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’m 40, my wife is 37.
We’ve been married for 11 years.
Do you have kids/family (if so, how old are they)?
We have five children — ages are eight, five, 4-year old twins, and two.
What area of the country do you live in (and urban or rural)?
We live just outside New York City (urban).
What is your current net worth?
$3.0 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?
- IRAs / 401(k)’s $875k
- Real estate investments via crowdfunded sites $500k (10 separate investments valued at cost)
- Brokerage account $285k
- Private business investments $1.0 million (3 separate investments valued at cost)
- Deferred compensation $375k (a portion of my bonus is deferred each year)
We have no debt, though we may incur debt once we decide to buy a home.
EARN
What is your job?
I am an executive director for a large bank in NYC.
My wife runs the household and two web sites.
What is your annual income?
My annual income is approximately $750k, though that can fluctuate (my salary is $275k and I’ve been paid discretionary bonuses of ~$475k for the past two years).
The two web sites my wife is running pulls in approximately $250k per year.
The real estate investments generate ~$30-40k per 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?
My first job was working at my dad’s office mowing lawns and pulling weeds when I was eight years old. I think I got paid $10 per month – just enough to get a Slurpee and a package of gum at 7-Eleven on our way home from mowing the lawns.
I also worked as a pizza delivery boy in high school and as a youth camp counselor for a couple summers in college.
My first job out of college was at an investment bank where I made $55k base + $95k bonus in my first year out of college. The base salary was not enough to live on in NYC, and I remember getting down to the last $100 in my bank account before I was paid the bonus at the end of the first year, which gave me some breathing room and lifted a huge weight off my shoulders.
I spent ~3 years there and then went back to business school to get an MBA, after which I was hired to work at a hedge fund in the Midwest, where my first year all-in compensation out of business school was $400k. That job was a huge step up for me and really became the foundation for building our net worth to where it is today.
The first five years there were fantastic from a career perspective, and my compensation increased nearly every year, peaking at $1.15 million (salary + bonus) in year five.
Year six was a huge letdown however, as politics within the firm led to a large falling out among our team members, and I ended up getting paid down significantly and left shortly thereafter.
Our family decided to move back to NYC and help start another hedge fund with a former colleague of mine, but that didn’t work out, and so I ended up joining the bank where I work now.
What tips do you have for others who want to grow their career-related income?
The best thing you can do to grow your career income is to perform well at your job and be likable.
Most jobs are not rocket science, so if you focus on doing your best work, with a special emphasis on adding value to your company, and being friendly to people you work with (including customers / clients), you’ll set yourself apart.
In addition, if you have the opportunity to attend a top-tier educational institution, I would do it. The costs of doing so are much higher but the rewards can be hugely outsized. The only reason I found the job working in the Midwest was because the firm recruited on-campus at my school, and they only considered candidates at two other schools.
What’s your work-life balance look like?
Work-life balance is something that we’ve tried to be very conscientious about. My first few years out of undergrad were a grind – I worked 80 hours per week consistently for 3 years (one of the reasons I decided to go back to business school was to clear my mind, take a vacation, and think about what I wanted to do for the rest of my career).
Even after grad school, I’d say I worked 65-70 hours per week very consistently.
Once we started having kids, I’ve tried to cut that back some to spend more time with our family, but I still work 50-60 hours per week consistently.
I don’t work weekends, and there are very rarely any surprises with my schedule, which makes it easier to schedule family events.
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?
As mentioned earlier, our two web sites my wife runs earn approximately $250k per year.
The crowdfunded real estate investments we’ve made make approximately $30-40k per year.
We also get some dividend income off our brokerage accounts (~$3k per year).
I don’t count any income from our retirement portfolios because those are all automatically reinvested.
SAVE
What is your annual spending?
Over the last twelve months, we’ve spent approximately $190k excluding taxes and tithing.
Before we moved to the New York area, we consistently spent $100-120k. The difference in cost of living is real, which is one of the reasons we don’t intend to retire here.
What are the main categories (expenses) this spending breaks into?
- Housing $84k (this is simply ridiculous in my opinion given we rent a modest sized home – but it is the NY metro area)
- Food – $26k
- Healthcare – $30k
- Kids activities – $22k
- Travel – $20k
- Misc – $6k
Do you have a budget? If so, how do you implement it?
We have a budget but we’re not that focused on hitting the actual budgeted cost numbers.
We use the budget more as a sanity check than anything else, and to record historical transactions that we can use to guide us on how much we’ll need to budget for in upcoming months.
My wife and I have taken turns monitoring it but we find that gets tedious, so we end up just updating it at the end of the month and reflecting back.
What percentage of your gross income do you save and how has that changed over time?
We’ve saved over 50% of our income over the last seven years.
Prior to purchasing the two web sites, our savings rate was heavily influenced by the size of my bonus each year, as my base salary covered our living expenses and the bonus was nearly 100% saved.
Since purchasing the two sites and investing in the crowdfunded real estate deals, our savings rate has consistently been in the 30-50% range pre-bonus (ie – we’re saving significant amounts of money each month now so that even if my bonus were zero, we’d still be in the 30-50% range).
What is your favorite thing to spend money on/your secret splurge?
Experiences and travel, no question.
We love to see new places, experience new cultures, and take our kids to have meaningful experiences.
A perfect example of that is my wife and oldest daughter just got back from London, where they spent one week with her parents getting to know the city of London and the surrounding area. I encouraged them to go because I felt the opportunity for our daughter to go to England with her mom and grandparents would be a lifelong memory that hopefully she’ll cherish, and that opportunity is not likely going to come again given the ages of my in-laws.
INVEST
What is your investment philosophy/plan?
First, we max out all our retirement account contributions each year.
There’s no reason not to take advantage of the tax savings and employer contributions that come with our 401(k) contributions. We invest all of our retirement portfolios into index funds for the most part.
For after tax money, we’ve tried to invest our savings in a variety of different assets – stocks, bonds, real estate, private businesses.
We’ve conscientiously kept our investments in private assets below certain thresholds so that if they were to lose all their value, it wouldn’t impact our retirement plans. And we’ve also kept our retirement accounts away from risky private investments.
What has been your best investment?
The best “investment” I’ve ever made was to marry my wife.
She’s very frugal, supportive, and hard-working without expecting much in return…the perfect combination for happiness in life.
Outside of our choice of each other as a spouse, I think the best investment we’ve ever made was to get my MBA, hands down. That opened a tremendous amount of opportunity that I’m not sure we would’ve ever had.
Focusing on performing well at work has also resulted in a tremendous return on our time and effort.
Our best financial investment to date was to purchase the two web sites. They are making +25% cash-on-cash returns without the use of leverage, and the tax benefits of owning your own business are substantial.
What has been your worst investment?
I lent $5k of money to someone to buyout a salon (he borrowed a total of ~$200k). He ran the salon into the ground, losing customers to the previous owner, and we ended up getting less than 1/2 our money back.
That was a great learning experience for me and thankfully it didn’t cost much money.
What’s been your overall return?
I don’t know exactly what my overall return has been on our portfolios because we’ve had to transfer all of our assets into the bank where I work currently, and we lost all the historical data.
I do know, however, that our net worth has compounded at 68% per year over the last 9+ years since I graduated from business school.
The past couple of years, our net worth has compounded at a more modest rate of ~30%.
How often do you monitor/review your portfolio?
We do an in-depth review monthly along with our budget.
I check on my brokerage / IRA / Roth IRA at least 3x per week though.
NET WORTH
How did you accumulate your net worth?
We accumulated our net worth from making money from my career, saving a significant portion of the money, and investing it well. See answers above for specific details.
We’ve never inherited any money.
What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?
I think our greatest strength to date (relative to other profiles I’ve read) has been the “E” in ESI: Earn.
There are others who can save more money (% wise), but I find the ability to accumulate net worth is a lot easier when you earn a lot of money.
I also think we have a relative advantage in investing our savings wisely, as investing money has been the prime focus of my job for 15 years.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
The biggest road bump we faced was the falling out that occurred at my previous job.
In addition, I have a health condition that sometimes makes it difficult for me to go to work.
As a result of that experience at work, where we felt like we weren’t in control of our lives, and due to my health condition, we decided to diversify our earnings and invest in a variety of cash-generating assets that would be able to sustain us in case we went through something like that again at work, or my health deteriorated and my ability to work was impaired. This led us to buying real estate and online businesses.
What are you currently doing to maintain/grow your net worth?
We max out our retirement contributions each year and invest our retirement portfolios in index funds.
We’re also saving every dime that comes in from the two web sites, the real estate investments, and my bonuses, and we’re investing that money in a portfolio of real estate, dividend plays, and more online businesses.
Do you have a target net worth you are trying to attain?
We don’t really think in net worth targets.
Most people target a net worth to comply with the 4% rule, which is another way of saying they’re really targeting a certain annual income. If through skill one can generate the same amount of income with a lot less capital, than the net worth one needs to reach before retirement becomes a lot smaller.
As a result, we’ve been targeting an annual income amount outside of my job before we’re ready to retire. Our goal over the last couple of years was to reach $250k because that represented what my salary was (before I got a raise earlier this year), which we’ve now hit.
We’re now targeting $500k in passive income over the next 2-3 years and ultimately, I’d like to be closer to $1 million in annual income, with multiple sources of income, before I leave my job for good.
I’m incredibly conservative in many ways, having been through the financial crisis as an investor and seeing how quickly things can change for businesses and real estate owners. Hence, my desire to have “bulletproof” income levels.
If we’re unable to reach the $1 million goal, we’ll at least be well ahead of our cost of living.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I was 34 years old when we made our first million. It took four years to get to $2 million, and 1.5 years to go from $2 million to $3 million.
It’s incredible how compounding works. I’ve read somewhere that over 90% of Warren Buffett’s net worth was generated after the age of 50. There’s hope for all of us.
If you can get out of the pattern of living paycheck-to-paycheck and invest your savings, your money can work a lot harder for you than you ever will.
For the vast majority of people, investing your savings in index funds is the best way to go.
I would say that we’ve had almost zero behavior shifts since then. I recall feeling a bit of a letdown when we passed $1 million in net worth. I’m not sure what I was expecting, but in my head I thought that my life would change for the better once I became a millionaire, that somehow I would be happier or the world would show me more deference for my elevated status.
What a rude awakening I had – the truth is that I’m still the same person as I was before, and all the things that make me happy, frustrated, sad, angry, etc. are just the same as they were before.
I’m thankful to be in the position we are today, but it hasn’t really changed our lives – having five young kids to look after helps keep us grounded as well. 🙂
What money mistakes have you made along the way that others can learn from?
I would invest in cash-flowing assets earlier. Real estate preferably.
In addition, I should mention that we owned a home in the Mid-West and bought it in June 2011, near the bottom of the housing market. We paid off the mortgage in three years, which I now consider to be a mistake.
If we had instead simply bought the S&P 500 index with the money we used to pay off the mortgage faster, we would be >$250k richer today.
We paid it off so that we could sleep better at night but in the end, it didn’t really produce the intended effect. We sold that home and used the proceeds to pay for the first web site and some of the real estate.
That decision has led us to making $280k per year outside of my job. We’re happy to trade ownership of a house for $280k in additional annual income, which will allow us to reach our financial goals much faster.
What advice do you have for ESI Money readers on how to become wealthy?
Choose your spouse wisely. Marrying someone who isn’t frugal, demands a lot of your time and attention, or has lots of insecurities about your relationship makes it incredibly difficult to accumulate wealth.
Once you’ve figured that out, I personally believe the best path to wealth is to consistently earn more money, save the increase, and invest it wisely.
The philosophy of most of the blogs I read in the financial independence arena tend to place much more weight on saving by cutting expenses than anything else. In my opinion, this is misguided.
There are very dwindling rates of return on your time focused on cutting your spending down to the bare bones. If you’re focused instead on how to grow your earnings, there’s an endless amount of money that you can make.
All three components are important, but of the three, earning gets emphasized the least. And the fact that ESI emphasizes all three components is one of the reasons I’m a big fan of the site, so keep reading ESI Money. 🙂
FUTURE
What are your plans for the future regarding lifestyle?
We will retire early but not for several more years.
What are your retirement plans?
My goal is to retire at 45. If everything goes well, I expect our annual passive income will be in the $1 million range by that point.
If things don’t go as expected, I would expect us to still be in the +$500k range.
We will definitely not retire in the NY area given the very high cost of living. We look forward to living closer to family (we’re both from the west), traveling, spending more time pursuing hobbies with our kids while they’re still interested in spending time with us, and providing service to the community.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
The biggest issue that concerns me is the cost of healthcare, especially considering my health condition. As long as we can qualify for health insurance though, it shouldn’t be too much of a concern.
MISCELLANEOUS
How did you learn about finances and at what age did it ‘click’? Was it from family, books, forced to learn as wealth grew, etc.?
Most of what I’ve learned about personal finance started after I got my first real job and I had to learn to budget very closely. I learned some lessons in college but my parents were always there to help with some spending money if I needed it, and I had a full tuition scholarship for school, so I had very little money needs outside of the spending money I had earned from summer jobs.
But it clicked very quickly for me in a general sense once I started working 80 hours a week, having to answer “to the man”. That really propelled me to aggressively pursue learning everything I could about personal finances and saving and investing as much as I could.
Funny enough, my dad was a CPA and gave lots of seminars on personal finances to his clients, but we never talked about money in my childhood. Any time I’d ask him how much money he makes, he would say, “We have enough for our needs.”
I think he didn’t want money to be the focus of our lives, and he didn’t want to force the principles of personal finance on us kids, but he’s been very happy to engage in personal finance discussions once I started engaging in that myself.
Who inspired you to excel in life? Who are your heroes?
My greatest heroes are my parents.
My older brothers have also been an inspiration for me to excel.
I’m blessed to have had a wonderful childhood with lots of great memories and having fantastic examples around me to show me the value of hard work, setting goals, and having faith in yourself to achieve those goals.
My mom and dad have always been very encouraging of me to pursue my dreams, and my older brothers have provided plenty of inspiration.
When I was in elementary school, I used to attend my older brothers’ athletic events and seeing the success they had in sports and school pushed me to do the same.
Later when I was in college and thinking about a career (as well as mid-career), my dad and older brothers provided great mentorship in helping me think through my career and life choices.
My mom is a hero of mine for overcoming a childhood that was made difficult by an alcoholic father and becoming an incredible example of faith, hard work, and perseverance.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We give to 10% of our income to our church and we also give to several other organizations – schools, childrens’ hospitals, and a handful of others.
We also volunteer at our church and spend 10-15 hours per week collectively volunteering. We’re huge believers in being involved in the community, giving back, and striving to have a positive impact on others around us. We find great joy in service, and we want our children to see that example.
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, definitely. We’ve set up a trust to transfer wealth to them in case of our early deaths.
We want them to appreciate the amount of hard work it takes to make and save money, however, so the trusts are set up to transfer money to them in stages. They’ll receive some amount of their inheritance at ages 25, 35, and 45. Hopefully that will strike the right combination of not taking away the pleasure of work from them and also being a nice safety net to allow them to take risks and be entrepreneurial with their lives (not just their careers).
In addition, we want our children to learn the power of compounding returns, so we’ve been transferring small amounts of money into a brokerage account in each of their names each month and investing it.
We’ll also employ our children in the businesses my wife runs so that they can take advantage of Roth IRA contributions from an early age.
The goal is to show them by the time they’re in college that the little bit of money we’ve transferred has grown into a real amount of money, encouraging them to do the same once they start making their own money.
The Physician Philosopher says
What a model example of how to get it done. I love your hybrid model of financial independence (we use the same). It’s not all about getting to a “number.” If you can supplement your income with other income sources that will remain once you’ve stepped away (whether real estate, websites, a side passion, etc) then you will need to obtain a lower nest egg to reach FI.
I also agree that people focus too much on cutting spending, particularly in the high income arena. As long as you don’t make the big mistakes (buying a big house when you cannot afford it, financing brand new cars frequently, etc), it will work out.
Now, if you are in a middle to low income situation with less earning capacity, then cutting spending will matter greatly. Also, this is probably the one area people in this situation feel like they can control.
Thanks for the thoughtful interview!
TPP
interviewee110 says
thanks!
Jake says
What is the plan for health insurance in retirement? Not sure how old the kids are, but I imagine it would be quite expensive in the open market, not that you couldn’t afford it with your passive income.
interviewee110 says
we don’t have any set plans at the moment, but it’s one of the main concerns we have about early retirement, and we think we may be interested in using one of the christian ministry health plans, but it’s a few years off so we haven’t looked that closely yet.
gtmoney says
Very impressive! Keep up the good work. Agree on two key comments. Marry the right person and focus on earning more. I’ve been blessed to have both. I have said it before but earnings can make savings less critical. Still believe in being smart and frugal.
interviewee110 says
thanks!
Razorback 14 says
Outstanding and interesting interview——
Many thoughts here, but I’ll boil them down to the following:
1. God first, always. ✔️
2. Selection of spouse ✔️
And family focus ✔️
3. School and degree choices✔️
4. Increase EARNINGS ✔️
5. Savings large amounts✔️
6. Investing wisely over time ✔️
7. Passive income plans✔️
8. Being frugal, but real ✔️
9. Understanding where to live in retirement ✔️
10. Keeping the focus on helping your community ✔️
Tom says
That sounds like a good summarization on how to win at life.
Razorback 14 says
Amen, and indeed——. Agreed!!!
Taylor says
Thanks for sharing. My wife and I have also been looking at buying a website. It would be great to connect and hear more about how you approached it.
interviewee110 says
happy to do so. not sure how we should get in touch – maybe the moderator could help?
ESI says
You can both email me you contact info saying you want to be connected.
MI93 says
I am also interested in this topic. ESI didn’t you purchase RockstarFinance? Maybe a blog article on the topic with MI110 commentary?
ESI says
I did. And I’ll add this topic to my list. 😉
Jace says
I would like to discuss this as well if you don’t mind talking with another one. Thanks!
Margot says
Thanks for the interview. We’re in a similar position with 3 young kids in Toronto. I’m very curious to hear about your wife’s successful websites. How does she do it with 5 kids?! So very impressive. I’ve been focused on keeping expenses down on the home front, but you’re right, there’s a limit to how much you can do on the frugality side of things. It takes a lot of energy. I’m trying to figure out how to contribute to the earnings side of things, while also being at home to hold down the fort.
Lara says
Really interested in learning more about your wife’s websites
“As mentioned earlier, our two web sites my wife runs earn approximately $250k per year.”
What kind of a website business did you buy? Was it something you could have started from the ground up instead of buying?
That is an impressive amount
interviewee110 says
Hi, thanks for the question. I’m glad you asked about the websites. They are both service-oriented businesses that could be performed offline but happen to be online.
The businesses could absolutely be started from the ground up instead of buying but it would take several years to scale to the level of income these businesses produce. In general, we are far more interested in buying businesses than starting them – the risk of spending so much time building a business only to see it fail does not exist for purchasing a business. The risk of failure is much lower when purchasing due to the existing customer relationships, company infrastructure (people, systems, processes), and current cash flow of the business. That doesn’t mean you can’t make mistakes when buying a business, but we felt the risk could be mitigated by buying businesses that have years of history, a higher percentage of recurring revenue or repeat business, and a team of people doing the day-to-day work to help with the transition of ownership.
Hope that helps! Happy to discuss more if you’d like.
Lara says
Love it! Thanks for responding
I have never even considered buying an online business. Obviously people buy businesses but I am used to brick and mortar businesses being sold.
It would be interesting if ESI did a follow-up interview about how you’ve selected these websites to purchase, the risk level of this type of investment, how did you come across them, how much you expected you would pay for the businesses etc.
All very interesting to me
Ellen says
Any particular reason you rent a home rather than purchase one?
interviewee110 says
Buying a home has never really been a large goal of ours. And the thought of using our savings to buy an asset that at-best will generate 3% returns is not appealing in any way, particularly as we have been able to find suitable housing for our family to date.
That said, we will certainly buy a home once we’ve obtained our income goals so we can lock in our cost of housing.
Phillip says
Nice work! At 30, I was on your trajectory. At 40, you’re doing great and I stagnated. I’m terrible at company politics and not that likable. I think you also worked a bit harder than me post MBA. May your success continue.
Joe says
I’m wondering how you manage certain aspects of your life. When your wife and in-laws were traveling with one kid, how did you work 50-60 hrs and handle 4 kids?
Since you were a hedge fund partner, why don’t you invest in hedge funds or managed equity funds?
interviewee110 says
great questions. On the spousal travel question, we had my parents come to town to help with the kids during the day so I could go to work. We’re fortunate to have parents who are willing and capable of helping out in a pinch.
On investing in hedge funds, I’ve been in the space for long enough to say that I don’t see the value that the vast majority of hedge fund managers add, particularly with the fees they charge. On top of that, it’s very difficult to outperform the market, particularly when you have capital that’s not long-term, so investing in hedge funds and managed funds (in most structures) means I’m assuming the risk of other investors behaving rationally in volatile markets. When they want to sell, the hedge fund manager is forced to sell investments in a down market to raise cash to return to nervous investors.
Believe it or not, Individuals have a HUGE advantage over hedge and mutual funds in that they have long-term capital. If retail investors realize that, they can take advantage of market volatility. Most investors don’t know how to do the research necessary to invest in individual companies, but they can definitely outperform the average mutual fund by simply buying the indices. If you’re patient and rational, you’ll do much better than the average hedge fund investor over time.
Joe says
Thanks for your reply! Gives me a great deal of insight!
Like many of the other commenters, I am curious about your online businesses also. Why would the seller part with such a cash cow that requires little time to maintain? Did you make improvements to increase cash flow?
Dom @ Gen Y Finance Guy says
Very impressive and inspiring income levels!!!
Do you consider the income generated from the websites your wife runs as passive income? It sounds like it from the interview. How much time does your wife need to spend to keep the money flowing? Are these sites eCommerce or content related websites?
You have a goal of $1M in passive income, in broad strokes, how do you imagine achieving that number. For example, will 50% come from websites, 25% from Real Estate, and 25% from dividends & interest?
Is the $1M gross (i.e. if Real Estate, is it before or after mortgage, property taxes, insurance, repairs, etc.)?
Thanks for taking the time to participate in this interview series.
interview110 says
Hi Dom – i’m a big fan of yours and a subscriber to your weekly emails. Thanks for the question.
We consider the income generated from the websites to be mainly passive. Though they’re more active than real estate, they don’t take up more than 10 hours per week as we have systems and people in place to help manage the sites. The sites are service-oriented (content creation and translation).
In broad strokes, we’d like at least 25% of the income to come from real estate as it’s the best combination of passive, higher yielding, and stable. We set that goal based on an expectation that we would live on less than $150k per year, so after taxes, our living costs are covered by real estate. The remainder of the $1m goal is likely to be achieved by purchasing more businesses that yield a higher cash return.
And finally, the $1M goal is net of all expenses except taxes and tithing.
Keep up the great writing – I enjoy reading your bits of wisdom!
Dom @ Gen Y Finance Guy says
Thanks, Interview110!
If you have the interest I’d love to continue the dialogue over email.
If so, drop me a line and we can continue the conversation:
[email protected]
interviewee110 says
ok, thanks. will do!
Abhijit Varma says
What a wonferful story.
Really insightful how you have diversified your passive income flows.
The website investments are an intriguing option. Would you say they are more passive than realestate? And (assuming no leverage to buy then), are they stable investments and provide more upsides to increase sales and profits?
You are surely living a full life, growing a large family, working a full job, building a plethora of passive income flows, and contributing to your community with the same intention.
Really, really inspirational ! Thanks for sharing your story.
RP says
Good job of your hard work. I am curious about buying a website that generates $250k/yr passive income. What are the websites?
MMiguel says
I also spent some of my early career on Wall St, and indeed at times the Earn part of the equation was extraordinary in a way I just don’t think much possible in other professions. It is super-burn-out work, but a great way to jump start one’s financial future, not to mention the steep learning curve and useful experience. Most of the work I’ve done over multiple careers has either been salary + commission, salary + bonus, or salary + stock options, so I can very much identify with the live on base salary, bank the windfalls approach and it has worked well. I also believe one of the keys to out-performing on the Earn part is to do entrepreneurial-like work that features variable comp (i.e. pays you for your results, not your time).
You’ve given me some real food for thought – though I’ve outperformed on NW, I don’t currently have enough passive income streams to sustain the life-style I’d like to have in retirement – I always assumed I would either be drawing on NW or converting NW to create income streams. But, I like your approach, which is a total focus on income streams. I see that I should be putting more emphasis on that now, rather than later.
Like others, I’m very curious about the website businesses, whatever you can share.
Thanks
Ken E says
I struggled with this interview. Although not part of the ESI charter, there’s an implication each of us is more of the “everyday millionaire” variety (read: regular to lower-6 figure incomes). I just think it makes for much easier reading and provides more takeaways for the rest of us. If you work in private equity or banking and you AREN’T a multi-millionaire by 40, something is very wrong with you if you are a halfway decent saver.
interviewee110 says
Ouch Ken. I can feel your insult through the screen :).
I don’t disagree with your contention that it’s a lot easier to save money when you make more money. It’s one of the reasons why we’ve focused on increasing our earnings, which ANYONE can do. It comes down to the choices we make – education, career focus, what you do with your spare time, etc. People don’t have to accept making less money as their reality. Not to say that it’s easy, but there are so many examples of people increasing their earnings all the time.
Ken E says
No insult meant interviewee110. Really. I am sorry this came across as a direct attack. I applaud what you and your family have done, and I know how hard it is to crack I-banking – you have done well in life (#winning). I just get more pleasure seeing the “little guys” win the ESI/FIRE game, so naturally cheer for teachers, first responders and blue collar types over the Wall Street, MD and Silicon Valley crowd. Thank you for sharing your ESI tips.
Charles Marks says
Want to defend MI 110. He has the good fortune to make a great salary but he is earning it all. Long work days and sacrifices. Nobody is handing him a thing. And he is doing what the rest of us with pedestrian salaries are doing (or should be doing): saving and investing with a vengeance. We have all known of individuals who make upper 6-figure or 7-figure salaries and have only ‘stuff’ to show for it. Having ‘stuff’ is not the same as being wealthy. I applaud MI 110’s work ethic and savings / investing habits and am envious of his earning power. He is putting it to good use. Congratulations.
MMiguel says
Oops, Ken I might as well leave the room by that criteria, as I’ve spent time in finance and made as much as MM-110 in my boom years. The good ole 15 hour days are behind me now – thankfully – as no way I could keep up that pace forever. I miss the paychecks though I don’t miss handing half of my hard-earned cash to Uncle Sam. It is not a tax efficient way to generate wealth.
Anyhow, I seem to recall reading some of the other interviews of doctors, corp execs and the like where incomes reach this level, so I don’t really understand why ESI would exclude any profession. A very productive doctor, lawyer, executive or even an accountant in the right career sweet spot can hit a $1mm income.
And while it certainly helps to have great income opportunity, sadly, banker does not equal multi-millionaire – like all matters of personal wealth it depends on a lot of factors like when you started, the state of the economy, the flushness of the employer (or lack thereof), pace of promotions, politics, how many good years you could rack up, how many times you’ve been laid off, lifestyle, etc. Lifestyle is key because these jobs are usually in crazy expensive parts of the country, like NYC. They also typically absorb 100% of your time and energy, so its impressive that MM-110 can bring home the bacon like this and have mindshare to devote to developing alt income.
MM-110 must be be very good at whatever he does judging by the paycheck. But you should also equate this type of work with a lot of potential for income volatility. You eat what you kill, as the saying goes… in other words, you keep your job by producing results. And the moment you are not producing or the firm is having a bad year, your bonus evaporates or worse, you simply don’t have a job any longer. A lot of these firms routinely purge staff just for kicks – so they can “trade up”, i.e. make room to bring in fresh talent. Which is to say job security is nil. The smart ones, like MM-110 bank the bonuses because the hiring/firing cycle always turns ugly at some point. So, there are tradeoffs, though the media only focuses on the $$$.
I have picked up on the “everyday millionaire” theme and recognize that is the focus of most FIRE blogs… people want to hear about how a regular Joe can become a millionaire too. But, I like ESI because they are willing to take things a bit further ands mix it up a bit on the EARN part of the equation – IMO just as critical a part of the equation as SAVE and INVEST.
So, we get some regular salary millionaire stories, and we get some doctors and bankers too, and its all very fascinating to get a peak under the covers!
Ken E says
Fair enough. thanks for replying and keeping me straight – and honest.
JeffB MI20 says
There aren’t a ton of accountants that will break the $1M mark without a firm behind them or a few high end clients. I know my wife could have made more if she made partner at Big 4 firm, but most of the partners are in the high 600K-$700K and a bit more with their shares, but not make break the $1M unless they are running the office or have highly specialized skills. BUT, there are plenty of accountants making $250K – $400K after only 20 years experience, so being in your mid 40s making $300K isn’t too shabby. My wife is a Tax Director and broke the $500K mark last year. Too bad it won’t last long since we are retiring within 3 years.
MMiguel says
JeffB, thanks for the edification. It is indeed rare in any profession to be able to consistently break $1mm income on a W-2.
I like MM-110’s goal of $1mm PASSIVE income. Now that is something I’d sign up for.
Jake says
Can you talk a little about how you’re saving for your 5 kid’s college, if at all? Did you superfund their 529? Do you contribute a small amount every month? I have 4 kids and have a goal to pay for their undergrad…we are high income earners, so not sure how much help we’ll get.
interviewee110 says
We have funded 529s for each of the kids. We put an initial amount in their accounts when they were born and haven’t funded them since. It’s enough that we think it will cover their cost of undergrad as well. If not, we’ll have to pony up for more.
Matt says
Thanks for the interesting interview. Can you provide some details on the real estate investments through crowdfunding? I’m interested to know what mechanism you use for that.
interviewee110 says
Hi Matt,
We’ve used a few different crowdfunding sites (RealtyShares.com and CrowdStreet.com). This was our first foray into real estate investing and we were only interested in participating in the equity investments (they also have debt investments). We also wanted to spread the investments into a diversified pool of multifamily and self-storage projects, which we believe are the best real estate assets near a peak in the credit cycle (over hotels, office, retail, etc.).
We prefer CrowdStreet over the other platforms we’ve seen because CrowdStreet allows investors to invest directly in the deal rather than indirectly through an LLC setup by the crowdfunding site itself (which is what RealtyShares does). There are lots of them out there though, and I haven’t researched all of them.
Matt J says
Awesome interview thanks for sharing!
I’d love to hear more about the websites and the purchasing process. Did you use empireflippers/ latonas/another source to find business for sale? I’ve done a bunch of reading on the topic and hope to buy something in the next few years after I save a couple hundred thousand more. I see it as a way to stay busy, yet flexible while potentially earning a large return on investment after I retire from my regular career.
Let me know if you’d be willing to chat privately
Thanks again!
Daveso says
Agree- EARNING (wrt ESI) should be a much bigger leg of the stool! I’ll 100% admit that I’d love to see incomes like yours- but I believe that you put in the work and are very talented. 80 hour work weeks is more than most will ever see. Good for you. Sounds like you had great role models and mentors but you put in the work.
Some may like to see people with “ordinary” incomes make it to millionaire status- which is awesome in itself and in some ways more challenging albeit in different ways….. but personally I’d think more would be intrigued to find ways to increase their earnings. Now I understand that not everyone can make $750-1M/year but I do believe that everyone can increase their earnings and that is what I’d focus on. I’m not as motivated as I was when I was 25 or 35 but damn- it’s all out there if you want it. Read, learn, find mentors, work hard/smart and grow. I’m mid fifties and still get fired up reading these things…
J says
Really enjoyed the interview. I can really identify with your story as I also work in the financial services space and reside in the NYC area. I am a bit younger (early 30’s) than you with just 1 child, yet my wife and I hope to increase that number in the coming years. Similar to you, I have worked very long hours for a decade since undergrad and have emphasized my after-tax savings rate. My income isn’t quite as high as you, but I have saved essentially $2M over the last 10 years. However, I do not have the same creative buckets as you on the passive side. I would be sincerely greatful to learn more about the website investments. What was your due dilliegence process like when you were searching and what resources helped you make the ultimate decisions. Any color/feedback would be greatly appreciated.
Thanks again for the insightful article and congratulations on all of your professional and personal accomplishments. You certainly have an immense amount to be proud/thankful for.
J
interviewee110 says
Happy to follow up privately. Send ESI your contact details and I can reach out via him. That goes for anyone else on here that is interested in discussing buying online businesses.
ESI says
Just a note here that this offer is no longer available. I’m done playing email go-between. 😉
Razorback 14 says
Smart move —-
I was wondering about this earlier. Honestly, I would prefer you to continue to focus on thinking about, producing and sharing RICH and interesting content —-
Again, very smart move ESI.
Carry on —
My Early Retirement Journey says
I really enjoyed reading this. It felt like a real face to face interview. It was written really well for a numbers guy. The sheer trajectory of your success was intriguing and I was so excited to get to the end! I could almost see you giving yourself a mental pat on the back as you wrote this, as in- gee, my life is pretty awesome! 🙂
interviewee110 says
Ha ha, you’re very kind. Life doesn’t always feel pretty awesome with a bunch of young kids, but it certainly has its moments!
Todd at Invested Wallet says
Really loving this series and this one was awesome. Been looking at real estate crowdfunding myself, although not quite as much as you have invested.
Great read!
Feisty FIRE says
Phenomenal Interview! Wish you continued success!
GV says
What an awesome story of increased earnings and diversified investing. I especially like the passive income number! I tried a few crowdfunding deals and the results were less than satisfactory. What I learnt was it is important to vet the sponsor instead of relying on the marketing hype of the portals. I’m assuming you were able to do this on CrowdStreet by investing directly and talking to the sponsor as opposed to going the LLC route?
Vigaro says
Great interview . . . despite rockin’ the other ends of this great equation, there’s nothing like an explicit alien view of a life I’ll never live, or necessarily even want to–NOT to be unkind, at all, it’s just that all the excellent choices made early, then 50 to 80-hour work weeks and five children and the big life in Gotham has never once entered my mind or bloodstream. I didn’t get financially wise until my mid-40’s, almost by accident. That would be the difference to some (lol), but believe me, perfectly cool where I’m at, no problem. Playing mountain man in the woods with an old mine to tinker in or something, another impossible dream, a bit closer to the heart. The fascination point here, however, would be this incredible glimpse, vicariously imagining life as investment banker elevated to Executive Director at a major NYC bank. Heavy doses of realism along the way, and at street level, I can totally dig his shrewd views regarding hedge funds and/or ‘active’ managers vs. the simple logic of index investing. WORD, baby . . . and finally, who doesn’t love hearing this:
‘It’s incredible how compounding works. I’ve read somewhere that over 90% of Warren Buffett’s net worth was generated after the age of 50. There’s hope for all of us.’
Vigaro says
There is a terrible new calculus when it comes to healthcare and retirement costs. Investopedia had a recent article suggesting the current safe and happy point is around 7.5 million; again, probably not downtown Manhattan or Silicon Valley, just generally speaking (!). Along the way, long before hearing that, I figured 4 million as the new 2, knowing our lifestyle and habits. Never say never, but I’m thinking I’ll be lucky to set aside 300k, house paid off, no further debt. SS is currently projected to cover month to month utilities and a reduced property tax, already low, so it could all work, maybe. The cost of Medicare supplemented is a bit harder to quantify; with serious trouble, a quick wipeout and bounce down to Medicaid. That doesn’t necessarily scare me; money is no guarantee of quality or integrity. That’s what I see today, all of which could change. The next fifteen years will tell the tale. On the one hand, I don’t have that much to lose, and the house might be preserved for my partner. I’d like to see a nationwide solution, and a boomer crisis may tip it that way. Hope isn’t enough. Oddly enough, human greed and love of money are getting in the way. We’ll see.
Vigaro says
Less hope, more action . . . a universal problem, begging for credible solutions. I’ll never forget Hurricane Katrina, that old lady in a wheelchair left out on the sidewalk, tarp half-covering. We can and should do much better and we all know it. Here in WA state, though, it’s one scandal after another; half-assed surgical round-robins at Swedish, deadly mold killing young ones at Children’s, mental health ‘destinations’ as rabid and corrupt as one can imagine. Beyond that is the street, where you may have trouble believing what you see. I know I’m not alone, being concerned.