Today we continue the ESI Scale Interview series where people answer questions about their success at working the ESI Scale.
In short, the series focuses on what the interviewee is doing in the areas of earning, saving, and investing. They also get an opportunity to ask ESI Money readers for suggestions if they choose to do so.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
Today’s interview is with Lily who writes at The Frugal Gene and her husband.
With that said, let’s get started.
My questions are in bold italics and their responses follow in black.
OVERVIEW
Please tell us a bit about yourself.
Lily: Hi! My name is Lily. I’m 26, my husband is 30. No kids and we live in up north in the Pacific Northwest, in the heart of tech giant, Amazonia. I don’t remember how long we’ve been married.
Hubby: For the last time..2 years honey…
Lily: Hey, did you guys know that we had our wedding in a Jack in the Box? Haha!
What is your current net worth?
Lily: $1.1 million including real estate and mortgages but the breakdown will change very soon. We are currently selling our rental cottage and repositioning the money into a small retirement home for my parents. It’s like they will be our ‘tenants.’ They don’t have much money saved for retirement and they want to be with my dad’s family in South Carolina. We immigrated to China from the US when I was 9ish. They’ve been struggling and making ends meet since 2009! I think it’s a good move; it would be hard for them to live with us…plus we’re thinking the cap rate is probably better in SC than anything near the coast so why not.
Hubby: Not repositioning soon, that’s 2+ years away. We are waiting for your mom to retire but since it’s in the known plans – it’s better to sell in a hot market than worry about it later.
Lily: Oh yeah, very true! But for now, it’s like (roughly) 35% real estate, 40% brokerage, 20% retirement and 5% cash emergency.
How did you accumulate your net worth?
Lily: My husband worked for Amazon and unknowingly collected a bunch of shares. Majority of the money was hustled by my husband who got lucky. Full story here. It’s not just us though! A lot of people hitched onto the Bezo’s wealth train and skyrocketed to even more money.
EARN
Tell us a bit about your career.
Hubby: I am a software developer. I make a pretty typical 6-figure engineer salary. My company gives bonuses and stock grants based on work performance which makes my salary fluctuate wildly.
Lily: Hate it when people skirt around this…it’s $200k+ IF he’s a good boy.
Hubby: I started as an Intern at Amazon back in 2010. In 2013, I was only making around $95k a year.
I was battling depression at the time so I let all these things slide:
- being severely underpaid
- being underappreciated
- not contributing to retirement
- holding 50% of my money in a .01% savings account and 50% in one specific volatile stock didn’t mean much to me.
I was just hoping not to have a “down” day. No one saw that AMZN stock would take off like it did. I remember all my coworkers selling immediately when it hit the coveted 300 mark. Money was the last thing on my mind. I wanted family, love, and a companion more than anything.
Lily: When I met you, you were still depressed. It’s weird because depressed people always find me for some reason and end up liking me. If you’re not slightly depressed, you probably wouldn’t understand my terrible humor is my guess.
Do you have a side hustle?
Lily: He works full time so he can’t. All I have are side hustles. I do Airbnb, freelance stuff (doggy daycare, eBay flip selling, writing etc.). I made $80k ($40k net) last year. I’m thinking I’ll probably only make around $30k this year without our cottage. This blogging thing doesn’t pay but it sure is fun! [Editor’s note: Blogging can pay if you follow the right path.] 🙂
Whenever someone asks us what we make…I’m…like…that dependsssss. It’s like getting frozen yogurt. They charge 50 cents per ounce for the yogurt but it’s extra for different toppings! Half of his salary is based on performance and I’m the extra wild card!
If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?
Lily: Last year, 9/10. This coming year…8/10.
Hubby: 10/10. It’s enough honey.
Lily: Yeah OK, it’s good.
What are your future plans regarding growing your income?
Hubby: I’m good where I am. I like my work. They offer 3 good meals, unlimited chocolates/treats and frills like open gyms and kayak rides. I don’t work as hard as my wife sells it.
Lily: He’s good where he is. As long as he doesn’t get fired, he’s good. He’s gone for up to 12 hours but I’m pretty sure half of that is him eating in the kitchen and playing foosball/video games with his coworkers. As for me…”I want the world, I want the whole world, I want to lock it all up in my pocket, it’s my bar of chocolate…” (The original Willy Wonka movie is much better than the remake.) I just want to try all different kinds of things. I want to get into everything and see what sticks. Being uber frugal gives us lots of freedom for that.
SAVE
What percent of your gross income do you save?
Hubby: Uh, 68% of our gross income went into savings and investments. The rest went to taxes and the mortgage. We lived on 4% of our gross income…
Lily: We didn’t have these figures before. We had to figure that out for ESI.
How did you get to this level?
Hubby: 4%…
Lily: My dad came to live with us after he retired. He helped me cut down the grocery bill and now we’re eating at $2.50/meal.
I went through a phrase of thrift store addiction. I spent a whopping $375 dollars on clothes. Sold most of it and kept the ones I liked…so I made decent money shopping for myself.
We have never taken a vacation. Last year, he switched to his new employer and had to reaccumulate his vacation days which meant no honeymoon for us or anything.
We keep our expenses down by doing killing the big numbers first:
- Living car-free.
- Airbnbing.
- Limiting any shopping.
If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?
Lily: 9/10.
Hubby: 9??? There’s not much else we can save…there’s not much more to save. I mean, the only way we can lower living expenses is raising income. Taxes will always be there. There’s not much to cut on the budget now — 10/10.
What are your future plans regarding saving your money?
Lily: We will loosen up after we have kids, I’m sure. This is the mad dash accumulation phrase. I’m happy with the way things are right now, I’m just waiting for driverless cars. He makes fun of me because I’m cheap but he’s just like me. He doesn’t change anything because he secretly likes it.
Hubby: There…umm….mmmmm.
Lily: You drive me nuts. What do you want?
Hubby: *STARES*
Lily: Do you need anything, we can get it.
Hubby: *Laughs* I dunno honey…ummm….
(LEAVES TO GO TO THE BATHROOM MID CONVO.)
*Comes back*
Hubby: A new laptop because ours is 8 years old and an air conditioner…
Lily: Approved! You do the shopping and set the budget.
Hubby: I don’t know how to…D: D: D:
Lily: See.
INVEST
What are your main investments?
Lily: About 20% of our portfolio is in big tech. If you learned to live on less than 4% of your gross income and is relatively content with life like we are…there’s not much that threatens you. Everything else is in index funds. I have an annual budget of $20,000 as my play money. That is what I use to buy individual stocks that I like.
If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?
Lily: 6/10. I just feel like there’s something we’re not doing right. We’re pretty weighed in big tech.
Hubby: There are different schools of thought on investing. I don’t know how to answer this one. The bulk of our index funds are in Vanguard total market, total international and emerging markets. I leave it alone and forget about it after the money makes it in. We have some savings bonds.
Lily: Some mid caps too…and we bought the US consumer staples…because I think the staples fare through downturns better and we’re ripe for a dip.
Hubby: Consumer staples have been doing terribly…
Lily: Oh really?
Hubby: It’s OK. We’re novice investors. I try to not follow blindly and I don’t follow “hot” stock tips. Most of our Vanguard funds are now at admiral status.
Lily: But compare to your dad…like…
Hubby: Well, my dad’s retired. He has time to manage his own portfolio and do every little thing. He’s also very conservative because he retired. When the market is open is when I’m at work. It’s better if we keep it simple.
What are your future plans regarding investing?
Hubby: ……Do it? *thumbs up*
Lily: LOL. Yaaaay. We never had our money in anything else besides a bull market. I think we’re utterly investing infants and there’s going to be a lot of growing pains along the way. That’s OK. We’re not the rockstar types of people and we’re not greedy. Like I said before…if you can figure out how to live on very little, there’s not much that threatens you.
WRAP-UP
What money mistakes have you made that others can learn from?
Lily: I think our rental was something I would have done differently because I was young and I was like “Oh, let me get this, it’s gorgeous! I want to do it. It won’t be exhausting for me! Everyone has a rental. It’s like the cool thing to do.” And then I realize it’s totally boring mixed with moments of terror like “What do you mean the water valve can’t shut it off?!” We wouldn’t break even unless we managed it ourselves (which we learned either of us wanted to do, especially with the current laws in place.)
Hubby: Yeah…I was not 100% for it. Everything was so “up in the air” at the time. We weren’t even sure if we wanted to stay in Seattle.
Lily: I learned we’re incredibly lazy, shy, introverted people.
Hubby: Yeah…
Lily: We didn’t invest sooner…until you were 28. I’m 26 already!!!! 😀 I know in comparison to 50 year olds, we’re young but I feel old. I feel slightly more mature now than when I was 24 when we got married.
Hubby: Yeah…me too. Lots have changed since we got married.
Lily: In a good way or…..bad way?
Hubby: Hi….in a good wa…in what sense?
Lily: ………..
Hubby: I feel like a more complete human being. STOP TYPING. Honey, I don’t know what you’re doing. Years ago, I wasn’t investing, except for Amazon stock that I didn’t even think of as money. Things are different now.
Are there any questions you have for ESI Money readers regarding any parts of your finances?
Hubby: Does being an accredited investor open any investment opportunities that have been found to be worthwhile in comparison to what’s available otherwise?
Lily: I always feel like we can do better. There are so many flaws as I spat this interview out. Has anyone bought their parents a retirement house? They’re very responsible and frugal. They’re both mid-60s and in good health for now. My father’s family are all in SC and it would be nice to have a community of close relatives who speak their language. They just don’t have any credit history. I’m the only child so the plan was they pay us rent and I inherit the house after they pass.
Accidental FIRE says
Ha! As expected Lily’s interview is by far the most entertaining one in this series so far. You never know what she’s gonna say next.
A dude in my cycling club here works for Amazon and informs me that there’s a keg-erator in every break room. I asked him if he actually drinks beer during the day and say, goes to meetings with a beer. He looked at me as if it was the most stupid question he’d ever heard. Duh… of course I do..
Ah… to be young again. So the takeaway is that Amazon is run by day-drunks 🙂
Lily | The Frugal Gene says
Really!?! Hippo is asleep so I can’t ask him yet but reallyyy? It is high pressure. Maybe some weed too.
Lily | The Frugal Gene says
Oh yeah I totally take that blogging thing back. It does pay off if you’re good at it and work at it. Hehehe.
Jason@WinningPersonalFinance says
Thanks for the entertaining read. I love the husband/wife interview format.
Living on 4% of your gross income excluding housing is very impressive. Do you have a breakdown of your spending you can share? It seems like you’ve been able to stay away from my travel vice. I think we are going to take 7 trips this year with two being by plane.
I don’t have an answer to the question about accredited investors but looking forward to hearing any replies.
Lily | The Frugal Gene says
We are not big on traveling but I have a biggg food vice. Nothing wrong with a traveling vice mate 🙂 4% (excluding housing) is pretty normal for us, it’s just comical compare to income that’s all.
TheHardenedInvestor says
“We never had our money in anything else besides a bull market.”
You have a lot to learn. That’s not a negative comment. You guys are doing great! And you seem to have made very sensible investment decisions particularly with investing in Vanguard index funds. But like the old saying goes, how much do you really know about yourself if you’ve never been in a fight?
Having invested through 2000-2003 and 2008 all I can say is that your mental fortitude hasn’t been tested. Investing is all mental. My only advice, prepare thyself.
Lily | The Frugal Gene says
That’s intense! Good advice, we’ll see what happens 🙂
Sean @ Frugal Money Man says
Living on 4% is freaking impressive! Kudos to you guys for living way below your means and setting a standard.
I think we are similar in that I want to save/invest every single dollar I earn, but unfortunately that just isn’t possible. We are also investors who only know a bull market, and we will definitely have our learning curves once the bear is back!
Great interview!
Lily | The Frugal Gene says
Thanks 🙂
Laurie@ThreeYear says
Lily, you slay with those frugal ways. Completely amazing. What part of SC will you buy in? That’s my home state you know?! Your interview was completely wonderful as usual. I think you’re way hard on yourselves. When Mr. ThreeYear and I We’re in our 20s we were eating sushi out every night and saving almost nothing…
Lily | The Frugal Gene says
Turtle…Myrtle…Beach? Lol!! Turtle beach hahaha.
Don’t tempt me with sushi…if hubby liked raw fish, we would be in trouble. I’m glad my vice isn’t his. His is just video games.
Joe says
4% of $200k + $40k is $9600 a year. How?
Ray says
I assumed they were including their investment income
Joe says
$9600 is for their total annual expenses. They are homeowners with a mortgage. I don’t have a mortgage, but my property tax is already over $10k.
Lily | The Frugal Gene says
Not including investments! 4% because it EXCLUDES housing – it’s what we eat, shop, dress etc. It’s super easy if you’re frugal and smart about it.
P.S. I made almost 80k, that was my typo, 40k was net. (Could you edit for me @ ESI?)
ESI says
Yes, I’ll update now…
Moose says
Living on 4% gross income…that’s amazing! Very cool interview Lily, you two sound fun.
Mike H says
Nice interview and very entertaining!
You are ready to retire now based on living on 4% of your gross income. Take your net income and put it in dividend growers that average a 4% yield. With consumer stables being down you can pick up of the usual suspects and build out a 5-10 position portfolio that should be growing faster than inflation.
I’ve been doing exactly that for the past 4 years and I’m about a year or two away from having a portfolio that spits out six figures of growing dividend income annually.
I guess you are looking for the options to increase your spending as you get older. In that case, do invest like I mentioned and keep working to build up that portfolio!
-Mike
Hillary says
An attempt at answering your accredited investor question: At 1.1m you are just over the threshold, Congratulations!! Take this time to do research into the products that are now available but please don’t jump until you are confident in your path (seriously 6mo-1year of research, I beg of you!!).
There are some very valuable resources that are free or near free that will get you set up for success and will take a minimum of personal time to investigate. For what it is worth we chose to dig into angel investing, mostly because our accreditation came from successful exits from startups and we love the dynamic nature and can do attitude of entrepreneurs. If that avenue looks promising to you, search out podcasts on investing (“angel” is a great primer) or if you want to put time and money into the opportunity search out your local angel syndicate, do it live, much more valuable than using internet syndicates like angel list or seed invest as you get started. There are also some great webinars, research articles and information available on the Angel Capital Association website (www.angelcapitalassociation.org). Either you will decide you have the risk tolerance for this activity or you will run back to stocks and bonds (and either is fine). If the thought of watching thousands of dollars (and more) get spent by others and never handed back if and when a start up fails makes you lose sleep, don’t do it. Obviously, the up side of opting into angel investing is when you make a good bet and getting a high multiple, nothing is more fun than getting a call or certified letter asking for your wire transfer number because the firm is selling for a profit. Good luck!