Mr. Nest Egg

Published 9:00 pm Saturday, February 17, 2007

EVERETT – Many dream of being millionaires, while others work hard toward that goal.

Howard Bono, on the other hand, wants to help others – 1,000 other people, to be exact – amass that kind of wealth.

“The truth is, I started with the goal of creating 100 millionaires, but I thought ‘that’s just not big enough,’” said Bono, who has spent the past 15 years in the mortgage industry. “I needed something that was big enough that I might never accomplish it.”

He’s serious enough about the goal that he’s been offering free workshops over the past five years outlining how he thinks others can become financially secure. He’s also working on a book covering the same subject.

“It was definitely life-changing for us,” Sarah Boyd of Marysville said of taking two of Bono’s workshops with her husband, Mike.

The couple, both in their early 30s, refinanced their house to help them quickly create a year’s worth of emergency savings. They’ve also been budgeting their spending and have bought a second property.

Bono, 50, bought his first home when he was 20 years old and now owns Old West Mortgage in north Everett. He says that his net worth today is within the “millionaire” category.

If nothing else, he wants to get people thinking and talking more about personal finance. More people than ever, he argues, have no idea how to save effectively or prepare for retirement.

“We don’t talk about money,” he said, adding that many of the people he talks to said their parents offered more practical advice about sex than about finances while they were growing up.

As a result, most people also don’t have a plan. Instead, the vast majority don’t look past the next paycheck.

There is, of course, some compelling evidence behind his arguments. The rate of savings by U.S. households is now at its lowest level since the Great Depression, and household credit card debt remains high.

On those points, Bono’s advice is in line with some other financial experts: stop using credit cards, spend less than you make and save a minimum of what it would take to survive for three months.

When it comes to the long-term goal of retirement, Bono doesn’t offer the traditional advice, however. That’s because the traditional advice is outdated, he said.

Retiring with an adequate nest egg has never been easy. But for the generations who grew up in the first half of the 20th century, the formula itself was pretty basic Find a good job, buy a house, raise a family, pay off the mortgage, turn 65 and retire. Then you could usually live a good retirement on your pension and Social Security.

For most of the baby boomers growing nearer to their retirement years, it’s been a bit more complicated. Many pension plans have been replaced by not-so-certain 401k plans. Fewer people in the generation have stuck to just one job for decades. Many have taken out second or third mortgages during the refinancing boom.

For the generations born in the 1970s and beyond, however, that way-off goal of retirement looks more uncertain than ever. The person who joins a company in his 20s, stays there for 40 years and retires with a full pension is rare. Instead, people are more likely to be working several part-time jobs or as independent contractors. Many in these latter generations don’t even believe they’ll get the same Social Security benefits as today’s retirees.

Which is why Bono suggests, in addition to preaching everyday financial fitness, that people use property as a tangible investment for retirement.

His rationale? Real estate values in the Puget Sound region grow, on average, by 7 percent a year. Which means if you buy a second property and hold onto it for a couple of decades, its value is bound to grow to three or four times what you paid. In the meantime, the second home can be rented out for additional income to cover its mortgage.

The key is to hold onto property long enough for it to dramatically rise in value. He doesn’t teach flipping – the fast turnaround of properties for profit, a practice that gained popularity during the real estate boom but is much riskier.

Bono said he knows that investing in real estate is not a strategy advocated by traditional financial planners and others.

“In many senses, it’s counterintuitive to what our parents taught us,” he said. “But it’s simple enough to follow.”

Of the 1,000 or so people Bono estimates he’s taught in the past five years, about 70 of his former students seem to be on track toward becoming millionaires, he said.

Sarah Boyd said she and her husband hadn’t considered investing in a second property before hearing Bono. They’re now excited about renting out their first home after they move into their new one.

“It is a leap,” she admitted. “But we feel good about it.”

Penny Thedens, who attended a workshop with her husband, was impressed enough with Bono’s tips on saving and investing that she returned with her 22-year-old daughter so she could hear him, too.

Dealing with unemployment, the Thedens refinanced their home with Bono to give themselves a few years of income to live on. Penny Thedens said they’d refinanced before, but Bono’s follow-up and advice on budgeting made a big difference.

Now, as her husband’s starting a new job, the family hopes to build up their savings in a serious way, she said.

So far, Bono’s kept his classes free, figuring that the business he generates from students who use his firm for mortgages and refinancings is worth his time. His business includes a classroom space where he teaches.

He may charge in the future, but first, Bono said, he wants to get closer to his goal of creating 1,000 millionaires.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.