The following is a millionaire interview I first published on a previous site.
I have several of these interviews, conducted over the past four years or so, that I now want to place on ESI Money (so they are all in one place).
I’ve been posting them every now and then, but would like to get them all completed soon, so you’ll see more of these in the weeks to come. All great stuff!
My questions are in bold italics and their responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am 37 yrs old, wife is 35 yrs old. We have been married 9 yrs.
Do you have kids/family (if so, how old are they)?
3 kids: Boy (6), Girl (4), Boy (2)
What area of the country do you live in (and urban or rural)?
Florida, in between rural & urban. Would not call it fully one or the other…suburban.
What is your current net worth?
$2.4M
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 (non-primary resident, investment properties) = $551K which generate approx minimum $35K annual income not considering equity increases
- Notes carried $140K at 6.25%
- 401K = $278K
- Brokerage fund with large brokerage house (mixed assets: stock, bond, etc) = $768K
- TD Ameritrade = $7K (stocks)
- Company stock at separate brokerage house = $450K
- Cash (money market, savings, etc…) = $200K+
What is your annual income?
Varies. Last year after tax about $397K… this was my net worth increase last year… Salary is $165k.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
Main is still job, heavy bonus/incentive based, but my portfolio (including investment properties) is becoming substantial enough that it is a big part.
What is your annual spending?
Negligible for someone in my situation. I say this based on my peers, and even family making significantly less and with less net worths. We are “hyper savers”. This is a big key to the big net worth increases realized over past few years (averaging about 20% or so annually for past few years). My wife is incredible, I am more of hyper saver than her, but she is not far behind me. We don’t feel like we are missing out on things, we search for great opportunities to do with kids or ourselves but don’t lose sight of cost.
I can’t give you an exact dollar amount since I subscribe to “pay yourself first” so I really don’t get caught in counting where every penny goes. I used to try this and I am just too anal to do it. I freak out over chewing gum $25 cents at a machine when I try to track. I realized my income was huge and I just don’t spend enough to stress over tracking it…nor does my wife. I would feel differently if I saw my account not increasing as much. I know this goes against all the logic and all the blogs but it works for us.
How did you accumulate your net worth?
Always was a hyper saver, just did not spend money frivolously, even when everyone around me did. I avoid almost ALL financial temptations.. I love gadgets and other cool stuff too… does not mean I need to have every one of them, or have them immediately at highest price… My kids all have Iphones now. My parents and friends passed to them as they upgraded to knew ones. We don’t ask for hand me downs and don’t act poor, but we often take things that folks just don’t want and it is nice to us… simple folks.
Another thing that helps a lot, my wife does all the cooking at home. She does not work now, she stopped working after our 2nd child was born. She was never a big earner, so this made sense. Prior to her leaving work we were living off her income alone though I was making significantly more.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
Money makes Money. Having a plan helps create money, it is not accidental. Use it wisely to produce more versus throwing it away on material stuff that will depreciate or be obsolete soon. Earn as much as you can (grow your career as you always say… I did this and it has really paid off. My parents came to US from another country and are not college graduates. My wife’s parents are poor living in a foreign country, not American. So we are self-made, no silver spoon at all. I earn more than all of our parents put together, by a lot, just on my base salary), save as much as you can, marry wisely.
What are you currently doing to maintain/grow your net worth?
(1) continuing to focus on career to hit incentives get promoted, etc…
(2) make sure all additional money I get is going towards some investment mechanism: (1) buying stocks/bonds, (2) real estate, (3) dividend opportunities, (4) buying notes…
Key is to create different money streams to diversify and grow versus buying material objects. Time is on my side if start now.
Do you have a target net worth you are trying to attain?
$4M. I used to have a target of just generating $80K a year since I don’t need much, this is assumed house paid for and some money for kids college. However I have raised that amount over the years so now looking at $200K a year. For me it would be a dream to have this coming in each year without working, but the dream is getting pretty realistic fast (as I put above, averaging approx 20% annually past few years and I am at 2.4M, so the math shows it could happen… I don’t expect to continue this pace since harder to maintain as total dollars go up)… at 5% $4M would give me my $200K, but I know the preferred withdrawal rate is often quoted at 4%… so we’ll see what I do.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
Retire early. It may be semi-retirement, not sure, since I am so young I may not stop all together. I think my childhood poverty has really focused me to make enough I never have to worry again, whether I have a job or not… this is probably a big driver for me not commonly openly discussed. My wife just lets me take care of the money, she does her part by keeping costs way down, but keeps me in check since we do have kids and need to have some balance… she is amazing in this regard.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
You have a choice of what to do with each dollar, so why do so many people struggle to delay gratification and throw away so much money on temporary things? My advice is don’t be materialistic, avoid competing with friends and neighbors, and be very conscious and cautious of ALL marketing.
“My advice is don鈥檛 be materialistic, avoid competing with friends and neighbors, and be very conscious and cautious of ALL marketing.”
THIS! Totally true. It sounds like this person is a great example of work hard, earn high, spend little and invest! Good story.
Very impressive!
“Money makes Money.” Yep, I think hard on how to put each $1 Money Factory Worker to work so that he makes me more money. Compound interest feels like magic after awhile.
I’m already FIREd, but I didn’t make it happen until I was 52.
Great job. You have accumulated a high net worth at a very young age. It is great that you were able to do so on one income. It will not take you too much longer to reach your target number of $4m.
$4M is easy at that point. We didn’t hit $4M until this year and we are saving about $250K a year. I am hoping we get to $6M when we retire in 2020.
HI Dave,
This is true, if you see my later update (MI#2), I made it… so just keep raising the bar.
Wow $2.4M at 37, that’s awesome. Very inspiring for me, at 25, as I’m just hitting the $100k mark.
Thanks for sharing this interview ESI – I love these!
Thank you for sharing these stories! This is a great example of knowing how money works. The peace of mind of being able to support your family regardless of life’s circumstances feels so much better than any short term excitement from purchasing the latest gadget.
Income is spectacular! What type of job was the interviewee doing is my question?
He could be an engineer or high level Accounting for a F500 company. Good bonus if salary is $165K and he can get a $100K bonus.
Engineering background, F500 company, but was in Business Management role at the time of this post.
@ESIMoney – are you updating these with new info from the interviewees? Just curious as to whether these are just re-prints or interviews with updates….love the series!
I had the same question. Actually what would be really interesting with these older interviews is to get an update from the interviewee, what’s changed, how has their perspective changed over time, etc. Especially since many of the interviews (not this one, but others) are for people who seemingly only recently crossed the millionaire threshold, or only recently saw big gains in income, it would be very interesting to see how they’ve sustained the momentum and how their spending has changed when faced with abundance.
They are reprints from my previous site and not updated.
Back in the day when I used to do these, I promised the people complete anonymity, as I do today. But back then I went so far as to destroy the emails we exchanged so there was no way I could identify them (I know, a bit over the top, but I can be that way.) As such, I have no idea who these belong to.
They still serve as useful examples IMO. In fact, they could have simply been written by someone yesterday and had the same info/conclusions/meaning/etc as they did a couple years ago.
ESI – – Great interview with this guy. He and his wife have done well – – – –
Equally, my wife and I have done well too — I’m 62 and she’s 58, and we’re set to retire on December 31, 2020 – – yep, we have the date set and maybe even the time (midnight, this will roll us over to the new year) – – – – Goal: Full retirement – January 2021—-At 65 and 62, we should have plenty of life at our fingertips to really enjoy traveling, spending time with our grandkids, and moving in to our new and final home.
Anyway, currently, we have a solid net-worth of over 3 million, so if you’re interested, we would be available to share our quiet (hard-working) story of building a path that has taken done the “millionaire” pathway.
Both of us have spent the bulk of our careers working in the public education arena……..As teachers, (some time as an administrator), we’ve dedicated our lives to helping others — -why not help others learning about our plan of action (POA) —
Many of the stories I’ve read seem to share most of what we’ve done over the years, but in 1988, I started charting and tracking (before spreadsheets – developed my own)——so, I feel having this POA (plan of action) has made all the difference. From college to current day, I’ve built a net-worth plan that I could monitor each monthly, and then again each year………..all the way to retirement –
Peter Lynch once said, “Know what you own, and know why you own it.” So, this would be part of the plan I would share, if you elect to call on me/us for helping others…..
Free to call me or you can simply email me, if you need my help – If not, continue on ——–I love reading all you are sharing!!!
All the best.
It’s great to read these to see some of the details of people that have done well. And I like to see people with multiple kids that have been able to set themselves up for FIRE.
Forgot one thing. Have you compiled any stats & common themes/lessons for the people that you have interviewed for this series? I’m sure the main ones would be E-S-I, but it would be interesting.
Yes. Have a post coming up on it in a month or two. 馃檪
It’s a nice interview but the math doesn’t work very well unless above average return assumptions are made without accounting for the tax consequences of the income. Also, at higher incomes, the tax consequences become more relevant as tax advantageous investments begin to diminish.
My point- randomness (luck) is a big factor in these numbers. 14%+ annual after tax returns for example. (or inflation?)
One must have skill and save to be lucky in investing and growing wealth but this is a situation where one should expect strong reversion to the mean regardless of savings.
Another quick example, the present value of a perpetuity using the loan interest rate is 35k/6.25%= 560k. Hard to get excited about a property valued at 551k. Rough analysis.
No question “luck” is a big factor. We have been extremely fortunate. It’s hard to tell the entire story in these numbers… The Real Estate portion of my Net Worth I try to keep conservative on purpose. I don’t include my primary residence, and I use the purchase price of all my real estate, not Zillow or other methods.
A lot of what I have is great cash generating property but not appreciating, so this makes the return look above average too.
I will mention that as much as luck is a key factor, you have to really be open to finding and taking advantage of it…
@SPY – can you explain a little more to a novice, what did you mean by present value of a perpetuity @6.25%. I can see that their income from the rental is ~$35K and what does comparing the $560K and $551K say – that their rental asset value is lower ???
HI All,
Just seeing this post and thought it might be helpful to share that MI#2 = MI#13, both are me, different stages in my life.
Thank you are for all the positive comments.
Can you please remove my name? Replace with the name Dave.