ESI Scale Interview 10

Today we continue the ESI Scale Interview series where people answer questions about their success at working the ESI Scale.

In short, the series focuses on what the interviewee is doing in the areas of earning, saving, and investing. They also get an opportunity to ask ESI Money readers for suggestions if they choose to do so.

If you’d like to be considered for an interview, drop me a note and we can chat about specifics.

With that said, let’s get started.

My questions are in bold italics and her responses follow in black.

OVERVIEW

Please tell us a bit about yourself.

I’m Ruby, I came to the United States almost 5 years ago as part of a work visa and was born and raised in the Philippines. I’m 33 years old, and married to a Slovak-American named Peter, who’s 32. We’ve been married for almost 2 years now, no kids yet but hopefully there will be a few in the future. We currently live in Jacksonville, Florida, a fairly low cost state/city.

I mostly moved to the US to earn more money. I had a brief stint working in the UK, and I realized that when I was working in the Philippines, I was exerting the same amount of effort as my peers living and working abroad but we only earn 25% or less than what they are earning. I figured that the time/value ratio is not worth it by living in a third world country so I moved to a first world country to boost my earnings and help me accumulate more income faster than back home.

The Philippines may be a low cost of living country for most people, but not if you are young and working there. I had to live with my mom and commute 1 1/2 hours one way to work just to save on rent expenses (and occasionally food expenses) alone.

What is your current net worth?

We are currently worth around $300k collectively. This was based on the last time we looked at our net worth, which was the end of 2017.

We don’t include our house equity in that breakout, and around $225k of that is invested in mutual funds (401k, Roth IRAs, Traditional IRAs, HSAs and taxable accounts combined), the rest are in cash as emergency funds,

If we are to include our real estate properties, that will add another $300k, but we owe at least $180k to our local credit union. We aim to pay that off in the next 20 years or so. We’re not in a hurry because the internet rate is low (maximum of 5%) and we want to use the money that we have to put more in our investments or to build businesses that can help generate more income for us in the future.

How did you accumulate your net worth?

We don’t really earn a lot of money in our day jobs. I’m currently an accountant and my husband works as a business analyst. We earn 5 digits individually, so together, we finally reach the 6 digit mark. We max out our retirement contributions, and because of the bull market, the investments did pretty well. We also dabbled in real estate so our rental property is paying for itself, and we AirBnB the spare room in our house so it also helps with our primary residence’s mortgage expenses.

I do a few side hustles as well like mystery shopping, which helps to pay for our food expenses, and I also did a brief stint (for a year or so) of freelance writing until we stopped and decided to make our own blog to chronicle our journeys (be it travel or personal finances). We would rather write articles for ourselves and share our story on our own websites. We can then in turn, monetize our website so we can earn a little bit more money on the side.

We’re not really doing anything that differently from other people except that we are frugal folk, we don’t really indulge in much except on travel and experiences. We travel hack and save a few thousand dollars every year by using various points and miles to help pay for our airlines and hotels as well as other activities. We use our cash back cards to help pay for essentials, or gifts to friends and family during the holiday season. We don’t like paying full price for most things, so we also research and look for sales and meal plan around them.

EARN

Tell us a bit about your career.

My husband and I are both assistant vice presidents at large multinational companies, and together we earn in the low 6 digit marks (below 200k). My current company is still the same company that I started in as a fresh graduate from university, so I did not really do much job hopping. I stayed mostly with my current company because of the various work assignments I got throughout the years. This enabled me to leave my own country and start anew in the United States, where I met my husband and have been living ever since.

I did not really progress that fast up the career ladder because I was choosing opportunities in different countries instead of staying in my home country and working my way up there. Because I moved to different roles, I had to start anew with the role and so I don’t get as much salary bumps every year. We mostly get a modest salary bump if you stayed in your current position and at least a 10% bump if you get promoted. Back in the days, the bonuses and the pay increases were great, but not so much anymore. There are times when there are no bonuses or even pay increases in a year!

Do you have a side hustle?

We do have a side hustle to help compensate our income. I do mystery shopping for restaurants so that gives us a free meal and a few dollars (between $4-8 per assignment). It doesn’t earn much but the free food component is what draws us in. We do have a rental property which is cash flowing around $250/month, and we use $100 of that to pay extra principal to our mortgage and we also AirBnB our spare room, which averages around $9,000/year, which helps to pay for our mortgage expenses.

We’re dabbling into the business of blogging too but we haven’t made as much money yet, maybe around $200 or so a year. 2018 is the year when we get our first check from Google Adsense so we are excited about that! We don’t get much blog traffic coming into our site, but hopefully we get enough to be able to qualify for Mediavine or Adthrive publishing and make our earnings even higher.

In order to pay for our video game hobby, we are also doing a little bit of video game flipping on the side to help pay for our games and maybe our consoles, but that is very niche-specific and you can’t really cash out on that little hobby of ours (unless we decide to do Youtube videos of us playing games and stuff, but we don’t know how to monetize that aspect yet). At one point, I did some designer bag flipping on eBay but that turned out to be a lot more work than I expected so I stopped.

If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?

I would give myself a 7 on the scale, because we found other streams of income that’s not tied to our W-2 jobs.

We want to pay off our mortgages sooner so that whatever we earn from the rental property aspect is just pure cashflow that we can enjoy.

What are your future plans regarding growing your income?

We want to explore other streams of income like freelance writing, becoming SEO professionals, VA work, or any other job that can be done remotely. Since we do a lot of travel, the goal is to transition from a W-2 cubicle job into more remote work so we can work whenever we want in the world just by bringing our laptops.

SAVE

What percent of your gross income do you save?

In 2017, we saved around 55% of our collective income from side hustles and our W-2 jobs. We started with a 20-35% savings rate when we first met, but we worked on getting my husband’s student loans paid off, and then scrounged to get the down payment for our current house.

Once we got the house, we started our AirBnB side hustle, and started researching how to make our money work more for us. This helped us increase our savings rate as well as our earning rate as we had a bit of cash coming in from our side hustles. With more savings invested, that also has been able to make additional money that is constantly being reinvested for our freedom fund.

How did you get to this level?

When I first came to the US, I did not know anything about the financial system so I kept some cash in Bank of America savings and CDs. At the time, it was the only savings account that I can use. My husband (then boyfriend) then helped me get more acquainted with 401ks, traditional IRAs, and other tax deferred accounts.

We learned together and slowly applied what we learned into our savings and investing goals. I then closed that savings account from BoA (earning less than 0.05% per annum) and moved to Vanguard funds and online bank accounts like Discover Bank for our emergency funds. At the time we found out that I also wasn’t qualified for 401k contributions so I set up a Traditional IRA for myself.

If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?

We give ourselves a 6 on the savings front. It took a year or two for us to figure out what we were doing and that’s two years that the money could have compounded and we could have invested in the stock market instead of just leaving it in the bank accounts that were earning zero to very little interest.

We could have also used that extra cash we had to buy more rental properties when they were still cheaper in 2014/2015.

What are your future plans regarding saving your money?

We plan to be more conscious about our savings and try to optimize our expenses.

We aim to raise our savings rate to about 5% extra per year.

If we save more than our original goal per year (for 2018, we aim to save around 60% of whatever income we have), then that will be a good year! Pretty soon we can probably live on less than one person’s salary and still be able to save!

INVEST

What are your main investments?

Our main investments are in Vanguard stock funds. Our 401k has the institutional stock fund equivalent of VTSAX so we put most of our money on that, round 60-70%.

I try to dabble into sector funds as well like REITs and Healthcare, which gives a good dividend per year. It is much more volatile though and would not recommend investing in these funds if you are not after the higher returns. These sector funds have fared very well for me (my husband does not invest in these), and has given the biggest yearly return in terms of dividends from all our funds.

The rest of our money is in bonds, life-strategy income funds (Vanguard) and Target Date funds. This accounts for around 20-30% of our investments.

We are fairly conservative in terms of our investments especially now that we think that stock values are overpriced and at the verge of going down. It hasn’t gone down to our fire sale price yet, but if it does, we are then going to convert some of our bond funds back into stock funds and using some of our extra cash in our emergency funds to invest in the stock market.

If you were rating these results on a scale of 1 to 10 (with 10 being best), what rating would you give yourself and why?

We would give ourselves a 6 on this front.

We still think we are a bit too conservative when it comes to our investments and we should really learn how to become more aggressive, given our age level (early 30s). We are just very cautious individuals in general and do not like losing more of our hard earned money. I was in the UK in 2008 when there were mass layoffs after the last financial crisis. It kind of got me a bit scared that I could lose my job at a very early stage in my life when I just paid off my loans and was still accumulating my income.

What are your future plans regarding investing?

We plan to continue investing the maximum tax advantage accounts that we can contribute, and change our strategies depending on the new tax laws that will start this 2018. We found ourselves in a much lower tax bracket this year, and my employer has a new benefit for 401k that we can utilize to convert after-tax contributions to Roth 401k contributions and any dividends or capital gains from it will grow tax free!

WRAP-UP

What money mistakes have you made that others can learn from?

When I first started my job, I became a shopaholic. I thought that since I was earning this much money, I deserved to treat myself for all the hard work that I had done.

Little did I know that I was living paycheck to paycheck because I was blowing most of it during pay day.

I also got the money to travel and on my first trip to Hong Kong, found myself in credit card debt because I had underestimated our travel expenses and ended up in credit card debt. I vowed never to have that feeling again and not let the credit card companies earn from my stupidity.

In the US, everything is a system, and if you learn how the system works, then you can find ways to benefit from the system instead of actually paying for it.

Are there any questions you have for ESI Money readers regarding any parts of your finances?

I have several:

• What other things can we do to improve our money/finances? We are not willing to give up our travels, and we are actively looking for real estate investments.
• Should we pay our mortgage first given that the interest rates are 3% and 5% per year? Or should we do what we do and just throw them all in Vanguard mutual funds?
• Do you guys also know where to find good-paying freelance jobs? I’ve written and tried Upwork before but since I was competing with other writers from India and the Philippines who write for $5 for a 500 word article, I find that it is not worth my time competing with them.
• Are there any other side hustles that you can suggest we do?