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 https://esimoney.com/contact/ 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)?
I’m 59 and wife is 56
Do you have kids/family (if so, how old are they)?
We have 3 kids. 24 year old daughter, 26 year old son, and 37 year old daughter by a previous marriage for me.
What area of the country do you live in (and urban or rural)?
We live in Northern CA, live in rural area, but work has been in bay area.
What is your current net worth?
$5.15 million
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 = $398k
- Stocks= $2.15m
- Trust deeds = $500k
- 401k/403 = $1.1m
- IRAs = $977k
- HSA = $25k
No debt and no home at this time.
We sold our home in CA awhile back and are renting back with the idea we’d move out of state “soon”…however, it’s now been 3 years…so perhaps next year. I just retired and the wife is still working. We do believe we’ll be moving out of state within 1.5 years back to Midwest.
What is your job (type of work and level)?
Before I retired this year, I was a mid-level manager in the high tech industry in the Bay Area. Wife is Director at a private school.
What is your annual income?
When I retired this year, I was making $155k per year salary and $20k in bonus for total of $175k per year. My wife makes approx $85k per year
How did you grow your income so high?
I don’t have a college degree, when I moved to CA in 1987, my first job here was making approx $21k per year and there was no such thing as 401k or stock purchase plans for me.
I kept taking on new responsibilities and increasing my worth to the company. I’ve always been a manager and had people reporting to me so that was more salary.
Also, I realized that if you changed jobs every 4-5 years, you could increase your salary significantly…i.e. $10k-$15k per year by changing jobs.
I was fortunate enough in 1995 to go to work for a start up company that went IPO during the dot com boom. This is where I began making enough money for investing, 401k, stock purchase and stock options etc.
After that company, I went to work at another startup that also had an IPO. Of course there was the dot com bubble burst during this time as well.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
Prior to my retirement, it was my job. Now it will be dividends and investments.
I have a large amount of funds in cash that I’ve purposely not invested in order to buy a home out of state when we move. Looking back, I would have been smarter to invest those funds the past 3 years vs leaving in cash, however, I was afraid the stock market was/is going to crash.
My goal is to live off the dividends and income from the trust deeds and not touch the principal if I don’t have to.
What is your annual spending and what are the main expenses you have?
Annual spending is approx $76k per year. The biggies are:
- Rent = $30k
- Utilities = $12k
- Insurance on vehicles $3k
- Food and Gas = 12k
- Travel = $2k (however, expect this to increase now that I’m retired)
- Misc = $3k
- Health insurance = $14k in premiums (this will kick in next year as I’ll be paying Cobra for 18 months. Hopefully politicians will get something worked out to lower this…but not counting on it, so this is a wildcard)
Taxes not included in the expense list.
How did you accumulate your net worth?
As mentioned above, I started at internet startup company in 95. It went public a few years later during the dot com boom. While I didn’t have that many shares, they did split a few times. That got me started in investing in other companies and stock market, also got me to max out 401ks each year.
I also make sure my wife maxes out her 401k each year, and then I contribute $13k in IRA’s for both of us each year.
During my working years, we began having family and moving up in house sizes:
- First house in San Jose was purchased @ 1989 for $167k and sold in 1992 for $235k.
- Purchased our next home in 1992 (central valley) for $280k and was under water for years before selling it @1998 for $315k.
- We then purchased a nice ranch home on 1.5 acres in 1998 for $450k as the housing market began to really take off. We sold that house in 2002 for @ $820k and purchased some acreage and built a custom house.
- In 2015, we sold the custom home and acreage for $1.5m+. We are now renting back this home for $2500 per month for as long as we want. The buyer was interested in the acreage mostly. So we are free to move whenever we wish.
What money mistakes have you made along the way that others can learn from (or something you’d do differently)?
During the dot com boom/bust in 1998-2000, I had a net worth of $3m. This was largely made up of company stock…then comes the dot com bust, and that quickly eroded to $800k. The lesson here is to DIVERSIFY! (Enron employees would probably tell you the same thing).
The second mistake was I purchased a building in 2007 with the thought of starting a business. However, then came the 2008 recession and everything took a beating, so I decided to not pursue this venture and sold the building at a $500k loss 2 years later. However, the good thing was I didn’t sell any of my stocks, so they all bounced back a few years later.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
I try to teach my kids to save and invest vs spending. We don’t spend much on ourselves, we will buy a new vehicle but then we keep it till the wheels fall off. However, we don’t buy what you would call luxury cars that cost a lot to maintain.
I’m a big believer in maxing out the 401k or at least to the point your company is matching. Take out additional IRA’s if possible.
Right or wrong, my belief was to always save for when I retired. So our vacations were typically road trips or flights back to Midwest to spend time with parents and family.
Seldom did we spend extravagantly.
I also try to eliminate or reduce taxes as much as possible. Since we sold our house and kids have left home, we have zero tax deductions so taxes are killing us right now.
What are you currently doing to maintain/grow your net worth?
Watching spending and will attempt to live off dividends only. It will be close. Also trying to be careful in what I’m investing in.
Do you have a target net worth you are trying to attain?
I didn’t have a goal in mind, but once I hit $4m, I was thinking strongly of early retirement. My goal was to retire at 55, however, with the dot com bust and the 2008 recession, I missed it by 4 years.
As I see classmates and friends of mine dying from cancer and other causes, I felt I had enough to last me till I kick the bucket and I wanted to have at least 10 good years to do some traveling. After all, I put it off for the past 40 years to save…so now that time has come. You need to be able to enjoy it while you can.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
Wife still wants to work for a year or two…so I’ll spend time traveling and visiting friends and family and figure out where we’ll be living in the future, and then when she retires we’ll travel together.
When the kids were young, we needed everything bigger…bigger house, bigger yard, bigger pool, etc. Now that the kids are gone, it’s time to get smaller house, smaller yard, NO pool! I don’t think people realize that when you have “bigger” your costs are also much “bigger”.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
I was married at 20 with a kid at 22 and divorced at 25 making $12k per year in 1984 with no college degree. I finally got my act together and decided to get better jobs and believe in myself. I took a job overseas for a couple years and then moved to CA in 1987 and got married to my current wife in 1989. We have 2 kids.
When my kids were born, I opened up CDMA accounts (pre 529 college accounts) and deposited $150 per quarter. Then went to 529 plan when they hit the market. By the time my kids went to college, I had enough saved to pay for it. All my kids graduated from college and are successful in their own careers.
My advice is to teach your kids how to save and invest and how to invest in ETF’s or Mutual Funds or even a target fund.
The important part is start early and keep at it. The second part is to spend wisely and don’t run up debt on credit cards or new cars.
Someone once told me if I don’t spend so much, I don’t have to make so much.
As I look back from where I came from, I think anyone can do this if they understand how to save and invest and spend wisely.
Nice interview, #29. I liked the lessons learned the most.
You and your wife are doing very well and should be in good shape, even through the next recession, whenever that hits.
-Mike
Thank you.. I still continue to worry about the next recession.. human nature I guess..
Awesome! Great example of having some hardships and still making it to the retirement finish line!!
My God are these interviews addictive. I love that even with mistakes (tech bubble, timing) things still pull through like daisies for the focused. Very authentic read!
M29, thanks for sharing your story and your path to FI! I’d keep renting a $1.5M prop at $2500 for eternity ?
Your’re welcome. I thought I’d be out of California by now.. however, the wife is still working and I can come an go as I please.. so I’m not in a hurry to move I guess.. However, I still don’t like paying the high CA taxes… or CA politics…
Thanks for sharing, ESI. Great story about a guy with no college degree really making things happen for himself and his family….
I consider myself lucky.. I don’t think I could get a job in hi tech in the current environment without a college degree. As I look back, I do wish I had gone to college vs getting married so young.. but everything happens for a reason and everything is a learning experience!
Thanks for sharing #29. You have a great story, and it shows how getting to be a millionaire can come from many different paths. College degrees are not required, but mistakes probably are 🙂
Wow! What an impressive net worth accumulation. It’s great to see the specifics of your house purchases/sales. It was also good to hear that even though you “lost” over $2M in net worth with the dot com boom, you came back from it, better than before. Your kids are very fortunate that you taught them so well.
I’m still trying to get the youngest to listen and learn!!
This was nice interview. Some good lessons learned and overall some great and well rounded advice.
Sorry, there isn’t an edit option here. My grammar isn’t as bad as my post infers.. 🙂
I feel your pain. I’ve never been good with typing with my thumbs and I’ve trained myself through school to just get my thoughts out quick and then review, but with social media and quick commenting I find myself simply pressing submit.
Congrats on your retirement! Thanks for sharing your story.
Love this – “Someone once told me if I don’t spend so much, I don’t have to make so much” So simple and so true!
This is such a great story! And thanks for sharing your story! I’s amazing to see how you and your wife have built up such a huge amount of net worth and made great incomes.
My husband and I just started maxing out our 401(k) (I’m 30, and my hubby is 35). We are trying to pay off the mortgage on our primary residence, but we will def need to diversify our investment in the future as you mentioned.
I’ve learned that when I had it maxed out right out of my check, then I learn to live with a smaller check.. 😉 One other thing I wish I had done earlier was to join HSA vs paying standard health care premiums etc.. do the math.. HSA is triple tax free.
I was really really hoping this new tax plan would have have HSA available to anyone. Why shouldn’t we get a tax break taking care of ourselves? So few plans allow for an HSA in my area.
I noticed this when I started reading and saw the high net worth with a small HSA. Appreciate you taking the time to tell your story. Gives me direction and let’s me learn from others experiences.
Another great interview ESI. I feel like I’m reading a continuation of the Millionaire Next Door. The accumulation of wealth for #29, when compared to their salaries, is very impressive. To do so without a college degree is even more impressive. Great work Millionaire #29! Enjoy your retirement.
Thank you.. hard work and living within your means pays off in the long run!
Thanks for sharing this interview ESI. The power of starting early, and increasing your income and savings at work. Another great example.
I like this one! Made something of himself and his family despite not winning the birth lottery. Congrats.
Great story. Love the fact that he was able to earn so much through hard work and smart decisions. Financial success is not necessarily contingent on degrees or credentials.
Thank you for Sharing M29! Your story proves in more ways than one that the ESI philosophy works every time. The strategy is so sound it can even take a couple of big hits, and you can still make your mark!.
Congratulations and enjoy your rewards.
PS. We had a great weekend with our tween daughters. We came up with a saying that goes something like this “Today is Yesterday’s tomorrow, so Today’s rewards are the fruits of Yesterday’s efforts”.
I enjoy these interviews. There is always something you can learn as well as gain some motivation and inspiration. I like to hear about the different ways people have “made it”. Investing early on and maxing out a 401k and an IRA is one way to really give yourself a big boost down the road. I’ve never made much money and it really worked for me. At your age and having over $5 mil. I don’t think I would worry too much about your finances. I think you will be just fine. Plus your wife working for a little longer is a nice extra as well. Fine tuning your spending can really add up and make a bigger difference than you may realize. Another point you mention that sometimes gets lost in the finance discussion is that you need to adjust a bit and find ways to spend and enjoy fruits of your labor while you can. We can get so caught up in the big push to work hard, save, max-out our accounts, etc that you can forget what its all for. Seeing what happens to people on the news or friends passing away at a younger age can really make you think. I dont obsess over it, but theres no guarantee you are going to live to 70, 80 etc. Its definitley part of the equation and shouldnt be overlooked.
Arrgo and M29,
you are both so right about spending in retirement and enjoying what you have planned/saved for. You never know what the future holds with health for either spouse. My husband and I retired 18 months ago (COBRA ending now) and we were told that we need to learn to be spenders vs savers. We saved our entire careers, enjoying life but now we have the time to travel and splurge more than we have in the past. It is so difficult to change behavior but we deserve it but it takes constant reminders to ourselves. I am enjoying keeping track of our trips and how many days we traveled during 2017 and begin to plan 2018.
Great job M29 and continue to enjoy family and life.
Great story and so practical. By keeping expenses low and acquiring regular cars budget vacations (your basic things) is a great formula. And great advice on the end of if you spend less you don’t have to make a whole lot of money. 🙂
Thanks for sharing!
I really enjoyed this interview. It was wonderful to see that despite weathering some low business cycles, you recovered and ended up wealthy. It just shows that if you keep plugging away and saving and investing, you can still end up very well off despite some bumps along the way.
Very nicely put story. The simple fact about how high earnings are not the only way to go the path of high net worth is amazingly brought out by this real-world story.
I love these interviews! Thanks for sharing. Awesome to see how even after years of market ups and downs you can end up on top if you stay disciplined!
Also, it is easy for M29 to say he should have invested that cash for a house over the last three years in retrospect, but it still seems like the right decision to me to keep it liquid. He wasn’t sure exactly when he would need it and the market could have easily gone the other way.
M29 – I’m with you on hoping politicians figure something out with our healthcare! I go on COBRA next summer and I’m not looking forward to that bill!
I really like how this poster was honest about his mistakes! I like how he said he didn’t believe in himself. I had the same issues in my early 20s (still do, to some degree, but not as bad).
The new wisdom to me in light of all these interviews so far (1 – 29) is that to survive a potential medical catastrophe / high care situation without long-term care insurance (assuming your claim even works, so I crunch the numbers WITHOUT, knowing what we know of slimy insurers), you seriously need either 3 million-plus if married, or a nest egg in the low 100 thousand range if you’re single. Basically self-funded (one or two million should cover it, with a cool million left over should you or your partner survive), or a bounce down to Medicaid till the bitter end. That’s my best conclusion for now, so the heat is off; seriously doubt I’ll break the lower barrier by that critical juncture, and the gf and I are purposefully committed to single designation for both this and other reasons (basically no religion, and generalized fear of the mother of all nuclear options, DIVORCE). By my lights, the current state of U.S. healthcare, particularly the insurance gambit, is a menace to most, especially those caught in the midrange. Tell me how I’m wrong so I can adjust this possible misunderstanding. It seems to be a glaring gray area here, for the most part lost in all the HNW hype and high-fiving. Money is super important, sure, but one’s health is everything, and so unstable past 40 to be honest, when it slowly starts the inevitable descent.
Yet to be resolved, if not soon, still hit-and-miss with preexisting coverage, the costs forever a shade too phenomenal. Magical thinking as various loved ones drift into the twilight is unacceptable; it must be hammered out.