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 April. It’s a long one, so I’ll be breaking it into two parts.
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)?
My wife and I are both turning 50 this year.
We have been married for 28 years, following several years of dating each other in college.
I’ve known my wife pretty much my entire adult life, which is unique nowadays I think.
Do you have kids/family (if so, how old are they)?
We have two daughters.
Our oldest daughter is finishing up her freshman year of college in a STEM field.
Our youngest is currently in high school, and also seems to be very interested in STEM majors, just not sure which one yet!
What area of the country do you live in (and urban or rural)?
We live in an outer suburb of a large HCOL city on the US east coast.
What is your current net worth?
Approximately $3.7 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?
- Pre-tax retirement accounts: $1.2MM
- Roth retirement accounts: $200K
- Brokerage account: $950K
- 529 accounts: $50K
- Cash: $20K
- I-Bonds: $40K
- Settlement annuity (more on this later): $560K
- Home equity: $700K (no mortgage)
We have no debt, other than a credit card balance that we pay in full every month.
What is your job?
I’m an individual contributor “director level” engineer with a small technical consulting firm. I’ve only been in this role for about a year, and prior to this I’ve had roles with increasingly higher levels of responsibility in various Fortune 500 companies.
My wife is a public school teacher who currently works a reduced part-time schedule, but still gets full-time health benefits for our family. She was full-time up until this recent school year, but after over a year of dealing with the pain and hassle of “virtual school” she became burned out and (with my total support) decided to claim more of her time back.
What is your annual income?
My annual salary is around $240K, including bonuses that (while discretionary) are paid out regularly.
My wife’s salary is around $30K as a part-time teacher.
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 graduated in the mid-1990’s with a degree in chemical engineering.
I started out at a salary of $42K as an engineer in a consulting firm. While that seems like a small number now, it was probably the largest salary of my (engineer) friend group in college. The mid-1990’s was a tough time to find a job in my field, so despite the salary I was just very happy to have a job at all!
At first I thought that being an engineer at a consulting firm would be a great fit for someone like me just out of school, as it would give me a chance to see lots of different facilities and learn more than I would working at a single company for a long period. However, I quickly realized that this would not be the case. I didn’t realize how little overhead these engineering firms operated within, and so there just wasn’t a budget for training. I basically became a CAD technician for most of the time I was there since it was something that was relatively easy to teach people.
After about 3 years, I was able to secure a job at a large chemical manufacturing facility and a design and support engineer at an initial salary of $50K. I consider this my first “real” engineering job, and I was able to learn a ton about how “real” manufacturing facilities work.
I worked under a more senior engineer for about two years, and when he left for an overseas assignment I became the lead engineer for my assigned section of the facility. While it was challenging for me to be dropped into such a big role that early in my career, I learned a ton and was able to fill the role quite well.
After a few years there, the site decided to expand the facility to support a new and (at the time) unproven manufacturing process. I felt that the amount I was learning in my role was starting to plateau, so I decided to volunteer on the startup team for this facility expansion project.
Once again, the amount I learned just took off! I also realized that I was good at “thinking on my feet” and quickly solving various problems encountered during the startup, and this gave me a significant amount of confidence in my engineering skills. My stature within the site improved as well, as I became the main “go to” person for difficult and challenging assignments.
While I enjoyed my work at this facility, it eventually became clear to me that the economics of the facility were not sustainable long term. It was also very far away from where my wife and I grew up. When my wife and I became pregnant with our oldest, we decided to move to a new job at a Fortune 500 somewhat closer to home (i.e., hours of driving versus days of driving) at a salary of $72K.
The new job was similar to my old role (manufacturing equipment design / support), but was in pharmaceuticals with which I had basically no experience. So once again, I needed to learn a lot about that industry. Thankfully the basics of this industry were similar to my old job – still fluid moving through pipes and tanks, LOL – but the testing/validation, documentation, and cleaning / sterilization requirements at this plant were entirely new to me. So, I was required to learn all of this very quickly, and ultimately began to crush my assignments and get more internal visibility.
However I slowly became increasingly frustrated at the absence of any promotional opportunities for me at the site. People achieved promotions at this site largely by attending the right meetings and saying the right things to the right people, but that was impossible for me given the amount of time I was spending getting my work done. I also preferred to do work rather than just talk about work and attend meetings, which didn’t help.
I eventually “got my promotion” by leaving that facility to join a new company (another Fortune 500 company) in another part of the country, at a starting compensation of $115K including bonuses. This role was also manufacturing / design / support in a pharma facility. However, this facility was significantly more technically advanced than the one I left, so I once again had the chance to learn more about how “modern” pharmaceutical facilities worked.
They also had a very unstructured, haphazard approach towards new engineering projects, and as a result there was a history of design / improvement projects at the site not going very well (i.e. overbudget, not meeting customer needs, etc). I was able to leverage my lessons from my previous employer (which demanded a very structured approach towards projects) and was able to successfully deliver a number of very high-visibility, high-priority projects despite what the site considered “unreasonable timelines” – but in reality was fairly easy for me given my experience with actual unreasonable timelines at my previous employer.
Unfortunately, after several years there was a management change at my new employer. The new management was very focused on cutting costs, especially labor costs, so senior-level staff like me with relatively high salaries became targets. Rather than lay people off, however, the new management would instead make the lives of the senior staff miserable to encourage them to leave without having to pay them severance. While I was surprised and very disappointed in their behavior, it made my next steps very easy to take without second-guessing myself.
I then took a new job in the area of the country where I still live, at a significantly higher starting compensation ($220K including bonuses) for a Fortune 100 company. While it was a similar role to what I had done previously, the job was part of a global team supporting this company’s facilities worldwide, so the projects were significantly larger (routinely over $100M or more) and far more complex.
I led multiple project teams across the country and around the world, and also was the manager to several other direct reports. There was also a significant travel component that I enjoyed at first, but eventually I grew to dislike the amount of time I was spending away from my family.
Over the years I was there, I grew my compensation to over $300K per year including bonuses. While I liked my compensation and work, my work-life balance basically became non-existent during that time. This actually became much worse during COVID. Even though my travel went to zero, the hours became insane as I was managing major projects virtually across Europe and AsiaPac, and some days I had 8-10 hours of back-to-back-to-back teleconferences – mostly off hours.
I wasn’t the only one that dealt with this, and many raised concerns about the sustainability of this to our leadership. My company constantly talked about addressing the work-life balance issues we all had, but ultimately just did nothing about it and even added more work.
In fact, they began an effort to begin to normalize the amount of work we were all doing, basically using the insanely busy COVID period to re-baseline everyone’s work level and schedules to what they called “the new normal.” At the same time, my overall wealth was approaching the level of FI – so my wife and I began to wonder whether or not staying with this company was really needed.
The “last straw” for me was when the company ordered everyone to return to the office at the end of COVID, even though we had successfully delivered all of our commitments (even the moonshot ones) virtually. At almost the same time, I received an unsolicited offer to work at a consulting firm as a fully remote employee. While the compensation was slightly lower than what I was getting at the time, there was the real possibility of having a better work life balance as well as the removal of an unnecessary (in my mind) commute.
I then decided to leave this company to join a smaller consulting firm at a lower overall comp level ($240K). As a fully remote role the work life balance in my new job is much better! I also don’t have any direct reports anymore, which is fine with me. There are some people who tend to define success in their lives based on whether or not they manage others, but I’m just not that enthralled by it anymore — just ambivalent about it at best. I’m told that I have been a good boss to work for though, which is good. Overall the tradeoffs in the new job are worth it for me and I’m happy with the decision.
My wife’s career path is somewhat less exciting. She worked as a full-time teacher for the first few years we were married (at a salary of around $30K back then), and then left the workforce to become a stay-at-home mom when our oldest was born.
She went back into the workforce when our youngest entered middle school, at a salary of around $45-50K.
We were initially concerned that her long period without paid employment would hurt her when looking for a new job. However that turned out to be a non-issue as demand for teachers seemed to be consistently high wherever we lived, and apparently taking time off to be a stay-at-home parent is not uncommon among teachers.
The only somewhat painful aspect of her getting a new job whenever we moved was obtaining state certification. Every state has their own certification requirements (and testing requirements, and – most importantly for each state – new application fees). I really wish there was an easier way to obtain a national teaching certification that would have eliminated the need to constantly apply and take new tests, since I really don’t think that teaching really changes from state to state.
While they do have a “national certification” pathway that most states recognize, it is quite arduous and far more difficult than each individual state’s certification process. Lots of politics in this area unfortunately.
Her starting salary when we moved to our current location was around $60K, but it dropped back to $30K once she went part-time. Like me, the lower salary was absolutely worth the tradeoff to have more of her time back. The best part was that she was able to keep her exceptional health insurance as a teacher, even as a part-time employee. It’s a great deal!
What tips do you have for others who want to grow their career-related income?
Never stop seeking out new things to learn at work. I’ve always been an intensely curious person, and if something seemed interesting to me I’ve never had any problems with going out and learning as much as I could about that thing. Over time, I had done that often enough where I eventually became someone who knew a moderate amount of multiple topics, sort of a “jack of all trades” for manufacturing and manufacturing support.
A lot of the more well-compensated roles I had were in facility startup and project management, which requires one to have a basic understanding of multiple different disciplines to do very well. Even when I didn’t know much about a topic, I would at least know enough to ask questions to help myself and others better understand issues – which helped get issues remediated faster.
I’ve also found that people who are “deep experts” in one thing tend to miss potential solutions that are apparent with knowledge of multiple fields. In other words, having broad knowledge across multiple areas allowed me to more quickly identify good solutions to problems that would stump others, simply because I had a more broad experience than many others.
In addition, always be willing to respectfully challenge things that “everyone knows” is a fact. The chief engineer at that first “real” engineering job (see above) used to always grill us “new guys” on questions that we thought were so simple we didn’t need to research the answers. While it initially seemed to be a waste of time, we quickly learned that the things we thought that “everyone knew” were often not true at all, or perhaps partially true but with very important caveats that people tended to forget.
I also learned that there is a lot of value and opportunity locked up in these things that “everyone knows” that I could exploit for my company’s benefit. By being willing to get into the weeds and “do the math,” I was able to identify and eventually implement improvement opportunities that others missed, which definitely helped my career growth as an engineer.
Be willing to move employers and physical locations. I found that the best way to see large compensation increases was to change employers, and often to also change areas of the country to live in. The areas where my wife and I grew up unfortunately never really had strong job prospects, so for the most part living near family has never really been an option for us. The best we could do was to remain within a full-day’s drive of at least one set of relatives, which was good enough for us.
On a related note, I’ve also found that the pool of job opportunities (and similarly, the chances of scoring large compensation increases) is much better when one is willing to move to a different location. While I know it’s not for everyone, our willingness to move when needed has had a big impact on my compensation level.
We’ve found that, on balance, the benefits of moving to a different location usually far outweigh the risks. Our family has always done well when we moved, and our kids now have friends in multiple parts of the country that they remain in contact with virtually. We have always worried about what would happen if we move and don’t like the experience, but every time we move we realize that those concerns were wildly overblown.
Additionally, I think there is a lot of value in taking company politics more seriously than I did. I have always had a lot of pride in my work ethic, and I always looked down on people who focus more on appearance than actual results. Unfortunately, in very large companies, the appearance of results very often is far more important than the actual results themselves, and I’m sure that I have missed out on promotional opportunities because of my unwillingness to play the political game.
I’ve always been easy to get along with and all – which is also really important! – but just never bothered to seek out “face time” or build strong relationships with people at high levels in the company. If I had done that I probably could have increased my compensation even further, possibly without needing to move.
All that said, however, I do think there is value in liking and respecting what you do each day, and being able to look at yourself in the mirror at the end of each day and make the effort feel worthwhile. For me it was worth the tradeoff, but definitely something to consider.
Finally, having a stay-at-home spouse was critical to my ability to drive results at work. We never really had to juggle child care when kids got sick, or if the weather was bad. We also were able to build strong relationships with our kids, which I think was important to how they eventually developed. I realize that this is not financially possible for many, and others would prefer to have both spouses work rather than having one stay at home. All I can say is that having one spouse home for our kids worked really well for us, even at the expense of not having my wife’s salary (which, in retrospect, would probably have been almost entirely consumed by child care expenses anyway). To each his or her own, I guess.
What’s your work-life balance look like?
My work-life balance in this new role is fantastic!
Moving to a fully remote role freed up the equivalent of a full day each week that would have otherwise been spent commuting. My schedule is also flexible enough for me to frequently go pick up my daughter from school in the middle of the day, or take a nice walk around the neighborhood at lunchtime, or take a moment between meetings to fold laundry or clean, and so on.
My new job is fairly easy and straightforward and can be completed in less than 6 hrs each day, so my stress level is near zero. Occasionally we do get clients that are difficult, so I do sometimes dread having to deal with that, but for now it seems like a good deal overall.
I do think that being a consultant helps with this, since the marginal value of my free time to our clients is no longer zero as it was for past employers. Having to pay for every single hour (especially with what my company bills me out at per hour!) has to force people to think twice before asking me to do work. This makes it so that customers generally don’t ask me to do work that is of low value, which is helpful in keeping my overall time spent on work to a reasonable level.
I will say that I’m deliberately not trying to be a superstar in this new role, as my experience is that “superstars” tend to be “rewarded” with more work for no additional pay. I’m simply doing my role that I was assigned, without actively seeking out more. I probably would have gotten frustrated with someone like me earlier in my career, but at this point in my life – with FI levels of wealth – spending huge amounts of time and effort at work is just not that critical to me anymore.
All that said, my sense is that I am still seen as a “high performer” at work despite me deliberately reducing the efforts I’m putting into it! Not sure why that is or what to make of it.
This, of course, stands in stark contrast to my extremely poor work-life balance prior to this current job. I was frequently putting in 50-60 hour weeks (or more!) at my past roles, with a lot of off-hour and weekend meetings or contractor coverage. While the amount of time I spent on business travel dropped to zero thanks to COVID, I ultimately got enough work and required meetings dumped on my plate during that period to more than offset that time spent traveling.
Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?
Nothing significant for us beyond our W2 income.
Our only other source of income is dividends and interest from our various brokerage and savings accounts, which we don’t really track separately from their growth in overall value of these accounts.
What is your annual spending?
Our annual spending was approximately $100K/yr in 2021.
This is up from about $90K in 2019, i.e. the last “normal” pre-COVID year.
What are the main categories (expenses) this spending breaks into?
I use Microsoft Money to maintain our family’s day-to-day finances, after having used Quicken for almost a decade.
We switched once we saw Quicken transitioning to a subscription model, and we realized that MS Money does nearly everything that Quicken did – but at zero cost!
I started using Quicken (and eventually MS Money) to make it easier to manage our checkbook, but after several years we realized that it was also a great way to track our family’s historical spending. As a result I have detailed records of our family’s spending going back over a decade, which has become very helpful as we start to plan for early retirement.
Here’s the breakdown for our 2021 annual spend:
- Automobile (gas, insurance, maintenance): $6K
- Monthly bills (cable, internet, mobile phone, electric/gas, insurance): $17K.
- Misc cash ATM withdrawals: $3K
- Charitable Donations: $5K
- Clothing: $5K
- Computer supplies (new laptop and mobile phones): $6K
- Dining out: $9K
- Gifts: $3K
- Groceries: $16K
- Healthcare (doctor / dental visits, prescriptions, etc): $2K
- Home maintenance: $7K
- Property taxes: $6K
- Travel / Vacation: $15K
Note that I have not included income taxes as a cost, since they tend to vary based on income and we expect will be very low once we hit early retirement.
It also doesn’t include college costs for my daughter, which I track separately.
Relative to 2019 (the last “normal” pre-COVID year for us), we saw our annual spend go up around $4K in 2021 thanks to my oldest getting her drivers’ license (i.e. higher insurance costs). I’m expecting it to go up further when my youngest gets her license early next year.
We have also seen our grocery bills go up by approximately 50% since then despite having less of us in the house (oldest is away in college), which we attribute to food inflation over the past year or two. All other spending is around the same as before.
When we early retire, we’ll need to add in the cost of health insurance to our overall $100K annual spend. For now I’m factoring in an additional $10K for health insurance and spending, although we may be able to get good ACA subsidies (thanks to most of our spend being funded by non-taxable sources) so I’m hoping our actual costs will be lower.
We also hope to eventually wind down our kid-related expenses once both of them are out of school, which may reduce this further. But this seems like a good early retirement number to use for now.
Do you have a budget? If so, how do you implement it?
Early in our careers we used to budget hard.
My parents refused to offer financial support for me to go to college, so I borrowed a significant amount of money to do so. (My wife had student loans as well when she graduated, but they were negligible as her parents paid for most of her schooling). While it was definitely worth it for me to borrow to go to school, those student loans were painful early on. We needed to track our spending closely to make sure there would be enough left over after student loan payments, bills, and savings to live on.
My last student loan payoff coincided with my wife leaving the workforce to become a stay-at-home parent, so we continued to carefully monitor our spending to maintain our savings goals.
When we moved to my next-to-last job (i.e. the one with the big pay bump), we continued to track our spending for another year or two. Eventually we realized that our spending habits were pretty consistent – apparently those years of frugality and careful spending just stuck with us, even with more money – so we decided to just drop the monthly budgeting.
I still maintain a budget, but it’s now more just to track what bills are due and when so I don’t forget to pay them!
Last year we started just using our credit card for all spending and just automatically paying off the balance at the end of each month. I’ll typically look at our spend at the end of each month and ensure that we’re staying consistent with our historical spending patterns but that’s it. That said, we haven’t seen any changes in our spending habits since doing that, and the “low maintenance” approach to our finances seemed to work well for us.
As far as the division of labor goes, I am the CFO of our family which includes paying bills, monitoring investments, and so on. I’ve tried to get my wife interested in this, but have not been successful so far – she seems satisfied to just let me run with it!
I do worry about how things would go if I were suddenly incapacitated, and so to address those concerns I’ve begun setting all of our bill payments and investments on “autopilot.” Nearly all of our monthly bills get paid automatically through our checking account, and we maintain enough in our savings to keep things going for about 2-3 months without having to liquidate investments.
I’ve also consolidated as many accounts as possible with Fidelity, which has offices nearby to whom my wife could potentially reach out with questions if I was unable to do so.
What percentage of your gross income do you save and how has that changed over time?
Early on we saved around 10-15% of our gross income in qualified retirement plans. While that is not very high, given my student loan situation it was the best I could do at that time.
We also maintained an emergency fund of several month’s worth of spending in case there were issues.
Our savings rate went to 60% of our gross income once we received our windfall from an insurance settlement several years ago (more below). We used a portion of the windfall to pay off our mortgage, which opened up a significant amount of free cash flow that we could save.
We also eventually learned that my wife, as a school teacher, could save money in both her 403(b) and 457 qualified retirement plans, so we began maxing those out as well as maxing out my own 401(k) plan at work.
My employer at that time offered a strong 401(k) match, and also provided the ability to do “mega-backdoor Roth” contributions which we took advantage of. We also learned what a “regular backdoor Roth” was and began saving there as well. Any money we couldn’t save pre-tax went into our brokerage accounts.
Right now our savings rate is approximately 40% of our gross income, thanks to my compensation going down in my new role. That said, I believe we are very close (if not already at) a level of wealth associated with financial independence, and the tradeoff of saving less due to making less makes sense for us.
What’s your best tip for saving (accumulating) money?
Pay yourself first!
Treat savings as a required bill each month, and make sure that savings comes off the top before other bills are paid. We have found that we’re able to save a large fraction of our income if we never really see it in the first place.
Also, it’s critical to avoid debt that you cannot immediately pay off. I got my first credit card as a freshman in college, and found it very easy to “just charge it” rather than pay the money out of the limited cash flow I had as a college student. It took years for me to eventually develop the discipline to stop using the charge card and eventually pay it off. Having a debit card (i.e. card linked to checking account) made this easier, but unfortunately those really weren’t much of a thing early on in my career.
Avoidance of long-term debt is also important, where possible. I ended up with a huge amount of student loan debt, which made it more difficult for me to speak up for myself at work since I needed that money to pay the bills. While it’s hard to tell in retrospect, I wonder if I would have negotiated harder on salary if I didn’t have to worry as much about servicing the debt if the negotiations failed.
In my case it wasn’t much of a choice, since I would not have been able to attend college in the absence of those loans – but the constraints that debt placed on me was a huge downside that I honestly hadn’t thought much about when I was younger.
What’s your best tip for spending less money?
I think one important thing is just being more mindful of the “opportunity cost” of what you spend money on.
For example, my wife and I like to go out to dinner with our family, but that can get expensive – especially nowadays with the inflation of restaurant costs. As a result, we’ve started thinking – is this the best use of our money? Is it worth the hour or two we spent at work to pay for it? What other things could we instead spend money on that we value?
It’s hard for us to justify good answers to most – but not all – of our restaurant spending, so we’ve found ourselves starting to eat more meals at home. We find that we often eat better and healthier that way, at a much lower cost.
Another important consideration to minimizing spending is avoiding recurring spending. We have found that it is easier to justify a “one off,” experiential spend than to commit to a long-term recurring spend like a car or home payment, or a subscription to an on-line service. What we find is that the value of recurring spending tends to drop as time goes on, so we feel like we are better able to “get our money’s worth” when we spend once on something we truly value.
What is your favorite thing to spend money on/your secret splurge?
Travel and vacation spend is our big splurge item! Neither my wife nor I had a lot of money growing up, so vacations tended to be spent at home or close to home. In fact, the first time I ever left the state I grew up in was to go to college in a nearby state!
We’ve both always been fascinated by travel, especially overseas & international travel. There are so many things that we just sort of take for granted here in the U.S. that do not exist elsewhere, so there’s just a huge amount there we can learn from.
We’re determined to give our kids a different experience that we had growing up. They both have passports that have been used multiple times. The travel has definitely had an impact on them.
I remember taking a tour in Mexico with the kids, and our tour guide showed us a run-down shack that was basically the local public school. The guide further explained how the low school budget meant that kids could only go there part time. I know this had a meaningful impact on our oldest, as I think this helped her see just how well she lived relative to those in other countries. Since then she has always tried to “make do” with what she has on hand rather than spending money wherever possible.
That’s it for today! For the rest of the story, see Millionaire Interview 321, Part 2.