|Michael Potter and kids|
NEW YORK (CNN/Money) -
Michael Potter has known affluence; he made plenty of money as a stock broker.
He also knows what it's like to walk away from that to live on income of about $15,000. It's not easy and even he isn't convinced he can get by forever. "Maybe I'll be working as a Wal-Mart greeter when I'm 65," he says.
He owns two rental properties and has equity investments that should safeguard him from that fate. Anyway, the risk seems worth it. "It was such a drain being a stockbroker," he says.
And a roller-coaster ride. In the early 1980s, heavily leveraged, "I lost every single dime. I was living in my mother's basement."
He fought back and invested more cautiously. Even so, he remembers an October 1987 meeting with a client. The market, in free fall, lost 22 percent of its value that day. He was sneaking glances at his screen, watching investments implode. "I was losing the equivalent of a car every few minutes," he says, "all the time I'm talking to some people about opening an IRA."
He and the market recovered and in 1990 his net worth hit $200,000 plus. That put him in a position to quit -- and he did.
"Making a reasonably large amount of money is not that tough in America," says Potter. "What you don't have is time. True wealth is time, to spend with your family, to make your own schedule."
Rental properties provide much of Potter's income, bringing in $1,100 a month -- before expenses. He supplemented that last year, opting to take equal installment payments from his IRA. Under this plan, people under 59 1/2 may take a fixed amount every year without penalty. They pay taxes on it and once they start they have to keep going until they reach 59 1/2. Potter receives nearly $7,000 a year, upping his income to $15,000.
That means sacrifice. He learned to cut his own hair, saving $15. When gas prices spiked, he almost stopped driving. "I went six weeks without a fill-up." He combines trips, and walks or bicycles to stores and activities.
His utility costs stay low; he uses no cell phone, hangs wash outside, sets the thermostat at 61 on winter nights, and subscribes to basic cable. The climate of Corvallis, Oregon, where he lives -- and a well-insulated house -- eliminate the need for air conditioning.
Saving money is not the main point of his other activities, but things do seem to work out that way.
Potter spent about 10 years pursuing a passion for, appropriately, pottery, trying to perfect a mug design that would feel "tailor-made."
He also says, "I got really interested in throwing porcelain. Porcelain takes more work. I got obsessive about getting clay so thin you could see through it."
Doing ceramics at nearby Oregon State University cost only $40 a semester. The potting shop opened around 11 and he worked until 5 five days a week, a lot of value for $40.
He never sold his work, saying, "After being a broker I wasn't about to sell anything again." But he did give many away as gifts and donated other pieces to fundraisers.
Potter raises his own vegetables and buys little processed food. His grocery bill comes to about $225 a month. He enjoys cooking and the family only eats out only once a week. He doesn't own a big flashy gas grill; a $30 Smoky Joe works fine.
Potter has little need for new clothes and spends less than $150 a year on them. He buys off-brand shampoo and rinse. "They work just as well," he says. His unlimited rentals subscription at a video store costs $15 a month. And he paid $1,600 ten years ago for a lifetime gym membership. Annual renewal: $25.
Change of life
Nine years ago, he married his girlfriend and they bought a house together. He cashed out some investments and, with her home equity, they paid cash. He and his wife, who worked full time as an accounting clerk but switched to 20 hours a week after the first of their two children was born, have always kept their finances separate.
When he and his wife separated about a year ago (they're working things out) Potter took a $60,000 home equity loan, which helped buy out her house share. Otherwise he's adamant about avoiding debt.
Change of hobby
Potter is not immune to big-ticket temptations. About five years ago Potter stopped potting because he discovered mountain biking.
At first, what other bikers paid for equipment amazed him. "I thought, 'Who could spend $4,000 for a bike?'" He soon found out who: he could. "The frame alone of my bike cost $2,200."
He also owns a $16,000 Harley, one of perhaps 20 motorcycles he has had over the years, as well as three Corvettes. Most of the bikes he bought at the end of the summer riding season, getting bargains. When he sold them, he often got almost as much as he paid.
Even the 'Vettes cost him less than most people spend on cars. He bought one 1985 model when it was a year-and-a-half-old for $21,000, drove it for 10 years and sold it for $10,000 -- costing him only $1,100 a year. A 1972 Stingray he bought in 1985 for $8,000 sold in 2002 for more than $10,000.
He did recently buy a $7,000 entertainment system, which he himself calls "a really outrageous amount compared with my income."
Overall, Potter feels that his way of life offers no hardship. On the contrary, he luxuriates in it. He loves his town, his house, his lifestyle, and his interactions with his kids. Potter has made a fine lifestyle choice, at least for him.
"It's quite a gift," he says. "I feel extremely fortunate that our family can enjoy this lifestyle. I'm grateful that my wife and I were able to be with our children full time from birth."
To see how a young Baltmorean saves, click here.
Robert Levine saved a bundle building his house. For his story, click here.