In short, the interviews will focus on what the interviewee is doing in the areas of earning, saving, and investing. There will also be an opportunity for them to ask for suggestions from ESI Money readers if they choose to do that.
Since the series is just getting started, I’m looking for feedback as well.
Specifically, I’d like to know what you think of the questions — which ones are good, which ones need changed, what should be added, etc. I’d like to get to a consistent list to ask everyone, so I’ll take your thoughts for a few of these posts and then settle down on a final list.
Please note that the questions need to be applicable to a wide a variety of people with very different situations. In other words, a question just for wealthy people won’t fly in this series.
Also, I give the interviewees the option to add their own questions (as you’ll see below). These may or may not be adopted into the final set of questions — we’ll see what you all think of them.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
With that said, let’s get started.
My questions are in bold italics and his responses follow in black.
Please tell us a bit about yourself.
My wife and I are both 35 and have been married a little over 11 years (no kids, only 2 cats for the time being).
We have lived in various areas of the country. We started about in mostly rural Missouri (rent $450/month), followed by 5 years in Birmingham, AL (rent $800/month) for graduate school, and have spent the past 6 years in Seattle, WA (current rent $2195).
What is your current net worth?
Current net worth (as of October) is $258k, which I track monthly and graph it so I can see the short- and long-term trends.
Assets (we rent, so no house value; this excludes the value of our cars, wine, and other valuables):
- Retirement accounts: $239k (including HSAs)
- Cash (checking + savings + small taxable index funds): $33.7k.
Debts (no loans; only debt are revolving spending on credit cards–for points!–which fluctuates month-to-month $9-18k): current is $15.3k
How did you accumulate your net worth?
We have generated our net worth through a combination of early-ish investing and also increasing incomes over time.
To provide a full picture, we started our marriage with a ton of debt (well over $100k, which included students, car loans, credit card cash advances, credit cards, and individual loans). We were forced evaluate our spending and our lives, and through a combination of smarter choices, a tight (and finally making a) budget, and tons of self-education (personal finance blogs, books, etc.) we muddled our way through it.
We only have tracking data starting from mid-2009 (after we had paid our car off), when we had a net worth of -$30k (assets, $39k; debts, 69k).
I keep a rolling 5-year change in net worth so I can analyze our progress in a slightly different way; our current 5-year rolling increase in net worth is $233.8k! This helps me put it in perspective instead of looking at the monthly numbers–this means we averaged +$47k net worth each year! How’s that for progress!?!?!?!
Tell us a bit about your career.
Let me walk you through both our careers and earning by location.
We started our marriage when I was finishing up college and working retail (30-40 hours/week with a full-time class load), and my wife was 1 year into her first job as a teacher. I was earning $15k a year, and she was at $27k. This may seem low, but for our area(s) of Missouri, this money went quite far. My wife had money in the teacher’s retirement during that one year (more on that later).
When we moved to AL for me to start grad school (working on a PhD in the hard sciences), my stipend (I had no control over the amount; it was set by the University) started at $23k for my first 3 years and then was bumped to a whopping $25k for my last 2 years.
During grad school, I started on my first side hustle (see more below). I would be remiss if I didn’t mention that my school/employer had NO retirement vehicle for graduate students.
My wife began a teaching job there at $33k, and after 5 years and a graduate degree ended at $45k. She also had no control over salary or the amount she contributed to the teacher retirement system, which was set by the state/school district and followed schedule/formula based on years of experience and highest degree earned.
We began paying off our debt in earnest and left the state with a barely positive net worth.
I realize this is an atypical progression, but here we go!
After arriving in Washington, I continued working in academics starting at $37k. I did a lot more side hustle work during this time (more on that below). I spent 3 total post-PhD years in academics and topped out at $42k. Again, I had no control over my salary, which was mandated federally (my salary was paid from federal NIH grants) and followed a “years-of-experience” only model. I found it very frustrating to be stunted in such a way.
I had a 403b plan available, but I was not able to put much in it at the time due to cost-of-living and debt repayment. Through work in my side hustles and pulling from aspects of my academic training, I leveraged my skills to leap out of academia into an industry that supports pharmaceutical companies and biotechs. At the time of my transition, I had spent a lot of time reading and practicing and managed to land 4 competing job offers across the country (Boston, Atlanta, Seattle, St. Louis). I had had a contact at the job in Seattle, and it was the one I really wanted; however, I used the other job offers to practice my interview skills and my negotiation tactics (securing additional $$ and moving expenses for each offer).
When I accepted the job in Seattle, I had been leveraging the other job offers to push for a timely offer, and I received an offer of $100k (also known as a 238% raise), which I accepted without negotiating for 2 reasons: 1) It was $15k over what I would have been willing to accept (and $10k over the top of my desired range) and 2) the company was in a distressed situation, and from my contact on the inside, they came in with their best offer. Huzzah–real money now (albeit, in a really expensive city)!
I ended this job at $101k (part of a pro-rated raise) because I was laid off after 9 months but received a 5-month severance–not bad in my opinion! I had advance notice of the lay-off (I got notice but had to stay on for 3 months as a transition to receive my severance), so I was able to line up 2 competing job offers (1 for $105k that I had negotiated up $20k and different title from their original offer of $85k, and the other for $110k–but this company would not budge on salary or anything really, so no negotiation). The job for $110k would have had a minimum of a 45-moutinute commute one-way (without traffic); so, I took the job for $105k because it would allow me to work from home and not commute.
At this job, I was promoted unexpectedly after 10 months because of my performance, and they offered a 6% raise that took me to $111k. However, as they caught me off guard (literally, they called me and said ‘here is your promotion and new salary’), I was not ready with a counter. I did not let this deter me, and I did a bunch of research on the appropriate salary range for this level. It turns out they had put me in at the very bottom of the salary range.
I scheduled a call with my boss and my boss’s boss, and laid out my research of what the range of this position should be and how my contributions (despite my relative inexperience) deserved a higher salary. I asked for the mid-high end of the total range, requesting a salary adjustment up to $125-130k–they gave me 130k (so a 24% raise over my initial $105k)! I was very happy with this amount, and I also received a sizable bonus at the end of that year. For me, I typically don’t count my bonus amounts in my compensation, as they are never guaranteed. The following year, I had another raise and ended at 134k (3% raise).
In moving from this job, which I did back this June, I switched companies. I had been thinking about looking for different opportunities, but I was not trying that hard. A recruiter/head hunter reached out to me unexpectedly to see if I was interested in a new position.
I had several factors at play here: first, I work in a niche industry; second, the current specialized job market has a severe lack of talent; I already had a job (and therefore not desperate); and finally, I know what I am worth. The recruiter starting by asking me what it would take to get me to move companies, and I came back with it would take at minimum $150k to get me to jump ship. I mentioned that I didn’t even want to have an HR phone screen unless this amount was within the company’s range.
I was fairly bold during these conversations (knowing the recruiter ultimately works for the employer), and I also said point blank that the new position would also have to be interesting because I didn’t want to be bored. 🙂 Like I said, bold. I went through all the hoops and such and they came back at me with $150k base salary. I was disappointed, but I went full force into negotiating tactics (and again knowing the state of my industry, I was actually the one with more power, which rarely happens in these situations).
We went back and forth several times, once with them telling me they had a secondary candidate who would be willing to take the job for cheaper (to which I said, okay well then go with them), they tried to get me with a sign-on bonus, but I ended up getting them to add it to my base salary, so at $155k, which is where I sit how (or a 15% raise from my previous salary). At one point, in discussions with a VP-type (and keep in mind, my current position is an individual contributor position), I asked (more like demanded) that I would not work with a certain client (as I knew they had some of this business) due to my past exposure and bad experiences with them. This job is also a work-from-home job! 🙂
So, total salary increase from $15k to $155k, or $140k increase in annual earnings over in 11 years. I typically like to calculate my increase from when I switched industries, so I’ve had a 55% increase in salary over the past 3 years or 18%/year. I have also never had a formal management position, although I have “hired” and “managed” contractors that do work for me.
Once in Washington, my wife left teaching and went into healthcare. She started an entry level job answering phones for $39k, and it was hourly, so there was some overtime but intermittent at best. After a year, she left for a healthcare training job making $50k (28% raise), stayed there for 2 years and ended at $55k (5% raise per year-ish). I should point out that in her specialized area in healthcare, there is little to no negotiation in salary, which is why I am not telling a big negotiation story here.
She then left for another company, where her salary was $60k (a 9% raise). She ending up gaining management experience here, but her program was shuttered, and in lieu of severance, she was able to take on a new position with WAY less responsibilities (no more direct reports) for $65k (and 8% raise). She remained at this job for about 6 months before it became too boring for her (sensing a theme yet?).
Next up, she had competing job offers in slightly different but related areas in healthcare for $75k. She negotiated one of them up to $78k and took that job (a 20% raise). Unfortunately, this job was not everything that was promised to her, so she went into job-hunt mode again after about 6 months and found a job much more suited to her skills and interests. They initially offered $70k but she negotiated them up to $80k (using her previous salary as a bargaining chip), which resulted in a 2.5% raise (but after 6 months in the old job). Her current job has some travel and some office work, but they are very flexible and allow working from home several days a week.
So, total salary increased from $27k to $80k, $53k increase in yearly salary over 11 years.
Summary: As you can see, we have both leveraged the demand for talent in our industries to get significant jumps in our salaries, especially when switching companies. We have been very lucky and fortunate in this area–a lot of right time, right place, right skills, and good negotiating. I have a PhD, and she has a Masters; both of these advanced degrees have been crucial in our ability to earn more. Currently, we sit at $235k/year combined (so, a total combined increase of $193k increase in total yearly income since the start of our marriage 11 years ago). This amount does not include any bonuses or RSUs–base salaries only.
Do you have a side hustle?
I have had various side hustles paying different amounts over the course of the years, some paying a little as $10/hour up to my most recent of $110/hr. Some of my side hustles have included (total ranging $1k – $15k, depending on the year):
- Being a “standardized patient” at the local medical school. This side hustle is sporadic but paid a lot at the time I did it, and you get to be a fake patient for medical students learning how to do exams and how to interact with patients
- Teaching community college courses
- Editing scientific manuscripts for authors whose primary language is not English
- Various writing and editing consultancy gigs in the medical/pharmaceutical space
Almost all of the side hustle money has gone to help pay off our debt faster! My most recent side hustle was in 2016; my earliest was in 2009.
How happy are you with these results and what future plans do you have for growing your income?
I really can’t complain about our results. I am not really sure, given our personalities, job specialties, and locales that we could have done much better. For the future, I’m already targeting my next step, which will probably pay in the range of $180-190k base salary. That is probably a few years off (but quote is in today-dollars), but I know it is the career progression that I want.
I might try to pick up a few side-gigs in the next few months, but I am not aggressively pursuing anything.
My wife is comfortable and happy where she is and does not foresee any major changes in the next 2-3 years. However, she might be picking up some low-effort side hustle work in the near future.
What percent of your gross income do you save?
We currently save about 18-20% in retirement accounts (401k, IRA, HSA) and probably another 5-10% in cash (for various things like vacations, medical expenses, new car).
How did you get to this level?
For the first 5-6 years of our marriage, our main focus was on debt repayment, and we made a conscious decision to focus most of our resources on that. There is a huge psychological component in it for us (i.e., peace of mind, freedom); thus, we aligned on spending/saving in that way. Starting really though in the past 3-4 years, we have been able to focus on saving (maxing out retirement accounts).
Between amount saved and stock market gains, we have added $173k to our net worth in the past 3 years.
How happy are you with these results and what future plans do you have for saving more?
I am happy with our savings rate and amount given our choices. For the future, I would like to ensure continued maxing-out of tax-advantaged accounts and perhaps $10-15k/year in taxable investment accounts. I would like to get to a point that these funds could finance financial independence without retirement accounts.
What are your main investments?
Our main investments are index funds or ETFs (surprise, surprise!!) or cash for short-term items. We earn 1-1.5% on our cash savings, which is fine because we value the liquidity and peace of mind having this amount of cash in savings.
Honestly, for our index funds, I am not really tracking that closely, and we have things spread across a couple different investment houses (Fidelity, Vanguard, other for 401k administrators). We invest mostly in index funds that capture the broadest section of the market and then some in blended/income funds because I am a bit more conservative in investing than what the “experts” would say for my age. For example, my retirement funds in Vanguard have a 7.8% return from Sept 2008 (when I started investing) to present.
How happy are you with these results and what future plans do you have for investing?
I am happy with these returns. Considering our age and the relative recent ability to really boost our savings rate, we sort of see ourselves as playing catch up in terms of retirement savings. For the near-midterm (~5 years), I am not planning on any major changes to the types of investments or the rates of savings. Our main focus is getting money into the accounts!
NEW QUESTIONS ADDED BY INTERVIEWEE
Describe your getting out of debt journey.
This fall is our 3-year anniversary of being debt free! However, over the course of our journey, I have considered debt repayment as mostly an investing opportunity. With all of the debt I mentioned above, we started our marriage completely maxed out and almost unable to manage minimum payments. In fact, though I’m not proud of it, I had to take out a separate line of credit so I could consolidate some credit card balances and get the min. payment lower to improve monthly cash flow.
Once that was stabilized, I starting reading a lot of personal finance blogs (Get Rich Slowly, The Simple Dollar, Free Money Finance, Bargineering, etc.). I had a list of about 10-15 blogs, and I was reading them each day to educate myself. Next, I started reading some more of the well-known books (I’ll save my critique of each one for another time), including Dave Ramsey’s book, Your Money Your Life, Boglehead’s Guide to Investing, among others.
Along with this education, I also constructed a budget for the first time in our lives using an Excel spreadsheet. To this day, I still use an iteration of that original spreadsheet I developed 10 years ago! Tracking our spending was very sobering and really showed us where our priorities were and were not.
Another strategy we used to help us along was to take out student loans to pay off some credit cards because the interest rates were lower, and we could defer payments, interest-free, while I was in school (Note: I am not endorsing this method, as its legality is on shaky ground).
As we began to dig ourselves out of our self-inflicted hole, we were convicted to begin a true tithe to our local church (we had been donating some, but not a full tithe of 10% of gross), which at the time, around 2008, was about $425/month, which represented a huge chunk of change that could have be used to pay down debt.
Then, as many of you remember, there was this thing called the financial crisis. Unfortunately, my wife’s teaching job was on the chopping block. Because of this uncertainty, we ran the numbers and figured out how we could live on my salary alone, if need be. We doubled, maybe tripled down, and starting chucking all available money towards our car loan and min. payments on everything else, hitting somewhere in the woods of 25% of our gross income to debt repayment to make the cash-flow work out if we had to downsize to 1 income.
Luckily, with the passage of the stimulus package in 2009, my wife’s job was safe, and after wiping out our car loan (~$18,000 in 2 years), we made the step to supercharge our emergency fund, getting it up to about $10k. Once we had this buffer built up, we channeled our available resources of $$ into debt repayment. As we got any pay increase or found money, it all went to debt or savings, so we were still living on a pretty bare bones budget.
Once we got out to Seattle, despite the high cost of living, we were able to continue paying down debt and finished paying off all of our student loans in November of 2014. If you are following all of the lengthy story from above, you may note that we managed to pay off everything prior to achieving large salaries. Wanna know what we did? We threw a debt-free party! We used the amount that we had normally been paying towards debt and packed our place with friends, food, booze, and cake!
How much do you give away, if any?
We made a faith-based decision back in 2008 to give away at least 10% of our gross income. We recognize that numerically this stunted our savings and debt repayment, but this decision was and is aligned with our values.
My rough formula for our current giving is divide our annual income by 10 and give that per month. So, per the above numbers, we donate/give ~$2300 each month. For “found” moneys (i.e., bonus payments, birthday checks, side hustles), we give 20% of the gross amount. For example, this year, we are on track to give away approximately $28,000 real dollars. I am not sure of the % yet, as we have both changed jobs during 2017.
What money mistakes have you made that others can learn from?
Our largest mistakes were not having any real money management education or skills coming into our marriage. This ended up making for a really hard few years and a long time digging out of the crushing debt. It definitely compromised our ability to save and enjoy life in general.
Other than that, with our recent increase in salary, we have taken a few more liberties in purchases (i.e., vacations, spending more eating out, wine purchases), and we could definitely cut back. However, the past year and half has been really difficult emotionally for us, for a number of reasons, and we have consciously loosened our spending caps (I realize this is lifestyle inflation). Part of me wishes it were different, but I am okay with where we are.
Are there any questions you have for ESI Money readers regarding any parts of your finances?
NOPE! I’ve been a lurker/creeper on ESI’s websites for the better part of a decade and decided it was finally time to share and contribute something!