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Paul Cloud's finances got off to a rocky start after he graduated from college in 1979. Three years later, he lost his job as a chemical engineer. Soon afterward, a severe allergy attack sent Cloud to the hospital for two days. With no health insurance, he charged his $2,500 medical bill to a high-interest credit card. "Being unemployed with no savings made a big impression on me," he says.

Cloud bounced back by trimming his expenses and investing in himself. He gave up his apartment and moved in with an elderly cousin rent-free. He returned to school full-time to get his MBA, and he nabbed a part-time job as an accounting clerk to help pay down his debt. In 1984 he married his wife, Doris, who was studying to become a CPA and who shared his financial values: "Be as debt-free as possible, save consistently, and trust in the stock market."

Fast-forward to today. Paul, 48, is a vice-president with JPMorgan Chase in Houston. Doris, 45, is a project manager for the human resources firm Hewitt Associates. Last fall the Clouds' investment portfolio passed the million-dollar mark, not counting the $64,000 they've set aside to pay for college for their two teenage children, William and Elizabeth.

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The Clouds have made it a habit to save a portion of every paycheck, automatically funding their 401(k) retirement plans and adding an extra $1,000 a month to their mortgage payment. A $44,000 inheritance boosted their savings, but for the most part they owe the size of their kitty to the 1990s bull market. Their tech stocks suffered during the recent bear market, but they pulled through, thanks to a diversified mix of mutual funds and stocks they selected by doing their own research. About 80% of their investments are in U.S. stocks, with the rest in foreign companies.

Firm believers in living beneath their means, the Clouds budget their expenses and occasionally have friendly disagreements over such things as whether to splurge on a hotel room with an ocean view when they take an upcoming vacation in Hawaii. For the most part, though, the Clouds see eye to eye on finances. And they are passing along their values to their children by giving Elizabeth a weekly allowance and requiring William to pay for his gas, CDs and other expenses.

The Clouds plan on retiring in eight years. By that time, they hope, they'll be millionaires two times over, with assets of $2.2 million that would generate $70,000 a year in earnings and allow them to pursue their leisure interests. Paul wants to spend more time sailing, and Doris would like to donate her accounting skills to a charitable organization.

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