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.
Note: This interview was done in mid-March, 2020.
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 41 and my spouse is 40.
We have been married 9 years.
Do you have kids/family (if so, how old are they)?
2 kids; a 7 year old and a 3 year old.
What area of the country do you live in (and urban or rural)?
A mid-Atlantic state, in a rapidly expanding suburb.
What is your current net worth?
Taking into account the volatility of the market somewhere around $1.8 – $1.9 million. Maybe a bit more, maybe a bit less.
Ask me again after the market stabilizes.
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?
A majority of our net worth is stock, mutual funds, and real estate (primary home and rental properties). For simplicity, I am rounding:
- Traditional IRAs: $186,855
- Roth IRAs: $53,925
- 529 accounts: $143,500
- 401k’s : $748,185
- Cash (in the bank and our wallets): $150,870
- “Other” investments (such as stock and mutual funds): $372,045
We own one rental property outright and don’t plan on selling anytime soon. So long as our current renter is there, we’ll keep it. Current value is right around $110,000.
We own one home that we rent, that very conservatively would sell for around $300,000 – $325,000. The remaining mortgage is less than $180,000. Time will dictate when we sell, but probably not anytime in the next 5-10 years.
Our primary home is worth more than $515,000 with a mortgage of around $409,000. The true value of this home is debatable. I (and realtors) don’t agree with the Zillow estimate of the house value.
When we got the mortgage an appraisal wasn’t necessary (we assume due to the loan-to-value ratio). Based upon the home’s prime location and the oversize lot, the home could be worth as much as $535,000.
It doesn’t matter. We don’t plan on moving anytime soon. Plus, I saved by not having to pay an appraiser for my mortgage.
Of particular note is that a portion of our “other” investments (6%), Roth IRA (23%), and Traditional IRA (11%) is non-correlated to the market. I both like and dislike this. The probability of the non-correlated investments going down in value is negligible. But the return could be as low as 0%, or as high as 20%, historically.
I feel like given the current state of the economy, it’s nice to save for a rainy day and be just a little conservative.
EARN
What is your job?
I’m an engineer and my spouse is in the medical field. Both professional jobs.
My job is somewhat specialized, so I didn’t need a Master’s degree.
My spouse’s job requires an advanced degree (Master’s degree at a minimum in this case).
What is your annual income?
Combined, in 2019, a little over $268,000, including bonuses and overtime.
I expect 2020 to be around $250,000 due to a potential decreased bonus.
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 mowing lawns, but in terms of a real actual job with a paycheck I was paid $4.25/hour (minimum wage at the time) working in a grocery store. As Chris Rock once said about minimum wage, “if I could pay you less I would but I can’t because it’s illegal”.
In college, I prolonged my graduation due to an internship. Had I not taken the internship (I think the starting salary was $10.80/hr, well above minimum wage at the time) there is a 0% chance I would be in the job I am right now. I am in one of the top salary jobs for a non-managerial position in my company.
I started at the bottom of the salary range, but it was a starting job and a full-time job and when I graduated college, kids were looking for employment. It wasn’t a good time and I was happy to have secured full-time employment.
Having the salary I do right now is both a blessing and a curse. What I mean by this is that there is no movement upward unless I get into a managerial position, and those jobs don’t appear very often, especially taking into account my skillset. Any job change that is non-managerial initiated by me would almost certainly be a decrease in salary, and I don’t know if that’s a good decision long-term.
Working hard, sometimes 80-hour weeks prior to being a full-time employee gave management the impression that I wasn’t a slacker and would do what needed to get done. Slowly, over MANY years my salary went from the low end of the entry job to the midpoint of my current job.
In the past 20 years I have had 3 promotions. I’m currently paid (base salary) right around $135,000/year. (For reference my spouse is paid in the low $100,000’s/year, not including bonus.)
What tips do you have for others who want to grow their career-related income?
Do your job.
Don’t complain.
Try to volunteer to do projects that other people don’t want to do.
Be positive. Everyone has good days and bad days.
Try your best to do your best every single day.
Working hard costs nothing. Having a good attitude costs nothing.
Find something you’re good at and keep at it.
Make ethical choices. There are few, if any, shortcuts in life. If you think taking shortcuts will make you more money, you’re mistaken.
Look around at the successful people in your career. What are they doing that you aren’t?
Last, it’s good to be in the right place at the right time. So I guess you can say luck is part of it.
What’s your work-life balance look like?
We both work a lot. Weekends, holidays, anniversaries, birthdays. We work them all. It isn’t unusual to bring home work every night.
We both put our education first in our lives for so long and have worked very hard to get to where we are in our careers. We believe we are paid relatively well given our geographical area. (We aren’t working in a major city like New York City).
Kids and their activities eat up our free time.
My spouse brings home work every weekday and weekends are spent catching up on what needs to be done the following week.
Being an adult is hard. Just about every day has something planned and we have little-to-no downtime. But being “senior” people in our careers requires lots of responsibility and sacrifices.
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?
We get money every month from [stock and mutual fund] dividend income (around $200/month) and rent for our rental properties.
The dividends are reinvested consistently (automatic reinvestment) in our investment accounts.
We don’t get much money from the rentals, but enough to pay the taxes, monthly and quarterly dues and have a little bit of income so that long-term we can fix what breaks. Over time, we hope to make money when, and if, we sell.
We bought a condo when we had very little money and were just out of school just to have a place to live.
Renting our homes, for the most part, sucks. It was at the peak of the real estate market and between getting married and purchasing a house to raise our kids, it just wasn’t worth it to sell it at a loss (we would have lost about 60% of the original purchase price).
It still isn’t appraised at the price which we bought it, but we have since made enough from our renter to pay off the mortgage and have a small amount of money coming our way every month. Total at the end of the year, we clear right around $6,000 net.
If I can give any advice to potential rental owners, use a rental property company. When things are going smoothly, everything is great. But when there is a dispute, their monthly fee is worth it. They have a lawyer on staff if you have to go to court. I wouldn’t want to navigate the court system if I had to do it myself.
For the rental house, we are essentially breaking even each month.
We never purchased either property with the intention of renting them, but life happened and we did what we had to do. We haven’t rented the house for more than a year so I don’t know the exact cash flow, but it is positive.
SAVE
What is your annual spending?
Not including daycare, in 2019 we spent right around $55,700. This is a bit flawed as we purchased a new home in the summer of 2019.
For 2020 I anticipate we will spend around $66,000 due to a larger mortgage and higher utility bills.
This includes pretty much everything from home repairs, to food, to car maintenance, and life insurance premiums.
Last year childcare was about $21,000. Childcare isn’t cheap. I don’t include it in our annual spending because we really don’t have an option due to our jobs.
What are the main categories (expenses) this spending breaks into?
Mortgage (around $28,000/year), and essentials: food, utilities, healthcare, and life insurance premiums.
We don’t travel much due to having young children. Visiting family or friends is the extent of our traveling.
Part of the problem is our work schedules. We don’t work a traditional Monday-Friday job, so weekends aren’t entirely free to do as we please. We may be off on Wednesday and Thursday.
I put everything on my credit card and it’s difficult to say exactly what we spend on food. I cook almost every meal but we do get a pizza or takeout every now and again. Best guess is once a month for eating out. Note: hamburgers, cheeseburgers and chicken nuggets for the kids aren’t included when I say we eat out once a month, but we do it at least once or twice a week to make our lives easier.
Do you have a budget? If so, how do you implement it?
I suppose we don’t technically have a budget.
We aren’t big spenders. We don’t really go out much. Mainly because going out to dinner with children is difficult.
If we don’t need something we don’t buy it. If it doesn’t make our lives easier, we don’t buy it.
We do splurge on a nice bottle of wine every now and again.
What percentage of your gross income do you save and how has that changed over time?
I put in the maximum allowed to my 401k (I’m a highly compensated employee), 15%.
I also put money into my 401k after tax. It isn’t much maybe 3% of my monthly salary but I plan on taking the money out and converting it to a Roth IRA sometime before I turn 55.
After that, I put in a good chunk into my children’s 529 plans ($1,475/mo).
I also put money consistently into Vanguard and Fidelity. I invest in a SP500 mutual fund, and a total market fund, every month (a total of $500).
My feelings toward investing is that I feel it is best to pay yourself first.
When it comes to saving, I like to save to the point that what is left over after making all these investments is slightly uncomfortable.
I have always maxed out my 401k since the day I got a full time job. I guess you can say that I have been a saver my entire life. Because we are savers it allowed us to purchase another home without worrying about selling our previous home.
What is your favorite thing to spend money on/your secret splurge?
If I can buy tools and fix something cheaper than hiring someone, I do it assuming I have the time to do it. So, I guess you could say tools. (The great news is that you can learn a lifelong skill and save money long term.)
The big thing we splurge on is a house cleaner. Working the hours we do, it’s really nice to come home to a clean house with clean bathrooms. While we don’t leave all the cleaning to the house cleaner, they do a majority of the heavy lifting. I still vacuum and clean here and there because I can’t stand clutter or messes.
Readers might like to know we pay $125 each time they come, and they come every other week.
INVEST
What is your investment philosophy/plan?
Invest for the long term. Save for a rainy day. Live below your means!
I’ve seen people who had lots of money and large, expensive homes end up dead broke, living with friends, or in some instances being moments away from being homeless.
What has been your best investment?
I bought Microsoft a few years ago and am up around 300%.
I also bought a stock which was acquired by another firm, and another firm. It’s probably up around 600%.
You can probably tell that I like to buy quality stocks (and mutual funds) and hold forever.
What has been your worst investment?
I bought a stock only for the dividends that were paid every month. The stock ended up losing a lot of value and I ended up taking a $15,000 loss when I sold it. When I did the math, I ended up (net) down around $5,000 as a result of netting out the monthly dividends, not taking into account my tax bracket and the fact that I was paying taxes on said dividends.
I learned my lesson and no longer lose sleep over my investments anymore.
In 10-20 years, I’m confident that my portfolio will be up even more and the winners will far outweigh my losers.
What’s been your overall return?
Over time, I haven’t really looked at my performance. I follow Jack Bogle and Warren Buffett’s advice: over the long haul, the US is going to be up in the next 15-30 years.
Between now and then, there will be ups and downs. There will be turmoil and good days and horrible days. This is for certain. But, over time, you’ll do just fine if you invest consistently in good quality mutual funds, or stock that you “understand”.
Conclusion: NO CLUE!!! Well over 10%, though. Maybe 15%?
I’ve been investing since I had a full-time job and could buy into an IRA and Roth IRA. Prior to that, I saved and invested in CDs.
I honestly only look to see what the current dollar value is of my investments. I don’t dwell on how much I am up or down with respect to percentage.
How often do you monitor/review your portfolio?
A few times a week.
When the market drops, I buy the S&P, per Warren Buffett’s suggestion. I ask myself the question, “in 10 to 20 years do I expect the market to be higher than it is now?”
I’m writing this Q&A in mid-March and due to volatility I am sitting on the sidelines and doing nothing, except for my monthly automated investments. I’m not even checking the value of my investments because in 5-10 years it probably won’t matter if the stock market dropped 1,000 points in a day.
NET WORTH
How did you accumulate your net worth?
I have inherited a bit of stock, but not much — from my father’s investment club. He in turn, inherited it from his father. A total value of perhaps $4,000.
I gained my wealth the old fashioned way: saving and not buying something unless I really needed it.
I still drive an older car, I shop at Walmart and Costco and clip coupons. I buy generic whenever possible (and have found that many times the quality of generic oftentimes exceeds name brand).
Consistently investing in the market, living below your means and asking ourselves, “do we really need it?” before we make a purchase has helped us maintain our net worth.
I will reemphasize what I’ve read here on ESI in the past that marrying someone who isn’t a big spender and shares in your financial views helps A LOT!
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?
Save and Invest.
We don’t keep up with the latest fads. We live below our means and are as reasonably humble as we can be.
I do realize that our combined income is well above the national average, so I guess you could say that earning helps with the saving and investing to some degree.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
I graduated from college with about $20 in the bank (this isn’t an exaggeration). I had some credit card debt, but nothing excessive (perhaps $1,000 or $2,000). I paid that off right away and started saving as much as I could in both my 401k and my paycheck.
Also, fairly recently, I had some relatively major expenditures helping my aging parents.
My wife is very smart and had academic scholarships. She took out loans for grad school and anything that wasn’t covered with scholarships. She lived like a college student for years and one day wrote a check and paid off the college loans.
What I’m trying to get across in this question is that we have never increased our spending with our bonuses or raises. We have always tried to not spend.
What are you currently doing to maintain/grow your net worth?
Save, save, save.
Use things until they break. Learn to repair things yourself if you’re the least bit handy.
A new BMW will get you to work in the same time as a maintained 15 year old car with 150,000 miles. One will be a bit more comfortable, but unless there is a safety concern, there is nothing wrong with driving a clunker.
Life happens. Things break. Accidents happen. I was reading a CNBC story about how most people aren’t prepared for a $1,000 emergency. I read another article that said something like, “most people don’t have more than $600 in their bank account”. This is sad. I look at it this way: no one is going to help me when it comes to savings and retirement. Not the company I work for, not the federal government, not my neighbor. Pensions have gone the way of the dinosaur. It’s only me.
I have two financial advisors that I bounce ideas off of. I feel like they are worth their 1% fee. They each control a relatively small amount of my retirement funds, and each has a little bit of an investment account. I like that they can help me diversify some of my capital.
They add value in that they can help me invest in funds that aren’t available on the open market, such as the non-correlated funds. They also help with respect to minimizing taxes. Restated, I feel like having them helps keep me on track.
I don’t NEED them, but it’s nice to have someone confirm that I’m doing what I should be doing.
Do you have a target net worth you are trying to attain?
Nope. Obviously the more the better.
I don’t view it as “well, I hit a net worth of $2 million, time to retire”. I feel like having a high net worth only tells you you’re on track for the future (and especially the unexpected expenses that arise).
What is much more important is how you save and invest and what you spend as opposed to your net worth, alone.
How old were you when you made your first million and have you had any significant behavior shifts since then?
Mid 30’s. It was just another day seeing my net worth cross $1,000,000. I didn’t pop champagne. I just kept living my life and continuing to save.
What money mistakes have you made along the way that others can learn from?
Save for a rainy day. It doesn’t matter what others think of you. You control your destiny.
Don’t loan money to friends or family unless you’re ok not getting it back. There are very limited exceptions to this.
What advice do you have for ESI Money readers on how to become wealthy?
Start saving yesterday.
For your next purchase that isn’t essential, such as grocery shopping, ask yourself two questions:
- “Do I really need it?”
- “Can I afford this?”
Last, but certainly not least, read The Millionaire Next Door
!
FUTURE
What are your plans for the future regarding lifestyle?
As the kids get older, we’ll eventually travel more.
I believe what a high net worth does more than anything is give you some flexibility in life and retirement, especially for the unexpected curveballs that life throws at you. I’m not sweating a $600 surprise medical bill, but sadly many people are.
What are your retirement plans?
Work until I’m about 65.
Healthcare costs have gone up too much for you to retire at 55 or even 60. With my spouse in the healthcare field, I have learned that due to advances in medicine people are living longer, medication is more expensive, and going to the doctor is more expensive.
Also, having spent so much time on our education, we had kids when we were older. I feel like this has pushed back my retirement.
Strangely, I don’t know what I’d do in retirement. Travel abroad, perhaps? I do like tinkering around fixing things and reading.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
I don’t know if it would be a good idea to be retired with kids in college.
Also, healthcare (see previous question for my comments on healthcare costs). The other retirement concern is healthcare. I like to plan for the worst and hope for the best and have assumed that I’ll get $0 for Social Security.
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
My father introduced me to the stock market when I was about 10. I didn’t grow up in an affluent home and saved early and saved often.
It’s probably what I can attribute to why I have the net worth that I do today. I’ve always been interested in investing. ALWAYS.
Who inspired you to excel in life? Who are your heroes?
My parents have sacrificed so much for me. I am doing the same for my children. I am doing what I can for my aging parents and my children, both financially and physically.
Seeing some people start with nothing and becoming CEOs shows me you can really do just about anything if you put your mind to it. A great example here is Jeff Bezos, or Bill Gates, or Warren Buffett.
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 Millionaire Next Door is a great read. If I were President of the US, I’d make it a mandatory book that every student would be required to read before they graduate high school. I think it would help with society in general, and debt/student debt.
It shows you don’t need to go to college to be successful. You don’t need to be a genius, either. You need to be a productive member of society and look at your wallet and think about what you want to do in life.
The Millionaire Next Door is THE BEST at explaining how to help yourself long term.
I also suggest reading and/or watching Warren Buffett’s letters and/or interviews. He gives great investing advice.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
There has been a family issue for the past few years that I’m working on. I have given significantly both money and time to our family. Without my giving and help, they would be absolutely destitute and homeless.
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?
My goal is to raise kids that aren’t total morons. I really hope to be able to finance their undergraduate career fully. If there is anything left over, I’d like it to be just enough to help them get started in life. But not enough to make them greedy and make them feel like they came from wealth. I don’t want them to be spoiled.
If I can become a millionaire after graduating from college with $20, anyone can. It’s being consistent, true to yourself, and thinking long term.
My questions:
Do you think that keeping my financial advisors is worth it?
One helps with my 529 plan and part of my traditional and Roth IRA, the other helps with non-correlated investments, a traditional and a Roth IRA. The non-correlated financial advisor has a fee of $100/account to close the account.
Maybe liquidate some of the account and transfer say 50% of the assets to help reduce the 1% fee he gets? Or does it really matter as it’s such a small percentage of my net worth it?
I would say that both advisors give me good ideas and they’ve help put me in funds and stocks that I would never have invested in. For the diversification I feel like it’s very beneficial. What I do want is a second set of eyes and I feel like they are like an insurance policy.
Thanks for sharing success story —- you and your wife should feel great about how you’ve focused on the power of saving and investing over the years.
Small “steps” move to large “leaps.”
Keep the focus, stay they course and continue to learn how to have fun.
Again, congratulations—- you guys are doing very well.
Really enjoyed your story.
Good job man. I am proud of you. Way to set the example with your dedication and effort.
Great job. Well on your way. I would say keep the advisors. They have done a decent job for you and it is good to have them to bounce ideas. The 1% won’t break your bank at all.
Thanks. Before reading your comment I never thought about how much I was paying them per year and the little bit of money I do spend on them is probably worth it. Definitely cheaper than a therapist for mental health!
“Learn to repair things yourself if you’re the least bit handy.” This is something I’ve done a lot of over the last few years. You’d be surprised what you can do now with YouTube and info on the internet. I’ve fixed a ton of stuff that I would have otherwise paid quite a bit on. Remember they charge you a good markup on the part plus a high labor rate. Its just as much a mindset and principle thing also. — As for the advisors, if you think they are keeping you on the right path, then maybe you could view it as being worth it. But my opinion is there is no free lunch with investing. Or I should say there is no “magic” being done by almost anyone else. Many of the elite hedge funds have under performed as well as many mutual fund managers. Are these “unique” investments they offer going to do better than the S&P or a good growth fund over 10 years? If so, will it beat that return including 1% each year you are paying in fees? At best I bet it will be wash in comparison or maybe even slightly under perform. Plenty of low cost choices out there now including Fidelity’s zero cost funds. I’d step back and give it some more thought on weather paying these advisors are really going to be worth it over the long term.
Yes, these unique investments require a minimum investment of something like $2 million if you aren’t a large firm. Trust me i’ve looked into buying these investments without using an investor and it is next to impossible. Since the virus outbreak, I’m a little happy that I have these investments as they are low return, yet consistent. I am considering reducing the amount of money they are investing, but the truth is the amount of money they get for the 1%/year really isn’t a lot of money and I do like the fact that they let me bounce ideas off of them and they keep me guided toward the finish line. Before the virus I was debating keeping them. Now that we are in an active depression/recession I like having them around, at least for the time being.
Something that jumps out at me is the amount of W2 work you and your spouse are doing on evenings and weekends.
That sounds pretty miserable the way you describe it.
What makes you want to do that until age 65?
Honestly, unless I go into management (which is unlikely), I have peaked in my profession. Starting over in another role would be a drop in salary. Since the virus has hit the US there is a high probability of working from home on weekends, so that’s nice.
Your work-life balance is dizzying to say the least. You have very young kids. Having money is great, but I hope you don’t regret later in life the amount of time you didn’t spend enjoying your life and more importantly, your kids. Congratulations with your portfolio balance and what you’ve achieved so far. Every decision is a choice.
We do spend lots of time with the kids. The truth is we just have little time to ourselves as a couple. I don’t remember the last time we went out for a dinner just the 2 of us. Definitely been a while. Note: since the quarantine I really wonder when we’ll be able to out again. Any guesses?
“Being an adult is hard. Just about every day has something planned and we have little-to-no downtime. But being “senior” people in our careers requires lots of responsibility and sacrifices.”
I chuckled at this but I am sitting here nodding in complete agreement. For most of us, success only comes on the back of hard work and perseverance. If you want more out of life you have to be willing to give more of your life to it. There are few easy roads that lead to prosperity.
I’m about 20 years ahead of you and my wife and I have “the scars of success” but I don’t believe either of us would really change anything. We worked hard and enjoy the fruits of our labor. There is a saying in sports that “you should have nothing left in the tank by the time the game is over” and that is kind of the mentality we have always had with our careers. People will be jealous of your work ethic and there will always be those who want to take their shots at you but just keep your head down and plow forward. In the end, you are the one walking away satisfied that you gave your all and achieved a life you can be proud of. And your children will take notice and that will encourage their strong work ethic along the way.
Great job up to now and good luck moving forward toward achieving your goals! I have no doubt you will continue to be very successful.
@Paper Tiger…….I respect your comment, but “You should have nothing left in the tank by the time the game is over” is defining a win/lose situation in a game of sports – this is real life that involves young children. My dad was never home growing up. Thankfully my mom was a stay at home mom. I was extremely close to my mom, but never really had the opportunity to get very close to my dad. Maybe their children will grow up and notice that their parent’s work ethic had a detrimental effect on them. I certainly hope not, but in his own words, M184 is describing a work-life balance that I don’t think too many would be jealous of regardless of his portfolio balance.
Hi IMHO, my point is, whatever you decide to go after, whether that is being a good parent and/or a good executive, requires giving your all to be your best. My wife and I both have/had executive careers and raised one, well-balanced daughter who is about to complete her Junior year at a Top 25 Public University and has been Dean’s List almost every semester. She is engaged in many activities, has a lot of friends, and seems genuinely happy and well balanced at this point in her life.
Did it take a lot of flexibility, organizing priorities, and hard work? Absolutely! I too had a traveling sales Dad growing up so he was basically a weekend Dad and my Mom had to do most of the raising during the week. Each flourished in their own careers and I never felt lacking in any way. Dad used the weekends to coach on most of my sports teams which gave us a lot of quality time together and also gave Mom a bit of a break. I feel like I learned this balancing act from them.
I just don’t think you have to forego for your children certain aspirations you and your spouse may have if you work together and stay flexible. Yes, our daughter did spend regular time at a Boys and Girls Club as she grew up but that also turned out to be a blessing. She LOVED that club and wound up becoming a staff member and working after school and summers in college. It al led her to her calling of wanting to become a Pediatric Nurse. It also taught her how to “play well with others” and get along with a diverse mix of kids and cultures.
From my experience, success comes from having a strong work ethic and a great attitude, being organized around your priorities, and staying flexible. If you have a great partner and solid communication between the two of you, along with shared values, the hard work pays off in everyone living their best life without making too many tradeoffs.
To each his own and I understand that most people may feel a stay at home parent is a must. However, our family is living proof that the alternative can also be rewarding and successful but it does take pretty much everything you have “in the tank” to pull it off.
Thanks, it’s nice to have a gut check from someone who has experienced the same thing I’ve gone through.
I’m also an engineer (a few years behind you) and it seems a lot of the work/life balance is common. Sure, depending on companies, assignments, and project cycles it can be more or less stressful. Growing up I had a father figure that worked in construction as a GC and he traveled…a lot. But, he had a major influence on me. It’s where I get my work ethic and drive from. I remember calling him many nights when he was away, it’s simply just how it was. But, you know what I also remember? When he was home, he was HOME. Sure, there were plenty of calls organizing men or equipment for plant outages, and things broke which needed his attention so he left to take care of it. But I understand that it’s the nature of a life in this field and it’s provided us with a great life.
In the end, I believe it’s all about balance. I, too, struggle with how I’ll approach this as my kids get older (they’re too young to really notice now but grow very quickly) and I want to find that ‘perfect’ balance. I believe they’ll eventually understand the travel, long hours and sometimes stressful work; but my struggle is how do I ensure that when I’m home, I’m home. They need to remember their father traveling, working on weekends, etc. but I want them to look back and say that it didn’t really matter. That they got the best parts of me, I was there for the important moments, and we combined all of that with a good life provided by the demanding work environment.
My advice is lots of coffee. I haven’t slept well since the kids were born. To me, there is a fine line between working and being the best parent you can be. Right now I’m typing this while trying to break up a fight, my wife is doing telemedicine in the other room, and I need to get back to being a teacher to my kid as it’s all online learning. Maybe I’ll look back at this comment in a few years and laugh. But for now, it’s exhausting, that’s for sure!
I only use “free” advisors. After churning through a few advisors at Fidelity, I finally found one that is competent. Did the same thing at TD Ameritrade. The Vanguard guys suck in my experience so I don’t use their free advisors. You can interview and request new advisors even if they are “free” if you have the assets. Given you are young relative to most clients that have over $1M in investable assets, I suspect firms will be willing to try and please you since you are still aggressively accumulating and could be a client for many decades.
I get good value from my advisors because I drive the agenda. If you leverage their expertise through specific questions and topic areas, they can help you much more effectively. They won’t recommend specific assets but can recommend specific areas which you can research to pick specific assets (e.g. ETFs, etc.) if you ask them. I’ve gotten advise on things such as estate planning, college savings portfolio balance, umbrella insurance needs, timing of roth conversions, tax loss harvesting strategies, etc.
My brother in law uses an advisor and pays a 1% fee because he likes the comfort of a “objective” pair of eyes. He thinks the 1% is worth it but I don’t. Neither answer is wrong, it’s just what you think is best for you.
I’ve tried Fidelity and a couple others. What stuck me as odd is that I honestly felt that I knew more than they did. Almost as if they plugged my age, salary and investment philosophy into a program and read the results. I mean, I can do that. I like the old school guys that take the time to sit and get used to how you think and what makes you tick. It seems like they are a dying breed. The 2 investment professionals are younger, but I get the impression they don’t sit behind a computer and type in generic ideas based on your age (like a program). They actively think about what to do. They can get you with tax advisors, etc. They have contacts throughout the market, be it lawyers, doctors, etc. That in itself is worth the yearly fee.
Agreed, most I’ve initially met haven’t been helpful at all beyond what I already know. My company utilizes Fidelity and for the most part, I feel that they just read a script as you described. I have met one of their regional reps that is constantly booked up yet makes time available for our company a few times a year. I have met with him about every 1-2 years and it’s great. We don’t have to go through the basics (like calling customer support) as he picks up where you are pretty quickly.
I think it’s all about finding the right person to complement your skills/needs that aligns with what you’re willing to pay. Many will argue it’s absurd to pay a financial advisor especially when you’re competent enough to do it all on your own. But, to each their own…
A coworker once told me he dry cleans his work shirts and some pants while only doing the basic laundry simply because he hated doing laundry. I thought this was crazy and expensive, and he asked: “do you know people who pay for lawn care, landscaping, etc?” Sure I do…well, he said, I think that’s ludicrous. His point was he loved being outside or fixing things with his hands so while others may pay for that (which is widely accepted by society) he does not. He hates laundry, can afford to pay someone else to do it, and time is money anyway, right?
You’re definitely on the same page as me!
Wow – so many similarities to me and my wife,, right down to both of our professions. You have done good job keeping expenses low, great job on that. Keep it up! As you are an engineer – suggest Quicken or some spread sheeting to track overall savings/growth. It is good to see you are on track and how close you are to some goal.
Funny, but I’ve found a spreadsheet works best. With my money all over the place i’ve actually found it quite difficult to have one piece of software that aggregates everything. And my advisors aren’t low-tech. Their programs just can’t handle the fact that money isn’t in 1 (or 10) places, it’s all over the place. But, i’ll try Quicken, if it’s free just to see how it works.
Spreadsheet works..but I swear by Quicken (as does Mr ESI). Its not free, but for me it is worth it. You get what you pay for. I click a button daily and every account updates, and it categorizes all my spending which is fun to analyze. I can run a report on anything I want going back 12 years. MINT is free and does much of what Quicken does, but it is all cloud based. I have not used MINT personally but know folks that use it and like it. Good luck on your journey and don’t forget to enjoy those kids to the maximum – they grow quick.
So do you have one file with 12 years worth of transactions? I break mine into years and I wish there was a good way to merge them for comparison.
My Quicken file has every single transaction made since I started using in 2009. All stored in one QXF file. I back up regularly. Literally any money in or out is recorded and every purchase made. Want to know the trend of my electrical utility bills since 2009? click a few buttons and…boom! it’s there. I can call that up in a few seconds. How much have we spent on automobiles over the years? got it. Groceries? got it. You name it, I can call it up.
Although Quicken can do everything, I also have a separate financial summary excel file I also keep. This tracks balances in all accounts, summarizes net worth and forecasts future balances based on past performance. It has every account, account numbers, balances, along with a bunch of trend charts and calculations of my own creation. I update it about once a month. I drop in a new column of balances with a new date every so often, the columns extend back 15 years. In the spreadsheet I have multiple tabs that I use to keep track of stuff that’s interesting, NW trends, savings trends, W2 data year by year. I call this the “keys to kindgom file”. I have told my wife if I bite the dust this file has everything in it she needs to know, where to find the money, the accounts, numbers, life insurance info etc. It is all in there.
I have one excel tab that charts NW over time. I simple enter net worth on 12/31 each year. you could easily create that file if you wanted to and manually enter your summary data.
I am kind of a nerd and enjoy spreadsheeting. Like i said, Quicken (or MINT) can actually do it all for you, with little effort. I highly recommend it.
I find it easier to break it into separate years. The file is just too slow for me when it is too big. Also, too many errors and downloads have caused me to delete a few accounts and start over. I do go back into old files and see what I used to spend, but don’t have much desire to compare electric bills from 2001 to now. 🙂
hmm…Never had any speed or file size issues with mine. My Quicken QDF file is currently at 98MB. Years back i had a few download/connection issues, but Quicken tech support resolved over the phone with some secret reset codes they walked me through. I know from another comment on this site that Mr. ESI has 20+ years of data in his Quicken file. If you are not interested in your electrical bill in 2001 that means you are free of the engineering nerd curse! I can’t relate, but i am often envious of folks that can let go of the details!
I second MI 160; if the advisors give you piece of mind, keep them. Stress is a killer.
Good luck with traveling more when the kids are older! My son is 11 and scheduling travel is more difficult than it was in the past. So many activities require full participation, which means a lot of weekends and much of the summer centers around his activities. Scheduling trips to Rome, Disney, etc. is next to impossible.
I wouldn’t lose sleep. It’s just that it’s a bit like insurance. If I have a worry about the market, or any investment (even something they don’t manage for me), I can typically shoot off an email and hear back within 24 hours. It’s like having a doctor on call, for a fairly low fee.
I’d really like to thank everyone for their kind words. It’s nice to have a place to come to in which people with similar investment philosophies can get together and bounce ideas off of each other. Speaking of which, with what has happened in the world recently, what, if anything, are people doing differently? I feel like the rest of the year is going to be horrible; and that in about 5 years we return to a more “normal”. Between now and then, colleges, public schools, and mom and pop stores are going to have a really rough time. But if you’re investing for the next 30 years, the world will be fine and get better. If your horizon is 5 years, hold on, you’re going to have a really rough ride.
I have done nothing different. I made a few buys, but nothing drastic. I feel once the covid is over, the market will bounce back into the 27K range.
You mention you are saving into your 401k after tax and hope to convert to Roth IRA before 55. I would suggest systematically converting that money now. Most plans will allow for “in-service withdrawals” of after tax money to your Roth IRA a few times per year ( plan specific of course) and you do not have to be 59.5 to do this type of in-service withdrawal. The benefit of doing it now is you only pay tax on the gains, which if you are doing systemically, won’t be very much each time. Now all future gains will be in Roth and tax free. Whereas, if you wait to, say 55, and convert the after tax money , you will have years and years of gains on those contributions and you will owe taxes on those gains at the time of conversion.
I’d recommend getting your 401k Summary Plan Document (SPD) and find out how often they allow for after tax in-service withdrawals. My employer allows them every 6 months. So, like clockwork, I call Fidelity every 6 months and roll to my Roth.
I’d like to hope your advisor(s) are pointing this out to you.
Let me know you have questions. I don’t charge 1% 😜
I 2nd this…convert the money periodically based on plan allowances and/or time you want to dedicate. Once or twice / year seems like a good target.
What difference does it make if the money is in a Roth 401K vs a Roth IRA besides the choices of funds?
This is regarding after tax 401k contributions, not Roth 401k contributions. There is a difference.
Isn’t an after tax 401k contributions a Roth 401K?
There is a difference. I’m not so well versed that I could type out a response to you, but I’m sure there are those on this site that can – or you can just google it.
Contributions to a Roth 401k:
Contributions are tax free when withdrawn.
Gains are tax free when withdrawn.
After Tax Contributions to a traditional 401k (these would typically be contributions after the 19K tax deferred contribution limit up to the 56K 401k total limit on contributions):
Contributions are tax free when withdrawn.
Gains are taxed when withdrawn.
Thanks for the reminder. I haven’t done this in about 2 or 3 years. Do you find that you need to open a new Roth IRA account with Fidelity each time you do a rollover?
I just roll into the same Rollover IRA I have at Vanguard. No need to have multiple IRAs for rollovers.
I applaud you on your work ethic, discipline and successes. I’m much younger and much farther away from where you currently are. I’m currently working 7 days a week / 70 hours a week. Saving massively.
But what I’ve been thinking about lately – and reading your story emphasizes – is: is it really worth it to work all this Time in your youth to have lots of money in your golden years?
Time is the greatest resource. We both seem to have not so much..
Can’t you at least take off every other weekend and have a bit of a life? Or work longer during the day? You have to have some balance.
I am actually taking a weekend of this weekend. First one since February. Agreed I should take more time off, marathon not sprint. But I’m in a unique position right now to make some hay while the sun shines so to speak. Perhaps this guy is in the same position.
Always good to introspect!
What a great read! Congratulations and keep up the good work.
“When it comes to saving, I like to save to the point that what is left over after making all these investments is slightly uncomfortable.” – This gem..words to live by and my thoughts exactly. Great interview.