A Million-Dollar Station Wagon

Building wealth doesn't have to be about pouring over investments or living like a beggar. Sometimes it comes down to one thing - one change in your life - that you're willing to make for your future.

For me, it's my car.

I drive a beaten up 1997 Mercury station wagon in a classic shade of hunter green. It has two long scratches down the sides and a rearview mirror held in place by elmer's glue and hope. Two years ago good friends of mine offered to let me borrow this extra car that was taking up space in their driveway. In return I would let their dogs out before and after work to give them more flexible schedules.

I had no idea this arrangement would make me rich.

The car runs well and passed all of its inspections after some minor repairs. It's not pretty but it's reliable and has plenty of cargo room. When I recently considered buying a new car I ran the numbers to see what I would gain if I kept it. I never new it would make me a millionaire. Here's why it will:

I save $350 per month on a new car payment and
I save $100 per month on insurance for a new car (my beauty is $30)

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Total: $450 per month in car savings

I contribute the monthly savings to my retirement account at work that matches me dollar for dollar with immediate vesting:

I put $450 per month into my retirement account and my employer matches me $450 which I vest immediately (meaning I get to keep it even if I left the next day) totalling $900 in monthly contributions to my retirement account. I invest it in an S&P 500 index fund.

My $900 per month will sit and grow in a broad market-based index fund earning 9% per year average after minimal expenses. I don't expect to retire for another 30 years.

$900 per month earning 9% over 30 years = $1.47 million dollars.

I get $1.47 million dollars for driving a beat up station wagon.

For me it's a car. For someone else it might be having a roommate, taking public transportation or only eating out on special occasions. These changes aren't easy but the payoff is too great to pass up. Now when I get in my car I feel gratitude - gratitude to my friends for lending me the car, to my employer for the generous retirement match and most of all to the car that dutifully starts up every morning. One day it won't start up, and when that day comes, I think I'll cry.