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.
My questions are in bold italics and their responses follow in black.
Let’s get started…
OVERVIEW
How old are you (and spouse if applicable, plus how long you’ve been married)?
I’m 41 and my partner is 40.
We’ve been together for 10 years at the end of this year.
Do you have kids/family (if so, how old are they)?
No kids, we’re a family of two.
What area of the country do you live in (and urban or rural)?
We live in an inner city suburb ‘Downunder’ in a city that’s small by world standards, and fairly large for our country.
What is your current net worth?
$1.04m when converted into U.S. dollars – as are all the figures below.
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?
Note, I list the equity we have in each of the properties, rather than what they are worth:
- $220k in investment property 1
- $189k in investment property 2
- $490k in own home
- $17,700 in crypto – we bought 3k of Bitcoin for a lark in 2017
- $18,600 in cash
- $113k in shares and retirement accounts
We have $1m in debt across the three properties, but the portfolio is worth $2.2m.
EARN
What is your job?
Mid-level advisory role in strategy for me.
Mid-senior level advisory role in economics for my partner.
What is your annual income?
$92k (me), $119k (partner) from our jobs before tax.
See below for other 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 started on minimum wage (can’t remember what it was at the time, probably about $6.50/hr) when I was 14 or 15 washing dishes in a café after school.
First real job at 21 was $25k a year teaching English in Japan – I thought it was a fortune at the time!
Went back to grad school and finished in 2015, first job paid $38k plus a city carpark but I wasn’t there for long and have increased my income by leveraging my skills into a new and more lucrative subject area (from public health to strategy) and field (non-profit to government).
I’ve been a real flitter if I’m honest – lots of travel and a variety of jobs but the skills I developed have put me in good stead – I learn fast and am good at engaging with a huge range of people, and my grad school program was very analytical so that added something different and useful to my skillset.
My partner has been slow and steady after grad school, and started in a graduate job and worked his way up in government roles in the same field.
What tips do you have for others who want to grow their career-related income?
Be organized and likeable, put your hand up for everything (to start off with) and fewer, more interesting things (as time goes on) and deliver on time or before it’s due.
Develop a good relationship with your manager (easy for me as a people pleaser). Boring but true.
I’m also a great advocate for being a generalist. We live in a very specialist world, but I very much believe the best solutions to problems almost always emerge from between ideas/disciplines/people.
What’s your work-life balance look like?
Pretty good now.
The last 5 years were a real hustle, with buying and selling properties, and renovations and we’ve decided to slow down a bit now.
We both work around 40 hours a week in our jobs, and maybe a few extra on and off to deal with rental properties but that varies.
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?
$40-60k a year in rental income. It has varied as we bought and sold properties.
Not sure of dividend income as we just reinvest it.
We didn’t buy our first house, a townhouse in an inner city suburb, until 2017. It was bought in my partner’s name – he had saved $160k as a deposit over his career, and also used some of his retirement savings (we have the ability to withdraw from retirement funds for first homes here). The value of this house grew very quickly as we were lucky with the market.
I bought a small, sunny apartment right in the city in 2019 that we moved into and renovated, and we rented the original house out for $24k a year as I found I wanted more sun, and also we didn’t need as much space as we had at the townhouse.
We also sold our car, as I discovered after tracking our expenses since 2017 that it would be cheaper for us to use carshare or rent cars when needed, than to maintain and register a car (we both walk to work). This decision was made when I changed from my first job post-grad school where I had a carpark as one of the perks, to a new job where I didn’t, as we didn’t want to spend upwards of $5k on a carpark per year.
In mid-2020 we used equity from the townhouse to buy an apartment close to friends in another city, in 2020. We were lucky with this buy, as it went on the market right at the beginning of a lockdown (so there were fewer viewers and people were distracted and less willing to take a risk). This meant I had to buy sight unseen, but the numbers stacked up and it has appreciated a lot (maybe $100k over the period). We rent this one out for $20k a year. Glad to have a base in this city if we decide to live there, and it shields us from market shocks in the city where we live.
We sold the original townhouse, and bought a townhouse in a more desirable area that we now live in, in 2021. We did a few renovations but nothing structural, and it has appreciated about $100k in the last year. We now rent out the apartment for $21k a year.
We now have the townhouse we live in and two rental properties. I would have kept the other townhouse but my partner is more risk averse than me, and wanted to pay down debt – in retrospect, this was a good move as interest rates are rising and fixed term loans are short (vary between1-5 years) in our country. We’ve now been focusing on building up our equity portfolio.
SAVE
What is your annual spending?
About $40k a year for our living costs.
About another $20-30k in expenses for the rentals which includes things like insurance, mortgage interest, tax on rental profit and local body taxes. This has changed depending on the year/number of properties.
What are the main categories (expenses) this spending breaks into?
Below is the living costs breakdown from 2021:
- $9.5k groceries and booze
- $6.6k pocket money (split between us, which we use for presents for each other, meals and drinks out, any little things we want for ourselves)
- $4.5k misc (which includes gifts for family and friends, homewares, shoes and clothes, also any furniture etc that we could take or sell if we moved)
- $4k travel
- $3.7k health (this includes skincare products, physiotherapy, podiatry and products, doctors’ co-pays, dental care, anything bought at a chemist)
- $2.8k entertainment (this is usually concerts and film festivals – one-offs that we don’t pay for out of our pocket money. It was high in 2021 but usually lower).
- $1.6k insurance (life, home and contents for our own home, and health)
- $1.2k electricity
- $1.1k transport (this is Ubers and rental cars and public transport, the occasional gas top up if we borrow a car)
- $1k house (which includes anything we can’t take with us if we moved, so mostly repairs or hardware, paint)
- $1k education (courses or workshops not paid for by work)
- $950 phones and internet
- $800 eating out (this is if we treat someone to a nice meal together, the rest of our eating out money comes from ‘pocket money’)
- $200 other (credit card fees etc.)
Do you have a budget? If so, how do you implement it?
No.
Weirdly, every year since we’ve tracked it, we’ve hit the same total number for living expenses, roughly, though the amounts per category change.
What percentage of your gross income do you save and how has that changed over time?
Percent of our net income for the last 4 years:
- 48.3%
- 41.8%
- 56.2%
- 63.7%
Before that I saved very little.
Well, that’s not true exactly, I would save a bunch, then spend it all on travel! So it would be fair to say I have always been a good saver, but also a good spender.
My partner was much more sensible and had about $160k when we met 9 years ago. I’m the one that grew it though – as mentioned, we have very different risk appetites, which actually works really well for us as a team. He just had it in the bank, which is nuts IMO!
What’s your best tip for saving (accumulating) money?
Keep your expenses constant and grow your income.
Having had very little money as a grad student, it wasn’t a hardship to maintain that lifestyle (maybe inflated by 10% or 15%) while our income grew.
What’s your best tip for spending less money?
Covid!
Jokes aside, all our friends have kids, so there’s a lot of hanging out at each others’ places and potlucks, and not much fancy restaurant and bar-going.
We have simple tastes – we enjoy camping, hiking and cooking at home, and when we travel, we are happy to stay in self-catered accommodation and travel economy.
We are both big readers and borrow lots of books from the library.
What is your favorite thing to spend money on/your secret splurge?
Like just about everyone here, travel!
I am also a nut for skincare and do spend a ridiculous amount on that (nearly $900 last year).
INVEST
What is your investment philosophy/plan?
Diversify.
We have spent the last 5 years buying, selling and renting property in two cities.
We are now starting to diversify into ETFs. We have 50% in developed world equities, 20% in commercial property REITs, 10% in healthcare innovation, 15% in emerging markets and 5% in bonds.
What has been your best investment?
The first property we bought.
Bought for $459k and sold for $629k only 4.5 years later.
What has been your worst investment?
Not sure honestly. Nothing major so far.
I suppose blowing all my savings on travel in my 20s and maybe student debt (I just finished paying off grad school), but I can’t say I regret the former, and the latter has certainly had an impact on my income so I think it all came out in the wash.
How often do you monitor/review your portfolio?
I do a statement of position every 6 months and pretty much don’t look at our equities aside from that.
I do look at the value of our properties pretty regularly as our banking app has a valuation of them on it!
Maybe every week, when I do some banking.
NET WORTH
How did you accumulate your net worth?
I’m not sure this will be super helpful for readers to emulate, as we were very lucky with the property market, and bought in and sold at the right time.
I suppose you could say we took opportunities that came up though – I kept a close eye on the market during that period.
We did actually spend 16 months housesitting (free rent) and that helped us save a lot for our first home deposit.
We have also really focused on growing our incomes, and keeping expenses low.
We had a big push for 5 years to build equity which I don’t think we could have kept up for too many more years as it was a bit exhausting.
I think my partner inherited $6600 in 2017, so not really significant.
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?
I have to say a combination of all three.
If I had to choose one, it would be save at this stage, as we are both pretty frugal and can enjoy life without spending a lot.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
We’ve been very blessed and haven’t had any major ones – we’ve certainly had bumps in the road of life (e.g. health issues) but nothing specific to money.
I had a health issue for about three years, with more than 10 surgeries, that I suppose could have made a dent in my career trajectory but I kind of just sucked it up and kept going.
What are you currently doing to maintain/grow your net worth?
Staying the course.
We are planning to slow down a bit after this year,
Do you have a target net worth you are trying to attain?
25-28x our expenses (we are at about 15x now, since we don’t include our residence).
I suppose we could include it, as we plan to live in a van for a long period and travel around in places where the cost of living is a lot cheaper (we will rent out our house as we do this) but it’s a margin of safety thing.
How old were you when you made your first million and have you had any significant behavior shifts since then?
Well, it was a couple of years ago in our currency, so no, I think we may have popped a bottle of bubbles.
What money mistakes have you made along the way that others can learn from?
I would have saved more money as a teenager and invested it – I was at home and didn’t need the money.
I often think of that saying (can’t remember who to attribute it to) that if you saved $5k a year from 15-25 years old and invested it at 7%, you’d have more money at 65 than a person who saved $5k a year between 25 and 65 years old.
I haven’t done the maths on that so it could be lies though, haha.
Having said that, I had a pretty traumatic time of it in my teen years (part of the reason I travelled so much in my 20s I think), so I probably wasn’t in the headspace to do this, even had I known about it.
What advice do you have for ESI Money readers on how to become wealthy?
Avoid lifestyle inflation.
Hang out with people who you don’t feel you need to ‘keep up with.’
Focus on growing your income.
Keep an eye on opportunities all the time, and take them instead of waiting ‘til they’re in the news!
FUTURE
What are your plans for the future regarding lifestyle?
We plan this year to start arranging our finances so we have more flexibility to do as we like from mid-next year though (mostly travel).
We plan to leave our assets to grow, and only work enough to cover our living costs for each year, or maybe a bit more (Coast FI).
What are your retirement plans?
We will travel domestically and internationally a lot to start off with, including some big walks from one side of the country to the other in our country, and travel in a van here and abroad, then we’d like to build a tiny house (teach ourselves to do it) on a large section where our friends can also join us, first on holidays and then as they also retire.
We will spend lots of time reading (as we already do), and I love cooking, so will do a lot more ‘project cooking.’
We will also spend a lot more time on making music.
I also have a few ideas for websites I want to develop, and some ideas for pop-up restaurants.
I do yoga, and I can see me spending a lot more time on that too.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Not hugely.
We will still be pretty young (assume about 45), so we can always pick up more work if necessary, if there are any financial issues.
We are lucky to live somewhere with free healthcare (not the extras like dental, but major surgeries etc.) so that’s not a worry.
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
I found FIRE blogs in about 2017 and really started getting into it then, so fairly recently.
I suppose by the time we are financially independent (I assume in 4-5 years), it will have been 10 years since I got into it, which seems a standard number of years for people to manage it in, going by the blogs.
Who inspired you to excel in life? Who are your heroes?
I wouldn’t say I excel in life, particularly, we are pretty ordinary people.
I am inspired by the beauty of nature, and also by my smart, capable women friends.
I’m also very blessed in my choice of partner. My partner is extremely caring and intellectually inspiring.
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?
Funnily, though I am an avid reader (120 books a year usually), most of my finance knowledge comes from blogs! So, not really.
I have read the favorites that come up in the interviews but I didn’t get more out of them than the blogs posts I read.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
I give about 3 hours a week on governance committees/boards.
We also occasionally do ad hoc financial donations, especially during Covid lockdowns, to foodbanks, but nothing regular.
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?
We don’t have heirs, but we will inherit from each other, and if we die together, everything goes 50/50 to his and my siblings.
charlie @ doginvestor.com says
Nice, yes I hear Aus has had some fantastic property appreciation
A question on RE investing, am not a property investor but would like to learn more, but is earning a net of usd 20-30k on about $400k of equity in property a decent return? Or how do you measure your return vs alternate assets like divis etc?
M-124 says
Great question. Return on cash invested is one metric but I really like the “return on equity” approach.
Different people have different comfort levels with leveraged debt. In my portfolio 35%-40% has always been a comfortable LTV for me. But that does reduce the ROE.
This is where it’s easy to refinance, pull money and then buy more property – refi is not a taxable event btw so it’s very attractive.
Great question.
M-124 says
Enjoyed this profile. You’re into something here either the RE. Keep doing what you are doing – leveraging cheap debt to scale your property business. You mention reading / following the FIRE method. Keep on.
I’m not sure of the tax advantages there in Aus but here in the US , real estate is the superior asset class – and by a stretch. Most people don’t understand it but you are doing it. Youre systematically leveraging debt and allowing tenants to pay it off -Cheap money borrowed , paid down by increasing (inflating rents ). Keep scaling!
You mention that you guys have free healthcare and I also notice that your cell/cable expenses are $900 a year ?
We have a long way to go in the US regarding healthcare and also the monopolies that exists in the space of telecom. Be well !
Maverick says
Um, it’s not really free healthcare. You are being taxed for it indirectly.
M-124 says
Um – Right.
Like Medicare ?
Maverick says
Yep. Now notice the word FREEDOM starts with free. That’s what you have when you keep more of what you earn and spend or invest it how you like. YOU have the freedom to do as you choose. It’s the foundation of the US founding father’s documents. Take a look, that word freedom is in there multiple times. My direct ancestors were involved in helping to create those documents. But beware, with freedom comes responsibility. I can handle responsibility. It’s ESI. Can others today? Or do they need hand outs?
M-124 says
Uh – Or PPP loans ? You mean things like that ?