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 her 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 about to turn 43 years old and my husband is 47 years old.
We’ve been married almost 18 years (a month away).
Do you have kids/family (if so, how old are they)?
We have two boys, ages 11 and 12.
What area of the country do you live in (and urban or rural)?
We live in New York City.
What is your current net worth?
Net worth without primary residence or kids 529’s: $1.33M
Including primary residence and 529’s: $1.88M
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: 120K
- [Vested] Restricted Stock Units (RSUs): 30K
- Taxable Investments: 75K
- Retirement accounts (401K, Roth IRAs): 853K
- HSA: 30K
- Investment Property: 300K
- Primary Residence: 650K
- Mortgage (Investment): -70K
- Mortgage (Primary): -208K
- Kids’ 529’s: 104K
Other than the two mortgages, we have no debt.
Missing from the above is 50K that we put as a deposit on a second investment property we are in contract to buy in 2021.
Also not included in the above list is 330K of unvested RSUs.
What is your job?
I’m a software engineer at a large tech company.
I’ve been in my industry for about 20 years now but contrary to most in my industry, I’ve only worked at two(-ish) companies. I say two-ish, because the first company I worked at was bought out by another company less than a year after my start date.
I stayed at that first job for about 10 years and just made it to 10 years at my current company.
What is your annual income?
This year’s projected total income for our household is 550k.
My base salary is 212k (husband’s is 80k).
My annual bonus in 2020 was 43k (it has generally hovered around 20% of my base salary).
This year, my total vested stock will likely come in at 190k. The value of my annual vested stock historically has been around 90% of my base salary but that depends entirely on the stock price. It’s worth noting that these bonus and stock numbers are based on performance scores and my scores have been on the higher end.
If you add up the above numbers you’ll notice there’s some missing pieces, made up of miscellaneous items like opportunities for extra income at work and a small amount of income from our investment property.
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?
I think my first job was as a lab tech in a biology lab. It was a part-time position/project in high school.
While working at the lab, I took an interest in computers and the IT department of the lab hired me as an intern. I don’t remember exactly what my hourly rate was, but according to ssa.gov, my annual earnings that year was $1,403. I took a few campus jobs in college that earned me some spending money and a couple of paid internships over summers.
I stayed in college an extra year to complete a 5-year combined program and left with both a bachelors and masters degree. My first full-time job out of school was a software engineer position, paying 75k. I remember thinking that was a whole lot of money after living on a stipend of 1k/mo as a grad student.
I just went through all my annual review letters dating back to 2011 and except for a few years with a higher bonus, my annual increases generally hovered around 3%. By the time I left that first job after 10 years, my base pay had only risen from 75k to 109k. (What not to do if you want growth: stay at the same place for 10 years without asking for more competitive pay).
My second job paid much more competitively and my total compensation (including bonus and stock) increased 25% within the first year. I learned after that first year that I was being underpaid at my first job. After a little over two years at my new job, I had doubled my total compensation and several years after that I had nearly tripled it (thanks to high performance review scores and a couple of promotions).
After 10 years at this second job, I am almost at quadruple the pay I was at when I left my first job. I have actually never sat down to crunch the numbers like this and it was eye-opening to see the difference in income trajectory between the first decade and second decade of my career.
What tips do you have for others who want to grow their career-related income?
I’m not sure if I have any tips to grow career-related income as I didn’t do a good job of it initially myself, but I’ll share what seemed to help my career:
- Build your skillset. While I wasn’t getting paid the bigger bucks that I am now, my first ten years in the industry were really formative and I built a solid skill set which enabled me to land my second higher paying job.
- Establish good relationships. These days ‘pay for performance’ and ‘meritocracy’ are words that people throw around that make it seem like all you need to do is good work to get ahead, but sadly that is not all it takes. Good relationships amplify good work – they can get you opportunities you wouldn’t otherwise have access to. The people I’ve cultivated relationships with have given me advice, feedback and pushed me out of my comfort zone – all of which helped me to grow.
- Make your boss’ life easier. I think this is similar to the advice of making yourself indispensable. When it comes time for them to look around for who to give more responsibility to, given equal competence, they’ll likely remember the person who makes their life easier and be more willing to entrust the work to that person.
What’s your work-life balance look like?
I’ve always had a pretty good work-life balance. I would say most of my career, I’ve spent 35-45 hours per week working. Of course there were select weeks that exceeded that, but those times were few and far between.
The job is also flexible in that it can be done from home and at different hours of the day. So when there were things I needed to take care of during the day, I could make up for it later in the evening. That was key when our boys were younger.
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 make a small stream of income from our single investment property (6k/yr). We purchased a short sale property in 2012 after a co-worker shared about purchasing in that particular market. After doing a little research, the numbers made sense and we had a little money in savings so we pulled the trigger on investing. That property has more than doubled in value now.
We are in the process of purchasing a second investment property which will eventually yield a positive cash flow. For this second property, we decided to purchase in our backyard as it’s an area we are familiar with, is up and coming and also easy to manage ourselves. It will not yield much cash flow in the beginning as we did not want to drain all our cash reserves, but we are in this one for the long game. Hopefully by the time we want to retire, it will yield a decent cash flow (of 1k-2k/mo).
Including ALL sources of income, there was also 2k in dividends, 1k in bank interest and 700 in cashback rewards last year.
I don’t really have any bandwidth to manage labor-intensive additional streams of income, so I tend to choose the ones which require minimal work. We use a property manager for the current investment property and they handle almost everything for us. I thought about trying to start a blog or possibly an online business, but it seemed like too much of a hassle.
What is your annual spending?
184k. Yikes! I don’t often go looking back at previous year’s spending, but that’s a lot.
What are the main categories (expenses) this spending breaks into?
I don’t exactly budget/bookkeep in the traditional way. The best I can do is what Mint says, although it’s hard to get a full picture since doesn’t include anything taken directly from payroll so here is what I found that gets spent post-payroll, non-HSA/FSA/etc (excludes medical/dental & insurance):
- Donations/Gifts: 60k
- Housing: 35k
- Food (eating out, groceries, seamless!!): 28k
- Shopping (anything that doesn’t fit elsewhere goes in here): 28k
- Health & Fitness (gym, personal trainer): 9k
- Kids Activities/Camp: 9k
- Bills/Utilities/Subscriptions: 5k
- Travel: 5k
- Transportation (subway, car rental): 3k
- Entertainment: 2k
Do you have a budget? If so, how do you implement it?
Sort of. I don’t budget in a traditional sense with categories and I don’t check where I spent against those categories.
Instead, I map out cash flows and plan ahead for where money should be going. I use something I call a ‘future ledger’, which shows where my cash flows will be 1, 2,… 12 months down the line.
My “budget categories” match actual transactions in my accounts, so instead of “eating out”, “personal care” or “travel” as a budget category, I have “mortgage 1”, “electric”, “chase” or “amex” as my categories (since I do all my spending on credit cards).
If I want to save more, I just increase the “savings” line item and make sure I reduce other line items like “chase” accordingly and as long as my account doesn’t go negative, it’s all good.
My spouse doesn’t know anything about (nor is he interested in) the spreadsheet or details of our finances (although he has access to everything). But we always discuss big purchases or major changes in financial direction.
What percentage of your gross income do you save and how has that changed over time?
Between 401k, IRAs and HSAs that’s 64k (not including company match which this year was over 11k).
If we count 529s another 16k.
And then Mint says our net income versus spending was 120k, so I guess around 35%?
It’s definitely increased over time although I don’t know by how much without doing a lot more historical accounting.
What’s your best tip for saving (accumulating) money?
If you don’t waste cognitive cycles, unnecessary toil or require restraint to achieve savings goals, you’ll have a better chance at succeeding.
What’s your best tip for spending less money?
Spend less time on social media & ads.
I think we all get tempted to “want” things we actually don’t really care about and when it’s constantly flashed in front of our eyes, we’ll likely fall for the temptation.
If I can add a second tip, it’d be to add a waiting period before any discretionary purchase. If you want to buy something online, put it in your cart and force yourself to wait a week or two before actually buying it. I find that a lot of times, I don’t care to buy it after waiting.
What is your favorite thing to spend money on/your secret splurge?
I love spending money on hanging out with friends. Spending money on yourself can be nice but spending it on friends, like paying for everyone so we can all eat out together, brings us the most enjoyment. We want to be conscious not to pressure our friends to spend beyond their budgets, but we also want to eat good food and go to nice places, so this is the best solution to us.
As for secret splurge – I love to buy lottery or scratch tickets. I know the odds. But it’s cheap entertainment to dream for a moment.
What is your investment philosophy/plan?
My philosophy is to do it.
Don’t get fancy, don’t overthink it and then end up not investing while spinning in circles – I just need to do something with my money. I don’t need to chase the best returns and I don’t need to become a stock-picking expert. I will try something, learn a little along the way and do better next time.
That goes for my real estate transactions as well as stock/bond investments. Also, I’m not afraid to lose a little money – it’s only money.
What has been your best investment?
Probably the investment property.
It was a short sale property in a good rental location. It’s more than doubled in value over the last 7 years and also produced a net positive cash flow from day one.
What has been your worst investment?
It’s a tie between selling a piece of real estate at a 100k loss and selling off some investments during the crash of 2008.
I guess the latter was worse because there was nothing to be gained from it. In the former, the alternative would have been to manage the property as a rental and the rent wouldn’t have covered the mortgage and maintenance.
What’s been your overall return?
According to Vanguard, it’s been around 7%.
How often do you monitor/review your portfolio?
I check out my Mint dashboard daily on my phone, mostly to check my net worth, which indirectly tells me whether my portfolio is up or down, since that is what causes the most fluctuation in my net worth.
But I don’t actually look at the portfolio breakdown often. Maybe a few times a year.
How did you accumulate your net worth?
I would say it all started when my parents paid my way through college so that I could graduate without any debt. So instead of starting my working career with a negative number, I started at zero.
I happened to stumble into an industry that didn’t require a lot of extra school and paid really well.
When we got married, my husband had a small amount of debt, which we were able to pay off years ago.
We haven’t received any inheritances or large gifts (we received a small gift of a plot of land which we sold immediately for ~15k). Most of our net worth accumulation came from saving and investing.
Aside from 401k and IRA contributions, real estate has been the other main way we’ve increased net worth. Historically, two of the properties we’ve owned and sold have netted 50k profit each. But then we lost 100k on another home mentioned above, so that sort of leaves us breakeven in terms of real estate sales.
We currently own two properties with over 500k equity between them and we were able to pick them up at amazing prices as we bought post-2008 crash when prices were low. But since we’ve also sold a home post-2008 crash, we know that real estate prices do not always go up and who knows how much we’ll actually profit on these homes when it comes time to sell.
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?
For me, it’s earning. If my income had not increased 2, 3, 4-fold, we would not have reached our current milestone.
We do not live frugally and I know there is a lot more we could do in the saving department if we tried. But I believe money is there to be spent and so rather than arrive at some arbitrary net worth goal faster, we are enjoying the scenic route there.
I would say it’s not investing because we don’t pay much attention to it. I throw most money into index funds and even with real estate, we’ve mostly purchased to live in houses rather than thinking from an investment angle.
And when we chose to purchase an investment property, the opportunity sort of appeared before us, rather than us going to hunt for good investment opportunities. In fact, we’ve thought numerous times about selling it just so we had one less thing to worry about, but we’ve held onto it, mostly because of inertia and the fact that it’s cash flow positive.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
We haven’t really hit any bumps along the way, minus losing 100k on the house. Thankfully we haven’t had to weather any job loss or major financial costs like a health crisis yet.
I also believe that having financially stable parents is a HUGE help. Everyone runs into little financial bumps and emergencies, but when you don’t have a cushion, those little bumps lead to larger setbacks. Having financially stable families that could lend us money if needed, provide a place to stay (like when our house closing was delayed by months!) and free childcare are invaluable supports in building wealth.
Also, not having financially dependent parents is a blessing. I have seen friends who have had to deal with the fallout of their parents’ financial problems and I don’t take for granted that both sets of parents are healthy and financially independent.
What are you currently doing to maintain/grow your net worth?
Just the same thing that we’ve been doing until now.
Saving what we can and maintaining our earnings.
We are also in the process of adding another investment property to the mix.
Do you have a target net worth you are trying to attain?
I don’t have a particular target.
I only started tracking my net worth in recent years and it was really exciting to pass the one million dollar mark. My retirement spreadsheets target 3M by retirement (not including primary residence). But something tells me that we’ll see the 3M target number come and go and when it happens, not much will change.
How old were you when you made your first million and have you had any significant behavior shifts since then?
We hit the 1 million dollar mark (w/o primary residence) sometime in 2019 at the age of 41 (close to the average age based on your millionaire stats). That’s 19 years since I started working.
When we first hit that one million dollar mark, I was so excited. But it was like getting all dressed up with nowhere to go. I was so excited to hit this milestone and had no one to tell.
But, as many other millionaire interviewees have mentioned, nothing really changed. The net worth column on my spreadsheet had to get a little wider and life went on. It really was kind of anti-climactic.
We’re on track to get to 2M in 3 years which means 19 years for the first 1M and 4 years for the second. Crazy how it speeds up.
What money mistakes have you made along the way that others can learn from?
In hindsight, there isn’t too much I’d do differently, other than not sell off investments after the 2008 crash.
I could go back and change decisions to optimize returns and save/make the most money, but I think that all of those experiences were part of my own learning process.
But, there are definitely things that others can learn quicker from my experience:
- Don’t try to time the market and don’t sell when the market is tanking (use up some of your savings and buy into the market instead!)
- It takes a lot of time and energy to micro-optimize savings. I was obsessed with clipping coupons for a while and hacking credit card rewards for free or discounted travel. If you have the time and energy or consider it fun, do it. But I don’t think it’s a sustainable way to save money. I eventually gave up and saved WAY more money when my monthly rent went down.
- Be careful who you lend money to and consider what happens if they don’t pay it back. There were a couple of people we lent money to and even though we lent it without an expectation of getting it back, it still affected our relationship negatively when they didn’t pay it back.
- Don’t ever pay for an item online via Western Union. Still can’t believe I fell for that one once.
What advice do you have for ESI Money readers on how to become wealthy?
- Spend less than you earn.
- Don’t increase your lifestyle just because you got a raise. If you get a raise, start first by saving more (because it hurts less to save money you weren’t used to having, than trying to reduce your spending to save more).
- Optimize the largest costs in your budget (like housing) and if you do, you don’t need to sweat the small stuff as much (like lattes).
- Don’t pay interest if you can help it, especially if it’s not tax-deductible, like credit cards. It’s throwing away money.
- Be patient. It’s probably going to take decades.
- Increase your earning potential. This isn’t necessary but makes everything go faster. If you can’t or don’t want to make more money (because it means a lifestyle change you are not willing to make), that’s fine – you just need more of that patience above.
- Keep learning (this helps you with earning potential).
- Get therapy. (A lot of issues I see that people have with money are about non-money problems, like insecurities or fears).
- Being married helps. Being single doesn’t have as good economies of scale as being coupled. Not getting divorced helps also as it’s a big drain on wealth and also makes you single again.
- Gain basic financial literacy. You cannot manage what you do not understand. Although writing this last one feels like preaching to the choir because if you are reading this, you are probably already doing this one.
What are your plans for the future regarding lifestyle?
Good question. Changes a lot.
When I first learned about FIRE, I was all about retiring early – as early as possible.
Then as our net worth began to grow, I started thinking that it wasn’t worth rushing to an early finish line but to take the scenic route and spend more now.
Then I wanted to retire by the time my kids went to college, but thinking about it now, it seems silly to work hard to save while the kids are home only to be ‘free’ once they were out of the house.
Now I’m thinking that I want to work through the kids’ college years since we will likely not qualify for any financial aid. That’s about 10 more years of work for me.
Once we hit that milestone, I’ll probably want to move away from a 9-5 job and try out a bunch of things on either a more flexible schedule or a part-time basis.
What are your retirement plans?
My husband will probably work for the foreseeable future. I don’t think he has any plans to retire (he doesn’t have a conventional 9-5 ‘job’).
Once I ‘retire’, I’ll likely continue to work in some capacity. For me, retirement is just a phase where we are financially independent and draw on our retirement savings, if needed.
In terms of activities – there are a lot of jobs I’ve been interested in trying out, like being an accountant, an administrative assistant, doing something in education or producing a podcast (not creating my own but learning from one of the larger produced ones, like Planet Money).
I’ve also thought about setting up a side business helping people with personal finance, as it’s something I’ve been doing for the past few years, somewhat organically. Or maybe I’ll just do a lot of volunteer work.
But who knows, anything is possible. Maybe I’ll just end up helping take care of grandkids or maybe I won’t stay ‘retired’ and end up starting a second career!
Are there any issues in retirement that concern you? If so, how are you planning to address them?
I’m concerned about our health and medical coverage.
The only plan to address them now is to save up enough to afford non-employer sponsored insurance.
How did you learn about finances and at what age did it “click”?
I don’t remember learning about finances, per se and I don’t think I had a specific moment where it clicked. I do remember thinking that I was poor growing up, because my mom had told me so often “We don’t have money for that”. It turns out, we did have enough money, she just didn’t want to spend it on ‘that’.
There was always enough money for housing, food, school, necessities and anything to further our education. There was no money for the current popular toys, brand-named clothes or eating out.
I think I learned some things about finances (like spending on what matters most) through osmosis from my mom. My dad sat me down before college and explained what a Roth IRA was. That was probably the most explicit lesson I got on money.
My parents did not give me a lot of money to spend, so that taught me from high school to ration whatever spending money I had to make it last. I’ve never gotten into debt (other than mortgages and car loans) and always kept a spreadsheet for my finances.
Learning about FIRE and discovering Mr. Money Mustache’s blog four years ago was a major inflection point in my financial journey. It was a big shift where I went from staying out of debt and saving a little to becoming much more intentional and hands-on with growing my net worth.
Who inspired you to excel in life? Who are your heroes?
No heroes or inspiration for me.
My parents held me to the highest standards growing up and so I think I continued to hold myself to those standards into adulthood. I think those internal standards drove me to excel more than any role model in particular.
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?
I don’t have any new recommendations beyond the standard ones.
I can talk about ones that made an impression on me, though. I remember reading ‘Rich Dad, Poor Dad’ as a kid and walking away with the notion that ‘money can work for you’.
After that, ‘The Millionaire Next Door’ made an impression because it was the first peek behind the curtain of what millionaires were really like versus the image I (and the media) had built up in my head.
And while it’s not a book, the next thing that made a huge impression on me was reading these millionaire interviews here on ESI Money. There are polished books and articles about money and then there is hearing from real people about real lives and real situations. I’m thrilled to be able to contribute to something that helped me so much.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Yes. We give roughly 10% in tithe to our church and then support a collection of other causes (schools, civic organizations).
I think it’s a good practice to remind ourselves that money (and time) is fleeting and it does more when spent than hoarded for ourselves.
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?
I don’t plan to leave an inheritance. There is a plan in place in the case we pass away before we reach retirement. And in that case, we’ll split things 50/50. But if we can live long enough to see retirement, I plan to spend as much as I can while I’m living as I don’t feel any obligation to leave a large sum of money to my kids.
But, using a different definition of inheritance, I do want to leave my children with a solid foundation to help them on their own journeys to financial independence.
First, by instilling a value for learning and improving oneself.
Second, by teaching the value of hard work – even when no one is looking.
Third, by talking openly about money from an early age and equipping them with basic financial knowledge so that they won’t need to stumble around to figure things out in college and beyond.
Lastly, if I can help them graduate from college with no debt, as my parents did for me, that would be a major head start.
I do think that a majority of the lessons we learn in life are learned through experience and I would hate to rob my kids of that experience by attempting to bypass struggle and difficulty.
Of course, on the other hand, as parents we’ll always be there for them and help out when life’s unpredictable storms hit. I do see this assistance and support as a way that wealth can be passed on, just not in a monetary form.