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.
This interview took place in September.
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 65 and my wife is 61. We have been married 27 years.
I was profiled in Retirement Interview 10 last year.
Do you have kids/family (if so, how old are they)?
We have a married niece, 32 and nephew, 30, we helped raise after my wife’s sister passed away.
In addition, I have a large extended family and my wife’s Mom in our area is our last living parent.
What area of the country do you live in (and urban or rural)?
We live in a rural/suburban county in our home area, on the coast of a Mid Atlantic state.
What is your current net worth?
About $2.25 million, largely in investment real estate and retirement accounts.
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?
We paid off our last mortgage in 2014 prior to retirement and have no debt of any kind.
Assets are as follows:
- Investment Real Estate, Apartment Partnerships, $900K
- Investment Resort Home, $350K
- Retirement Accounts, $600K ($310 self plus $290 spouse)
- Primary Residence, $300K
- Money Market & Cash Accounts, $40K+
- Small Airplane, $60K
EARN
What is your job?
I am a retired career military officer and defense contractor who retired about six years ago.
I retired from the military after 30 years in 2007 and continued to work as a full time defense contractor/consultant for the next six years. I also served for four years in an important state board position (State Aviation Board) and continue to consult or serve as needed as a part time legislative assistant primarily in military/veterans affairs.
I also continue to fly as an active Pilot.
What is your annual income?
Despite retirement we are at a career high of $150K, mainly from military retirement /VA and real estate income.
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?
My military income grew from only about $13K in the late 1970s to $132K when I retired in $2007.
My contractor income was about $100K when I first retired to $120K when laid off for the second time in 2014.
Had planned to retire or at least go part time in 2015, so just sold an investment property with our last mortgages and retired early.
What tips do you have for others who want to grow their career-related income?
Focus on finding a career or job that you really love and care about.
Take advantage of all educational and learning opportunities, including self-help areas and books by good authors.
Don’t be afraid to stretch into new positions or areas of interest, particularly leadership positions, public speaking, and other professional opportunities.
Take care of your care of your career, save, and invest wisely and the money should take care of itself.
What’s your work-life balance look like?
Retirement life is great now with plenty of time to pursue my interests and volunteer work but never had a problem with life-work balance.
Despite being in the military and occasional stresses there and in defense contracting, we always were lucky to have a good work-life balance.
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?
We earn about 50K in annual income from our real estate investments.
I am a long term real estate investor in single family homes and diversified over the past few years into multi-family investment from section 1031 tax deferred exchanges.
Our three apartment investments are held as Delaware Statutory Trusts (DSTs).
We could also earn more from our resort beach home but we no longer rent that out since retiring.
We also earn about 14K annual from wife’s Social Security and I’m drawing 6K annually from a retirement account until the account closes and I take Social Security in a few years.
SAVE
What is your annual spending?
Our spending varies somewhat but is generally no more than 8K month or about $90K per year.
What are the main categories (expenses) this spending breaks into?
- Personal Taxes: 10K
- Real Estate Taxes: 6K
- Home/Flood/Wind Insurance: 4K
- Home Maintenance: 6K
- Aircraft Maintenance, Fuel, & Expenses: 8K
- Vehicle Maintenance & Taxes: 3k
- Restaurants/Fast Food: 10K
- Groceries/Misc. Household: 8K
- Church and Charities: 12K+
- Travel: 3K
- Medicare/LTC Insurance: 6K
- Cell/Internet/Cable: 6K
- Misc/Reserve: 8K
Do you have a budget? If so, how do you implement it?
We are not big spenders but generally do not budget since we have more resources than we spend.
Do not recommend this approach but my wife really dislikes budgets due to the past complications and multiple expenses of our rental properties.
We are really blessed and as long as we give, save, and invest our desired amounts, money has never been a big issue for us.
What percentage of your gross income do you save and how has that changed over time?
We have tried to save and invest at least 10 percent of our income in our real estate or retirement accounts.
Early on I relied primarily on my real estate investments to carry the load in our savings program, but with access to government and company retirement accounts we ramped up our investments also to about 10 percent.
What’s your best tip for saving money?
Stay away from new vehicle purchases!
New vehicles depreciate fast and unless you’re already a millionaire, it really doesn’t make sense to buy new and take all that depreciation in the early years. Most new vehicles are financed anyway, which means in my book you can’t really afford them.
Better to save and invest all that money instead of make new car payments.
This tip alone can easily make you a millionaire over time!
What is your favorite thing to spend money on/your secret splurge?
We bought a beach resort property as an investment that we use now as our second home.
I also bought a small used airplane to train in and upgraded to a better model a few years later.
Used airplanes usually hold their value pretty well if you take good care of them.
INVEST
What is your investment philosophy/plan?
Invest in Real Estate over the long haul and also invested in our retirement accounts at least to take advantage of any matches.
I’m a Dave Ramsey fan and he recommends 15% of your gross income that I heartily agree with.
What has been your best investment?
Single family homes and our current multifamily apartment partnerships (DSTs).
What has been your worst investment?
Small businesses I have tried to start or invest in with partners.
Also lost pretty big in a fixer upper real estate deal when an agent partner who was working it declared bankruptcy and skipped out!
What’s been your overall return?
My residential real estate has returned about 6-8% growth and income over time.
Our apartment partnerships/ DSTs have performed much better, earning 11-18% in the two partnerships that have gone full circle, from acquisition to sale.
I have lost on two individual deals, the fixer upper mentioned above and a Townhouse that became a Section 8 rental.
Our mutual fund investments have also performed well, basically approximating the S&P 500 with our dividend growth fund and a single high dividend real estate stock.
How often do you monitor/review your portfolio?
We do not review the retirement accounts very often since we are long term investors.
The apartment partnerships/DSTS get reviewed when they sell after generally 5-8 years and we do a tax deferred exchange into another property.
NET WORTH
How did you accumulate your net worth?
I started as a long term real estate investor, investing in single family homes as possible with a modest income. I looked for good assumable financing with small down payments in good locations.
When we married, my wife who had a real estate finance background became our property manager.
We also invested in IRAs and retirement accounts to the extent possible, but always counted on the real estate investments along with my military retirement to achieve our financial goals.
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?
Earning, saving, and investing are all critical to your success.
I tried to do a respectable job on all three but after succeeding in the military most of my emphasis was on the real estate investing and that ultimately brought success.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
Lost a fairly large sum on a fixer upper, ultimately sold at a lost, took out a second mortgage on my best rental and sold another to recoup the loss but eventually recovered.
Also lost all sums invested in multiple small business deals, including a very sizable amount after we has achieved our initial financial goals. I thought it would be good to diversify into several small technology ventures but this turned out to be high risk and did not work out.
What are you currently doing to maintain/grow your net worth?
Continuing the plan to gradually grow the real estate investments, primarily through the multifamily apartment partnerships (DSTs) and retirement accounts.
Do you have a target net worth you are trying to attain?
We’d like to grow the real estate investments and retirement accounts/mutual funds to at least $2 million plus.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I was 48 and still in military service when our real estate and other investments reached that amount.
What money mistakes have you made along the way that others can learn from?
Tended to use too much leverage in my real estate investments and also undertake too much risk with the small business investments.
Stay away from both of those!
What advice do you have for ESI Money readers on how to become wealthy?
Get and stay out of debt, except for perhaps a personal mortgage and save and invest at least 15% of your income in mutual funds and or investment real estate.
Earn, save, and invest all you can.
Plan, budget, and stay out of debt while wisely investing and you too can retire to a life of financial freedom where your time is your own!
FUTURE
What are your plans for the future regarding lifestyle?
We were able to retire a little early in 2014 and pursue our interests! Financial freedom and our long planned retirement lifestyle without financial worries is great!
What are your retirement plans?
See above and my retirement interview #10 for details.
I continue to fly, travel to our resort home and elsewhere and pursue volunteer opportunities in our areas of passions.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
No concerns at present…six plus years of retirement have been great!
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
I learned mainly through self study of good books and attending real estate and business seminars and classes.
Who inspired you to excel in life? Who are your heroes?
My Dad was a military veteran, career firefighter, and small real estate investor who I worked with when young and always greatly admired.
He was very hard working and a lot of fun and I was always close to Dad and other members of my family.
Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?
I like Tom Stanley’s books and his most recent update The Next Millionaire Next Door that his daughter recently wrote.
I’m a Dave Ramsey fan and must also recommend his The Total Money Makeover with details on how to get out of debt and build wealth. Did not read his book or take his class until later in life, but would have done a lot better if I had found and adhered to his plan over the years.
I also like Wes Moss and his book You Can Retire Sooner Than You Think as a practical guide to planning a great and early retirement.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We target ten percent for our church and Christian ministries.
I also volunteer as needed with a great ministry we support.
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?
We may spend down retirement accounts if needed, but updated our will and estate plan to leave real estate assets to niece and nephew and church ministries after we both pass away.
My retirement account and other assets will go to a younger sister with financial issues.
My wife will be well cared for with military survivor benefits and our other assets until she passes. Plan is to save and use her retirement account for long term care if needed since she doesn’t qualify for Long Term Care Insurance that I bought at 60.
The Millennial Money Woman says
Thank you so much for your interview and for your honest answers. I think you are absolutely right in that the worst thing that someone can do for their net worth is to buy a new vehicle. One of my former colleagues bought a new (luxury sports) car, right out of college, and with insurance payments, she ended up spending more per month on her car (at an 11% interest rate, because she had no credit built up yet) than I was spending monthly on my home mortgage! Like you said, stay away from depreciating assets is key if you are trying to build and maintain your net worth. Thank you so much for your interview – and thank you for your service.
Cheers,
Fiona
Fuzzy says
I’m afraid car payments and lack of discipline in saving and investing are keeping many folks from achieving financial freedom. Thanks for the kind words!
Ace says
Congratulations on a successful career. I’m thrilled to finally see somebody here who’s into general aviation – what kind of plane did you get? Can you tell that’s part of my dream?
Happy landings!
Fuzzy says
Hi Ace,
Thanks for the kind words. I’m a fan of the Grumman family and have a nice Grumman Tiger. Can highly recommend these aircraft if you want a fun, practical, GA airplane. Good luck with your plans and flying!
Ace says
Awesome – that’s definitely a fun and great looking bird. I’m surprised by the $8k/yr you claim for the expenses – would have expected more, along the lines of M50 below. Someday …
M50 says
Thanks to M222 for your service.
Hello Ace, see https://esimoney.com/millionaire-interview-50/ for another ESI aviator. Me😁. Since that interview we escaped California for Idaho. We now have a new Cessna 182K that is radically equipped for speed and STOL. We can land and rotate at 45 mph and cruise at 161 mph. Awesome for a new mission in the Idaho that country or coming to Vegas like we are today to get warm.
Blue skies,
M50
M50 says
Back Country🤪
Ace says
Beautiful! Flying and camping all bundled into one.
It’s not a sin for me to be jealous if I’m also happy for you. Hope to be there myself someday. Cheers!
M50 says
You will. The best thing you can do you are already doing is reading ESI Money
MI-109 says
I’m also a General Aviation guy. You can read a little more about me in the MI-109 interview. I am in a two way partnership in a Bonanza A36 (straight tail, six seats). It is very versatile with passengers and luggage and offers good speed – 165 Knots True Airspeed.
I’m also a retired military officer, so I know with a little discipline and time, wealth is possible, even on a modest income.
Cheers to all!
MI221 says
Nice interview! What immediately struck me was how similar our results were after following completely different career paths (military vs small business owner.) Even the date of hitting the first megabuck threshold.
But the common elements drove the success – working hard, avoiding debt except for a mortgage, investing in self, finding a career you love… all great advice!
And staying away from new vehicles — yes. Newest vehicle here is a 2006, and the oldest is a ’71 VW convertible. No planes though, although that was once a consideration – the VW will have to do for fun here 🙂
Best wishes and enjoy your well deserved retirement!
Fuzzy says
Yes, we have a lot in common! My best friend is a small businessman and fellow pilot. Unfortunately my business investments did not work out but you folks are Great Americans!
KE says
I enjoyed this interview. Also military here, close to retirement. I have a net worth in the same ballpark as yours. Any advice on getting a planner or CPA to help with investment withdrawals etc. in retirement? Any other advice you’d give us ESI vets that we might not learn from the civilian profiles on here?
Thank you for your service.
Fuzzy says
Hi KE,
Do not really use a CPA or planner for investing or distribution strategies, but that may be a good option if you use one. I really just use a CPA for taxes and a Real Estate Investing professional for the multi family partnerships.
On the military side, I’d counsel you and fellow vets to stay in as long as possible. Civilian sector, even with fellow vets or defense contractors usually does not compare with the military in terms of people, job satisfaction, benefits ,and other areas. We may not have the net worth or earnings of others but who cares? Hope this helps!
MI-109 says
KE,
I retired with 35 years of active duty/full time Air National Guard service. I have been with USPA/IRA, now First Command since the mid ’80’s. They convinced me to start investing when I was 23 years old and it was one of the best decisions I ever made. The downside is they broker loaded funds, but they offer a lot of technical investing advice and support for military folks. Most of their reps are veterans. They have been especially helpful to me as I approach the draw down phase of my financial life. I spent a lot of years concentrating on the building of wealth, but not much time studying the drawdown of assets.
Thank you for your service and good luck as you enter retirement.
Martdoc says
M109, I am a current military officer and also used First Command earlier in my career. As I learned more about investing through sites like ESI, White Coat Investor and Physician on Fire (yes, I am a doc), I realized between loads and annual fees, First Command can easily total 2-5% fees annually. I moved half my investments to Personal Capital and have had just as good if not better advice from them, and maintain half my investments myself, including TSP. Highly recommend you look into fees First Command charges. I knew I was paying for the advice/services, I just did not realize how much.
Phillip says
Thanks for mentioning real estate investment failures. It’s hard to find people who are confident enough to admit mistakes. Any additional thoughts/guidance on what went wrong and what should have been done differently in hindsight?
Fuzzy says
Phillip,
As mentioned, I usually had too much leverage with my real estate, usually purchasing real estate with small down payments and or assumable loans. Could have done better if I had more time to devote to the real estate and property maintenance skills but real estate was strictly a side hustle for me and means to an end.
Jake says
Great interview! Which market do you invest in real estate? Did you focus on mainly appreciation or cash flow when you first started? I recently started investing in real estate and I’m currently buying my first rental property. Definitely learning a lot through this experience.
Fuzzy says
Yes, we have a lot in common! My best friend is a small businessman and fellow pilot. Unfortunately my business investments did not work out but you folks are Great Americans!
Fuzzy says
Jake, I focused on appreciation in the beginning but now focusing mainly on cash flow. Began investing in the DC/ Northern Virginia area but also invest in southeast Virginia and the Outer Banks, NC. Now I mainly invest through Apartment partnerships and invest in these where we can find the best deals. Currently, we own these in Northern Virginia and the Atlanta area.
Jake says
Glad to hear! Haven’t researched on DC and Virginia, but NC is appreciating and Atlanta is hot right now! For the longest time, I was deliberating which strategy to go with and decided to go for appreciation for my first purchase. Quick question though. I’m planning to put 20% down and do a buy-and-hold strategy. Do you recommend buying points to lower the interest rate or not? Is there a way to determine when to buy or not buy points?
David @ Filled With Money says
This is the kind of ideal retiree that FIRE bloggers are talking about. Passive income coming in from real estate and $150k is a nice chunk of change to live on.
Good on you and congratulations, now all you have to do is enjoy the fruits of your labor and live a life that’s on your terms. Starting early with real estate probably helped out tremendously.
Mel says
So do you have two pensions? One 30 yr military and after military service? 100k? Income from real eastate 50k?
So the rest is gravy…
Without the pension would you be hurting or able to adjust 90k spending?
MI226 says
Great interview, and I will be forwarding this one to my daughter. She is eight years TIS and loves the Army. She is under the new BRS plan. I convinced her to max out her TSP for the match from the first day (she elected to start contributing at 15% from day one). I then had her to fill up her individual Roth IRA each year, and then come back and continue to fill her TSP as much as she can. She is now up to 18% contributions (plus she gets the 5% govt match), and has also maxed out her Roth IRA for the last three years. I also have her saving outside her TSP for some possible real estate investments, which is where I can really help her plan shine. She has been bumping up her contributions at each pay raise, and she has now completely bought in and hit a six figure net worth prior to thirty years old! I’m super proud of her. What a great opportunity the military presents for kids! She is long on the Army and planning for a 20-30 year career. She could be 42 years old and fully retired, if she chooses, based on her current investment situation and the Army +40% pension. She will likely do 30 years (increasing her pension) because she enjoys the Army. But like I tell her, it’s always good to have choices! You (and she) have found an incredible financial niche in the military. Congratulations on recognizing the opportunities that were in front of you!
Charlie @ doginvestor.com says
Enjoyed the long-term view of investments and income – and great to see how it built up over time.
I liked the comment about “Focus on finding a career or job that you really love and care about.” – This to me is super important to most as building wealth is a marathon, not a sprint. I’d add the disclaimer that the career/job you focus on also needs to be reasonably well paid.
MI236 says
Shhh – don’t say that to the young whipper-snapper who is building an app he/she thinks is going to change the world.
The startup from a garage story – Apple, Steve Jobs and others is a powerful motivator. Some have found great monetary success selling off their startup or going IPO – the epitome of the American dream which brings people, ideas and energy to these lands.
Fuzzy says
Stay away from car payments! They are the enemy of building wealth. I’ve had some inexpensive new cars too, but car payments before you are FI or wealthy is the real problem.
MI236 says
Agreed that incurring debt to pay for a depreciating asset is a double whammy, you lose on the value of the vehicle plus you pay interest to some bank on its purchase.
MI236 says
It is too general of an advice to say “never buy a new car”, like much in life it all depends. There are considerations beyond the depreciation. To share our perspective:
1. Do you have the time and the energy to find a good, used car?
2. Can you go to the dealers, get the car inspected and check and trust Carfax and other reports?
3. Can you be certain or reasonably certain that the car you are buying was not in a flood?
4. A lot of used cars come from rental car companies and also people who dump their leased vehicles after driving them for a few years. Majority of them were not serviced properly (which is why car companies started offering oil-change services for 2 yrs as part of new car purchases/leases).
5. While there is depreciation and insurance coverage to think about for a new car, the other monetary consideration is the amount and frequency of fixes and repairs needed on a used one. Cars are after all electro-mechanical devices with a million parts and pieces. Road conditions and other environmental factors also play a role in the life of a vehicle.
6. Finally, if you buy a used special edition BMW, Land Rover etc. then you will get a sticker shock when you take it for a routine service. I had a friend who used to pay thousands for each service+repair since spare parts for his car were so damn expensive even though he had bought his car used. So, total cost of ownership matters.
If one can afford it, and get a good deal on a vehicle and the loan (or better yet, pay cash) and you plan to hang onto the vehicle until it’s useful life is over then buying a new car can be a good deal and increase rather than decrease one’s peace of mind.
Or you can say to heck with it and buy a Honda or a Toyota. 🙂
CaptainFI says
Beautiful aircraft, I used to love flying the Baron and teaching in it. I now have four throttles and 100s of passengers instead of 6 haha. But I loved my old GA days and even single engine instructing, which I sometimes still do on weekends. Absolutely its tough industry financially, but with motivation and discipline there is still plenty of room for saving and investing.
Success Triangles says
Great interview. I think this is one of your key point:
“Take advantage of all educational and learning opportunities, including self-help areas and books by good authors.”
The first book I ever read on investing was Learn to Earn by Peter Lynch and it rocked my financial world. If you don’t remember Peter Lynch, he was the lead fund manager on the Fidelity Magellan Fund for years when it beat the market handily. Anyhow, his simple concepts on investing started me on my investing journey.
If what they say is true about the majority of high school/college students never reading another book after graduation, then that is really a shame. I’ve learned so much since college by reading around 50-75 books a year on all kinds of topics. Books that have improved my finances, health, and relationships. And best of all, I check them out from my local library and they’re free.
Just my two cents 😉
dan says
Thanks for sharing, learned a lot from people like you. My approach is a little different maybe I am young and willing to take a lot more risk.
My goal is to retire before age 40, I think the best way to accumulate wealth fast is by using debt, I know its different than what Dave preaching, but I believe using debt and invest early in real estate is one of the best ways to build net worth faster. But of course, need lots of experience and education before jump into it.