I love good rags to riches stories. I always think there is something to be learned. A while back, I was reading the September 16th Wall Street Journal. The paper edition is delivered to my door in the morning. Old habits die hard. I must be a real dinosaur reading a print newspaper.
There was an article about a man named Dennis Washington. Mr. Washington is a wealthy 83-year-old businessman. His net worth is $6 billion according to Forbes. Yes, he is a billionaire! He made the news because his privately held entity, Washington Cos., is set to close its biggest acquisition ever. They are purchasing a diamond mining concern for $1.2 billion.
I did a little more research on Mr. Washington. Forbes magazine profiled his life in 2013. You can read that article here: Billionaire Highway Man: Life Lessons Dennis Washington Learned When He Was 25
RAGS
Here is a brief recap of Mr. Washington’s early life as reported in the Forbes article. Mr. Washington bounced around several different grade schools on the West Coast as a youth. He contracted polio at age 8 and spent eight months in a rehab clinic in Seattle. His family lived in a government housing project during World War II. Mr. Washington bounced around living with his Mom, Uncle and at a boarding school during various points after his parents separated.
He worked construction jobs at his Uncle’s construction company as a young adult. At the age of 29, he married and struck out on his own starting Washington Construction with a $30,000 loan from a friend. In the 1960s, they lived mostly on his wife’s teaching salary. Their house only had an outdoor bathroom and no indoor plumbing for several years. He credits his early business survival to the following factors:
- Discipline
- Hard work
- Accepting only profitable construction jobs
- Focusing on positive cash flow
Even as he met with some financial success, he stated “I still never borrowed money for cars, boats, and homes. I never really felt financially secure until about 1988.”
RICHES
The Wall Street Journal Article focused on his current personal, business and investment philosophies. Specifically:
- Running businesses that pour off cash for reinvestment
- Putting seeds in the ground and just keep plowing them
- Focusing on long term investing
- Owning businesses forever
- Living frugally (okay, we will have to give him a pass on his yacht collection)
- Hating to lose money frivolously
WHAT DOES IT MEAN FOR YOU AND ME?
So what can we learn from Mr. Washington and how he built wealth? Lots. We want the businesses we talk about and invest in here at Dividends Diversify to:
- Be disciplined and work hard for us, and
- Focus on profitable business lines that pour off cash
We will take some of the cash from those businesses in the form of dividends to:
- Put seeds in the ground and just keep plowing them, and to
- Reinvest in new holdings
We will manage our personal spending by:
- Living frugally, and
- Not losing money frivolously
Do you have any other important business and investment philosophies?
Do you have a rags to riches wealth building story of your own? Leave a comment and let me know.
Related: How to become a millionaire from nothing
Steveark says
I have a friend who came illegally to the US at the age of 16 because she was starving in Mexico. She then had a bad abusive marriage and divorce and ended up working as a maid in our small city. The lady she worked for as a maid believed in education and drug her to the community college and she got her GED. She then got an LP nursing degree. Then an RN, then a MS RN. Finally a nurse practioner PhD. She is a millionaire now earning high six figures. All because that lady made her get her GED. I volunteer to this day at that college because education changes people’s futures!
Tom says
Great story. Thanks so much for sharing it. Totally agree about your comment regarding education and applaud you for your volunteer work at the college! Have a great weekend. Tom
Mr. ATM says
That’s a great rag to riches story. I also remember reading about this janitor who quietly made millions by investing in stocks, and died as a multi-millionaire. Nobody knew he was such a rich man as he lived a very simple and frugal life.
It was only after he passed away that his family and friends found out he had amassed such a fortune. He donated most of his wealth to a public library.
I think being disciplined and focused is really important to make it in any field. For me personally, it is also about having passion for whatever I do.
Passion is what keeps me moving forward, despite any challenges or hardships on the way.
Thanks for sharing such a nice article Tom.
Mr. ATM
Tom says
Mr. ATM, I remember the janitor story also. Thanks for bringing it up. If we are remembering the same one, it was only a couple years ago and his story hit the mainstream media including CNBC. If I remember correctly, he was a dividend stock investor like us. Tom
Two Investing says
Great stories! Earning the money through hard work really makes you value it all the more. I know a couple people who both would never have to work again. One, screwed around in high school and barely graduated. I guess he didn’t see the need to work hard since he already had a trust fund earning him millions in interest a year. He was also a first generation inheritor…I believe his father was the one starting the business.
The second story is completely different. She has a trust fund as well but graduated college and is working her way up the corporate ladder, investing well and not spending above her means. She even doesn’t even want to use the trust fund money to live off. She earns a good living in her own right. Instead she hopes to have it grow through investments and will use it mostly for donation.
I wonder what the difference is between them that leads to such different philosophies. I’m betting it was how they were raised as children.
Scott
Tom says
Scott, Thanks for your comments regarding the people you know and how they handle money. I think you are right that one’s upbringing has a lot to do with it. We are also all “wired” a little bit differently. Enjoy the rest of your weekend. Tom
Dividend Diplomats says
Tom,
I think those takeaways summarize all the important takeaways I had. Man I love reading stories like these and seeing what people were able to make of a “rags” situation.
For me, my grandfather came to this country after World War II without speaking a lick of English and surviving some pretty tough life situations. His family had a lot, but that was all stripped away from him during the war. Then, he came to the US, learned English, worked as building maintenance man for a relative. During this time, he learned English and studied. Eventually, he graduated college and became an engineer. A story that serves as great motivation for me and one that I need to remember more when I am having a crappy day at work or I think I am stressed out.
Thanks for sharing this story today.
Bert
Tom says
Hey Bert, Thanks for your thoughts. We all have those “crappy days” from time to time. It is good to have something like the story of your grandfather in our personal lives to help keep us grounded. Good to hear from you. Tom
Damn Millennial says
I love hearing about stories like this. I feel like barring health set backs anyone who works hard and stays disciplined will find some level of success. Being a billionaire I think is a different game, but being a multi millionaire I believe is very possible in one generation if you are focused and willing to delay gratification.
Thanks for sharing.
Damn Millennial
Tom says
Totally agree. One’s health is an underlying ingredient for sure. Thanks for stopping by, glad you enjoyed the post. Tom
Sean @ FrugalMoneyMan says
After I got my first job out of college, I thought it would be cool to sign up for $20,000 of car loan debt. I wasn’t totally in the “rags” department, but I lived about as frugal as can be to wipe out that loan in 2 years instead of 5. During that time I really studied personal finance and what makes millionaires and billionaires tick.
The overarching theme I found was actually highlighted in your post:
1. Invest for the longterm
2. Own businesses forever
Just keep feeding your investments and reinvesting those dividends back into your investments.
Thanks for the share!
Tom says
Hi Sean, Welcome to Dividends Diversify. Thanks for your personal story and happy new year! Tom