The following is a millionaire interview I first published on a previous site.
I have several of these interviews, conducted over the past five years or so, that I now want to place on ESI Money (so they are all in one place).
I鈥檝e been posting them every now and then and will continue to do so, mostly in the slower times when many readers are on vacation or busy with other activities (like today). All great stuff!
The interview below took place in 2014. I’ve lost touch with the interviewee, so no update on this one. 馃檨
My questions are in bold italics and his responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I鈥檓 49 and my wife is 42.
We鈥檝e been married for 10 years.
Do you have kids/family (if so, how old are they)?
No.
What area of the country do you live in (and urban or rural)?
Fairly high-cost Midwestern suburban area.
What is your current net worth?
$1.9M
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?
- Retirement Accounts: $1.33M
- Non-retirement Accounts: $221K
- Home: $300K (fully paid)
- Cash: $77K
- Debt: $0
My investment portfolio is a mixture of no-load and low fee mutual funds and ETFs and is:
- US Large Cap: 40%
- US Mid Cap: 24%
- US Small Cap: 8%
- Intl Equity: 9%
- US Bond: 18%
- Cash: 1%
What is your job?
I鈥檓 a software developer and my wife is a manager for a consulting company.
What is your annual income?
- Combined base: $190K
- Combined bonus: ~$25K
How did you grow your income so high?
Each of us has only cracked the six figure mark in the last couple years.
In my case, it鈥檚 largely due to being in a good field for a long time allowing me to acquire marketable skills.
In my wife鈥檚 case, she just works much harder than anyone else on her team and consequently delivers a lot of value to her company.
If I worked as hard as my wife I probably could make quite a bit more money, but the trade-offs don鈥檛 work for me. I鈥檇 have to spend a lot more time away from her, and we decided long ago that that鈥檚 not how we鈥檇 like to live.
I鈥檓 pretty sure that I鈥檇 be a bit more disagreeable to be around too. Work/life balance is very high on our priority list.
What is your main source of income?
Jobs.
Any investment income that we receive is reinvested.
What is your annual spending?
- Expenses: 64% (nearly half of this is taxes, ugh!)
- Savings: 32%
- Charitable Contributions: 14%
How did you accumulate your net worth? Also, please share any mistakes you’ve made along the way that others can learn from.
I followed the tortoise methodology. I steadily saved as much as I could for a long time and diligently invested practically from the first day of my career.
We have never really inherited any significant amount of money.
We have never really had a formal budget.
My salary was quite modest when I started my career but was still large enough for me to save some. For the first decade or so, every time that I got a pay increase I would add it to my savings instead of increasing my lifestyle.
I was very fortunate that the equity markets performed extremely well early in my career (late 80s and through the 90s).
I鈥檝e managed our investments; we鈥檝e never hired anyone to manage our money.
My parents were quite conservative with their money because they needed to be. Neither of them ever had a very high income, but they were very hard workers and excellent savers.
Fortunately for them, and for me, they learned how to invest while they still had some earning years left. They are not wealthy but are very comfortably retired.
I learned from my parents to live simply, save aggressively and invest wisely.
What have you learned in the process of becoming wealthy that others can learn from?
Don鈥檛 be afraid to do without. There are so many material trappings in our culture that don鈥檛 really add much value to your life when you look at the big picture. You really need to decide how important it is to have the latest gadget or clothes now versus having financial security now AND for your future retirement.
I鈥檇 advise developing a thick skin early in life because this is one of those things that鈥檚 simple but not easy. There have been lots of people throughout my life who鈥檝e viewed me as overly frugal or downright cheap, but I鈥檝e realized that I can鈥檛 completely control their opinions. I鈥檓 not suggesting that you squeeze every two pennies until they鈥檙e a nickel; I鈥檓 just saying that you should be intentional about your spending so that you get real value.
Stay invested. It鈥檚 an extremely rare person who is disciplined enough and smart enough to time the market.
Of course I took a beating in the bear market leading up to early 2009, but since then the broad market is up over 150% and presently at all-time highs. You probably would鈥檝e lost out on a good portion of that 150+% had you tried to time the market.
Actively manage your financial health. Obviously having a positive cash flow is important; stay employable in order to keep your income at a nice level. Also, it鈥檚 very powerful to have enough cash on hand to pay cash or not have to worry when your credit card payment is due. This may allow you to ask a vendor for a discount for paying cash.
Keep tabs on your credit reports too. I have my three free reports staggered every four months in order to make sure that all of my accounts are as they should be. Businesses, especially financial institutions, tend to want your business quite a bit more when you have a good credit rating and generally good financial health.
Gain an understanding about how businesses and the markets work. I was in an investment club for several years and was really surprised at how much I learned about how our markets work. It just gave me so much more of an appreciation about what businesses need to do in order to be profitable and get investors and analysts to like them.
I never really dedicated much effort to investing directly in stocks in my own portfolio, but I got a much better understanding why companies do the things they do.
One of the consequences of this is how I interact with them as a customer. I no longer think that businesses and business owners are always sitting on huge piles of cash and are looking to stick it to you to get more. I now understand that most businesses are trying to manage risk and reward and income and expenses just as I am.
You don鈥檛 have to join an investment club, but you should have a basic understanding of quarterly and annual reports that public companies are required to produce.
What are you currently doing to maintain/grow your net worth?
We鈥檙e starting to take a serious look at estate planning, which we鈥檝e never done before.
We鈥檇 really like to make sure that we can keep our money while we鈥檙e alive and that our heirs receive it quickly after we pass on.
Do you have a target net worth you are trying to attain?
Honestly and embarrassingly, no.
I鈥檝e thought about some of the factors involved in calculating this number but haven鈥檛 seriously done the math. We鈥檇 like to be able to live off of the interest and little or no principal.
My SWAG would be $3-4M. We鈥檇 almost certainly move to different area that had a much lower cost of living.
What are your plans for the future regarding lifestyle?
We really would like to retire early from our corporate jobs and use our skills working for non-profits.
Our hope is that we could work for an organization that is really personally meaningful to us and that our skills would help them thrive.
We鈥檇 like to move towards this sort of situation long before age 65 and continue as long as we鈥檙e able.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
Be joyful.
One of my favorite radio talk show hosts has a regular segment on happiness, but I think that joy is a little different and quite a bit richer.
For example, it鈥檚 not possible to be both happy and sad at the same time, but you can be joyful and sad simultaneously. This is because joy isn鈥檛 just about your present circumstances but about a hope in something greater than yourself and even greater than anything you can imagine.
Perhaps it鈥檚 an arguable point that this will increase your wealth, but it surely will increase your quality of life.
Razorback 14 says
Joyful – got it.
Nice job with the sharing of your story. You guys have done well.
Good luck in the future.
Eddie says
My wife and I are in our mid 50鈥檚 and live by the same rules as well. Friends and family call us frugal or cheap. I consider my wife and I to be wise. Most folks think of now and tomorrow. Few think of their future and the future of their children. It鈥檚 a real shame here in America that we don鈥檛 plan ahead for the things that matter most. We have no debt and our home should be paid in two years. We鈥檙e not rich yet, but well on our way. that鈥檚 true joy.
Arrgo says
Enjoyed this interview. Some good reminders here.
Chuck says
Thanks for sharing your story. It appears you give a pretty large portion of your income to charity. That is admirable! We are re-evaluating the amounts we give to church and other charities. Do you follow a plan for giving? Have you set up a charitable trust or donor advised fund?
Isaac says
Q10’s percentages don’t add up:
Q10: What is your annual spending?
Expenses 64%
Savings 32%
Charitable Contributions 14%
Total 110%
Did I miss something here?
Breezy says
ESI do you happen to have any of your previous interviews that you have the updated numbers for 2019? I鈥檇 be curious how much their net worth has grown these past few years!
ESI says
I’ll be doing some updates later next year.
Vigaro says
I’m guessing 4% would be charitable contributions, to pet loves perhaps, if not church. Still too high for my blood . . . an offense to others, but I still take the general view of ‘Nick’ in Metropolitan (1990), that someone is always more fortunate, others less so. Fat cats and starving dogs. Have you ever considered you are less fortunate? It’s all relative, forever in flux. I say, stop the social engineering and mind games, wishful thinking, pipe dreams and other nonsense, and strictly go for what works: limited cash gifts and favors to those you respect without strings or further presumptions flowing either way. That would exclude most ‘eternally’ hungry churches, forever passing the plate to unknowns ends, and then various bloated charities. Your local food bank, on the other hand, could probably really use some help, though, financial and otherwise, if you want to stretch your love out to total strangers.
Vigaro says
A little melding with Margin Call (2011) in there, btw, to elaborate a simple point further. Whether others see virtue, I see vanity, sometimes the creation of new problems over old or systemic ones. Capitalism is not nice, still the best game in town. And greed remains good i.e. success first, perhaps, for those inclined to spread it out, feed the economy, get that good-guy badge, favor their various pets. Others should save, always more.