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 his responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
55 and 54 respectively. Married 31 years.
Do you have kids/family (if so, how old are they)?
Two grown children ages 26 and 24.
What area of the country do you live in (and urban or rural)?
Southeast
What is your current net worth?
$2.1MM+
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?
- Stocks: $1.5MM
- Bonds/cash: $250K
- House: $350K
- Misc.: $75K
What is your job (type of work and level)?
Corporate finance executive.
What is your annual income?
$200K+
How did you grow your income so high?
The best thing that I ever did career wise was to get my MBA (10 yrs. after getting undergrad degree). This opened up opportunities to me that would not have been available otherwise. Thus my first 10 years out of college were relatively stagnant career and income wise.
Obviously working extremely hard is table stakes for success. The other key is to learn your business, build relationships, and be proactive in exerting leadership on a daily basis. Be a problem solver not a problem finder.
When you are starting out, it’s critical to learn about other parts of your business besides your current scope. Seek out opportunities to interact with leadership and to build relationships with others in your organization. And exert leadership on projects or other applicable areas. Step up to fill gaps and get stuff done. I see many young associates who stay locked in their cube from 9-5. You need to get out of the cube and interact. This lays the groundwork for advancement.
[Editor’s note: This is what I call over-performing. Those who do more get paid more and receive higher raises.]
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
My job.
What is your annual spending and what are the main expenses you have?
Our base spending has dropped since the kids are out of the house. We now average around $50K per year for all living expenses and about $5K-$8K for vacations.
We paid off our mortgage 3 years ago and also fully funded both children’s college education and one child’s masters degree which cost us a total of about $200K+.
We also recently purchased two near-new vehicles and paid about $60K in cash. Now totally debt free.
How did you accumulate your net worth?
My net worth was achieved by simple ESI. I worked hard and that paid off in gradual increases in my compensation. But the big factors were:
1) We always saved from day 1 and this forced us to get used to living below our means.
2) Whenever I got a raise, it was allocated to increased savings whenever possible vs. simply increasing our lifestyle and spending.
3) Bonuses and any tax refunds were almost always treated as windfalls to savings and not spent.
4) Since my mid-30’s I’ve always maxed out my 401K. (wish that I started earlier).
5) My MBA focus was in finance and I became a student of the markets at an early age. I also had some great professors that taught the futility of trying to beat the markets and the benefits of indexing (this was in the early 90’s so well ahead of the curve here). So when I refer above to “savings”, I really mean investing in the stock market via mutual funds. While early on I did dabble quite heavily in actively managed funds, over the years I’ve gradually weaned my portfolio to be heavily indexed. My investments have always been 100% stocks with zero bonds. I have only recently been building up some cash and short term bonds to restructure my portfolio for retirement and to provide a buffer against any sequence of returns risk. Except for very early on, I never buy stocks directly.
6) We avoided debt whenever possible. Besides a mortgage and some car loans early on we never financed anything or accumulated credit card debt. We always bought slightly used cars and either financed and paid it off early or paid cash. And we always drive them until the wheels fall off.
7) Have a plan! In my mid 30’s, my company was going through a merger and many people were being laid off. During this very stressful time, an older guy in his 50’s (that used to be old) collapsed in his cube and had a heart attack. He had kids in college and needed his job badly. Well he survived but that made a huge impact on me. I then built a spreadsheet to track my investments and net worth and established the goal to reach $1MM by age 55 and to retire. I did not want to be that guy. Well I reached this goal several years ago and I’m only still working because I enjoy it and I choose to. You cannot reach your goals without a plan! It’s critical to have a plan and track your progress.
What money mistakes have you made along the way that others can learn from (or something you’d do differently)?
In my mid 20’s (before MBA), I followed a tip from one of the executives at my company and I purchased $10K of stock in a small company. This was basically all of our savings but I was assured that it was a sure thing. They were developing this product that was going to change their industry…blah…blah…blah.
Well guess what? The stock doubled and I sold and pocketed a cool $10K profit. So I obviously was a genius and I became an instant expert on the stock market. When the stock dipped guess what I did? I bought back in but just with $10K, playing with house money…smart investing. Well the stock continued to dip which made it even more attractive (so said the executives) so I eventually put about $15K more into it. Well we all know how this ends. The company eventually went bankrupt and I lost all $15K. This however was the best $15K I ever spent because it taught me some very valuable lessons:
1) I learned about NOL carryforwards (expensive lesson)
2) I learned that I knew nothing about investing or the markets. But this exposure gave me a huge appetite to learn about this mysterious money machine and about how the economy works. This is what actually pushed me to get my MBA and focus on finance and investments.
3) I learned that a stock can indeed go to zero. Prior to this many people had told me that it could never happen.
4) I learned first-hand the value of diversification.
I’m very grateful that I learned this lesson at 26 versus 36 or 46. If it had been later in life I’m sure that the losses would have been much greater than $15K.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
Back in the day getting an MBA was one of the best ways to equip yourself with the knowledge that you needed to maneuver through the investing landscape. This is not the case today. There is so much information readily available on personal finance that it is incumbent on everyone to get knowledgeable on this stuff. It’s really not very complicated but it does take some effort to get educated and the discipline to live responsibly within your means.
What are you currently doing to maintain/grow your net worth?
Earn as much as I can before retirement.
Do you have a target net worth you are trying to attain?
Not really but $2.5MM sounds nice.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
I feel very fortunate to be financially independent and to be in a position to retire at any time. It’s a great feeling to have the heavy lifting done (mortgage paid off, kids’ college done, etc.) As soon as I no longer enjoy my current role I plan to retire from career A and move on to plan B which might include teaching, coaching, or who knows what.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
The best advice is ESI. It takes hard work and discipline but it’s not rocket science.
There is no shortcut unless you win the lottery or have a trust fund.
Amy @ Life Zemplified says
Thanks for sharing your story #21, well done!
Have you spent much of your career at the same company or have you changed organizations a few times for increasing responsibilities and salary?
With your high income and low spending, it seems you’ll hit $2.5MM soon. Do you have any plans for extensive travel if and when you leave career A?
Snowdog says
Amy, I have switched jobs several times along the way. Some due to re-orgs and some to proactively take advantage of better opportunities. And yes, we definitely have some plans traveling. I’m looking forward to it?
Paper Tiger says
MI 21, congrats on your success. Your experience resonates with me in many ways. I too felt the value of my MBA was a real accelerator in a number of ways. My gap between BS and MBA was even wider than yours at 24 years. I certainly was a better student and more engaged in the curriculum the second time around!
Planning and having goals to work toward is certainly a critical part to achieving FI, as you so eloquently point out. We all need the motivation to fuel our drive and having goal numbers and a spreadsheet to track our progress makes a big difference. Kudos to you and your wife as well for funding 3 degrees for your two children. What an awesome gift for them not to have school debt to worry about right after they graduate. Our daughter just began her Freshman year and we have money in a 529 to pay for both her BS and MS and feel blessed we can do that for her as well.
I retired from my primary career after 36 years and on to my second career as an entrepreneur with some guys I used to work with and highly respect. It has certainly been a learning experience over the last couple of years, with several peaks and valleys, but also one that has been exciting and hopefully very fulfilling in the days ahead.
Good luck and continued success toward your current goals and new goals to come!
Snowdog says
Thanks Paper Tiger. I was also much more motivated in graduate school. Undergrad GPA of 2.7 vs. grad school 3.9. Having work experience and concrete goals makes a big difference.
Dave says
Great interview. It was inspiring to read how you built your wealth by way of esi. That is the path that I am on. I related to the fear of desperately needing a job after age 50. I am doing everything I can to avoid that predicament.
Snowdog says
Thanks Dave. I would also like to note that my wife was a stay at home mom, and my income was fairly modest until the last 3-4 years. While we tried to balance enjoying the journey while socking money away, that relatively early start with an aggressive bias towards equities has really paid off.
Dads Dollars Debts says
Congrats. A 50K spending is a nice retirement budget. I am sure when you do stop working your spouse and you will enjoy a good quality of life.
Regarding kids educations. Was 200K enough for all 3 degrees (2 undergrad and 1 masters)? Were they at state schools? I am always curious about this because it is so hard to predict how much kids will need for college (particularly considering my son is 2 now). I always thought I should put 100K in the 529 and watch it grow. I would assume that would be more then enough, but who knows.
Paper Tiger says
DDD, for what it’s worth, I started a 529 for our daughter when she was 2. I steadily put in $800/month in an S&P500 Index Fund and did this for about 16 years. I stopped about a year ago as I needed the extra cash flow for a new business venture. The fund has grown to a little over 300K and at about 50K/yr, that will cover her out of state, top 50, undergrad education and her two years of graduate school.
Unfortunately, if costs keep rising 3-5% per year, your little guy’s education will cost considerably more unless he stays in-state. Had our daughter chosen our in-state PAC 12 school, she would have saved us a little over 30K per year (25K less per year in tuition and a 6K per year scholarship she received). But of course, she had other ideas and we were glad to be in the position to support her. For what she wants to do, her choice was a better fit, regardless of the added cost.
Snowdog says
Yes fortunately they went to state schools. My numbers are estimates but I recall each kid running about $20K per year all in. They did get some partial scholarships that helped a bit. My daughter also lived at home during part of her masters program and that cost us about $40K. To Paper Tigers point above, college has tracked a ~5% inflation rate so plan accordingly.
Ms99to1percent says
Hi M21,
Thanks for sharing your inspiring story. I really learned a lot.
Question: Do you also have a CPA or a CFA,…? I have a CPA and I’m wondering if I should also look into getting an MBA. And what kind of MBA did you get? Are those expensive Ivy League MBA’s worth the cost?
Jeff B. says
It depends one what you are doing now and what you want to be doing. My wife is a CPA, but never needed her MBA.
Ms99to1percent says
That’s good to hear ?
David says
I agree with Jeff B. It depends on your career choice. I am a CPA, used it for the first 10 years of my career and then moved into Risk Management and haven’t needed it since. I never got an MBA as was already an Exec and it wasn’t going to help me. The CPA got me into public accounting where my next job was a client that I had. So depending on your career a CPA or MBA may be more valuable.
Ms99to1percent says
That’s good to hear ?
Snowdog says
I do not have a CPA. My career has leaned on the finance side. My MBA has a concentration in Finance and investment management. It was from a well regarded state school so no Ivy league credentials here. I’m sure the expensive schools may be worth the cost if you’re plan is investment banking/Wall Street. Otherwise I’m not sure. However, I do have a strong opinion that an MBA from a bricks and mortar university is much stronger than an online degree. I know the lines are blurred these days but I see a lot of discounting going on in the marketplace for online degrees from hiring managers.
Ms99to1percent says
Thanks for answering my question. If I get an employer to pay for the MBA, I will consider it.
GCS says
Great story. Your point about you and your spouse managing the formula on a modest income until the last 3 or 4 years seems to be a common trait in many of these millionaire stories. I’m just one year older than you, have been with the same company for almost 32 years and have made significantly more in the past 4-5 years than early on. For me, this is what makes the decision to retire now or wait 1-2 more years a tough one.
Congrats!
Snowdog says
GCS, the retirement decision is very tough when you’re making good money and enjoying what you’re doing. I’m enjoying my current gig more than any other in my career Since giving this interview I’ve added even more to the stash and I never thought I would be working once I hit this level. As I said in the interview, 55 was my retirement goal for 20 years. I just turned 56 and I can’t get myself to walk away. I don’t think it qualifies as OMY syndrome since I’m enjoying my role. However, it is stressful, and there are other things I’d like to do before I drop dead so I can’t see my continuing in plan “A” for more than perhaps a year. We’ll see.
GCS says
50% of my all in comp is in the form of an annual bonus and annual stock grants. This makes the OMY syndrome a very nasty culprit to fight off. I’m not complaining, it is a good dilemma to have….
Entrepreneur says
I think this is probably a more common dilemma than people realize. I’m making 30x as much today as I made when I graduated college. I started as a teacher in a poor school district and move into software, so an extreme example, but the general phenomenon that your current year is your best year ever is quite common. Despite saving aggressively for years, my wife and I will earn about 15% of our total net worth just this year (post-tax).
Jay says
Great stories and comments by everyone. My dilemma I pose to MI 21 and all:
I am 55, I have over 1.2m. I have made my mistakes along with some bad luck.
I have essentially had parallel goals. Goal 1, work to 62 and maintain my lifestyle. Goal 2, semi retire now. Semi retirement would mean, doing as much consulting as I can get or care to do. Challenges for me include 1) healthcare as I have a congenital heart disease and 2) I currently rent in los angeles.
If I were to retire now I would leave LA.
Been unsure if and where I should buy a home. If that is wise. I am single, no kids. My job is interesting but stressful, so I’d want to leave it soon possibly.
Any thoughts re: subsequent course of action?
Thanks
GCS says
Jay- where to move is a personal decision based on many factors. With a little research you could probably narrow it down to 4-6 options where quality of life is outstanding and home ownership likely signicantly less than renting in LA.
Here is one thought, locate the market you want to live in, buy a duplex, live in one half and rent the other side for 60-70% of your mortgage payment. Rates are still very low so with a reasonable down payment could pull this off.
jay says
Thanks GCS. Great points. I have lived in Atlanta so perhaps I could get a good value in a suburb there again. I am not sure if I would want a house or condo, but a house seems appealing and then I can rent out a room which would provide income and hopefully decent company. Or I can help family if needed. Of course I have heard good things about St Pete (pre hurricane) and AARP says Daytona beach good value. And then there is metro Nashville. probably good value.
I’d like to put my dream/plan into action even if I don’t do it today.
My family is on long island NY, but high cost of living there too.
Obviously we are all looking for the same thing in some way or another and that is to have the freedom to live decent and not HAVE to work. Always good to have that exit plan when needed.
I make the assumption that healthcare premiums would be 1,000 per month, but it is still a wildcard.
thanks
Snowdog says
Jay, sounds like you have a lot of flexibility in terms of areas that you are willing to consider. You can definitely get a lot more for the money in Atlanta and Nashville. Not sure about FLA. Also sounds like you have the resources to pull the plug any time. Congratulations!
GCS says
If you have an attraction to the SE US Asheville NC is a beautiful area with a very reasonsble cost of living. So is NW Arkansas in the Bentonville/Rogers area. Some nice lakeside communities, very low tax structure, reasonable housing cost. This is the backyard of corporate Walmart so some pretty decent civic and entertainment choices for a relatively small population base. U of A is just 20 miles down the road in Fayetteville.
The Green Swan says
Great interview, Snowdog, and nice journey toward FI! I’m sure it does feel great having the heavy lifting done (mtg, kids college, etc) and sitting on a nice nest-egg! I too noticed a significant take-off in salary after my MBA. Hard to say it is directly correlated, but it has certainly paid off. Keep rolling in that dough until your satisfied, then enjoy the early retirement!
snowdog says
Green Swan, sorry I’m just seeing this comment. Yes the feeling is great. I’m still socking away cash and getting ready to pull the plug. I’m thinking February 2019 (got to get the bonus). It’s really strange to contemplate retiring. I do really love my job, but I commute out of town each week Mon-Fri and it’s taking it’s toll and I’m feeling the burnout. The NW is now just shy of $3MM so I think we’ll be fine. Hey I really enjoy your blog. I can also relate to the burnout you spoke of. I’ve been involved in several M&A deals and they do suck the life out of you as they are all consuming. I’ve definitely lost the passion…as you said…been there and done that.
Lily | The Frugal Gene says
Lol @ your name SnowDog!
I’ve been interested in going back to graduate school for a finance degree (if things don’t pan out in 20 years and I’ll be 46). At the current price tag of education, it’s a hard pill for me to swallow. How much did your grad degree cost?
Congrats on a lifetime of success and finding love! Hehe!
snowdog says
lily, so sorry for the very late response. Just noticed this. I honestly do not remember the cost as it was 26 years ago. I went to a fairly highly rated state school and I was able to cash flow the tuition payments so I never went into debt. I do remember that it was fairly reasonable however. I would be careful about student loans.