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 May.
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)?
Me, 37; spouse, 41.
We’ve been married for 8 years.
Do you have kids/family (if so, how old are they)?
We have a 4 year old and a six month old.
What area of the country do you live in (and urban or rural)?
We are US government employees assigned outside the United States. We currently live in a small capital city in sub-Saharan Africa.
We have been assigned overseas for more than a decade and have lived in five different countries.
What is your current net worth?
$2.1 million, including the kids’ 529 plans.
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?
- Retirement accounts: $805,000 (Roth = $145,000; remainder is traditional IRAs, TSP, 401(k), etc.)
- Taxable accounts: $520,000
- Rental properties (3): ~$380,000, inclusive of $190,000 in mortgage debt
- Cash: $130,000 (we keep a large cash reserve due to our careers and lifestyle, which could require us to move halfway across the world at any moment (this actually happened in March 2020 at the beginning of COVID, and we were so very glad to have liquidity). We recently got a HELOC as a back-up emergency fund, and we’re planning to invest about $70,000 of this over the course of 2021)
- 529s: $250,000
We’ve never owned a primary residence.
What is your job?
I am an agriculture expert. I have a Master’s degree and I’ve been working in food security and climate change adaptation for 15 years. I provide technical assistance (training, consulting) to non-profit organizations who work with smallholder farmers in developing countries to improve their agricultural practices and yields.
I’ve been working overseas for 10 years. The first 5 years of my career, I was based in the US. My early career was more focused on project management for food security programs: setting targets, developing and monitoring timelines, tracking budgets, writing reports, etc.
How did I end up in my field? I was fascinated with foreign language and culture from a young age, and very social justice and service oriented. I traveled internationally with my family beginning in elementary school, I learned Spanish in middle school and high school, and I learned French in college. I majored in Economics and International Affairs, and studied abroad for a semester, with a plan to go into international business.
After college, I joined the Peace Corps where I was a Youth Development Volunteer (and I met my spouse). It was there that I decided to pursue work in the social sector instead of going into business.
When I returned to the US and started looking for a job, I had a few options including some in highly specialized fields. I realized there were fewer jobs and less potential for growth if I pursued those options, so I chose to pursue a Master’s degree in agricultural science, which seemed practical to me at the time (and turned out to be).
What is your annual income?
My base income is $115,000. I also receive other incentives of about $37,000 per year, though this is variable.
My spouse earns in the same range as I do.
Due to our overseas posting, we have very generous benefits. We both get TSP/401k contributions from our employer (mine is 10%), have good health insurance, and are reimbursed for about one trip per year for our family to return to the US. Our housing and utilities are also covered.
My spouse will be eligible for a modest pension at 50, inflation-adjusted and with survivor benefits.
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 worked throughout high school and college in a variety of jobs: retail, waiting tables, temping, poorly-compensated internships, etc.
After college, I served in the Peace Corps for two years. Not great from a salary perspective, but invaluable experience for my profession.
I got my first salaried job at 23, fresh out of Peace Corps, earning $43,000/year at a non-profit. It was a good starting salary. I had another offer at the same time for a job that I also would have liked, but it had less growth potential and only paid $28,000. I made the practical decision.
Very early in my career, I had a toxic boss that taught me a very important lesson: No one is going to stand up for you if you don’t stand up for yourself. Since then, I’ve been proactive about negotiating my salary whenever I change jobs and when I’m promoted.
I’ve also been lucky to have a few employers over the years who recognized my value and gave me significant bumps (with and without promotions). I’ve averaged about 7-8% base salary growth per year.
What tips do you have for others who want to grow their career-related income?
Invest in yourself. Going to grad school was an expensive and time consuming endeavor, but it increased my salary potential a great deal. Grad school may not be a good investment in everyone’s field, but building skills always is.
Don’t assume that just because you’re in a public service or social sector role, you don’t deserve to be well-compensated. Also, be practical when choosing a career field and employer. I work with lots of talented people in non-profits and government who are mission-driven, and can barely make ends meet. I get to be mission-driven, and also take care of myself, my family, and my community. That’s because I’ve made practical decisions along the way.
Don’t underestimate the value of your benefits when considering a compensation package. I received $15k in tuition reimbursement from one employer. I’ve had three employers that provide a 5-10% retirement contribution, regardless of my own contribution (not a match). I’ve had a few that provide ~$200/month contribution to public transportation costs. It all adds up.
The most important financial decision you will make in your life is who you marry. It’s not romantic but it’s true. My spouse’s support has been the most important factor in growing my income: taking on more household responsibilities when I was in graduate school; managing the kids when I travel for work; making our career decisions together; etc.
What’s your work-life balance look like?
Pre-COVID, we both worked about 50 hours a week. It’s a little less now for me, although it feels like more because there’s no separation between home and the office.
We’re very lucky to have a nanny and housekeeper, which allows us to spend our off hours with our kids and relaxing (not that having two little ones is ever relaxing).
In pre-COVID times, we both travelled occasionally for work, 1-2 week long international trips a few times a year.
We have generous annual leave, and we take about one month every year to visit family members in the United States. We usually also take a one-week vacation somewhere nice just to relax.
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 have three rental properties that net us about $12,000 per year. It’s not much, but they’re steadily paying down their mortgages and they more than cover all expenses including insurance, management fees, vacancies, and improvements (we’ve cash-flowed a new HVAC, kitchen remodel, etc.).
We bought them over the course of 4 years in a rental market we know pretty well, with modest but steady returns. Our goal was not to grow a real estate empire, but rather to get our foot into a housing market that we may eventually want to live in, considering that we don’t own a primary residence.
We also wanted to diversify our investments a bit so we weren’t entirely reliant on the stock market.
What is your annual spending?
I have to be honest that we don’t track our spending very carefully, but I’d estimate it’s in the $125k/year range (after taxes).
What are the main categories (expenses) this spending breaks into?
These are all back of the envelope, but here goes…
- Childcare (nanny/pre-school) and household staff: $26,100
- Groceries and restaurants: $13,000
- Various insurances (health, life, etc.): $8,000 (our health insurance is highly subsidized but our life insurance rates are much higher than average due to living overseas)
- Travel: $15,000
- Donations and charitable gifts: $20,000 (higher than normal this year due to COVID)
- Other (kid’s clothing, toys, and books; diapers; adult clothing; health/medical expenses; media subscriptions; household supplies; technology; other misc.): $44,000
The devil is clearly in the details, and there’s a lot buried in that last line that we don’t track at all.
Do you have a budget? If so, how do you implement it?
As you can see from above, we don’t keep a budget or track our expenses very closely; is that heresy?
I set a savings goal for the year, and we automatically divert that amount into our savings/investment accounts.
While we’re not particularly frugal people, neither my spouse or myself are big spenders either, so considering our current income situation we don’t worry too much about our spending.
We’re at a point in our careers and lives where time is more precious than money. If we needed to trim I’d say we could pretty easily cut at least $30,000 in annual expenses without any real pain, if not more.
What percentage of your gross income do you save and how has that changed over time?
Including our employer matches, we save about 50% of our gross income in retirement accounts, a taxable account, and 529s. We’ve saved that proportion, or more, ever since our first overseas assignment, though our salaries were lower back then.
When we lived in the US, we only saved about 20%, although I was also spending $15k/year on grad school during those years.
What’s your best tip for saving (accumulating) money?
Put it away before you see it.
Figure out how much money you can (or want to) save, divert it directly into your savings/investment accounts, and then consider it untouchable.
Don’t increase your spending at the same rate as your income…keep lifestyle inflation in check, at least until time becomes a more precious resource than money.
We’ve been able to save quite a bit of money in the last decade because we’re both high earners and only medium spenders.
What’s your best tip for spending less money?
Because of our (lack of) budgeting system and incomes, it’s rare for us to decide we need to cut back. But when we’ve had to, we focus on big ticket items.
For example, when I started graduate school we moved out of a gorgeous, massive sunny apartment in a perfect walkable neighborhood that was $2,100/month into a cozy, rather dark apartment farther from everything for only $1,300/month. That $800/month savings went a long way.
What is your favorite thing to spend money on/your secret splurge?
Travel. We haven’t done much travel since the kids came along, but it’s definitely our splurge.
We used to travel cheap (heck, we were Peace Corps volunteers), but as we’ve gotten older we’ve gone soft and developed a taste for higher end services.
We are currently planning a luxury vacation for when COVID subsides – business class flights, luxury suite, the whole kit and caboodle.
One particular area where we’ve just recently increased our spending is on business class flights. Beginning about a decade ago, we started joking that if we won the lottery one day, the only thing we’d change about our lives is we’d fly business class (we take a lot of long-haul flights). This year, we looked at our net worth and decided it was worth it to start flying business. If that means we need to work one more year before retirement, so be it.
What is your investment philosophy/plan?
“Let it ride.”
We’re currently 80% stocks/20% bonds in our investment portfolio, of which 35% international exposure.
When our investment balance tipped $1m, I did a mental exercise…what if it was 2008 and suddenly I woke up with only $600k? And I was fine. So that’s now my mental benchmark; I can stomach a 40% loss.
My spouse is more risk-averse than I am, hence the bonds.
What has been your best investment?
We’re index investors. Over the past 10 years, the US stock market has clearly been the winner.
But we’re long on the international markets.
What has been your worst investment?
From a return perspective, probably our real estate.
But like I said, we never expected to out-earn the stock market with our real estate investments, we just wanted to diversify a bit.
What’s been your overall return?
Our ITD annualized return is 11.4% at Vanguard, where about two-thirds of our investments reside.
For reference, we opened our Vanguard account in January 2013.
How often do you monitor/review your portfolio?
I log in about once a week.
We update our overall tracker (including accounts only my spouse has access to, like their work 401(k)) quarterly.
We use Vanguard Personal Advisor Services (with 0.3% fees), and they invest our contributions on a bi-weekly basis and rebalance according to our plan at least quarterly.
How did you accumulate your net worth?
Nothing fancy, just earning and saving.
We focused on dual career maximization rather than favoring one spouse’s career over the other’s. It has not always been easy, particularly with moving overseas, and we’ve both had to make compromises.
As a result, we’ve increased our household income by about 150% since we moved in together 13 years ago.
We’ve also had kids, increased our spending, etc. — but not nearly as quickly as our incomes have increased.
We’ve never had any debt, other than our rental mortgages. We were both very fortunate to have college paid for by our (respective) parents, and I worked my way through graduate school.
Working full time while in grad school was exhausting and I wouldn’t recommend it to everyone, but it was definitely worth it for me to avoid student loan debt. Another important factor was that my employer contributed $15,000 for tuition for my Master’s degree.
My spouse and I have both always (even before we met) paid off our credit cards in full every month.
We saved up 20% down payments for our rentals, and even bought one of the three in cash.
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?
We’ve hacked our careers pretty well, particularly considering that there are two of us. Our jobs pay well and offer us a lot of benefits that reduce our cost of living.
Neither of us are particularly frugal, and we’re mediocre investors at best.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
Money has always been easy for us, even when we didn’t have much of it. My spouse and I have a similar money mindset: invest in your career to earn well, live within your means, avoid debt, etc.
We’ve never had an argument about money (disagreements, yes; arguments, no).
We have a strong safety net — partly from family, and partly what we’ve built — that has allowed us to get where we are.
What are you currently doing to maintain/grow your net worth?
Stay the course.
We plan to continue to save a significant amount of our income, which will only increase as our kids get older and no longer require full time childcare and/or pre-school.
Do you have a target net worth you are trying to attain?
Vanguard tells me I’ll be good at $2.5m in investments, but I’m aiming to reach $3.4m total invested assets, excluding the kids’ 529 accounts, before we let off the gas.
Anything above that is gravy.
How old were you when you made your first million and have you had any significant behavior shifts since then?
It was not that long ago; just two and a half years.
The markets have been kind, and we’ve been socking away a lot of money.
What money mistakes have you made along the way that others can learn from?
I made my biggest money mistake when I was young, which saved me from making it when I was older.
My parents very generously paid for my college tuition, room, and board. The first two years, I lived in the dorm. My junior year, I chose to move into an apartment with some friends. My parents gave me the money they would have spent on my dorm and meal plan package, and allowed me to manage the money. I did fine my junior year, but my senior year involved more partying and I ran out of money about two months before graduation.
I was embarrassed and ashamed. I eventually confessed to my parents, who (after seeing that I had learned my lesson) bailed me out.
Recounting this story now, I realize that it is the epitome of privilege to have had that safety net. I am so grateful that I had room to make mistakes and still recover. Many people do not.
What advice do you have for ESI Money readers on how to become wealthy?
I wish I had something useful to offer here, but in reality — my spouse and I were handed every advantage in life. We’re healthy, white, straight, college-educated, and were raised in upper middle class families. Our families paid for our college education (although not graduate school). We have simply taken what was handed to us and not squandered it away.
The only thing we have done that distinguishes us from our privileged peers, is that we rejected the predominant lifestyle and made our own way of living. We identified an opportunity to live a lifestyle that was better for us — personally, professionally, and financially. We made intentional choices, and sometimes sacrifices, to make it work for our family.
My advice to ESI readers who wish to build wealth, or even just live life differently than society expects you to, is to be intentional, prioritize, and be diligent. Living life against the grain is not easy, but it is worthwhile.
What are your plans for the future regarding lifestyle?
My spouse and I plan to retire from our first careers when my spouse turns 50. We expect to receive a partial (~$42,000/year in current dollars) inflation-adjusted pension with survivor benefits and health care benefits beginning then.
We will likely be in a position to fully retire if we wanted to, but that’s not really our style.
What are your retirement plans?
Return to the US and spend time with our parents, extended families, and children.
Take up lifestyle jobs, or second careers, or go back to school, or volunteer.
Go to baseball games in the summer and basketball games in the winter.
Buy a house in the country with a giant garden and hens, or maybe a townhouse in the city with no lawn care and walking distance to restaurants.
Live a slower and quieter life.
Or maybe not.
Financially, we will supplement our pension and rental income with drawdowns from our nest egg, particularly while the kids are still in the house. Depending on how much we’re able to save and how the market does, my spouse may take Social Security early. Longevity (100+) runs in my family, so I will definitely wait until the max age.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Our careers are such a big part of our identities and our lifestyle, and it’s hard to imagine actually leaving them.
My spouse has lots of interests and skills that would readily translate into a second career/lifestyle job in the US, and they have no ego about their work.
My entire life, from high school until now, has been about being able to have the career I have now…and I’m ashamed to say that I do have quite a bit of ego and pride in my work. I know it will be time for us to come “home” in about a decade, but I’m not sure how I’ll handle it. This is by far my biggest worry about retiring early.
My other concern is that I’m planning for a (potentially) 56-year retirement for myself (more like 40 for my spouse). Even with Social Security, a pension, healthcare, and a large nest egg — there are so many variables that will change in that time period. No matter how many times I do the math and adjust my models, and no matter how much we save, one can never be 100% confident that you’ll be secure over that time period.
How did you learn about finances and at what age did it “click”? / Who inspired you to excel in life? Who are your heroes?
My dad, the ultimate pragmatist.
He spent 45+ years in a career he loved that compensated him well, and retired only begrudgingly at 70.
He gave me my first lesson in compounding interest when I was in high school, which has stuck with me ever since.
He also taught me two very important lessons in life:
“Do what you love, and you’ll be good enough at it to make ends meet” (Note that this is certainly not true for everyone, but my Dad knew me and knew it would be true for me).
“You can have anything, but you can’t have everything.”
That second one is so valuable. I learned from both my parents that everything has a cost, and you have to prioritize. You may have to sacrifice. I remember my mom saying, in regards to fancy clothes or cars that other people in our neighborhood had but we didn’t, “We choose not to spend our money that way.” I have been a natural with this money concept since I was in college. (I am still learning to apply it in regards to how I spend my time.)
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 got into the personal finance blog scene when I was in my mid-twenties, and that’s always been my preferred media for money matters.
Many of my favorite bloggers have retired from the scene (for example, I loved J. Money at Budgets are $exy). J.D. Roth is still around; he’s great.
Now that I’m at a higher net worth, I also read Physician on FIRE and similar blogs. I also like the ChooseFI podcast.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We don’t do much volunteering, partially because we’ve got two little kids and partially because we work in the social sector, so in a way our careers are public service.
However, giving money to charity is important to me (less so to my spouse), because we have been very fortunate in life. My spouse indulges me in getting our donations lined up each and every year.
This year we gave about $20,000 to various causes (of which $10,000 was COVID-related). Not all of it is charity in the tax-deductible form. For example, we’re helping put a deserving kid through college, because his family couldn’t afford it and he couldn’t get the financial aid he needed.
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?
My spreadsheets say that I’m going to die with like $40 million dollars or something crazy, because it’s impossible to extrapolate out 60+ years from now — the assumptions you have to make are nuts.
But if I really die at 100 with $45 million (seems unlikely), I’ll leave my kids/grandkids/great-grandkids? enough that they’ll still have to work for a living, but won’t have to worry about making rent, paying health insurance premiums, or sending their kids to college.
The rest will go to charity, or politics if I get really radicalized in my old age (which is entirely possible).
If both my spouse and I die tomorrow, everything we own plus $2 million in life insurance goes straight into a trust for the kids.