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 her 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 47 and my husband is 37.
We’ve been married for 11 years.
Do you have kids/family (if so, how old are they)?
We have two children, ages 7 and 9.
What area of the country do you live in (and urban or rural)?
We live in a quaint New England village that’s fairly walkable, outside of the dead of winter.
What is your current net worth?
$1.2M, if you don’t count the equity we have in our home.
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?
- My business 401k – $470k
- Cash balance pension plan set up for my business – $335k
- My Roth – $20k
- Husband’s Roth – $38k
- Husband’s 401k through his W2 employer – $110k
- Kids’ 529 savings – $28k
- High interest savings – $200k
- Our primary home is valued at $480k; we owe $355k on it (20 year fixed @ 3.875%)
- No other debt
- No real estate outside of our primary home, although we’re on the lookout for a multi-family that would cash flow properly (apparently not an original idea in our part of the country, because it’s slim pickins)
EARN
What is your job?
I own a marketing services business focused on tech clients.
I sometimes do the work directly and other times employ subcontractors to provide me with some leverage, although subbing has sometimes been more trouble than it’s worth.
The business has netted, after expenses and before taxes, around $360k for the last two years each, although is expected to hit a lower amount of $300k in 2019 (not by choice).
It is the opposite of a passive business. I enjoy the work, but would like to work less, particularly with clients in wildly different international and domestic time zones, and having worked in tech and been laid off through the 2000/2001 and 2008/2009 crashes, I’m worried about the stability of this business as our primary income stream.
My husband is a W2 employee as a manufacturing engineer. His salary is around $78k and after taxes, retirement and health insurance, he nets around $2k per month.
He is planning to take his PE (Professional Engineer) certification exam later this year, after which there may be more opportunities for some minor salary growth and side gigs in engineering consulting.
His current employer is a short commute and provides reasonably-priced health insurance for the family, but isn’t great for the long-term because there isn’t much room for career growth and the vacation policy is stingy.
We would like to develop an income model with more diverse income streams.
What is your annual income?
In 2018 it was ~$430k, before accounting for taxes and retirement savings.
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 out in my field in 1995 taking a job for $23k as an entry level marketer at an agency.
I was able to grow that to six figures only 4-5 years into my career by leaping around a bit and because the tech market was so hot. Until it wasn’t.
I was laid off in 2000 (dot com crash); then again in 2001 (still the dot com crash and then 9/11); engineered my own severance package when a company I worked for was acquired in 2005; and was laid off again in 2009 when the agency I worked for during the financial meltdown had its own special meltdown.
And then found out I was pregnant with our first child that same week and wasn’t able to find employment while expecting.
About a year later, we left the San Francisco Bay Area, because we wanted a less expensive cost of living to weather volatility and we wanted to be closer to family to help with what was our one child at the time (soon to be two children).
That’s when I started my own business, working remotely, providing marketing services to tech clients, and that business now nets about 3x what it did the first year 2010 and grosses ~ 5-7x.
My husband worked as an auto mechanic for 10 years and when we left the Bay Area in 2010, decided to go to college to earn a degree in mechanical engineering to increase his earning potential and get away from the day-to-day working with toxic chemicals.
He has been with the same company working as a manufacturing engineer for 4 years. His starting salary was $65k and now he makes $77k.
There isn’t much opportunity for career growth there, but the commute is short, he’s home in time to get the kids off the school bus, and the employer provides decent healthcare at a reasonable price.
What tips do you have for others who want to grow their career-related income?
- Stay nimble in your career. If the right opportunity isn’t available, consider creating it yourself by starting your own business.
- Stay in touch with colleagues from every job you’ve had. Your network will help you when you need it; and you’ll be able to return the favor too.
- Seek degrees and certifications that will provide advancement.
What’s your work-life balance look like?
This needs improvement.
We’re in the weeds with two young children, a business that requires full attention, my husband’s full-time job and aging parents.
We’d like to get to the place where we have some “passive-ish” streams of income from real estate or another business.
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?
No.
SAVE
What is your annual spending?
In 2018, we spent approximately $15k a month or $180k. We are already on track to do better in 2019 running at about $9.5k a month in the first quarter.
What are the main categories (expenses) this spending breaks into?
For 2018, here are the big categories:
- Home – $64k for the year, including $2800 monthly for mortgage, insurance and property taxes payment; utilities, home improvements, including new high efficiency boiler
- Food – $35k for the year including, groceries, eating out, stops for ice cream/coffee/etc. I am aware this is ridiculous and we are working on this for 2019. We enjoy buying organic, but still, we can do better here.
- Shopping – $22k for the year including books, clothes, gifts, video games, Amazon content and other nonsense. Another area to work on.
- Auto – $18k for the year including gas, parts to maintain our older cars, and hobby parts for my auto-enthusiast husband.
- Health/Fitness – $8k for the year including a Pelton bike (love it) which allowed us to get rid of gym memberships, as well as co-pays, eyeglasses, pharmacy, dentist.
- Kids – $5k for summer camps and other childcare.
Do you have a budget? If so, how do you implement it?
I check our accounts daily to see where we are with cash flow and see if anything weird has hit our credit card accounts.
And then monthly I go into Mint and in broad strokes ensure everything is in the right category.
I report to my husband when I think we need to pull back on certain spending, such as considering a staycation instead of going somewhere else expensive.
We don’t typically watch every penny, which may explain some of the numbers above, but we discuss unexpected purchases over $100 and home improvements before taking the leap.
What percentage of your gross income do you save and how has that changed over time?
In 2018, we saved ~ 43% of our gross income (before taxes) in pre-tax retirement accounts for a total of ~ $185,000.
We continue to be able to do this large amount due to the Cash Benefit Pension Plan through my business.
After taxes, we saved ~ $20k in a high interest savings account.
This is generally on par with the years prior. I’m not sure if this is the best way to get at savings percentage?
What is your favorite thing to spend money on/your secret splurge?
When I travel cross-country for business meetings, I fly first class, so I don’t require as much recovery time on either end and can maximize my time with clients and be fresh when I return home to the family.
I try to limit travel so I’m not doing this more than a couple times per year.
INVEST
What is your investment philosophy/plan?
We’ve always agreed that it’s a good idea to invest in things like our health, enrichment opportunities for the kids in the form of cool summer camps and furthering my husband’s education.
And except when my husband went back to school, we’ve always spent significantly less than we’ve earned, although as you can see, we’re not exempt from a little overspending now and again.
What has been your best investment?
Right now the Cash Benefit Pension Plan through my business seems to be a smart way to stash away lots of pre-tax dollars, and catch up on building our nest egg, since so much of my prior employment was stop-and-start during downturns.
What has been your worst investment?
We have a financial advisor for my business retirement accounts, our Roth’s and the kids’ 529’s. I’m not sure if it’s led to a great enough improvement in returns to accommodate his fees. Probably not.
Although our advisor is a nice, responsive guy, we’re looking to change this in the next 2 years and transition to more of a DIY model.
What’s been your overall return?
I honestly am not sure, but am now working to find out.
How often do you monitor/review your portfolio?
I check daily the amounts that are in the accounts, but don’t monitor it for specific returns or fees.
NET WORTH
How did you accumulate your net worth?
100% this is from earning more than we spend. No inheritances. And as best as I can tell, only mediocre investing.
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 would say we’ve done well with the earning and saving and need to work on the investing.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
Layoffs and my husband going back to school for a degree were setbacks.
We cut costs during the last major market downturn by moving to a lower cost of living area.
What are you currently doing to maintain/grow your net worth?
We are keeping an eye on real estate and my husband is looking for work on the side, although time is limited because of current commitments, including my business and having young kids.
Do you have a target net worth you are trying to attain?
No.
We’d ideally like to have $3.5-4 million in assets or around $10k in monthly passive income (via business and/or real estate) before we retire.
I expect to retire first, ideally in about 8 years, with my husband likely working until we get our youngest through college.
We’re welcome to input on if you think this is possible mathematically.
How old were you when you made your first million and have you had any significant behavior shifts since then?
46; no behavior shifts yet.
What money mistakes have you made along the way that others can learn from?
We should have taken out loans for my husband’s schooling and kept the money in the market and then paid off the loans when he was done before they started accruing interest.
We also should have pulled the kids out of private school 1-2 years earlier (they’ve been in a good public school for 2 years now).
One thing that I don’t regret, but that someone else might, is that we bought an old Victorian fixer upper and I love it, but maintenance and renovations are significant. Charm can be expensive!
What advice do you have for ESI Money readers on how to become wealthy?
If you are young and thinking about furthering your education to improve employment options, do it before you have babies, if you can, because having time to study and think becomes rare once kids are in the picture, especially when they are small.
FUTURE
What are your plans for the future regarding lifestyle?
We’d like to pay off our primary home mortgage and any college loans for the kids, and grow passive income to $10k per month by 2034.
(I’m not going to lie, I’d also like to remodel my 1960’s kitchen in the next 12-18 months, but that’s not really factored into our numbers yet).
We want to work towards a less hectic lifestyle, where we have much more time to enjoy each other’s company, can be available to help aging parents and we have our needs/wants paid for in a reliable way that doesn’t require me to be in perpetual “hustle-mode.”
Our plan to get there includes investigating real estate, as well as my husband starting his own business.
What are your retirement plans?
I’d like to retire by the time I’m 55 in 8 years and my husband would like to retire in 15 years when he is 52 and the kids’ college is taken care of.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
I’m worried that we have too much of our wealth in paper assets and if a market downturn wipes us out, we may not have time to recover for me to retire in 8 years.
MISCELLANEOUS
How did you learn about finances and at what age did it ‘click’?
My mother taught me early on to avoid credit card debt and explained the importance of spending less than you make, which was extremely valuable.
She also taught me that if I maxed out my 401k from the moment I got my first job that it would compound enough so that I would be able to retire on that money comfortably.
While starting early is indeed important, this didn’t account for all the starts and stops in my career and the exact times I should have been dumping money into the market buying low were the times when I didn’t have employment to do so. So, we now are playing catch up.
The fact that I would need to play catch up didn’t really click for me until 3-4 years ago when I started to realize I was one of the older people in meetings with my tech clients and that aging out of the tech industry might be a real thing (pass me the hair dye, please).
Who inspired you to excel in life? Who are your heroes?
My parents instilled in me the value of hard work, doing what you say you will do and treating others with respect.
Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?
The Leverage Equation: How to Work Less, Make More, and Cut 30 Years Off Your Retirement Plan (Financial Freedom for Smart People) by Todd Tresidder is fantastic.
It gives an alternative view to the standard approach of making a big salary, saving as much of it as possible and investing in low cost index funds.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We give a little.
Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?
We don’t plan to leave an inheritance.
Our gift to our kids will be to pay for their undergraduate degrees. My parents did the same for me with the agreement that I would do the same for my children when the time came.
We also plan to keep ourselves physically and mentally fit as long as possible so that we do not become a burden to our children in our old age.
Do you have any questions for ESI Money readers?
Aside from spending less and losing the financial advisor, do any readers have any other input or advice for us?
Jim P says
Love this series! Sounds pretty solid, with a desire for better work/life balance. Once you get a taste of more flexibility, it’s really hard to go back, so make sure you crank out the big bucks while you still can. My wife still works full time from an at home job, and I’m in the middle of a 3 yr break. It’s still really difficult to find time (other than weekends) to do stuff together, and she only gets so many days off per year. I know “index funds” are all the rage, but I am still a believer in picking individual stocks. My advice would just be to learn more about investing from the ground up. Everything you possibly can. It also seems that adding 3M to net worth in just 8 yrs, might be a little ambitious. Don’t let that goal push your “risk tolerance.” Otherwise…sounds like a nice life.
M-137 says
This is great advice to learn more about investing from the ground up. I’m interested, but there’s so much noise about investing that it’s hard to know where to start. I’m looking for books/blogs that go beyond passive index fund investing, and I can handle a little math, but lose it at a certain point. For example, I read William Berstein’s “The Intelligent Asset Allocator” and liked it, but would probably need to read it 10 more times to get all the nuances of the arithmetic. Do you have any advice on where I can go to learn more?
Refugee from Academia says
Not a millionaire, but if you want lots of ideas on investing (although you seem pretty solid with your plan), how about attending FiCon this year? It’s in DC so relatively close to you.
Congrats on your success. I understand about the rewards and terror of a high-pressure job and applaud you and your husband for working hard to make it all come together.
I live in a town with a lot of Victorian houses, so the “doorknob” comment resonates with me! They are lovely but expensive to keep up. However, the value of having beauty in your life every day cannot be over-estimated.
M says
Truthfully, I think this family needs to get focused on improving their finances–they may be “millionaires” but do not look particularly healthy. They earn a lot of money, but their spending is very high, and they have virtually no money outside their retirement accounts. The $200k cash may seem like a a lot (~ 1+ year spending), but its hard to envision how they could stop working and support their lifestyle beyond that very short period. Need to work on the S and I.
M-137 says
You are absolutely right that we could spend less — we’re working on it! The good news is that we have 8+ years before we are even considering one of us retiring to save more. Part of the reason why we have more in our retirement accounts than outside of them is because of our ability to take advantage of a Cash Balance Pension Plan. Between maxing that out and my husband’s 401k, we’re putting away around $185k per year in retirement, *pretax*. So, while we sometimes wonder if maybe we should be putting less into retirement, it’s hard to beat the tax benefits.
Phillip says
I agree. Interviewee has done a fantastic job building a marketing services business but I’m concerned about how long the great times will last. I’d personally work on the S & I too.
M133 says
Your story is a great example of the resiliency that is needed to achieve career and financial success – you persevered through 4 layoffs, helped your husband get an engineering degree (no small feat), and created a business that is generating an outstanding income. Congrats!
I wonder if your goal of Fat FIRE at 55 and 52 while also working less is realistic. An alternative to retirement at 55 could be to downsize your business now to provide better balance in your life while your kids are young and to work longer, perhaps until your kids are out of college. Firecalc (https://firecalc.com/) could be a useful tool to estimate the growth of your portfolio. Good luck!
M-137 says
M133,
Thank you for recognizing the hard work that has gotten us to where we are (even though we have so much further to go!)
I enjoy work most of the time and while I would love to be financially independent, I’m less interested in retiring early. I think you are 100% spot on about considering working a little less but for longer. My biggest worry is taking my foot off the gas pedal and becoming less relevant in my industry. If I knew for sure that I wouldn’t regret passing on a good client or two in the short term and that I could keep a steady stream of work coming indefinitely, your proposed plan would definitely be my core plan. Thank you for the Firecalc tool, as well.
Yes says
I don’t think it’s unreasonable to spend 200K per year. Life is about balance. If you live off 80K and save an extra few million, but you’re less happy, it’s not the best option for you. You’re not guaranteed a life span until 90 or 100.
Everyone will have their perspective and comfort level with respect to what striking that balance is. Some will prefer living off of 100K and saving 200K, others will be the inverse.
M-137 says
I agree!
Damon B Flowers says
You might want to re-evaluate your food-related expenses. $35K per year equates to $95.00 per day for a family of four, especially when two of the four are young children.
M-137 says
Damon, you are exactly right. That is the first area to tackle!
retireby55 says
It is possible to make significant improvement and retire at 55, but you will definitely need a pathway to passive income, or an increased amount of saving and investing. Since you are a big fan of Todd Tresidder as well, he has a coaching service you could benefit from, writing up a wealth plan is incredibly valuable, you should go through this exercise, it will force you to put a plan to paper and focus your efforts. I was in the same equity position at 45 ten years ago, converted $1M to $3.5M in ten years time and $150k of passive income. I had half the income level you currently have, It did not happen by accident and took a ton of work and focus to make it happen. Your spending and savings will need to improve as well, putting a plan together will tell you that.
Make the most of your income while you have it, find ways to simplify your life.
Hire someone to prep your food for you weekly/monthly and stock your refrigerator.
M-137 says
I would love to hear more about how you did this. Sounds very inspiriting!! I also love the idea of hiring someone to prep our food and stock the refrigerator. Did you actually do this?
retireby55 says
I worked with a friend on the food prep, she had more time and did the food prep, I paid for and purchased the groceries for both families. I helped organize the menus and created the step by step planning. This worked out great until she moved away, I then hired someone to do this. I have more time now, and do the majority on my own. This was a life saver during a very busy period of our lives, we saved money and ate better.
M-137 says
so smart. and then may i ask how you were able to grow $1M to 3.5M? that doesn’t sound like it’s just from index fund investing. Real estate and/or business?
retireby55 says
Making a plan, utilizing our equity at that time strategically. We did this via real estate.
Most significant factor was a plan.
M-137 says
I’m taking this to heart. Thank you for taking the time to respond!
M-121 says
lots to recommend here from the work-ethic and the “E” side of things, but this couple needs to pay a little more attention to their spend side, and their investing side. Damon is right–way too much spent on food per year relative to their income and their retirement dreams. I also question how “husband starting a business” is part of the migration to a slower, less hectic, less hustling life. Starting a business is a great idea and her husband sounds like the kind of worker who would be successful at it (educated, lots of experience, drive and hard-working) but starting a business isn’t historically part of a “slow life down” strategy. And the giving–staying in shape is nice, but giving close to nothing leaves much to be admired.
M-137 says
Hi M-121,
Lots of good points in here. Thank you for sharing them. I agree that although we are saving around 45% of what we make, investing most of that, there is much room for improvement. I wanted to point out that I didn’t say we were “giving close to nothing,” I just didn’t share how much. I think that’s a really personal decision whether to toot your horn about that.
Breezy says
Curious why you say you should be dumping your advisor? At the end of the day cost IS important; but is he/she bringing unique ideas/strategies to the table that you, otherwise, would not be doing today?
You said your best investment is your cash benefit pension plan; was this your idea or did the advisor suggest this?
I’m not trying to attack you but I notice a theme on this site (as well as others) that advisors are not worth the money and DIY is always the way to go.
I have a great advisor who helps us with ideas/strategies/taxes that I never would have known how to setup. Paying him $$ is well worth it and missing out on those ideas to save a % on an ETF seems short sided to me.
Instead of firing your advisor, to save a few bucks, cut the food costs down and you will be way further ahead.
M-137 says
Thank you for your input. I agree that our advisor has been of some assistance, especially now that we have reached a certain threshold with our retirement investments. I probably started working with him too soon (before I even started a business) to make the cost those early years worth it and I am sometimes frustrated with his disorganization when it comes to paperwork. But you are exactly right that the cash benefit idea was his and was a HUGE money saver/maker for us. I’m not smart enough yet to go full DIY with the investing, but I’m eager to learn more and will keep working with him until I feel we are ready. The food costs should be cut either way.
Sue K in NJ says
I agree with Breezy’s comment that “I notice a theme on this site (as well as others) that advisors are not worth the money and DIY is always the way to go.”
We have done extremely well with our financial advisor. We are not into figuring all that kind of stuff out and he’s put us in programs we would have never heard of. Plus in terms of paying something – well don’t all of us want to be compensated for our knowledge, experience, and expertise?
M-137 says
I agree, Sue K. I would never expect to receive my advisor’s expertise for free. I’m glad to hear that you are getting a lot of value working with an advisor. If I may ask, do you work with an advisor on a fee-basis or percentage of assets held?
Paper Tiger (aka MI-27) says
Personally, I use advisors a little differently. For the most part, I have managed our own portfolio and used mostly low-cost index funds. However, there are a few areas where I use multiple advisors for very specific investments. For example, I have a guy that specializes in Bonds and fixed income investments, I have another guy who specializes in REITS, I have another advisor who specializes in Private Equity.
The way we work is I let them bring me ideas and if I choose to invest in any then they collect their commission on the transaction. I’m not looking for anyone to manage my portfolio as much as I’m looking for some alternative investments for diversification and to invest in some things that don’t always track with the market.
I also have one advisor who looks at my overall portfolio and will make some suggestions and I may buy a couple of things through him to make it worth his time.
In these ways, I stay in control of what I buy and what I’m willing to pay for the ideas I receive but at the same time recognize that I can’t possibly know everything that is available and can leverage multiple brains and options to goose our overall performance.
M-137 says
Paper Tiger, This is a unique approach that I haven’t heard people talk about. The best of breed approach is highly effective in many other scenarios, so it makes sense it would apply here. I didn’t even know you could find experts so specialized. That’s why I love this forum!
Sue K in NJ says
It is a combination of both. A fee charged monthly based on the assets under mgt. Also some programs like 529 plans that he receives an ongoing trail commission for service.
Simple Money Man says
Thanks for sharing. I agree charm can be expensive, but if you like it, it’s worth it! It seems you’ve fared well considering the challenges (i.e., layoffs early on). If time is of significant value, I’d suggest investing in low-cost index funds. They do all the work for you.
M-137 says
I love the charm, although my oldest has requested that the next time we buy a house that we find one where the doorknobs work 🙂
Matt says
I’m curious about the housing spend. $64K seems like an outrageous amount to spend. If half is mortgage, what is the other $30K+?
I’d suggest you do a deep dive into all your expenses if FIRE is really a priority to you. Seems like the spend has room for serious improvement.
M-137 says
Hi Matt, It’s insurance, property tax, utilities and improvements, including a switch to a new boiler (previously the home was heated via oil). We bought a fixer-upper and updates/repair costs so far have been expected and planned for. And I agree on your point about expenses!
Matt says
Glad to hear that it’s (hopefully) a lot of one-time items. That should mean annual costs are much lower and FIRE is definitely possible, especially with that large income.
Good luck to you. Thanks for sharing your story with us all.
MI81 says
M137 – you and your husband have achieved a lot and your business is obviously doing quite well! You are doing a great job of saving pre-tax (and like you say, take advantage of all that space you can). You are also earning a significant amount of money. My husband and I are in the same age range as you and earnings are similar as well.
Since these interviews are written approx. a month to two in advance of being published, curious to know what steps you’ve taken since you answered the questions to tackle the food expense? I am a food lover myself and don’t scrimp when it comes to quality or quantity. Food along with travel are our personal two biggest expense categories. To give you a data point, as I looked at our food expenses so far this year, we’ve spent $9k (family of 4 with, two teenagers) and this is grocery shopping at Whole Foods and eating out at high end restaurants.
Everyone has their personal thought on advisors (never to can’t live without mine). I am in the DIY category and think about it in this manner from all that I have heard: even with an advisory is a really good person, this is their job and their focus is making money for themselves. If you’re paying the typical 1% (and potential additional other fees due to the product you’ve been invested in since they can receive commissions) ask yourself if it’s worth it. At $1.2M you are paying $12k annually, this will go up as you increase your net worth. I’d personally prefer to keep the $12k for myself. Investing doesn’t have to be complicated – here’s a place to begin the DIY education process https://www.bogleheads.org/wiki/Getting_started. Even as a self proclaimed DIY person, I do believe there is place for paid advice, but prefer flat feel consultations for percent based relationships.
It’s always a balancing act, enjoying what you have today vs. planning for the future. Questions only you can answer on importance of spending as you are currently do and enjoying today and working longer or trimming expenses and retiring earlier. With your current savings rate and a 8 year horizon with a 8% rate of return, you should around $4M, but if the majority is in retirement accounts – you’ll have to get a handle on how to generate the passive income you need if the majority of dollars have restrictions until you hit 59.
All the best to you, you’re asking the right questions and have the right focus – just need to lay out a plan on how to get there!
MI81
M-137 says
Hi MI81,
First off, I loved reading your post. Your rapid growth in wealth after you hit your first million proves that your system and dedication are fully on target – I admire what you have accomplished. I also think it’s interesting that you flag how important it is for wives to be involved. We have the opposite dynamic at home where as the wife, I am 100% the financial-focused partner and my husband would have a hard time taking over in an emergency. It’s another area for us to work on in our partnership. On the flip side, I’d have a hard time repairing our cars like he does or figuring out how to start the lawn mower.
To answer your question regarding food spending, we’ve been able to reduce spending by 15% this year over last year with zero effort. (While our spending in that area has been appalling, I want to note that it includes everything we spend at the grocery store including pet food, household cleaning supplies, shampoo, etc.) Our next step is to implement a meal planning process. Neither of us wants to own it, because the kids are picky eaters, one has celiac which provides another challenge, and the time of day that we would need to start cooking is a super hectic time for us, because the kids and my husband are coming home at the same time as my west coast clients are really needy. So, that’s a full paragraph of excuses, but I do believe with some initial effort to get a proper system in place using the slow cooker, eating leftovers, etc, I think we can probably save $1000 a month from where we were before, achieving a high ROI for a small amount of hassle. It’s our Achilles for sure.
On the advisor bit, we are actually paying closer to $15k per year right now, because of the added administrative costs of having the defined benefit plan. It’s worth it at the moment given the massive tax advantages, but may not be forever. What we will probably do is continue to work with our guy for at least another 2-3 years and then dissolve the cash benefit plan rolling it into my business 401k, which will dramatically reduce the compliance requirements and complexity and then transition to a model where we use a fee-only advisor for at least the first year. And then after that, go full DIY.
You hit the nail on the head with the balancing act. For example, I’m fine with driving a Honda Civic that’s 10 years old in exchange for a vacation once a year with the family. Along with the theme of making choices, when you zoom out and look at our big picture, you can see that it barely makes sense for my husband to work, financially. Much of his income goes to taxes, because my income bumps us up in brackets. Any money he currently brings home now could easily be saved off the bottom line if he quit and was focused on home economics instead. Much, if not all, of our overspending is due to operational inefficiencies in our home due to two busy, working parents. But his job brings him joy and because he works in another industry it helps diversify our risk in a downturn, so we choose for both of us to work, but it comes at a price.
And then to your note about generating passive income — because I may retire first (I am 10 years older than my husband), he would still be working, either for himself or an employer, our passive income needs would be reduced, but we are looking into real estate.
I wish you the greatest success with your situation and any tricks/tips you’ve developed to get healthy food on the table with two working parents are welcome!
MI81 says
Great to hear you’ve made some significant progress on the cutting food expenses. We all do the best we can with full, busy lives (and enjoying what one does, like you said your husband’s job is extremely important, even if it means a bit of a juggling act).
My only tip on the food side is as you mentioned, planning. Husband and I put together a meal plan for the week, go shopping for the ingredients and I find that’s over half the battle. The worst is when it’s getting closer to dinner time and you have no idea what to make or what you have in the fridge. Like you, I have the challenge with the time difference in working with the west coast. I take advantage of this situation in the morning and actually prep my dinner then. I keep it simple during weeknights. It is much easier for me to have dinner ready by the time everyone is home from work/school.
Cheers,
MI81
117 says
Everyone seems to have pointed out the obvious. Good thing you have great earning potential now- just do the best you can with the great money you are making now… as others have said- maybe scale back once you think you’ve got yourselves in better financial position to make ‘retirement’ fun.
Heck your husband is only 37- he’s got a lot of years to go even if you retire in 10 years or so. You both are so young actually. Enjoy life while getting things in check!
Vigaro says
One further ‘complication’ worth considering, especially when geared toward organic or specialized diets is gardening, period. Kitchen windows, side yards, in the garage under lights; always a way. Remarkably cheap to get started for the casually resourceful, only a minefield for the foolish; all sorts of containers, sometimes spare lumber and tools can be found at garage sales, while the average Home Depot / Walmart / ACE Hardware has all the soil and goods you could possibly need if fresh or new is one’s thing. Fifty bucks or less, easy, you are in, then generally cheaper as time goes on. I buy exclusively from Baker Creek, an organic/heirloom seed superstore of sorts. I start almost everything from seed because I enjoy the ‘creation’ parallels (and therapeutic effects), coming from an otherwise nonreligious perspective. Frost threat isn’t over, but I still have Italian parsley, Kyoto Red carrots, and aloe vera in the kitchen window, little containers. A lemon tree, chives, bok choy and several kales in the living room window. Half a dozen other species in the garage, under lights, waiting for the early gardening, hardening to the cool temps. Two days ago I placed a shockingly large order (lol) from BC: 25 dollars! As opposed to five or ten, here or there.
Basically seven new seed packets and two freebies, all for the secondary garden, roughly June onward (always a short, challenging season here). Yeah, if free is your thing, nothing like getting free organic/heirloom seeds just for ordering from very nice people at a great company. Kids can be introduced to gardening early, generally for their benefit unless it feels like forced labor or a mindless chore. Being told to weed three 20′ long rows of slightly grass-strewn strawberry plants on an otherwise perfect summer day, or entrenching compost, never really my thing. Rethought it decades later, got started; no looking back. Max brownie points with the gf, an added benefit. ‘You need some greens, honey?’ as she starts the chicken and so on. Easy way to get in on an excellent meal, since we otherwise eat separately, and differently. Food for thought, anyway. I spend twenty bucks a week on groceries, typically beer and a few supplements. Gf spends about fifty, which seems like overkill. Do the math . . . what a savings, big time. Also strictly organic.
Vigaro says
If I could craft my own beer and bread, how awesome, seemingly low cost forever. Not really worth the additional time and startup costs, however, and there’s a space issue with craft brewing. Never say never, but on that front, perfectly happy shopping from the pros. They get my $20 or less, weekly.