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.
This interview took place in October.
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 am currently 57 (born 1963) and my wife is 55 (born 1965).
We just celebrated our 32nd wedding anniversary (married since 1988).
Do you have kids/family (if so, how old are they)?
Yes, we have 2 grown children who are out of the house and contributing in their own unique ways to the world.
Our son is currently 29 (born in 1991) and our daughter is 27 (born in 1993).
What area of the country do you live in (and urban or rural)?
We have lived in the same suburban area of a midwestern metro area since we were married.
What is your current net worth?
Our current net worth is around $1.1M (excluding my forthcoming pension and wife’s small business).
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?
Main assets include:
- $640K in my 401(k)
- $310K in our real estate
- $140K in our Roth IRAs
- $50K in cash
Our only debt is $57K left on our primary residence mortgage.
What is your job?
I am a mid-level manager with the Department of Defense (DoD).
I had spent 4 years in the USAF doing aircraft maintenance before I transitioned into a civilian position.
My wife has owned and operated her own small business for just over 5 years.
What is your annual income?
Currently, our annual income is around $140K.
This consists of my $110K salary plus my wife’s $30K small business revenue.
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 real job in 1980 paid me $3800 for the year.
While in the USAF from 1981-1985 I made between $6-9K per year.
When I left the USAF and became a civilian for the DoD, my income increased to $22K in 1986.
The 1990s saw an average income of $45K.
The first 10 years of the 2000s was an average of $72K, and the last 10 years, an average of $100K.
The rise in income can be attributed to getting a secure position, working diligently, and riding the federal pay scale, which provides within grade increase on a regular basis and usually an annual cost of living adjustment (COLA).
What tips do you have for others who want to grow their career-related income?
My biggest regret, and best tip, is to nurture work relationships and to remain in touch with former co-workers as you progress in your career.
I think there would have been many more opportunities if I had stayed in touch with people and built a stronger network.
What’s your work-life balance look like?
My work-life balance has been very good overall. Working for the government has allowed me fairly set hours and predictable travel. I was able to be home for breakfast and dinner with the family unless out of town on business travel.
Lately, since I have been full-time teleworking, my work-life balance has improved even more as daily commuting time has been eliminated.
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?
Right now the only sources of income are my salary and my wife’s business revenue.
When I retire, I will receive a life-long pension of around $4K per month.
What is your annual spending?
Our annual spending is currently around $75K per year.
This includes every expenditure as tracked in Quicken.
What are the main categories (expenses) this spending breaks into?
Over the last 3 years our average spending looks like this:
- Savings – 30% (pay yourself first, right?)
- Income Taxes – 18%
- Misc – 17%
- Shelter – 11%
- Auto – 7%
- Food – 6%
- Giving – 5%
- Medical – 4%
- Recreation – 2%
Do you have a budget? If so, how do you implement it?
We really don’t have a budget per se. I don’t like that term and prefer “spending plan”. We know what we generally spend in each area, and I monitor spending weekly / monthly to make sure we maintain a positive cash flow.
A helpful tip that has worked for our marriage is that we each get some money every week to spend however we want. This has eliminated most of the “why did you buy that?” discussions that were typical early in our marriage.
What percentage of your gross income do you save and how has that changed over time?
Currently, we’re saving at least 30% which is the most we have ever saved. I attribute this to making the most we ever have and to being empty nesters.
I’m contributing the maximum to both my 401(k) and Roth IRA.
What’s your best tip for saving (accumulating) money?
My best tip for saving money is to categorize it just like any other category in your spending plan. This technique is commonly known as “pay yourself first.”
If you plan to save what is left over, you probably will not save much when compared to prioritizing your savings and actually paying yourself first.
What’s your best tip for spending less money?
The ability to distinguish between genuine needs and wants.
For example, I NEED some form of transportation. My 2010 Toyota Camry does the job just fine. Of course I WANT something newer and nicer, like a 2020 Toyota Avalon, but that would cost more and thus reduce money going to more important things.
What is your favorite thing to spend money on/your secret splurge?
I love to spend / invest in personal educational pursuits that have a direct bearing on quality of life.
For example, I just invested in a dividend stock investing course. As a result I bought some positions that met my new dividend stock investing criteria. It’s been enjoyable receiving regular dividend payments within my Roth IRA.
Another recent example is my investment in the Millionaire Money Mentor Forum here with ESI. 🙂
What is your investment philosophy/plan?
My investment philosophy and plan is to keep it simple. Only invest in things you understand.
I’ve only ever held a few investments after making sure I understood what they were. All investments have been held within my 401(k) and Roth IRA.
What has been your best investment?
My best investment has clearly been my career which includes a 401(k) benefit.
This is especially true when one considers the matching funds for my 401(k) contributions.
What has been your worst investment?
Investing too conservatively when younger.
I started my 401(k) by investing in the Government Securities option which just didn’t grow like the equity options I could have invested in.
What’s been your overall return?
Over the past 10 years, my 401(k) has returned an average of 7% and my Roth IRA has had a return of about 6%.
How often do you monitor/review your portfolio?
I take a look at Personal Capital and eMoney at least once a week to see how things are progressing.
I also reconcile every monthly / quarterly / annual statement for each account.
How did you accumulate your net worth?
Started early by investing in a 401(k) and Roth IRA as soon as employed, bought real estate (house) as soon as prudent, and stayed away from consumer debt, which I define as borrowing money to purchase anything that declines in value.
We have also always purchased used vehicles and kept them for long periods of time.
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 “save” since we have been fairly frugal and built our net worth on a very average income over the past 30 years.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
The stock market losses in 2008 and 2018 were not fun. I have probably invested more conservatively because of those experiences.
It is worth noting that over time the markets have always recovered.
What are you currently doing to maintain/grow your net worth?
Re-looking at asset allocation as we consider moving into retirement.
Distribution of assets looks to be a whole different game than accumulating them.
As stated above, I’ve also started dividend stock investing and really enjoy the process and rewards.
Do you have a target net worth you are trying to attain?
Ever since my mid-20s I’ve had the goal to become a millionaire. Now that I’ve reached that goal, I’m fairly satisfied.
Going forward, I just want to minimize taxes and live life to its fullest without focusing on money so much.
It seems like I’m transitioning to where time is becoming more important than money.
How old were you when you made your first million and have you had any significant behavior shifts since then?
Excluding my pension benefit, I achieved a net worth of a million dollars in 2018 at age 55.
The downturn in the markets later that year reduced my net worth slightly, but it has since recovered.
I have recently shifted my investments to a more conservative stance in preparation for retirement.
What money mistakes have you made along the way that others can learn from?
I would have invested more aggressively when younger.
When I started investing in my 401(k), it was in the conservative government securities fund instead of the stock market alternatives. Based on a historical perspective, I believe I would have become a millionaire much sooner had I invested more aggressively.
What advice do you have for ESI Money readers on how to become wealthy?
The same advice found on the ESI Money blog which is:
- EARN and increase those earnings
- SAVE by paying yourself first
- INVEST in knowledge and then in whatever investment vehicles you understand
What are your plans for the future regarding lifestyle?
I plan to retire in a few months at the end of my 57th year of life and just over 39 years of service.
My wife and I are investigating where we will live and what we will be doing in retirement.
I feel strongly that this should be the best time in life, where we have our health and the resources to do what we choose to do.
Regardless of where we choose to live, and what we do, my pension and our investments should allow for a comfortable lifestyle. My wife now has the option to continue with her business or move on to something else.
What are your retirement plans?
Certainly moving from an accumulation phase to a distribution phase regarding finances.
The biggest challenge for me seems to be finding ways to contribute to the world once retired.
I’ve been communicating with friends who are already retired about what their life looks like post-retirement. Most of them have told me they don’t know how they found time to work before retiring!
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Not really. I just want to maintain my health and live the best life possible.
I also am seeking ways to give back to society in my retirement years.
How did you learn about finances and at what age did it “click”?
I was fortunate to have a mentor in my early 20s who taught me practical Biblical financial principles. At the time I met him I was paying on a new $8K auto loan and starting to accumulate credit card debt. With my mentor, I set a goal to be debt free within a few months. Thanks to the teaching of my mentor, and applying what he taught me, I was able to achieve that goal by focusing on debt repayment as a priority.
Ever since then I have continued to study and learn about personal finance. I’ve also had the opportunity to share with others by leading several different financial studies over the years.
Who inspired you to excel in life? Who are your heroes?
I think growing up poor incentivized me to pursue wealth and become a millionaire.
My heroes are those who have learned the important lessons of life and are passing those important principles on to others. People like the late Zig Ziglar and Jim Rohn come to mind.
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?
Yes, I really like some of the same books as recommended by the ESI Money blog.
The Millionaire Next Door was very motivating and instructional for me. Now I am the millionaire next door!
Also, The Richest Man in Babylon was enjoyable since I love fiction that teaches sound principles.
Finally, The Automatic Millionaire is great because it teaches one of the most important steps to reaching financial goals…automating what you can so you take the emotional decision making out of the picture.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Yes, we have given around 10% of our income to church and missionaries over our married years.
Currently, we are shifting most of our giving to my wife’s parents since they have very little income in retirement. They live in a foreign country which has no real “safety net” like the United States.
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 plan to leave some kind of an inheritance to our heirs but are just starting to think through what that looks like beyond our immediate two children. We have already helped our son and daughter by providing them with 0% loans for major purchases (cars, etc.) and launched them into the world with bachelor degrees and no debt.
We would like to leave an inheritance to any future grandchildren (none yet) to help them realize their educational, business, real estate or investment desires.
Our primary reason for this desire / plan is found in an old Hebrew Bible passage. Proverbs 13.22a says, “A good man leaves an inheritance to his children’s children…”