Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
My questions are in bold italics and his responses follow in black.
Let’s get started…
OVERVIEW
How old are you (and spouse if applicable, plus how long you’ve been married)?
I’m 47 and my amazing wife is 39. We’ve been married 21 years.
Do you have kids/family (if so, how old are they)?
We have one 17 year old daughter who my wife homeschools.
What area of the country do you live in (and urban or rural)?
We live in a coastal town in the deep south—our home is a 7 acre hobby-farm about 25 miles outside of town, so lots of fresh air and privacy, but still just a half hour’s drive from church, my office, restaurants, movie theaters, etc.
What is your current net worth?
$2.6 million in personal (non-business), 600k of which is our home (owned free and clear, no mortgage) which I don’t count, as we intend to live here forever and as such won’t be selling.
Our daughter and her family will do something with it after we’re gone.
I’m not entirely certain how to valuate my business—we do roughly $8 million in revenue annually, so depending on the valuation model you use it’s worth somewhere between $4 and $12 million.
I have serious doubts it’d sell for more than $4 or $5 million though. Mortgage companies are notoriously difficult to sell for prevailing valuations.
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
- Home (600k) –I exclude this from my calculations though, as per above it is our home—our little piece of heaven here on earth—and won’t be liquidated in my wife’s or my lifetime (that’s the plan, in any event).
- 401k’s/Ira’s – 530k
- HSA (used as a retirement vehicle, never withdrawn from for medical expenses) –25k
- Taxable accounts (Vanguard index funds) – 850k
- Cash – 550k (Vanguard money market fund)
- Gold/silver (physical) – 50k
We’re a bit heavy in cash right now because $250k of that is our daughter’s college fund (held in a money market account), another $50k is her car fund (which will be spent for her as a high school graduation present in a year and a half), and another $40k is her wedding fund (daughters are expensive 🙂 ) which I’ll continue to push money into each month until it hits $100k.
We’re not sure she’ll need the full $100k, or when she’ll be getting married (she’s only 17 but her mom and grandmother on both sides got married at 18, though I’m in no hurry for this…) but I prefer to be prepared, and I like piling up cash.
A good sized pile of cash is as good as a soft pillow when it comes to sleeping well at night.
We have zero debt.
EARN
What is your job?
I own a small (30 employees) mortgage company.
My wife is an incredible homemaker and our daughter’s homeschool mom.
What is your annual income?
Varies, but this year will be approximately $1.2 million.
I’m a W2 employee of my company, entitled to 100% of the profits once payroll, overhead, marketing, etc. are all paid each month.
In the hot season (March through August) when it is literally hot both regarding the weather and home sales, the months are quite good — $100k-$150k income per month.
The market slows a good bit for us in October, and my income drops as well (our overhead is for the most part fixed, so there’s less profit for me to take in the slower months, so less income.)
The “bad” months are closer to $50k-$60k/mos.
Tell us about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?
I got into the business in January 2005 and made $61k that year.
- 2006–121k
- 2007—115k
- 2008 (the mortgage meltdown was rough) – 107k
- 2009 –119k
- 2010—230k
- 2011—170k
- 2012 – 190k
- 2013 – 323k
- 2014– (this is the year I opened my business and went from being a one-man outfit to growing a team and leveraging other salespeople’s ability instead of relying only on mine) – 230k
- 2015—488k (2014 was a growth year, as I hired, invested in the company, etc. this year, 2015, is when those hires began hitting their stride and bringing in a good bit of revenue/profit)
- 2016–788k
- 2017 –1.3 million
This year is slightly lower than last year—I’m at $1,050,000.00 ytd and will come in at about $1,200,000.00 for the year. [Editor’s note: This interview was conducted in November 2018.]
All of the above are pre-tax (gross) and I’m W2’d, so I pay a lot of taxes.
What tips do you have for others who want to grow their career-related income?
Two things:
1. Marry well and don’t divorce.
Divorce will destroy your finances and rob your wealth like nothing else in the world, and I’m told it’s worth every penny if you marry poorly, so don’t do that either.
Marry well, and never ever divorce.
2. Own it.
I was an employee for someone else for a decade prior to getting into the mortgage business, and an employee for someone else the first 8 years of my mortgage career.
The really big money (400k and up) didn’t happen until I went out on my own and became the someone else that folks worked for.
There are more and different headaches, but the rewards—greater income potential, more freedom, greater sense of control, etc—are so worth it.
Taking that risk in 2014 has enabled me to be positioned to retire young (age 50; 12/31/21 is the exit-date, carved in stone).
What’s your work-life balance look like?
It’s excellent now.
The first decade it was rough—my wife said she felt like she worked with me since I’d come home and continue to work on the computer into the night, talk about work, live it through the weekend, etc. This was a mistake and one I wish I could go back and undo.
It’s possible that level of work was required to get the business where it is now, but even so, I’d still go back and change it if I could. The money simply isn’t that important.
Now though I work Mon-Thurs (never on Friday) and I don’t set an alarm clock anymore.
I go to bed around 10, wake up around 6, workout, bible study, have coffee with my wife every morning, hang with our little girl a bit (she’s homeschooled so I get time with her each morning, which is wonderful) and then I’m in the office by 10 or so. I work until 6-7, then go home.
Every weekend is a 3-dayer, which has been really neat.
In 2019 I’m going to be cutting Monday out of the schedule as well and working 3 days/week until early retirement at end of 2021.
I have 4 direct reports who are compensated well (80k – 500k) to keep the office running and grow revenue, so I can gradually step back from the day to day running.
It took time to get there, and 2014 and 2015 had some long days/nights in them, but we’re (my family and I) reaping the benefits now.
Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?
I’ve spun off a couple ancillary businesses over the years that are tied to mortgages (title insurance, biweekly payment plan sales).
The title insurance company makes about $12k/year, and the biweekly payment plan sales makes about 25k/year…nothing major, but once the initial cost of setting up the businesses (LLC filing and registration, legal, accounting) was in place, the ROI is almost infinite as there is no overhead.
SAVE
What is your annual spending?
Really low.
I had to go back and tally it for this interview—in 2018 YTD (through 11/18/18) we’ve spent just over $50k on day to day living.
That doesn’t include a couple vacations we’ve taken (Disney for 4 days, Bahamas for 3) which were an additional $20k combined.
My wife has also bought some additional furniture to replace the old stuff we’ve had for 20 years, but those are one-time expenses.
Our biggest bill each month is our grocery bill—my wife loves to cook and she buys only organic and local, so it’s around $1,200/month, give or take.
Our next biggest bill is car insurance, which is around $300/month (again, daughters are expensive).
One of the reasons we’ve been successful in growing wealth (aside from solid income numbers) is that we are fairly simply people—our favorite restaurants are the chain ones (Olive Garden, Chili’s, Sonic if we’re doing a “cheat-meal,” etc) and we don’t eat out much in any event.
A fun date for my wife and me is a Jersey Mike’s sub and a movie, or a hot cocoa and a walk downtown (our downtown is the best on the planet, bar none).
When we were dating I was in grad school and she was fresh out of high school so we were really, really broke, so a couple chili dogs and a walk around the water downtown was big for us.
We’ve never really inflated our lifestyle to match our income. We’ll do a nice dinner out with friends every couple months, but hiking trails, working out in our home-gym, walking downtown, strolling the beach, gardening on our property, doing yoga together, movies—these are all either free or low-cost forms of entertainment.
What are the main categories (expenses) this spending breaks into?
- Groceries
- Electric (no water as we have a well. No sewer as we’re on septic.)
- Car insurance (no car payments; we pay cash and keep our cars on average 10 years or so, then trade them in and buy new. I know folks say don’t buy new, but we do, and keep them a decade, and spare ourselves the car maintenance….I’m not particularly handy with cars or mechanically inclined.)
- Car gas
- Life insurance (I have bought a lot of this over the years, $6.5 million in face-value, probably more than I need, and the total cost each year is approximately $6k. These are all term policies staggered out so that they begin expiring in 3 years when I’m 50, and then the last one expires when I’m 65).
- Disability insurance—also expensive, roughly $500/month for 14k/months in coverage
- Health insurance ($600/month, but I run this through the company so it doesn’t actually hit our personal budget)
- Miscellaneous (date money, our daughter’s allowance, my wife’s and my play money, household odds and ends…)
Do you have a budget? If so, how do you implement it?
Not anymore.
We did, and stuck to it rigidly for years and years, which helped us out a great deal.
I’m blessed in that my wife is a big believer in budgeting, financial freedom, frugality, etc. Have I mentioned she’s amazing? We don’t budget anymore because, at the risk of sounding arrogant, we make a lot of money now and don’t spend much, so there are many thousands of dollars left over monthly.
My wife and I each get an “allowance” monthly for fun money—money that each of us can spend without accounting to one another.
Hers (at 500/month) is a bit more than mine (100/month) but she’s a homeschool mom and is out a good bit with our little one, so needs more for lunches, etc. I honestly don’t know what she does with it, and don’t ask.
That’s part of the wisdom, in my opinion, of allocating to each person in the marriage a certain amount of money that they have control over. I think this is particularly important when one spouse isn’t gainfully employed, like my homemaking wife.
I can honestly say that my wife and I have never, ever had a single argument over money, whether we made 19k that year (as we did in 1998, our first year of marriage) or seven figures. It just isn’t something that we have ever disagreed on.
What percentage of your gross income do you save and how has that changed over time?
It started with 2% my first year out of grad school (1998) because this was the minimum required to qualify for the 401k matching.
I increased it 1% annually each year through 2004. My salary that last year (2004) with that company was 38k/year.
When I got into the mortgage business and saw the income potential, we kicked it up to 15% and left it there until 2010, when I moved it up to 25%.
It’s now 50% of our gross the minute I get paid, and then at the end of the month whatever is left over gets moved into savings as well….whatever goal we are working on at the time.
Currently it’s our daughter’s wedding, for which we have 40k saved and intend to grow that up to 100k.
So I get paid, 50% of the gross goes to our taxable account (all Vanguard index funds) and then whatever is left at the end of the month goes to that goal.
Once we have the 100k in her wedding fund, I’m not sure where this overage will go.
Probably a legacy account for our daughter or something like that.
Maybe college savings for our perhaps-one-day grandchildren.
Maybe a vacation property in the Caribbean….we’ve kicked that around, though I’m not super excited at the idea of owning additional real estate.
So we’ll see.
What is your favorite thing to spend money on/your secret splurge?
For my wife, it’d be shoes. Clothes. Purses. That sort of thing.
It’s not super-secret though because she’ll send me links and cut out pictures from catalogs and leave them around the house for me to find. ??
For me, it’s a mid-day movie with nachos, by myself. I’ll slip out of the office sometimes and go into the movies with the retired folks at 11 am and crush a jumbo nachos and movie-sized box of candy. Costs me $26.00. I bring my own bottled water.
I know that’s not really splurging, but I get more joy out of that than most folks would a new Range Rover.
If not the movie and nachos, I’m not sure. I’m not much of a spender, really. Cars, clothes, things…these don’t really do it for me.
We do love Disneyworld (we’ve been as a family 14 times in the last 12 years, and we splurge while we’re down there) so I’d have to say a spontaneous trip to Disneyworld would be a fun splurge for me. (one of the benefits of owning my own company, and having a stay-at-home wife and a homeschooled daughter is we can pick up and go wherever whenever we want).
But I don’t spend much money personally. My allowance that I withdraw each month for my “play” is 100 bucks/month, and I usually have money left over at the end of the month. My wife likes to make fun of me for this.
I don’t do stores, don’t go to bars (I quit drinking by and large years ago, aside from the occasional titos and soda if I’m out at dinner with my wife) and don’t play golf.
INVEST
What is your investment philosophy/plan?
Max out, in order:
- My 401k
- My (nondeductible) IRA
- My HSA
- My wife’s (nondeductible) IRA
- Taxable Vanguard Index funds
We dump 50% of my gross each month into the above.
Above that, I also buy 4k/month in physical gold, for diversification, and will keep that up until I have $200k.
Gold is a really dense store of wealth, so 200k doesn’t take up much space (though it is heavy.)
I’m a set it and forget it fellow. I don’t read prospectuses, don’t have much interest in how individual companies are doing, earnings reports, etc. That stuff is extremely boring to me.
What I do like is watching the numbers pile up over time, so all of our investments, regardless of what vehicle I’m investing into at the time (401k, ira’s, hsa, taxable account/s) go into index funds.
Over time, the index wins, against virtually every managed account out there. We’ve never liquidated an investment in these accounts, either, so everything beginning with dollar one all the way back in 1998 is still there working for us.
I’ve been approached multiple times about investing in other things—P2P lending, Forex (I had to google what it meant—foreign currency exchange ??) sector-specific stocks, cash-value life insurance and its many incarnations, and I have no doubt that these and others may be great investments. But they just don’t appeal to me.
My philosophy is that life should be interesting and investments should be boring, and you can’t beat, in my opinion, Vanguard index funds for boring.
What has been your best investment?
I would have to say opening my own company in January 2014, as it has turbo-charged my income and allowed me the freedom to retire 15 years ahead of the previous schedule (age 50 instead of 65). And with a lot more money, which is nice too.
Beyond that, and speaking strictly financially, it’s Vanguard index funds. The low fees are tough to beat. And it requires almost zero intelligence from me to build wealth there. There’s nothing for me to do beyond point and click each payday and move the money into the funds.
Non-financially, it’s been the woman I married. I hit it out of the park with her.
Having someone on the same page with you, daily, and always being supportive whether we were dead-broke while I was in grad school and she was in college, or transitioning careers, or quitting my position to open my own shop, she’s been supportive and nurturing each step of the way, and there’s no doubt I would have failed without her in my corner with me.
What has been your worst investment?
I almost hate to admit it, but at the risk of offending many of my fellow ESI readers, real-estate. We’ve bought a couple investment properties over the years and have sold at a loss each time.
My income is such that I get no tax-break for the property, and the sale price for each of the investment props we bought—and we held each of them for at least a decade—has always been less than the purchase price I paid. So for the pleasure of being a landlord (which is no pleasure at all) I got to lose money on all of the properties.
I know that real estate can be a great investment; it is not one suited for my personality though. Even the potential upside—say a couple hundred a month in net rent income, and a 5-10% year appreciation rate—isn’t worth it for me.
Vacant months, property damage, increasing taxes, realtor commissions, etc….it just isn’t for me.
We may buy a vacation property on a Caribbean island one day down the line, but I would be buying it as a toy to enjoy and not as an investment.
What’s been your overall return?
Aside from the real estate we have bought and sold at a loss, roughly 9%.
Inclusive of the real estate, I don’t know, and won’t do the math on because it will only annoy me.
How often do you monitor/review your portfolio?
Every Saturday morning from 7-9.
I get up, pull up the info, write it out using pen/paper, and compare it to that week last year. I’ve done this for as long as I can remember.
There is something about watching it grow which I find very soothing and satisfying, and I enjoy moving money from our checking to our investment accounts.
The act of actually transferring the money from checking to Vanguard puts me in a good mood every time.
NET WORTH
How did you accumulate your net worth?
100% earned.
My wife and I were married in 1998 while I was in grad school and she had just finished high school, getting ready to start college. She earned 5.15/hour and I worked weekends cleaning carpet and sold plasma biweekly to keep the lights on.
When I got out of grad school and got my first real job at $30,735/year gross ($1801/month after taxes) we felt rich. We didn’t know what we would do with all that money!
First thing we did was have me stop selling plasma, which was a welcome treat.
Next thing we did was move the grocery budget up from $150/month to $300/month, which allowed us to shop at Publix instead of Wal-Mart, also a welcome treat.
I’d say we invested well in that we invested every single paycheck, always, without fail, and always into the same vanguard index funds (small-cap, mid cap, total stock, total bond) and just kept doing it.
There’s a lot of noise out there, a lot of folks eager to and good at separating folks from their money, and we have been able to avoid all of that by sticking to our plan.
We have also always been good at living below our means, staying on a budget, and being easily (and cheaply) entertained.
In the end, just being together and having time is the important thing. It’s why we married one another—to be together—and it’s still our thrust.
That sounds corny, I know, but it goes back to the marrying well bit I mentioned above. Do that, and so much of this other stuff just seems to fall into place.
What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?
Well, the earning is pretty strong now, but I’d say it’s the “save” aspect simply because moving money out of our checking into our savings/investment accounts just comes naturally, and is enjoyable for me.
We’ve done it from the beginning, when the numbers we were working with were very small. I remember in the early days the 401k contribution was 50 bucks a month.
But the act of saving then when the numbers were small helped build that habit so that now, when the numbers are bigger, it would feel weird if we weren’t doing it each check. It makes me feel like I’m buying future time to spend however I want.
Also I think this desire and propensity to save has helped us avoid debt—we pay cash for everything with the exception of our home, which we bought in 2012 for 320k at a foreclosure sale, financed 256k, and then paid off in June 2016.
Having a paid for house was a dream of mine since before I had a house at all, so stroking that last check was super fun. We as a family literally burned the mortgage together in our fire pit, then hit Ruby Tuesday’s for a celebratory dinner.
My daughter has had the avoid-debt mantra modeled for her from day one and I’m proud of that.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
None really—becoming a millionaire was never the goal. It just sort of happened.
I wanted a paid-for house because I hate debt and agree with what Proverbs says about it (the debtor is slave to the lender).
I wanted to run my own business so I would have the flexibility to control things and buy back some of my time by leveraging other people’s (employees) time, and these two things—the paid for house and the growing my own business—just sort of combined with my enjoyment of saving/investing to make us millionaires. It was the by-product; never the goal.
What are you currently doing to maintain/grow your net worth?
Still dumping 50% of my gross each month into our accounts, which I’ll continue until 12/31/21.
Do you have a target net worth you are trying to attain?
Not really. I track it weekly because I like tracking things (I track most everything; how many phone calls I make a day, how many appointments with referral partners I have each week, how many steps I take a day, etc…) and just realized one Saturday morning while doing the numbers that we’d crossed over the million dollar mark.
I anticipate I’ll have about 3 million, give or take, in retirement/taxable accounts on 12/31/21, and will then “retire” to a half day each Friday to meet with my direct reports.
I’ll likely keep pulling revenue out of the company each pay day, but possibly less than I do now.
I’m considering selling 49% of the profit to one of my managers here, in which case I’d be pulling ~40k/month out beginning Jan 2022.
The part of this that relates to the business is contingent on a lot of things, though. I may just sell it all outright. I haven’t made that decision yet.
One of the things that draws me to blogs like ESI is the fact that this is all difficult to discuss with one’s peer group unless there are others in the peer group in a similar situation. I don’t have any friends/colleagues who own million-dollar businesses and are looking to step out entirely in 3 years 1 month and 9 days (not that I’m counting.)
I’ve invested some time trying to connect with other business owners in my community, but it seems that once we get around to this topic most of them plan to either a) leave the business to their children, b) sell it outright, c) never retire and die at their desk.
My little girl has shown zero interest in the mortgage world, and I wouldn’t want to burden her with the expectation of coming to work in a field that she isn’t attracted to.
I may sell it outright. I really don’t know. I’ll continue to read and research and see about crafting an exit strategy insofar as what to do with the business when I go.
But what isn’t undecided is when I’m going. My wife and I have made the decision that 12/31/21 is our freedom day, the day I step out of the business physically but for one day a week. So that’s happening. The rest we’ll figure out.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I was 44 when we crossed a million in terms of dollars in the bank (excluding house and business value).
I was 46 when I made over a million dollars a year for the first time (it was last year).
What money mistakes have you made along the way that others can learn from?
I bought investment properties with 100% financing (terrible idea) and tried to manage them myself.
I also got fed up with it and sold in a down market, so had the pleasure of taking money to those closings as a seller.
I also would, if doing it different, open up my own shop sooner in life. It’s been amazingly rewarding both psychologically and financially.
What advice do you have for ESI Money readers on how to become wealthy?
Work hard.
Spend less than you earn, regardless of how much you earn, and whatever you do don’t get caught up in lifestyle inflation.
As you make more, and as your assets grow, try not to inflate your expenses and over time you’ll see an enormous amount of space between what you make and what you need—and all that space is filled with money that is yours to invest and buy back your time to do whatever you want.
Save something every single check.
Consider the greatest revenue harvester in the world—the federal government—and how they get their money. They don’t wait for you to do whatever you want with it and then let you send in what you have left over. They take it off the top, before you get yours. That was always a powerful example for me, so we always moved it from our checking account to our savings/investment accounts the day I got paid.
Without exception. If you wait a couple days to do it that money will find somewhere else to go. You have to do it the day you’re paid.
Also give—whether it’s because you’re called to by your faith (which my wife and I are) or because you believe in karma, the reciprocity principle, or just plain leaving the world a better place, you’ll do better if you give regularly as well. I’ve seen this proven out too many times to doubt it.
FUTURE
What are your plans for the future regarding lifestyle?
As I mentioned above, I’m walking out on 12/31/21 and will come to the office on Fridays only from there out.
My wife and I love to garden and work on our property (chickens, bees, orchard tree growing). We’ll increase that a good bit once I’m retired, and I can envision going to the gym together, travelling more, and making ourselves available for our daughter (who will be in college) and any family she creates (marriage, kids) down the line.
Other than that I don’t really know what the days will hold—I’m a little apprehensive as I’ve always been busy and have always worked, but I know myself well enough to know that I’ll find something to get involved with. Political campaigns, volunteering through our church, etc. There’s plenty to do.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
One would be that if I jump too soon (if I sell the company, for example) and then regret it, I won’t be able to step back in.
I think the greater regret I’d have though would be staying too long, then looking up and realizing I’m 68 years old and still working, and missed my daughter’s college years, missed gallivanting around the country and Caribbean with my wife, missed my (future) grandkids growing up. There isn’t enough money in the world to make that worthwhile for me.
As you age, you begin to realize that time is the one resource you can never, ever get more of, and it seems to go faster and faster as the years roll by.
The other thing would be if my daughter needs something and I don’t have enough resources…my wife likes to say I try to plan for everything, which is true I guess, but I think of the possibility of her having a need that requires a chunk of money I don’t have, and it makes me want to save a little more.
Some of that is just part of being a dad to a little girl, I think. I’m not sure you ever stop worrying about them.
MISCELLANEOUS
How did you learn about finances and at what age did it ‘click’? Was it from family, books, forced to learn as wealth grew, etc.?
I’ve always enjoyed saving, so that part came easy, but the book The Millionaire Mind really turned a light on for me.
It’s the follow up to Dr. Stanley’s The Millionaire Next Door (also a great book) but The Millionaire Mind is the better of the two in my opinion.
I listened to it in my car on the way to work and back in 2002 and it really hammered home the importance of saving, working for yourself, living below your means, etc.
It’s filled with specific case studies which spoke to me.
But again, becoming a millionaire just sort of happened—it was never the goal. It came about as an offshoot of my love for saving, budgeting, and my wife’s and my just natural frugality and the pleasure we take in living simply.
Who inspired you to excel in life? Who are your heroes?
My dad worked hard to put me through college and grad school (he paid for all of it) and I learned my work ethic from him.
My parents modeled frugality for me.
I loved the thrill of the sale when I got into the mortgage business. Each time I closed a loan it fed that fire for me. I was number one in sales after my first year, and I enjoyed that position.
My then-boss made a big deal out of that each month, which made me work harder. The job just fit my personality—it rewards repetition, systems, organization, tracking—so it was an easy one at which do to well.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Absolutely. My wife and I tithe 10% to our church.
Our daughter does as well, on her own without having to be asked, which is a source of pride for her mother and me.
Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?
Yes, absolutely.
We have one child, aren’t having any more, and I continue to believe the professional landscape can be tougher for females than males, and that girls in many ways start behind boys. Even if I didn’t believe that I would plan on leaving her an inheritance.
We’re taught that a wise man leaves an inheritance for his children, and while I’m not sure how wise I am, I’m trying.
Also, and this is a key point for my wife and me, our daughter has been an amazing young lady. I know I’m biased, but she’s never given us a bit of heartache. She doesn’t misbehave, is mature and responsible and incredibly hard-working, and I honestly believe a lot of the reason I’ve been able to come into this office each day and successfully build this company is that my marriage is sound and my daughter is well-behaved.
I have friends and employees whose kids have put them through some of the most horrible circumstances…sneaking out, drugs, early pregnancy, school suspensions, running away, fighting, shoplifting, skipping school, bullying, etc.
We’ve not had any of that, and it’s freed me to come to work and do what I do well—produce income—while my wife educates our daughter peacefully and without incident here at our home.
She’s a lot of what makes our family/home life as smooth and warm and nurturing as it has been, and so I’m quite comfortable passing along to her a chunk of the “winnings,” from that, if you will.
So estate-planning, should our estate reach a point where taxes start becoming an issue, will be a key part of our retirement strategy as well.
Razorback 14 says
Takeaways :
1. tracking early and often is important
2. Focus on the family — daughter and wife —-always! Your dad led by example, it seems
3. Giving is important
4. Taking a calculated risk in business
5. Saving a lot —-each month – each year.
6. Setting a good date to call it quits: 12/31/31 —- I’ve done the same.
7. Shorter weekly work schedule-
8. Going to the movies with retired folks —- ha! It ain’t that bad. Especially, when you grab the JUMBO candy box.
9. Just thinking of selling your business to your co-worker means a lot.
10. Keep planning for your daughter’s future and KEEP calling her your little girl. Love it ?
m-121 says
Thanks razorback 14. you’re right: tracking early and often, giving, saving/investing, living below one’s means, and keeping the main thing (your family) the main thing really are the keys I believe. The setting of the grim reaper zit date (our freedom day, as we call it) is exciting and a bit anxiety-inducing as well. I’ve never not worked. I’m a little unsure as to what those retired years will look like, given what will be my (relatively) young she of 50 at the time. I’m curious: when is your date, what will your age be then, and have you figured out how you’re going to spend those years yet?
m-121 says
no idea what “grim reaper zit date” means. auto-correct in effect there. should read “early retirement exit date”
Maverick says
Just an awesome storybook read to start my day. Thanks, and congratulations for your success. Application of nowledge, hard work and some luck (selection of spouse).
M-121 says
Thanks maverick. Lots of all three, plus God’s grace ?
MI-1 Jason says
great success story.
I’m curious if there isn’t a way to structure the business to reduce your W-2 income to reduce taxes. While I am not averse to paying taxes, and all of our income (minus some small dividends) is W-2, it would seem that the major advantage of owning your own business is being able to reduce taxable W2 income..
M-121 says
Jason, it’d be nice to pay myself 1099if possible, but the Feds require ALL mortgage professionals who make commission from mortgages to be W2 if we’re going to have an fha license. Fha is a big part of what we do/our income, so alas, until they change the law in stuck w the w2.
Andy says
“Marry well, and never ever divorce”. Easier said than done. Unfortunately crystal balls are hard to come by. Granted there are some people who see the writing on the wall and go through with the marriage anyway, but for the most part nobody goes into it thinking they will ever divorce. And if your marriage does go south is it really worth throwing away the rest of your life just to avoid a financial loss?
Consider yourself lucky buddy. Divorce is no picnic, but neither is staying with someone who makes you miserable. If it wasn’t already obvious, yes I am divorced, and it was worth every penny.
m-121 says
understood, yes sir. I have ridden shotgun through my closest buddies’s divorces and it was brutal for all involved, to be sure. From a purely financial aspect, it was devastating to all of my friends who have been through it, and a few of them have not recovered even now, years later. But all of them would agree with you–that it was worth every penny.
Andy says
Yes, fortunately I was able to recover financially from the big D in just a couple years, but a lot of guys have it much, much worse, especially when children are involved.
I find it interesting that a lot of states make you wait a year to legally divorce after separation yet they don’t make you wait a year to marry after you announce your engagement. You could probably reduce much of the former by implementing the latter.
m-121 says
it’s a solid point–ending permanent alimony probably wouldn’t be a terrible idea, either.
Ron says
Well done in all regards. Congratulations on a really good life!!
My only advice……you have enough money. We all grow short on time in life. Either sell entirely, or really whittle your time spent down……and focus on all the joys you’ve been afforded.
In the end, you won’t regret it. I am 51, work only occasionally, and spend a ton of time with my 16 year old daughter. It’s been so rewarding.
Again, congrats and well done!!!
m-121 says
Ron, thanks–how do you know when you have enough? do you use the 4% rule? do you see a downside to keeping a foot in the company (and thereby retaining control and a sizeable income) post-retirement? or does it require the total and wholesale transition into retirement to really enjoy the time? my wife is 100% in agreement with you–sell entirely or whittle it down to a day a week, if not less. I agree in spirit, but struggle with the finality of it. But flipside, I am keenly aware of the passing of time and don’t want put off retirement too long, either….
Alan says
“Life should be interesting and investments should be boring”.
You are a wise man, my friend! Keep sharing that joy!
m-121 says
thanks Alan. This is a fantastic blog on which to connect with other folks in similar situations. I appreciate your reading the interview.
Pete Patel says
Love your story-business owner!!!
Don’t sell 100% of your business, it appears to be a cash cow, hire the best auditor you can find.
I’m traveling, so can’t comment all the things I enjoyed about your story!
But I’ll be forwarding to couple of people I know they can learn from your story..
m-121 says
Thanks Pete. To sell or not to sell…that really is the dominating question of the day for me of late. I’m leaning toward keeping it, putting a really good and trustworthy surrogate in my chair, and coming in a day a week to run the books.
KE says
I love this guy and his story. Although he is a big money earner, he does it in a non-sexy business and doesn’t live like a typical big city doctor-lawyer-C suite type. And I also agree with him about real estate. For many, it’s a prime driver of their wealth accumulation but for many of us, real estate was a pain to manage, provided little to no ROI and were ultimately liquidated at a loss. I think luck has a lot to do with real estate success. Finally, he’s right about divorce – either don’t get married (smart move) or choose very carefully and never split up (equally smart move, albeit a little trickier than staying single). This guy is ESI all the way. Bravo.
m-121 says
Thanks KE. You’re right–I’m terrible at real estate. Index funds don’t ever need to be evicted, don’t steal or damage things on the way out, don’t smoke in the livingroom and destroy the carpet, don’t have property tax increases that go up year over year, etc etc etc. Index funds are boring, automatic, and over time have proven wonderful for us. Though I would disagree with you on one point–I find mortgages very sexy. 😉
Heidi says
This was a delightful read!
M-121 says
thanks Heidi!
Danny C says
Great story and thank you for sharing. I will be reading this many times more as I’m starting the ESI journey.
Things that slapped me on the face are:
1. Marry and stay married. (Check 27 yrs)
2. Having a positive income flow is like a good pillow. You sleep better… Yes indeed.
3. No debt.. (Almost there).
m-121 says
congrats on the 27 years, Danny. Well done. That’s the most important (and most fun) part of all of it. Positive income flow and a cash-cushion are strong, yes sir, and having no debt is key. It’s a lien on future-income, as my dad always said. Once you don’t have any (debt) the amt of future income you need goes down.
GenX FIRE says
That’s quite a remarkable story, and rise. I love reading about stories like this; the success of others makes me happy. It encourages me to try to start a business if I ever come across an idea that makes me want to start one.
I agree with him about real estate to a point. I think those who do well know their area well, and well luck is a component with everything. Joe Theismann had everything except luck in that play off game back in 1985. I saw that game live, as I was and remain a fan of the team he was playing against.
M-121 says
I assume you are referring to “the sack” with LT? I watched it live with my dad–back then we recorded all the games on VHS and I remember seeing that play repeatedly. Made my stomach sick every time.
Tyler says
Great interview. Reading it, I’m shocked you’re considering selling the business. It seems like you have such a solid perspective on life and appropriate work life balance that the main driver would almost exclusively be financial – that is the upfront payment received from selling the business will result in more total dollars in your pocket over time that continuing to own and operate the business. No one here knows as much info as you do on your business, but allowing a surrogate to run it for you seems to be the obvious choice to me. Regardless of your choice, well done! Certainly a path to aspire to.
m-121 says
Thanks Tyler–actually, selling it would almost certainly net a far lower payout than maintaining it. I mentioned in the interview that we realize around 7-9 million a year in revenue, with profit on that around 1.5-2.25 million/year. That profit is mine to take. Each year i own it/run it would net to me (w2, pre-tax of course) around 1.2 to 1.5 million.
selling it would net probably around 2-4 million, possibly slightly more, but not much more. Much of the business that comes in comes in because of my long-standing relationships with realtors and other referral partners, so it’s tough to quantify. Some would stay, but if i got out of the game and stopped calling on and having coffee/lunch/dinner appointments with them, some would eventually get poached by competitors.
i think you’re right though–the surrogate is probably the way to go, with me coming in a day a week to call on key accounts, meet high-level referral partners, do the books, etc etc. I am leaning that way, and the 6 days a week of not being in the office would work for my wife as well.
Thanks for your input though–it is greatly appreciated and valued. It’s fair to say that this topic has been foremost in my mind of late, as I don’t want to do it wrong, and definitely don’t want to stay in the workforce longer than I have to/should. Time with my wife to travel and relax and putter is more important to me than the money at this point. That said, exiting right is important.
Sunny Shah says
So much to like about this interview. First off congratulations on your success. As a younger guy on this journey (age 33) I can take a lot away from you and apply in my own way to my life.
I’ve got a lot to say but I will keep it brief. I’ve been a landlord I was lucky enough to get good tenants but it was still a headache on most days. I enjoyed the experience and going through it but would not do it again. However selling the property in 2016 led it to be my most significant investment to date and it pulled my net worth to a new level but, it could have gone the other way and derailed it. Having rental properties comes down to luck at the end of the day.
2. Have you thought about buying a subscription plan like AMC A-list to use at the movies if you go every week it might make sense.
m-121 says
of all the things I’ve heard or read today, the words “subscription plan like AMC A-list to use at the movies” are the most intriguing. I didn’t even know that was a thing, but i’m off to google to see. Our theater is literally within walking distance of my office, and that is a well-worn path for me, so a subscription card to make it less expensive would be kingpin.
thanks for the tip!
Cody says
This was definitely one of my favorite interviews in the series. Your story is incredibly inspiring. Congratulations on your well-deserved success.
Also, for what it’s worth, with the way you’ve structured your business and provided that keeping it doesn’t cause any (or too much) stress in retirement, I vote for keeping that cash cow.
m-121 says
Thanks Cody. I’m leaning heavily toward that option I believe. As long as the stress is low and the benefit is still there, i’m likely to hang on to it and give it a day a week.
Tom says
This is one of the best interviews I’ve read, and I think I’m at at least 85% of the ESI interviews. Some real nuggets here! Here are three of my favorites:
“A good sized pile of cash is as good as a soft pillow when it comes to sleeping well at night.”
This is so very true! Every time I feel even a little pinched on cashflow, it costs me sleep.
“There’s a lot of noise out there, a lot of folks eager to and good at separating folks from their money, and we have been able to avoid all of that by sticking to our plan.” Preach! I’ve fallen for some of the siren songs, and am pretty sure I’d be better off by taking the money and putting in a Vanguard fund. Then again, I’ve hit a few nicely, so it keeps me coming back….
“In the end, just being together and having time is the important thing. It’s why we married one another—to be together—and it’s still our thrust.” And that is what it’s all about, my friend.
Thank you for this mind-expanding, very well-written post. It’s inspiring!
Tom says
And oh, by the way, talk about the poster child for focusing on the “E” side of the equation! Well played!!
m-121 says
Thanks Tom. I appreciate the kind words. For folks who are good at investing, there are probably funds out there (or individual stocks for that matter) that outperform the VTSAX fund at Vanguard, but there aren’t many, that’s for sure. The chief attraction for me with the index funds at vanguard is that they are so inexpensive as to almost be free, and they are truly set it and forget it. I’m just not savvy enough to outsmart the market, so index funds are right up my alley. For folks who are good at reading the landscape and picking winners and avoiding losers, well, they have my respect and admiration. a nice split the difference for you may be to put the bulk of your money in the Vanguard index funds, and then leave some aside for your play–call it speculative/gambling/playing, whatever, and feel free to chase the hot tips and possible big payoffs with it. And if you lose all of it, you’ve still got the bulk of your money growing consistently and conservatively year over year at incredibly low expense ratios.
the key thing is to spend less than you earn. It’s almost hard not to build wealth if you do just this one thing!
Pete Patel says
You should build your business model not to go the office at all, unless you want to; I retired 2 years ago and 100% of my revenue is passive (hotels).
Implement profit sharing and see how that business model works out.
If you sell a portion of your business, only give a small amount of shares (you could always increase it).
m-121 says
Pete, how much time do you give to the business now and, if you don’t mind my asking, how old were you when you retired? Do you own the hotels themselves, or lease the land to the hotel corps?
the profit-sharing is an intriguing possibility actually. That’s something i’m going to be diving into further with an employment attorney. Thanks for the tip!
Carlos says
Great story! Congratulation on your success !
M-121 says
Thanks Carlos!
Little Seeds of Wealth says
Not meaning to sound too frugal since I know you can afford it but why such high numbers for cars and wedding for your daughter? 100k for a wedding even 10-15 years from now is still very high considering the average wedding costs about 25k nowadays (perhaps even lower in the FI community I’m not sure). As a frugal daughter, I find these numbers difficult to take in.
Other than that, love your wonderful self-made story.
M-121 says
Well, I’m not sure to be honest. I have no real clue how much weddings are (my wife and I eloped) but she (my wife) has mentioned a few times that 100k is a little high for one here in our area (southeast). So we have since scaled it back to 60k. Probably still too high but I’d prefer to have it and not need it. Anything left over can always go to something else. Re the car, our little girl likes the Toyota Tundra, and those are fairly pricey new. I know all the arguments about buying a beater for your kid’s first car, but beaters aren’t as safe and if my little girl is going to be out driving I want lots me lots of safe, air-bagged, strong steel protecting her. So I’ll probably indulge a bit on the car and rationalize it as safety. I also would want her in something less likely to break down. But I think you’re probably right re the wedding. We’ll likely spend well under the 60k I’ve saved. A lot of this is just me not knowing how much is the right Amt and also liking piles of cash stacked up.
Pete Patel says
I was 55 years, when I retired.
I’ll be glad to share the information, you can email me at [email protected]
so we can set up a phone call.
Mi-77 says
Why not share your story with us by doing an interview on esi as well 🙂
Pete Patel says
MI-77
Maybe one of these days:)
Here’s a brief summary (I’m not the best writer, I normally get my 18-year-old daughter to review/edit – but this is all me, she is asleep). My goal is to create a website with mostly financial topics, but I don’t feel confident with writing.
Currently, I have a side gig, which is related to investing in hotels with a local firm that I started to invest with at their inception 2008 – because of them, I got to retire early at 55 years and wife at 46.
The firm was introduced to me by one of the partner’s father – I know the son too, but I have a closer relationship with his parents (I normally don’t believe in luck, BUT in this case, I was very lucky – I did take a calculated risk when I started).
I worked for Home Depot at their corporate office (payroll/production support) for about 11 years, while they were a good firm for me (started at the bottom and did get quite a few promotions) and my wife, I did not enjoy some of the aspects of the way they approached certain things – I left on good terms, gave them 9 months notice.
The hotel group hired a broker/dealer (I believe in 2018) to bring on new investors and the hotel group approached me last year to look into becoming licensed, since I started to invest from the beginning and I am very familiar with them and I could make a little side income (100% commission).
To me, this looked like the right fit for me since I want to remain in the space of living off passive investment for the rest of my life with REPUTABLE firms.
After speaking to the broker/dealer – Since I would be self-employed and no minimum sales required, I got the 2 required license (series 22 and 63) in Sept 18.
Although I can do business with other firms, I chose to just introduce the hotel firm I am familiar with and invested with for the last 10 years.
Between prior and current deals, from 2008 to date (February 2019), I have personally invested in a portfolio of 67 properties (Equity and Debt).
I did research another hotel firm and have invested $50k just to see have they perform; I did bring on a friend as an investor with this new firm and I have boarded 6 investors with the original firm and I have about 3 to 4 in the pipeline which should close very soon.
I used all of mine and my wife’s (also retired with me from Home Depot) money from our IRAs to invest in hotels, through a Self-Directed IRA.
I have boarded one client and one in the pipeline with Self-Directed IRA too. My two cent is, if the Index averages 8%, and passive investment in this space is also 8%, it is a better choice, since the cash flow is more stable and since you are a limited partner, you do get depreciation/expense and CAPITAL GAIN on K1 only on the Equity. Capital gain for a married couple, $0 – $77,200 is 0% and with the standard deduction of $24,000, you can make $101,200 without paying any federal taxes (state deductions are not that friendly as federal, but with depreciation and expense on K1 mine isn’t too bad – I’m in GA). For Federal over $77,200 your at 15% up to $479,000 and max 20% and GA would be 6%.
Good Night
Pete Patel says
Also, this new venture is absolutely ZERO stress to me and I am learning a lot too and can be anywhere, as long as I have connectivity and a computer.
And I can do business in all states, currently licensed in 7 states.
MMiguel says
m-121,
Congrats on your success and thanks for shedding some light on how you did it. I am mid 50’s and upper seven figures NW, but still working daily as in the global MegaCorp world, though have side gigs with wife: r.e. holdings and small family business. Also, helping a young relative with a start-up, so that could be an interesting transition if it takes off.
Anyhow, where I was headed was that I understand well the dilemma of when and how to wind down, when to divest, etc. There are certainly tax issues to consider, as I’m sure you’ve thought about – I’m guessing the IRS will take a chunk out of your proceeds when/if you sell the business. Similarly, I have a pretty large gain on r.e. and truly hate the thought of handing over a big check to Uncle Sam.
I think the biggest question for folks in our position is how to extract yourself from the day-to-day responsibilities but keep the gravy train going. I’m training my successor at MegaCorp and they’ll be ready in say 2 years when I plan to parachute out on good and lucrative terms (hopefully). I do worry that the aforementioned successor will become impatient and get lured away before my exit – the youngsters are like that you know :-). I can’t give him equity the way you could on your end.
One thought is to perhaps begin to transition equity in your business to your senior employee(s). You retain a big stake, but tie them to the business in a way that solves the question of keeping them and keeping them motivated.
I think if I were in your shoes, I would find a way to keep the business, but in a much more “passive” way, with a clear succession plan that rewards the people who helped you build the business, ties them to the business (also so they don’t do what you did and go start their own thing), gradually transitions and retains all those relationships you’ve built, and provides you and your family with cash flow into infinity. Typically these types of arrangements have a pre-determined buy-out amount should anything, god forbid, happen to you – i.e. your partners must buy-out your stake so that your family receives the proceeds (rather than continuing to own %).
Hope that made sense – I’m rushing off to my crazy JOB (shaking head, wondering what is wrong with me).