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.
Today our interview is with the Fiintrovert.
With that said, let’s get started.
My questions are in bold italics and his responses follow in black.
OVERVIEW
Please tell us a bit about yourself.
I grew up in an affluent, high-cost of living area and currently live in the same general Metropolitan Statistical Area (MSA). Growing up in such a way had its advantages like summers roaming freely in a tree-lined neighborhood, going to a private high school and undergrad debt free.
Growing up that way also had its disadvantages. My Dad had to keep up the lifestyle that my parents had built and as a result took jobs out-of-state. This led to an unstable home and an eventual divorce for my parents. It also led to naiveté, a wariness of demanding jobs, and entitlement once I got out on my own.
Further, being an introvert, it took me awhile to figure out where I fit in the world and strategies to excel in environments that reward “happy” extroversion (dating, office culture, college and post-college socializing, etc).
However, the upside of being an introvert is a lot of introspection and that can lead to self-improvement. I am very fortunate right now. My wife and I got married last spring. We are nearing our one-year anniversary. I am 37 and she is nine years younger. We have no kids but are planning to start a family in the next two years. We have a great dog that is the light of my life and that is plenty for now.
What is your current net worth?
Well, that’s a good question isn’t it? I’ve thought about this a lot because we have so much wrapped up in our home but I don’t feel comfortable counting our home in our net worth.
With the traditional way that people think about it, it breaks out like this:
- Taxable Accounts: $21,000
- Retirement Accounts: $299,300
- Real Estate: $185,600
And no, there is no way I am putting the Kelly Blue Book value of our car in our net worth numbers.
But real estate causes a problem for me. First, I think that the Zillow and Redfin estimates can be very high. Second, because of the fees and commissions you have to pay to sell a home a straight valuation minus mortgage principal doesn’t work for me. So if I take six percent off the Zillow estimate of the value to account for commissions and fees then our net worth is around $442,500.
But like I said, I think the estimates are high and we still have to live somewhere if we sell the house, which we are not any time soon, so what is the point in including our primary home in our net worth without a solid near term plan on how much equity we’d actually gain from a sale?
With this in mind, I’d say our liquid net worth is $320,000. As you probably noticed, a lot of that is wrapped up in retirement accounts. We are working to rectify. However, I have a Solo 401(k) and I think that tax advantages are too great to not max that out on both the employer and employee side of the equation.
How did you accumulate your net worth?
I accumulated my net worth by finally advocating for myself. What I mean is that I stopped settling for bad jobs, started utilizing networks, and so yes, earning a lot. I grew my earnings from $40,000 at age 30 to $235,000 currently. My net worth has really only accumulated in the past four years or so. Before that, I was in debt – deep debt.
My wife’s net worth really has been accumulated the past two years since she met me and put her contributions on autopilot. She earns a lot for her age for sure and has great benefits.
EARN
Tell us a bit about your career.
Oh boy. Well…I sort of raged against the machine for a while. Growing up affluent and seeing my Dad not be around in order to continue to support that lifestyle made me hesitant to take on too much obligation at work. I also just didn’t really get “playing the game” and took principled stands on things when I should have kept my mouth shut.
First job out of school was at a small hospital doing marketing ($33k). Then I went to a healthcare startup-marketing firm (~$42k). The east coast staff got on the phone one day with the CFO, who was in Los Angeles, and he told us we wouldn’t be getting paychecks because of a cash flow problem. I left that day and called a guy who had offered me a job previously.
In that job I had five different bosses and four different roles during the five years ($45k to $72k). The company was run by a couple of young guys – one of which who had been given the company by his father. All around me people in their 30s and 40s were getting rich off the stock options and I felt it was a dead end for me moving from role-to-role with no stability. That was from 24 to 29, probably when my career should have been taking off.
I quit that job a few weeks before my 30th birthday. My grad school experience had started at that time as well. Busting my 401(k), I lived off of that and a three-day a week $40,000 a year job working in advocacy for men’s health and going to school for an MBA and a Master’s in public policy. Rough times. I was frugal by necessity.
(Oh I forgot to mention I bought a condo almost at the peak of the housing market in 2007. So I had to live very frugally not to lose that.)
Amazingly, I leveraged this three-day a week job into a consulting firm where it was the CEO, a girl in her first job, and me. It was hell (I was still going to school too). Working for such a small team, I learned a lot very quickly. I had to. You can’t hide in a three-person firm.
That lasted for over three years ($60k to $100k). I learned how to think, be a consultant, and see how a small business ran. I hated a lot of those three years but I wouldn’t be where I am without them (or that $40k part time job that got me in the door at the consulting firm).
Around the same time I left the consulting firm, I also found Mr. Money Mustache. My life really started to change at this point in all aspects. I became a VP at a foundation ($140k to $165k) and then left that foundation and became a VP at an advocacy organization ($145k).
Last year, I was hired as a consultant in the same niche of the foundation I worked at. Basically, I have two full time incomes right now (Should be about $235k if everything holds steady for the year). It will not last forever though so I am trying to put one income into investments. So far so good.
So yeah I’ve lost and made hundreds of thousands by going to work every day. Nothing special.
Do you have a side hustle?
My wife and I host dogs at our house using Rover. We started late last year and we made about $4,000. We’ve been doing it this year sporadically and have made about $1,300 this year. It picks up over summer and then gets nuts over the holidays. We were getting $75 a night over the holidays. For a dog!
I would really like to monetize my blog by helping people overcome some of the introvert hurdles and get them unstuck in their career like I did. Not sure if that will be one-on-one coaching, or a course, or a book but that is the long-term goal.
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’d give myself a 7.
It could have gone either way there for a while. My life was a real (self-imposed) struggle and I was making $40k at 30 years old while going to grad school and accumulating debt. I got out of the depths and have turned things around.
It bothers me when people say “I can’t save anything. You don’t know what it is like to have no money. You earn a high salary.” Oh yes I do. I was eating peanut butter off a knife for meals and riding a used bike at 30. My friends were on fast track to partner and owning their own firms and getting married and having kids. I do know what it is like and that is why I am writing my blog. You can avoid some of my suffering by reading and engaging with the content.
What are your future plans regarding growing your income?
Honestly, I think it may plateau a bit income-wise. I will be on the lookout for opportunities but I am content with the job I have now in advocacy. If I lose the consulting contract, that will cut income almost in half. I don’t have a solid plan to increase my income except to keep growing my reputation, network, and look for opportunities that excite me. Of course, I never imagined I’d be where I am now so, who knows what lies ahead?
SAVE
What percent of your gross income do you save?
We were able to save over 50% of our income last year. We got married and bought a house last year so I think we can get to 70%.
Look, I addressed this above but for people that say “well you can save 50% of your income because you have two high earners and no kids,” okay, that is true. But it is also just as easy to spend all your money as two high-income earners. There is more credit and more expensive toys or properties or vacations to wipe you out quicker and in a bigger way.
We have one car. Our meals are 99% at home. We got a more expensive house than I wanted but we got a deal on it and I just wanted to buy a house once because of all the transaction fees.
Our very affluent friends who earn almost double us lament they have no money. There are specific lifestyle reasons for this. Having a high income doesn’t guarantee success. If that were true then multi-millionaire celebrities and athletes wouldn’t go broke.
And remember, at 30 I was making $40,000 while incurring tens of thousands of debt. So it’s not like I have been a high income earner all that long.
And no, I did not ride the bull market up from 2009. I didn’t even have access to a 401(k) until late 2013. It is all saving and avoiding (for the most part) lifestyle inflation.
High earning is no predictor of financial success and modest earning is no barrier to it! Don’t use that as an excuse to dismiss other peoples’ success with financial independence.
How did you get to this level?
I started off with over $70,000 in debt and earning $60,000 at my first year of the consultancy. How’d I get here? I saved with the same discipline that I used to pay off that debt. I read Mr. Money Mustache from the first post to the last post. I read a lot of books about introversion and by understanding myself and extroverts I got better jobs and a consulting contract. In short, I worked hard both internally and externally to earn these savings and investments.
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?
Post 2013, I would give myself an 8 on the saving scale. It has been pretty perfect except I wish I had not bought the house this early and that would have allowed both of us to keep more of our savings. (But I guess technically the money is in the house :eyeroll:)
What are your future plans regarding saving your money?
I can sum up my plan in two words: Stash. Cash.
I want to get up to 75% savings this year – especially while I have this contract. We really need to increase our taxable accounts and we are working hard on that right now.
INVEST
What are your main investments?
My investments are in equities – specifically low cost index funds. I connect all my accounts to FutureAdvisor and it (for free) tells me the allocation and recommends three different low cost funds for that allocation. There is no damn affiliate link for FutureAdvisor – and that is too bad because I really believe in the product and it is probably the most clicked link on the blog. I hope people are getting value out of using it.
This high cost of living area doesn’t make sense for real estate investing. I’d be competing with people with loads more money, time, and experience for marginal gains.
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?
Again, post 2013, I’d give myself a 7 on this. I fooled around with biotech investments a bit and tried to get extra income for the wedding by speculating so that was dumb. But overall it has been steady investing in low cost index funds.
I laugh at the recent market volatility. It doesn’t faze me. I know I have shares of the right index funds for me and that over long term those shares are what I need to become financially independent.
What are your future plans regarding investing?
Stay the course on equities. I am finished with my employee contribution on the Solo 401(k) and well into my employer contribution as of the end of March. I plan to keep hitting the taxable accounts hard the rest of the year.
Investing in myself, is going to be a focus as well. That will include investing in the blog, writing skills, books, and courses.
Oh and I invest heavily in a personal trainer each month. None of this matters if I don’t have my health.
WRAP-UP
What money mistakes have you made that others can learn from?
Oh my God I don’t there is enough space on the Internet to list all the mistakes I have made and what I would do differently. Here are a few:
- I made the mistake of gambling to try to get ahead. Gambling on penny stocks or in a casino will not pay off, not in any meaningful way and not in the long term.
- I would not have gone to an expensive grad school. I don’t regret going to grad school per se but I chose an expensive one, part time. A lot of the value of grad school is the network you make, not the material. If I did it again I’d go full time and low cost.
- I would have been more purposeful with my career. I think part of it was the entitlement feeling I had. Like someone was going to come and pluck me out of mediocrity and put me in a CEO position. It took me into my thirties to realize no one was coming and I had to start suffering a bit to get to where I wanted.
- This is obvious but I would have saved more and earlier. When I was moving out of my condo to our current home I came across some ShareBuilder account statements from circa 2002. I was investing in companies like Microsoft, eBay and Home Depot, just a little at a time. If I had just kept that up I would be in a very different position today. Save early and often.
- Lastly, I would have house hacked. When I was in my early and mid-twenties the banks were giving away mortgage money. I remember walking out of one bank with a pre-approval letter for $500,000. I thought that was nuts! But house hacking when you’re young and single is a great move. Tough to do in high cost of living areas these days without capital but if you can do it, do it.
These are things I would have done differently but I can’t say they are regrets. All of my trials and mistakes have shaped me. I just have no idea who I’d be without them and so they are part of me. But if you can avoid some of my mistakes simply by reading this then so much the better for you – and really all of us because you won’t be walking around all pissed off, or as pissed off.
Are there any questions you have for ESI Money readers regarding any parts of your finances?
How do you approach your house? Do you count it in your net worth? Why or why not? I just can’t get my head around that when we live here and if we were to sell it we’d have to live somewhere else.
What do you think about the heavy weight toward retirement accounts? I just can’t give up the value of the Solo 401(k) just to have more taxable assets. Again, I don’t think this unique consulting situation will last much longer. While I am heavy now, we’ll soon return to only being able to put $18,500 each in retirement accounts.
I do think I will be able to get that IRA money into a 401(k) in the future and then do a mega back door Roth conversion.
Thoughts?
Amy @ LifeZemplified says
Thanks for sharing your story Fiintrovert. For us, I count our main home in our net worth because we plan on selling it when my husband retires. Like you I use an estimate a bit lower than Zillow/Redfin and discount it for commissions and fees as well. We also own a home in Florida and an inherited small summer cottage which I do not count in our net worth as we will be living in them during retirement. Frankly, they sometimes feel more like liabilities right now…
With your high income currently, I think it makes sense to continue getting the tax savings by investing in the Solo 401(k).
FIINTROVERT says
Thank you, Amy! I agree it makes total sense to include your home since it is part of your retirement plan. (Right now, my main home feels like a liability!) A small summer cottage sounds ideal. : )
Tom says
“With this in mind, I’d say our liquid net worth is $320,000.”
If its in a retirement account, is it considered liquid?
FIINTROVERT says
Hmmm, good point. I supposed it is because we can access it (with a 10% penalty). Though we’d never do that.
The Physician Philosopher says
This is a great story of ups and downs and twists and turns. Way to stick with it!
I like your investing approach, also.
I count my home in net worth (fair market value – mortgage). I include the fair market value in assets and mortgage in debts so that I am still encouraged to pay it off. The fair market value comes from homes in the area that are similar and recently sold.
As for your money being in retirement accounts, it depends on when you plan to retire. If well before 59.5 you will need to access it somehow. Many people choose to convert the 401k to an IRA and then perform a Roth Ladder conversion. After five years you can then take the Roth money out without getting hit by 10% 401k penalty. Many bloggers (including myself) have written about bridging that early retirement gap.
You will need some money in your taxable account or cash on hand, though to bridge some of that time before you can access your 401k… But very few people are going to discourage you from using tax advantaged space first.
FIINTROVERT says
Thank you Physician Philosopher.
I do believe I can get my IRA into a Solo 401(k) with ETRADE (I currently have it at Vanguard and need to confirm this) and then start doing Roth conversions with a “clean” IRA. I don’t want to convert my current IRA because I’d have to pay a lot of taxes on it. So I do believe I can put that IRA into a 401(k) and then start putting money into an IRA with a $0 balance and convert to Roth so I could eventually do a ladder conversion. Need to stop procrastinating on this and investigate further.
JV says
IRAs are all joined together for rollovers– look up the IRA aggregration and pro-rata rules. : ) You can still do a mega backdoor roth with after tax money though, if that’s what you mean.
Chris says
I would suspect you probably wouldn’t want to convert to roths now. Wait until your income dips or even wait till you partially or fully retire. What’s the harm building up the pretax? At your income I would max pre-tax worry about it much later.
My theory is if you get to 2 million then maybe do roth 401ks or something but until you get up pretty high I would pre-tax if you are anywhere near where your income currently is.
K D says
I love your story. You had such an up-and-down path, unlike so many in this series. Thank you for sharing. As a fellow introvert I understand where you’re coming from. I think it is even more of a disadvantage these days (to get ahead in the working world) than it was (I’ll be 60 soon).
FIINTROVERT says
Thank you K D. I need to do a better job of weaving this story through my blog.
I am interested in your perspective about introversion being more of a disadvantage today versus as you were coming up. Would love to hear further comments or, if you are interested, have you as part of my Introvert Interview series on my site. Hope to hear from you!
Arrgo says
Enjoyed your story. At your age I would lean towards maxing out all your retirement accounts if possible for a few years, even if it hurts. However I do understand your concern about wanting money for your taxable accounts also. The index funds are pretty tax efficient so you may not be giving up too much there if you put some of your money into taxable investments to use for early retirement. What about your wife’s income? Perhaps you can add that in and look at things like one big pool of money when considering investments (taxable vs 401k/IRA) I’d stay smart with your spending as you mention your large contract might not last much longer. Not that you wont find something else, but things change with jobs, so I think its smart to stay prudent with how you spend/ invest your money even when things are good. I dont like to really count the value of my house in my net worth value. I view it as a separate bucket and would rather just look at the value of all my accounts when looking at my financial picture.
FIINTROVERT says
Thank you for your thoughts Arrgo. My wife is maxing 401(k) and HSA. She is contributing to our taxable account every month now that her car is paid off. She has a pension as well if you can believe that! Since she is younger, the plan is to get me to financial independence and have time to raise a family with a less demanding job or no job and stay at home. That may be a pipe dream but we are trying.
George says
Great story, thanks for sharing.
I don’t count our home (paid off) in net-worth simply because we need a place to live (perhaps similar to your thoughts?). If we moved, we’d have to buy a house… or spend a lot of money on rent, which would greatly affect our savings rate. If we moved and bought something cheaper, we’d make some money but I can’t imagine it would be a lot. So to me, it’s just a big rent discount while we still pay property tax, insurance, and repairs. The longer we live here, the bigger the savings on “rent” when averaged over time.
FIINTROVERT says
Thank you for reading! Yes, we are thinking the same. Some younger folks give me the old line of “I hate throwing money away on rent!” This is a fiction. I explain to them that in a 30-year mortgage you are mostly paying interest, taxes, and insurance (and repairs). So as you say, you really need to get deep into the mortgage to before there’s a massive difference. Plus you have the freedoms. There is a give and take for sure but renters are not throwing money away.
Bad_Brad says
Well, one comment there …
People compare a $2,000 per month rent and a $2,000 mortgage payment and assume they’re the same. They’re not.
In the $2,000 per month mortgage, even early in the loan, you might be paying $500 to principal, $1,000 in interest, and $500 escrow which breaks into $300 property taxes and $200 insurance (made up numbers to illustrate). $500 goes straight to your net worth. $1,300 (interest + property tax) is deductible, so the after-tax cost might be $1,000. So the true cost of the $2,000 mortgage is really $1,200. Now, this assumes you itemize deductions, which in the new tax reform world will not be the case for as many people as before. But the real compare from strictly a dollar standpoint would be $2,000 rent against more like a $2,500-$3,000 mortgage.
What you do get with renting is a) flexibility, and b) avoidance of transaction costs to purchase and/or sell a home. So for some who need that flexibility because they won’t stay in one place as long, renting makes sense. But the financial comparison is not 1-for-1 as some make it out to be.
Tom says
Great story! I have two net worths. One is traditional, with all real estate, including primary residence and vacation home included (both fair sale value less an estimate of fees/commissions and mortgages).
The second is my “Rich Dad” net worth, following Robert Kiyosaki’s model. If it puts money in your pocket, it’s counted. If not, no. So the primary and vacay properties don’t make that list.
I have a spreadsheet and calculate both net worths monthly.
Thanks!!
FIINTROVERT says
Thanks, Tom! I think that is the way to go. Two net worth calcs.
M22 says
I also do two new worths. One is overall with my home and second home. The other is “retirement assets”, which does not in include my home and second home as I plan to use those in retirement. I do include a rental property in my retirement assets, but discount it for sale expenses.
Bad_Brad says
Great story. The part about growing up affluent and not seeing your father very much and how that shaped you really resonated with me. I went through my 20’s pretty much thinking that because I was who I was that I would eventually be a CFO or CEO or have whatever job I wanted. It was in my early 30’s that I, like you, started to realize that this job fairy was never showing up and that I actually needed to roll up my sleeves and put on work clothes. But I’m also super-leery about life-balance because of what I observed with my dad. So it’s a fine line for me.
In terms of the house, yes, I include it. The simple fact is, two people who are identical except one has $250,000 in home equity and the other doesn’t are not in the same financial position. It’s important to realize that home equity is basically illiquid until you pay off the house, but it’s still real wealth. Other parts of wealth have illiquidity as well. Your retirement accounts are basically illiquid until you hit a certain age. College savings accounts for kids are basically illiquid until your kids hit college. Et cetera.
FIINTROVERT says
Brad, thank you for sharing that you had a similar experience. Make me feel better that someone in similar circumstances has the same thoughts as me.
Why do you say that equity is illiquid until the house is paid off? Would you feel comfortable tapping equity once it is paid? I don’t think I would but maybe I am missing something. I feel like the equity is trapped until you sell. Otherwise, you are taking out a loan on your equity. Maybe that is too conservative but I can’t imagine paying off my home and then going into new debt by cashing out the equity.
Bad_Brad says
What I meant was, home equity, unless you take out a loan against it (which is not an advisable move generally), is not liquid. I pay extra into the principal of my mortgage every month, and I see plenty of financial advisors tell people this is a great thing to do. It might not be for everyone. If you either a) might need that money in a pinch because your emergency fund is not big enough, and/or b) can without excessive risk get a better return on that money elsewhere, then it doesn’t really make sense to do it. For me, my mortgage is at 3.75%, it’s the only 100% guaranteed 3.75% return on investment that I have available to me. But if I didn’t also have an emergency fund, as well as other money invested for growth in the context of my needs and risk tolerance, then I wouldn’t be doing it.
Fiintrovert says
Yes, but what I think you mean is illiquid until you sell the house, not until you pay off the house. You can pay off the house and the money is still illiquid.