ESI Money Three Simple Steps to Wealth Wed, 24 Apr 2019 17:00:15 +0000 en-US hourly 1 ESI Money 32 32 Millionaire Interview 131 Mon, 20 May 2019 09:00:10 +0000 Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights. If you’d like to be considered for an interview, drop me a note and we can chat about specifics. My questions are in bold italics and his responses follow in black. Let’s get […]

The post Millionaire Interview 131 appeared first on ESI Money.

Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.

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

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

Let’s get started…


How old are you (and spouse if applicable, plus how long you’ve been married)?

I am 47 and my wife is 45.

We have been married for 15 years.

Do you have kids/family (if so, how old are they)?

We have two children. Our daughter is 14 and our son is 12.

What area of the country do you live in (and urban or rural)?

We live in sub-urban New England.

What is your current net worth?

Our current net worth is $1,121,492.

What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?

Our main assets are:

  • Home: $360,000 (mortgage of $284,410)
  • My 401k: $448,882
  • My work profit sharing retirement plan: $336,618
  • My Roth IRA: $106,291
  • Wife’s 403b: $40,393
  • Wife’s Roth IRA: $17,486
  • Wife’s rollover IRA: $12,970
  • 529 college savings: $27,000
  • Taxable brokerage account: $34,900
  • Cash: $48,320

Other than the mortgage we are debt free.

I only use our home and investments when calculating our net worth. College savings is not included in our net worth, but I wanted to show what we’ve saved.


What is your job?

I am the Director of Production at a manufacturing company. I’ve worked for the same company for 26 years.

My wife is a patient care technician at the local hospital working part-time. She has worked for the same hospital for 21 years.

What is your annual income?

About $215,000 per year.

$185,000 is my income, $30,000 is my wife’s.

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?

I earned $14,189 my first year of full-time employment out of high school as an electronics technician in 1990.

My income has increased every year since then. I broke into 6-digit earnings in 2011.

Over the years I’ve taken on the tasks that nobody else wanted to do. I also worked at maintaining a positive attitude and worked with difficult people without giving up.

I did not go to college out of high school, but I’ve worked at my skills over the years. I earned an associates degree by going to school in the evening and I am always looking for material that will aid in my self improvement and leadership skills.

I learned over the years that you can work really hard as an individual, but your income potential is capped based on your own output. When you lead others you leverage your skills and greatly increase your income potential. I think this applies to most any career.

What tips do you have for others who want to grow their career-related income?

If you want to succeed in your career you need to be willing to do more than what you are paid for. You need to grow into your next position.

This doesn’t necessarily mean working all sorts of hours, but being productive in the hours that you do work – providing value.

You need to be the type of person that others feel comfortable working with. You need to build a reputation of being reliable. Never compromise your integrity.

What’s your work-life balance look like?

My work-life balance is very good. I spend between 45 and 50 hours per week on average at work, including commute time.

I don’t think working more hours would make me more effective. In fact, I’m sure I would be less effective.

My wife works part-time so she can be with the kids and she also helps my elderly mother.

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?

My career is my only source of income.

I would like to start up some sort of business that would create a side income, but I haven’t figured that one out yet.


What is your annual spending?

About $85,000.

What are the main categories (expenses) this spending breaks into?

  • Groceries (food and household supplies): $16,000
  • Gasoline: $3,280
  • Cable/Internet: $3,000
  • Property taxes: $9,000
  • Insurance (Auto, home, umbrella, life): $10,000
  • Charity: $4,000
  • Utilities (electricity, propane, garbage, water, etc.): $6,000
  • Vacation $5,500
  • Housing (mortgage, etc): $21,000
  • Restaurants, coffee, etc: $7,000

Do you have a budget? If so, how do you implement it?

I use a zero based budget for my income, which pays most of the expenses.

My wife has a part-time income and is only responsible to pay for groceries. She does so without a budget other than the amount of money she earns.

She does not wish to participate in the budget, but we have an understanding on how money should be spent.

It concerns her that she doesn’t understand our finances and it is my challenge to figure out how to get her more involved in a way that she will be interested.

All accounts are joint accounts.

What percentage of your gross income do you save and how has that changed over time?

My wife and I both save 15 percent of our gross income in our retirement plans. This has been our main vehicle for long term savings.

I have been doing this pretty much my whole working life, while my wife has been for about the last 8 years.

I save an additional 25 percent of my income towards shorter term expenses.

What is your favorite thing to spend money on/your secret splurge?

We like to take one nice family vacation a year. Lately that has been to Disney World.

We are homebodies, so we like to spend money on our home.

Last year we moved to a nicer house and we are having an inground pool installed for this summer.


What is your investment philosophy/plan?

Keeping it simple. Boglehead investing. Broadly diversified, low expense index funds.

Our retirement investments are mostly invested in the “three fund portfolio,” which is comprised of the Total Stock Market Index fund, Total International Stock Market Index fund, and the Total Bond Market index fund.

What has been your best investment?

To be honest, I don’t have a single good investment. Time has been my friend. Investing regularly in boring mutual funds.

What has been your worst investment?

I dabbled in individual stocks when I first started out, but soon felt they weren’t worth the aggravation.

My worst investment has been purchasing brand new cars and trading them in 3 to 4 years later. I did this up until 5 years ago. I wasted a lot of money doing this.

What’s been your overall return?

Sadly, I have absolutely no idea.

I always focused more on doing the investing than measuring how the investments perform.

I have been investing in broad index mutual funds for many years, in a portfolio ranging from 100% stocks to 80% stocks, 20% bonds today. Since my portfolio isn’t trying to beat the market, I really don’t pay that close attention.

I can say that I would not be a millionaire today if I hadn’t started to invest 26 years ago. Most of my net worth is investment gains.

How often do you monitor/review your portfolio?

I monitor my portfolio at least weekly. I use Banktivity to monitor my finances so it is very easy to see where my finances stand at any given time.


How did you accumulate your net worth?

Most importantly I always lived below my means.

I did not use credit cards to fund my lifestyle. If I don’t have the money in my account to buy something, I don’t buy it.

I learned early the importance of “paying myself first.”

I made it a priority to save some money out of each paycheck before I started to spend.

I am a natural saver, so this wasn’t all that difficult for me.

I took full advantage of all employer savings plans. The 401k is my largest asset.

I work with people who say they can’t afford to save money in their 401k. I say you can’t afford not to save! Compound earnings over time are so powerful and are how I’ve accumulated what I have so far.

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?

Investing in my retirement plans has been the key to my wealth. I am a good saver, but it is too easy to spend your savings. Retirement funds are protected from spending and are allowed to grow.

What road bumps did you face along the way to becoming a millionaire and how did you handle them?

Stupidity with money was my greatest road bump.

There are a lot of purchases that I’ve made over the years that did nothing to improve my quality of life for very long.

As I stated before, purchasing brand new vehicles and not keeping them for more than 4 years really slowed my wealth building down. Especially after I got married and started to purchase two vehicles at a time.

What are you currently doing to maintain/grow your net worth?

I am getting more serious about budgeting my income. I would like to direct more money to long-term investments.

I’m also constantly working to improve my skills through self-education — trying to read more books and consume more valuable content on the internet so I can advance my career and earn more money.

As I earn more money I want to make sure it goes towards wealth building and not lifestyle creep.

Do you have a target net worth you are trying to attain?

I would like to reach $5 million to become financially independent.

Hopefully we can reach even more, but $3 million is really the least I would like to attain before leaving the workforce.

How old were you when you made your first million and have you had any significant behavior shifts since then?

I was 46.

Even though my net worth is over a million, I don’t feel like a millionaire. If anything it has motivated me to be more intentional with my money so I can achieve the multi-millionaire status as soon as possible.

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

I would have started to budget my money a lot sooner than I did.

You really need to have a plan for how you are going to save and spend your money.

I would save up a bunch of money and then go buy a brand new car. Really stupid.

If you have a pile of money without a plan for it, that is an invitation for some big time stupid spending.

What advice do you have for ESI Money readers on how to become wealthy?

I think there are so many more tools available to people today than there were when I started out.

I didn’t have any good mentors to teach me how to invest, so I had to stumble for several years before getting any good focus. Now there are so many awesome resources on the Internet (the Internet didn’t exist when I started). Blogs such as ESI are such great sources for knowledge and inspiration.

Websites like offer so much wisdom. Listen to Jim Rohn seminars. I found out about Jim about a year ago and he has so much valuable inspiration to share.

My mistakes were caused by ignorance. I didn’t understand investments and the true power of compounded returns early on.

If you can find some good mentors, either in person or virtual, who can point you in the right direction, that will give you a great start.

Avoid debt as much as possible. Better yet avoid it all together.

It may be necessary for most people to have a mortgage to purchase a home, but additional debt reduces your choices and freedom. It holds you captive to your past spending instead of allowing you freedom to spend and save as you please in the present and future.

What special skills or talents are needed to become wealthy?

Being consistent and intentional with your money combined with time is all it takes to become wealthy.

There is nothing special about me. I’m pretty boring actually.

I made up my mind several years ago that I wanted to be wealthy. Not so I could buy fancy houses and impress others, but so I could eventually experience financial freedom.

To me financial freedom is the point when your money earns more than you do.

When you no longer need to work to live, but you can work for the enjoyment of it.

I’m not there yet, but I’ll keep the slow and steady progress going in that direction.


What are your plans for the future regarding lifestyle?

I expect that my net worth will allow me to retire early. It all depends on how much satisfaction I get from my job as my net worth grows.

It will be difficult for me to go from growing my net worth to drawing it down.

What are your retirement plans?

The idea of not having to answer to anyone is very appealing to me.

I’d like to have the flexibility to do some traveling. There are so many places that I would like to see.

I see retirement as an opportunity to volunteer my time to help others to keep engaged.

My goal is to have a large enough nest egg to be able to live off of the earnings of my investments.

Are there any issues in retirement that concern you? If so, how are you planning to address them?

The cost of healthcare is of great concern. I am hoping this situation will improve by the time I am ready to retire.

If not, I’ll just need a larger nest egg before I will be able to be free from needing to work.

I find when I’m home from work I tend to spend more money. I notice things that need to be done around the house, etc. I will need to be sure to stay within a budget so I won’t spend too much of my retirement savings.


How did you learn about finances and at what age did it ‘click’?

I’ve been interested in finances for as long as I can remember.

My parents provided me with a good example for handling cash flow. They never used debt. They never borrowed even one cent. They never had a mortgage. They used envelopes filled with cash to budget their money.

Where they failed is investing. My father received a decent inheritance from his mother, which included a half dozen blue chip stocks. I remember my mother demanding they be cashed out because she didn’t trust stocks! When I think about it now I think the stocks were worth about $60,000 in 1984. I honestly think if left alone they would be worth well over a million dollars today. What a huge mistake!

I didn’t really start to make progress until my late 20s when I started to understand the importance of investing. I would go to the library and read all of the personal finance books.

I think the book, The Millionaire Next Door was the most inspirational money book for me. It gave me some actionable ideas on how to build my net worth.

Who inspired you to excel in life? Who are your heroes?

I’ve always looked up to successful people, but I never had a good mentor.

In my twenties I started to read biographies of successful people. John D Rockefeller, J.P. Morgan, and Andrew Carnegie. While Morgan had a successful father to get him started, Rockefeller and Carnegie made a fortune on their own. I don’t have anywhere near the drive to succeed that they did (see my net worth), but I still found their stories fascinating.

More recently I’ve been inspired by Dave Ramsey and Jim Rohn to take responsibility for my own future and success.

Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?

The Millionaire Next Door by Thomas Stanley. This book provides the blueprint to wealth. Habits and behavior with money are so important to wealth building. Just because someone looks wealthy doesn’t mean they are.

The Bogleheads’ Guide to Investing by Taylor Larimore, Mel Lindaeur, and Michael LeBoeuf. Simple straight forward financial advice that shows you how to handle your own finances.

The Simple Path to Wealth by J.L Collins. Becoming wealthy doesn’t have to be complicated and in fact it is easier to become wealthy if you keep it simple.

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

Yes, we give to charity, but not in the conventional sense.

We have found great satisfaction in directly helping people in need.

Last year we knew of a few people who were going through rough medical problems which resulted in financial stress. We were able to write some checks that helped to ease their burden.

It was very satisfying to see our money help people without the middleman.

We would like to work towards becoming more generous in our giving to people in need.

Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?

Ideally our wealth will outlive us and if it does the current plan would be to pass it along to our two children.

That could change if we find them to be irresponsible with money.

If we were to leave money to them we would want it to be a blessing, not a curse.

Hopefully as they get older we will be able to teach them the money values we have developed and they will be receptive. I feel if they will listen to what we have to say, they won’t need any money from Mom and Dad.

Neither my wife nor I have or will receive any money as an inheritance, so we don’t see it as a priority.

The post Millionaire Interview 131 appeared first on ESI Money.

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Help a Reader: How to Spend $500k in Life Insurance Sat, 18 May 2019 09:00:27 +0000 A couple weeks ago I received a heartbreaking email similar to what’s below. I chatted with the author via email a bit and we agreed to ask ESI Money readers for advice. He provided an updated, more-detailed explanation of his situation and I’m posting it below. Please read this and respond with your best suggestions […]

The post Help a Reader: How to Spend $500k in Life Insurance appeared first on ESI Money.

A couple weeks ago I received a heartbreaking email similar to what’s below.

I chatted with the author via email a bit and we agreed to ask ESI Money readers for advice.

He provided an updated, more-detailed explanation of his situation and I’m posting it below.

Please read this and respond with your best suggestions for the author and his wife to consider.

He’ll be monitoring the comments, so if you have any clarifying questions, ask and he’ll provide answers.


The Short

I am 27 years old and have late stage IV sarcoma cancer. I am likely looking at dying in the next few months.

Here’s my situation: I have been married for almost four years now and we have no kids. Our two cats and puppy are enough!

I am active-duty Air Force, so finances haven’t been a concern when it comes to medical bills.

Due to my active duty status, I have life insurance worth $500K and have elected to leave it all to my wife.

I am writing this message for advice. My goal isn’t for anyone to tell us what to do but rather open our eyes and allow us to consider options we otherwise may not see.

So, you’re 26 (my wife’s age) and you’re handed $500K—what are some smart money strategies?

The Long

Here’s where I would like to give you some insights as to our personalities and our thoughts so far.

We met at FSU and both have our bachelor’s degree. Through scholarships and consistent employment through college, we were fortunate and graduated debt-free.
From there we both considered more education, but decided one of us needed to start earning income. I joined the Air Force to help defray the cost of portfolio school for her (advertising major in undergrad, went to portfolio school for art direction).

The idea was, four years later (Oct. 2019), I would exit the Air Force with GI Bill in hand. She would become the sole income earner of the house as I returned to graduate school (with GI Bill to offset costs and provide allowance for housing).

Needless to say, the plan changed significantly when I was diagnosed with cancer January of 2018. She had graduated portfolio school and gotten a job as an art director. She worked for about six months before quitting to take care of me and spend time together.

The goal was for me to go to school for my MBA and within five years the two of us hoped to open a bouldering/coworking space. Through this time, it’s become clear to us that we would love to work for ourselves.

We were going to spend time deciding what locale would best support this, as we have no roots holding us down. We’ve constantly been on the move throughout our relationship.

For the business, seed money was going to have to be raised with a solid business plan and loans. (Keep in mind as you read this that if parts of “the big plan” don’t seem to make sense, it is because our plan changed over time as we grew up and our priorities shifted.)

Now, my wife is scrambling to piece together an uncertain future. We have talked and she anticipates spending about a year after my death living with her parents and figuring out her next moves.

It’s impossible to tell where life will take her, but the core of what we have talked about includes two things: purchasing a home and starting a business.

We both realize $500,000 goes fast in this day and age, especially when it comes to home ownership and starting a small business. I would love to know that she can pay off a significant portion of a modest home and would be elated if the rest of the money allowed her to work for herself.

Different types of businesses have different start-up costs and we’ve talked about both a design firm (low overhead) and the original bouldering/coworking space (major start-up costs and overhead). I have no doubt she will find her way.

How should we go about deciding how much money goes toward a house vs the business?

I tell you all this to hopefully reveal we do our best to think things through. You should know too that my wife is unstoppable when she decides to move forward with an idea.

More than anything, I am wondering if there are smart financial decisions we haven’t considered. I realize our current plan is fast and loose; it definitely is not a conservative way to go about stretching $500K.

I believe that she will be successful in whatever she chooses to do, so the idea of a small business generating life fulfillment and income for her appeals to me. Neither one of us come from money, so when we talk to our parents they generally advise to “Buy a house so you don’t have a mortgage, put the rest in a retirement account, and go to work for an ad agency.”

We realize that is an alternative. We are hesitant, for obvious reasons, to go the “retirement” route, or other options that have returns after 40 years. While “Put $250,000 in a Roth IRA,” may be wise, my wife and I are thinking more about 5 and 10 year plans. Feel free to disagree and explain why!

Are there any other ideas you would propose? Looking to bounce ideas off of others as it is hard to think about this with anyone else due to the emotions involved.

Also, I desire to be cremated and the military offsets almost all of the cost of a burial. Plus we have around $15K in savings. I include this to illustrate that hopefully she will actually have the $500K and not lose a large chunk to funeral costs.

Last year, while I was going through the worst chemotherapy sessions of my life, I came across this blog. I liked the voice and writing style and read through many of the ESI articles. I also typically scrolled through the comments, and it seems this community is both smart and supportive.

Thanks to everyone ahead of time!

The post Help a Reader: How to Spend $500k in Life Insurance appeared first on ESI Money.

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Retirement Interview 9 Fri, 17 May 2019 09:00:44 +0000 Just a note before we get to today’s post: I’ve added another new (free) email series called Creating a Great Retirement. If you want to subscribe to any of my series, you can do so here. Here’s our latest interview with a retiree as we seek to learn from those who have actually taken the […]

The post Retirement Interview 9 appeared first on ESI Money.

Just a note before we get to today’s post: I’ve added another new (free) email series called Creating a Great Retirement. If you want to subscribe to any of my series, you can do so here.

Here’s our latest interview with a retiree as we seek to learn from those who have actually taken the retirement plunge.

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

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

Let’s get started…


How old are you (and spouse if applicable, plus how long you’ve been married)?

I am a 69-year-old widower.

Do you have kids/family (if so, how old are they)?

I have a daughter who is 40 years of age.

What area of the country do you live in (and urban or rural)?

I live in a major city in the Southwest.

Is there anything else we should know about you?

I’m not sure what else might be relevant, but there is more information in Millionaire Interview 45.


How do you define retirement?

For the majority of my career, I had the opinion that retirement was the absence of work. I felt this way because when I was much younger, I had the impression that retired people simply stopped doing everything and sat around the house. Going back several decades that was definitely what a lot of retirees were doing.

My father retired from the Air Force at the age of 55 and was perfectly happy to spend the rest of his retirement watching television and puttering around the house. He was just satisfied to get away from the stress of his job.

When I retired, I was completely convinced that I wanted to do a variety of things. I had developed quite a bucket list of interests that I simply never had time to pursue prior to retirement. My view was, and still is, that I can now do pretty much anything I want to do, so why waste time?

I fully believe that retirement, for me, simply means financial independence and I will continue to be staying busy as long as I possibly can.

How long have you been retired?

I have been retired for approximately four years.

Is your spouse also retired?

I retired six months after losing my wife to cancer.

I was very much aware that two of the most stressful occurrences that a person can experience include the loss of a spouse and retiring from work. I was faced with experiencing both at the same time.

What was your career and income before retirement?

My entire career included land-use management, environmental planning, and archaeology.

In the 20 years just prior to retiring, I managed a group of scientists conducting permit acquisition requiring studies in geology, biology and archaeology.

When I retired four years ago, my salary was approximately 92K/yr.

In addition, I taught environmental science, cultural anthropology and archaeology online, also for the last 20 years. My income from this ranged from 30K to 50K annually.

My wife spent 25 years as a pediatric social worker at a Children’s Hospital. During the last few years of my wife’s career, her salary ranged from 75K to 93K.

Why did you retire?

My original plans were to retire at the age of 66, which was my Social Security full retirement age. After ensuring that I was financially prepared at the age of 65, I decided to retire a year early.

However, the best way to describe my primary reason for retiring is that it was impacted by circumstances.

As I mentioned, the work stress level was high, although I always appreciated the people I was able to work with as well as the subject matter.

After being home for a few weeks during my bereavement leave, I returned to work knowing that I would be back among friends. Close friends in the office were very supportive, which I appreciated a great deal.

However, it was somewhat awkward working with everyone else because everyone seemed to be walking on eggshells around me. People mean well, but they really have no idea how to talk to someone experiencing grief (I won’t go into further detail, but this subject is covered in numerous articles and books).


When did you first start thinking seriously about retirement and when did that turn into a decision to do it?

Throughout my entire career, I maintained a continuing interest in the subject matter with which I was dealing as an employee. I had always been interested in both archaeology and environmental science and I did not have plans to retire early.

As I approached the end of my career, life happened. On the one hand, I experienced the loss of several close family members. Unrelated to this, I was becoming a bit disillusioned with working for clients.

Ever since we were in our early 40s, my wife and I had been able to take advantage of 401(k) plans offered by our places of employment. From that time, we set specific goals for growing those accounts and eventually being able to retire with approximately $1 million.

When we finally became empty-nesters, we focused more closely upon 401(k) contributions and turned that focus into a friendly rivalry. My wife had jumped out into an early lead and maintained that lead permanently.

Shortly before turning 65 years of age, I was convinced that I was prepared to retire, but wondered if I would simply be better off by working one additional year.

I wasn’t exactly in the proper mindset for considering only the effects of retiring.

For the first time in my life I began working with a financial advisor who agreed that I was (at least financially) prepared for 30 years of retirement. I retired from my primary job shortly thereafter. I continued to teach online as one of the activities that I knew I would need to keep busy.

What were the major steps you took from deciding to retire to developing a plan to do so?

I have absolutely no regrets about retiring when I did. Despite the fact that I loved the subject matter as well as the people at my place of employment, there was a large amount of stress – especially in regard to finding clients, finalizing contracts, and getting paid.

In addition, people often simply do not know what to say to someone who has lost a loved one.

I quickly determined that my focus had not only changed, but probably would not return to that of a normal employee.

I spent the next six months finishing up projects and continuing to plan and prepare for retirement, and then officially retired.

My boss was incredibly kind in retaining me on an active employee list in case I wanted to come back at any time. However, I remain completely satisfied with my decision.

What did your pre-retirement financials look like?

Back in 2007, we had assets of just under $1 million including approximately $700,000 in our 401(k)s), and total liabilities of $330,000 (primarily the mortgage for our permanent residence) for a net worth of approximately $625,000. We rode through the following few volatile years with only minor changes in our portfolios, and we were glad that we did.

During the few years just before I retired, my wife and I had accumulated approximately $900,000 in our 401(k) accounts.

The funds were primarily invested in index funds and the accounts were held under Merrill Lynch and Wells Fargo. In addition, we had approximately $60,000 in cash.

We also had some stocks that we had inherited from my father-in-law, and some company stock that had been given to me by my place of employment.

Our liabilities included a small amount left on the mortgage, as well as approximately $12,000 in credit card debt.

What was your overall financial plan for retirement?

In my opinion, despite the fact that retirement planning should begin early in one’s career, a number of the details simply aren’t clear until a few years before your projected retirement date.

By this I mean that you certainly can come up with a relatively accurate projection of what your assets should be at retirement, as well as what you think you might be spending on an annual basis. The part that changes over time is your personal behavior and therefore your wants and needs. For this reason, we all obviously need to reassess our situations each year, both before and after retirement.

In my family’s case, although planning had been initiated years earlier, we became much more focused in our 40s when we both finally had jobs offering 401(k) accounts.

Early on, we had determined to shoot for $1 million in assets by the time we retired. At the time, retirement seemed so far away, that we projected a gross annual expenditure during retirement of $40,000 per year. Despite the fact that there were so many unknowns, we diligently contributed to our 401(k), although at only 10 to 15%.

When we were in our mid to late 50s, we had a clearer picture of what would be needed in retirement and determined that we would be spending approximately 80% of our combined incomes. At approximately that time period, we each raised our annual contributions to more than 20%. I also planned at that time to continue my side hustle of teaching online for at least five years after my normal retirement age.

As mentioned, my 401(k) was handled through Merrill Lynch, while my wife’s was with Wells Fargo. To assist with our selection of index funds in which to invest, we took recommendations from financial advisors provided by our respective companies, as well as financial professionals within our own families.

Did you make any specific moves to prepare your finances for retirement?

I made no specific moves as I approached retirement in regard to either moving or downsizing. I was not operating a business as such, but I was, and still am working (from home) as an adjunct college instructor.

When I did reach retirement age, I paid off my mortgage, as I had planned to accomplish this as quickly as I could. My desire was to enter retirement with no debt.

I made the determination that I would retire only from my primary job, and that I would keep teaching online as a part-time gig. Although by 2014, I knew that I didn’t really require the income but I was very interested in staying busy doing a number of different types of activities.

Just prior to retiring, I worked with a financial advisor to shift assets from savings and the two 401(k) accounts into three IRA accounts.

Who helped you develop this plan?

The retirement planning in previous years was conducted by my wife and I.

As mentioned, just before retiring, I worked with a financial advisor, who did a rollover of the 401(k) accounts into two separate qualified Individual Retirement Accounts.

We also established one separate unqualified IRA comprised of funds from prior savings accounts. It was from this unqualified account that I began withdrawing a small monthly amount.

What were your pre-retirement concerns (financial or non-financial)?

In regard to financial elements, my initial concern was the danger of outliving my assets.

After a great deal of reading (articles, books, blogs) and playing around with about a dozen financial calculators, I was convinced that my assets would carry me at least into my mid 90s. Just before retiring, I had no debt, I had the prospect of high Social Security income, a long-term care policy and I had paid off the mortgage.

My other financial concern was the cost of healthcare in later years. To a certain degree, it still is, but I feel much more confident than I was when I retired. I have a good Medicare Advantage plan and so far (knock on wood) I am still in very good health. I remain in the same boat as everyone, however, as it is unclear how the cost of healthcare will multiply in the coming years.

Regarding my non-financial concerns, they centered on not knowing what to expect in the bereavement process. It was clear to me that I needed a plan for how to spend my time going forward. It is true that anyone approaching retirement needs the same type of plan, but my efforts were critical.

I know that I was greatly assisted by two very important factors – a strong family and friend support system, and the fact that I have always had a great variety of interests.

So, despite going through two of life‘s greatest changes, I was absolutely sure that I wasn’t going to spend time at home feeling sorry for myself.

My retirement plan had so far been financially successful, and I needed to make sure that every element unrelated to finances was also well planned and implemented.

How did you handle deciding on and paying for healthcare?

Prior to retiring, I was covered by a very good health insurance plan provided by my employer.

When I was approaching retirement, I sat down with a Medicare specialist who had conducted an exhaustive study of the pros and cons of each type of Medigap and Medicare Advantage plan. Based upon my health status and the fact that my primary physician was already in the network, I chose a Medicare Advantage plan provided by Cigna.

The only additional coverage I needed at that point was dental. I didn’t know anyone who was an expert in dental insurance, so I simply called my dentist and asked her which company and plan was easy to work with.

I have carried these coverages now for four years and I have been completely satisfied with each of them. Importantly, however, I have not had any type of major claim.

How did you tell your family and friends of your plans?

My daughter is now my only close relative, and I sat down with her to explain my plans for the future.

I also had several conversations with my friends at work regarding my decision to retire at the age of 65.

I sat down with my boss and explained my plan to leave the firm. Fortunately, I had not been indispensable on any projects for quite a while, as I had received permission from the firm to work primarily from home in order to take care of my wife. I had therefore assumed support roles in all the projects with which I was connected.

My boss had been very understanding regarding my situation, as my wife had been very ill for the previous five years.


How did you ultimately retire?

As I’m sure you can understand, I wasn’t exactly in the same state of mind as other prospective retirees. However, I benefited greatly from the strong support system of family and friends.

My primary focus after making the determination to retire was to take care of some aged project requirements at work.

We had recently become shorthanded on several projects, so I focused on completing them and closing them out. A number of my coworkers asked me about my plans for the future and my short answer was always “hiking, biking, travel, being with the grandkids”. This description had been my tiny bucket list for at least six months.

The actual steps that I took included completing the financial considerations by working with my financial advisor.

After the 401(k)s were rolled over, I made arrangements for a small percentage of the accounts to be sent to me on a monthly basis.

I applied for and received survivors’ benefits through Social Security, and I planned to continue to spend a few hours each day teaching online.

My initial consideration was that I would do this for approximately five years (it will probably be a bit longer than that).

I met with an estate attorney and updated my will.

I visited each of the banks that I do business with so that I could add my daughter’s name to each of the accounts.

I tried to make sure that there was no fanfare on my last day of work by visiting each of my friends and talking in detail with them about my plans and the fact that I wanted to continue to see them.

What went well?

Pretty much every element of the act of retiring went well.

The actual exit was smooth and unemotional. I feel strongly that I have maintained the friendships that I had made at the office in the previous 20 years. I continue to see those friends on a regular basis for lunch.

I was surprised when my boss continued to keep an office for me for the next few years in case I wanted to return. I certainly appreciated that, but I have definitely not had second thoughts about retiring when I did.

Moving forward, I will continue to stay in touch with friends and coworkers.

What didn’t go so well?

As far as the actual act of retiring is concerned, I have no complaints whatsoever.

How did you ultimately find the courage to do it?

I was absolutely, 100% sure that I wanted to retire when I did. The decision required no courage. I will always value the friendships I still have with my team, but I never want the stress again.


How was the adjustment, especially the first few months after retirement?

Again, due to my unusual situation, life was confusing for the next few years.

That being said, I immediately appreciated not having to worry about projects or having to jump out of bed at 5 o’clock in the morning.

I also appreciated not having to worry about money and the realization that I could say “no, thank you” to anyone who asked me to do something (I usually didn’t, but at least I knew that I could!).

As time passed, I grew to appreciate the incredible feeling of freedom that comes with retirement.

How is retirement life now? What do you like about it and what do you dislike?

I have to say that retirement life is living a dream. What I like about it is the fact that there is no schedule and no one expects anything from me. Obviously, a retiree can enjoy this situation for a few months or so, but it’s very important to develop your own plan for how you want to spend your time.

I like the fact that I can pretty much plan to do anything — ranging from sitting in an easy chair all day to flying to New Zealand (I haven’t done either of these things yet, but they sure sound good).

I also like the fact that the future is open – I will continue to discover things that were never on my bucket list because I simply didn’t know they existed.

A few months ago I decided to visit every museum in the city. After completing that, I decided to see every animal sanctuary in the city.

Anything I do in the future is only limited by my imagination.

As far as what I dislike, I must say that everything in that category is directly related to growing old! If an old sports injury starts acting up, or I only get two or three hours of sleep at night, it certainly can affect what I plan to do with my time. My goal is to continue to try and stay in the best shape possible.

What do you do with your time? What does an average day look like?

Each day can be extremely variable. An additional major time expenditure began a few months ago when the college where I teach asked me to develop two new courses – one in global health/medical anthropology and the other in old world archaeology. This has become an incredible time sink but it’s been fascinating.

On any given day, I can be directly involved in five or six of the following activities:

  • teaching
  • course development
  • socializing with friends
  • visiting with kids at the group home next door
  • book club
  • yard work
  • planning grandkid trips
  • (as part of the Scientists Ashore program)
  • BMW club
  • classic Volkswagen club
  • going to the gym
  • swimming
  • hiking
  • biking

Looking back, what would you have done differently?

If there’s one thing that I should have done during the past four years of retirement, I think that I should have gotten more physically active from the start. The real surprises have been the effects that inactivity has on an older body.

Despite the fact that I have felt just fine most of my life, I was not fully aware that frequent movement is one of the keys to living longer. My doctor mentioned to me that more than 80 million people in the United States are prediabetic. The scary thing is that most of them don’t know it. So, I continue to make improvements in my dietary and exercise habits.

Was there any emotional impact from leaving the workforce?

There really was no emotional impact in retiring from my primary job.

The reasons for this were the fact that I could still go back to it during my first two years of retirement, I’ve made a point of continuing to stay in touch with my work friends, and I continue to be much more interested in retired life than in working life!

What surprises (financial or non-financial, good or bad) have you had since retiring and how have you handled them?

The only negative non-financial surprise was a health scare about two years ago. Fortunately, it was just a scare. I remember feeling very relieved at the time that I had already informed my daughter about my will and I had given her a detailed letter of instruction regarding my estate.

The letter of instruction included not only the steps to take upon my demise or incapacitation, but also detailed information about where everything is located. I have heard horror stories from other folks about how long it took to settle “grandma’s estate” because no one knew where everything was.

I don’t recall any additional surprises.

What are your future plans?

My future plans are to stay the course with my current investments. In addition, I intend to be much more physically active (as soon as my left knee heals a bit).

I intend to continue visiting my daughter, my son-in-law and the grandkids as much as I can. They live on the other side of the country, but we can usually get together about half a dozen times per year.

I’m also looking forward to doing a few more adventurous things such as exploring some caves, going on a cruise, etc. Throughout the last four years I have focused specifically on increasing my social contacts and that will continue as well.

I will also continue to be heavily involved in the activities previously mentioned.


How has your financial plan performed compared to what you had estimated before retirement?

The financial plan has done very well.

Last year my expenses totaled about $56,000. My teaching and class development work is pulling in only about $8,000 to $10,000 now, but I applied for my Social Security last year and I’m now receiving $34,000 annually.

I’m also receiving 2.3% distribution from my IRAs. My estimate prior to retirement was that I would need closer to 4% distribution from the IRAs.

Not including the investments, my cash flow for 2019 to date is a positive $5,000.

The portfolio currently includes the following asset types:

  • US Bal/Asset Alloc – 2.37%
  • Cash and Cash Equiv – 3.78%
  • Large and US Gro Eq – 10.73%
  • Large US Val E – 2.95%
  • Mortgage Back Sec – 2.85%
  • Small US Bl Eq – 6.74%
  • Strategic Income – 7.32%
  • Bank Loan – 6.11%
  • Large US Bl Eq – 36.81%
  • Large Capitalization Global Stock – 2.48%
  • Mid Cap US Bl Eq – 3.82%
  • Mid Cap US Val Eq – 2.79%
  • Sector – 2.88%
  • Short Int Hi Qual US Bond – 4.33%
  • Other – 4.04%

How are you handling Social Security, required minimum distributions, tax issues and the like?

I waited until the age of 68 before applying for my own Social Security.

As I mentioned above, the current annual amount is $34,000. For the final 20 years of my career, I worked two jobs, both of which required Social Security deductions.

Beginning next year, I will have to start taking RMD’s.

As I mentioned above, I’m currently receiving an approximate 2.3% distribution (currently coming out of an unqualified account). This will rise to approximately 3.1% of my qualified IRAs next year.

At that time, my options will include spending the additional distributions, retaining some to handle the additional taxes, giving more to charity, loading more funds into my granddaughters’ 529 accounts, etc.

I have not finalized my plan for the use of the additional distributions.

Up until very recently taxes have not been an issue at all. In doing my taxes for 2018, apparently $1,700 of my Social Security became taxable.

Next year, of course, my entire IRA distribution will be taxable.

Did you return to paid work? Why or why not?

I didn’t return to paid work related to my previous 9-to-5 job. As indicated earlier, I was ready to move on from the stress despite the fact that I enjoy the subject matter and my work colleagues.

However, I kept working at my side hustle because there was a very low if any stress level, and I really enjoyed it. Teaching online allows one to work from home or anywhere else they wish. I knew that I needed something solid to keep busy and figured that I would enjoy doing it for at least another five years.

Did you find it hard going from being a saver to a spender?

Upon retiring, I felt that I was completely ready for spending instead of saving. I felt confident that with the combination of part-time employment, Social Security and a relatively small amount of money from my portfolio, my assets would last as long as I needed them.

So far, the situation has been better than expected, as I continue to make more money than I spend. This has allowed me to increase my savings.

Looking back, what do you wish you knew in advance?

Frankly, I wish I had had a better handle on the approximate amount of money I would spend annually.

I purposely did not solidify a retirement budget until I had spent a full year in retirement.

I felt confident that I was in good shape to handle quite a bit of spending if needed.

As it turns out, the money that I spent during the first year allowed me to more accurately determine what would occur in the ensuing 3 to 5 years.

What advice do you have for those wanting to retire?

The obvious advice would center on making sure that your history of “earn, save, invest” has brought you to your projected “number” for retirement.

If you determine in your 50s and 60s that you’re still somewhat far from your number, my suggestion would be to work a few years longer and/or try to initiate a side hustle.

The key is multiple sources of income, so real estate ventures are another good option.

Assuming that you are confident of being ready to retire, make sure you have a well developed plan of how you will spend your time. Make sure that you and your significant other work together on this.

Hopefully, you both will have many similar ideas of how you want to spend your time. However, if you don’t, that is normal and perfectly understandable and you can still get along very well by doing something separately and some things together.

Good luck and enjoy your retirement!

The post Retirement Interview 9 appeared first on ESI Money.

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Money Lessons from Failure, Part 2 Wed, 15 May 2019 09:00:10 +0000 Today we’re going to continue sharing thoughts from How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life, a book that I recently read and loved. If you missed the first post in this series, check out Money Lessons from Failure, Part 1. We covered the first three […]

The post Money Lessons from Failure, Part 2 appeared first on ESI Money.

Today we’re going to continue sharing thoughts from How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life, a book that I recently read and loved.

If you missed the first post in this series, check out Money Lessons from Failure, Part 1.

We covered the first three (quite interesting) points in that post.

So now let’s pick it up now where we left off…

4. Passion is BS.

Ok, he didn’t say “BS” (he used the word) but I’m family-friendly here. 😉

He spends a whole chapter talking about how advice to “follow your passion” is bad.

He shares a story of when he was a loan officer. Adams was told not to loan money to businesses with passionate owners but instead to go for passion-less owners — the grinders who see it as a business and will make decisions based on information/facts and not emotions.

He adds the following as well:

My hypothesis is that passionate people are more likely to take big risks in the pursuit of unlikely goals, and so you would expect to see more failures and more huge successes among the passionate.

It’s easy to be passionate about things that are working out, and that distorts our impression of the importance of passion.

Passion can be a simple market for talent. We humans tend to enjoy doing things we are good at, while not enjoying things we suck at.

If you ask a billionaire the secret of his success, he might say it is passion, because that sounds like a sexy answer that is suitably humble. But after a few drinks I think he’ll say his success was a combination of desire, luck, hard work, determination, brains, and appetite for risk.

In money the whole passion thing raises it’s ugly head most in the area of picking a career. People are told to “do what they love” (i.e. follow their passion).

This sort of advice, in part, is responsible for kids borrowing $100k+ for college degrees that produce $20k per year jobs. It just doesn’t work.

The author of Rise: 3 Practical Steps for Advancing Your Career, Standing Out as a Leader, and Liking Your Life completely agrees that “do what you love” is bad advice, saying the following:

We all get told at some point (if not over and over again), “Do what you love and the money will follow,” and it’s just plain bad advice. The number of people who make a lot of money doing what they love is so insignificantly small that it’s an unrealistic and useless thing to model. The most unfortunate thing about this is that it makes people feel like they are failing when they don’t achieve it.

This plays out in two destructive ways:

1. Because they don’t have the same feeling of love for their work that they do for their family or leisure activities, they feel like they are selling out or living life wrong. They waste a lot of time feeling unfulfilled, unhappy, or plagued by the feeling that they should be doing something different.

2. Others, who try to do the things they love full time, find that the effort to make a business of it and a living at it takes away all the enjoyment of it. They end up turning their love into a job they don’t like, one that generally doesn’t pay very well. They end up not loving life after all. And they waste time that they could have spent earning money.

Don’t put this pressure on yourself!

KEY INSIGHT: Consider thinking about your work/life strategy like this:

  • Do what you love for free.
  • Work for money.
  • Change how you do your job to feel less tortured about it—and maybe even feel pretty good about it.
  • Spend the money you make on doing the things you love when you’re not at work.

And here’s a great comment from a reader of my former blog:

Yes, you missed something VERY vital. Under #2) Not working to maximize your career, you should have added: “Make sure you pick a career that pays a decent amount of money. DO NOT ‘do what you love’ just because you have a lot of yes-men in your life saying ‘ALL YOU NEED IS PASSION! You can make a living wage at any career!’, because that advice is false, false, FALSE.”

I followed my dreams to become a graphic designer, because I was sure that all I needed to do was be passionate about it, and ‘do what I love’ and the money would follow. I found out the hard way that life doesn’t work this way. Some jobs are over-saturated, and have too many people doing them, and not nearly enough work, not even enough to employ half of the people who need jobs in that field.

This brings up an interesting conversation. Which is the true way to “maximize your career”?:

  • Do what you love – The old saying goes, “Do what you love and the money will follow.” And even if it doesn’t, the consolation is that you’ll probably be happier since you are in a profession you enjoy.
  • Do what pays – This concept says forget doing what you love — go for the money. Work is work, it’s meant to be hard. Work hard at something you may not enjoy, make a bundle, and get enjoyment from after-work activities.

Personally, I don’t think “do what you love” works in most situations.

Do you know what most people LOVE doing? Nothing. Most would LOVE being paid a ton of money for little work.

In addition, people LOVE what is fun. Examples: going to the movies, playing video games, sitting on the beach, etc. But those are not work options — they are pleasure options. They call it “work” for a reason.

Here are things I LOVE:

  • Spending time with my family
  • Playing video games
  • Traveling to tropical islands
  • Watching TV/movies
  • Reading
  • Relaxing
  • Exercising

Unfortunately, these don’t pay much (if anything.) Sure, I could start a “travel services” company, but that’s not the same as “traveling”. In fact, doing the former might kill my love of the latter.

Working in a job you hate just for the money doesn’t work either. Eight to nine hours each day of having the life sucked out of you starts to wear on you pretty quickly. You won’t be able to enjoy your off-time if you really hate your job.

“Do what you like” is the solution IMO. Find a profession that you like (one where you enjoy most of the job to a reasonable extent) and that also has decent pay. This is the balance between the two (generally accepted) options above, one that has worked for me, and a concept that I think will work for most people.

What’s your take on the issue?

5. Start looking for another job as soon as you get a new one.

Adams tells the story of sitting next to a business man on a plane. The guy was the CEO of a company and as they chatted he offered Scott some career advice:

He said that every time he got a new job, he immediately started looking for a better one. For him, job seeking was not something one did when necessary. It was an ongoing process.

Adams comments on this idea with the following:

This makes perfect sense if you do the math. Chances are the best job for you won’t become available at precisely the time you declare yourself ready. Your best bet, he explained, was to always be looking for a better deal. The better deal has its own schedule. I believe the way he explained it is that your job is not your job; your job is to find a better job.

I personally like this and wish I had thought of/applied it during my career.

Now some might ask about the loyalty you owe a company, and that used to be something of value. But these days I think most companies have made it clear that they are out for themselves. Employees are the same as machinery, buildings, etc. — as long as they produce, they are kept. But the second they stumble a bit, all company loyalty to the worker is out the window.

I’m not saying I like it this way, but that it’s simply reality.

If I had been looking for a new job at all times, I probably wouldn’t have wasted five years of my career in jobs that were decent enough but not ideal. At least twice I spent two years in a job I knew I needed to leave but had to ramp up the job search to find something — and it took time. In the meantime, I made less than I could have and certainly enjoyed my work-life less.

Anyway, this seems like decent advice, even if it’s only used in moderation (i.e. begin looking for a new job after a year on any given job.)

6. Pay the price.

Here’s a great passage from the book:

One of the best pieces of advice I’ve ever heard goes something like this: If you want success, figure out the price, then pay it.

I know a lot of people who wish they were rich and famous or otherwise fabulous. But these are merely wishes. Few of those wishful people have decided to have the things they wish for. It’s a key difference, for once you decide, you take action. Wishing starts in the mind and generally stays there.

Haha! Tell me about it!

The world is full of those who want something handed to them. They want the results that others have achieved but don’t want to put in the work (or often ANY work) to get those results.

I hear from this group quite often, usually when I get some sort of mainstream media coverage (ESI Money readers and not this sort). When it reaches a boiling point I then go on a mini-rant to get it out of my system.

Here are some of the posts inspired by those who want results without paying the price:

7. Success has a spillover effect.

Adams makes this claim in the book:

Success at anything has a spillover effect on other things. You can take advantage of that effect by becoming good at things that require nothing but practice. Once you have become good at a few unimportant things, such as hobbies or sports, the habit of success stays with you on more important quests. When you’ve tasted success, you want more. And the wanting gives you the sort of energy that is critical to success.

He goes on to say how he was “talented at several trivial games” (Scrabble, pool, tennis, ping-pong) simply because he was willing to invest “insane hours of practice” into each.

He then makes this point:

Thanks to my experience with these exceedingly minor successes, I have a realistic understanding of how many hours it takes to be good at something. That keeps me from bailing out of things too soon. But more important, I know what winning feels like (great!) and it energizes me to seek more if it.

A great strategy for success in life is to become good at something, anything, and let that feeling propel you to new and better victories. Success can be habit-forming.

A few thoughts on this from me:

  • I’m not so sure success in anything qualifies you for success in something else. Some of those things seem so trivial that I can’t see how they really matter. So I’d prefer that the formula be revised to success in something at least semi-valuable leads to further success.
  • There’s a value in knowing when to give up. Sometimes things don’t work out (and never will). So as valuable as it can be to stick to something, it’s also valuable to know when to quit. That said, I believe that the bigger problem is people quitting too early versus not quitting when something is doomed.
  • I 100% agree that success in something at least semi-important sets you up for the next (bigger) success. In fact, this is the story of my life — all the way back to grade school. As I accomplished one thing, I had more belief in myself to try the next. And when I was successful at that, I went to the next step. These built upon each other over years and decades to become quite significant.
  • That is not to say there weren’t setbacks — like the time I tried out for the basketball team in high school. I was tall, but I had limited coordination, was in poor shape, and wasn’t willing to put in the extra effort to get better. I realized I wasn’t going to be a sports star, so I abandoned that hope and started focusing on speech and debate. I did pretty well in both of those and the skills I learned along the way helped my career tremendously.
  • In the end, I don’t think it’s the successes themselves that make Adams’ statements true but the belief in oneself that results from the successes. As noted above, they have a way of building upon each other, reinforcing themselves, to drive the person forward.

8. Pause before you trust experts.

He says:

Dealing with experts is always tricky. Are they honest? Are they competent? How often are they right? My observation and best guess is that experts are right about 98 percent of the time on the easy stuff but only 50 percent of the time on anything that is unusually complicated, mysterious, or even new.

If your gut feeling (intuition) disagrees with the experts, take that seriously.

I think you know my view on “experts”.

In fact I have a whole category on this site called “Not Experts” dedicated to highlighting those who claim to be experts but aren’t really.

A few that I’ve covered so far:

I could probably write a blog on this subject alone if I wanted. Is “” taken? LOL!

In the end, I don’t mind using experts/professionals, but I do think you need to know enough so you’re not 100% reliant on their views without some perspective.

For instance, I use a CPA but I also pay attention to tax law so I can offer suggestions and have an intelligent conversation with her. On more than one occasion I have identified something she did incorrectly, so things do work out better when it’s a team effort.


Adams wraps up the book with the following:

The model for success I described here looks roughly like this: Focus on your diet first and get that right so you have enough energy to want to exercise. Exercise will further improve your energy, and that in turn will make you more productive, more creative, more positive, more socially desirable, and more able to handle life’s little bumps.

Once you optimize your personal energy, all you need for success is luck. You can’t directly control luck, but you can move from strategies with bad odds to strategies with good odds. For example, learning multiple skills makes your odds of success dramatically higher than learning one skill. And if you stay in the game long enough, luck has a better chance of finding you.

Much of this is a summary of issues we’ve already addressed. I will say that I love the common sense approach in this book that is nicely summarized in these few sentences.

As I said at the beginning of part 1 — there’s lots more great stuff in this book! I covered maybe a third of it. So if you’re looking for an entertaining and educational book to take to the beach this summer, you should highly consider this one.

The post Money Lessons from Failure, Part 2 appeared first on ESI Money.

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Millionaire Interview 130 Mon, 13 May 2019 09:00:57 +0000 Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights. If you’d like to be considered for an interview, drop me a note and we can chat about specifics. My questions are in bold italics and his responses follow in black. Let’s get […]

The post Millionaire Interview 130 appeared first on ESI Money.

Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.

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

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

Let’s get started…


How old are you (and spouse if applicable, plus how long you’ve been married)?

My wife and I are 33 and we have been married for 7 years.

Do you have kids/family (if so, how old are they)?

We have two children. Our loud and proud son who is 4, and our sweet little firecracker of a daughter who is 2.

What area of the country do you live in (and urban or rural)?

We live in Canada, in a beautiful city just outside of Toronto.

What is your current net worth?

Our current net worth is $2,640,000 USD not including my wife’s pension.

What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?


  • Taxable Accounts $1,110,000
  • IRA Equivalents $160,000
  • Roth IRA Equivalents $130,000


  • $70,000

Real Estate

  • Rental property $200,000 (Mortgage -$84,000) = $116,000 Equity
  • 50% ownership of a cottage $270,000 (Mortgage -$42,000) = $228,000 Equity


  • Equity/loan in Master Canadian Subdivision Development $200,000
  • Equity/loan in U.S. Subdivision Development B $150,000
  • Equity/loan in U.S. Subdivision Development C $120,000
  • Hard Money loan $230,000 @ 8% Interest (65% LTV); Term of 6 months


What is your job? What is your annual income?

Fresh out of university I attempted to play poker online full time, though I scraped by the first 6 months barely covering the $1500 or so a month I needed to live on.

I finished that first year making $35k and feeling like I was within the grasp to earn significantly more. I was also attempting to get hired as a police officer as I knew poker was not likely a long-term career and also to appease my girlfriend (now wife) and family by showing them that I would not be a degenerate gambler and actually become a productive member of society.

Needless to say I had a few interviews however they had a hard time with the current occupation of “professional poker player”. My second year of playing poker full time I earned $80k, the third year I earned $200k, the fourth year I earned $400k, and my last year full year (2014) I earned $800k.

The landscape in 2014 was significantly changing for the worse as games got tougher and action dried up. I was so burned out mentally and physically during the last year that I had to take muscle relaxers to sleep at night or else I would constantly wake up with numb hands and arms, sitting for 8-12 hours a day at the computer was taking a serious toll on my health. With our son on the way in 2014 I couldn’t have picked a better year to retire from poker and move on to something else.

Fast forward to today and I am currently in my 4th year working as residential realtor. I average about 20 hours a week nowadays as I have pulled back significantly from my 60+ hour weeks.

My first year as a realtor in 2015 I netted $120k, my second was $50k, and last year I earned $130k.

My wife has been working as a nurse for the last 10 years and currently earns $67k a year. She is our financial rock, no matter what mistakes I make or risks I take we have always been able to fall back on her income to cover almost all our basic needs. This has been very helpful in allowing us to take risks in life knowing we will be fine if they don’t pan out.

I have always been fascinated by real estate which stemmed from reading “Rich Dad Poor Dad” when I was 18. This led me to getting my real estate license after poker to focus on investing in real estate and to better understand how the process works.

I instead got caught up trying to be “successful” which I and most other agents had correlated to earning $100k or more a year. This was never my plan and I truly lost sight of my originally intentions.

I do not have the personality, drive or need to grind it out as active residential realtor. To be a good realtor you have to be talking and networking with people ALL the time. While I do enjoy talking with people, I find it mentally draining to push myself in an unnatural way to connect and work with people with I wouldn’t ordinarily.

One of the most interesting things I learned about the business was how relatively simple it is to make a very good income. There are a few basic principles Realtors need to apply to their business to be successful. For those interested I would recommend that you read The Millionaire Real Estate Agent.

The reason most people fail is their lack of consistency and not focusing on tasks that provide out-sized returns. I have seen many new agents come into this business. You can usually tell right off the bat if they will make it or not. The ones that do are driven, focused and have the grit to keep moving forward when they fail. It’s simple to succeed but not easy.

I expect to earn $80k in commissions this year and I am trying my best to keep my hours under 20 per week and only work with people that I know and like. I’m learning to say no this year and it feels very good to be in a position to refer out potential leads or business to other agents and to just spend more time with my family and focus on health.

I am very blessed to have a best friend that is a partner in a small boutique investment firm that has access and puts together many of these deals. Their fees are low as they primarily invest their own capital and that of their family trust, combined with the fact that I have extremely honest feedback from my best friend, it’s been a great ride.

Without him it would not be possible for me to get comfortable with these types of projects as the usual interest rate of 10%-16% + equity does not compensate enough for the risk of capital that is present. The risks and potential profit can be so easily masked or inflated that many developers will put together investor packages where they have no money in the development yet take greater than 50% of the profits, thus they tend to over-estimate potential returns.

I usually invest in about 1/2 of the deals he brings to me but this varies based on expected returns, potential risks, how much exposure we have to real estate, and timing for the return of capital of our other investments. Some of these deals have zero cash flow for the first 4-5 years so we have to careful.

A few of the deals I have invested in:

Solar farm construction

This was a loan at 12% per year interest for a term of 18 months (Loan to value was 65%).

This project had almost zero risk with the exception of some sort of fraud.

This one was completed without any hiccups in the projected time frame.

Sometimes financing niche developments are too complicated or different to go through traditional bank financing, so it can be easier for the developer/company to go through the private investor route even though this money comes at a premium to the banks.

Pre-construction low rise condo construction loan

This deal was 15% interest per year compounded and paid out upon completion.

The builder had raised approximately $6 million in equity which was our safety buffer (albeit small). I was lured by the high return and the fact that it was a small development in a great area of Toronto.

Even though I knew the Canadian real estate market was due for a correction I thought their time horizon of 24-30 months was quick enough to mitigate much of that risk. This project was successful and we ended up with an IRR (Internal Rate of Return) of 16%.

However they went 2 years beyond the initial 24-month projected time frame (48 months in total). In hindsight I think there was too much risk involved and I didn’t account for the potential for such extreme construction delays. Had the condo market declined moderately or tanked over the 4 year period we easily could have lost all of our invested capital.

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?

Yearly Income sources:

  • Real Estate Commissions: $40,000 – $80,000
  • Wife’s Nurse salary: $60,000
  • Dividends: $20,000
  • Rental Property: $12,000
  • Private Real estate/ other business investments $50,000 Approx. (See description)

We have a constantly changing mix of real estate joint ventures and interest bearing loans some of which include interest and equity.

Payout schedules and returns can verify greatly from year to year, but we expect an additional $50k-$75k per year on average.

The catch is they are not distributed uniformly so some years might be $0, while other years might have a joint venture completed that pays out a few years of accrued interest/equity worth a few hundred thousand.

Total Household Income: Approximately $200,000/ year

What tips do you have for others who want to grow their career-related income?

From an entrepreneur perspective: keep investing in yourself.

Try taking a course, join a meetup or group that focuses on what you want to do, and read as much as you can on the topic. This will be some of the best returns you will see on your money and time.

Secondly, surround yourself with people that are already where you want to be in life. These people have already navigated the path you want travel — learn the shortcuts from them. It will make your journey faster, more profitable and more enjoyable.

Lastly, take action! Very rarely in life will you have 100% information. I myself am guilty of this, by the time you get close to 100% information the opportunity will have already passed you by. Take calculated risks and reap the rewards, and don’t forget from failure will come your biggest successes.

What’s your work-life balance look like?

I have struggled in the past finding balance, often putting in more hours than I would like (60-70 hours a week).

This last year I have tried to find a balance working 20-30 hours a week.

My wife being a shift worker and us having two young kids, I often have the kids by myself for a few days during the week and on weekends. I’m always the only dad at the park on a random Wednesday.

As I join a bunch of nannies and grandparents that are getting the little ones out for some exercise, I realize how lucky I am to be able to spend so much time with my kids as they are growing up.

In the last year I’ve managed to get to the gym 6 days a week. It makes a huge difference on my mood and overall happiness. This is something that I plan to continue with my more flexible schedule.


What is your annual spending?

Our annual spend is approximately $75k oops…upon closer inspection approximately $96k.


  • Rent – $2,200
  • Utilities- $200
  • Rental property mortgage and taxes – $550
  • Cottage mortgage taxes and expense – $800
  • Groceries – $1,000
  • Kids exp (daycare, sports, clothes, etc.) – $1,300
  • Insurance (2x car, house, rental property, cottage life insurance) – $350
  • Travel – $800
  • Entertainment & Meals out – $300
  • Misc personal exp and stuff we don’t need – $500

Estimated Total Monthly $8,000/month

Do you have a budget? If so, how do you implement it?

We do not have a budget.

I have created a rough one in the past as a guide to how we are tracking, and approximately once a year I do a quick checkup to see if our spending has gotten out of hand.

A few years ago we were eating out a lot and buying things on Amazon all the time.

We were able to reduce our spending by about 20% in a few months by putting a lot more thought into our purchases and preparing better in advance for meals so we are not making a last minute decision to dine out.

I have tried to install frugalness in my wife. She’s great with some things (driving a 10-year-old dented Civic), and less optimal with others (shopping for the kids).

I try to avoid nitpicking small things now as it tended put stress on our relationship. In the grand scheme they don’t matter too much anymore for us. Happy wife = happy life.

What percentage of your gross income do you save and how has that changed over time?

We have saved as much as 90% during the 2 years where we had combined incomes over $500k and as little as 10% when I had a low income year and my wife was on maternity.

With an average income of $200k I expect us to save approximately 40%.

We have done our best to slow lifestyle inflation as our incomes have grown (or shrunk) over the years.

I always knew my career playing poker was similar to a professional football player. I would likely peak and fizzle out within a few years, or the regulation landscape would change. So I squirrelled away as much as possible knowing I likely wouldn’t have an opportunity to earn like that again, and more importantly I really wanted to avoid having to get a typical 9-5 job in the future.

What is your favorite thing to spend money on/your secret splurge?

I would say health & travel.

We pay a little extra for a nice gym around the corner with yoga, pool, weights, etc. I’ve always had a gym membership and never regretted it.

I also like to road/mountain bike.

I don’t mind spending on things I enjoy/get value out of. However when I spend $1,500 on a nice road bike I take care of it and ride it for 10 years.

We also spend approximately $10k a year on trips.

We put a high value on experiences and usually take two trips a year.

Last year we went to a nice resort in Dominican for 10 days and also spent 3 weeks in Costa Rica renting a house in a nice beach town.

We have re-booked Costa Rica for February of 2019 and also plan to do a week in the Cayman Islands.

We love to explore the beaches, try the local food, and meet new people. I also really enjoy surfing and Costa Rica has some of the best surfing in the world.


What is your investment philosophy/plan?

For equities I am mainly an index investor now.

I have some blue chips stocks I bought in the past that I generally don’t touch. I add to the index funds when I want to increase my equity %.

For real estate I am always on the lookout for value add properties or real estate investments that look like they have a good risk/reward.

I don’t mind taking lower returns these days for low risk investments. It helps me sleep.

What has been your best investment?

Not really investments but…Bitcoin, and our last house. Both were somewhat accidental.


I used to play poker on a site that operated in Bitcoin in 2014.

I purchased 3 Bitcoin at $1,000 each in 2014. I proceeded to win approximately 30 coins and generally sold them off pretty quickly as the price was consistently dropping to the $500 range.

Eventually I stopped playing on the site for fear of being cheated and I left 8 bitcoins on my computer worth approximately $4,000 which was chump change at the time. I forgot about them.

Fast forward to 2017 when one bitcoin was now worth over $3k. I remember that I have them on my computer and realize I should probably take a look for them as I haven’t opened the program for a few years. However I’m too busy and I also don’t want to be heartbroken to find out I definitely lost them.

Quickly the price of Bitcoin rises to over $6,000. I realize I could now have nearly $50k of virtual currency so I finally take the time to search my old desktop computer, but I forget that I reformatted my computer in 2016…OMG I DELETED THEM BY ACCIDENT.

I had backed up a file to Dropbox but it turned out it was the wrong wallet with a measly .001 Bitcoin in it.

Panicking I make a quick call to a local computer whiz I know. He comes over a few days later and proceeds to tell me he won’t be able to pull an old file over from the reformatted drive as I’ve written over it already. Devastated I sit there and ponder.

I suddenly remember I have an old hard drive stashed away in our basement storage where I would occasionally backup files from the desktop over the years. It’s possible I could have accidentally backed up the wallet program on the hard drive.

I ask him if it’s possible to find the file there. He scans the old drive and low and behold it’s buried in an old computer backup that I had done 6 months before the reformat.

I didn’t make any decisions right away as I still felt like it was free money and the current momentum didn’t look to be slowing. As an economics major I am well aware of bubbles and the tendency of humans. I have also have seen Bitcoin already go through two large run ups and implosions. I am fairly confident that this story will not end well in the near future.

As I waited to sell the price continued to skyrocket. I planned to sell if/when they were worth $80k.

However we had a two week vacation planned and I was still waiting for my account to be confirmed on the crypto exchange (where I would sell them).

When I arrived home from vacation I take a look at the price only to realize that the value has nearly doubled again while we were away.

Knowing that it’s only a matter of time before the hyperbolic bubble implodes and also realizing that this now represents over 5% of our net worth, I start selling it and manage to get them all sold at an average price of $18,000 per coin for a total of approximately $150k.

This has now become a significant windfall and a very nice boost to the net worth. (I do not own or plan to own any cryptocurrency.)


We upgraded to a large 2,500 sq. foot home in 2016 for $600k which was a great buy and a little undervalued at the time.

A year later our market went bonkers and it had increased in price by 30%.

I knew our market was a little bubbly as I had been involved with multiple offer situations where foreign buyers were consistently setting new and ridiculous records for neighborhoods. I was fairly confident we would have a correction after our province implemented a speculator tax for foreigners that was set to happen in a few months.

My wife reluctantly agreed to sell after I pleaded with her to let me sell our home. When she finally agreed we quickly put the house on the market and managed to sell just 3 weeks before the new tax was officially announced. We sold for $800k and netted $150k after expenses.

We are now renting and waiting for (hopefully) a better opportunity to buy something a little smaller. Our market is down 15% from the peak when we sold but I hope to see a bigger correction as interest rates rise.

What has been your worst investment?

Options and a few stocks that went to 0.

After quitting poker I had the bright idea that I could beat the market. I had a friend who is a phenomenal investor and thought I could replicate his success, because hey I’m good at making money right?

Boy was I wrong.

After a brief and meaningless period of success my portfolio dropped by 30% while the market dropped by only 10%.

Leverage was not my friend. I lost approximately $250k in 2014.

I made few speculative stock investments that went to zero. Greek banks looked cheap after their economy imploded, Chinese reverse merger (looked cheap and I thought I had some great inside info that they were not a scam), and even some of my Bank of America options that looked like a no brainer ended up expiring worthless due to my lack of understanding of options and aggressiveness with the position.

It was a good but expensive learning experience that I can be my own worst enemy, leverage cuts hard and both ways, and even if I did somehow have an edge (I don’t) it would have been very small. I realized my time is much better spent on other ventures.

What’s been your overall return?

I would estimate a measly 2-5% in equities due to my prior failed active management strategy and approximately 15% in real estate and real estate related ventures.

Thus averaging 7-9% or so but with oodles of headaches and stress.

How often do you monitor/review your portfolio?

For the last 3 years I have done a monthly net worth update which helps keep me honest with returns or losses.

I regret not starting this 10 years ago. It would have forced me to realize how poor my stock market performance was and make a change.

It takes me a few minutes to update monthly in excel, but provides excellent feedback.


How did you accumulate your net worth?

Our net worth has accumulated from earnings with a nice tailwind from returns.

I always focused on where I saw opportunity and my wife has consistently but slowly increased her earnings as her experience/seniority grows.

I expect the majority of our growth from here on out will come from compounding and not additional investments.

What road bumps did you face along the way to becoming a millionaire and how did you handle them?

I would estimate if we just indexed all of our equity investments from the get-go we would have an extra million our so…alas I’m a gambler. You win some and you lose some the key is to learn from your mistakes.

What are you currently doing to maintain/grow your net worth?

I’m currently working on a house flip with a couple partners. We expect to split 50k profit.

The main goal of this venture is to learn and get experience with rehabs.

I plan to move towards multi-family real estate investing. I will be focusing on the “brrrr” strategy. Buy, Repair, Rent, Refinance, Repeat!

Do you have a target net worth you are trying to attain?

The goal post keeps changing.

I used to think if I just hit $1,000,000 that we would be set.

Now I would like to have a mortgage free house (approximately $600k in our high cost of living city) and $3 million in invested assets.

Using the 3% rule that would make for a nice, safe, fat FI. With a paid off house, we really only need about $80k to maintain our cushy lifestyle.

How old were you when you made your first million and have you had any significant behavior shifts since then?

I think we hit the mark at 27.

I have significantly reduced my risk tolerance since.

Having a very high risk tolerance is necessary to being a successful high stakes gambler. In the world of investing this trait can be devastating. It led me to some poor investment decisions and over-confidence/denial in my abilities as an investor.

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

My biggest mistakes have come from being afraid to ask for help or asking how to improve.

My own insecurities held me back from asking these questions. Often I was afraid I would look stupid. I would bang my head against the wall trying to figure it out the hard way.

What advice do you have for ESI Money readers on how to become wealthy?

1) Hustle Hustle Hustle…Don’t be afraid to fail. Failing is learning. Trying things that others are not doing can often lead to some of the most profitable ventures. Of course be aware enough to realize when something new is not working out and when to move on.

2) Talk with people who are doing what you want to be, ask them questions, show them you want to learn, see what you can do to help them in their lives and business. My best investments, career development, or investment decisions can usually be attributed in some way to my network.

3) Come from contribution. People want to help people. If you are a good person and show genuine interest and drive in what someone is doing they will have no choice but to root for you and do what they can to assist. Learning what is working from exceptional people and copying those habits and strategies is 100x easier that trying to pave your own way from scratch.

Lastly, coming from experience, don’t let your ego/insecurities hamper your progress.


What are your plans for the future regarding lifestyle?

I have discussed recently with my wife about her going part-time.

She worked so hard (4 years) to get a full-time position that she is hesitant to give it up. Also she’s a busy bee, so I think she would get bored and feel unproductive.

Even though I have shown her the math she doesn’t fully believe that we don’t need to work anymore.

I plan to do less residential sales and focus more on acquiring great performing multi-family properties. With 2 kids aged 2 and 4, I suspect we will continue to lead pretty typical lives once hitting our goals. As we work less we will spend more time up north at our shared cottage and do some more traveling/exploring.


How did you learn about finances and at what age did it ‘click’? Was it from family, books, forced to learn as wealth grew, etc.?

I read Rich Dad Poor Dad when I was 18.

I have a fleeting memory and I actually forgot that I read it until about 5 years ago when I was listening to a real estate podcast that brought it up. I do believe that I did internalize this book and it has shaped the way I think about income producing assets, real estate and wealth, even if I didn’t realize it.

Currently I listen to a ton of podcasts and audio books mostly about real estate investing and personal finance. I enjoy the Bigger Pockets podcast, Choose FI, and most recently the Dad Edge podcast which focuses on just being a good person.

Who inspired you to excel in life? Who are your heroes?

I read the snowball about Warren Buffett’s life in 2008 when I was 23 and it gave me a profound amount of respect for him as an investor and person.

Richard Branson has always been a person that I have admired for his fearless attitude in business while also embracing philanthropy.

It’s nice to see there are good humans out there!

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

We give locally to friends or neighbors raising money for cancer or local causes.

It embarrassingly only adds up to approximately $1,000 a year.

I used to volunteer at the local food bank and was a big brother in my 20’s for many years, but I have not been able to make the time since having a family and having a busy work life.

I plan to start volunteering again when the chaos settles down a little. I have recently heard about and love the idea of visiting a few of the local retirement homes with the kids to give back as a family and help to instill those values in them.

We have been so busy trying to accumulate that I always looked at giving significant sums as slowing down our snowball. Knowing now that there will be more than enough money for us now, I have started to spend more time thinking about what causes are important to us and how we would like to donate but it’s still something I/we struggle with.

I grew up with a scarcity mindset and it’s something I’m still working to shake to this day.

Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?

We will likely leave a significant inheritance to our kids — 40-50% of our assets — however I will tell them to expect very little.

I want our kids to pave and earn their own way, and anything they get will from us will be a bonus.

Growing up my parents gave us very little handouts and were very frugal. This gave me the drive to start earning and working at the age of 12.

I’m confident this contributed a great deal to my drive to get to where I am now.

We plan to give away a bunch as we get older to causes that are important to us. I suspect it will be focused on helping the underprivileged kids in our area. It’s hard to fathom how big of a disadvantage many of the kids in our local area are at and to make a small change in some of their lives would be a great feeling.

What can readers take away from my ramblings?

My self diagnosed ADD and obsessive compulsive disorder have led me to pursue many different adventures from selling play-doh in the school yard at recess, running a window cleaning company in university, working the oil rigs in Alberta, playing poker 12 hours a day, to selling houses.

The most important thing I have learned is that it is possible to have just slightly above average intelligence (me) yet excel a very high levels.

Do not underestimate the power of grit and consistency. If you dedicate yourself consistently to improving at your business, job, or hobby, and keep applying the 80/20 rule (20% of your activity will provide for 80% of your results), you will have no choice but to have built a phenomenal business, achieve a blackbelt in karate, or become a master carpenter.

I have seen and experienced so many examples in my life where it is so clear that the reason for an individual’s outsized gains or success are not because they were the smartest person in room or were naturally gifted, it was because they were consistent and focused with their goals.

Thanks for reading if you made it this far!

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Money Lessons from Failure, Part 1 Sat, 11 May 2019 09:00:29 +0000 I’ve been reading a lot lately now that I have a couple extra hours each day (since selling Rockstar Finance). One book that I’ve enjoyed immensely is How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life. It’s written by Scott Adams, the creator of Dilbert. I think […]

The post Money Lessons from Failure, Part 1 appeared first on ESI Money.

I’ve been reading a lot lately now that I have a couple extra hours each day (since selling Rockstar Finance).

One book that I’ve enjoyed immensely is How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life.

It’s written by Scott Adams, the creator of Dilbert. I think it’s supposed to be a self-help/advice/success book but it’s difficult to classify. Anyway, it has many useful thoughts about how to succeed in life.

Many of his suggestions are either directly or indirectly related to money.

BTW, in addition to being full of useful advice, the book is also very funny! (as you might have guessed)

I first “read” the book on Audible (listening to it). It was similar to Meet the Frugalwoods: Achieving Financial Independence Through Simple Living (see Frugalwoods: Finding Fun and Fulfillment in Frugality) in that it was a great combination of humor and useful ideas.

A couple months after listening to it I ordered the book from our library, intent on reading and posting about it. This didn’t happen as I found myself wanting to make notes in the book. Since our library frowns on this behavior, I pursued another option.

I took the (rare these days) step of buying the book, reading it again, and noting several passages and thoughts I wanted to share with ESI Money readers.

So that’s what I’ll be doing in this post as well as one other to follow.

Even though I’m spending two posts on this, I’ll probably only cover one-third of the great content in this book. So if you’re looking for an awesome read, you might want to check this one out.

The posts will be a jumble of thoughts but the one unifying theme is that they deal with becoming wealthy in one way or another.

With that said, here are the nuggets of truth I liked best…

1. Luck is what you make of it.

I am working on a separate post about luck in financial independence, so I won’t share too much here.

But there’s so much good stuff on the topic I can’t pass it by.

Adams covers the issue throughout the book so I’ll share several key quotes that I loved.

He begins talking about luck even before the book gets started (in the introduction):

Was my eventual success primarily a result of talent, luck, hard work, or accidental just-right balance of each? All I know for sure is that I pursued a conscious strategy of managing my opportunities in a way that would make it easier for luck to find me.

I’ll share my comments at the end of this section. For now, let’s move on to this quote:

You can’t directly control luck, but you can move from a game with low odds of success to a game with better odds.

The best way to increase your odds of success — in a way that might look like luck to others — it to systematically become good, but not amazing, at the types of skills that work well together and are highly useful for just about any job.

Then he lists the skills as follows:

Luck has a good chance of finding you if you become merely good in most of these areas:

  • Public speaking
  • Psychology
  • Business writing
  • Accounting
  • Design (the basics)
  • Conversation
  • Overcoming shyness
  • Second language
  • Golf
  • Proper grammar
  • Persuasion
  • Technology (hobby level)
  • Proper voice technique

Later in the book he offers another take on luck as follows:

I find it helpful to see the world as a slot machine that doesn’t ask you to put money in. All it asks is your time, focus, and energy to pull the handle over and over.

A normal slot machine that requires money will bankrupt any player in the long run. But the machine that has rare yet certain payoffs, and asks for no money upfront, is a guaranteed winner if you have what it takes to keep yanking until you get lucky.

In that environment, you can fail 99 percent of the time, while knowing success is guaranteed. All you need to do is stay in the game long enough.

Even later on he writes:

What good is a book that discusses success if success is entirely luck? That’s a perfectly reasonable thing to wonder. And it matters because if you believe all success is based on luck, you’re not likely to try as hard as if you believe success comes from hard work. No matter what genes and circumstances you have, history tells us you still need to work hard to pull it off. Does belief in pure luck work against you? It can, but it doesn’t need to.

And finally, in the book’s summary he says:

If I’ve done my job right [in writing this book], you’ve changed in a way that will someday make people say you were lucky.

Lots of thoughts on this one for sure:

1. Overall, his thinking on luck aligns with my take on it.

Sure, there is random good and bad luck that you can’t do anything about, but most “luck” (good or bad) is helped along by what you choose to do or not do — the actions, plans, strategies you do or don’t implement in life.

For instance:

  • I was “lucky” to earn a high income during my career. Then again, I got an MBA, worked like a dog (especially in those early career years), and actively took steps to make the most of my career.
  • I was “lucky” to invest in real estate when I did. Then again, I saw a potential opportunity and approached a knowledgeable person to determine options. From there I took the steps (and the risks) despite knowing nothing about real estate investing.
  • I was “lucky” to have a side hustle like blogging that helped out significantly. I’ll tell you, I didn’t feel lucky at 2 am when I was writing post after post or trying to correct some tech issue that was causing my site massive problems.

You can probably name similar situations from your life as well — whether it was good luck or bad (i.e. my mom was “unlucky” to get cancer but she also smoked for 40 years.)

Anyway, my belief is that there is certainly good and bad luck we can’t influence. But no matter what cards you are dealt, I believe you can make the situation either better or worse through your actions or inaction.

2. I totally agree with the thoughts on skills.

We’ll cover this more in the point below, but I think we all know that 1) certain skills have better odds of making you “lucky” and 2) the more of these you have, the more likely you are to experience “good luck.”

I might nitpick on what skills should make the list, but we’ll get to that soon…

3. Luck can also often be defined as perseverance.

I like the slot machine analogy.

I’m not sure that success is guaranteed in any form or fashion, but I would say that the more you try and/or stick with something, the better your odds at achieving what you set out to do.

I can attribute many of the “lucky” things in my life to determination, dedication, and perseverance. I was often not the smartest, most skilled, most talented, etc. person up for an opportunity, but I was willing to work harder than almost anyone else and never give up in the pursuit of success.

Anyway, those are my thoughts on luck for this post.

I’m interested in hearing your take on the subject. Let me know your take in the comments below.

2. Every skill you acquire doubles your odds of success.

If you’ve heard the term “talent stack”, this is what he’s talking about here (though he doesn’t call it that in the book.)

I’ll let him explain and then chime in with my comments:

The formula, roughly speaking, is that every skill you require doubles your odds of success.

Notice I didn’t say anything about the level of proficiency you need to achieve for each skill. The idea is that you can raise your market value by being merely good — not extraordinary — at more than one skill.

Then he elaborates:

Successwise, you’re better off being good at two complementary skills than being excellent at one.

When I say each skill you acquire will double your odds of success, that’s a useful simplification. Obviously some skills are more valuable than others, and the twelfth skill you acquire might have less value than each of the first eleven. But if you think of each skill in terms of doubling your chances of success, it will steer your actions more effectively than if you assume the benefit of learning a new skill will get lost in the rounding.

He even gives a formula for this effect:

Good + Good > Excellent

Adams details this thinking a bit more on his blog where he says:

The idea of a talent stack is that you can combine ordinary skills until you have enough of the right kind to be extraordinary. You don’t have to be the best in the world at any one thing. All you need to succeed is to be good at a number of skills that fit well together.

For example, I’m not much of an artist, not much of a business expert, and my writing skills are mostly self-taught. I’m funny, but not the funniest person in my town. The reason I can succeed without any world-class skills is that my talent stack is so well-designed. (That’s intentional, by the way.)

Pretty interesting stuff! Here are some thoughts from me:

1. This line of thinking matches my personal experience.

I think about all the successful men and women I met during my career. Their accomplishments weren’t because they were the best in the world at one thing or another but because they had an unusual (and valuable) combination of skills that made them successful.

The same holds true for me. I wasn’t the best at public speaking, negotiation, analytical thinking, leadership, and so on, but I was “good” (or at least “good enough”) in these and more. And the combination served me well in my career.

In addition, I continued to learn new things and develop new skills throughout my career. He’s right — each one built upon the others to make me more valuable. And more valuable employees generally get paid more.

2. Certain skills are more valuable and should be pursued disproportionately.

In the luck section above, Adams listed his 13 skills that are better than most as follows:

  • Public speaking
  • Psychology
  • Business writing
  • Accounting
  • Design (the basics)
  • Conversation
  • Overcoming shyness
  • Second language
  • Golf
  • Proper grammar
  • Persuasion
  • Technology (hobby level)
  • Proper voice technique

Many of these also make my list of skills that can grow your career

The one I might question these days is golf. It was certainly big in my day, but as I got towards the end of my career fewer and fewer people were playing it. I’m not sure if that’s because it was expensive (and time consuming) for businesses or if the game simply lost popularity, but it’s not as important as it was in business circles these days.

Anyway, it’s better to stack more valuable skills on top of each other than to pursue less valuable ones, though I would concede that every skill added has some sort of benefit.

3. This phenomenon certainly applies to money.

For instance, you can be world class at saving but if you don’t earn much, you won’t get far.

The same is true in reverse: you can be world class at earning and yet spend it all because you can’t control your saving (just look at all the actors and professional athletes that make a ton and then go bankrupt.)

It’s far better to be simply “good” at earning, saving, and investing. Those three will get you far. 😉

3. Happiness is health plus freedom.

I’m interested in seeing what you think of this one.

In addition to literally saying that “happiness is health plus freedom”, he takes the additional step of defining what he calls “the happiness formula” as follows:

  • Eat right.
  • Exercise.
  • Get enough sleep.
  • Imagine an incredible future (even if you don’t believe it).
  • Work toward a flexible schedule.
  • Do things you can steadily improve at.
  • Help others (if you’ve already helped yourself).
  • Reduce daily decisions to routine.

A few thoughts from me:

1. Is he describing financial independence?

When I saw “happiness is health plus freedom” I immediately thought about being financially independent. Why?

Well, much of the FIRE movement talks about “happiness” as being the ultimate goal. Combine that with the freedom you get once you become FI, add in the chance you have to improve your health when you stop working full time (I’m probably 10 years younger since I stopped working), and it all seems like it fits so well.

2. The list is simple but right on.

Basically he’s saying to take care of yourself physically and mentally. If you do that, you’ll probably be happy.

Being financially independent makes all of this easier because you have time to focus on these. When you’re working your attention is divided in ways that make it much harder.

3. He’s not anti-charity.

When he says you need to help yourself first, he’s simply referring to what many would say — you can’t be a help to others if you are not in a good place yourself.

You know, the whole “put your mask on first” speech that airlines give you before every flight.

Ok, we’ll stop here for today and pick up in a future post.

What do you think of the book so far? Has anyone else read it? I’d love to hear your thoughts below!

The post Money Lessons from Failure, Part 1 appeared first on ESI Money.

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Retirement Interview 8 Fri, 10 May 2019 09:00:41 +0000 Here’s our latest interview with a retiree as we seek to learn from those who have actually taken the retirement plunge. If you’d like to be considered for an interview, drop me a note and we can chat about specifics. My questions are in bold italics and his responses follow in black. Let’s get started… […]

The post Retirement Interview 8 appeared first on ESI Money.

Here’s our latest interview with a retiree as we seek to learn from those who have actually taken the retirement plunge.

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

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

Let’s get started…


How old are you (and spouse if applicable, plus how long you’ve been married)?

We’re both 61; married 37 years.

Do you have kids/family (if so, how old are they)?

2 kids…

30 yr old girl- married.

24 yr old son- single.

What area of the country do you live in (and urban or rural)?

Live in rural Indiana, 1:15 outside of a major city.

Is there anything else we should know about you?

We have been blessed in many ways both known and unknown by our families, friends, strangers, good fortune, and God’s grace.


How do you define retirement?

We define retirement as being financially independent enough to do pretty much what we want when we want to do it.

How long have you been retired?

We both have been fully retired almost 2 years.

Is your spouse also retired?

Yes, but she also started a craft jewelry business 4 years ago.

It’s taking some time each week, and we can both participate in some aspects.

It is done from home and the time commitment is very manageable.

What was your career and income before retirement?

My career progressed to mid-level manager in a Fortune 100 manufacturing & consumer services company, retiring at age 57.

Then stepped into a hospital office work role, leaving at 59.

Wife’s career was mostly stay at home mom.

She later took on various office & bookkeeping work.

Combined household income at retirement was $145k.

Why did you retire?

Retired from corporate job after experiencing cardiac arrest while playing basketball.

Fortunately my buddies reacted quickly and performed CPR until First Responders arrived with an AED and re-started my heart.

Doctor said I had died–Very lucky for us.

That event got us re-thinking an earlier retirement date.

We had loosely planned working until 60-62, but after the cardiac incident decided to lower the stress level and began a different kind of work soon after.


When did you first start thinking seriously about retirement and when did that turn into a decision to do it?

Actually pretty early after college.

Started saving for retirement at 23 in a “pre-401k type” savings plan as the result of a co-worker’s urging. He was about 15 years older than me and said that I needed to start saving for retirement now versus spending money on things that I didn’t really need.

So planning and saving for retirement has been on my/our mind for a few decades.

What were the major steps you took from deciding to retire to developing a plan to do so?

We wanted to be prepared to retire early at 55 in case something came up. Always envisioned the “something” would be an early retirement offer from the company (that never happened.)

Major steps we took included:

  • Agreed & set goal of being financially prepared to retire at 55.
  • Put 8-15% of pay into savings/401k plan from age 23.
  • Prioritized retirement savings over kids’ college savings.
  • Managed reasonable level of debt (mortgage, car, kids’ student loans.)

What did your pre-retirement financials look like?

Assets (at corporate retirement- age 57, Aug 2015)

  • House value: $201k
  • 401k: $1.02M (accessible after 59 1/2) Held at Vanguard.*
  • Lump Sum Pension: $543k (accessible)
  • My Roth IRA: $41k (accessible)
  • Spouse’s Roth IRA: $41k (accessible)
  • Bank Savings: $29k (accessible)
  • College 529 Svgs: $5k
  • Total Assets: $1.880M

*Assets in 401k:

  • Target 2020- $635k
  • FTSE Index- $35k
  • Retrmt Trust- $201k
  • Tot Bond Mrkt- $51k
  • Value Index- $62k
  • Employer Stock $36k


  • Mortgage balance: $133k (as a result of refinancing $150k in Sept 2013)
  • College loan balance- Daughter: $38k
  • College loan balance- Son: $20k
  • Car loan balance- $19k
  • Total Liabilities: $210k

Net Worth: $1,880,000 – $210,000 = $1,670,000

On-going income from hospital office work & spouse’s work: $53k / yr. (from age 57-59)

What was your overall financial plan for retirement?

Taking into account our spending, assets, spouse’s Long-Term Care coverage (I didn’t qualify after my heart event), and income streams in addition to Social Security, we projected, and our financial advisor agreed, that we were financially highly likely to sustain a comfortable retirement through age 95 and beyond.

Our monthly expenses totaled about $6600/month. In addition to living expenses, we set aside money each month for health, auto & LTC insurance, other annual expenses, and charitable giving.

We determined our expenses based upon analyzing cash, debit, & credit receipts, as well as recurring electronic bills. It took us about 4 months of receipt analysis to accurately capture what and where we were spending on a monthly basis.

When I left the corporate job, we rolled $800k of the Vanguard 401k and the $543k Lump Sum pension into an IRA. We drew our supplemental living expenses (see below) from the remaining $200k Vanguard funds.

Our immediate retirement spending plan used on-going salaries ($4400/mo) for living expenses supplemented with a regular monthly draw from pre-tax assets ($2200/mo).

We believed we were self-insured, so we dropped disability income insurance ($1300/yr), and didn’t renew life Insurance policies (4 term, 1 whole life) as they came due over the next 3 years ($3050/yr).

Did you make any specific moves to prepare your finances for retirement?

We changed our spending behavior, somewhat.

Prior to retirement, we had been freely using a credit card to pay for many daily living expenses, but decided to stop using credit moving towards debit & cash.

We didn’t like the big monthly bill coming weeks after all the fun had been had.

This behavior change has given us a clearer view of our spending and we’re more intentional as a result.

Intend to live in current house for foreseeable future (been here 26 years.) Contemplating a move south in a few years.

Once funds were available to us, we prioritized paying-off all debt as soon as practical. We set the priority as:

  • Car loan- Paid from savings (2016: $19k after-tax),
  • Kids’ college loans- Paid from IRA assets (total 2017: $75k pre-tax), and
  • Mortgage- Paid from IRA assets (2018: $157k pre-tax).

Paying-off our debt, setting up the monthly draw, and using debit & cash have given us “permission” to spend.

Who helped you develop this plan?

We set up the plan with our Edward Jones financial advisor that we had been working with since 2010. He was very helpful in investment & tax planning.

What plans did you make in advance to leave your job?

As mentioned above, we had intentionally been long-term savers preparing for an early retirement, not knowing how or when it might occur.

What were your pre-retirement concerns (financial or non-financial)?

Centered around having enough nest egg to last for a long retirement and cost of medical care prior to Medicare at age 65.

Also unsure if we were going to stay put or move south.

How did you handle deciding on and paying for healthcare?

After leaving corporate job for hospital job, enrolled in hospital’s insurance plan.

After leaving hospital at 59, took hospital COBRA for 5 months (Aug-Dec 2017), then enrolled in Marketplace plan (beginning Jan 2018).

Fortunately, my corporate employer had funded a Retiree Healthcare Savings Account which has been used to off-set healthcare premiums for a period of about 3-4 years.

How did you tell your family and friends of your plans?

After leaving the corporate job (retirement), then leaving hospital job 2 years later (we called it a re-retirement). Now working a very part-time office job (1-2 days/mo.)

People we told knew my recent medical history, so all seemed pleased. If asked by a stranger what do I do I tell them I’m retired and work part-time.


How did you ultimately retire?

Made decision to retire in March 2015, but waited until I had post-retirement employment plans in place.

Wanted to continue working in a lesser capacity with lower stress and no commute. Began exploring local opportunities (hardware store, hospital). Hospital role had better hours (M-F, no weekends), better pay & benefits. Interviewed with hospital in late April–Accepted job late May 2015.

Sent retirement resignation letter to my boss and HR the next day, specifying last work day in mid-July. Took 2 weeks vacation til end of July, with Aug 1 as official retirement date.

Put together an effective transition plan for my group and worked closely with my successor through June to mid-July.

What went well?

My hospital supervisor worked with me to delay my start date to July 13.

The corporate work transition plan and project hand-offs went smoothly, in my opinion, but I know my successor had this additional responsibility dumped on him. I had been developing another person as my successor, but the business unit’s VP wanted to go a different route.

What didn’t go so well?

No surprises retiring and with the subsequent employment. A couple of times I had to be reminded to punch the time clock, since I hadn’t done it during my career.

How did you ultimately find the courage to do it?

Amazing what an untimely serious health issue can do to give you courage.


How was the adjustment, especially the first few months after retirement?

My last in-office work day was a Friday and I started at the hospital the following Monday, so no real time off between jobs. My official retirement date was actually 2 weeks later.

My wife and I agreed that we wouldn’t make any firm volunteer commitments or obligations for a year. Well, we’ve extended that approach indefinitely.

How is retirement life now? What do you like about it and what do you dislike?

Retirement is truly good, but you can lose your sense of day of the week. I tell people that I keep track of what day it is by comparing my daily pill box with my phone to see if they match.

It’s tough to beat this flexible schedule and are happy we can visit our adult children when we want.

I always have a few projects going, and also like to help-out friends with their projects as well.

I like not being responsible for the hard parts of work such as performance appraisals, but miss many of my co-workers–both their talents and hearing about their families & activities.

We’ve made a conscious decision to travel as much as possible over the next 10-15 years. We both had parents that experienced health and mobility issues in their later years and we want to avoid that.

Trips taken and coming-up include: Adirondacks, Finger Lakes, and Thousand Islands New York areas, Savannah, Atlanta, Charleston, Chicago, California, the Caribbean, Nova Scotia, Florida panhandle, Mississippi River, Hilton Head, New England, Alaska….

What do you do with your time? What does an average day look like?

It’s good having time to complete projects: kitchen, living room, garage. Mornings normally aren’t rushed.

No set waking time, but tend to get up later than I did when working (5:00am.) I try not to waste too much of a day though.

Early mornings spent at the computer, coffee with my wife. Read a few blogs & listen to a few podcasts throughout the day.

There are days with a couple of appointments (various doctors & dentists, car repairs) and days/nights with other engagements.

Spend more time practicing & playing bass guitar, including in our church band. Golf lessons are next. Will likely spend time helping out with Habitat For Humanity.

Looking back, what would you have done differently?

I would have retired with a more definite purpose versus it persuading me to retire due to the heart event.

This has also been a period of getting used to having unscheduled free time.

Was there any emotional impact from leaving the workforce?

The everyday workday stress is absolutely gone.

What surprises (financial or non-financial, good or bad) have you had since retiring and how have you handled them?

No surprises financial or non-financial.

Wish there was a cohesive plan for medical care for those under 65. Incredible how much inefficiency is in medical practice, health insurance, prescription, and payment processes. Insurance seems to run the show.

Some of the good is that we are tighter with our siblings due to our retirement.

What are your future plans?

Travel, enjoy our adult children’s adventures, improve my bass guitar and golf capabilities, increase my volunteer activities.

We’re considering enrolling as traveling house-sitters through It’s similar to being an AirBnB host, except we would travel to other’s homes and take care of the house, pets, and plants while they’re away.


How has your financial plan performed compared to what you had estimated before retirement?

Financially, we feel solid and sleep well. The strong market over the last several years has been a bonus. It’s nice to do pretty much what we want when we want to do it.

I check our retirement accounts frequently, but rarely make a change to our holdings.

How are you handling Social Security, required minimum distributions, tax issues and the like?

We know the RMD’s and the tax issues are coming, so are planning & projecting our spending to best manage taxes.

Did you return to paid work? Why or why not?

Working very part-time office work now- 1-2 days per month. No plans to change at this time.

Did you find it hard going from being a saver to a spender?

It took a little more thought than I anticipated, but was happy to do it. There’s more to tax planning than I realized.

Looking back, what do you wish you knew in advance?

First, how much daily stress we actually experience in our work lives. In retirement, it’s just not there.

Second, no regrets about my career choice, employer, or where we’ve lived. No matter what’s happened, we’ve always looked forward.

What advice do you have for those wanting to retire?

The usual…Start saving early, saving consistently, and saving more—You will then be pleased when you reach your retirement decision point.

The daily routine or non-routine you can adjust to over time, but you must be financially ready to retire. Otherwise, you won’t sleep at night.

Think through your retirement options, make a decision, and don’t look back.

The post Retirement Interview 8 appeared first on ESI Money.

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Retirement Update: 2.75 Years Wed, 08 May 2019 09:00:14 +0000 Ok, I’m going the wrong way. I thought that I’d move from two retirement updates per year to simply one annually, but there is so much going on, I’ve been doing them quarterly the past three times! If I don’t, my updates would often seem way out of touch. Besides, everyone seems to like these, […]

The post Retirement Update: 2.75 Years appeared first on ESI Money.

Ok, I’m going the wrong way.

I thought that I’d move from two retirement updates per year to simply one annually, but there is so much going on, I’ve been doing them quarterly the past three times!

If I don’t, my updates would often seem way out of touch.

Besides, everyone seems to like these, so for now I’ll be doing them more often.

Here’s an overview of my retirement life since the last update in February


  • As you know, the tougher-than-usual Colorado winter has us thinking about spending the winters in a warmer climate. We’ll be headed down to Florida in October to do some scouting and see what we come up with. I’ve also been chatting with friends who live and/or vacation in the area we’re targeting (Tampa to anywhere south on the Gulf side.)
  • Both my wife and I had birthdays since the last update, so I’m now 55 — which rounds to 60 versus 50. Ugh.
  • I’m doing more volunteering at church these days — serving almost every week as an usher. I would take another volunteer position if one came available, but I’m not looking for it.
  • With the Rockstar Finance sale I now have a lot more free time. Ok, it’s only a couple hours per day, but it feels like a ton more time. One of the ways I’m spending it is getting a few things done around the house. In the past few months we bought a new microwave and had it installed above our stove (which was a much bigger ordeal than I would have thought). In addition, we got our kitchen sink plumbing fixed (turns out when they remodeled the guys who did the counters probably “updated” the plumbing instead of actually hiring a plumber, so it was in kinda bad shape.) I’ve also got our grass to be the greenest on the block. Yes, I’m turning into “that guy.”
  • I started a new policy regarding clothing: I can’t buy anything new unless 1) something wears out and must be replaced (tennis shoes are the best example of this as I wear them out after 9-12 months) or 2) I get rid of an item — a 1-for-1 swap. I bought a couple new shirts recently (half price Columbia fleece — my favorite — at the outlet mall) and then did a full closet review. I ended up giving away about 20 shirts, pants, and jeans, most of which I hadn’t worn since I retired, so I’m a bit ahead of my goal.
  • Overall, I’m feeling very relaxed these days. It’s amazing what an extra two hours a day can do for you.

Family and Friends

  • My wife is working like crazy, way more than the 15 hours a week she was supposed to commit to the church. She loves it and they love her (she’s awesome with kids) so it’s been more like 20-25 hours at times. It’s ok with me as I like alone time (only child, I know, it explains a lot) so it’s all good.
  • My daughter moved out in February and into a house with two girlfriends. She didn’t have much stuff and we got it all over there (about 20 minutes from our house) by filling up three of our cars. In April we made another trip to move our keyboard to her place. She’s the one who’s played it 90% of the time the past several years, so why not?
  • My wife and daughter went to San Francisco in April to see my wife’s oldest brother. They had a great time. My son and I stayed home and it was “bro week” (my son’s term) and there were lots of action movies and bad-for-you-but-good-tasting food consumed!
  • My daughter got engaged at the end of April and it looks like we’re headed for a July wedding (no rush, right?) It’s going to be a small gathering as the couple wants to spend most of the money we’re giving them for a trip to Greece. As you can imagine, my wife and daughter are quite busy with the planning.
  • My daughter has created a job for herself by working for a variety of websites (including ESI Money) doing social media, editing, and a few other tasks. She likes the time and freedom of the job so I’m not sure she’ll ever have a “regular” job. I introduced her to estimated quarterly tax payments which was a welcome-to-adulthood moment. 😉
  • My son is working for the site as well. His skills are in the video area, so be on the lookout for some cool things coming up!
  • He’s also switched jobs to something he likes better. He’ll be working at a local kids’ camp this summer (40 hours a week). He also took a side job as a soccer coach for two 11-year-old club teams.
  • My son had what seemed to be a minor car accident (he ran into a curb) but it did $3,500 in damage to his wheel and a bunch of stuff under the car. We used insurance to cover it — he paid the $1,000 deductible out of his savings and AAA covered the rest. We’ll brace ourselves for an insurance increase at the next premium time. They said it would probably go up $600 a year, which still made it worth taking.
  • My mom and dad are moving (still slowly) towards leaving Iowa this summer/fall to full-time RV. They are just about to put their home on the market, but they’ve been “just about” to do it for a year now, so we’ll see. They plan to drive down to Florida and vacation with us there in October.


  • I’m still working out (of course) and am actually upping each workout. On weight days I now add in seven sets of 30 lunges and on cardio days I add in three sets of push-ups. I also plan to add swimming now and then since I have the time and enjoy it. It might just be a summer activity as our outside lap pool opens then.
  • On the advice of several ESI Money readers, my wife and I have taken up pickleball. Our gym has it available inside the basketball court area every Tuesday and Thursday, but we haven’t played there yet. We play on the outdoor courts at the park a few blocks from our house. I joined the Pikes Peak Pickleball Association and hope to get in many games this summer. We’re just having fun for now but if it’s anything like my past experiences, I’ll probably go fully crazy with gear, etc. sometime soon. Haha! 
  • We have also looked into buying electric bikes to make biking up the Colorado hills much more bearable. We found a bike shop close to our theater that lets you take free test rides, and we’re planning on doing so soon.
  • I had a follow up doctor appointment in March and went on cholesterol-lowering medication. I’ve been fighting a 20+ year battle with borderline cholesterol. It appears I have some forming in my arteries that my doctor wants to clean out. I did lose 10 pounds like he requested and after six weeks on the medication my cholesterol is at a record-low of 145. I’ll stay on the meds for a year and have a re-scan of my neck (how they tell if arteries are clogging) in a year.
  • Two days after the doctor appointment I saw my dermatologist for my six-month checkup. All was well on that front.
  • Through the first four months of the year I am averaging just over 18,000 steps per day. This has been rough given our winter weather and I had several days where I made laps around the house to keep the numbers up. It should be smoother sailing from now on.
  • I’ve been working a lot on ESI Money (see below) and it’s been challenging my mind (a good thing). I also do three chess puzzles a day plus a “hard” Sudoku a few times a week. Gotta keep the mind working as much as the body!


  • Movie day on Tuesdays (discount day) is still going strong. Since my last update we’ve seen Us, Shazam, Captain Marvel, Pet Sematary, The Lego Movie 2, The Avengers, and Alita at the theater. Our theater now serves Starbucks coffee, so that’s a bonus for me. We also saw Green Book and A Star is Born at home on Red Box and Spider-Man: Into the Spider-Verse from the library. I liked Green Book but was disappointed in A Star is Born (though I liked much of the music and the acting — didn’t care for the story.) Spider-Man was great! I need to replay that video game!
  • Now that I have extra time in my day I’m also reading much more. In the past few months I’ve read How to Fail at Almost Everything and Still Win Big (review coming), Get What’s Yours: The Secrets to Maxing Out Your Social Security (excerpt coming, hopefully), Pickleball Fundamentals, and Your Complete Guide to a Successful & Secure Retirement (excerpt coming). I’ve also canceled my Audible subscription and am now listening via Libby to several books on tape. Libby is “ok” as my library doesn’t have everything I want and what I do is often on hold by someone else, but I’m getting used to it.
  • I’ve also started listening to podcasts again. Still having trouble finding a lot of money podcasts that tell me something I don’t know, but I enjoy Freakonomics, Laptop Empires, Planet Money, Money and Media (FinCon podcast), and ChooseFI.
  • One new, interesting book I found is The Infographic Guide to Personal Finance: A Visual Reference for Everything You Need to Know. I reached out to the publisher and they allowed me to share these:

  • How cool are these? Especially for teaching kids and young adults about basic money principles! I really like any book that makes understanding money simpler and this book certainly fits into that category.
  • Our TV viewing plans took a big hit! The college scandal sucked in Lori Loughlin which took When Calls the Heart off the air. Thankfully it’s back now! Plus we’re still feasting on Shark Tank, the beach-related house hunting shows, Gotham, and This Old House. And Hallmark movies, of course.
  • The video games have been sparse lately — at least the ones I like best. I did snag FIFA 19 for $20 in a sale and I’ve been considering getting Red Dead Redemption 2. I’ve heard such great things about it. Not sure if they let you push a button and say, “I’m Your Huckleberry”, but if they do, that would be awesome.

Totally a side note, but I have watched this video featuring the best scenes from Tombstone about 20 times in the past couple of years. It’s just so awesome!


  • Things are rocking on the net worth front! The combination of the Rockstar Finance sale and a hot stock market have our net worth well over $4 million. It’s still hard to believe we’re up $800k since I retired.
  • I mentioned on an earlier post that I’m investing with a friend who is buying rental places. He pays 10% and so far I have $60k there spread over three different properties. I have at least $90k more ready to allocate if he buys additional places.
  • The sale of Rockstar Finance has also left me time to focus more on ESI Money. As a result, traffic has been up and so has revenue! I’m also working on a few things behind the scenes that will help with both.
  • In particular, people are loving my millionaire and retirement interviews — not so much the ESI Scale Interviews, which I’ll still do but only now and then. I also have another one that will debut in a few weeks. If you want to be interviewed for any of my interviews, drop me an email and I’ll give you details.
  • I’m also working on a post with a working title of “Cool Things People Do in Retirement” and I’d LOVE to include your story. If you have something interesting, fun, unique,etc. that you do in retirement, please send it to me! It could be travel, a hobby, a side business — anything! 
  • I moved the “30 Days to Great Finances” email series to ESI Money (from Rockstar Finance). I also added a new series, “The 52 Best Ways to Save Money.” If you want to subscribe to either or both of them (it’s free) you can do so here. I have plans to add new series every couple of months or so, so stay tuned.
  • We completed our taxes in March and owed $5k to the U.S. government. We’re still paying estimated taxes quarterly, of course.
  • We moved almost $80k into our donor advised fund and it’s our intention to distribute up to $100k this year. I’ve already sent out $35k and am working on a much bigger project for the fall that will involve ESI Money readers. For long-time readers you might remember I used to do a giving effort every November and December. I’m thinking of doing something similar this year. So keep some of your charitable giving handy for then if you want to challenge me in giving away a bigger sum.
  • We are oh-so-close to completing the update of our wills. I’ll be writing about it sometime but the hardest parts have been: 1) deciding how to distribute everything and 2) finding a trustee to watch/mange the money as it gets distributed to our kids.
  • I’m down to $11k at Lending Club and $7k at Prosper. It’s taking me forever to get rid of everything I bought.
  • I’m still on Facebook and Twitter if you want to follow me there.
  • It’s possible that I’ll be hosting a meet-up in Washington, DC for the evening of September 3. If I do, I’ll announce details in my next retirement update which will post in early August.

So, that’s my retirement life lately.

Any thoughts or questions?

The post Retirement Update: 2.75 Years appeared first on ESI Money.

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Millionaire Interview 129 Mon, 06 May 2019 09:00:20 +0000 Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights. If you’d like to be considered for an interview, drop me a note and we can chat about specifics. My questions are in bold italics and his responses follow in black. Let’s get […]

The post Millionaire Interview 129 appeared first on ESI Money.

Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.

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

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

Let’s get started…


How old are you (and spouse if applicable, plus how long you’ve been married)?

I’m 59 my wife is 57.

We’ve been married for 32 years.

Do you have kids/family (if so, how old are they)?

We have two daughters. One is 26 and works in showbiz. The younger one is 21 and is in her junior year, getting a degree in industrial engineering with an analytics emphasis. She’s applying to get a Masters in Analytics and will pay her way through graduate school.

What area of the country do you live in (and urban or rural)?

About 40 minutes from the center of a large urban center in the southeast.

We live in the woods but we’re close to the city in a relatively low cost area.

What is your current net worth?

$1.8M to $2.2M depending on what I include. Our investible assets are $1.2M.

What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?

  • Cash at Bank: $70.2K
  • 401K Plan: $194.5K
  • Stocks/Mutual Funds: $764.2K
  • Life Insurance Cash Value: $252.8K
  • House 1: $529K
  • House 2: $386K
  • Cars (2): $45

Subtotal Assets: $2.242M

  • Home bridge loan: $400K
  • Credit Cards: $5.5K

Subtotal Liabilities: $405.5K

Net Worth: $1.836.5M

The credit card debt is paid-off every 30 days.

I don’t count household assets like furniture.

The bridge loan was to take advantage of a great home buy that my wife and I downsized to last summer. We have a contingent contract for the sale of our old home. When the home sale closes we’ll be at zero debt.

The only borrowing we do is for convenience (credit cards) or for larger purchases in which we receive favorable (below market) terms.

We don’t borrow money to buy cars and tend to own our vehicles for 10 to 12 years.

Our current vehicles are hedonistic wasteful buys (Lexus & BMW). For the majority of our marriage we’ve driven Hondas.


What is your job?

I’m a technology consultant, author, and speaker (last 10 years).

For the 25 years prior to that I worked in manufacturing/distribution in a variety of increasingly-responsible roles.

What is your annual income?

My base and incentives have averaged around $350K/year for the last 5 years.

My current annual base pay income is around $245K/year. We have another $28K/year in passive income from dividends on stocks.

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?

I graduated in 1982 with a business degree.

I also passed the CPA exam but never wanted to be an accountant.

That year was a particularly bad one to get out of school (Unemployment rate: 10.8%, GDP Growth: -1.8%, Inflation %: 3.8%). This was the tail end of a very bad stagflation period (high inflation and high unemployment) during the late 1970s.

My first job out of college was the same job I had while working in school at a campus drug store.

I was also a bartender, insurance salesmen, copier salesman before I landed my first real job working in accounting for a medium-sized company that was doing leveraged buy-outs.

The first real job paid me $15,000/year plus a free apartment. Over the next 5-years in that company I received good raises every year and by the end of that time was making around $35,000/year plus bonus. My last year there I received a $5,000 bonus.

I left that company to go to work for a Fortune 500 medical device manufacturer and my salary grew to from $48,000 to around $50,000.

I then moved back into a smaller multinational where I worked in a variety of roles for 18 years. During that time my salary grew to $125,000/year plus bonuses. I also started receiving stock options which provided a windfall of $100,000 when our company was acquired.

In 2008 I founded a consulting practice inside of an existing consulting company (where I still work). My salary and incentive pay has ranged between $235,000 to over $500,000. That big year was due to a very large bonus based on growth targets that I exceeded.

What tips do you have for others who want to grow their career-related income?

Be flexible. I started my real career as an accountant but I quickly transitioned into other roles when the opportunity presented.

Prior to becoming a consultant I worked for one company in sales, manufacturing, distribution, quality systems, and information technology. I gravitated toward under-performing processes and businesses that needed positive leadership and change.

When I look back on that period, I realize that even prior to my official career as a consultant I was in essence doing long-term (2-3 year) consulting-like jobs. When the business or operation was turned-around, I would move to a new role.

This afforded me a lot of exposure to a variety of roles which enhanced my knowledge, skills, and value.

Always give your best effort and work at helping those around you. The good you do for others always comes back in unpredictable ways.

What’s your work-life balance look like?

I have always loved my work.

When I transitioned into consulting officially 10-years ago the variety, challenges, and opportunities multiplied.

I work long hours but enjoyed (and still enjoy) working.

I really don’t have much of a line between work/family/life. They are all the same thing to me.

What’s changed as I’ve grown older is that I’m more aware that I need to make time to be with family. So, my vacation time tends to be with my wife and grown children.

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?

The vast majority of our family income has been from salary and bonuses. My wife and I have always been savers so we derive additional income from high dividend-yield stocks (around $28,000/year).

During the next 10 years I plan to do more writing, start at least one blog, so I can start to generate side-incomes in topics that I’m interested in learning more about.

The internet makes it so easy to start “idea” businesses. ESI Money and Rockstar Finance are two of my favorite financial blogs. Congratulations on those. I’d like to pick your brain on starting a successful blog. [Editor’s note: Here’s a great place to begin if you’re interested in starting a blog.]

I’m traveling less on my job now because the practice has grown to the point where we have geographic managers that are all running teams. I mentor, give talks, and help them close deals. This has provided me with more time at home while still keeping me actively engaged in the business.


What is your annual spending?

When my wife and I were in our 20s and 30s we were very frugal with spending and tracked every penny. We always saved a significant portion of our income. (20% to 30%). Windfall bonuses typically went into savings.

As our children grew we spent less time worrying about where we spent money and more effort targeting specific savings goals.

During the last 10 years we focused on traveling more with our kids and spent much more than we did in the first 25 years of our marriage. Some of these trips were quite expensive; the “experiences” were worth the money spent.

We’re now working on a 30-year plan in which we will start living off of our investments and side gigs. The idea is to have that option provide enough income by 2026 so that I can cut back my consulting/work time to spend more time on my own projects/travel/writing.

By mid-2019 we’ll have our old house sold, bridge loan paid-off, and we’ll be back to zero debt permanently.

Some people may feel paying off a mortgage (at current interest rates) does not make sense but I like the piece of mind of having zero debt. And, what other way can you get a risk-free 4.75% ROI?

What are the main categories (expenses) this spending breaks into?

Since we don’t budget spending in great detail we monitor the primary big ticket expenses which for us are eating-out and travel. We’ve been loose with these items over the past 5 years.

Our plan is to tighten the belt over the next 6 years and start to live on the budget that we might deploy should I decide to stop working around age 65. That way we can get comfortable with a lower-spending lifestyle and save more money for our nest egg.

My wife’s parents have a sizable estate so it’s possible that she will receive a windfall of money sometime in the next 10 to 15 years. We aren’t counting on this; but if it does happen the corpus of our invested assets will potentially double. This will provide a much larger safe withdrawal rate and enable us to leave a bigger estate for our children.

Do you have a budget? If so, how do you implement it?

We do utilize and Personal Capital to monitor spending, assets and liabilities.

Our primary interest the last 10 years has been toward wealth accumulation.

I’ve routinely maxed-out my work 401K plan. I have a rollover IRA from my old job. We have taxable stock portfolios and both my wife and I have small (capped by income) Roth IRAs.

My wife likes to track expenses on paper. She does the majority of the spending as she pays all the bills. I like to use Mint and Personal Capital to do occasional deep dives into our assets and big picture spending reviews annually.

Our new 30-year plan will require that we control our spending more to achieve the added savings we are targeting. We have a general plan now. In the next few months we’ll transition to a more detailed plan using Mint for spending analysis and Personal Capital for investment analysis.

I like using these apps because it becomes game we can play to see how much we can grow our investment assets.

Our primary vice is eating out, so we’re focused on eating more meals at home and limiting our dining out.

What percentage of your gross income do you save and how has that changed over time?

When I got out of school in the early 1980’s I lived very frugally and managed to save close to $3,000 in my first year out of school on a gross salary of $15,000.

When we got married (before kids) we increased our saving rate.

When the kids started getting older we spent more money on their activities and family trips so our savings rate went down.

Now I’m maxing-out my company 401K plan; then we save on top of that. I’m targeting a savings rate of around $75,000 this year. $25,000 in my 401K, $28,000 of dividend income reinvested, and another $25,000 to $30,000 of savings from my paycheck.

When my youngest daughter graduates; our saving rate will be closer to 50% of our income until I turn 65. At that point I may decide to reduce the number of hours I’m working and accept a comparable pay level.

My wife will probably start a side business or go back to work. As I mentioned before; I’d like to start a blog, write more books, and develop a speaking business.

If any of these things pan-out we may have a lot more cash coming in than we’re planning on which will provide more options for savings, investment, travel, and philanthropy. My wife currently volunteers time serving on a charter school board.

What is your favorite thing to spend money on/your secret splurge?

I love technology, gadgets, travel, reading and learning. My wife enjoys eating out and travel. We both love looking at real estate.

Our biggest splurges tend to be on family vacations. A few years ago we did a 10-day trip to Europe and took a cruise visiting multiple cities in Western Europe and taking in the sites and culture. We’ll probably do more of that kind of thing if our investments are generating enough growth to achieve our target number for retirement.

We also live in a part of the country that makes 3-4 day weekend driving trips feasible to the mountains or the ocean.

Right now we have enough money to stop working entirely. It’s more of a game to see how much we can grow the nest egg. If we can get our invested assets to around $2.2 to $2.5 million in the next 5 to 6 years; we can easily live on a safe withdrawal rate that will not require invading the corpus of our invested assets to live.

My guess is that we’ll be able to meet our goals and we’ll probably generate more income that isn’t in our plan through work and/or side income streams that we develop for fun.


What is your investment philosophy/plan?

The first 25 years of our marriage I liked picking stocks.

Because I know technology and have a deep interest in it; we invested in companies like Microsoft and Cisco when they were young companies.

Microsoft was a particularly good investment. In the 1990s that stock grew consistently. During that decade the stock did 9 (2 for 1) stock splits. Every time the stock split I’d sell half and diversify into other stocks. We built a decent sized portfolio that way that includes technology, pharma, utilities, REITS, and index funds.

We also tended to buy stocks on sale. I’m a big fan of value investing and Buffet style by and hold strategies. After every crash beginning in 1987 we were generally nibbling at high quality companies after the market downturns. Buying on sale and holding them through subsequent downturns.

Our retirement 30–year plan has caused a significant shift in my investment style toward income-generating dividend stocks, REITS, master limited partnerships and perhaps even getting into rental properties that we can buy during real estate downturns.

What has been your best investment?

I don’t have one.

First, company 401K plans and the Microsoft stock I mentioned earlier.

My wife received a gift of $10,000 worth of AT&T stock in the early 1980s which has been a clinic in investing due to the splits, divestitures, reverse splits, stock-dividends, and recombination.

I’ve invested a significant amount of money on books and reading and always take advantage of company-sponsored seminars in technical areas of interest and in productivity. I probably read 30-40 books every year. 80% of those are non-fiction (learning) books. The rest are novels for entertainment.

The best seminar I’ve ever been to was a David Allen Getting Things Done (GTD) seminar before he became famous in the mid 1990s. David taught the class. I felt weightless after 2-days thinking about planning and brain-dumping my to do list.

What has been your worst investment?

During the late 1990s .com boom I set aside some gambling money and was lucky to breakeven. We have a few big winners and a few big losers including one total loss. I never allocated more than $15,000 to this fun folly.

Stock speculation is in my opinion; gambling. More convenient than going to Las Vegas with only slightly better odds. It was fun, but ultimately a waste of time and effort.

What’s been your overall return?

I really have no idea but I would guess that we’ve probably averaged slightly less than the NYSE Composite index return over the last 30 years.

I might be substantially better than that; I’ve just never bothered to calculate it.

We’ve always been more focused on saving money and putting it to work. I’m more focused on how to average 5% to 10% returns every year from now until I croak though a combination of income and value growth stock investing.

While index funds seem like a good idea, I’m somewhat of a contrarian that wants to pick stocks and invest on my own. I enjoy looking for value and have the financial skills to do this kind of investing reasonably well.

How often do you monitor/review your portfolio?

I do a cursory review every week. Lately I’ve been looking at our account every day because I’ve been redeploying about $400,000 of assets into income-producing stocks.

Every year we do a detailed review together. Every 10 years we’ve done a deep dive to look at rebalancing.

The 30-year plan we’re working on now is very detailed and includes significant shifts out of growth stocks and into income-producing stocks in tax-sheltered accounts. This is very different style of investing that is in some ways easier that trying to pick growth stocks.

I’m focused on finding dividend paying stocks in the 2% to 10% yield range. My overall goal is to achieve a 5% to 6% yield on our portfolio with good diversification. I believe I can achieve that with 35 to 50 stocks. We currently own 25 stocks and 3 mutual funds.


How did you accumulate your net worth?

Over 90% of our net worth came from the income we generated.

My wife did get a nice stock gift from her grandfather before we were married. That small gift of around $15,000 has now grown to over $380,000 just by letting the stock accumulate, and reinvesting the dividends.

I’ve been fortunate to get decent incentive pay that has brought in annual windfalls (that we normally invest the majority).

When my grandparents died, I’ve also received around $15,000 of cash over the last few years. Relatively small amounts that we just put into savings and invested.

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?

I’ve been a good earner. My pay level over the past 10 years has kept us in the 95% of wage earners in the USA. A few years I was probably in the 99th percentile due to large bonus checks or stock-option wins.

My wife is a very disciplined saver and I’m happy to give her control over the weekly spending and saving.

I also enjoy investing and have been pretty good at picking industry trends and emerging companies. We don’t try to pick individual winners. We look at big trends and try to buy quality stocks that are market leaders.

What road bumps did you face along the way to becoming a millionaire and how did you handle them?

Over the past 35 years there have been several large downturns in the stock market. We’ve always viewed those downturns as buying opportunities. It much easier to make money on investments when you are buying at relatively low Price to Earnings ratios.

Very occasionally I’ll invest in a startup that I’m very familiar with. Those we watch closely and set sell targets when we’ve achieved the desired return.

What are you currently doing to maintain/grow your net worth?

Our 30-year plan will change our spending pattern. We feel that if we start living on a “retirement budget” in the year 2019; that by the year 2026 we’ll have a lot more money in the nest egg.

So, we will return to our fiscal discipline that we lived in during our 20s to 30s; and invest more of our income.

If I do decide to retire and take a lower annual income; we’ll already be accustomed to living on a lower spend.

Do you have a target net worth you are trying to attain?

Yes. A $2.5 million net worth is the goal.

In our case that would yield an investable corpus of $2 million.

If we can manage that to yield at least 4% we can live on the income from the corpus. If we can earn 5% to 10% we will grow the corpus or go on more expensive vacations.

Any money we earn from my wife returning to work or side-hustles will add to the corpus as well.

How old were you when you made your first million and have you had any significant behavior shifts since then?

I don’t know exactly because most of our wealth has been tied-up in the stock market. We probably achieved a net worth of $1 million in the late 1990s during the dot com boom when I was around 40 years old. When the crash came we dropped below that number and started buying more stocks on sale.

Now our invested corpus is $1.25 million and we’ve managed to build significant equity in 2 homes valued at $915,000. When we sell our old home we’ll have zero debt and a $529,000 house.

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

I won’t call them mistakes. I’ll call it gambling entertainment investing in the stock market.

We’ve had fun doing that and managed to break even.

The only other mistake I can think of would be that we eat out too much and spend way more money than we should on that and the occasional vacation.

Those family experiences have been worth the cost. We once stayed in a very expensive hotel in Rome across the street from the Spanish Steps. The hotel room was over $3,000/night but it was worth every penny.

What advice do you have for ESI Money readers on how to become wealthy?

While it’s certainly easier to save a lot of money if you earn a lot of money; I’m shocked at the number of people in the United States that live beyond their means and have almost no savings.

The best advice I can offer is to “pay yourself first” and live on the rest.

Live below your means.

Max your 401K plan out and take advantage of the company match.

Pay cash for your cars.


What are your plans for the future regarding lifestyle?

I have no interest in retiring early and at age 59 I have no plans to work less until I reach 65.

Even then I plan to continue to work until I’m around 70 as long as my health remains as good as it has been.

I like work, exercise, travel, and learning.

If I do retire earlier than I plan it will probably be because I want to start a side business, or we decide to travel more.

I’d like to hike the AT when I can devote 6-7 months to that adventure.

What are your retirement plans?

I’ve already discussed our strategy for investing. My idea of retirement is doing more of what I enjoy and less of what I don’t.

Mostly I love the job I have. It does require a significant amount of travel. I may want to travel less for work and more for pleasure with my wife and adult children.

Financially, I think we are well-equipped to manage our money. Our 30-year plan is our guidepost. We purchased our “final” home this year 2 miles away from the house we raised our kids in after looking all over the Southeastern USA.

Why? We could get a lot more home for less money and lower taxes. Plus; because we live near a metro area with a great airport. That makes travel easy. We live in Georgia. The taxes are relatively low. When I turn 65 our taxes will be even less.

Are there any issues in retirement that concern you? If so, how are you planning to address them?

My biggest worry is the fiscal irresponsibility of the Federal Government.

At some point running massive deficits will start to seriously affect social programs like Social Security, Medicare, and Medicaid. I think our children will have to be the ones who act like grown-ups to solve the pending problems that the United States will experience in the coming decades.

I’m not counting on social security income for our retirement. If we manage to get back what we’ve put in with a 1% to 2% ROI, I’ll be happy with that outcome.

Mostly I’m an optimist and feel that we’ve done the right things to afford to have a comfortable retirement.


How did you learn about finances and at what age did it ‘click’? Was it from family, books, forced to learn as wealth grew, etc.?

My grandparents were very frugal.

My parents had close friends that were into investing. One of them wrote a book for children on investing called Stock Market ABC. I got a signed copy of that book when I was 10-years old along with a calculator for Christmas in 1969. I recently bought and exact copy of that calculator on eBay. Those things made a live-long impression.

Who inspired you to excel in life? Who are your heroes?

I don’t really have heroes. I was motivated to learn by my parents. I have been motivated by the people I work with and my clients. Smart people who I can learn from motivate me to learn more.

I like meeting business people who aren’t driven by the Wall Street quarterly earnings figures. People that build odd business models that are more oriented towards building a great product or service.

I like smaller companies that do things very well. I work for one of those and have met a lot of interesting people at the Inc 5000 conference.

As a speaker/author I’ve met very smart people on speaking tours. They all motivate me. I learn things every week from my co-workers and my clients.

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

We don’t have a particular charity that we give to. Our gifts tend to be targeted and local. We have given to the Universities we’ve attended.

I can imagine volunteering time to wilderness non-profits. We enjoy the outdoors. I’d prefer to give by putting in time doing trail maintenance. I can also see getting interested in building bicycle trail networks in our city and county.

Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?

Whatever money we have when we’re both gone will go to our children.

We’re planning to live a long time as both of our families tend to live long lives.

We exercise and maintain a positive mental outlook.

Our kids will have to deal with a problematic federal budget in the USA. I trust them to make good decisions with whatever money we leave to them.

The post Millionaire Interview 129 appeared first on ESI Money.

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Retirement Housing Decisions Sat, 04 May 2019 09:00:21 +0000 For the vast majority of my life, where I lived was decided for me by one factor or another. Initially, wherever my parents lived, I lived. Then it was school. The colleges I went to (undergrad and grad) were in specific cities/areas I had to live in. And finally, there was my career. Of course […]

The post Retirement Housing Decisions appeared first on ESI Money.

For the vast majority of my life, where I lived was decided for me by one factor or another.

Initially, wherever my parents lived, I lived.

Then it was school. The colleges I went to (undergrad and grad) were in specific cities/areas I had to live in.

And finally, there was my career. Of course I could choose who to work for, but if I picked the employers I did, then I had to live where the job was.

In retirement, things are different.

Sure you might want to live in one place over another (for family, friends, weather, etc.), but you have much more freedom to choose where to live than you’ve probably had at any other point in your life.

And that’s what this post is about — the discussions my wife and I have been having about where we want to live in retirement.

Warning: I don’t have a lot of answers at this point. This isn’t a “How to Decide Where to Live in Retirement” post.

Instead, I’ll detail our background and thinking, then I’m counting on you to offer suggestions and advice. My hope is that others will learn from this process too so that they can decide their best retirement location.

How Did We Get Here?

Let’s rewind a bit for some backstory.

As you know, we could have retired many years earlier, when we lived in Michigan.

I loved Michigan despite the terrible weather. It was a great place to raise a family and we had many friends there.

But it’s not really what I would consider ideal retirement territory.

Instead I took a job in Oklahoma and when my “contract was exercised” (company lingo for “we are firing you but we’re paying you a lot of money to leave”) we could have retired there as well.

There was only one problem: we lived in Oklahoma.

My wife liked it there (it was a warm weather climate) but it was probably my least favorite place we’ve lived.

I loved the people, but the dirt was red (and everywhere), it was rather trashy (we used to joke that people simply threw trash out of their car windows knowing the wind would blow it into Arkansas), too hot for me (I can take heat if there’s a beach, but OK is pretty dry), and during the spring/summer months you had to fear for your life from the killer tornadoes.

If you live in Oklahoma and/or are from there and love it, I’m happy for you. I’m just saying it’s not my cup of tea.

So we decided to move on and took my last job in Colorado, arriving in Colorado Springs in the fall of 2015.

Oh, Colorado, where had you been all my life? Why didn’t I move here three decades ago?

It’s amazing here! So when my new boss turned out to be much more than I wanted to deal with, I decided to retire in my beautiful Colorado. It seemed like a no-brainer.

You would think that the story might end here — and it well may — but events have transpired recently that have us wondering whether we should stay or go.

Things to Consider

What events you might ask? Well, here are a few:

1. The winters.

I feel like a weenie even mentioning the winters. After all, we lived 14 years in Michigan. In about 10 of those years we had five plus months of cloudy, cold weather with 100+ inches of snow. So compared to that, Colorado is a breeze.

That said, if Michigan is a “1” on the winter scale and Grand Cayman is a “10”, Colorado Springs is a 5 or 6. Not bad, but not great either.

Now someone might be thinking about all the great winter activities Colorado has available.

Yes, you can drive to those if you like them, but we’re not big skiers. Plus it’s not like we live in Breckenridge, Aspen, or Vail. Ski places are hours away.

The first winter we had here was not good — lots of snow and my maniac boss made us drive in despite it being hazardous.

The next two were pretty mild, and if those would be normal, then I would rate Colorado Springs a 7 on the winter scale.

But they are not normal and this winter has been brutal — more like a 3. It’s been long, cold, and snowy and has us thinking this may not be our ideal winter climate.

2. Our daughter’s plans.

After our daughter graduated college, she moved back to Colorado Springs, which was awesome.

If she was staying here we probably would as well.

But she has a fiance, will be getting married soon, and will be leaving the area (he’s in the army). That means we have one less (major) tie to our city (our son would likely move with us as he’s always up for an adventure).

Now she could move and then come back. Or she could move and never come back. They plan to come back but those of us who have lived several decades know that life has a way of changing your plans.

3. The housing market is on fire.

The housing market in Colorado Springs has been on a steady march upward the past three years!

I don’t know what our house is worth now, but my guess would be $80k more than we paid for it (we paid $370k and now I’d estimate it being worth $450k after realtor’s fees).

Better yet, they are putting the finishing touches on a new hospital about five blocks from our house.

Do you know who needs nice, big houses and has plenty of money to over-pay for them? Doctors.

Realtor friends have said they think the hospital makes our area ready for a mini-boom on top of what the city has already seen.

So within the next year or so might be the time to cash in and call it a day on home ownership.

4. Loving Grand Cayman.

You’re probably tired of me talking about Grand Cayman, but we really do love it there, especially given the winter we had.

We should have stayed longer than 10 days this year, but that can be rectified easily. That said, I’m not sure there’s enough to do there if we wanted to stay a long time.

Plus it’s kinda pricey — both the places to stay as well as the food.

And it’s a bit far (though there is a new direct flight from Denver taking only 4.5 hours).

Anyway, if we could find a cheaper, closer place similar to Grand Cayman in the US, that would be pretty nice.

5. Plans by other family members and friends.

Turns out a lot of our family is thinking of converging on one particular state.

My wife’s oldest sister has one of her kids in Florida and she visits regularly.

My wife’s oldest brother is thinking of moving from California (where he has what I would call a below average house here that’s worth twice what my house is) to Florida to escape the out-of-control taxes there.

My wife’s youngest brother has retired from the army and is looking at leaving Pennsylvania winters in favor of Florida beaches.

My wife’s youngest sister spends a few weeks each winter in Florida escaping the cold. Her husband retires next April and they may be expanding the time there.

My parents are hitting the road in an RV this fall and plan to spend winters in Florida.

We have a lot of friends who live in Florida (all over the state).

Anyway, I think you get the idea. It seems like everyone we know is either moving to Florida, thinking about it, or at least spending a good part of the winter there.

We’re also pretty familiar with the state. I lived there in middle school (Orlando), visited often (my aunt lived in Key West and then St. Pete), and we’ve been there on vacation (Disney and a cruise departure.)

So the Sunshine State has popped up on our radar.

6. Downsizing.

Currently my wife, son, and I live in a home that could easily fit a family of 10.

Ok, maybe that’s a bit overboard, but when four of us lived here, a five bedroom, 4.5 bathroom, 3,800 square foot house was still pretty big. Even when we have company take over our basement for visits we still have plenty of room.

Now that there are three of us (and could be two at any time) do we really need (or even want) a place this big?

Probably not.

Housing Objectives

So where does this leave us?

Taking all the considerations above into account, we come up with these thoughts…

1. We would like to live in as little winter as possible.

The weather issue is a balance. We don’t want the toughest part of winter — which is basically January through March here. If we could avoid those months and be elsewhere when it’s cold here, that would be great.

That said, I dislike high heat as much as I dislike cold (probably even more). The one exception is where there’s a beach it feels less hot to me. Anyway, I don’t want to move year-around to a hot climate. We’ve lived in warm-weather climates (Nashville, Oklahoma City) and the summers are brutal.

Even as a kid I remember the Florida summers being too hot for me.

So any solution we come up with probably means we don’t live in the same spot year around.

2. We don’t want to abandon Colorado completely.

As noted in point #1, we love it here nine months out of 12. In fact, it’s close to perfect those months.

Plus who knows, maybe our daughter will stay and/or move back. And we have friends here, of course.

All this leads me to believe that I don’t see us coming up with a plan that has us leaving Colorado and never coming back.

3. At least some part of the year needs to involve a beach.

Whether it’s a trip to Grand Cayman, a Caribbean cruise, or a longer living arrangement, part of each year needs to involve a beach of some sort.

The beach speaks to me. It says, “Come, you love it here.” And I do. 😉

Specifically, I prefer clear water beaches like you find all over the Caribbean. A body of water that’s not that clear is just not as appealing to me.

4. If we want to downsize (which I think we do at some point), then selling in the next year or so is probably a great time to move on.

I can just see a nice cardiologist living here. She could pay us a fortune, then gut the whole place and put in high-end doctor stuff. 🙂

Her commute to work would be 10 minutes — if she WALKED.

On a bike it would take five. In a car, three.

It’s a win-win.

In addition, not having a house would make a semi-nomadic lifestyle much easier.

So What Are We Thinking?

Given all of the above, here’s what we’re toying with at the moment:

  1. Sell our home in Colorado Springs within the next year.
  2. Rent a place in Colorado Springs for April through December each year.
  3. Rent a place on the gulf-side of Florida for January through March each year.

Of course this is easier said than done. There are lots of considerations that go into something like this.

Our Considerations

Here are issues we need to confront if we plan on proceeding with the plan above:

1. There are pros and cons of selling the house.

We’d have to get rid of a bunch of belongings and it would be a hassle for a time (if you’ve ever lived in a home for sale, you know what I mean), but it would probably sell rather quickly.

The hardest part might be selecting who sells the house. We have about 50 friends who are real estate agents.

For a counter-point to this, we COULD rent the home for extra income. From looking at similar places it appears we could get $2,500 a month on the low end to $3,000 a month on the high end.

We could also AirBnB it and make a fortune in the summer and during Air Force Academy major events.

But do we want the hassle of that? If the house was in Michigan we’d simply roll it into our management company. But do we want to deal with an entirely new manager, more tenants, etc.?

2. Can we find places to rent for part of the year in Florida and Colorado?

I’m sure we could find a January through March rental in Florida, but could we find a 9-month rental in Colorado Springs?

And, of course, both places would need to be furnished.

One option could be to buy a duplex, rent out one side, live in the other, and have the tenant watch our place next door while we were gone.

3. Could we downsize enough to be mobile and live in two places?

Like most Americans, we are stuff collectors.

Even though we cleaned out when we left Michigan and again when we left Oklahoma, we still have lots of stuff. Can we get rid of it all?

Even more, can we live without it?

It’s an interesting question to ponder: what is the absolute minimum (or at least a reasonable minimum) of items a family needs?

4. Is mobile life good or bad?

We’ve never lived in two spots, so we don’t know what it’s like.

Do you lose community in both places or do your friend double in size?

Do you feel like nomads with no specific “home” or it home wherever you are?

Anyone have any advice on this? We’re completely in the dark on this topic.

5. What are the cost implications of such a plan?

While money isn’t really an issue (within reason), we also don’t want/need an extravagant lifestyle. It’s not our style plus spending more generally comes with its own set of problems that neither one of us wants to deal with.

And since I brought up the issue of money and this is a personal finance blog, let’s look at some numbers…

What are the Financial Implications?

Here are some general thoughts on costs related to all these issues:

1. Owning a huge house is expensive.

We don’t have a mortgage, but there are still taxes, insurance, utilities, and the wildcard of maintenance (which could be almost nothing or could be $4k when your heater goes out).

And the biggest cost is that we have a $450k asset that has appreciated nicely, but at some point likely won’t appreciate much more (and could go down).

If we could sell the place and invest it at 2.5% on the low end and 10% on the high end (I recently found a real estate investor who pays this) that means we’d earn between $11,250 to $45k annually from it.

These dollars would go a long way towards paying rent at some nice places.

2. Renting and moving back and forth is expensive.

Is it more expensive than owning a house?

I think it depends — on the house, the places you rent, how you move back and forth, etc.

I’d personally be ok with a mobile solution that would cost $20k more per year, so we could get what we wanted.

3. Taxes are better in Florida.

Haha! You knew I was going to bring this up, right?

I’m wondering if we can/should live longer each year in Florida to establish it as our state of residency.

No state income taxes is very nice. 😉

Then again, our Colorado taxes this year were $2,440 so it’s not like we’d save a fortune.

Next Steps

Now that everything is on the table, here’s what we’re doing as of now (this is highly subject to change):

1. We’ve narrowed the focus of where to look in Florida.

Initially we started with the entire state, but have decided the gulf-side beach towns are best for us. The water is clear (like the Caribbean) and beaches are beautiful, or so I’m told.

In particular, we’re going to concentrate from Tampa/St. Pete/Clearwater to anyplace south. Those are the places that have 70 degree temps even in January.

2. We’re doing remote research.

This involves a couple of things.

First, we’re looking online at data (like temps), housing costs, reviews, etc.

Second, we are talking to as many people as we can who either live in our target areas or visit them.

If you fit this criteria, I’d love to hear your thoughts.

3. We are planning a scouting trip(s).

We were initially headed to Destin, Florida in October since we’ve heard so many great things about it, but it turns out Destin in January isn’t as warm as my wife would like. So if we don’t want to stay there as part of our long-term plans, why would we want to scout it out as a potential location?

As such, we’ve altered plans and are likely headed to Siesta Key, Florida in October/early November (still working out the details).

In addition to enjoying the life there, we’ll do a bit of exploring (both north and south) to see what we like and dislike. 

Then this coming winter we’ll head back down again for a month-long tour of the places we liked. We’ll probably fly to Tampa, rent a car, and head south.

That’s a long way away at this point, so it’s highly subject to change.

4. I need to begin the “what do we do in Colorado?” process.

This means taking steps on selling the house and finding places here to rent.

To be truthful I dread the thought of it (real estate agents here are like sharks in a pool of blood), but it has to be done.

5. I’m posting this so you can help.

I’m sure many of you can offer ideas on our line of thinking, the pros and cons of various places in Florida, or a host of other things we haven’t thought of or have wrong.

So let me have your comments below — I’m looking forward to hearing them.

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