Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
This interview took place in October.
My questions are in bold italics and their responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I have just crossed the special milestone of 59 ½ years old. Now I have unencumbered access to my retirement funds.
My wife is a year younger than me so she will reach this milestone next year.
We have been married for 33 years.
Do you have kids/family (if so, how old are they)?
We have two boys who are 29 and 27.
Both graduated from college without any debt. Both are debt free today. Between them they own four houses free and clear.
This year our oldest made us grandparents.
What area of the country do you live in (and urban or rural)?
We reside in a rural town in the Pacific Northwest and have lived in our current house for 24 years.
We are currently redecorating it and plan to stay here for a long time.
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?
- Retirement accounts (Stock): $2.4M
- Home: $0.9M
- Investment Real Estate: $4.4M
What is your job?
Currently an Author/Speaker/Coach.
What is your annual income?
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 odd jobs until I finished medical school and started residency.
Up until then I had been paid as a musician, bellman, painter, lawn mower, data entry specialist, maintenance man, babysitter, answering service, forester, and I pulled dryer and cleaned up in a plywood mill.
My first real full-time job was as a resident surgeon. My starting salary was $21,000 a year.
My first year as an attending surgeon I earned about $100,000. I peaked out at about $250,000 a year throughout my career as a surgeon up until I retired several years ago.
Today my income consists of investment real estate cash flow, retirement plan distributions, book royalties, speaking fees, coaching fees, and some advertising revenue from my website. Many of those income sources are extremely variable, but I have been earning (mostly passive income) better than $250,000 a year since I retired.
My wife “retired” from her corporate accounting job when I finished residency and has been a stay at home mom/wife ever since.
What tips do you have for others who want to grow their career-related income?
Look for opportunities around you.
Make yourself indispensable.
Find ways to use your career for other things that build on your knowledge.
What’s your work-life balance look like?
I worked hard to keep my life balanced throughout my career. I took 8-12 weeks of vacation every year. Our family took a three-week motorhome trip each summer while the kids were out of school. We also took a weekend getaway in the motorhome every month.
I tended to avoid activities that were for only me, such as golf. Even though I liked to golf, I couldn’t justify spending that much time away from the family when I worked so many hours.
When the kids were playing soccer, I became a soccer coach. When the kids got into bike racing, I started racing bikes also. We fished together, hiked together, and did a lot of activities as a family. I tried to be at every sporting event and school activity the kids were involved in. No committee meeting outranked my kids’ soccer games.
My wife and I took at least one vacation for just the two of us, every year. And I tried to date my wife on a weekly basis. We also taught classes together and played music together at church. Every few years we also attended a marriage seminar somewhere. I considered this preventative maintenance.
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?
My main source of income outside my medical practice was real estate cash flow and ownership in a surgery center.
I started by investing in my own office building. My partners and I were in private practice and owned the building that housed our practice. It is hard to quantify what that made since we were paying ourselves rent. Mostly what it did was transfer some of our earned income, which is at the highest tax rate, to passive income, which is a lower tax rate and sheltered by depreciation. It is so much better to pay yourself rent than for that money to go to some other landlord.
Next, I participated in building a surgery center and another medical office building. This was a big partnership with other physicians in the community. Once the project was up and running, it produced returns of approximately the amount of my initial investment every year.
Then my wife and I began to invest in small apartment buildings. We purchased five of them over six years for a total of 65 rental units. The first-year cash flow was about $22k and by the time I retired it was producing more than our annual expenses. We self-managed the properties for the first 12 years.
Today it produces $130k-$160k a year in cash flow with full property management in place. My active involvement is only a few hours a year. My wife spends four or five hours a month paying a few bills and looking over the property management company monthly financial reports.
What is your annual spending?
About $100,000 and we have no debt to service.
What are the main categories (expenses) this spending breaks into?
It is important to know we have no personal debt, including owning our home outright, and have been this way for 20 years.
These numbers do not take into account income tax or charitable giving.
Since I retired I got rid of life and disability insurances.
Our medical care is covered by a Christian Medi-Share program:
- Travel and entertainment: $50,000
- Housing: $20,000
- Food: $5,000
- Transportation: $5,000
- Clothing: $1,000
- Everything else: $19,000
Do you have a budget? If so, how do you implement it?
Since we live on less than half of our income, we don’t work very hard on sticking to a budget. We can pretty much buy whatever we want.
But we do track all of our expenses and look at them frequently. This way we have a handle on what we are spending and what we have available to spend if we want to do something big. I recently bought a grand piano and we knew the money was there for the purchase.
My wife does all the data entry and designed the Excel spreadsheet we use to track expenses. It is the same one we have used since we got married. Back then it was done on a Commodore 64 computer. This makes it very easy to go back and see what we did in the past.
What percentage of your gross income do you save and how has that changed over time?
When we got married and were both working, we decided to live on one income and save the other. We both earned about the same income so that meant we were saving about half of our income. We kept this up our entire married life.
Saving 50% of your income racks up a lot of money. It gave us a lot of options and allowed us to pay for our kids’ college expenses as they came in.
What’s your best tip for saving (accumulating) money?
When you get a raise, do not increase your lifestyle, save the increase. You were living on the money you made before, so just keep it up. Save the new money.
That is what we did. I was living on my income when we got married and she moved into my home. Our expenses didn’t change much but we added her income. We didn’t need it, so we saved it.
Many people anticipate getting a raise and start spending the money before they even get it. Living within your means (income > expenses) is the most important factor in achieving financial success.
What’s your best tip for spending less money?
Keep using what you have until it breaks and can’t be fixed. Many people get the next great thing, simply because it is there. There is no need to upgrade the iPhone you bought last year. It is still the same great product it was a few months ago. Use it until it doesn’t work or doesn’t do something you need it to do before upgrading to the newest version.
I have been using cell phones for about 30 years and have owned about six different phones. My last upgrade was from a Samsung Galaxy S5 to an S10. I upgraded because the old one didn’t have enough memory to run a new app I needed.
When the phone can’t do the job, then it is time for a new one.
Doing this with your cars will save a fortune. I’m still driving my 2004 SUV.
What is your favorite thing to spend money on/your secret splurge?
I love to travel. As you saw in the budget information earlier, travel and entertainment amounts to half of our spending.
Before COVID we were gone more than half the year. Not sure what will happen as things open up again, now that we have a grandson.
What is your investment philosophy/plan?
From the first year I earned a steady income, my first full time job, I maxed out my retirement accounts. My wife and I maxed out our IRAs and my 401(k). We did this most of my working years.
Later, after we became debt free and didn’t have a home mortgage to pay, we started investing in real estate. We bought five small apartment complexes. After our fifth purchase, my wife pointed out that the cash flow from these apartments would take care of us in our retirement, so we didn’t need to buy anymore.
She was right. So, we then switched to paying off the mortgages on our investment real estate. We bought almost everything with no money down. As the mortgages got paid off, our cash flow went up.
Today I am retired and living off that real estate cash flow.
What has been your best investment?
The first apartment we bought was a 31-unit place that we purchased for no money down and got cash back at closing.
If this was the only rental property we had purchased, and we spent the next few years paying it off, it would have funded our entire retirement.
It made the money in our retirement plans a bonus.
What has been your worst investment?
I bought into a candy company and didn’t know anything about making or selling candy.
Today that company is out of business and I lost all of the money I had invested. Had I invested that money in an S&P 500 index fund instead, it would be worth more than $1,000,000 today.
Just goes to show you, you can make some big mistakes and still reach financial independence at a young age.
What’s been your overall return?
I do not track my returns. I find no valuable reason to take time to figure out what my return has been since it is history and not repeatable. I’m simply satisfied that it is growing.
But I did do a look back when I was writing an article about my real estate vs. my stock investments. The stocks have returned better than 10% over the life of my investing (including the 2000 and 2008 market crashes). The real estate return was significantly higher than that. We put in less money for fewer years and the real estate is worth about double the value of my stock mutual funds.
How often do you monitor/review your portfolio?
I don’t look at my stock portfolio unless something happens to make me check. I do track my net worth on a quarterly basis, so I see the account balances at that time. I usually invest for the long haul. I still own the first mutual fund I ever purchased back in 1989.
Since my retirement accounts are invested 100% in stocks, I don’t need to do any re-balancing.
I did buy some CD ladders with the money in my IRA to make the expected annual distributions I was required to make after I retired using the Substantially Equal Periodic Payments plan. Since I had a required payment to make for the following five years, I went ahead and set that up on one day with laddered CDs and I didn’t need to look at it again.
I often get asked questions about “what I’m doing now that the stock market dropped?” I usually respond that I didn’t know it had dropped. I don’t follow the market, I simply invest in it using mutual funds and then I don’t need to look anymore.
I learned many years ago that it was a waste of time to watch the market or my investments. I never made any changes based on the market anyway, so why waste time looking. I’d rather be playing with my kids.
How did you accumulate your net worth?
From the first year of my first full time job, I started saving money for the future. I was a 26 year old newlywed fresh out of medical school in my first year of residency. We didn’t have a lot of money, but we had enough to meet our needs.
I put the maximum allowed into my IRA and my wife’s IRA as well as contributing the maximum allowed to my employee retirement plan.
We lived a frugal lifestyle in a three bedroom apartment with a garage. I was earning enough to keep the household running when we married that year. When my wife got a job, after moving to where my residency was, we technically didn’t need the money she earned.
We decided not to boost our lifestyle with her income but to save it instead. So we began a life of purposefully living on half of our income and saving the other half. That was the key to my financial success.
When I got my first job as a surgeon after residency, our income jumped up a bit. We decided to continue with the “live on half” philosophy and kept saving money. We also started funneling our other half into our debt to get it totally eliminated, including our home mortgage. When we were debt free, we started investing in cash flowing real estate.
Investing 50% of our income for 28 years made for quite a retirement savings. All the real estate cash flow went to paying down the real estate mortgages while I was working. Now that I am retired, the real estate cash flow alone sustains our lifestyle nicely, and we have all our 401(k) and IRA money as a bonus.
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?
Save is definitely our super power.
We started saving half our income when we had a household income of about $47,000. If you can’t learn to live on less than you make when you make a small income, you will not be able to live on less than you make on a large income either.
Most people want to wait to save until they get that next raise. But when the raise comes, they find a way to spend all of it. Don’t spend all the money you earn and you will become a multimillionaire.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
When I first started my job as a private practice physician, everyone wanted to lend me money. I soon found myself $500,000 in debt. I left residency with about $6,000 of debt. This huge debt burden caught me by surprise. It just crept up until we said enough. Then we set out to pay it all off and we haven’t succumb to personal debt again.
We made our final house payment 20 years ago and have resisted borrowing money ever since. The only debt we carry today is in our real estate LLC. We still carry a mortgage on the apartments we own.
It is the real estate business’ job to pay off their own mortgages, not mine. That LLC is able to keep paying down the debt while spinning off enough profit for us to live a very nice life.
What are you currently doing to maintain/grow your net worth?
I am retired now with multiple sources of income. We still live on less than we earn even in retirement. So our net worth keeps growing.
It has been almost eight years since I left my medical partnership. I then worked part time for three years before fully retiring. We now live off our savings and cash flow, yet our net worth has grown another 64% during that time.
We live a very nice lifestyle and before COVID we traveled a lot and were actually gone more than we were home. Our travel expenses are about $50,000 a year.
My investment plan has not altered after retiring. My retirement funds are still kept in 100% stock mutual funds, and I have some CDs for the money that will be distributed soon for my required annual payouts from my IRA on the Substantially Equal Periodic Payment plan that I set up, since I retired before age 59 ½.
Do you have a target net worth you are trying to attain?
My retirement goals were two fold.
First, I wanted to have enough cash flow coming from my real estate to fully support my living expenses.
Second, I wanted to have over $1,000,000 in our retirement accounts. After I reached this, I felt good about retiring.
I retired three years after reaching those goals.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I was 37 years old when I became a millionaire.
We were working on getting out of debt at the time and I made no changes upon crossing the million dollar mark. We continued to max out the retirement plans and the remaining funds went to extra debt payments.
Two years later we were debt free and two years after that we were worth $2M.
What money mistakes have you made along the way that others can learn from?
Every major money mistake I made involved investing in individual stocks. You make one bad pick and it can cost you a fortune. It is not worth the risk. So stick to mutual funds and spread out the risk.
Also don’t invest in things you know nothing about. One bad investment cost my net worth $1M.
What advice do you have for ESI Money readers on how to become wealthy?
4000 years ago King Solomon said “Steady plodding brings prosperity.” That hasn’t changed. Wealth accumulation is very simple and boring, but the consistency is what is hard to master.
Spend less than you make, invest the difference, avoid debt, and do it every month for the rest of your life, and you can’t help but become wealthy.
Avoid all flashy fad investments. The current fad is bitcoin, which is not an investment, but a currency. Don’t risk your future on getting lucky.
You will not get wealthy trying to use debt for personal items. Many people try to justify buying something with a low interest loan so they can “keep their money invested for higher returns.” Don’t play that fool’s game. If the thing you are buying is not directly producing enough money to make the payments itself, then don’t go into debt to buy it. If you really want to keep your money working for you, don’t buy it at all and leave the money invested. Pay cash for all your purchases.
What are your plans for the future regarding lifestyle?
I retired at age 54 to travel the world. I should be able to resume that in 2022.
Since we were stuck home, we have been accumulating a lot of money by not traveling. We just redecorated our entire house and I treated myself to the grand piano I’ve always wanted. That piano cost more than the most expensive car I ever purchased! I am loving playing it every day.
I don’t see us changing our lifestyle, we enjoy it the way it is.
What are your retirement plans?
We will continue to travel a lot when things open up again. In the last few years we have been to more than 2 dozen new countries. There are ten countries currently scheduled for a visit in 2022. We will be doing a lot of grand-kid baby-sitting whenever we are home.
I am brushing up my piano bar skills and building my song list. I intend to be playing professionally starting next year. Piano bars and cruise ships mostly.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
None. We have way more money than we need.
We should have a fun and rewarding retirement.
How did you learn about finances and at what age did it “click”?
I was an entrepreneur in high school. Had several sources of income, including managing/singing/lead guitar in a rock band.
The book that started it all for me was “Common Sense” by A. L. Williams. Everything I needed to know about money and investing was in that little book of only a few dozen pages. I followed that plan from the day I got my first full time job until today.
I have read a lot of books over the years about money and learned to do the right thing.
Who inspired you to excel in life? Who are your heroes?
My parents and grandparents taught me to not borrow money for personal items.
My parents taught me to live within my means.
My uncle gave me the A. L. Williams book and started me on the right track investing and understanding the importance of being a business owner.
My parents made me understand that I could do anything I put my mind to, even if I currently don’t know how to do it.
My grandfather read me the children’s book “Doctor Goat,” which inspired me to go into medicine.
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?
The Millionaire Next Door: This book will make you understand that anyone can become a millionaire, you just need to curb your spending.
The Doctors Guide to Eliminating Debt: This book will teach you that debt is not your friend and is likely holding you back from becoming wealthy.
The Magic of Thinking Big: Here you will learn that no dream is too large for those with passion.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Our annual giving floats between 15% and 20% of our income. We tend to give to national Christian organizations, our church and local charities.
We also donate our time to worthy causes and events.
I believe that giving is important to becoming wealthy. If you are holding so tightly to your money that nothing else matters, then you will never gain the things in life that really matter. Chasing money is a fool’s errand.
When John D. Rockefeller, then one of the richest men in the world, was asked “How much money is enough?” He replied, “Just a little bit more.”
If you feel that what you have now is not enough, nothing will ever be enough. You must learn the concept of enough and be content with what you have. It doesn’t mean you will not still earn more. But you must learn to be content or you will never have enough.
After our investment real estate mortgages are gone and we have unrestricted access to our retirement funds, I expect our giving to increase substantially.
This question made me realize that we really were not investing 50% of our income because our giving came out of that 50%. We lived on half and gave and invested the other half.
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 kids are now adults and are both smart with their money. Managing our trust will fall into their laps when we are gone and I think they will do fine with it.
We will likely begin transferring some money to them in the next few years, a little at a time, so they can use it during the time in their life when it could be the most effective, while they are still young.
Getting a big inheritance after you have already retired doesn’t do a lot of good in your life since it arrives after you don’t need money anymore.