Today I have two updates for you from previous millionaire interviews.
I’m letting three years pass from the initial interviews to the updates, so if you’ve been interviewed, I’ll be in touch. đ
These updates were submitted in March and April.
As usual, my questions are in bold italics and their responses follow…
OVERVIEW
How old are you?
I am 55, my wife is 56 (both extremely fit and healthy, due to our daily exercise OBSESSIONS!)
Do you have kids?
We have three children, all grown up and gone, two of which are our daughters who recently married off! (ages 21, 24, 25)
What area of the country do you live in (and urban or rural)?
Rural South, on 14 acres…living the dream….
What was your original Millionaire Interview on ESI Money?
Is there anything else we should know about you?
You all will find this very interesting…
I quit my six-figure (in 2021 my W-2 was $188k) to pursue my lifelong dream of low-paying Law Enforcement work.
I have always had a deep respect and admiration for the badge. I felt “the calling” many decades ago but I wanted to establish myself financially first, which I have. I thought I might be considered too old but when I aced the physical agility test the instructors were amazed and enthused (a much younger guy showed up, quit on the first exercise and walked away!) I performed 69 pushups in one minute, 47 sit-ups in one minute, haven’t run or jogged in twenty years but I was able to run a mile and a half in under 14 min, followed by a 300 meter sprint in 1 min, 10 seconds.
I made it thru the background check, the panel interview, the civil service exams and interview with no problems. I accepted the position as patrolman for the measly, annual salary of $36k. I am finishing up the 14-week Law Enforcement Academy now (graduation is in April).
So far I LOVE THIS and have no regrets. I can now serve my community the best way I know how.
NET WORTH
What is your current net worth and how is that different than your original interview?
My net worth is $1,975,000.
It has risen since my original interview but not by much as I am very low in equity exposure but very high in real estate exposure, both direct and syndicated.
What happened along the way to make these changes?
First the BAD…
I went heavily into syndicated real estate in 2016, 2017 and 2018 for the non-correlated benefits (to equity markets) as well as the preferred income distributions, most of which were paying 10+%. More than 3/4 of these investments were invested in hotels! What happened to that industry in 2020 and beyond? CRASH & BURN!
None of these pay any distributions any longer but none have gone defunct either. The sponsors assure me that the values have recovered but they are delaying distributions the 3rd quarter of this year for cash management purposes. Whatever! To me this is over $200,000 in dead money. I have mentally written these investments off.
Now the GOOD…
We sold our home in Dallas/Ft. Worth, Texas and moved 4 hours east to a rural two-year old home with beautiful views and lots of trees. We also purchased a lakefront condo to enjoy on weekends and possibly rent out as an Airbnb.
We paid CASH for both properties. We have ZERO DEBT and this offers a great deal of peace-of-mind. I know many readers are very savvy and keep debt, invest and play with the house’s money. I admire this, I do. They have guts! But think of this, if I am killed in the line-of-duty (hypothetically), wouldn’t my wife be much better off if I left her with no debt to worry about, and she still has plenty of assets? This is why I paid cash, I have my estate totally set up in the event my number comes up. (When your number’s up, your number’s up!)
Our equity exposure is at a very low 20% and we have another 30% invested in corporate bonds and structured notes and settlements. This portfolio earns approximately $36k annually with relatively little risk. At this stage I don’t like much equity exposure. I cannot collect on my IRA’s yet (another four years away) but at present the income from these is another $36k annually, tax deferred.
EARN
What is your job?
Sheriff Deputy earning $36k per year.
We are servicing no debt on this.
What is your annual income?
$72k with salary and investment income.
How has this changed since your last interview?
WAY DOWN but I am much happier and much more fulfilled.
I am living my dream!
Have you added, grown, or lost any additional sources of income besides your career?
I lost my big six-figure salary and the 401-k match, but hey, I have great insurance benefits from the county and a State Law Enforcement retirement which I can draw from after 10 years of service OR my widow receives.
SAVE
What is your annual spending and how has it changed since your interview?
We spent a lot to move that far, approximately $12k.
I traded in my Acura RDX for a new Jeep Gladiator Mohave! Another dream!
We will spend approximately $40-50k and my investment income will cover a portion of this. Keep in mind that at my present salary, filing jointly, we pay ZERO income tax! That’s a BIG WIN!
What happened along the way to make these changes?
I made a choice that I will own.
I don’t regret it.
INVEST
What are your current investments and how have they changed over the years?
Covered above.
I do no more option writing, no more active trading.
I am sitting in an equity-income ETF, I own corporate bonds and structured notes with 10%+ quarterly payouts.
What happened along the way to make these changes?
I am not holding my breath on the syndicated real estate hotel investments but hey, if they pay distributions again as they’re promising, YIPPEE! I hope to get my principal back, they all have scheduled maturity dates between 2025-2027.
If they can’t make it to then, then we ALL have worse things to be worried about, geo-politically and macro-economically speaking.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview?
I miss the big income but I am better off mentally and emotionally than before.
Overall, what’s better and what’s worse since your last interview?
My lifestyle is far improved.
Think about my peaceful, rural living. No traffic, no crime, clear skies with plenty of stars, fresh air and lots of deer roaming our property, we watch them feeding each morning over coffee.
What are your plans for the future?
To continue serving my community via the Sheriff’s Department.
I am certain I’ll be promoted to Corporal and Sergeant in record time due to my maturity and my ability to make very wise discretionary decisions as an officer. Much better than a 30-year old would be able to. The mature readers here will agree.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
Quit your job if you’re miserable and pursue your dream.
I only wish I had made this decision about 8 years earlier. I had inherited money from my late Father (in early 2014) and I could have paid off debt, aggressively invested the remainder and then gone on into Law Enforcement at that time.
———————————————
Pretty interesting stuff, right?
Our next one has some good things to share as well…
OVERVIEW
How old are you?
I am 58 and my wife is 64.
We have been married 18 years.
Do you have kids?
No children.
What area of the country do you live in (and urban or rural)?
We live in a small town of about 6,000 people in the South Island of New Zealand.
What was your original Millionaire Interview on ESI Money?
NET WORTH
Note: All amounts here are in US$. I have used the same exchange rate that I did in original interview US$1 = New Zealand $1.50 as it enables easy comparison. It is not too far away from that as I write this near the end of March but if can fluctuate significantly. In the last 12 months it has been as low as NZ$1.33 thru to a high of NZ $1.53.
What is your current net worth and how is that different than your original interview?
Current net worth $2.49 million.
It was $1.74 million in the original interview.
What happened along the way to make these changes?
Our plan since we did the original interview has not changed in any significant way. We had a strategy and kept to it.
Probably the only thing that changed was we made a conscious decision to basically save then invest all my wifeâs income in addition to the 8% that I was saving via Company Superannuation and Kiwisaver.
What are you currently doing to maintain/grow your net worth?
Over the last 3 years we have saved about 30% of our income from salaries and they have been invested across our portfolio. Now that my wife has retired and I intend to work part time then this will cease apart from a small contribution ($700) will make to my Kiwisaver to ensure I get the government contribution (approx. $350pa) each year until I am 65.
Up until now we have always reinvested any income earned from our Portfolio. This will continue though we will take about $2K each month from the portfolio to partially fund our retirement once we have used up funds sitting in cash. I donât envisage that will be necessary for 3 years at least.
EARN
What is your job?
I had a 40 year career in the banking industry doing many roles. My last one was a Bank Manager in a town with population of around 6000.
I had held senior roles earlier in my career but my wife and I made a lifestyle choice when she was made redundant around time of the global financial crisis and we relocated to where we live now. Our incomes dropped by around 40 percent when we did this but we have no regrets.
We are also proof that you donât need big incomes to increase your net worth. At the time we moved in 2008 our net worth was approximately $940K. Today it is $2.49 million.
What is your annual income?
Our combined gross income from salaries for the last 12 months was $115K split roughly 2/3rds to me and 1/3rd to my wife. In addition we earned approximately $15K (after tax) in interest and dividends.
In New Zealand, income tax is deducted at the source in a similar manner as to how it is for wages for interest and dividends so you receive a net amount. Most capital gains from NZ Shares are not taxable though any international shares held are deemed to earn an annual return of 5% pa (including any capital gain) and you pay income tax on that amount.
Obviously if the actual return is greater than 5% then that is a win and actual returns of less than 5% means you are paying tax on returns you actually did not receive. In the long run we are well ahead so we can live with those negative years.
How has this changed since your last interview?
At the end of February 2022, my wife retired and I finished up full time work in the banking industry after 40 years. She’s currently taking a break and will do some contract work for around 20-25 hours a week from mid-year as whilst I donât wonât want to work full time again.
I am not ready to fully retire from work yet. That decision was not dictated by financial need but more wanting to transition to fully retired from the workforce over a couple of years rather than go cold turkey.
Have you added, grown, or lost any additional sources of income besides your career?
No additional sources of income apart from our investment portfolio.
SAVE
What is your annual spending and how has it changed since your interview?
I have tracked our spending since the early 2000âs using Microsoft Money.
Even though support for it stopped a long time ago, a small software vendor designed a program with one off cost of $10 which enables me to still get updates on stock prices from around the globe so I will keep using it until it no longer works.
Spending last year equated to $82K.
Breakdown of expenses:
- Tax: $38K
- Household: $8K (includes maintenance and property taxes — called rates in NZ)
- Car/Fuel: $3K
- Holidays: $5.5K (Been domestic only since Covid.)
- Insurance: $6K (Roughly half is health insurance.)
- Food: $7.8K (Includes dining out.)
- Utilities: $3.2K
- Healthcare: $3K
- Subscriptions: $1K
- Clothing: $1.5K
- Miscellaneous: $5K (Things like hairdresser, purchase of sports equipment (Mountain bike))
Given our changes in work this year we are working on a budget to spend $50K excluding taxes.
Last yearâs expenses excluding tax were $44K so there is reasonable allowance for inflation (currently inflation in NZ is running at 5.9% pa but probably closer to 7.5% since Ukraine war broke out) will be funded as follows…
All the figures below are after tax hence excluding tax from expenditure budget:
- Mortgage REIT Income: $8K
- Contract Income (3): $16K
- Wife NZ Superannuation (1): $12K
- From Cash/Portfolio (2): $14K
1. NZ Superannuation is the equivalent of U.S. Social Security. It start at age 65 and the amount paid bears no reflection on your income earned in the past or assets held. (i.e. The local worker at McDonalds would have the same entitlement as Warren Buffett.)
2. Given the amount of cash on hand we should not need to touch our investment portfolio for a number of years. Budget excludes overseas travel. We hope to be able to travel to the U.S. next year and have a rough budget for this of $20K which will be funded from payout of around $70K I will receive in 2023 from maturing endowment insurance policy.
3. If I wish I can probably keep this income in place until I turn 65 when I will become eligible for NZ superannuation at the same rate my wife earns. If it stops prior to 65 any shortfall will be covered from cash/investment portfolio.
What happened along the way to make these changes?
Spending over the last 10 years has not varied greatly apart from the years we travelled overseas.
This is roughly every 3 years although our trip to USA in mid-2020 got canned due to COVID.
The years we travel overseas our expenditure would be approximately $15- 20K higher.
INVEST
What are your current investments and how have they changed over the years?
Current Portfolio:
- $650K: Balanced Investment Portfolio â aim is to be split 50/50 between growth and income assets. (Current % are as follows: Cash 7%, Fixed interest 43%, Property 4%, NZ Shares 11%, Australian Shares 13%, International Shares 20%, Alternatives 2%.)
- $609K: Growth Fund. 100% International Shares – Being based in New Zealand, U.S. shares make up a significant portion of this.
- $200K: Mortgage REIT. This returns about $8k pa after tax and likely to rise given the significant increase in mortgage rates recently.
- $650K: Real Estate — now solely the house we live in.
- $190K: Retirement Fund. Kiwisaver — closest thing we have to a 401K or Roth in NZ; 60% stocks, 40% fixed interest.
- $29K: Mutual Fund. This funds has same investment goals as Kiwisaver and was started by myself as Kiwisaver funds cannot be accessed until aged 65 unless you are experiencing extreme financial hardship. With the mutual fund I can make contributions knowing I can withdraw at any stage if I wish.
- $143K: Cash. This figure is higher than normal as when I finished my banking career in February I had an investment fund which had to be converted to cash. Currently sitting in an on call savings account whilst we decide what to do with it. Likely to be put in Certificate of Deposits and we want to basically have a couple of years living expenses available so we donât have to tap into our other investments, although it is probable that $33K of this will be added to Mortgage REIT. Interest rates in NZ are higher that the US. For example NZ 10 year Government Bonds (equivalent to Treasuries in US) are roughly 1% higher than US yields. Certificates of deposit for 1 year would appears to be about 1.5% p.a. higher than in US.
- $19K: Forestry Investment. Shown at cost. Value hard to calculate as harvest is 10 years away.
What happened along the way to make these changes?
At one stage we owned 3 properties including the house we lived in. We now solely own the house we live in.
Part of the property ownership was not planned as bought in-laws house to enable them to release equity to fund their retirement as they basically had no cash. We also bought a house in the town we now live in some years before we moved here on the basis we might like to retire here. At that start we rented it out and when we decided to relocate we moved into it and rented out the house we used to live in, in our old town in case we decided we did not like our new town.
Obviously that did not happen and eventually we sold it about 4 years ago at a significant capital gain. Property has been kind to us as house prices have risen significantly since the global financial crisis. There is no capital gains tax in NZ although if you now own an investment property for less than 10 years you will pay tax on the profit. This amongst other reasons is why we decided to liquidate our investment property portfolio before these rules came in. Funds were reinvested across the two investment portfolios and Mortgage REIT.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview? Overall, what’s better and what’s worse since your last interview?
Nothing is worse and we have been very fortunate that COVID has not impacted us greatly compared to most people here in NZ and around the world.
We both kept our jobs so income was steady and during the couple of lockdowns (6 weeks in total in my part of NZ, although our biggest city Auckland had a total of nearly 5 months) our spending reduced.
The better is that we have both now ceased full time work so work/life balance is better.
What are your plans for the future?
For the last 3 years, I have volunteered as Trustee and Treasurer of a local Community Trust. I will do this and have also been asked to do some business mentoring which I am considering.
My wife plans to do some volunteer work and we also want to travel both within NZ and overseas.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
Looking back it’s clear that prior to 2008, we were mostly savers rather than investors so with the benefit of hindsight there was probably some lost opportunity there and whilst some of the decisions we made prior to then have certainly contributed to our current wealth that was probably due to good luck rather than a conscious thought.
Examples of this are:
- When I was 20, you were automatically enrolled into my employerâs superannuation scheme. You had no choice. I am sure at age 20 I wasnât thinking about retirement and would have no doubt blown the amount I put away on beer or something similar! That said when I left the Company in 2008, I made a conscious decision to invest the funds when I received pay out and that has certainly been a great decision.
- Property has been very kind to us although now we just own the house we live in. We bought a house in town we now live in 2004. Property in that time would have risen around 300%. The house we owned prior to moving there was owned by my wife who bought it in mid 90âs. We sold about 4 years ago and price growth in that time was about 400%. Neither of the decisions to purchase were driven by any investment thoughts but they have certainly helped us accumulate the wealth we have today.
That said, I have no doubt we also made some good conscious decisions:
- Spent less than we earned even when we relocated and our incomes reduced significantly. Paying ourselves first and investing has seen our net worth increase and in that time we have had several overseas trips although none since COVID. Hoping to get to US again in 2023.
- We have never tried to time the market.
- During the global financial crisis and Covid we made the decision to stay invested even though at times we were down 20% or more.
- We would definitely fit the âMillionaire Next Door categoryâ as we have never been conspicuous consumers. With my wifeâs recent retirement and me only going to work part time in the future, a lot of our friends wonder how we do it. They think must have been in a great company super scheme (which to be fair I was) but I am sure they have no idea the actual level of investments we have.
- Never invest in something you donât understand. It is why we do not have any cryptocurrency though I appreciate many do and that is ok.
One final set of thoughts. Perspective can easily impact how you view something so over the years I have always tried to explore alternative views to my own when looking at something including investing.
The best analogy I can think of is the current price of Petrol since the outbreak of the Ukraine war. In both New Zealand and the US people are understandably complaining about the significant price increase. It’s worth comparing prices between US & NZ. Looking at online prices (I appreciate it varies from place to place as it does in NZ) in USA is about US$4.50 per gallon. The price in NZ is US$6.38 and that is after the government made a temporary reduction in tax on fuel of about US$0.65 per gallon. Obviously people in NZ would consider US fuel cheap but understandably Americans will not. Neither of us is wrong. It is just a different perspective.
I always enjoy reading the millionaire interviews as even though some of the discussions (eg about Rothâs & 401Kâs) are not relevant here in NZ they still provide an insight into strategies people use to grow their wealth. The tool you choose to achieve your goals might be different to what I can use but the underlying strategy is not.
LC says
I’m curious, what happened to your syndicated real estate investments in hotels? Were you able to recoup that?
MrFireby2023 says
Hi,
For the most part YES. I was on a recent Webinar for investors and they informed us that the hotel market is doing great and most hotels are fetching high prices. So far, in the past two months I’ve received approx. $72k in distributions which were proceeds from the sale of some hotel properties. In August I am set to receive a $50k distribution which is 1/2 of my initial $100k investment that I made in January, 2020 into a Hospitality fund (what timing!). The remaining capital in the fund is invested in bridge loans that are performing and as they mature over the next couple of years I’ll receive those distributions as well. I feel very fortunate that the market has turned around that they the sponsor invested in choice hotels which simply fell on hard times along with the entire sector due to the PLAN-demic.
Maverick says
MI101: Ah, yes, it’s a matter of perspective. I watch YouTube travel videos and see how beautiful NZ is all over. I also see that there are more boats than people in NZ. I also see the prices. While your medical / insurance and superannuation appear as nice perks, it’s supported by higher consumption and income taxes. Do you believe this suppresses the desire to work harder than a McDonald’s employee you reference? All the best to you and your spouse.
MI101 says
Maverick. I don’t think it suppresses the desire to work harder for a couple of reasons. 1. Whilst it’s possible to survive in retirement just on NZ Superannuation you certainly would be living a very basic lifestyle so I would surmise that encourages many to work harder so amongst other things they are in a better position when it comes to retirement 2. Whilst things differ in NZ to US with social security most would be unaware of the actual differences so it doesn’t impact their thoughts.
The boat thing is interesting. I read an article a couple of years ago which said the average annual use of a boat for recreational purposes was less than 10 hours a year. Now some people use their boats a lot so clearly some don’t get used at all for a number of years. You are never far from the sea anywhere in New Zealand ( The most inland point in NZ is less than 10 minutes from my house and I can easily get to sea in 2 to 3 hours by car) so guess the number of boats is not surprising
MI-94 says
Millionaire Interview 49 – Great job staying in shape and taking on a new and interesting career. That is really awesome!
MrFireby2023 says
Thank you. I love it! I am now in the Phase oof my training where I train with an FTO (Field Training Officer) and two days ago we traveled in unmarked vehicles, had a K-9 element with us and busted a “Chop Shop” that had 11 stolen cars! Tis is the first time I have drawn my weapon at the same time the Belgian Malinous were set loose. It was so exciting. I felt no fear or hesitation did as I was instructed. As we approached, my FTO instructed me to follow his lead and four of us barreled out of our vehicles with weapons drawn and the theft ring gave us zero resistance.
This experience and the outcome (busting a felony ring) has validated my decision to join this law enforcement community.
MI-219 says
MI-49:
Congrats on the hardcore lifestyle shift. Being a cop can be extremely rewarding-when done correctly it is a highly honorable profession. I just retired after almost 15 years on the job; here’s some unsolicited advice:
1. Some friends of mine were killed in the line of duty, this is part of the job and everyone knows it. What is less talked about is that more take their own lives. A cop is 3 times more likely to kill themselves than the general population. Make your mental health a priority. If you haven’t already, please read Kevin Gilmartin’s Emotional Survival for Law Enforcement. Have your wife read it too.
2. I concur with your assessment. With your experience and maturity you could easily climb the ranks. If you do, great. A good supervisor is worth their weight in gold. However, looking back, the day I earned a sergeant badge was the day the job stopped being fun. I’ve never met a fellow supervisor who disagreed. Take it as it comes, but if the opportunity comes up, do you want to be a cop out there helping people, or do you want to be the guy managing cops and spending more of your time dealing with paperwork and settling interpersonal squabbles?
3. You’ve got the money, invest some of it in high quality training that will keep you among the living. We had some great training on our department, and I ended my career running some of it. I also was in regular communication with other large departments conducting well funded training which set best practices. But the stuff I learned from guys like Craig Douglas(ECQC), Kyle Defoor, and Mike Pannone (CTT) was head and shoulders above what I’ve seen offered in house by any department. It also saved my life more than once when the bullets started flying. If those guys aren’t around, get training from a confirmed former member of Delta or Seal Team 6 experience. Our tax dollars made those guys the best in the world, and the GWOT gave them more reps surviving gunfights than any one cop has ever seen. If Nacogdoches is within a reasonable drive, making the trip to get training from Paul Howe/CSAT would be well worth it.
Good luck out there, and all the best on your journey!
MrFireby2023 says
Thank you for the valuable advice and THANK YOU for your 15 years of service to your community. I figured out very quickly while in the academy that to be a great cop you only need TWO attributes; common sense and scruples. I told my Sergeant that and he agreed and replied, “The hard part is finding people with common sense!” LOL
As for training, I have already been thru quite a few classes that I paid for. I attended Fieldcraft Survival’s pistol and carbine classes (phases 1 & 2). Fieldcraft is owned by Mike Glover, a retired Green Beret and what I like most about his classes is that ALL of his instructors have combat experience, both as military veterans as well as SWAT.