ESI Money https://esimoney.com Three Simple Steps to Wealth Sat, 28 Sep 2019 18:31:14 +0000 en-US hourly 1 https://esimoney.com/wp-content/uploads/2015/11/cropped-ESI-MONEY-ICON-3_512px-75x75.png ESI Money https://esimoney.com 32 32 Career Advice from a $300k Earner https://esimoney.com/career-advice-from-a-300k-earner/ https://esimoney.com/career-advice-from-a-300k-earner/#comments Sat, 12 Oct 2019 09:00:22 +0000 https://esimoney.com/?p=5213 If you’ve read this blog for more than 30 seconds you know how important earning is to your financial success. After all, “E” (for earning) is the first letter in the site’s name. There’s a reason for this — earning was one of the three vital steps I used to become wealthy and retire early. […]

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If you’ve read this blog for more than 30 seconds you know how important earning is to your financial success.

After all, “E” (for earning) is the first letter in the site’s name. There’s a reason for this — earning was one of the three vital steps I used to become wealthy and retire early.

Then of course there are the millionaires I interview. Many of them have built high incomes over time. Though this fact rankles some readers, it’s a simple math equation. Run the numbers and it will become apparent that it’s easier to grow your wealth through saving and investing when you earn more.

Before I started ESI Money, I had another site (two actually) where I started to interview millionaires (before I transferred everything to this site). I was chatting via email with one of the millionaires and his career story impressed me. I asked him to write it down so I could share it with my readers.

That’s what I’m posting today. Here are the career highlights (followed by my comments) from a man who earned $320k the year this was sent to me.

Here are the details in his words:

It started very early, back in my college days. I did more than try to be a student getting a degree, I tried to take on meaningful jobs that could expand my skill base and make me more attractive to employers, while of course making money to pay for my schooling and life.

I went to a large public university. As soon as I was eligible, the summer after my first year, I became a Resident Assistant (RA). Strongly recommend this job. You have to deal with all sorts of diversity of folks. It helped me with my housing and some food.

During one semester I did an internship at a company to get real world experience, this really put me in high gear in school since I learned how easy we had it in school since it was just a few hours of class/studying a week. I started to get more focused on my career. I was an RA every semester I was in school until I was able to become a Hall Director (over an entire dormitory, not just a floor as with the RA role), this was a year before becoming a grad student which is the typical requirement. Again, the skills learned were very marketable. Having a staff and responsibility over 500+ students, etc…

In parallel I got an assistantship at my university as part of my Master’s degree. This helped give approximately 14K annually and paid for 9 credits of grad school, a big deal for me back them.

Lastly I took work with a company that managed the campus telephone company. This was hourly and I was the manager, so I was able to set flexible hours and my experience in the school helped make this possible.

Oh, I got two master’s in parallel while doing all the above. This is not to brag, it is to make a point. By the time I got into the interview process with companies, I was a very serious candidate and had a lot to talk about, not just the “clubs”, “Fraternity activities”, etc. that I was a member of.

Once I finally got into my company, still same company over 12 years. I just committed myself. First in and last out. Not just to show my face though or be in the water cooler, I took every training opportunity they offered, I looked for exposure to new skills and learning. I really learned the basics from the ground up.

It was a meaningful commitment to build a strong foundation in this company. The field and the company culture were my coursework for the next 18 months. This translated into multiple promotional opportunities.

I was given a few opportunities that made all the difference in the world. First they asked me to go to one country for a few years and live, which I did, then years later I got another opportunity to be an expat in another country. For the first opportunity, I was not the best qualified for it, but I was hungry and willing to do it. So many folks refused the opportunity, they stayed behind and many of them were demoted since times in the US were tough, especially in our field, while I was promoted many times, since I was able to get more exposure and opportunity in growing environment.

I always focus on (1) having the right boss. I would not take a job just for promotion or title, I focus on the Boss. I have seen good guys get derailed by bad leadership and support. (2) Driving results, especially results in the eyes of the right boss. I believe my success has come from being able to understand the results required and being passionate about consistently delivering them regardless of the obstacles. Don’t over-commit and under-deliver. Properly commit and make it happen, beating when able…

Years later, I am still working very hard, but I believe the foundation I built during my early years set the basis for much of the core of knowledge I am using years later and the perception folks have of me…It was a great investment of time and energy.

By the way, I am not naive or big headed, I FULLY believe that LUCK played a big tole. Since my company happens to have done well over my career, had I ended up in another company I may have not had the opportunity to grow my career as well.

One final thing that jumps out that I should add, I was never shy. I would give results, but I would also share, when appropriate what results I was looking for when needed. I built good relationships with my bosses, since I invested time to be associated with the “right bosses”, so over my career I have made it clear why I should be getting an incentive or promotion, even if they did not ask first, just to ensure they were not forgetting…

I always did this linked to high performance/result times. Good to link the two, here are great results, just got your bonus boss and helped company really kick butt here, don’t forget me on bonus time or that next step we talked about before…something like that…

My Thoughts

Lots of good stuff here that people can apply to their own careers. Here’s what I found especially useful:

  • He took college seriously. He not only got his degrees, but also racked up some meaningful work experience along the way. He was developing his talent stack even before he was in the actual workplace. This experience (and his accomplishments along the way) set him up very well when it came to finding his first “real” job — he had actual experience and accomplishments to talk about, something most students do not have.
  • After he got hired, he kept learning, adding to his knowledge and skills. His talent stack grew even more, which in turn made him a more productive and valuable employee, and resulted in him getting promoted several times. With each promotion, his compensation grew.
  • He did things others weren’t willing to do — and did well at them. This strategy can backfire. When you take on a difficult task, it can either make you (if you pull it off successfully) or break you (if you don’t). For him, moving overseas was a risk, but he performed well and was rewarded.
  • He went for the right boss. There’s a saying in business that people join companies and leave bosses — meaning most employees leave because their direct boss is terrible. This millionaire turned that saying around and looked for great bosses on purpose, knowing he’d learn from them, have a champion for his work in the company, and be able to grow his network with solid, competent people. I had my share of both great and horrible bosses and can attest to the fact that the right boss can make a huge difference in your success as well as your happiness.
  • He over-performed. This leads my list of seven things you can do to grow your career. He took the right steps: finding out what was required then working hard to do better than that. BTW, it’s worth noting that this was hard work (which heads the list of six ways millionaires grow their incomes). It wasn’t a piece of cake by any means. But as he said, he invested early on in hard work and it paid dividends down the road.
  • He let others know he was over-performing (which set him up for more/higher responsibility). I detailed how important this is when I posted on over-performing. It’s not enough to determine the requirements and over-deliver them, you must also be sure those in authority know of your accomplishments. Otherwise it’s all for naught. Fortunately there are some simple ways to do this (like a weekly update email) without sounding like a narcissist who likes to spend all day blowing his own horn.
  • He got lucky. That said, luck is often the by-product of doing the right things which in turn open up opportunities. It’s likely some of his luck was random and not controlled by his efforts in the least. But it’s also likely that he created much of his own luck through hard work, dedication, and perseverance.
  • He works well with people. In other words, he’s likable and probably networks well, two other top keys to growing your income. This guy is leaving no stone unturned in his quest for career success!

Those are my thoughts from what he shared, but there are a couple other, broader issues I think his story illustrates:

  • Like almost every other millionaire I’ve interviewed, he grew his income over time. It wasn’t like he left school and made $320k the next year. He started at an entry level, applied success principles to his work, and saw his income rise again and again over time, eventually getting to $320k.
  • All the steps he took added up. I’m amazed at just how many of the vital steps to growing a career he implemented — it’s almost like he wrote the book on how to grow your career income. None of these were a “home run” that got him where he is today. Instead, they all worked together to make him a successful and productive employee and his income rose as his contributions did.

I know many of you reading this are similarly successful to this man. Please share your career secrets with us all in the comments below. I know many will appreciate your wisdom.

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Living Like Old Money https://esimoney.com/living-like-old-money/ https://esimoney.com/living-like-old-money/#comments Fri, 11 Oct 2019 09:00:35 +0000 https://esimoney.com/?p=5397 I’m not sure where I saw it, but someone I follow online mentioned that they were reading The Old Money Book and recommended it to others. Always on the lookout for a good money book, I went to my library’s website to see if they had it. Nope. I then hopped on Amazon to check […]

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I’m not sure where I saw it, but someone I follow online mentioned that they were reading The Old Money Book and recommended it to others.

Always on the lookout for a good money book, I went to my library’s website to see if they had it. Nope.

I then hopped on Amazon to check it out.

I liked the fact that it had two (not just one) subtitles.

They are:

  • “How to Live Better While Spending Less”
  • “Secrets of America’s Upper Class”

Ok, those sounded good. I’m all in favor of living large while spending less. And who doesn’t like “secrets”? We all do, right?

So I bought the book and want to share what I found in it.

Living Like Old Money

The book states its purpose in the introduction as follows:

The purpose of this book is to help people who want to live fuller, happier, and more productive lives do so by learning about and emulating the values, priorities. and habits of “Old Money”. The term “Old Money” refers to individuals whose families have enjoyed wealth and privilege for three generations or more.

In the United States, “Old Money” generally refers, but is not limited, to established families in the northeast of the country whose ancestors accumulated large amounts of money and then invested and spent it in a certain way.

If you want a list of “Old Money” families to give some perspective, here’s a list from Wikipedia. Some of the more notable family names are Du Pont, Forbes, Astor, Rockefeller, and Griswold (not the family from Christmas Vacation).

If you want a feel for what these people are like, here’s a video captured of them in their element:

But of course!

Anyway, the book is about how these families live and manage money. It’s broken into two main parts:

  • Seven core values
  • Nine ways “Old Money does it”

The first are more geared for readers of this site, though the latter list is much more entertaining, as you’ll see in a moment.

Seven Core Values of Old Money

We’ll start by covering the seven core values. I’ll list each one, quote what the book says about it, then provide some commentary.

1. Health.

Here’s how the book summarizes this value:

You can have millions of dollars in the bank, but if you are not healthy, you are not truly wealthy.

Old Money is active. It eats well, but moderately. It rarely smokes cigarettes and enjoys cigars and pipes in moderation, and almost never in public. The same moderation applies to alcohol.

I love that they refer to Old Money as “it.” LOL.

There’s no arguing with the fact that if you don’t have your health, all the money in the world is worth way less. I won’t say it’s worth nothing since money can save you if it lets you purchase the right treatment, but I think you know what I mean.

Old Money realizes the following about good health:

And of course Old Money agrees with my thoughts on smoking, proper nutrition, exercise, and alcohol shared in How to Save Money On Medical Costs.

BTW, I wonder if Grey Poupon is healthy. 😉

2. Education.

The book says the following about education:

The second core value of Old Money is education. This may be the most obvious core value, given the general public awareness of Old Money’s tendency to send its children to Harvard, Yale, and other such institutions. But the value of education, and the actions that result from it, extends more deeply than that.

The book goes on to tell how Old Money reads to its children from their early ages, takes children to libraries and on field trips, invests in private education, teaches a love for reading, and plans for children’s educations even before they are born.

Ok, a few thoughts on this from me:

So another set of kudos for Old Money. Up to this point they are right on the mark.

3. Work ethic.

Here’s how they talk about this core value:

Old Money realizes that there’s no good chance at happiness without purposeful, productive work. Obviously, in many cases, Old Money doesn’t work because it needs the money. It works because there’s joy in doing what you love. Whether it’s a profession that provides a paycheck, or volunteer work for a charity, Old Money works.

Ok, Old Money and I are going to have to differ just a bit on this one.

First of all, let’s start with where we agree: that hard work is vital.

Old Money does it for the pleasure of itself as well as the intrinsic reward, while the rest of us work hard to grow our incomes and thus our finances. For example, millionaires know the value of hard work — that’s why they listed it as the top way to grow an income.

But Old Money gets into the “do what you love” line of thinking that I can’t buy into. I agree that you don’t want to do a job you hate simply because you make a lot of money at it. Who wants to live that miserable life? But it’s impossible for most people to truly do what they love (i.e. sleeping in until 10 am and then playing video games all day) and make any money at it.

Instead I recommend “doing what you like”. Pick a field you enjoy well enough but one that also provides a solid income to grow your wealth. This seems like a great balance to me.

Of course Old Money doesn’t need to make these compromises since they are already wealthy, so it’s easy to say “do what you love” while they enjoy their tea and crumpets.

4. Etiquette and manners.

This section goes into a whole discussion of etiquette versus manners, the difference between them, and how Old Money deals with each. Yawn.

But here’s an interesting sentence that is bolded in this section:

Old Money is never condescending to others, regardless of their social position or vocation.

Really? That’s not the feeling I got from Thurston Howell III.

Later on in the chapter the book says:

At home, Old Money says good morning and good night. It offers to help if someone’s cooking a meal. Old Money is dressed; no walking around in boxer shorts with no shirt on, thanks.

First of all, Old Money cooks? Doesn’t the cook, chef, or maid handle that stuff?

Second, I don’t think Old Money would approve of my retirement wardrobe. LOL!

Seriously, I’m all in favor of civility, kindness, and being polite and am thankful they recommend it. Just color me a bit skeptical that this is truly one of their core values.

5. Financial independence.

Now we’re talking!!!!!

Here’s how the book introduces this point:

You can’t be Old Money without money. Saying that money does not buy happiness is missing the point; the truth is you have more options when you have money, and when you need money, there is rarely a substitute for it.

The priority for Old Money is financial independence, not display. If you have to get up in the morning and go to a miserable job in order to pay for a big house, expensive car, and high-end wardrobe, what’s the point? If you can get up each morning and do whatever you want to do that day — and every day — that’s quite a luxury. Financial independence makes it easier to discover what it is you really enjoy doing, both regarding a vocation and regarding hobbies and leisure.

Financial independence is easier to maintain when you live simply and focus on doing and being more than spending and having. Old Money knows material possessions can be cumbersome, so it chooses wisely. But don’t think Old Money doesn’t live well; it does. The convenience and comfort of quality clothing, a well-appointed home, a staff to take care of daily chores, private planes, and exotic travel — it’s a good life. But it’s not to be flaunted to those less fortunate, and it certainly is not an end unto itself.

Wow! Lots of thoughts here:

  • I have to agree with both “money doesn’t buy happiness” and “it kinda does”. If Eeyore is your spirit animal, then having money probably won’t make you happy. But given almost any level of happiness, I’d say it’s better to have money than not have it. In our case, money doesn’t make us happy as we’re generally a happy family anyway. But money provides lots of extras we enjoy. Conversely, if we were scraping pennies together or forced to work until 80 because we didn’t have enough money I can guarantee we’d be less happy overall.
  • I’m not so sure about Old Money not displaying their wealth. I think they do display it…
  • “If you have to get up in the morning and go to a miserable job in order to pay for a big house, expensive car, and high-end wardrobe, what’s the point?” Very true! But I’m not sure this is an issue for Old Money. It is for those of us who grew up as No Money and then had to take steps to accumulate our wealth.
  • “Financial independence makes it easier to discover what it is you really enjoy doing, both regarding a vocation and regarding hobbies and leisure.” Another truth bomb. I would say financial independence needs to be coupled either with retirement or at least semi-retirement to free up time so you then can discover what you like. I was FI over a decade ago but because I didn’t retire, I didn’t get to really enjoy life in a way I do now that I am retired.
  • “Financial independence is easier to maintain when you live simply and focus on doing and being more than spending and having.” Again, good advice for those of us who were (or those who still are) No Money. Obviously saving/controlling spending is a key part to becoming wealthy for anyone trying to increase their net worth.
  • I always think of Old Money as over-the-top when it comes to possessions. Either I have this wrong or the author is hedging a bit.

One other quote in this chapter that stood out to me is this one:

Children learn financial habits and attitudes about money from their parents. the apple doesn’t fall far from the tree. Old Money knows that a generation without good financial habits is a generation — and possibly a fortune — lost.

It goes on to talk about how Old Money passes along financial knowledge to their children.

We talked about this a bit in How the Rich Get Richer. For Old Money, the family stays wealthy because they pass down financial principles to the next generation. For most families who become wealthy, they experience “shirtsleeves to shirtsleeves in three generations” because they don’t know how to pass along that knowledge.

6. Family and marriage.

We’ll cover this one briefly, starting with the summary:

Divorce, domestic violence, drug and alcohol abuse, unplanned pregnancies, spoiled or maladjusted children — these are deadly to Old Money, or money of any age.

Can’t disagree here. I’ve talked about the cost of divorce and have listed “marrying the wrong person” as one of the ten worst money moves anyone can make.

On the opposite side, “marrying well” is one of the ten best money moves anyone can make. Plus if you have the right partner, you can be a great Super Bowl team. 🙂

7. Privacy.

Here’s an interesting quote from the book:

It has been said that Old Money individuals who live appropriately have their names in the newspapers three times: when they’re born, when they marry, and when they die.

Haha!

You’ve probably heard the term “stealth wealth”, which is the idea of being wealthy but no one knows it.

I don’t think Old Money has stealth wealth, but they do keep things on the down low.

Those of us who live normal lives can be even more low key and have wealth that no one would ever guess we have.

For instance, I look like some doofus half the time (or more) — the way I’m dressed, walking most places I go, and not having a job. I drive a car with 130k miles on it, live in a nice but normal house/neighborhood, and don’t have any of the trappings you’d associate with wealth. If you put me in a line up with other random people and someone was told there was a multi-millionaire in the group, I probably would be selected somewhere around the middle of the group, if that.

But I like it this way. I get to go through life with all the advantages of being wealthy with few of the disadvantages.

Nine Ways Old Money Does It

The next section of the book lists nine ways Old Money “does it”. In other words, nine things that are key to how Old Money lives successfully.

I’m not going to go through all of these. Instead I’ll list all nine, then make comments on a few of them as appropriate.

The nine are:

  • Attire
  • Diction and Grammar
  • Furnishings
  • Reading
  • Housing
  • Socializing
  • Cars
  • Travel
  • Staff and Services

Some thoughts from me on these:

  • The “attire” section is quite a hoot to read. It goes into detail of how Old Money should dress — both for men and women. It also has this statement in bold: “It should take someone five minutes to realize that you’re well-dressed.” It would probably take me five hours if I got it that quickly. Clothes don’t really impress me and I don’t pay that much attention to them. I’m sure Old Money wouldn’t approve of my standard athletic gear attire either. Ha!
  • I LOVE the fact that “Old Money reads.” I also like this tip: “A good regimen for reading is to alternate: read a book that you want to read about a subject that interests you, a guilty pleasure, even. Then read a book that you should read, a classic.” I have done this much of my life, sometimes reading a business book and others a fictional piece. These days I listen more than I read, but given that I listen when I walk (and I average 20k+ steps a day) I consume a TON of content. I’m a big fan of reading and it was key in enabling me to grow my career and income.
  • Old Money enjoys travel! You know who else enjoys travel? New Money! In fact travel is the #1 secret splurge of millionaires. I like travel as well, but don’t live for it. The transit portion is increasingly more annoying to me, though I love being in the places I go (like Grand Cayman). This is why when I travel I go to a place I really enjoy and stay for more than a week to make the trip worth it. It’s also why I’m spending more on the transit portion of travel — to try and make it more bearable.

The rest of the items are interesting to read but not really applicable to most of us. For instance, I don’t need to understand how to select and manage a staff. 😉

Book Summary

Overall, this was an enjoyable book to read and I’m glad I purchased it.

That said, it certainly wouldn’t make my top five money books list or even the expanded set of money books people should read. Why? Because it simply doesn’t have enough valuable and unique money tips in it. You can find what it says elsewhere and described better. So I can’t recommend it as a top money book.

That said, if you’ve read all the top books and want a different money book with an entertaining and interesting perspective, then this one could be for you. As I said, I did enjoy it. Plus it’s an easy read (140 pages) — perfect to consume on a flight somewhere and back.

Anyone out there ever read this book? What did you think of it?

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Side Hustle Interview 9 https://esimoney.com/side-hustle-interview-9/ https://esimoney.com/side-hustle-interview-9/#comments Wed, 09 Oct 2019 09:00:02 +0000 https://esimoney.com/?p=5401 Here’s our latest interview with a side hustler! As you know, I love creating a side hustle as part of a fast-track path to financial independence because it can make a huge difference (see this financial calculator), enough to actually get you to FI in 10 years. If you have a side hustle and would […]

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Here’s our latest interview with a side hustler!

As you know, I love creating a side hustle as part of a fast-track path to financial independence because it can make a huge difference (see this financial calculator), enough to actually get you to FI in 10 years.

If you have a side hustle and would like to be interviewed, shoot me an email and we can talk over specifics.

Today we are talking to Todd from Invested Wallet.

This is an exciting interview because Todd has had multiple side hustles through the years.

As usual, my questions are in bold italics and his responses follow in black.

Here we go…

GENERAL OVERVIEW

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

I’m currently 31 years old.

Not married, but engaged and currently planning a wedding next October. Exciting and a bit stressful at the same time!

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

No kids yet, but we are planning to potentially have two kids in the near future.

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

We live in an urban area in Pennsylvania, just over an hour from Philadelphia.

What is your side hustle?

I’ve been fortunate enough to have an amazing full-time job in marketing, where I work from home. The company is technically a start-up, but is profitable and works with some of the biggest companies in the world. It’s really an exciting opportunity.

That said, I’ve always gravitated towards side hustles since graduating college back in 2010. I love the freedom of exploring my own entrepreneurial endeavors and making extra money. I’m a firm believer of many sources of income and their value for financial health as well. Although at the time, I never used the term or heard many people calling these extra gigs “Side hustles.”

Currently I only have one active side hustle, which is running a blog. This takes some time and effort, but I’m currently pulling an extra $500 to $1,000+ (pending traffic, affiliates, etc) within my first year. I’m also open to doing marketing consulting, but right now I have primarily been working on the blog since 2018. But, I have dabbled in other side hustles, which I’m going to dive in a lot more below.

Is there anything else we should know about you?

Since I was young, I’ve always had a hustler’s ambition or looking for ways to make money. When I was in middle school I used to sell Pokemon cards to kids in my classes. I think that entrepreneur mentality and interest stuck with me ever since.

While I’ve never worked for myself full-time yet, it is my goal to one day do that. I think my current blog has a great chance of that happening. I took more steps too, by creating an LLC and leveraging/learning Quickbooks to really make it all more legit. I used to be a bit intimidated and terrified to give it a go, but in 2018 I made the moves to get this rolling.

CREATION STAGE

Is this your first side hustle? If not, could you give us a bit of background on past efforts — both successes and failures?

The current blog I’m running as my side hustle is not my first. As I alluded in the previous question, I’ve been dabbling in side gigs since I graduated from college almost ten years ago.

And not all were super successful, but most did manage to bring me some money that I desperately needed in the past.

Here are a few I’ve done, with some successes and failures.

1. Music Blog: Back in Fall 2010, I started my first blog. Of course, I had no idea what I was doing, didn’t know much about marketing yet, and really was doing it for fun. I saw it as a potential resume booster as well, because I was considering a career in the music industry. But about two years in, it started to do relatively well.

I was getting roughly 40-45k pageviews month, got free stuff from well-known record labels, free concert tickets, and started to make some money off sponsored posts from time to time. However, because I didn’t know much about blogging I made plenty of mistakes. First, was building it on Blogger instead of WordPress. I also had no idea how to properly monetize it, so I certainly left years of potential side income behind. But I learned a lot about website creation and triggered my first education of the digital marketing world.

2. Company and domain naming: Not too long after I started the music blog, I got into a crowdsourcing company called CrowdSpring. At first it was mostly for graphic design projects where if the company picked you, you got paid whatever amount they were offering for the work. Could be a logo, page design, web layout, etc. I went to school for graphic design and thought this would be a good way to practice and maybe earn a few hundred bucks from time to time.

However, they started adding new projects with writing. These included people looking for new company names, taglines, or website domain names, etc. I always was pretty good at writing and thinking creatively, so I started testing it out. In a span of about 9 months, I made over $8,000! One project, paid out $2,000 and I won the best name.

But once the music blog took up my time and got offers for my other side hustle, I scaled back on this. For one, it was really challenging to think of great names and website names that were not taken or trademarked. Plus, there would be nearly a thousand entries per project, so the competition was getting fierce. And, I started to dislike the process and would feel like I was forcing myself to spend time on it.

3. Marketing and web consulting: This was one of my favorites for a few years and something I plan on getting more involved with in the near future. But this was my third side hustle! I was working in email marketing at the time and a friend’s company needed some social media work. Since I was doing well with social for my music blog, they offered me the gig. The HR start-up paid me about $50-$75 a week, for just a handful of hours.

Then I was a marketing/web consultant for an e-commerce health company, was paid between $75-$100 per week (pending my hours). But this side hustle saved me, because 2.5 months after I started, I was laid off from my full-time job.

I reached out and they gave me 20 hours a week so I was able to make about $450/ per week and could keep some cash flowing. That also led to another 20 hour part time gig with a music start up, where I did marketing and blog consulting.

How did the idea of starting a side hustle begin?

I actually do not know what really triggered my interest in starting to side hustle. I think mostly how I thought about it was:

  • To help boost my experience on my resume
  • And to earn extra money

I wasn’t exactly making great money out of college, even up to four years after I didn’t make more than $36k/year. I had some student loan debt, car payment, and other living expenses, so I figured this could help me pay that down more.

How did you come up with the idea?

Blogging was mostly accidental, I thought it would be cool to have a website on my own, sharing my music tastes, and maybe using for my resume. I also had no idea how many blogs and music blogs there were when I started!

With CrowdSpring, it was mostly to find a way to practice my graphic design skills. I initially found the company my senior year of college when I really thought design was going to be my career. But when they added the company naming and domain creation to their platform, I thought it was interesting. I never imagined that I would be $8K+ from it.

Marketing and web consulting was more purposeful. Once I had a few years of experience and interest in marketing and websites under my belt, I knew it could be a great way to make some more money. So I put that idea out there with friends or colleagues in case anything ever came up.

What made you think this particular idea could be profitable?

The music blog I never thought it purely from a money standpoint at first. I was looking more for a resume booster and something cool I could say was mine.

With the company naming, I thought I could have a shot to make some money. But never anticipated the results. But my goal was to make money because the minimum project was $200 and many had $500-$2000 payouts. For an hour or two of work, that money is pretty solid. I had a bit of a get-rich-quick mentality back then, which I learned does not really exist. So I thought I could sweep up and win a lot, but it was more work than I realized.

Marketing and web consulting I knew could be lucrative. Two people I knew from college were doing that on the side making a few grand extra a month. One of which went completely full-time, so I knew the money was there.

I also know that not every business can afford to hire full-time employees for the work. As long as I could prove my value, I was sure I could find some businesses to work with.

What were the early days like — getting your side hustle off the ground, making your first dollar, etc.?

The music blog was purely accidental when it came to making any money. I originally tried to monetize with Adsense, but the ads didn’t look great and really brought in very little money. At this time, I never knew or heard much about affiliate marketing.

Luckily, a well-known media company reached out about doing some sponsored posts for artists they worked with. That’s really where any money came from.

For company naming, I had to really learn a process and develop an organizational way to trigger great naming ideas. I didn’t expect it to be as hard when I first started, but I became addicted to the process once I won my first $350 project for 1.5 hours of work.

And for marketing and consulting, that took some time to generate opportunities. I really had to network with my friends and colleagues, as well as learning about companies online that I could reach out too.

Many initial conversations didn’t go far, but it helped me learn how to speak and sell myself the right way. When I wanted to start pursuing this, from what I recall, it took about 9 months before I got to do some social media marketing consulting.

BUILDING STAGE

What did you do to grow your side hustle? Were there any specific actions that resulted in major breakthroughs?

For the music blog, it was a learning experience to really figure out digital marketing and growing a brand. I really focused on social media, because it was a great way to connect with artists and record labels. It’s really how I grew the website, because my SEO was bad.

Doing this overtime also led to brands and PR people finding my site. When I last looked at my email for example for that site, I had over 65k emails and music submissions!

For company naming, I really had to figure out a process with coming up with names. Many who submitted would just think of something on the fly and submit like 20 entries.

That’s what you call “throwing a dart in the dark,” hoping to hit the bullseye. You might, but the odds are stacked against you. Once I figured out my process, I stuck to it and I credit that for being able to generate $8k+.

To get marketing and consulting gigs, really came down to networking and showing my knowledge. I stayed very active with friends and colleagues so I’d be in their minds if an opportunity they knew came up. Networking is such a huge piece to driving success for anything career or side hustle.

What sort of time commitment did your side hustle require while becoming established?

The music blog took almost two years and numerous hours every week to really become more known in the space. As well as getting it to 40-45k pageviews a month.

Blogging is a tough category that takes time. Even now as I know digital marketing so well, it’s still taking time for my current blog to grow.

The other two (company naming and consulting), there wasn’t much to establish. It was more about getting in with the platform or company and delivering great work. The time constraints were more on me for what I was able to do on the side.

Where did you find the time to work on it?

All my side hustles happen after my 9-5 jobs and sometimes on weekends. Typically would spend 2-3 hours after work and maybe a Saturday or Sunday for 4-6 hours.

You shouldn’t side hustle yourself to the point of mental and physical exhaustion, but you have to put in some work to make whatever it is you are doing a success.

Were you the only one involved or did others help out?

For all my side hustles, I was the main person to get it going and do the work. Of course with the blogs, I’d occasionally have some guest writers.

As much as I love being social and working with others, I wanted to truly drive everything in these side hustles whether failures or success.

I knew I could learn a lot from these experiences, but ultimately I wanted to control my results without relying on others.

RESULTS

Can you give us specifics on what you earn with your side hustle?

The music blog, in the 6+ years I had it, probably only made around $600-800. As I said, I never really tried to monetize it nor did I really know how. Towards the end, I was barely working on it. But I got a lot of free stuff an access to awesome music.

For company naming, as I mentioned I made over $8000 in a span of 9 months when I worked on it. This was of course before taxes, but not a bad chunk of change for coming up with names and website names.

And marketing and web consulting is where I made the most. I’d have to truly look back at all my tax papers and pay stubs to get the exact numbers, but I have a good estimate in my head. I’m combining all the ones I did here, which spanned 2012-2016. It would be roughly around $30,000. Again, before taxes.

Lastly, I’ll include my current blog that I’m working on. The first six months I made $0, but the last six months I’ve made almost $4,000. I’m pretty excited about this and I can see this only going to grow in year two of the blog.

For the first three side hustle areas, my costs were extremely low. My first blog was on Blogger, which was extremely cheap, it was like $10 a year to renew the domain.

The company naming and marketing/web consulting cost me nothing. I already had a laptop and there were no costs to me to get started. If you want to get technical, you could say paying for internet at my apartment would be a cost, which was around $50/month.

However, the current blog has cost me the most so far. Mostly because I got an LLC, pay for Quickbooks, and run some marketing campaigns. Yet, for starting it as a business, it’s still quite cheap. The goal is to funnel any revenue back into the blog to take it to that next level.

What impact has this extra income had on your finances?

Most of the income I generated in the early stage was to make some extra cash to pay off bills and debt. Essentially to have a bit more financial cushion since my full-time job wasn’t paying all that great.

When I started the marketing consulting, especially more when I lost my job, that side hustle helped me bring in income while I was looking for a new career.

While I would have loved to be able to save or invest all that previous side hustle income, it was not the case.

However, once my current blog starts generating more consistent money, this can either be the catalyst to saving 100% of my full-time income, or can help me boost my savings and investments further.

What went well in this process?

Generally, for being a noob in most of my first side hustles, I’ve been fortunate that they went quite well. I was paid on time, I learned a lot, and I had a lot of fun for the most part doing the work.

While the consulting for example brought some great income, I found the education and the reward of making money through my own endeavors exciting.

What could have gone better?

There is actually not much I can say for this question. While I could say I wish results came faster or I could have worked harder, I think the way everything fell into place was purposeful and served me well for my current knowledge.

What do you wish you would have done differently?

Honestly, the only side hustle I wish I did a bit differently was the music blog. While 2010 wasn’t the first year of blogs, it was still a great time to get started.

But, I was intimidated by the thought of WordPress, I didn’t have a great website name, and I never valued it as a place I could monetize well until a few years in.

Has it been worth it? Why or why not?

Completely worth it! Over the years of different side hustles, I’ve learned a ton about marketing, business, and technology that was beneficial to my current career.

At the time there was some learning curves and I wasn’t making huge money, but it all was valuable.

From the financial standpoint, these side hustles kept income coming in even during the rough period of a layoff. This helped weather against wondering how I was going to pay bills, buy groceries, etc.

What are your future plans for your side hustle?

As I’ve mentioned, the music blog and company naming are dead side hustles for me. I lost the passion and realized it wasn’t worth my time at this current stage of my life.

That said, the personal finance and investing blog I run has been my main side hustle focus. I’ve had three goals or “stages” for this blog:

  • Generate enough monthly income to cover all my expenses each month
  • Have the blog generates a potential full-time income (that can be defined differently for many people, but mine is to hit at least $45k+ per year)
  • Lastly, sell the blog for six-figures (low or high six-figures)

The marketing and consulting has been pushed aside a bit over the years, but I’ve added that to my blog for people to work with me. Eventually, I’ll be promoting myself more to get opportunities, but the blog is so time-consuming and where my main focus is right now.

What advice do you have for ESI Money readers who may be thinking about creating their own side hustle?

Just get started if you have a passion or interest in doing something. I never want to look back and regret never trying and not knowing what could have been. So many side hustle stories end up being successful endeavors that changed peoples lives.

Of course, your side hustle can fail too. But that can be the best learning experience you may never have realized you needed! Nothing will be perfect from day one, but the knowledge you gain makes it worth it.

So don’t worry if you aren’t sure where to start, afraid of failing, etc. No matter what happens, your side hustle can create amazing opportunities and insights.

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Millionaire Interview 151 https://esimoney.com/millionaire-interview-151/ https://esimoney.com/millionaire-interview-151/#comments Mon, 07 Oct 2019 09:00:56 +0000 https://esimoney.com/?p=5200 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. Today we are talking to Educator FI. My questions are in bold italics and […]

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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.

Today we are talking to Educator FI.

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

Let’s get started…

OVERVIEW

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

I’m 44. My wife is 46.

We met in a college math class and this year celebrate our 20th anniversary.

We’ve worked hard to make sure we’re on the same page with our financial plans, so you’ll see that I intentionally use “we” in most of my answers.

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

No, we’re not fortunate enough to have kids of our own.

Instead, we like to say we give all our time to other people’s kids through our careers in education.

Oh, and we love our four nieces and nephews.

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

We live in a moderately high-cost-of-living city in the western U.S. Definitely urban, but we can get to rural for outdoor experiences really quickly.

What is your current net worth?

As of this writing, it’s ~$1.15m. That excludes any valuation of our pensions.

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?

Real estate: $229,800

Assets (I use 90% of Zillow estimates):

  • Rental Unit: $331,000
  • Vacation Home/Short Term Rental: $184,000

Liabilities:

  • Rental Unit Mortgage: $139,900
  • Vacation Home /Short Term Rental: $145,300

Paper Asset: $561,700

(Maintain 80% stocks, 20% bonds)

Retirement Accounts (both of us have access to the same options, so amounts are combined):

  • 403b: $427,900
  • 457: $59,100
  • Roth: $19,600

HSA (a new option for me): $5300

Taxable Brokerage (VTSAX and International Equity funds): $46,500

Individual Stocks: $3300

Cash: $364,500

Note: The cash is so high because we just sold our primary residence. More on that later, but the majority of it will be allocated to other areas soon. We typically maintain about $30,000 in online savings.

We have no debt other than the real estate loans. We do use credit cards, but those are paid off monthly.

We are both vested in public employee pension plans. However, due to uncertainty both about how long we’ll work and exactly what level of benefit will be available, we choose not to include our pensions in our net worth.

As we get inside the five year window and decide how long we want to keep working, we’ll include it as future income. For now, we’re fine being conservative even though it’s likely a very substantial asset.

EARN

What is your job?

I currently work as an education administrator overseeing programs that serve students who have been pushed out of traditional schools.

My wife is an elementary teacher.

What is your annual income?

For the last three years, we’ve made a combined income right around $200,000 a year. Depending on how many extra projects we take on, we make $10,000 more or less than that. Unless we take on an extra side hustle, we’ll be right in that range this year.

That excludes rental income. Our rental house cash flows about $300/month but we put that all back into paying down the debt. The second home also generates short term rental income, but that’s a net loser of about -$6000/year.

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 had a number of jobs as a teenager. I vaguely remember picking berries for pennies a pound. My first real job was working for a friend’s dad in a cabinet shop job for $3.75 an hour.

Professionally, I came out of college and was working in an economics related field for a starting salary of ~$42,000. That same year, my wife was a first-year teacher making $34,000 a year.

I had a pretty good career path in front of me that would have led me to six figures in a relatively short period of time. In my first year, the company switched me to a four-day work week. I started volunteering in my wife’s classroom on the extra day.

Growing up in poverty, I’d been obsessed with the concept of making money and had always dreamed of working in a finance-related field. Near the end of college, I realized I preferred service over profit. So, I left that job, spent a year in college getting a Master’s in teaching and took a new teaching job for $36,000/ year.

That’s a bad equation on paper! Lost wages, increased education costs, and a lower starting salary. That was our first year of marriage — we were making a combined $73,000.

But, we believed in our jobs. My wife has stayed in teaching, getting the standard raises and will make about $76,000 this year.

I taught in a classroom for seven years. In most public teaching situations your salary is dependent on two things: experience and education. The experience just leads to raises every year. But, you can move “columns” and increase your pay rate up to a certain point. My wife maxed out her columns in 5 years by going to school to get endorsements (English Language Learner, etc).

In my third year, I noticed a “hack” in our contract that granted full column advancement for National Board Certified teachers. There was a program that paid for the cost of the certification and granted preparation days to do the work. It was a lot of self-directed work, with a relatively low first-time pass rate. Most teachers who pursue it wait longer. I wanted to accelerate my craft and the extra pay wouldn’t hurt. So, I dove in and worked hard to pass. I topped out my columns in my 4th year.

So, we both were making our experience maximums within 5 years of entering the profession.

I progressed professionally by being the teacher who was most flexible. Every year, some teachers have to change assignments. This isn’t a popular thing because it requires learning new curriculum, sometimes moving classrooms physically, and switching up teammates. Many teachers *hate* this. I’ve always been bad at sitting still, so never minded. This flexibility helped.

As leadership roles came up in the school, both administrators and colleagues would ask me to step into them. These sometimes came with extra stipends or hours of pay. In my 8th year, I found myself leading school improvement efforts under an ineffective administrator.

Since I was doing the work anyway, I decided to go through an administrative certificate program. The district would pay for it. At the time, I honestly wasn’t sure I’d use it. But, I ended up getting my certification for free.

The next year, colleagues encouraged me to apply for administrative openings and I felt inspired to make a greater impact. I got an elementary principal job that paid $95,000.

Since then, that pattern has basically repeated. I’ve been flexible and willing to do what it takes to improve outcomes for kids. While doing that, I’m learning about other opportunities. I was never actively seeking another job, but I was always ready if the opportunity opened.

As with everything, it’s effort and good fortune. Other opportunities opened for me very quickly.

From that first job I chose (or was pulled into) leading other schools and taking on school-district-level responsibilities. I’ve even briefly led whole school districts. If income was my primary driver, I’d do that again.

Now, I earn about 3.5x my starting income in education. I could make more, but it’s the right mix of interest, impact, and income for me. We feel good about making a solid living serving in public education.

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

In education, the levers are really experience, certifications, extra-duties. Other than that, you need to decide if you’re going to climb the career ladder into administration. I chose that route, but my wife has more than doubled her salary as a teacher through experience and education. Some years, she earns as much as an additional $10,000 through extra duty.

If you’re in education: know your contract. You can plan out your salary growth (and how to reach your goals) if you look at the pay schedule. There are benefits in many teacher contracts that can provide advancement. These include things like education credits, leadership stipends, and benefit hacks.

In general, I believe you should focus on performing at your best in your current role, educating yourself for the next role, and being ready to seize that next opportunity. This approach will serve you well in any profession.

I’ve also found that working for really good leaders is a huge benefit in two ways. First, you learn an incredible amount from them. Second, they’re more likely to be promoted or pursue other opportunities resulting in an opportunity for you.

What’s your work-life balance look like?

It used to be atrocious. For the early years of my administration career I probably averaged 80 hours/week, especially during the years I was also pursuing continuing education. Fortunately, my wife is a hard-charger too so that part of work hasn’t stressed our marriage.

Now, our work-life balance is merely ugly. I work a lot, and neither of us really “switch off” during the school year. We’re making progress though and have found a better balance of using time off to unplug and ensuring we take at least some of the weekends to ourselves.

For awhile, we were coping with this using a full work-hard play-hard approach. We’d push hard until a break, and then spend lavishly on tropical vacations. We’re now balancing it out by planning a little more into the future and expecting to back off our full-time work in the next 5 years. That’s brought its own sense of balance.

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?

In general, all of our financial progress has come from our education careers. Primarily, base salary. But both of us have earned additional money by taking on extra duties: summer school, work groups, and coaching. We’ve each probably average between three and five thousand dollars a year this way. Some years, we’ve hit as high as $10,000 in extra income.

I’ve also worked as an adjunct professor for local universities. I’ve taught a variety of courses, primarily on leadership development. They pay in the $3000 dollar range per course. This isn’t actually enough for the work you do — but it’s extra income and provides great professional connections.

Our rental will eventually be income, but currently all the money we make goes into paying down the loan.

The second home would actually cash-flow if we used it as a full-time short-term vacation rental. But, we don’t and it doesn’t.

SAVE

What is your annual spending?

Our annual spending has been as high as $125,000 but with some intentional work we’re down into the $70,000/year range.

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

We’ve actually tried to get tight about tracking the details of our spending many times, and it has just never worked well for us. So, these are estimates based on our budget rather than actuals:

  • Housing/Utilities: $30,000
  • Food/Entertainment: $12,000
  • Transportation (Gas, Insurance, Maintenance): $6000
  • Second Home (net of rent): $6,000
  • Travel: $12,000
  • Misc (clothing, gifts, etc): $5000

That’s horribly non-specific. Tracking spending is one area where we could absolutely improve.

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

Over the years, we’ve developed a practice that works well for us. We create an annual budget once a year. We use that to automate investments/savings. Recently, we’ve stretched ourselves a little farther each year and typically “beat” our budget by a bit and sweep our accounts into investments.

We do our annual budget and planning in a two-part process. We start by going out to dinner, having some wine, and talking about how we’re feeling about our finances. Are our goals still the right ones? Do we want to push harder or back off in the coming year? It’s really a great connecting moment and helps us stay on the same page with our goals.

The next day we spend time on our spreadsheets. We have one that tracks our progress to financial independence. We start by updating that. Then, we work on the annual budget sheet. After we’re comfortable with that, we make adjustments to our auto-withdrawals and we’re set to go.

Throughout the year, we have a monthly check-in where we do a short version of the process with a long walk out and away from the house.

It’s not a strict budget process, and we only have a loose idea on any given day if we’re hitting it. But it’s tight enough that we can tell if we’re slipping off track, and we can adjust as needed.

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

This year, we’re on track to save a little over 60% of our income. We didn’t really track it until four years ago.

For most of our marriage, it was under 10% and mostly accidental. Our lifestyle grew with our income.

Once we discovered financial independence, we started working intentionally toward saving. For the last four years, it’s gone 20% – 30% – 44% and we’re trying to hit 65% this year.

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

Easy answer – travel. It’s always been part of our work-hard / play-hard approach. But, we also just like seeing different places. We typically take week long trips 3x a year, and go to the second home for a weekend in months we don’t.

We also spend money on cycling events to help motivate ourselves for longer rides during the cycling season. This can require some travel and there are registration and donation fees.

Both of those are luxuries but add to our lives. We could cut them if needed extra cash or we wanted to accelerate our path to FI. For now, we’ve found an okay balance.

INVEST

What is your investment philosophy/plan?

Currently, we are maxing out all of our pre-tax options. As teachers, we are fortunate to have good options in both 403b and 457b vehicles. In 2019, we can each contribute $19,000 pre-tax to each of these for a total pre-tax investment of $76,000. Three of these are in stock index funds and the fourth is in a bond fund.

We contribute in a separate brokerage account to an international equity fund and VTSAX. We strive to keep about an 80/20 stock to bond allocation and adjust each year using new contributions.

We plan to keep the single-family rental and anticipate paying it off in 5 years. At that point, it will be pure cash-flow.

We are index fund investors with the real estate providing some balance. For now, we’ll continue contributing heavily to pre-tax and brokerage accounts while maintaining the 80/20 allocation.

What has been your best investment?

Two answers here. And this is where I have to acknowledge most of our success has been blind luck. We worked hard on income, but didn’t really think much about investing for years.

In 2008, I took an administrative job that paid into my 403b. We’d both had the option for years, but hadn’t done it. That job benefit caused me to put money in mostly at the bottom of the market, and I’ve increased the contribution every year since. Fortunately, I chose VTSAX back then (I’d read something about Vanguard index funds.) After big drops when I had very little in, I’ve been contributing regularly for the whole market climb.

The second is our rental home. In 2010, at the bottom of the market we stumbled on what we thought was our dream home. Our home at the time was right on the edge of underwater after the housing collapse. In order to make the new home work, we had to either sell quickly (at a likely loss) or rent it. We chose rent. It broke even initially, and has mostly cash flowed since. Since then, no vacancy longer than 2 weeks and appreciation of nearly 100%.

What has been your worst investment?

That bigger home we bought in 2010. We loved living there, and were fortunate that it appreciated. But, it was expensive and larger than we needed.

By the time we cashed out, we pulled out almost exactly what we put into it. So, we didn’t lose real money. However, we lost a whole lot of opportunity during the market of the past 9 years.

What’s been your overall return?

I haven’t really tracked this until recently. However, overall I’d say we’re just under 10% return.

How often do you monitor/review your portfolio?

I look at market reports about once daily with just a quick “Huh, up or down a bit” type look. I glance at Personal Capital for Net Worth once a month. We do a full spreadsheet calculation of our Net Worth quarterly, and a full financial assessment once a year.

NET WORTH

How did you accumulate your net worth?

We started tracking about 5 years ago, but can pinpoint a few specific points on our trajectory.

  • 2001: -$130,000 | We were newly married, had student loans and consumer debt, and bought our first house on a zero down loan.
  • 2010: $0 We upsized our house, still had some student loan debt, and a bit in investments.
  • 2019: $1.15 m

A bulk of our net worth came as a result of increasing our income and accidental savings in terms of those first 403b contributions and equity in real estate. Had the real estate market not run up in recent years, we’d be worth less. Almost $300,000 of the net worth came from selling our primary residence, and another $150,000 from rental appreciation. The rest is investments and growth.

It’s not the same path I’d follow now — but it worked out for us when we were mostly financially clueless.

Our most recent net worth growth, and where we project growth for the next several years, comes from a high savings rate and contributions to index funds.

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?

Our greatest strength has been income growth. That’s funny to say for public educators, but increasing our income about 3x from when we started out covered a lot of our spending stupidity. We increased our wages and have regularly taken other opportunities to make additional money.

If we’d been smart earlier and investing earlier, we’d have a lot more than we do now. But, we’re doing okay and will be doing better in the future.

Savings is now a close second with our new 60% savings rate.

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

My road bumps were all in a childhood of poverty. They made me obsessed with money and spending in an unhealthy way. It created a drive to earn more, spend more, and never think about money.

Both this intentional unwillingness to pay attention to money and a lack of knowledge led to us wasting almost a decade of income growth by saving very little.

Fortunately, we didn’t suffer any real catastrophic losses or hardship and I consider myself incredibly fortunate.

Now, we’re able to use the income growth we’ve created and our strong marriage to accelerate our net worth growth. We could have been millionaires years ago, but hitting it in our mid-40s isn’t bad.

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

Right now, we’re contributing more than $100,000 a year to our investments. We also recently downsized our home to reduce our housing costs and free up equity.

We expect our second million to come much more quickly.

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

This is flexible due to the pension. Theoretically, the pension will pay out about 40% of our income. If that ends up being true, we’ve already got a relatively comfortable number. That said, due to financial fears from my childhood, it’s not really comfortable for us.

For now, we’re shooting for $2m + pension as a backstop, but may adjust that as we get nearer to 50.

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

We crossed the million threshold in our net worth last year when I was 43. I didn’t really consider it as millionaire status because so much of it was equity in our primary home. Now that we’ve cashed that out, I consider us millionaires.

We’ve actually gotten more aggressive about wealth accumulation since that point. We’re spending less and investing more this year than ever before.

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

Of course, the biggest one was not using our tax advantaged investing options in our 20s. For our first years of teaching, we should have been investing at least half of our annual raises into our 403b options. Instead, we went almost 10 years without doing anything with investments. Ouch.

Even worse, I didn’t realize we had access to a second option in 457 investments. (I actually discovered it reading an earlier ESI millionaire interview!) The 457 is really FIRE magic because you can access it upon separation from work. Not contributing to that until recently was a huge benefit missed.

Finally, we shouldn’t have bought the bigger house in 2010. If we’d instead stayed in our previous home and purchased two rentals with the money, or even just put that money into the market, we’d be much farther ahead.

Basically, I made the most classic money mistakes: Started late and bought too much house.

Income growth really does cover a lot of blunders. Our work there has made it possible for us to recover and accelerate.

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

I think I’ve covered it pretty well above, but I’d say this: grow your income, buy (or rent) a reasonable house, start investing ASAP, and track your numbers.

FUTURE

What are your plans for the future regarding lifestyle?

We plan to continue at our current hard-charging for the next 3 -5 years, depending on how the market acts.

We both love the work we do, but also crave more balance. By 50, we hope to be able to cut back into part-time education positions until we feel ready to retire completely.

What are your retirement plans?

We’ll draw down our brokerage and 457 accounts for expenses until 59. At that point, any pension will kick-in and we’ll have easy access if needed to our 403b funds. The pension creates an interesting quirk in that we could theoretically have an explosion in income years after we retire.

Our retirement life will consist of travel, exercise, and volunteer work. We’ve always enjoyed traveling, but during our work careers it’s been hard for me to ever be gone for more than a week. I’m almost never disconnected. We’re looking forward to slow traveling both domestically (road trips!) and internationally.

We’ll do long distance cycling for leisure and exercise. We try to stay up on it now, but the rhythms of work cause our fitness and ride time to vary more than we’d like.

Finally, we know we’ll both stay involved in education. My wife will volunteer in classrooms or tutoring. I already serve on a number of non-profit boards and will continue or increase that service.

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

Healthcare is always the issue! Who can predict what the future of healthcare will look like in this country? We continue to monitor it closely. For now, we simply project it to be a large expense in retirement. It’s definitely one thing that will delay any full retirement until we have more clarity.

MISCELLANEOUS

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

I was an economics major in school, so I learned about it in theory at a relatively young age. This is probably the only thing that kept us from making really stupid mistakes. We haven’t spent more than we made since we were married, and we never fell into any get rich quick schemes.

Sadly, it didn’t really “click” for us until about 5 years ago in our late 30s.

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

My mom inspired me and is a hero. She was a stay-at-home mom until my dad left when I was 8.

Over the course of the next decade, she raised us while working full-time and getting her nursing degree.

It had its rough moments, but she always just got it done. Now all three of her children are college-educated and financially stable.

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?

I’m an educator so I have so many books I’d recommend! You asked for three, so here are the three I most often recommend in relation to money:

  • The Simple Path to Wealth is the best simple overview of building wealth in a reasonable way. I’ve found it captures the biggest concepts well and does so in a very accessible way. I’ve taken to given this as part of high-school graduation gifts.
  • Atomic Habits isn’t strictly a money book. However, it’s approach to changing behavior and being intentional about action creating outcomes makes it useful in a financial sense.
  • A Random Walk down Wall Street is a classic that remains my favorite book for building a deeper understanding of investing.

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

We do. We give a significant amount of time in the form of board service and direct volunteer work. We don’t track the time well.

We also give money. We’ve always been givers but realized recently that our giving has not kept up with our income growth. We’re going to give about 5% this year. Inspired by a number of people in the personal finance space (including ESI) we have made plans to increase our giving each year until it hits 10%. 10% will also be included in our retirement budget.

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?

Currently, our assets would be distributed evenly to our nieces/nephews. We’re okay with that.

However, we’ve talked about setting up a foundation (or contributing to an existing one) to provide scholarships with half of our assets. The rest would then be distributed to our family.

We’re fine helping our nieces and nephews some. They don’t really have any expectation of receiving anything and are moving through life without even knowing they may inherit substantial amounts someday.

We also know from our work that targeted scholarships can be life-changing and help break systemic patterns. In most scenarios we’ll end up with several million dollars in assets at end-of-life and know this could do substantial good.

Yes, this is all too nebulous for now. This is something we’ll work on once we reach retirement.

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How to Save Money On Medical Costs https://esimoney.com/how-to-save-money-on-medical-costs/ https://esimoney.com/how-to-save-money-on-medical-costs/#comments Sat, 05 Oct 2019 09:00:26 +0000 https://esimoney.com/?p=5368 The number one question I get BY FAR about retirement after “How did you do it so young?” is “What do you do about health insurance/medical expenses?” It’s a big issue for many in America because our medical system is so messed up. Look at it this way: millionaires are worried about health care costs […]

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The number one question I get BY FAR about retirement after “How did you do it so young?” is “What do you do about health insurance/medical expenses?”

It’s a big issue for many in America because our medical system is so messed up.

Look at it this way: millionaires are worried about health care costs in retirement. If it’s an issue for them with all their assets, how does the average person stand a chance of dealing with it?

So to help out ESI Money readers and those who might stumble upon this post from our lovely friends at Google, I decided to do a piece on how to save on medical costs. Plus it should be timely as open enrollment season for medical insurance is right around the corner.

And who better to do the post than a doctor? After all, he has the inside scoop to tell the rest of us how to beat the system, right?

That’s how I ended up with this guest post from Dr. Jeff Anzalone. Jeff is a periodontist (Anzalone Periodontics) who also runs Debt Free Doctor, helping doctors and high-income professionals reach financial freedom using passive real estate investments.

Normally for a guest post I add my comments at the end, but since I have so many thoughts on this topic, I’ll add them within the content. After Jeff presents a topic, I’ll chime in with my take using the heading “ESI’s Thoughts”. (I know, very original.) 😉

I know a bit about managing health care costs as our family has done a lot of that in early retirement. So I have some real-world experience that I think can be helpful.

I’ll also preface this piece by saying that the issue of paying for health care can get political, with heated arguments from both sides. As you know, I abhor political discussions on ESI Money, so I will try to keep any issues that can even slightly be seen as political at a minimum. And when I do have to cover them out of necessity I will try and give a balanced perspective so even my most insightful reader wouldn’t know which side of the argument I favor.

With that said, let’s turn it over to Dr. Jeff…

———————————————-

Do you want to save money on medical costs? If so, you’re not alone. Even if you have health insurance, one of the major expenditures that must be considered for those either nearing retirement or wanting to retire early is the cost of healthcare.

The United States spends close to $4 trillion dollars a year on healthcare, which is more than any other country in the world. And these costs continue to skyrocket.

Medical expenses cover a wide variety of costs with the main ones being:

  • Doctor visits
  • Medications
  • Lab tests
  • Surgical procedures

Unfortunately, these costs are unaffordable for many. For others, they must delay or even abandon early retirement because the threat of expensive medical costs is enough to scare the retirement right out of them.

Fortunately there are steps each of us can take to cut many of these expenses dramatically. I’ll be sharing ten of the best today.

But before we get started, let’s address what is often the largest medical cost of all…

How Much Is Health Insurance Costing You?

Of all the medical costs, health insurance is going to be at the top of the list.

According to CreditDonkey.com:

The average person pays:

  • $464/mo for individual coverage with an annual deductible of $2,903
  • $1,266/mo for family coverage with an annual deductible of $5,739

For someone on an HMO plan:

  • $548/mo for individual coverage with an annual deductible of $2,903
  • $1,498/mo for family coverage with an annual deductible of $5,739

For someone on a PPO plan:

  • $567/mo for individual coverage with an annual deductible of $2,903
  • $1,584 for family coverage with an annual deductible of $5,739

Just look at those numbers! And this is for insurance alone — you’ll be paying these even if you have zero additional health-related costs for the year! Yikes!

ESI’s Thoughts

I remember when the Affordable Care Act (ACA) was in the process of being debated. Things were quite heated politically in our nation. One of my co-workers summed up the situation in a way I thought was pretty eloquent. Towards the end of the debate when it appeared the ACA would pass, he said:

“My guess is that the Affordable Care Act won’t be the panacea that Nancy Pelosi says it will be or the disaster the Republicans think it will be.”

No matter which side of the argument you fall on, I think if you look at the ACA objectively you can likely find both good and bad in it. I won’t get into what the good and bad might be as I’m already past my political comfort zone.

But I will say one thing: In general, the Affordable Care Act is not affordable. It’s especially not very affordable for higher income individuals (which differ from high net worth individuals in many cases). So while it offers a solution in principle for early retirees (the focus for many ESI Money readers), it’s not a practical solution because it’s too expensive.

As such, saving on health insurance is a vital topic for many, and Dr. Jeff has some great suggestions in this area.

How Much Do We Spend on Medical Costs?

So what’s the price tag for health insurance plus annual out-of-pocket medical expenses?

According to Dave Ramsey, total medical costs—including premiums paid by employer, employee, and out-of-pocket costs—come to a nearly $27,000 for the typical American family of four on an average employer-sponsored plan.

Government numbers show the problem to be even worse, reporting that the average American spends $10,739 on healthcare each year

Whichever number is accurate, you can see how medical costs can be a HUGE budget killer for anyone — whether you retire early or not. As such a key part of becoming financially fit requires us to consider how we can reduce these costs.

So let’s dig into how we can do that to keep more money where it belongs…in our pockets!

ESI’s Thoughts

Before we get into money saving ideas, let’s do a bit of fact-sharing.

Here are some general stats from The Balance that will give us some perspective as well as set the stage for later discussions:

In 2017, U.S. health care costs were $3.5 trillion. It equals 17.9 percent of gross domestic product.

A Princeton University study found that Americans use the same amount of health care as residents of other nations. They just pay more for them. For example, U.S. hospital prices are 60 percent higher than those in Europe. Government efforts to reform health care and cut costs raised them instead.

Chronic illnesses, such as diabetes and heart disease, have increased. They are responsible for 85 percent of health care costs. Almost half of all Americans have at least one of them. They are expensive and difficult to treat. As a result, the sickest 5 percent of the population consume 50 percent of total health care costs. The healthiest 50 percent only consume 3 percent of the nation’s health care costs.

So the summary is:

  • Health care is expensive. And it’s a big part of total U.S. spending.
  • It’s not that Americans are getting more medical work done, it’s just that it’s more pricey. No surprise that government intervention made it worse. (If you want details on why this is, read the entire article linked above.)
  • A few, big diseases are responsible for the lion’s share of the costs and a very small group of sick people account for half the costs. It’s the 80/20 principle in action.

Overall, it’s a bleak picture, though not as bleak as it feels much of the time. More on that later.

10 Ways To Save Money On Medical Costs

 
1. Negotiate your bills.

Even people that commonly negotiate expenses with businesses/retailers sometimes might not know that their medical bills are one of the most negotiable debts they owe.

Maybe the reason is that they feel intimidated by being in a doctor’s office or hospital. If that’s the case, don’t let that deter you. In my office, there’s not a week that goes by without at least one of my patients trying to negotiate their costs with my staff and sometimes me!

Both doctors and hospitals realize that the majority of insurance companies will NOT pay 100% of the bill. Because of this, they’re used to having to write off a large chunk of the bill.

If you can negotiate with them so they don’t have to involve an insurance company, you can save big time.

An example of someone that asked for a discount came into the office just this week.

After discussing her treatment options with her, she chose the more expensive option which was multiple dental implants. But she asked if she could get a discount because of the number of implants she was getting (five).

I told her that we typically offer a 5% discount to patients if they pay in full. But in her case (and because she asked), I offered her 10% off of the total price.

When you ask for a discount, here are some tips to increase your odds of success:

  • Ask BOTH the doctor and financial person in the office. Sometimes if you only ask one, you may NOT get a discount.
  • Always be polite and nice when asking for a discount. Whenever someone frowns & asks, “I guess ALL of this work is going to be expensive, can you at least give me some type of discount?” then I typically tell them no simply because they weren’t NICE.
  • Be appreciative about whatever discount is offered (no matter how small).

And the negotiation doesn’t have to even be negotiated in advance. If you find yourself staring at a large doctor/hospital bill, the good news is that you probably don’t have to pay as much as the total amount. Many times you can get an impressive discount if you pay your costs out of pocket.

ESI’s Thoughts

In general I would say the same tactics that work when asking for a discount with other types of businesses works for doctors as well — asking for a cash discount, asking for a quantity discount, being polite, asking “what can I do to lower this cost?”, and so forth.

We’ve had the most success asking for a cash-pay discount prior to any work being done. As Jeff notes, insurance companies don’t pay 100% of the costs. Plus they take a long time to get resolved, require lots of paperwork, and cost a ton in expended employee hours before the doctor finally gets paid.

Doctors are starting to realize that having cash now, even if it’s a lower amount, will be better (more profitable) for them in the long run as they will save time and effort compared to tracking down insurance money. That’s why more and more are willing to offer cash-pay discounts.

One example: I was told for a routine colonoscopy it would cost me $3,000 if I used insurance, but only $1,000 if I paid myself. Now how much I would pay of that insurance amount is up for debate. But even if it was lower, I’m sure the insurance coverage plus my cost would be more expensive than what I’d pay with my healthshare (see below).

I’d also suggest asking your doctor for help with prices. My doctor recommended I go to a specific lab for tests simply because that’s the one he routinely uses. I asked if he could write the lab request and I could take it to a lab I know my wife had used that was much less expensive. He was happy to do this, we saved some money, and we got the needed work done.

2. Lower prescription costs.

Prescriptions can account for as much as 15% of your medical costs. As a doctor myself, it’s hard to keep up with not only the new drugs that hit the market but also their costs.

Even if your doctor prescribes you certain medications, consider asking for a cheaper alternative. Again, it’s up to you to try to save money on medical costs.

Before you take your prescription(s) to the pharmacy, call ahead to inquire about the price. Also ask if there’s a generic option for the same drug. Generic drugs are the same drug (brand-name drug copy) that compared to their original drug, have exactly the same:

  • Dosage
  • Intended use
  • Effects
  • Side effects
  • Route of administration
  • Risks
  • Safety
  • Strength

Sometimes you can pick up generics as much as 70% cheaper than the original brand-name drug.

Other drugs savings include:

  • Online ordering. Don’t be afraid to check if your prescription is available for online ordering. Significant discounts are sometimes available.
  • Buy in bulk. If you know you’re going to have to take certain medications for an extended period of time, consider ordering a 90-day supply which usually can save you at least 10%. Occasionally you’ll have to have your MD write the prescription in a certain way to reflect the larger amount in order to have it filled.
  • Consider over-the-counter (OTC) alternatives. Ask your MD if there’s a potential OTC alternative for each of the prescription that you’re prescribed. You never know what’s available unless you ask.

ESI’s Thoughts

Great advice all the way around here!

I’ve posted previously that my cholesterol is high and thus my doctor prescribed Lipitor. I asked him if there was a generic version and he said there was, so I got a prescription for atorvastatin.

When we called around for prices of atorvastatin (20 mg) we got prices ranging from $6 to $20 per month (yes, for the same exact thing!). So we went with the $6 option (of course), but asked if we could purchase it in bulk. They said yes, so we buy 90 days at a time for $14.

These costs are relatively mild compared to many, but we’ve seen the same thing when having to deal with more expensive medications. I remember my wife calling around one time for some sort of medicine for the kids and getting costs ranging from $50 to $200.

3. Leverage tax breaks.

Another way to save money on medical costs is to use a flexible spending account (FSA) or a health savings account (HSA).

I know what you’re thinking, these types of accounts aren’t technically going to get your medical expenses discounted. I get that.

But what it will do is help you save money in the long run.

Both HSAs and FSAs allow you to set aside tax-free money in order to cover medical costs in the coming year. You can only get an HSA if you have a high-deductible health plan.

An HSA is the ONLY account that allows you to have a triple tax advantage in that:

  • Contributions are tax-deductible
  • Money put in grows tax-free
  • Withdrawals are NOT taxed

You can’t beat that!

In a nutshell, an HSA allows you to contribute pre-tax dollars and then turn around and pay medical bills out of the account (unless you’re like me and let it grow to use it later in retirement).

For instance, a married couple with two dependents earning $100,000 a year and incurring $3,000 in medical bills can save $750 by using pre-tax dollars in a health savings account. If you want to see how much money you’ll save by using one, then input your own numbers into an HSA calculator.

ESI’s Thoughts

I still have money in my HSA from a couple of employers who allowed us to contribute to them.

Unfortunately I can’t use this option any longer (see #5 below.)

4. Shop around for better insurance.

Have you ever heard the phrase, “you get what you pay for”? Don’t be so quick to buy the cheapest health insurance even though it may initially seem like the smartest way to keep your costs at a minimum.

When my wife and I were shopping for insurance early in our relationship, we went with a cheap plan and found out the hard way that actually cost us in the long run.

With a low-cost plan, some of the tests and procedures we thought were covered actually weren’t. Also, some of the doctors that we wanted to use were not a provider with our new insurance. Come to find out that on cheaper plans, you’re restricted to a smaller group of in-network providers which can make it more difficult to get the care you need.

Something else to consider is the overall health of your family. If you have known medical issues that are going to cause you to frequent the doctor on a regular basis, then it may make more sense to go with a plan with a higher premium in which both your deductible and copay would be lower.

As an example, let’s say that you’ve narrowed down your choices to two separate plans:

  • Plan A has a $2,000 premium and a $6,000 deductible
  • Plan B has a $4,000 premium and a $3,000 deductible

If a sickness or accident causing you to pay $6,000 in out of pocket costs before your coverage starts then with:

  • Plan A: You’ll pay $8,000 total which breaks down to $2,000 for the premium + the $6,000 deductible.
  • Plan B: You’ll pay $7,000 total which breaks down to $4,000 for the premium + the $3,000 deductible.

I realize that this is a very basic example but it does show you that sometimes a higher premium is worth paying.

Here’s a chart from Nerd Wallet to compare plans that will help determine your out-of-pocket costs and which doctors you can see:

ESI’s Thoughts

It’s amazing to me the number of people who put medical costs into some special category when deciding what to purchase.

While they may shop around for the best price/benefits/value on everything from ketchup to a new car, somehow the thought of price shopping insurance coverage just never enters their minds.

And as Jeff said, it’s TOTAL costs that matter. What use is a low price in one area of health insurance if they gouge you in another area?

In short, again, use the same principles that save you money in other areas of life and you can save money on medical costs as well.

5. Consider dropping health insurance.

I know what you’re probably thinking, “Get rid of my health insurance?” Before you get too worked up, let me explain my case.

A few years ago we received a notice that our health insurance premium for a family of four was going to jump from $480/month to $1596/month. Now that our kids were older and rarely had to see a doctor, it didn’t make much sense to keep paying if other options existed.

At the time I’d learned that there were different options available and decided to do a little research and eventually signed up with Medi-Share.

Medi-Share is NOT health insurance. It’s a healthcare sharing ministry membership program in which Christians share their financial resources to help pay for other members’ medical expenses. Other popular ministries are Samaritan and Liberty HealthShare.

In order to grasp how they work, simply think of your local neighborhood. If one of your neighbors was sick and couldn’t mow their yard, more than likely some of the neighbors would pitch in and help out with their yard work. These organizations work in a similar fashion.

It is based on the biblical principles of Christians helping other Christians and applied to healthcare expenses.

Here’s a brief video of how Medi-Share works:

I realize that this isn’t for everyone but it could be something to look into if you’re in the same situation as we used to be, paying huge premiums for something we rarely used throughout the year.

ESI’s Thoughts

This is what we’ve done. You can read all about our journey in Picking the Right Early Retirement Health Insurance: Reviewing the Options where we decided to go with Samaritan Ministries.

That said, I recommend Medi-Share as well and had a friend write a review on them.

So far, three years in, we are 100% satisfied with Samaritan Ministries and don’t see changing anytime soon.

6. Practice preventative care.

I’m frequently asked, “Doc, why does this treatment cost so much?” For many of my patients, most of their issues could be prevented.

For instance, expensive gum disease treatment/surgery can be avoided simply by seeing their dentist twice a year for check ups.

I typically use the analogy of getting an oil change. I tell them that getting the recommended car maintenance (oil change every 5K miles) helps to prevent major issues from happening. The same is true with their oral health. Regular maintenance visits will help prevent big problems from occurring.

Now, I realize that everyone is busy these days and going to the doctor for check ups or seemingly minor health issues can become a hassle. Who wants to take off work for something like this?

But consider what could happen if that gum disease that could have been treated with a cleaning and turns into a surgery that could costs thousands of dollars? What about a cough that turns into pneumonia and puts you in the hospital? Not only are you putting your health at risk but also paying more money that needed for something that may could have been prevented.

ESI’s Thoughts

Ok, allow me to go off on a tangent for a bit. This is a HUGE tip relating to the total cost of medical care and what the vast majority of people can do to cut costs.

As noted at the beginning of this article, a large percentage of total health care costs can be traced to a few diseases. And do you know that for many people these diseases are preventable (or at least can be minimized dramatically)?

Before I get into my specific thoughts, let’s look at a few outside sources.

We begin with this one since it’s short and sweet:

Nearly half the U.S. population has one or more chronic conditions such as asthma, heart disease or diabetes, which drive up costs. Two-thirds of adults are either overweight or obese, which also leads to chronic illness and inflated medical spending.

Buckle up, there’s more where this came from.

Let’s go to CNN for the following:

Five things kill more people in the United States than anything else: heart disease, cancer, lung disease such as emphysema and chronic bronchitis, stroke and unintentional injuries such as those on roads or caused by medication overdoses.

Together, these five conditions cause almost two-thirds of all deaths in the country — nearly 900,000 each year.

On Thursday, the Centers for Disease Control and Prevention is releasing its first report on potentially preventable deaths from those causes in each one of the 50 states. The data suggest we could prevent at least a third of those deaths.

The greatest impact comes when we make the default choice the healthy choice — for example, making heart-healthy actions part of the normal course of everyday life.

Yes, I’m getting all up in your business. And I’m not done yet.

Let’s move on to some thoughts from Wikipedia:

The World Health Organization has traditionally classified death according to the primary type of disease or injury. However, causes of death may also be classified in terms of preventable risk factors—such as smoking, unhealthy diet, sexual behavior, and reckless driving—which contribute to a number of different diseases. Such risk factors are usually not recorded directly on death certificates, although they are acknowledged in medical reports.

Wikipedia then goes on to list the causes of preventable deaths as follows:

  • Preventable medical errors in hospitals: 23.1% of preventable deaths
  • Smoking tobacco: 18.1%
  • Being overweight and obesity: 4.6%
  • Alcohol: 3.5%
  • Infectious diseases: 3.1%
  • Toxic agents including toxins, particulates and radon: 2.3%
  • Traffic collisions: 1.8%
  • Preventable colorectal cancers: 1.7%
  • Firearms deaths: 1.3% (2/3 from suicide)
  • Sexually transmitted infections: 0.8%
  • Drug abuse: 0.7%

Ok, now you see why grandpa “never went to the doctor” and still lived to be 140. It’s because he avoided the 23.1% of medical error deaths. Ha!

Seriously, there are some MAJOR, AVOIDABLE things on this list that lead to untimely deaths (and costs associated with trying to prevent the people with them from dying).

We’ll get to those in a moment, I’m on a roll for now.

If you want to hear from the Centers for Disease Control (CDC) directly and really want to dig into the data, here’s their National Health Report.

If you want the highlights, I’d recommend looking at this infographic.

In it the CDC lists “The Key Lifestyle Risks for Chronic Disease” as follows:

  • Tobacco use
  • Poor nutrition
  • Lack of physical activity
  • Excessive use of alcohol

Ok, that’s it for facts. Brace yourself for a mini-rant.

Here’s my problem: A large portion of the things that kill Americans (and thus cost us a fortune to treat them) have major risk factors that are completely avoidable.

Even if you argue with “completely avoidable” you have to agree with “almost entirely avoidable.” I’ll accept that if you insist.

Said another way, Americans are killing themselves because of a lack of self control. And on their way to doing it they are costing themselves and the rest of us a king’s ransom.

Here are the completely avoidable ways Americans are contributing to their own health issues (and thus expensive health care costs):

  • Smoking
  • Eating like pigs
  • Being lazy
  • Abusing alcohol

What this information means for you and me is that we can reduce the probable causes of most of the major diseases (and many others) by doing what Dr. Jeff calls “practicing preventative care”.

And what this entails is pretty simple:

  • Don’t smoke
  • Eat a healthy, balanced diet
  • Exercise regularly
  • Only drink alcohol in moderation (or give it up completely if you can’t do that)

Now let me say a few other things before I hear it from the peanut gallery:

  • These comments apply to the majority of people. You don’t have to take my word for it, ask the CDC. Most people, most of the time.
  • That said, there are exceptions to everything. But don’t argue a principle based on exceptions. You can find a handful of cases that will counter almost anything. But that doesn’t mean the main conclusions aren’t true most of the time. So don’t give me that.
  • One of these exceptions is heredity. Some people simply have lost the gene lottery. I know about this as diabetes runs in my family. My grandmother had it, most of her kids have it, and many of her grandchildren have it. One of my cousins is on massive doses of insulin to stay alive. But he’s also 200 pounds overweight. Think that contributes to the problem? Of course it does. My dad had issues, then lost a ton of weight and has no indications of diabetes. So far, I have none either, but I also exercise, eat right most of the time, and maintain a healthy weight. So even if you roll snake eyes when it comes to good genes, you can minimize the negative impact by your choices.

I’m not really surprised that many health problems (and thus their costs) are avoidable because Americans lack self control. I see this issue every day in how Americans handle their money. Why would handling their health be any different?

The point is that many of the diseases and the costs associated with them are avoidable or at least can be minimized by making the right choices. And thankfully early retirement can help with two of them (exercising and eating right).

I’d also add a couple other tips to this section:

  • Do what your doctor says. I know. This should go without saying, but you’d be surprised at the number of people I meet who say, “Yeah, my doctor said not to do this but I’m doing it anyway” (and similar statements). I know our doctor told my mom to quit smoking for 30+ years and she never did — until she got cancer. At my last physical, my doctor told me to lose 10 pounds, so I did. At my follow-up appointment he was surprised. I said, “You told me to lose it so I did!” he then lamented that so many don’t follow his advice. I’m not saying to follow someone’s advice blindly, but if your doctor tells you to do something (or stop doing something), you should seriously consider her suggestion.
  • Be proactive with issues. If there’s a problem it’s almost always better to treat it now rather than later. Most things don’t get better on their own, so try to nip them in the bud before they get worse.

Whew! I’m exhausted after all that! 😉

7. Consider using telehealth.

In my opinion, I think we’re going to see telehealth used more to access health care providers in the future as this technology continues to evolve.

What is telehealth? It’s a way that consumers can access health care services remotely via electronic devices such as cell phones, computers, etc. A simple way to describe it is when technology meets health care.

Here’s one example of how someone can use telehealth that needs help with hypertension. They could:

  • Use a mobile phone or other device to upload a food log for review by a nurse who responds electronically to see if any of them could be contributing to the hypertension
  • Watch a video on salt intake and download an app for it to a phone.
  • Use an online patient portal to view test results, schedule appointments, request prescription refills or email your doctor.
  • Order medications online.
  • Get email, text or phone reminders when you need a flu shot, foot exam or other preventive care.

Not only could this save you time, but also money if you decide on taking advantage of this service. With Medi-Share, we have FREE access to telehealth via MDLIVE which gives our family access to board-certified doctors for non-emergency consultations.

Some of the conditions that they can treat are:

  • Acne
  • Allergies
  • Ear infections
  • Fever
  • Headaches
  • Joint aches
  • Sinus infection

ESI’s Thoughts

Quick question: how many of you have ever Googled to ask about some medical issue?

I know. Everyone has.

This is just the first step in technology helping to make medical care more accessible and affordable IMO.

So I’m personally 100% in favor of telehealth and anything related.

8. Check for billing errors.

We all make mistakes — just ask my wife about me!

Humans are the ones that input insurance codes into computers and humans are prone to errors. When coding mistakes are made, it could cost you thousands of dollars so it’s extremely important to do your part to review both bills and explanation of benefits (EOBs) which is a statement from insurance companies that summarize what they’ll cover and your out-of-pocket costs.

Our office is used to calling insurance companies on a daily basis. We are usually passed to multiple people during a single call so make sure that you keep a record of whom you talked to and when, because the calls are often recorded. By doing this, you have proof of making the call and what they are promising to do about the incorrect charges.

ESI’s Thoughts

Don’t even get me started. I’m just cooling down from the preventable diseases discussion!

Doctor’s and insurance bills are right up there with IRS instructions and directions you get when calling Comcast’s customer service line — they are almost impossible to decipher.

The only solution is that someone has to watch these bills like a hawk, then be tenacious as all get-out when an issue comes up.

Thankfully, my wife handles this stuff for our family and she will take you to the mat to get things right.

She’s probably saved us thousands of dollars through the years simply by paying attention to bills and getting errors corrected when they occur (which has been frequent — far more than you would expect).

9. Stay in-network.

When selecting your doctors, consider staying within your insurance’s network to save across the board. You could pay up to 30% more along with a higher co-pay if you decide not to.

What should you do if your doctor recommends a specialist who isn’t covered by your health plan?

Consider calling and asking your insurance company what you can do to avoid any out-of-network charges BEFORE you go.

Sometimes they can assist you in finding an in-network provider with similar expertise, or you may be able to work with the doctor to make the case that you need to use a particular specialist.

ESI’s Thoughts

I put this in the “save money by following the rules” category.

You buy a product, it has rules, and you follow the rules to keep your costs lower.

If you don’t follow the rules, you get penalized.

Pretty simple to comprehend.

10. Ask about your options.

Nobody is going to care about your health more than YOU.

Make sure that you ask questions when your doctor is discussing your treatment options and tests (if prescribed).

Also, consider asking about alternative treatment or medications that could possibly help too.

ESI’s Thoughts

Here’s a news flash for some people: doctors are human.

And as humans, they do things humans do — like make mistakes, get tired, forget, etc.

In addition, they deal with hundreds (or thousands) of patients and diseases. How can anyone expect them to be on top of every situation in every instance?

When I go into see my doctor, I try to help him out to the best of my ability.

A week before I go in I write up a short document detailing any issues I have and pertinent information I think he needs to know. I also list questions that I’ll be asking him at our appointment.

I deliver the document to his office a few days before our meeting, telling the receptionist that I have an upcoming appointment and saying the doctor needs to review this before our meeting.

This gives my doctor a chance to review the situation in advance and prepare for our meeting. He can look at options and consider what I may need to hear. He can also do some research if he needs to.

Then when I arrive, my doctor pulls out his copy of my document and I pull out mine. We then have a discussion of issues, options, etc. We can cover a lot of ground in a short amount of time, all because we both prepared in advance.

I would suggest doing the same with your doctor so he or she can help you in the process of developing options for any medical issues.

Final Words

As you can see, there are multiple ways to save money on medical costs as these expenses can completely destroy your budget no matter your age.

By using these ten steps, you should easily be able to save hundreds if not thousands of dollars each year that you could use for other things such as family vacations!

Either way, it’s a good idea to know what options are out there to lower your medical costs not only for the actual money to be saved but also to give you a peace of mind that you’re taking the necessary steps knowing your healthcare needs won’t drive you deep into debt.

For those of you who would like to see a summary of these tips in video format, here you go:

ESI’s Thoughts

Here are a couple final thoughts from me:

  • Ultimately you can become mostly self-insured. IMO it’s always best to have some kind of medical insurance (even if it’s just for catastrophic events), but as your net worth increases you become more and more self-insured, even to the point where you may elect to spend less on medical insurance and bear a bit more risk in case something goes wrong.
  • Be proactive and manage your health care. Just like you should be proactive with your money if you want to become wealthy, you should also be proactive at managing your physical well-being. No one cares more about your money than you, which is why I recommend becoming knowledgeable about managing money. In the same way, no one has more to lose or gain from managing your health than you. If you’re on top of things health-wise you’ll benefit greatly from it — so make it a priority.

Hopefully this post has presented some solid ideas that will allow you to save money on medical costs. But Dr. Jeff and I have may have missed a few great ideas, and we’d love to hear from you.

What are your best tips for saving on medical costs?

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What I’ve Learned from 150 Millionaire Interviews https://esimoney.com/what-ive-learned-from-150-millionaire-interviews/ https://esimoney.com/what-ive-learned-from-150-millionaire-interviews/#comments Fri, 04 Oct 2019 09:00:42 +0000 https://esimoney.com/?p=5635 Who would have ever thought we’d make it this far in the Millionaire Interview series? Back when I began with the very first interview I had no idea that these interviews would be as popular as they are. Here we are three years later and a century and a half of interviews completed. There are […]

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Who would have ever thought we’d make it this far in the Millionaire Interview series?

Back when I began with the very first interview I had no idea that these interviews would be as popular as they are.

Here we are three years later and a century and a half of interviews completed.

There are many more lined up, so we’ll be at this for a while before we run out of steam (if we ever do). That said, we can always use more, so email me if you’re interested in telling your story. 😉

I like to take these milestones to stop and pause (like I did when we completed the first 100), to look back at what we’ve learned so far. That’s what I’d like to do today.

Millionaires Are What I Expected

Before we get too far, I have to acknowledge that the findings from these interviews don’t surprise me much.

This is because these are my people. I’m one of the group (now over $4 million!) so I knew what to expect. How else do you think I came up with E, S, and I? 😉

That said, there are some nuances that did surprise me a bit.

So I’ll break this post into two major parts — findings I expected and the ones that were at least partial revelations to me. I’ll also compare and contrast what the millionaires have done to the actions we’ve taken in our lives.

Let’s get started…

Expected Millionaire Habits

Here are the findings I was pretty sure of:

1. Millionaires earn high incomes.

Not a shocker as we all know it’s easier to accumulate a high net worth if you make more.

As we’ll see below, millionaires didn’t always earn a ton (they didn’t come out of the womb pulling down $300k per year), but most built their incomes over two or three decades by focusing on and growing their careers.

This is exactly what I did during my 28-year career which had major positive impacts on our net worth.

This is why I talk about careers so much on the site. Growing you career is a HUGE part of the E in E-S-I.

Some people seem to avoid career-related posts but they do so at their own financial peril. For the vast majority, their career is their biggest asset and deserves a good amount of attention and care.

2. Millionaires save a good amount of their incomes.

Saving is listed as my #1 money move anyone can make, and millionaires certainly use it to their advantage.

Back in the day, saving 10% was considered good. If you saved that amount for 45 years, you could have a decent retirement at 65.

These days people in the FIRE community are saving 50%, 75%, or even more of their incomes. So that 10% looks kinda weak.

Millionaires are in the middle of these two. My estimate is they save 20% to 25% of their gross incomes. I don’t yet have a great handle on the absolute savings since some measure by gross income, some by net, and some offer contradictory savings rate information (i.e. two separate questions seem to reveal different answers).

In the end, I think 20% to 25% is a pretty good estimate. It’s also a decent level of savings, especially given their high salaries. When you couple solid savings with strong earnings, you get a great one-two financial punch.

We were a bit higher than average millionaires, saving 36% of our gross income during my 28-year working career.

3. Millionaires focus on simple investments.

When I was younger I used to think that millionaires had complicated investment strategies that were simply not understandable by the common man.

Then as my wealth grew I learned that investments didn’t have to be complicated to work.

Millionaires have found the same thing. While they have tried a wide variety of investments, they come back to the blocking and tackling of investing — index funds and real estate.

This is exactly what I experienced. I started thinking I had to be an awesome stock picker. That didn’t go well. Thankfully it was short-lived and I quickly found index funds as a replacement.

Then, once I had a much larger net worth and had built up my courage, I got into real estate. Doing so has been a very solid investment and we’re experiencing one of our best years yet in 2019.

4. Millionaires became wealthy by covering the money basics and avoiding huge mistakes.

I don’t think I’ve interviewed a millionaire yet who has become wealthy from one single event over a short period of time (like the lottery, inheritance, etc.).

They grow their net worths the old fashioned way — they earn, save, and invest, covering the basics. Then, over time, they become wealthy.

It’s pretty boring stuff if you compare it to the get-rich-quick stories often in the media. But it works. The process is tried and true. Slow and steady wins the race.

This is what has worked for us too.

We had some mini growth spurts like stock market surges, buying real estate, and big bonuses from work, but none of these were life-changing. We did it like everyone else, over a long period of time with the basics.

5. Work-life balance is often an issue.

As you might imagine, working yourself up the corporate ladder isn’t a 9-to-5 job. Many millionaires work long hours and have since a young age. As a result, their family life often suffers.

That said, one of the first things people do when they accumulate some wealth is begin to dial back on the hours and have more family time.

Millionaire after millionaire has told me that work-life balance “was an issue when I was younger, but is much better now.”

I will be posting on this issue in an upcoming post, but for now let me say this was pretty much my experience as well. Thankfully I was able to find a job mid-career which helped balance work and life while also paying me a great salary.

It was a true blessing to our family and something most don’t have the luxury of.

6. They have multiple sources of income.

In addition to their incomes, many millionaires have other income streams as well.

The most common are dividends, real estate, and side hustles.

Our multiple streams of income have built over the years as well.

We first added side hustles which helped us pay off our mortgage.

As our net worth grew, we generated more dividend income, which we always reinvested.

Then we got into real estate as I moved closer to retirement.

These days we have this site, our real estate, loans to another real estate investor (earning 10%), interest on cash held, and my wife’s part-time job. All that adds up to much more than we spend, so our net worth keeps growing.

7. Healthcare is their largest retirement concern.

No surprise here as the U.S. health system is designed for employees — with insurance tied to employers in most cases.

So what happens in retirement? People are left to figure that out on their own. There’s no really great solutions and hence millionaires are as concerned about retirement healthcare as everyone else.

We struggled with this as well, though it didn’t take too long for us to find Samaritan Ministries. They have been great for us through three rounds of skin cancer/mole removal and I can’t imaging not using either them or Medi-Share.

8. Travel is their favorite splurge.

Who doesn’t like a good trip? Millionaires sure do!

And the ingredients are right for them to make travel their top splurge — they have both the time and money to make it happen.

For us, Grand Cayman in January is a staple. It is an awesome place in so many ways, relatively easy to get to (now that there’s a direct flight from Denver), and really breaks up the winter with a nice warm spell.

This year I’ve convinced my wife to go for an entire two weeks, so I’m slowly inching her up to a month. 🙂

We also have Florida (October 2019) and Hawaii (2020) trips planned so I think we’re doing well this fall/winter.

Unexpected Millionaire Habits

While there was a lot I knew about millionaires, there were some surprises. Here are the findings I didn’t expect:

1. Millionaires started out with low incomes.

As I said earlier, millionaires weren’t born making the big bucks.

Many started with very minimal paying jobs out of college and through hard work and talent grew that into a very sizeable income.

People will often comment something like, “I’d be rich too if I made that income.”

First of all, they probably wouldn’t since income is only part of the equation. The averages show that most would spend whatever income they’d make, even a high one.

Second, it’s not like the millionaires have been making $300k for 30 years. Most began with minimum wage jobs (or close) and worked up from there. What we see are the results two to three decades later after a lot of hard work and dedication.

I had a similar experience but did take a bit of a short cut. In my senior year of college, after I realized I didn’t want to be a lawyer (an internship my junior year confirmed that), I discovered my employment options with a degree from a no-name college were quite limited. So I went to grad school to get an MBA. Two years later my income options had more than doubled and the rest was history.

2. Millionaires save less than I would have guessed.

If someone had asked me prior to the interviews how much I thought millionaires had saved of their incomes, I would have guessed 30% to 40%.

I am biased a bit towards savings and thus would have expected other millionaires to be as well. But the truth is they save far less than I imagined.

That said, I wouldn’t have thought their incomes were as high as they were either (I would have guessed $100k to $150k), so in the end the absolute amount saved is probably the same.

3. Millionaires have made common investing mistakes.

You would think that millionaires had it all figured out, right?

Most people believe that millionaires don’t make money mistakes. But they do (and have). Turns out they make the same mistakes most other people make.

And the #1 millionaire money mistake is in the area of investing.

Just like many Americans, millionaires thought they were smarter than most others and thus made a lot of investing stumbles (mostly in the area of picking individual stocks).

I know how they feel as I did the same thing. I was a know-it-all investor until I found out I knew much less than “it all”.

Thankfully we all came around to our senses fairly quickly, jumped on the index fund train, and the ride has been great.

4. Few have budgets.

This was a big surprise for me…and it kinda wasn’t.

The vast majority of millionaires don’t have budgets.

Many sort of track spending and saving, but they don’t estimate and pre-determine spending in a budget.

The reason? They don’t need to.

They make good incomes, save a decent amount, and have plenty left over. They are naturally self-controlled and don’t let costs get out of hand. So why would they need a budget?

I get it. We didn’t have a budget for many years. We did start out with one early in our marriage and it was a key reason we got off on the right track.

But once we got into a rhythm and developed our spending self control (plus our income rose), there really wasn’t a need to have a budget. That’s why we didn’t have one for many years. Then when we retired, I wanted a bit more insight into where our money was going, so we have one again that I update monthly.

That said I always did track spending in Quicken, so we had a good handle on cash flow if we wanted to dig into it.

For these reasons I recommend people have budgets at the beginning and end of their careers, but don’t necessarily need them as they get settled — which is what we see with millionaires.

5. Few have wills.

Again, you’d think that millionaires would be on top of things and have estate plans — especially given their level of wealth.

But they appear to be right there with the averages (almost 60% of Americans don’t have wills) — most millionaires don’t have wills.

I’m right there with them. Or at least I was. We had a will done 20 years ago. It had been so outdated for so long that it was probably useless.

But we remedied that recently and updated all our estate plans. I’ll give details in an upcoming post.

That said, for many years we were one of the majority who didn’t have a will.

6. Charitable giving is low.

This is one I really don’t get.

Millionaires are in the position to give substantially, even doing so while they accumulate wealth.

And yet most don’t.

I’m really not sure why. Perhaps some of you will have an explanation or two.

I will be discussing the issue in an upcoming post, offering reasons people should give on their way to financial independence.

We chose to help others while we worked our way towards FI, giving away 26% of our gross income

These days we contribute assets using our donor-advised fund, also an upcoming post. 😉

7. Most check their portfolios daily.

Experts will tell you that one key to investing success is to not watch the markets that closely (or else most people tend to make moves detrimental to their results).

Millionaires buck this trend with many checking their portfolios daily or at least weekly.

And somehow they keep on the right path.

I hardly pay attention to the market and only hear about it from others when something really good or bad happens. I’ll hear comments at the gym, on the pickleball courts, or at church. Otherwise, I don’t notice much.

I do update my net worth once a week via Quicken, downloading my index fund values automatically, but I don’t look at individual funds, I simply check the total.

Looking at values for each fund would be too much work/stress for someone trying to relax in retirement. 😉

General Thoughts on Becoming a Millionaire

Based on the findings above, I have some conclusions that could help those who aren’t yet millionaires become one.

But before we get to those, let’s quickly review the roles E-S_I play in becoming a millionaire.

Generally, here’s the pattern of things with millionaires (at the time they are interviewed):

  • Earning is more important than I thought.
  • Saving is less important than I thought.
  • Investing is more important than I thought.

The data show that millionaires focus more on earning, which means they need to save a lower percentage of income to still be socking away a ton.

They then invest the savings to grow their net worths.

However, that’s more of the long-term results. On the way up/early in their lives, the focus is as follows:

  • Earning is less important.
  • Saving is more important.
  • Investing is equally important.

In the beginning, they earn little, so there’s more focus on savings, which they then put into investments.

Those investments earn and grow for two or three decades after which time compounding makes them worth a healthy amount.

Given all this, here are some suggestions for those wanting to become millionaires:

1. Focus early on getting your earning ability ramped up.

It takes time and effort to make the big bucks, so the sooner you get started, the sooner you’ll reap the benefits.

This means considering both growing your career as well as developing a side hustle.

Over time they will both increase and be what fuels strong net worth growth.

2. Control spending using a budget from the get go.

Developing a spending self control is vital to becoming wealthy and a budget is the best tool for doing so.

Even if it’s just for the first few years of your financial journey, develop and live on a budget at least until you know you can manage your spending impulses.

Over time you can do without one if you like. And if things ever begin to slip spending-wise, you can always come back and create a new budget.

3. Invest early and often.

If you do #1 and #2, you will create a good amount to invest.

Before you dive in completely, learn about investing in index funds by reading The Simple Path to Wealth. Then read How to Invest in Real Estate since one day you may want to get involved in real estate (and the sooner you begin learning, the better.)

Sock away as much money as you can as early and as often as you can to get compounding working for you.

Over time you can keep at it or look to expanding into real estate depending on your goals and interests.

After that, it’s simply time. Give it long enough and one day you wake up wealthy. 🙂

Those are my thoughts from the first 150 millionaire interviews. Thanks to those who have completed the questions and all of you who read and comment on them.

Here’s to the next 150!

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How the Rich Get Richer https://esimoney.com/how-the-rich-get-richer/ https://esimoney.com/how-the-rich-get-richer/#comments Wed, 02 Oct 2019 09:00:51 +0000 https://esimoney.com/?p=5353 You’ve probably heard the phrase “the rich get richer”. There’s (surprisingly) even a Wikipedia page on it with background and details. Here are some of the highlights: “The rich get richer and the poor get poorer” is an aphorism due to Percy Bysshe Shelley. In A Defence of Poetry (1821, not published until 1840) Shelley […]

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You’ve probably heard the phrase “the rich get richer”.

There’s (surprisingly) even a Wikipedia page on it with background and details.

Here are some of the highlights:

“The rich get richer and the poor get poorer” is an aphorism due to Percy Bysshe Shelley. In A Defence of Poetry (1821, not published until 1840) Shelley remarked that the promoters of utility had exemplified the saying, “To him that hath, more shall be given; and from him that hath not, the little that he hath shall be taken away.”

The rich have become richer, and the poor have become poorer; and the vessel of the State is driven between the Scylla and Charybdis of anarchy and despotism.

“To him that hath” etc. is a reference to Matthew 25:29 (the parable of the talents, see also Matthew effect). The aphorism is commonly evoked, with variations in wording, as a synopsis of the effect of free market capitalism producing inequality.

Ok. I guess there’s officially a Wikipedia page on everything in the known world these days. But I digress.

Generally I’ve heard the phrase used to express exasperation that (for whatever reason) the rich are getting even richer (and at a faster pace) than the rest of us.

I may have even used it myself in my earlier days, though I can’t remember it for certain one way or the other.

For most of my life I didn’t really think of the phrase much. I didn’t really associate it with me or my finances in any way.

But it’s been on my mind lately as I look back on my life and see it’s clear that the rich do get richer.

So I thought I’d cover the issue here, first by seeing what others say on the subject and then sharing my own thoughts and experiences on it.

Wealth Inequality

Let me say that before I get into the post that I realize I’m treading on thin ice.

Wealth inequality is a big and growing issue in American politics and economics.

I want to remind all readers that this site is not about politics or economics and I’m not discussing wealth inequality in this post. If you’d like to debate that issue, I’m sure there are plenty of blogs that discuss it.

I’m simply looking at a popular (or at least well-known) phrase that has to do with money and trying to explain why it’s valid.

I’ll leave the politics/economics of wealth concentration for others to cover.

Google and the Rich

I started my search for an answer at (where else?) Google and typed in “why do the rich get richer”. I’ll be highlighting some of the top search results to see what they say in response.

We’ll begin with a couple videos.

This one from Valuetainment lists 10 reasons why the rich keep getting richer:

You can watch it but personally I found it a bit hype-y — kind of like a used car salesman talking about money.

That said, they did have some interesting stats on how wealth is distributed. The division of American land graphic was especially eye-opening.

Anyway, their list of ten includes the following:

  • Exponential growth
  • Positioning
  • Long term thinking
  • Regret minimization
  • Specialized skill
  • Networking
  • Leverage
  • Maximization of wealth
  • Family wealth transfer
  • Tax strategy

It’s hard to argue with any (or at least most) of these, but then again they seem a bit vague and hard to grab onto. Kinda touchy-feely. I prefer more concrete ideas and examples personally, so I kept looking.

Next is a video from Practical Wisdom:

The video title is “What Really Makes The Rich Get Richer And The Poor Get Poorer – The Five Laws Of Gold”.

The first part is what I had Googled and the last part sounded oddly familiar.

And it should sound familiar since the video is really a short summary of The Richest Man in Babylon, one of the books on my top five list plus a book I’ve reviewed here on ESI Money.

The book has seven steps to becoming wealthy while the video lists five, but they are the same basic principles.

That said, this video (and the book) are less about “how the rich become richer” than they are about “how anyone can become wealthy.” They cover solid money principles that anyone can apply to improve their finances and are certainly not limited to (or even targeting) people who are already wealthy.

In other words, it doesn’t really answer the question either.

So I moved from videos to articles.

Unfortunately I didn’t have much luck here either. I only found one that got to the heart of my question.

This post from CNBC says it’s true that the rich get richer and details why as follows:

The wealthiest 1 percent put three-quarters of their savings into investment assets. By contrast, the middle class had 63 percent of their assets tied up in their homes, with home equity accounting for about a third since they have large mortgage debt.

Wolff found “striking differences in returns by wealth class.” The top 1 percent earned an average annual return of 5.91 percent between 2010 and 2013—far more than the 3.27 percent earned by the middle three quartiles. And that was due mainly to having more exposure to the stock market.

“The differences reflect the greater share of high-yield investment assets like stocks in the portfolios of the rich and the greater share of housing in the portfolio of the middle class,” Wolff said.

In other words, it boils down to the facts that:

  • The wealthy have more assets (which is why they are deemed “wealthy” compared to others, by definition they have more)
  • As a result, they have surpluses to invest in higher performing assets (like stocks versus housing)
  • By investing in these assets, the rich become richer

The rest of the top articles were more like the second video highlighted above: they listed steps people could take to become wealthy in the first place (things like earning a good income, controlling their spending, staying away from excessive debt, investing for the future, etc.) Those are all well and good, but they don’t really address why people who are already wealthy become even wealthier at a faster rate.

But I think I have some ideas about why this happens…

Five Ways the Rich Become Richer

Based on both my life and observations, I think there are five key ways that the rich become richer.

All of them are a function of the following:

Most wealthy people have applied solid financial principles over time, accumulated wealth above the norm, and have placed themselves in a position to take advantage of their wealth to make it worth even more.

That said, here are the five ways the wealthy use their assets to become even richer:

1. They take advantage of compounding.

Here’s an easy math question:

Which will earn more at a 10% return rate — $5,000 or $50,000?

BTW, I’m using 10% to make the math really easy, so don’t get your shorts in a wad wondering (or asking) where someone can earn 10% guaranteed these days. I use 8% in my personal estimations, but I figured 10% made the calculations super simple for all. The principles are the same no matter what return rate you use.

I think we all know the answer but in case there’s someone who thinks this is a trick question, let’s spell it out:

  • 10% return on $5,000 is $500.
  • 10% return on $50,000 is $5,000.
  • $5,000 is more than $500.
  • Hence you earn more with $50,000.

Basically, the wealthy have a larger levels of assets which then earn larger amounts each year.

Then these increasingly larger amounts earn increasingly even larger amounts year after year after year, compounding until the difference is massive.

Let’s look at the examples above over time. Here’s what each of them is worth at 10% return:

  • After 10 years, $5k is worth $11.8k while $50k is worth $118k
  • After 20 years, $5k is worth $30.6k while $50k is worth $306k
  • After 30 years, $5k is worth $79.3k while $50k is worth $793k
  • After 40 years, $5k is worth $206k while $50k is worth $2.1 million

It’s easy to see how the compounding of large assets makes the rich even richer. In this example, they become $2.1 million richer than they were 40 years earlier and $1.9 million richer than the poorer people who started with only $5k.

2. They have surplus funds to invest.

The above example is only based on an initial investment sitting and compounding for 40 years.

But it’s also likely that the wealthy would have more excess funds each year to add to their investments. They are, after all, wealthier, so it’s easy to assume they have more to invest each year.

Let’s take the numbers above and add to them as follows:

  • One person starts with $5k invested and adds an extra $500 to it each year.
  • The other person starts with $50k invested and adds an extra $5,000 to it each year.

They both add 10% of their initial investment each year, so the savings are proportional. Yes, you could make a case that the wealthier person would have a disproportionately higher level of savings, but let’s ignore that for now — these numbers alone will make the point. Just know the difference could be even more.

If they both earn 10% on their money annually, here’s where they end up over time:

  • After 10 years, the $5k start/$500 per year is worth $19.8k while the $50k start/$5,000 per year is worth $198k
  • After 20 years, the $5k start/$500 per year is worth $59.2k while the $50k start/$5,000 per year is worth $592k
  • After 30 years, the $5k start/$500 per year is worth $162k while the $50k start/$5,000 per year is worth $1.6 million
  • After 40 years, the $5k start/$500 per year is worth $427k while the $50k start/$5,000 per year is worth $4.3 million

See how much the difference is now? The rich are even richer! And as I said earlier, that $5k per year they saved could easily be $10k or more, making the difference even greater!

3. They earn higher rates of return.

This is covered in the CNBC piece above, but I wanted to expand on their thoughts.

I know that when I had little to invest, I guarded it closely. It wasn’t much to wealthier people, but it was a lot to me and important to our finances, so I wanted to protect it. As such, I was cautious in my investments. I was limited in them as well by both the amount I had to invest and my own willingness to take risks.

As my assets grew, I loosened up. I was willing to take more risks with my money because I had more and any given amount wasn’t as important to me as it once was. If I lost it, it wouldn’t kill me. Hence I risked more and was rewarded with higher return rates.

I still wasn’t reckless in my investments but just willing to dial it up a few notches.

Think of it this way:

  • Most people start with their homes as their primary asset (as CNBC notes). This might earn them 3% gains over the years.
  • As they accumulate more, they invest in a combination of stocks and bonds and earn closer to 5%.
  • As this grows they are comfortable with risking more in stocks where they might earn 8% a year.
  • This grows into even more and they might branch off into real estate (like I did) and earn 10% in income plus strong appreciation.
  • Then they might buy a business (also as I did) and earn 200% on their money in a short period of time.

In each stage, the rich got richer. As they did, they invested at higher rates of return, which then helped them become even richer.

Just to humor myself, I ran the numbers to show what a difference return rates can have over time.

Let’s just do a simple calculation of someone starting with $50k and no additional annual investment.

Here’s how much they would have at various return rates after 40 years:

  • A 3% return rate would give them $118k
  • A 5% return rate would give them $335k
  • A 7.5% return rate would give them $902k
  • A 10% return rate would give them $2.1 million

Big difference, right?

In addition to simply changing what they invest in, the rich can also increase their return rates by getting better deals on their investments.

For example, because I had cash in 2013, I was able to buy properties at lower prices than those who had to finance, effectively giving me a better rate of return.

Let’s say Jim was bidding against me and he offered $200k but the seller wasn’t sure Jim would be able to qualify for a loan. Or perhaps the seller didn’t want to wait in a skittish market.

But I had $185k in cash and could close, guaranteed, very quickly. The owner could easily prefer my offer (and did) because he knew I had the money and had it now.

My return was effectively $15k better than what Jim’s would have been. This in effect raised my rate of return. Because I was already wealthy I was able to invest to become wealthier.

4. They have opportunities that aren’t available to others.

Sometimes the wealthy have access to opportunities that aren’t even available to (or known by) those who aren’t wealthy.

Here are a few times this has happened to me:

  • In real estate, I got deals (never mind they were at better prices) that others couldn’t have gotten simply because I had cash and they didn’t. So I was able to seize the opportunity and earn a good return when others weren’t.
  • I was given the chance to bid on a business because I had cash available (most others didn’t get the chance because they didn’t have the funds). In addition, I was able to outbid some other worthy competitors because I had a substantial amount of cash and was willing to risk it. So I purchased Rockstar Finance for way more than what it was worth using any reasonable set of metrics — but still a lot less than what I thought I could make from it. I won the bidding, grew the business, and sold at a handsome profit.
  • A friend of mine approached me to invest in his rental properties because he knew I was wealthy. To date I’ve been able to move $125k from earning 2% in a savings account to 10% with him. Sure, there’s more risk (which is why he pays more) but again it won’t kill me if I lose $125k, so I can afford to be riskier.

In addition to these I could list many examples of opportunities that I or others have had by networking. This is because wealthy people tend to talk about money, wealth, investments, and opportunities when they get together. This presents the wealthy with opportunities that others simply don’t get — and those opportunities are often quite lucrative.

5. They can strike when the iron is hot.

Warren Buffett famously said to “be fearful when others are greedy and greedy when others are fearful.”

A great example of this was the 2007-2008 crash that killed the stock market and most real estate.

But because the wealthy had excess reserves, they were able to be greedy when others were fearful.

This is when many poured millions into the stock market and bought real estate at bargain prices. Even though times were bad, they had assets to make these moves and could afford to risk them. Those with less assets tended to circle the wagons and pull everything out of the market and housing.

Now look at what has happened in the past decade. Because the wealthy were able to strike when the opportunity presented itself, they became even wealthier.

Here’s a video that highlights the five ways the rich get richer:

Rich Dad Poor Dad and Old Money

As I was winding up this post, I had just started re-reading Rich Dad Poor Dad for an upcoming review. In the introduction he makes the following statement:

One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is that the subject of money is taught at home, not school. Most of us learn about money from our parents. So what can poor parents tell their child about money? They simply say, “Stay in school and study hard.” The child may graduate with excellent grades, but with a poor person’s financial programming and mindset.

This makes a lot of sense to me. I bet many of you can relate as well — having parents who knew little about money management themselves.

That’s why I consider Dr. Thomas Stanley to be my “Rich Dad.” He wrote The Millionaire Next Door. I read it, I applied what he said, and I became wealthy.

Interestingly enough, Robert Kiyosaki, the author of Rich Dad Poor Dad has written a book titled Why the Rich Are Getting Richer which he calls “graduate school for Rich Dad students”. I’ll be checking the book out.

I’m also reading The Old Money Book and the sentiments in it are the same as in Rich Dad Poor Dad. In this case, Old Money parents do teach their kids about money — and since they know what they are talking about, the home education is quite successful at maintaining generational wealth.

Not Limited to One Method

A big reason the rich become richer is that they can use several (or even all) of the five points above to their advantage.

We’ve seen numerically that any one of the methods can help tremendously. How much more of an impact is there if they work together?

I know I have used all of the points above throughout my life, sometimes individually and sometimes a few combined for an even greater impact.

And if it’s clear that any one of these could make the rich richer, it’s even more obvious that used together they can grow wealth exponentially.

To wrap up, those are my thoughts on how the rich become richer.

Do you have anything to add? Did I miss anything?

If so, leave your ideas in the comments below.

The post How the Rich Get Richer appeared first on ESI Money.

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Millionaire Interview 150 https://esimoney.com/millionaire-interview-150/ https://esimoney.com/millionaire-interview-150/#comments Mon, 30 Sep 2019 09:00:15 +0000 https://esimoney.com/?p=5193 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 150 appeared first on ESI Money.

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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…

OVERVIEW

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

I am 53 years old and my wife is 52 years old.

We have been married for 22 years.

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

We have a 17 year old son who is on the autism spectrum, very high functioning, and a typical 13 year old daughter (as typical as a 13 year old daughter can be.) We have definitely noticed a change in her attitude in the last year or so.

My son attends a special needs high school just finishing up the 11th grade, paid for by the local public school district, and my daughter attends a Catholic school for the first time this last year for the 7th grade. Prior to this she attended the local public school.

I’m proud that my son has a paid 7 week summer internship this summer. [Editor’s note: This interview was conducted in June 2019.]

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

We currently live with 39.9 million people in California and the 25 million people in Southern California.

We were fortunate to have purchased a home in 1997, just a few years after the earthquakes, fires, riots and the defense contractors leaving the state. Or, it was about the last time that housing was semi affordable in Southern California.

It was just supposed to be a starter home, but like most people in California, once you have a home, you can’t afford to move.

What is your current net worth?

$2.5 million

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?

House: $1.4 million

  • $1.5 million value per Zillow and prices of similar homes in the neighborhood going from $1 million to $2.5 million.
  • Paid $330K in 1997 for the house, but have put about $200K in improvements over the last 22 years with entire inside and outside with a new driveway, kitchen, bathrooms, all rooms refurbished, new roof, new front siding, and new fully landscaped front and backyard.
  • Now we have a living room backyard with TV, grill, pergola, dining room table, fire pit and Jacuzzi that we can enjoy about nine months out of the year.
  • Mortgage is $64K to be paid off in two years if we keep the same payment schedule.

Cash:

  • $42,000: cash
  • $5,000: company stock purchase with 5% discount
  • $2,500: brokerage account
  • $12,500: cash value of spouse life insurance policy her father purchased when she was younger

Retirement accounts:

  • $690,000: 401(k) from last job
  • $175,000: Wife 403(b) from before she quit to stay at home
  • $57,000: 401(k) current job
  • $60,000: Two IRA and one Roth accounts with Oakmark, T. Rowe Price & American Century

Other:

  • $30,000: 529 for son
  • $24,000: 529 for daughter
  • $40,000: two used cars, MB (2012) and Volvo (2015), fully paid (my wife calls them “new to me” cars). The retail on these cars when new was $150K total, so I feel I got a good value and plenty of useful life left in them.
  • $10,000: Westin timeshare

Total: $2,546,000 as of June 2019.

Of the investments, my asset class is as follows:

Other future income — Social Security per the Social Security site:

  • If I take Social Security at age 62 I will earn $2,080/month.
  • If I wait until age 70, I will earn $3,784/month.

My wife has similar numbers, but will not earn as much due to her 12 year going part-time.

I plan on waiting until age 70 to claim my Social Security which is $45k/year, and my wife will be about $35K/year for a total of $80K/year.

My wife also has a defined pension of $500/month or $6K/year.

Total guaranteed social security and pension payments of $86K/year in 2036.

EARN

What is your job?

Senior Vice President at an insurance broker.

The prior 25 years I worked for an insurance company but was unexpectedly laid off. I found a second career on the brokerage side of the business.

What is your annual income?

Last year, our combined salaries, we made $275,000 (I made $168,000 last year, and my wife made $107,000).

However, as you can see below, my Medicare Earnings and Social Security earnings are different due to maxing out my 401(k) at work as well as health insurance and a Healthcare Spending Account (HSA).

I have always tried to reduce my gross adjusted income as my wife was only working part time and I maxed out my 401K.

I feel that I have had steady income growth over the last 30 years, with a marathon slow and steady rise of increasing my wages (see below chart). However, I plateaued a few years ago while I was the only wage earner.

I am astonished at how much money people earn each year who write into this blog, and I always felt when I was the sole wage earner that I was just getting by at two paychecks a month, with one to pay the mortgage and the second to pay for cars, food, entertainment and everything else. However, without savings in my 401(k) there was not a lot of money left over for side projects or side hustles.

I guess the side projects were updating and keeping our house up to date as it was built in the 1940s.

Until 2 years ago, we were a one income household with my wife earning $10K per year part time. We had a lot more flexibility in managing just one work schedule and the kid’s school schedules. Now we have to coordinate 4 people schedules.

I would not recommend an HSA if you have to go to the doctor with a high deductible for a family. This year I switched back to Flexible Spending Account and a low deductible health HMO plan with small co-pays.

The key of a HSA is that you don’t spend the money in the plan for healthcare. With two kids and our own heath, we felt we were paying arbitrary stratospheric prices for basic health care with several surprise bills for routine office visits, tests and labs.

Last year, we were just getting back on our feet after a seven month job search, and we did not have an extra $10K for routine medical expenses for your high deductible plan. When you also add the $10K in salary reductions for co-premiums, then I would not recommend an HSA. If you have the extra cash, more power to you. With kids, I sleep much better knowing I can go to the doctor without the surprise bill that I had to pay last year with the high deductible plan.

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 started off working at age 15 at Ben Franklin, a five and dime store in Minnesota in the 1980’s.

What I remember the most was that I only was paid $3.35 per hour, the minimum wage back then. (Today in Southern California, my son’s minimum wage job pays $13.25/hour).

However, I saved everything from 1983 to 1988 for my college debt free in 4.5 years. Tuition, including room and board, I paid about $30K for my undergraduate degree. It was humbling returning to MN after college and only being paid $7.50/hour at an internship for six months.

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

Keep learning.

I used to think it was the ones who performed the hardest and put in the most hours were the ones who got ahead. However, after 30 years, it is the ones who work smartest and make the best connections; at least within the corporate structure.

The intangibles matter more in a corporate environment, such as being well liked, smart on their feet, network well and also do their job well.

Notice that doing their job well is the last one listed, as sitting in your corner and doing your job without anyone noticing will not get you ahead. Your boss will be happy, but she/he just won’t have to work that hard.

Further, you have to ask for promotions and assignments in order to be rewarded with additional pay increases. Companies generally have not provided any raises for the last ten years.

I have been at my new job for two years and have not received a raise, but I did get one year-end bonus for my performance.

What’s your work-life balance look like?

It is better now as I am working from home 3 or 4 days a week. A little over a year ago, my company converted 6 floors of offices and cubicles in downtown to 3 floors in an “open office” environment. There are some advantages to the open office with more interactions with people who are not in the next cube or office, but the lack of a desk, space for your stuff, and noise is very distracting. They now allow us to work from home, and this is what most of my colleagues do in my division.

I was able to retain my 4 plus weeks of vacation from my old job to my new job as I was hired as an executive. My wife only has 2 weeks of vacation a year, and after a one week summer trip, along with several days throughout the year, we no longer are able to take a couple family trips and maybe a vacation.

However, I value the security of having two paychecks as being unemployed for 7 months which were the longest 7 months of my life. I cherish being fully employed, and not underemployed as that happens to over 50% of workers were are laid off after age 50, as I was.

I’m making less now than I did in 2016, but still within 5% of my maximum.

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?

Unfortunately as I found out in December 2016 when I was laid off after 22.5 years, my only source of liquid income was my by monthly paychecks.

As I used to work for an insurance company in a consolidating and declining marketplace, there were not a lot of comparable jobs at an Assistant Vice President level available anywhere in the United States, let alone Southern California.

My wife kept her medical technologist license by working one weekend a month for the last 12 years while staying home with the kids. I’m so glad I encouraged her to keep up her license, as without it, she would not have been able to quickly find a full time job, which is only two miles from our house, with a six figure salary. Just goes to show who much her stay at home compensation could have been, or our lost opportunity.

However, money and saving are not everything in life, and having her stay home for those 12 years were priceless.

She now works for a small employer with less than 20 employees that does not provide any retirement benefits and only medical benefits for her individually.

It feels like now we make so much money, it is like getting a bonus every single month (she receives one paycheck a month), as it all goes to the shoring up our finances and savings. With her going back to work enabled us to send our daughter to Catholic School, the private schooling system she attended.

SAVE

What is your annual spending?

Annual spending is about $75K per year with about half of that for mortgage, insurance and property taxes.

Prior to my wife returning to work in 2017, we always were living pay check to pay check. The first take home check of $3K was to pay the mortgage, and the second $3K take home check was to pay for everything else including food, entertainment, clothes, utilities, travel, home improvements, etc.

However, I had all of the family insurance and a full 15% of my salary plus 6% company match for over 20 years into my 401K.

When I met my wife, we had a net worth of $30,000 in 1996 in investments. I signed her up for her 403(b) in 1996 until she went part-time in 2005. Today that is worth $175K.

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

  • $36K/ year house mortgage, taxes, insurance
  • $36K/ year utilities, food, energy, auto, entertainment, restaurants, etc.
  • $10k/year middle school tuition
  • $5K/year vacations/timeshare/flights
  • $25K/year savings in 401(K)
  • $5K/year company stock at 5% discount
  • $37K/year federal taxes
  • $25K/year state taxes

One time purchases in the last two years:

  • $40K for two used cars. Prior to this we leased inexpensive cars as we don’t put on a lot of miles per year.
  • $60K for new back yard and front yard. The house refurbish is now complete for another ten years.

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

For the last 30 years, I never purchased anything that I was not able to pay off when the credit card bill was due. Never had a late payment and we have very high credit score.

I have leveraged credit card points for air travel for the last 15 years, and I estimate has been at least $1,000 per year in credit card points.

As to a budget, we always spend within our means.

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

I have always saved at least 10% of my salary since I started working in 1989, plus the 5-6% company match.

About 15 years ago I increased my 401(k) savings to 15% plus the 6% company match.

As this blog has demonstrated, it is my house appreciation, compound interest and a variable stock market in my 401(k)s that has created my wealth.

In the last 30 years, I have lived through three recessions: I looked for a job in the recession of 1989, the dot.com crash in 1999, and the great recession 10 years ago. I had a very slow start in salary accumulation due to starting work after college in a recession. However, this doubled in 5 years to $30K/year, and doubles again five years later in CA, that also doubled five years later until 120K/year in 2007.

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

The timeshare.

You might find this hard to believe, but the best memories over the last 18 years are going on vacations with the kids, along with grandparents, uncles, aunts and cousins. I figure that over the last years we spent about $50k for the timeshare purchase and maintenance fees. However, that was two weeks of vacations in 2 two-bedroom units a year. It comes to about $3K/year and we always stay in a Westin or Marriott timeshare resorts.

We have been to Hawaii half a dozen times, Cancun, Tahoe, Palm Springs, CA and/or Scottsdale, AZ (at least 20 times, and they are cheap as we can drive them – our kids and cousins don’t care if it is Hawaii or AZ, they have the same amount of fun), as well as several other places.

What I cherish the most are the memories that I have, but also the memories that I hope my kids will cherish. I never went on vacation in Minnesota when I was a kid, except for a long weekends at a very rustic summer cabin. I only stayed in a motel (not a hotel) once before I turned 18, and that was a trip to Mount Rushmore when I was 10.

INVEST

What is your investment philosophy/plan?

The last ten years, it has been slow and steady.

Invest in the S&P 500 mutual funds with low fees in my 401(k).

What has been your best investment?

Purchasing my house in 1997, which ended up being a market low. Sometimes you get lucky in life.

The house is now worth about five times what we paid for it, and about three times what we paid for it plus improvements.

I added up all of my monthly mortgage and home improvements payments over the last 22 years, and we have paid about $800K in monthly payments. Best of all, the house is almost paid for now.

What has been your worst investment?

I purchased some Compaq stock during the dot-com boom. I came to the dot.com game too late, and did not get out soon enough, with a five-figure loss.

What’s been your overall return?

The last several years about at a 6% return.

How often do you monitor/review your portfolio?

I monitor it weekly with Mint and Personal Capital.

The first time I set up a Mint account over 7 years ago, I thought it was magic in how well it monitored the spending, bills, and investments.

NET WORTH

How did you accumulate your net worth?

Persistence, grit, always living within our means, always saving 10-15% of my salary for the last 30 years.

Like most things in life, there is a little luck. We purchased our house that has appreciated five times the purchase price in 22 years. However, I feel we made our luck by always saving and a marathon of a work life gradually improving and moving slowly up the corporate ladder.

Improving my education in getting an MBA and it did not help me at the time, but I was just building my foundation. It would have been harder to get the MBA two years later as my son was born.

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?

This is a hard question, as it has changed over time.

When I had my first real job at age 24, I was only making $20K per year and saving like $2K per year. However, it was the foundation of paying myself first and saving, even if it was a little bit.

By the time I was 30, I had a net worth of $30K. It was when I turned 30 that my earning started increasing, but I kept the foundation of always saving 10% of my salary in the 401(k).

Then two years ago, my wife returned to full time work, and for the first time ever we have more money is coming in every month than is going out, even with saving 20% now, our investments investment have taken off. However, any fool with money in the market has made a killing the last 10 years bull market with investment returns.

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

I remember that feeling when I had over $500K in the 401(k) in 2009, and by 2012 it was about $250K even while still saving 15% each of those years. One step up and two steps back.

Persistence in saving and keeping with it is the key for long term results. However, you also have to grow your career, income and assets.

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

Paying off the mortgage in a year or two is going to be liberating.

I remember my first mortgage in 1997 was a no cash down, $5K down payment with the offer, with a 80/20 second mortgage concurrent with interests rates at $7.75% for the 80% and 10.5% for the 20% second. Those first two years we had no money as it was all into paying for the mortgage until I finally grew my income.

After several refi’s in the late 1990’s and early 2000s, I made the conscious effort to switch to a 15 year mortgage (3.5%), so that the house would be paid for by the time my son entered college. It should be paid off by the end of his first year and we have the education fund for the first year.

During the last 10 years, my income grew and I was able to improve the house with the extra income. The house has been our best performing asset.

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

I remember when I was in grade school in the 1970’s with runaway inflation, that we said we would all be millionaires in the future due to inflation. That has not played out for most people as wages and investments for the bottom 90% of the income distribution has not seen any appreciable increase after low inflation for the last 30 years and some are worse off. I feel fortunate.

My new goal now is to have $4M in total assets in the next 9 years, which I believe is an attainable goal. That is when my daughter will graduate college. However, I fear there is going to be a recession in the next year that will decrease the value of my portfolio 10-20% at least, and I hope it is not the 50% reduction we had in 2012.

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

I was 40, it was just after the big housing buildup as well as the stock build up in 2006. That was before the crash. We have $500k in the 401(k) and the house had over $500-600K in equity.

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

I did pull some of the money out of my 401(k) for a year in about 2010 and left it in cash as its value had decreased about 50%. I felt good initially, as the market continued to go down another 20-30% after I had done this. The problem, was not having a plan to putting it all back in the market.

I ended up putting it back into the market a little too late in retrospect and probably would have at least another 10% in my 401(k) now if I did nothing during the market crash.

I also purchased some Compaq stock in the dot.com boom that crashed where I lost about $10K. I have not dabbled in stocks since and have been in S&P 500 low cost (fees) mutual funds since.

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

Live within your means. Don’t buy something unless you are able to pay for it before the next credit card bill.

In 1996, when I met my wife, we had a net worth of $30,000 combined. I told her that if you took her apartment rent, plus my apartment rent, and deduct the tax deductions for a home loan, the monthly payment would be about the same a two rent payments. Best financial decision was buying our home, along with always saving 15% of my salary in a 401(k).

FUTURE

What are your plans for the future regarding lifestyle?

I have been debating leaving Southern California and purchasing a summer lake home in MN and a winter home in Tucson, AZ. I still have not decided if it would be best to just sell the Southern California home, or to rent it out for $5,000 per month (current rental prices now in our neighborhood) to make payments on two homes in MN and CA.

I have never had “other people’s money” pay my mortgage, and that would be an ideal set-up. Then again, putting $1.5M in an investment would probably earn more money on investment returns over time than the appreciation of either the MN or the AZ home. However, I don’t want to have a mortgage again after this house is paid for.

Then again, you need to be flexible with your career and where you live. I made 50% wage increase by moving to CA, and I’m sure it would have been 25 years of less salary in MN if I stayed or moved back. I was only supposed to return to CA for 2 to 5 years, and that was 25 years ago. Life happens.

What are your retirement plans?

My retirement plans are hopefully to be able to retire in 9 years. My daughter should be graduating from college by then and I will have a net worth of about $4M.

Ideally, I would want to sell the California house and purchase a summer house on a lake in northern MN from May until Oct, and then in Tucson, AZ or another lower cost area from Oct to May. To be a “snowbird” is something to aspire to, as there is no way my Southern California wife will live in a cold snowy MN winter. She has not ever lived more than 10 miles from where she has been born in Southern California.

The other option would be to keep the CA house, and rent it out that should be enough to cover the rent or mortgage of two homes.

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

After being without insurance for 7 months in 2017, I know how financially draining as it was over $20K per year for a family of four.

The other issue is my health. After seeing my parents’ health fail in their early 60’s, I understand that no matter how much money is in the bank, if you don’t have your health, the money does not matter. I have been diligent in cancer screening and everything is good.

I also know that not having a job will be difficult psychologically, as the lack of a job for 7 months was difficult. However, once I retire, I believe I will be financially set so I don’t have to work to survive.

I would like to travel more as my wife says she will retire herself in 5 years, after our daughter is finished with high school.

MISCELLANEOUS

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

I learned about finances when I was 15. My Dad said to me that he would like me to go to college, but with three other kids and other expenses, there was no way they would be able to pay for college. As such, I knew that if I wanted to attend college, I would have to work all of the time when I was not in school. I have been pretty much on my own financially since I was 18 and off to college.

In 1984, it was much more affordable to attend college. I went to a MN State college for two years, and then transferred to a UC college in California. If you add up my earnings though 1988, it was about $30,000 and I was able to afford to pay for college and room and board. MN was less expensive than CA, but it was about $6K/year and then CA was about $9K per year.

Ever since then, I have always been frugal, as I did not have any savings as it all went into my education. I was able to graduate in 4 years without any student loans. In today’s dollars, I figure it would be about $90,000.

My dad also taught me a lot about money, as in 1982 or 1983, I took out a CD with about 18% interest. I also used some of the tax savings in the early 1990’s to add money to an IRA that were dollar for dollar tax credits on my taxes. Those accounts are now worth about $60K just to avoid paying taxes.

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

My father and mother. They did not have much financially, but they were always there for us emotionally and shared what little they did have.

My dad never made over $40K/year. Even now, they give most or part of their RMDs to us kids instead of “letting the government get it” if they have to enter a nursing home.

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?

I have four memorable books:

The Road Less Traveled is not a personal finance book per se, but a book about confronting and solving problems, and I feel that in essence what personal finance is all about. Confronting the unknown and giving yourself a roadmap to getting there.

Grit also is not a personal finance book, but about the power of passion and perseverance and having the ability and allowing for delayed gratification. I was never the smartest person in school, but I found way. I was never the most well paid employee, but I worked with what I had to improve my salary over the years.

I also have to give a plug to Marketplace with Kai Ryssdal on NPR stations by American Public Media. This a great overall business news podcast five days a week that I have been listening to for over 25 years. Well worth a listen.

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

We have always given to our local church and more so now with my daughter’s education.

However, I have always paid myself first and will share with charity. In the future I hope to be able to increase my giving with our increased income.

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?

Yes, we plan to have an inheritance for my children.

We all worry about our children, but my son’s disability is concerning about his lifetime of earning. He is a smart boy, but has difficult with social cues.

We still need to set up family trust for our assets.

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How Much Economic Outpatient Care is Too Much? https://esimoney.com/how-much-economic-outpatient-care-is-too-much/ https://esimoney.com/how-much-economic-outpatient-care-is-too-much/#comments Sat, 28 Sep 2019 09:00:55 +0000 https://esimoney.com/?p=5347 As most of you know, my favorite personal finance book of all time is The Millionaire Next Door. It’s not because I think it’s “the best” personal finance book (I don’t know if there is one that I’d label the best, though I have named my top five) or because millionaires read it more than […]

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As most of you know, my favorite personal finance book of all time is The Millionaire Next Door.

It’s not because I think it’s “the best” personal finance book (I don’t know if there is one that I’d label the best, though I have named my top five) or because millionaires read it more than any other money book. No, it’s more personal than that.

I love the book because it came out around the time I was beginning my career/marriage/adult life. I read it, applied what it said, and I became wealthy.

There’s a bit more to it than that, of course, but the book was a key part of shaping my money philosophy and helping me accumulate wealth.

As I noted in my review of The Millionaire Next Door, the book highlights seven common denominators among those who successfully build wealth. They are:

  • They live well below their means.
  • They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
  • They believe that financial independence is more important than displaying high social status.
  • Their parents did not provide economic outpatient care.
  • Their adult children are economically self-sufficient.
  • They are proficient in targeting market opportunities.
  • They chose the right occupation.

Most of these are self-explanatory, but one that always puzzled me is #4:

Their parents did not provide economic outpatient care.

This was kind of a throwaway issue for me since it wasn’t anything I could influence or control. But these days, this issue is much more on my mind.

Defining Economic Outpatient Care

Before we get too deep in the topic of economic outpatient care (EOC), it’s probability best to take a step back and define it so we’re all on the same page.

In the book they cover EOC in chapter 5, describing it as follows:

Economic outpatient care refers to the substantial economic gifts and “acts of kindness” some parents give their adult children and grandchildren.

Ok, so it doesn’t seem that bad, right? Don’t parents love to help their kids (assuming they can) financially? Don’t they want to make it easier for their kids to have a good lifestyle?

Yes, they love doing those things. But the problem is, it’s bad for everyone involved.

The book goes on:

Those parents who provide certain forms of EOC have significantly less wealth than those parents within the same age, income, and occupational cohorts whose adult children are economically independent.

And, in general, the more dollars adult children receive, the fewer they accumulate, while those who are given fewer dollars accumulate more.

It’s counterintuitive but the data show that the more kids are helped financially, the worse off they are financially.

As the chapter continues, it discusses kids who live high on the hog because their parents supplement their income with gifts.

Consider this:

More than 46 percent of the affluent in America give at least $15,000 worth of EOC annually to their adult children and/or grandchildren.

The book goes on with some startling stats:

  • 43% of the affluent fund tuition for grandchildren
  • 32% of the affluent fund tuition for adult children’s graduate school
  • 59% of the affluent provide financial assistance for their kids to purchase a home
  • 61% of the affluent don’t make their children pay back loans

And the list goes on and on.

BTW, the book is generally supportive of paying for a college education since that tends to make the kids more productive/self-sustaining.

So What’s the Problem?

Now some of you may be wondering, “What’s the big deal? Why is it an issue if I help my kids out a bit?”

Well, let’s read on:

Adults who sit around waiting for the next dose of economic outpatient care typically are not very productive. Cash gifts are too often earmarked for consumption and the support of an unrealistically high lifestyle.

But it’s not all bad news:

Does this mean that all adult children of affluent parents are destined to become [unproductive]? Absolutely not. In fact, stated as a statistical probability, the more wealth parents accumulate, the more economically disciplined their adult children are likely to be.

But that’s the only bright spot in the chapter.

It goes on to list four findings as follows:

  • Giving precipitates more consumption than saving and investing.
  • Gift receivers in general never fully distinguish between their wealth and the wealth of their gift-giving parents.
  • Gift receivers are significantly more dependent on credit than nonreceivers.
  • Receivers of gifts invest much less than do non-receivers.

And then they highlight this in bold:

The more dollars adult children receive, the fewer dollars they accumulate, while those who are given fewer dollars accumulate more.

Ugh.

My Parents and Economic Outpatient Care

The reason EOC wasn’t an issue for me is that my parents didn’t give me much of it. And they certainly didn’t once I became an adult. After all, by the time I was out of grad school, I was making more than they did.

Even during college I had little help. The Cliff Notes version of this is:

  • My parents were divorced when I was in third grade.
  • As part of the divorce settlement, my mom accepted a lower child support amount in exchange for my dad’s commitment to fund my college costs when the time came.
  • When the time came, my dad was broke and his third wife wasn’t interested in paying for my college.
  • My mom and stepdad weren’t interested in paying for it either since they felt my dad was obligated.
  • So…I was on my own.

Thankfully I was a good student (academic scholarships), was involved a lot on campus (leadership scholarships), worked a ton (staff assistantship), was poor (federal grants), and could rely on my grandmother for an occasional loan.

When I graduated with my MBA I only owed $5k to my grandmother and I paid it all back a couple years later.

There was little EOC coming my way. Hence, no issue.

My Children and Economic Outpatient Care

Here’s where the issue is for me…

I now have adult children.

I have the means to help them out financially.

How much EOC (if any) can I give them without causing harm?

Unfortunately it’s a question that doesn’t have a great answer.

Some parts of the book imply you can give something and be ok:

Economic outpatient care refers to the substantial economic gifts and “acts of kindness” some parents give their adult children and grandchildren.

If your gifts aren’t “substantial”, are they ok?

Other parts of the book appear to say they are not:

The more dollars adult children receive, the fewer dollars they accumulate, while those who are given fewer dollars accumulate more.

This implies that for every dollar given, there’s harm being done.

And this is not only a current issue we are grappling with, it’s also an estate planning issue. How much do we leave our kids when we pass?

We’d like to help them out but not cripple/damage them with too much wealth. So what is the right amount?

Asking for Help

Since I didn’t know where to go to find the answer, I turned to the source.

I contacted Sarah Fallaw, the daughter of Dr. Thomas J. Stanley, the author of The Millionaire Next Door.

Sarah updated her dad’s work in writing The Next Millionaire Next Door which I also loved.

She also wrote the guest post Self-Reflection: A Critical Step Before Really Pursuing Financial Independence for ESI Money.

I sent her an email asking how much economic outpatient care is too much?

Her thoughts boiled down to the following:

  • It’s a great question.
  • Her company (DataPoints) is doing research in this area.
  • They don’t have any findings ready to publish at this point.
  • Hence, there aren’t great guidelines on this for parents.

Ok, so for now we’re stuck trying to figure this out for ourselves.

How I Plan to Address the Issue

Given the lack of concrete guidance, here are five steps we plan to take with our children:

1. Start small.

I think it’s wise to begin any giving to adult children with smaller amounts. I believe the biggest issues are likely to arise with large sums given in bulk, so we can potentially limit any damage by keeping the gifts small.

2. Give and watch.

Once we give, we will watch and see what they do with the gifts. If they are blown or used to inflate a lifestyle that can’t be sustained without the gifts, we will need to adjust (which will likely mean a cessation of gifts).

3. Give directly to the cause.

Instead of giving cash, we can provide for the need or pay it directly. For instance, gift cards for a specific need (like to a grocery store to cover food costs) are harder to use to create an unrealistic lifestyle. We could also pay bills directly if need be (like utility bills, rent, etc.)

4. Provide gifts in unique ways.

Instead of giving extra cash, we could pay for extras that the kids may or may not be able to afford themselves. The best example of this for us is likely to be vacations. As long as they are able and willing to go, we’ll probably cover our kids’ costs to go on vacation with us. We are paying for them to be with us in Florida next month and will probably take them to Grand Cayman in January.

5. Avoid dependence.

We don’t want them to get to the point where they NEED our support to afford their lifestyle. If it’s a hand up here and there, no problem. But if they MUST have so much from us each month to make their budgets work, that will be a problem we need to address.

Anyway, those are my thoughts on the issue. They are still in development and subject to change, but I thought I’d throw them out there and then let you comment with your thoughts, guidelines, experience, etc.

So with that said, what do you have to add?

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A Friend Recommends a Credit Card https://esimoney.com/a-friend-recommends-a-credit-card/ https://esimoney.com/a-friend-recommends-a-credit-card/#comments Fri, 27 Sep 2019 09:00:31 +0000 https://esimoney.com/?p=5334 As you know by now, I started playing pickleball big-time this summer. I began in April, but things were dicey in Colorado Springs weather-wise into the third week in May (when we got a HUGE snowstorm), so I didn’t get much action the first couple of months. But from June on, I have been playing […]

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As you know by now, I started playing pickleball big-time this summer.

I began in April, but things were dicey in Colorado Springs weather-wise into the third week in May (when we got a HUGE snowstorm), so I didn’t get much action the first couple of months.

But from June on, I have been playing 10 to 15 hours a week. I play anywhere from three to five days per week depending on what else I have going on.

I’ve also competed in two tournaments and have considered hiring a coach. Yes, I’ve become a bit over-the-top when it comes to pickleball.

Making New Friends

In addition to the fun and higher level of fitness the sport has afforded me, I’ve also met a TON of people.

Since having regular social activity is supposedly a key to a great retirement, that’s a good thing, right?

On a regular day at the courts near my house there are 16 people actively playing (four each on four courts) and another 16 or so waiting to play (they “paddle up” — they place their paddles in a line to take the courts as games end).

The courts downtown have even more people there — 15 or so courts with most full at peak times of the day.

The number of people playing has made the sport very social for me. I meet new people by both playing pickleball with them as well as chatting while we are paddled up and waiting our turns to play.

It’s hard to tell how many people I’ve met but I’ll guess that there are at least 30 new people (since April) I can call by name and another 30 that I recognize by face but don’t know their names. BTW, our pickleball association ($20 annual cost to join) sends us nametags to wear so it’s easy to learn names.

A Good Friend

One of the people I met along the way is Jim.

I didn’t meet Jim until July, but we quickly became friends. He’s 52 and retired from 30 years of service with the federal government. He was an IT guy who developed and ran software programs for air traffic control.

I met Jim when he and his girlfriend, Debbie, showed up at our courts one day. We played a few games, began chatting, and became friends.

We traded phone numbers and started to meet early to play foursomes before most other people showed up (most get to the courts at 8 am, so we’d meet there at 7 am). Sometimes I would bring my wife to play with us and other times we’d get another partner.

I then started to run into Jim and Debbie at Lifetime Fitness where they are also members. They introduced me to the indoor pickleball players there (I had never played indoor up to that point) who play on Tuesday and Thursday afternoons. This will be my go-to group for winter pickleball playing.

Jim then invited me to play a couple tournaments with him and we did. We did ok in both of them, winning a medal in the second. We also texted back and forth a lot as we have common interests.

Anyway, that background will get you up to speed for the conversation that follows.

Pickleball and Credit Cards

Jim and I were warming up one day early on the courts (most pickleball players warm up by dinking the ball back and forth over the net at close range) and we were chatting while we did.

It was just after my wife had left the previous day for a trip to Pittsburgh. I was relaying how she had gotten up late and construction was bad, so she was close to missing her flight. I noted that Denver airport security can take some time (it once took me TWO HOURS) but luckily she had breezed through.

Jim asked if my wife had TSA Pre-Check. I told him she did not, but that I did and she usually gets it when she travels with me. Then I mentioned that I was thinking of getting Global Entry and that’s when the conversation took a financial turn.

At this point Jim told me that I should check out the Chase Sapphire Reserve card. As you know, whenever anyone mentions any sort of money-related topic I perk up (especially after all the talk I hear in the Lifetime locker rooms). I want to hear what people have to say about money since I find real-life perspectives to be very interesting.

Jim began with the fact that the card has a $450 annual fee which at first blush makes it appear to be a bad deal. But then he listed off all the card’s benefits like he was an all-star money blogger and travel hacker! I was impressed! He noted that the card offers:

  • A $300 annual travel credit
  • Global Entry or TSA Pre-Check fee credit (statement credit of up to $100 every 4 years as reimbursement for the application fee charged to your card)
  • Complimentary airport lounge access (he told me the one included in Denver allows you to get $30 in free food at a nearby restaurant)
  • “Great points on your charges” (his words)

He then said it was BY FAR the best card he’s ever had, is well worth the money, and that I should check it out if I was in the market for a new card.

Little did Jim know that I am a credit card guy from way back and that I’d once considered this card. I didn’t really look into it too much as I like my credit card system and am used to it, but Jim’s recommendation spurred me on to take another, deeper look.

But before we get into that, let’s list the card’s other perks that Jim didn’t mention (plus add some specifics to general benefits he listed):

  • 3X points on travel and dining worldwide, 1 point per dollar spent on all other purchases.
  • 50% more in travel redemption when you redeem for travel through Chase Ultimate Rewards (For example, 50,000 points are worth $750 toward travel.)
  • No blackout dates or travel restrictions. As long as there’s a seat on the flight or room at the hotel, you can book it through Chase Ultimate Rewards.
  • 1:1 point transfer. Transfer points to leading airline and hotel loyalty programs at 1 to 1 value. That means 1,000 Chase Ultimate Rewards points equal 1,000 partner miles/points.
  • The luxury hotel & resort collection. Enjoy special benefits at a variety of hand-selected top hotels and resorts worldwide such as complimentary room upgrades, early check-in and late check-out.
  • No foreign transaction fees.
  • Trip cancellation/interruption insurance

And as of now, there’s also a sign-up bonus of 50,000 points after you spend $4,000 on purchases in the first 3 months from account opening (which equates to $750 toward airfare, hotels, car rentals and cruises when you redeem through Chase Ultimate Rewards.)

There are few other ancillary benefits, but these are the major ones.

Is This Card for Me?

Let’s look at how the card’s benefits stack up for me personally.

As you know, I’m not a big credit card points guy. I’ve tried travel hacking and my conclusion was it takes a lot of time and effort to get marginally better (if any better) results than straight cash back cards which take zero time and effort to use.

So for the Chase Sapphire Reserve card to make sense for me it had to be a good deal without a lot of hoop jumping involved.

So looking at the most obvious card benefits, here are my topline conclusions:

  • The bonus points make the card worth it for at least a year. If I was to get the card and spend $4k on it, I’d get $750 in travel plus $300 reimbursement plus $100 if I wanted Global Entry. So basically I’d spend $4k and get $1,150 from the get-go. But it also costs me a $450 annual fee, so the net is $700. That’s still a 17.5% return on what I’ve spent and is super. Of course, any credit card offering a big bonus is going to give these sorts of results (though this bonus seems better than most.)
  • The numbers without the bonus aren’t that compelling. In year 2 I’d still have the $450 annual fee and get the $300 credit, so I’m out $150 from the start. I don’t get the $100 credit since that’s every four years, so all the other benefits have to make it worth the cost.

So the question is, do the other benefits make it worth it? Let’s look at each of the major benefits detailed above:

  • Complimentary airport lounge access. I like this benefit as it fits into my stated goal of 10X-ing my travel experiences. Who wants to wait with the masses when you can be in a nice airport lounge with free food and drink? That said, I do much of my traveling with my family and my guess is they wouldn’t be able to go in with me or I’d have to pay a ton to make it happen, so the benefit from this might be three trips per year. Let’s say that having lounge access is worth $30 a trip, so that’s $90 in value there.
  • 3X points on travel and dining worldwide, 1 point per dollar spent on all other purchases. This not a great benefit. The Costco Visa card already gives me 3% cash back for travel and restaurants with zero hassle or effort (it’s cash). If I wanted to jump through some hoops I could make those points worth more than 3%, but that adds too much complexity to my life, so I’ll pass. This benefit has no value to me.
  • 50% more in travel redemption when you redeem for travel through Chase Ultimate Rewards (For example, 50,000 points are worth $750 toward travel.) Sounds like it entitles me to jump through more hoops. Not interested and zero value.
  • No blackout dates or travel restrictions. As long as there’s a seat on the flight or room at the hotel, you can book it through Chase Ultimate Rewards. I do like this option but not sure what value to place on it. If it gets me onto a flight or into a hotel I need to be in, then it could be very valuable. But I don’t think the likelihood of that is too great, so I’m going to say it’s worth zero.
  • 1:1 point transfer. Transfer points to leading airline and hotel loyalty programs at 1 to 1 value. That means 1,000 Chase Ultimate Rewards points equal 1,000 partner miles/points. More hoops. Pass.
  • The luxury hotel & resort collection. Enjoy special benefits at a variety of hand-selected top hotels and resorts worldwide such as complimentary room upgrades, early check-in and late check-out. Hmmm, this would help me with my 10X-ing. But my wife would probably freak at the cost and we’d end up staying in the Hampton Inn anyway. LOL! So no value.
  • No foreign transaction fees. This is a GREAT benefit and we use it a lot when we go to Grand Cayman. But the Costco card has no foreign transaction fees either, so no added benefit here.
  • Trip cancellation/interruption insurance. This is a big benefit too since trips generally cost thousands of dollars. But the Costco card has this as well. So no added value.

So where does this net us? A few conclusions:

  • The card looks like a great deal for the first year. This is not only for me, but for anyone. It seems to be a no brainer.
  • After the first year, it is still probably a good deal for the credit card hackers out there who travel a lot. If you can work the system, you could end up with 5% in value from this card, plus the other benefits (some of which you may not have on other cards).
  • For me, after the first year, it’s just not worth it. I prefer a simple, easy, known plan that involves little time and effort — and that’s a cash back program built around a few cards.

The Card that Works Best for You

Just yesterday, after this post was put to bed, a friend suggested that the Chase Sapphire Preferred card might be a better option. It has 60k bonus points and only a $95 annual fee. Thought I’d mention it here and get your thoughts.

That said, I realize people are different and get different cards for different needs. What interests me may or may not be the right choice for you.

With that in mind, here are links to various types of cards based on a variety of preferences:

So that’s my take on the Chase Sapphire Reserve card. What do you think about it? Anyone have one? I’d be especially interested to hear from you.

But most of all, I want to know if anyone reading this wants to come to Colorado to play pickleball and chat about money. 😉

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