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 November.
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 52 and my wife is 51.
We’ve been married for 17 years.
Do you have kids/family (if so, how old are they)?
We have one daughter who is 16.
What area of the country do you live in (and urban or rural)?
We are in the Seattle area at the northern end of Lake Washington.
It’s a suburban area.
What is your current net worth?
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?
Our only real estate holding is our residence, which is worth $766,000 and has a $491,000 mortgage.
We have two cars. One is paid off and one will be paid off within a year. The loan balance on that one is $54,000 currently and it’s at 1.25% interest.
We have various retirement accounts – Roth IRAs, rollover IRAs, and contributory IRAs. These were rolled over from 401(k) plans at previous employers. I have a 401(k) at my current job and my wife, who works for the University Of Washington, has a 403(b). Total value of all these accounts is $725,000.
We also have various taxable brokerage accounts for our emergency fund and general savings totaling $80,000.
We have set up a Uniform Trust For Minors account to pay for my daughter’s college and that is about $255,000. I suppose technically that isn’t part of our net worth since it’s a UTMA, but I include it.
Various other bank accounts totaling around $15,000.
The car loan and mortgage are our only debts. We use credit cards for the cash back rewards but pay them off in full each month.
What is your job?
I am a senior level database administrator with over 20 years experience in that role.
My wife is an assistant vice provost with 15 years experience in the administration side of higher education.
What is your annual income?
I make $147,000 a year and my wife makes $175,000 for a total of $322,000 annually, pre-tax.
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 out of college was a Junior Hardware Engineer in 1993 and I made $25,000.
After working for three different companies in the hardware engineering field, I was making $40,000 by 1997.
At that point, I switched over to software and started working as a database developer for $45,000. I stayed on the development side for a couple of years working up to $65,000 in 1999.
An opportunity to try management opened up at my company and I took it. I spent a few months as a manager making $85,000 before deciding it wasn’t for me and moved back into database development for a drop in pay to $70,000.
I wasted 5 years from 2000 to 2005 working at a company that had a salary freeze in place the entire time I was there, so my salary stagnated (went down really, when you consider inflation).
Finally, in 2005, I made the move from database developer to database administrator for $75,000. I worked for various companies in that role until 2016, eventually raising my salary to $110,000.
After my wife got a job offer in Washington, we left Arizona and I took a job in the tech-heavy Seattle area for $140,000. I’ve been here 3 years now and my salary is $147,000 with a possible 10% bonus each year. Last year, I received a $10,000 bonus.
Nothing earth-shaking about my path. Whenever I changed jobs, I tried to do so only if I could also increase my salary – with that one exception of getting out of management.
My wife’s salary history is somewhat more dramatic than mine.
She started her career as a music teacher in elementary and high school, where she was earning from $24,000 to $32,000 a year.
She made the switch to working as a program supervisor in a music arts non-profit, then into a similar supervisor role for the Physics department at Arizona State University, where she made $54,000. After rising to Program Manager, she moved to Director of Academic Personnel at ASU, making $80,000.
She was then recruited to her current position at University of Washington for $168,000. Yes, more than doubling her salary. When she got the offer, there was no hesitation – we packed our bags and moved!
What tips do you have for others who want to grow their career-related income?
Keep educating yourself.
Don’t be afraid to change careers if you think you will enjoy doing something else more. Even if it involves a temporary salary decrease, if you enjoy it more, you’ll likely do better and the money will follow.
Don’t stay with a company for years, hoping for a bigger salary. The days of staying with one employer for most of your life are gone. You’ll get the biggest increases in salary by changing jobs every few years.
What’s your work-life balance look like?
It’s actually pretty good right now.
Being in IT, I am technically on-call all the time, but I’ve managed to get things running smoothly so that issues rarely crop up. Wanting to avoid those after hours phone calls is a great motivator to make sure stuff is working correctly.
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?
Nothing that brings in significant amounts of money.
For a couple of years, I had a fairly passive side hustle of teaching on-line courses. They were all pre-recorded videos, so once they were made, I didn’t need to do anything other than answer the occasional question from a student. That brought in a total of $11,000 over two years.
The material is mostly out of date now and I don’t want to spend the time to update it, so that income stream has dropped off.
What is your annual spending?
You know, I haven’t actually run the numbers on that! I have a monthly budget that I find more useful.
Looking at that, we have more-or-less fixed expenses of $7,800 per month, so that would be a spend of $93,600 per year. But that includes a lot of things that can be reduced – eating out at restaurants, subscriptions, etc.
We have another $9,000 per month or $108,000 per year that goes into savings for one thing or another – emergency fund, vacations, home improvements, plane tickets to visit family on holidays, etc. So that works out to annual expenses / savings of $201,600 on an annual take home pay (i.e. after taxes, retirement plan deductions, etc.) of $204,000.
What are the main categories (expenses) this spending breaks into?
Utilities, food, and mortgage are about $4,600 per month or $55,200 annually.
Our mortgage is roughly 50% of that mainly because housing is so expensive in the Seattle area.
Do you have a budget? If so, how do you implement it?
I can honestly say that creating and sticking to a budget was the most important thing I ever did to get our finances under control.
I put all my accounts into Mint.com and tracked my spending for a few months. Once I had that baseline, I was able to use those numbers to get a very clear view of how our money was being spent, which allowed me to make a realistic budget.
I didn’t do anything fancy to create it. My budget is just an Excel spreadsheet.
What percentage of your gross income do you save and how has that changed over time?
Our savings rate right now is 23% of our take home pay and has been at that level for a couple of years.
When I started budgeting, we were probably down in the 7% – 10% range, but we were able to increase it through salary increases and getting control over our spending. Anytime I got a raise, I increased our savings rate.
Of course, we are also saving pre-tax through our employers. My wife is contributing the maximum amount in her 403(b), which is 10%. I am funding just enough in my 401(k) to get the full company match.
The reason I’m not saving more there is I’m not a fan of the investment choices in my 401(k), so I’d rather save on my own, even if that means using post-tax dollars.
If you are following along, it may seem like the numbers don’t add up. A few questions earlier, I said we save $108,000 yearly, which would seem to be close to a 50% savings rate. The discrepancy is due to varying ways I am defining “savings.” That bigger number includes savings for things like vacations – money that will eventually get spent in the short- to medium- term timeframe. But the 23% figure is money that goes into long-term savings – for things like retirement and not earmarked for any specific goal.
What’s your best tip for saving (accumulating) money?
If you don’t know where your money is going, it’s hard to control it. Make a budget and be sure it includes putting aside some of your income into savings.
Pay yourself first by transferring that money into a savings or brokerage account before paying any other bills.
What’s your best tip for spending less money?
You have to want to spend less.
Either have a goal you are saving for or a target amount you want to reach. You need something to motivate you to save, something that will give you a reason to save, instead of spend, your money.
What is your favorite thing to spend money on/your secret splurge?
We LOVE going to Las Vegas to gamble and be pampered with spa treatments.
Pre-COVID, we went twice a year and we’ve reached the point where we get really sweet deals – limos to / from the airport, VIP check-in, free rooms, free meals. Our trips to Vegas are actually a line item in our budget and we save for it like any other expense.
But what makes this a bit different from other budget items is that our goal is to return from each trip with at least 50% of our budget. When we return, we roll that 50% over into the budget for the next trip. Rinse and repeat. It’s worked out fairly well and that 50% goal has been attainable for us for the last couple of years.
Of course, it also requires sticking to a budget while in Vegas. We’ve got a set amount to gamble with each day. If we lose it, we’re done gambling until the next day. If we win more, we set aside the 50% we need to bring home and gamble freely with whatever we have left over.
The nice thing is, even if we lose money, as long as we haven’t lost more than 50%, we feel like it was a successful trip.
What is your investment philosophy/plan?
I started off years ago without a plan. I just invested in whatever stocks were hot at the time (which were tech stocks, back in the day) and hoped. As you might expect, my results were mixed, but tended more towards losses than gains.
Over time, I started focusing more on growth stocks. I was decades away from retirement and wanted stocks that would increase in value over time.
Over the past year, I’ve started transitioning into income stocks. I’ve always been a fan of cash flow and as I get closer to retirement, preservation of capital and income generation are becoming more important. My current goal is to accumulate stocks that will provide me with $100,000 per year in dividends.
Because I want to live off that dividend stream, I need it to be rock solid, so I’m focusing on companies that are Dividend Kings – companies that have increased their dividends each year for 50+ years. I’m currently 17% of the way towards reaching my goal.
What has been your best investment?
I have two I would consider my best.
I’ve been a holder of Berkshire Hathaway B shares for decades and that investment has more than doubled. That’s a large part of my daughter’s college fund.
I also was wise / lucky to invest in Tesla back when it was trading around $30 a share pre-split, or around $6 a share now. I was a Tesla shareholder even before I bought my own Tesla. As soon as I test drove one, I knew the cars were incredible and I bought shares of the company the next day.
There have been a lot of ups and downs and the stock has seen more than its fair share of volatility. I did get nervous at a few points and over time, I’ve ended up selling about half my initial position to lock in profits. But for what I have left, my cost basis is $16,500 and the shares are currently worth $155,000. Almost a 10x return in a couple years!
What has been your worst investment?
I had some really bad investments back in the tech bubble days. I remember losing money on Cisco and Lucent. I had virtually no financial education back then and had no business trading stocks. But I don’t have any numbers from those days, so we’ll ignore those for this question.
For several years, I invested in real estate. I was a flipper and managed to make a couple thousand on each of the couple houses I flipped. I then moved into holding the properties and becoming a landlord. The lure of passive income! Of course, as I soon found out, being a landlord is not completely passive. Still, the local rental properties I had still ended up earning me a profit each month and again when I sold them.
But the worst thing I ever did was try to become an out-of-state landlord. To make matters worse, I purchased a property in Oklahoma (I was in Arizona at the time) from another flipper sight unseen! Yeah, I didn’t even bother to go check out the property or the area for myself. I thought I could do all my research via the internet.
Well, it was a disaster. The flippers didn’t really fix the place up as nice as they claimed. The management company I hired couldn’t find anyone to rent it. I ended up selling it as soon as I could, but only after several months of bleeding money. I lost about $20,000 on that investment. That was an expensive education.
What’s been your overall return?
According to Schwab, where most of my accounts are, I have earned a 13.45% ROI over all of my accounts since I opened my first account with them.
I’m (pleasantly) surprised that it is that high, actually.
How often do you monitor/review your portfolio?
Weekly. Not out of any need, but, as I mentioned earlier, savings is a line item in our budget.
Each time my wife or I gets a paycheck, I log in to transfer money into our brokerage accounts and purchase stock.
I suppose I’d monitor it a bit less if I had auto-deposit set up, but I prefer to have the flexibility to skip a transfer if I need to. (I haven’t ever needed to yet.)
How did you accumulate your net worth?
It’s mostly been savings from our jobs.
My daughter’s college fund started with a $50,000 gift from my grandparents over the first couple years of her life.
I was fortunate in that my grandfather had retired and sold his company several years prior and needed to reduce his estate before he passed to avoid incurring a large estate tax. He gave tax-free gifts of $10,000 per year to his kids and great-grandkids for a couple years.
Other than that, it’s just been a slow accumulation of savings and investing. Granted, it helped that we didn’t need to worry about starting a college fund..
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 think it is a very close tie between Save and Invest.
I have zero problems saving money. The first thing I do each paycheck is put aside money for savings.
Investing is really not hard now either. I’ve become educated enough to know what to look for and to have reasonable expectations for returns. I have no need or desire to beat the overall return of the market or buy the next “sure thing.” I’m happy to match the market’s return. To that end, it’s a no-brainer to invest in no- or low-cost index mutual funds.
And, of course, I’m moving into Dividend King stocks, but there’s very few of them, so it’s not a tough choice.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
The biggest hurdle was staying motivated.
When I started, the dollar amounts were so small it was almost disheartening. I was putting away maybe $25 or $50 a month and it seemed like I would never amass a large amount.
But do that consistently over a period of years, as well as increasing the amount whenever you can, and one day you wake up and realize you have a decent size chunk of cash!
What are you currently doing to maintain/grow your net worth?
I’m focusing on accumulating dividend stocks.
I’m also focused on getting rid of the only two debts we have – one car loan and our mortgage. The car loan will be gone in a year and then I’m going to redirect that money into our brokerage accounts. I’m paying a bit extra each month on our mortgage. I’m not one to fetishize owning a house free and clear, mainly because it’s an illiquid asset, but I wouldn’t mind if the loan was paid off early.
Do you have a target net worth you are trying to attain?
My first target was $1 million net worth, which we hit one and a half years ago.
My next goal was a $2 million net worth, but that seems rather easy, considering we’re at $1.6 million now.
So I suppose the next goal is $5 million.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I hit a $1 million net worth when I was a few months shy of turning 51.
That was fairly recent, so no significant shifts since then.
What money mistakes have you made along the way that others can learn from?
I already mentioned my real estate fiasco. Don’t do that.
Become financially literate so don’t fall victim to excess fees or high-priced financial advisors. Finance doesn’t need to be difficult. You can earn a good return without help from others who may charge you fees.
What advice do you have for ESI Money readers on how to become wealthy?
There are many ways to become wealthy and any one way is no better than the others. Do whatever works for you.
If you are a saver, invest early and often. If you are young, time is your greatest asset. Invest in a low-cost index mutual fund and then ignore what the stock market does. It will crash – likely several times during your life – but it will come back. Just stay invested and don’t panic sell, which locks in your losses.
If you have an entrepreneurial spirit, look into starting a business. The internet has provided lots of ways to bring in additional income at little to no expense, often while still working at a “regular” job.
What are your plans for the future regarding lifestyle?
According to Social Security, the normal retirement age for both my wife and myself is 67, but we hope to be able to stop working well before then.
We’re hoping to retire before 62 and preferably while still in our 50s.
What are your retirement plans?
Other than regular visits to Las Vegas, we don’t have any plans at this point.
We like nature and Washington has many places to live with great views of either the sea, the mountains, or forests. Travel will likely be a regular part of our lifestyle in some form.
I’ve also become interested in retiring abroad, although I’m just starting my research into that.
As mentioned, the goal is to have a significant passive income stream in retirement so we don’t have to rely on social security.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
A huge concern for me is medical insurance.
I have multiple sclerosis and, while it is not causing me any issues right now, the medication is expensive. Without insurance, the retail price of my drug is over $7,000 per month.
Truthfully, I haven’t even started to look into coverage when we retire, other than just having the knowledge Medicare exists. This is an area that will require a lot of research.
How did you learn about finances and at what age did it “click”?
I grew up with the idea of rudimentary budgeting. My mother utilized the envelope method for my allowance – one envelope for spending money, one for savings, one for charity. She also taught me the concept of delayed gratification and how to save for things. I wanted a computer and saved money from odd jobs until I had enough to buy one – my very own Apple II+ !
It wasn’t until I was much older that I started to develop a bit more sophisticated view of finance. When my wife was working at the arts non-profit, she had booked an artist at a local bookstore. I went with her and, while she worked, I browsed the aisles. I ended up in the finance section and came across Rich Dad, Poor Dad, by Robert Kiyosaki. That book opened my eyes to what passive income was and how wondrous it is. I read the next couple of his books and those are what started me in real estate investing.
Now that I know more, I have all sorts of problems with Kiyosaki, but if you just look at the first book, it’s great for motivation. Not so much on the how-to part.
Who inspired you to excel in life? Who are your heroes?
I suppose my mother is the one who inspired me to always do my best. She was only 19 years old when she had me. She never went to college, not even community college, and divorced my dad when I was around 5 or 6.
Out of high school, she worked as a hairdresser to make ends meet for years. Through a ton of hard work, she made her way into better and better jobs.
By the time she finally retired, she was the head of the sales department at a national pharmaceutical distribution company and was earning over $300,000 per year. All without a college degree. And as a woman.
I can’t even begin to fathom the barriers she had to overcome.
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?
One book I love and that I give to anyone who graduates high school is The Richest Man In Babylon. I re-read it at least every two years. It’s good for inspiration and serves to remind me that acquiring wealth is not complicated.
The Millionaire Mind is another favorite. It was eye-opening to see how real millionaires behave and just how many practice “stealth wealth.”
My third book is one I’m only halfway through so far, but I already know it’s going to be on my must-read list for years – The Biggest Bluff: How I Learned to Pay Attention, Master Myself, and Win by Maria Konnikova. It’s about how a game like poker can give us insights into how we make decisions and what we choose to pay attention to and what we ignore or completely miss.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Yes. we’ve always donated sporadically.
When our salaries got a big increase from moving to Washington, we felt we finally had the means to financially support causes we cared about in a meaningful and consistent way. We’ve put a line item in our budget for charity and that amount is split between three groups.
Percentage-wise, it’s a pretty small amount – under 5% – but it’s a recurring monthly donation, which we feel is important so the charities can plan on having those funds.
We also donate anything that we no longer need but still has use left in it to Goodwill – clothes, games, books, etc.
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 hope to have an inheritance to leave to our daughter.
I suspect if our wealth continues to grow, we will look at setting up some sort of gift to the charities we care about as well.