The following is a millionaire interview I first published on a previous site.
I have several of these interviews, conducted over the past several years, that I now want to place on ESI Money (so they are all in one place).
I’ve been posting them every now and then, but would like to get them all completed soon, so you’ll see more of these in the next few weeks. All great stuff!
This interview was originally posted in December 2013. I have since lost touch with the interviewee.
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 their responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am 43, my wife is 41.
We have been married 13 years.
Do you have kids/family (if so, how old are they)?
We have two daughters, 8 & 6
What area of the country do you live in (and urban or rural)?
What is your current net worth?
We are obviously just north of one million, and a swoon in the market might knock us back under that number temporarily.
But we are here now, and plan to keep going.
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?
- Cash on hand, plus retirement & college savings (pre and post tax): $650,084
- Home value: $360,000
- Auto values: $42,377
Total assets: $1,052,461
- Mortgage: $34,166
- Auto loans: $9,796
Total liabilities: $43,962
Net Worth: $1,008,499
What is your job (type of work and level)?
Sales, executive level for small firm.
What is your annual income?
$115,000 him, $40,000 her working part time.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
What have you done to grow your career/earnings?
- Always beat the expectations you establish. If you tell someone you will have a project completed in a week, deliver it in five days.
- Smile – even when talking on the phone. People can tell.
- Feel free to negotiate salary and/or annual performance reviews – once you have proven success.
- Every once in a while, dump the email and pick up the phone and/or write a letter. Who doesn’t like getting a letter in the mail?
- Don’t use another job offer to force an employer to retain you or increase your salary. Either decline the offer, or accept it. Be dignified.
What is your annual spending?
We have been able to save approximately 35% of net income, so spending is approx. 65% of net income.
How did you accumulate your net worth?
We both entered into our relationship with very little debt and began participating in company 401k plans immediately. This allowed us to start saving and establishing goals early on.
I feel for individuals and/or couples just starting out that are already carrying massive student loan debt. That’s a serious disadvantage, and a pretty significant barrier to financial independence.
We purchased a starter home around the time we got married that appreciated wildly and we sold out at the peak of the market for a six-figure gain. We used the entire profit to pay over 30% down on a larger home as we began growing our family.
We pushed ourselves to go with a 15-year mortgage, plus have paid additional against the principle every month. Now, almost seven years in, we are on track to pay off the mortgage in 2014.
Our mortgage balance is currently less than what many people pay for a new, large, family SUV.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
I don’t feel wealthy, but do feel secure and content.
Find a spouse that is on the same page financially. That is by far the best advice I can give.
Control your fixed costs. My wife and I are in the “no debt” camp. I understand others may not agree with our strategy to pay off our mortgage so aggressively.
My reply to that is twofold:
- I have never heard any person who has paid off their mortgage express regret.
- I consider paying off the mortgage a hedge against my retirement investments.
Two thirds of my net worth is somehow invested in the market (401k, 529 plan, taxable brokerage, etc..). One third of my net worth is invested in my home. Just looking at the past 5 years of my own 401k plan, I see returns of +18.7%, -5.7%, +18.9%, +43.3%, and -44.6%.
At the same time, I see my home value has modestly increased 8-10% (my area of the country did not see the wild swings in the housing market some areas experienced) and the balance of my mortgage has steadily decreased. This gives me quite a bit of financial security, regardless what occurs in the market (personally, I’m hoping for another significant market correction in the next few years).
What are you currently doing to maintain/grow your net worth?
Steady diet of saving every month and reducing liabilities every month. As we are still in the midst of careers, we have not spent too much time determining on how to grow net worth further. When we pay off our mortgage in 2014, we have some interest in investing freed up funds into local, rental properties. I have enjoyed reading the details of ESI’s rental property strategies.
For us, the 2008 meltdown in the market was a blessing. So long as you didn’t (1) remove money from your 401k, (2) stop contributing or reduce your contribution, or (3) retire around that time – then you should have made out great (assumes you have a well-diversified 401k plan).
I think the lesson is to press forward and contribute as much as possible to 401k and/or Roth plans and don’t concern yourself with the overall year to year returns until you are nearing retirement. Also, don’t ever borrow money from your retirement plan.
Do you have a target net worth you are trying to attain?
About three million adjusted for inflation is our goal to have a retirement where we don’t need to work to fund our activities, travel and health care costs.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
We are just keeping our heads down and feel we are on track for a retirement in our early sixties.
We are open to exploring other ways to expedite retirement and move that target date up five years or so.
Is there any advice you have for ESI readers regarding wealth accumulation?
Determine what’s important to you and your spouse. Spend and enjoy money on those things (for us, it’s family travel and gym membership).
Ruthlessly save and slash on items not as important (for us: cars, jewelry, expensive clothes, decorating the house).