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.
This interview took place in April.
With that said, let’s get started.
My questions are in bold italics and their responses follow in black.
OVERVIEW
Please tell us a bit about yourself.
I am 39 and my wife is 39. We have been married for almost 17 years. We have four children ages 6, 8, 12, and 14.
We live on a small homestead in the great plains region of the Midwest. We live about 20 minutes from a 30,000 population town.
We met in high school and have been together ever since. I grew up on a farm where we raised 600 farrow-to-finish hogs, 100 head cow calf operations, many goats, and chickens along with small grains and hay production. My wife grew up on a small country property in one of the beautiful mountain states.
Currently we have laying chickens, 6 small dairy goats, a bottle calf, ducks, cats, and a dog. We chose to live on a small homestead to teach our kids how to work and to care for animals. Each one of the kids has the responsibility to daily tend to the needs of our animals.
What is your current net worth?
According to Personal Capital our net worth is $879,000.
Mint.com puts us well over the $900,000 mark due to depreciating assets like vehicles and tractors.
We have approximately $621,000 in retirement accounts:
- $350,000 in my 401k – I have maxed this out since 2015
- $11,000 in my solo 401k – I put in employer contribution of roughly $2,000 annually
- $72,000 in our Roth IRAs – Maxed out last few years
- $140,000 in Traditional IRAs – Roll over from previous employer and maxed out a few years ago
- $41,000 in our HSA – Started in 2017 and maxed out since then
- $7,000 in taxable brokerage
Other assets include:
- $350,000 Home (Mortgage Balance $128,000)
- $30,000 in cash
- $6,000 529s
How did you accumulate your net worth?
The accumulation was due to diligently saving and starting young.
I have always been obsessed with money. Growing up on the farm I never earned any money, but I learned how to work hard.
In high school I got a job at Burger King, and I was hooked on making money. However, I knew nothing about saving.
One small glimmer of hope was my mother encouraging me to start a Roth IRA my senior year of high school. I started putting 50 dollars a month in a Roth.
I got my first full time job after college at age 22. I was working as a coal miner out in the Western US, and I started at $21.50/hour with scheduled overtime every two weeks. I was operating the huge haul trucks, working in the plant, working in the safety department, and as a volunteer EMT at the mine.
I was making good money and putting 6% in my first 401k and getting a 6% match. That 401k was what turbo charged my retirement savings. I knew I did not want to be a coal miner forever. Most coal mines back then had a rescue team composed of firefighter trained, rope rescue trained, and first responder trained coal miners. I was part of the rescue team and really enjoyed being a medic.
After weighing my options, I applied to nursing school and was accepted. I was able to work straight weekends at the mine while I was in school. The mine had never had a part time worker until I asked.
EARN
What is your job?
I am now a Registered Nurse. I have been a nurse for over 10 years. I am a House Supervisor based out of the Emergency Department which gives me about 4 dollars more per hour over a regular nurse.
Along with my background in coal mining, I have been doing night shifts for almost 20 years. I love working nights! There is something nostalgic about being in charge of the hospital at night when there are very few resources. I do anything from triaging patients, starting IVs, transferring patients to higher levels of care, admitting patients to the floor, administering medications, compounding medications, delivering babies in the parking lot, to holding someone’s hand as they take their last breath.
Nursing can be a wide plethora of emotions, it can be an absolutely rewarding job to a downright depressing job. As many know, nursing has been in a crisis situation since the start of this pandemic, and it has been a hard two years. There is so much burnout in the nursing profession, and lack of staffing across the country has caused preventable deaths.
What is your annual income?
My base salary is $71,000.
With shift differentials and multiple shifts of overtime along with PRN (as needed) travel shifts (editor’s note: PRN stands for pro re nata, a Latin phrase that translates to as needed or as the situation arises. A PRN employee works when called, to fill in for an absent employee or to cover a special situation. PRN work gives employees a chance to make extra money and the freedom to choose assignments and shifts.), I have earned over $100,000 for the past 4 years.
My wife has stayed home raising the kids for over 10 years. She has always taught exercise classes at the YMCA, and the last two years she has helped in our school’s preschool room and in first and second grade. Prior to starting to teach again she earned about $2,000 to $5,000 a year as a fitness instructor. Now her earnings are just shy of $10,000 per year as a fitness instructor and teacher.
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?
In 2021 I earned $111,000, and my wife earned just under $10,000.
In comparison, my first full time year as a nurse I earned $54,000 in 2012.
In 2006 when I started coal mining fresh out of college I was averaging $67,000 per year.
I can go back all the way to high school in 1998, and see that I made $2,700 dollars my first year at Burger King.
I love going to the Social Security administration website to see almost a quarter century of yearly income reported to the SSA.
What’s your work-life balance look like?
As you can probably see, my work-life balance has not been very good.
I have been trying to back down to a more reasonable amount of shifts per week. It is easy to pick up shifts because there is such a high demand for nurses.
I was averaging about 5-6 shifts a week (about 60-72 hours) for the last 5 years, and this past year I have decided to back it down to around 4. As I will explain next, I have done a lot of travel nursing too. Traveling to different towns to work usually adds 2-4 hours of extra time to your shift.
I was recently just offered a straight night weekend job. It would be a huge increase of 36% of my base. Not many people want to do straight nights and straight weekends, but this is something I may pursue.
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?
I started my own travel nurse business a few years ago.
I have been doing PRN travel since around 2014. Basically, I set up shifts in hospitals in other towns around my area. I can usually negotiate a higher rate than my normal base rate because of travel and demand. This allowed me to set up my own business.
I was able to open a solo 401k, and this allowed me to contribute to a 401k as an employer. I have earned anywhere from $6,000-$12,000 per year with this business.
I set up my solo 401k to be able to invest in alternative assets such as real estate. I have also set this solo 401k up to be able to accomplish the mega backdoor Roth.
Although I have not utilized either of these two options as of this writing, it is something I may seek out in the future.
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 say 6.
We live in a state that has the lowest RN pay in the nation and the average in this state is $58,000. California is of course the highest paid RN state at $106,000. There are always pros and cons to different locations, and we are happy with where we live.
Many nurses go on to get their masters and honestly, the nurse practitioners market is heavily saturated and their annual salary averages around $111,000. The ROI on becoming a nurse practitioner is not very high.
I have grown my salary anywhere from 4-10% per year since 2012. It is difficult to get significant raises at the same hospital.
I did apply to another hospital in our town and they would not budge on the higher salary I was negotiating. Many hospitals base RN pay off of years of experience and do not falter from that standpoint. That is why this straight night weekend package is quite appealing.
What would you say is your best tip for earning more money?
I have gained my position by being willing to help wherever I can.
I was not the most experienced person who became a house supervisor. I was able to get this position because of working hard and being able to lean into uncomfortable situations. I attribute a lot of my actions to continually learning by reading, listening to podcasts, and taking extra classes above and beyond my job requirements.
I have taught nursing students during their clinical rotations. I teach advanced nursing skill classes. I am a facilitator to brand new nurses during their first year of nursing. I go around to small hospitals and help them implement our medical records systems.
I have been willing to do a lot of things other people do not want. This has allowed me to move up quicker in the system.
What are your future plans regarding growing your income?
I would love to increase my income, and I have been slowly starting to save more cash to possibly invest in real estate.
Nursing is a hard job to increase your salary significantly. Travel nursing can be lucrative and sometimes management can morph into a higher salary. I have found that extra shift incentives in low staffed areas can be lucrative.
SAVE
What is your annual spending?
The last three years according to Personal Capital our average is around $75,000.
What are the main categories (expenses) this spending breaks into?
- Mortgage: $15,000
- Transportation: $10,000
- Charity: $7,000
- Food: $5,000
- Travel: $5,000
- Kids Tuition: $5,000
- Utilities: $4,000
- Home Improvement: $4,000
- Homestead: $3,500
- Insurance: $3,000
- Entertainment: $3,000
- Restaurants: $1,500
- Health Care: $1,500
- Misc: $7,500
Do you have a budget? If so, how do you implement it?
We do not have a strict budget at all. I know roughly where and what we spend our money on monthly.
I use Personal Capital and Mint.com to watch how things are going. However, I do not get too worked up over any one category.
My wife is very hands off with anything money related. She is naturally frugal, and she supports the path we are on. I try to let her know how we are doing monthly and her eyes gloss over each time.
What percentage of your gross income do you save and how has that changed over time?
We have been anywhere from 30-55% savings rate the last 7 years.
We heavily increased our savings rate around 2015 and have been consistently saving since then.
In 2020-2021 we had a lot of extra stimulus so that went almost all to savings either Roths or cash savings.
How did you get to this level?
I had to increase my income to gain any ground. That consisted of picking up many shifts to get to that $100,000 dollar salary range.
This made it so much easier to max out my 401k, max out our Roths, and HSAs.
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 rate myself at a 7.
Many of these last few years I have hit the 50% savings rate, but it did come with the sacrifice of too much time away from home.
What’s your best tip for saving (accumulating) money?
One of my best tips is to save automatically.
Use your employer to set your 401k percentage, set up your HSA to max out each year, and automatically fund your Roth contributions.
Also I get a lot of ‘extra’ checks from my travel nurse jobs. My first step is to send the 20% to my solo 401k, but then the next step is to figure out how I want to save the rest of the check.
What’s your best tip for spending less money?
Ask yourself if this is something that will bring joy or be more of a hassle down the road.
We do many activities that don’t require a lot of money. A few examples would be things like gardening, outdoor activities, making almost all our meals at home, and butchering our own livestock.
We have a lot of vehicles and equipment on the homestead, and I maintain and fix 95% of the issues.
We also use credit cards for travel rewards. In over 20 years we have never paid a cent of interest on a credit card.
We barely use the A/C in the summer and keep the heat low in the winter. We use a clothes line all summer long.
What are your future plans regarding saving your money?
I am at the coast FI point for my retirement savings.
I have been actively debating about saving more cash and saving more money in after-tax accounts. I will continue to max out HSA and Roths, and right now my 401k is set back to 15% of my paycheck. I get a 5% match as long as I put in 6%.
I have looked into real estate, but I haven’t had enough of a down payment to actually purchase a property. I have read multiple books on real estate, but I have to build up enough cash reserves and down payment before I step in. This has been hard to do because of all the money I put into my normal retirement vehicles.
INVEST
What are your main investments?
My main investments are my retirement accounts.
I automatically contribute to my 401k and HSA each check. HSA is always set to max out each year.
I adjust my 401k throughout the year. In years past I would heavily fund it upfront and max it out around August. My employer makes a true-up contribution the following April of each year so I get the full match.
Our Roth’s are funded as I pick up extra shifts. My funds are following their respective indexes as far as performance is concerned.
What is your investment philosophy/plan?
I am going to quote my investment philosophy from one of my favorite books by Morgan Housel, The Psychology of Money: “More than I want big returns, I want to be financially unbreakable. And if I am unbreakable I actually think I will get the biggest returns, because I will be able to stick around long enough for compounding to work wonders.”
I am a long term investor. All of my accounts are in index funds.
My 401k is in a Vanguard SP500 fund and a principal Small and Mid Cap index fund. Our Roths are in a REIT and total market fund. My solo 401 is in international and Russell index funds. My traditional IRAs are in total market funds, total international funds, and small allocation to bonds. My HSA is in an amount of cash for my deductible if needed and the rest lies in vanguard index funds. My after tax account is through M1 Finance and is in some value and growth index funds.
My allocations are 78% US stocks, 15% International stocks, 4% Bonds, and the last 3% is REITs and developing market funds.
What has been your best investment?
Obviously, just riding the ups and downs of the market.
I started my coal mine 401k in 2006 and rode through the great recession by dollar cost averaging. I came out with a nice foundation to start my nursing career in my late 20s and early 30s.
My current 401k states that the last 5 years have had a 15.29% return. My Vanguard account has stated that I have had a 11.8% return since 2014.
My projected calculations estimate that I will have an 8% return.
My best investment is educating myself on behavior psychology.
What has been your worst investment?
At the coal mine, I participated in an employee stock purchase of $750 for 50 shares of our company stock in 2010. Like all my investments I hold them for the long term. Fast forward a few years, our society being very anti-coal and the cheap cost of natural gas caused a huge decrease in coal demand. The old company I worked for went bankrupt, and I lost all of my $750. Thankfully, it was a smallish mistake to make and learn from.
Another mistake I want to point out was an investment that I initially did with my 401k from the coal mine. I rolled this into what I thought was a traditional IRA. Well, I used a bank financial advisor to roll this over. What do you think they encouraged me to do? Yes, roll your 401k into my variable annuity that was offered at the bank.
Well, after I started figuring out my finances and learning about financial independence in 2014, I knew that this was a mistake. I left it in there for a couple more years when the ridiculous surrender fees were fairly low. I finally got it out of there and rolled it into a Vanguard index fund. I know the expense ratio was over 1% on the annuity, and the surrender fee was a few hundred dollars. Another price to pay for lack of knowledge on my own money and investments.
After those scenarios, I was determined to build long term wealth.
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.
I feel I learned some valuable lessons fairly early in life. Comparison is the thief of joy, and I know so many younger FI folks who are killing it way better than I am. I have potential to do so much more with earning, but I am also actively trying to balance my life and prioritize what really matters.
I know ESI recently reviewed Die with Zero. That book makes you question if the sacrifices are truly worth it. I think we all agree that time is one of our most precious resources, and I have seen so many people, especially these last couple years, run out of time quicker than they anticipated.
Therefore, get your foundation of investing off to a good start. Work towards a life that you can get excited to live. Work and invest into what you truly value, and keep working hard towards getting 1% better everyday.
What is your best tip for investing money?
Start early, use index funds, and dollar cost average.
I have opened up brokerage accounts for all my kids. They take their birthday money and gifts they get and they transfer it into either their brokerage or savings accounts. My children sell their extra goats or eggs and they invest and save more than half of all their money.
I try to teach them that saving half is the normal of what they should do. I also encourage them to give some of their money away. Giving to others seems to be a foreign concept in the FI communities, and I want to encourage my children to help wherever they can.
What are your future plans regarding investing?
I will continue to invest in my 401k, HSA, Roths, and after tax brokerage.
I think I am at a stage in my life where I will invest more into the cash funds and after-tax brokerage. If I do retire early, I need to start building up my after tax account for ease of access.
The other idea is to build up a small portfolio of rental real estate to live off that cashflow until I can access my retirement accounts.
I will also eventually set up a donor advised fund. I currently just cash flow our charitable donations weekly for our church, but I see a lot of opportunity to utilize a donor advised fund in the future.
MISCELLANEOUS
What are you currently doing to maintain/grow your net worth?
I am continuing to dollar cost average into my 401k, HSA, and fund our Roths.
I am upping my game by putting more money towards a down payment for real estate and after tax investments.
I am utilizing the approach of setting things up, continually monitoring, and maybe adding slight adjustments to my plan as I go.
Do you have a target net worth you are trying to attain?
I have done all the calculations for 25 times your annual expenses, coast FI, fat FI and others. All that said, I haven’t really nailed down a number I want.
I have run the numbers, and we will be more than fine. Consequently, I am trying to decide which goals and accomplishments we want our family to work towards.
To answer the question:
- 25 x $75,000 would be $1,875,000 which we will reach before age 50 at the current trajectory.
- 30 x $75,000 would be $2,250,000 which we would hit shortly after 50.
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?
The combination of this trifecta has great power:
- I have not had significant income, but we have been blessed with good income.
- I have had a high savings rate the last 7 years.
- Investing has been boring slow and steady index funds.
That probably means that savings has been my biggest strength up to this point. Without this high savings rate we would not be where we are today at the coast FI mark.
Time would also be another huge strength in our arsenal.
What money mistakes have you made that others can learn from?
I would not have gone to a four year college right out of high school. I would have gone to a tech or community college for generals for a year or two while working. That way I could decide what I wanted to do after that.
I had $24,000 in student loans after my first college degree in 2006. My wife had $22,000. We paid off her loan in 2011 and mine in 2015.
I also bought a newer truck a year out of college that I did not need and financed it.
When I started at the coal mine, a truck driver trainer told me about the 401k and how good it was. He said I could probably retire early if I utilized 401k. I remember that conversation, but I only did 6% because I did not know any better at the time. With the knowledge I have now, I would have loved to have maxed my 401k out at that time.
What are your plans for the future regarding lifestyle?
We will have the option to retire early if we so desire.
With nursing being such a high burnout career I am always considering another pivot.
I do love the lifestyle nursing affords me though. My basic schedule would be 3, 12 hour shifts per week.
I also have the possibility to work a straight night weekend rotation for 36% more than I make now too.
What are your retirement plans?
Right now I do not have anything solid in place.
Financially, I want to have enough to not worry about expenses.
I want to be able to give generously.
I am actively teaching my children how to be financially independent without support.
Travel is always enjoyable and will be a bigger part of our lives in retirement too.
I see us staying active with my spouse’s YMCA classes.
I enjoy learning and reading and trying out new skills.
I also see more time to work on our homestead.
Are there any questions you have for ESI Money readers regarding any parts of your finances?
Any advice as far as real estate in this present day?
I really like the concept of vacation rentals, but this is almost akin to hotel business versus long term rentals.
I have read a couple books from Bigger Pockets on short-term rentals. I have also read quite a few on general real estate investing.
Do you think it would be better to try and invest more into my solo 401k for doing the mega backdoor Roth vs real estate investing?
Does the cap weighted aspect of index funds make any of you nervous for the long haul? And what do you do to try and mitigate that risk?
This fellow has it all together
Great post
From the post, it certainly looks like you have a great life! From the family to finances really impressed with what you have been able to achieve. Congratulations!