial plan. Even in the 80s, he made sure his family understood and supported the need to invest. They were all aligned. Phil’s children knew better than to expect their father to support a lavish lifestyle. They also understood they would have to carry their own weight.

I’ve seen more than my share of couples who worked hard, did everything right, and still ended up broke in their retirement. The reason? The gave or lent money to their kids without understanding the economic fallout for themselves. They gave up that cash out of love, but they sacrificed their own futures. I realize that it’s tough to say no to people you love when they need want your financial support but, before writing those checks, make sure you weigh the pros and cons for everyone involved.

The bottom line to Phil’s story is that he didn’t have or need a “silver bullet,” and neither do you. You’ll read many financial success stories like Phil’s. Why? Because the principals work.

You may not need $10 million but, if you’re like me, you do need to make a plan and execute it if you want a secure future. The steps Phil took are steps that anyone can take. We may not end up with the same result, and the times are different to be sure. But still, Phil’s example is a good one.

Over the years, I’ve seen people succeed in all kinds of economic conditions and situations. In fact, the situations rarely had anything to do with the success these people enjoyed. I really believe that success is available to all of us but we’re going to have to get out of our comfort zone in order to make it happen.

We have make investing a priority.

We have to say “no” to people we love sometimes.

And we have to invest in the future and stick with our strategy during uncomfortable periods.

What are you willing to do to secure your future? What are you willing to change?

Published on July 28th, 2011 - 8 Comments
Filed under: Planning, Saving & Investing

About the author: is a Certified Financial Planner in Los Angeles whose goal is to help people improve their finances and find balance in life. He covers these topics at his personal blog Wealth Pilgrim.

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8 Responses to “Wealth Building Techniques That I Learned From the Garbage Man”

  1. 1
    Hunter @ Financially Consumed Says:

    Inspiring post. Street smarts is a critical factor in accumulating wealth. Phil is an inspiring character. I have no doubt that he would be able to adapt to the current economic climate, no matter what it was.

  2. 2
    Gary Says:

    Wow, this Phil fella sounds too good to be true! I read that Wealthy Barber book a few years ago. That was quite interesting and reminded me of Phil. Inspiring stuff!

  3. 3
    Shawanda @ You Have More Than You Think Says:

    After I read the title, I had to read this post. My dad was a garbageman. He didn’t have Phil’s wealth, but he was really frugal. His attitude towards money has largely shaped who I am today. I may not purchase a piece of real property every year, but if I combine Phil’s philosophy for building wealth and my dad’s principles of frugality, I know I’ll achieve extraordinary results.

  4. 4
    No Debt MBA Says:

    Definitely shows that I have no excuses when it comes to building wealth.

  5. 5
    Harvey Says:

    $10mm made in real estate buying property ever year, supporting a family of six with a stay @ home wife on a garbage man’s income? Call me Mr. I Seriously Doubt It.

    I grew up around a lot of millionaire garbagemen but they also had second jobs in the mafia.

  6. 6
    Jeff Says:

    I respectfully disagree with Harvey. A friend of mine just started as a sales manager for one of our town’s major waste removal companies. Believe it or not, the drivers of the garbage trucks made more than he did.

    There is a lot to be said for perseverance and concrete goals . . .

  7. 7
    Rich Says:

    I’m curious… When you say Phil was “worth over $10 million,” what does that mean? Does that mean that he had earned enough from his rentals and salary that he had socked away over $10 million in savings/investments? Or does that mean that the total value of all his (highly leveraged) rental properties was over $10 million? Either is impressive… but if it’s the latter, then I think the description is a bit inaccurate. His properties are so highly leveraged (always refinancing to take out equity) that he owes almost as much as he owns.

  8. 8
    Money Matters Guy Says:

    Great story. Just goes to show you can’t judge a book by its cover. The guy driving a BMW could be up to his eyeballs in debt, while the guy picking up his garbage has amassed a fortune.

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