Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
This interview took place in May.
My questions are in bold italics and their responses follow in black.
Let’s get started…
OVERVIEW
How old are you (and spouse if applicable, plus how long you’ve been married)?
Both my partner and I are 42.
We have been together for 21 years and married for 14.
Do you have kids/family (if so, how old are they)?
We are fortunate to have three beautiful children.
Our twins are 11 and our third just turned 8.
What area of the country do you live in (and urban or rural)?
We are in the suburbs in a capital Australian city.
What is your current net worth?
At current exchange rates (0.74USD to 1.0AUD): 1.77 million USD.
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?
- Primary Place of Residence – 886k equity (mortgage remaining of 10%)
- Investment Account – 442k which is under a diversified index managed fund provider. The portfolio is 80% stocks of which is split 50:50 for Australian and
- International funds. The remaining 20% is invested in bonds. The purpose of this account is to eventually fund our early retirement until we can access our retirement accounts.
- Superannuation (retirement accounts) – is also coincidently 442k this is a protected account that is almost inaccessible until you are retired and 60 years old.
- Cash – 0k we use the mortgage offset account and credit card paid off monthly.
EARN
What is your job?
My career has mostly been technology services.
I initially started in PC Support, then software development and testing for large start-ups and large tech companies.
Over time, I became interested in the business side and did a Master’s in Business, which enabled me to move into professional services and consulting roles.
Over the last few years, I have been working in a more managerial role for a small consulting business, which I enjoy but also found to be anxiety inducing and like most of my peers I have only been able to last at the general management level for a short time before exiting.
My next move will be to a more technical role but I’m finding management experience less valued than technical skills.
My wife is currently a social worker in a three day a week role having completed her Masters in Social Work in mid 2020. She occasionally does extra shifts on a casual basis for other services but more for personal growth than finances.
Prior to having kids she worked full time in the corporate world as a management consultant for 13 years, and pulled a high income at the time. She changed career to improve the family work life balance and find a career closer to home with more flexibility.
She was also hoping to find more meaning in her work to justify the time away from the kids which she was finding difficult. Her career change has been great for lifestyle and has worked well for the family, but not so much for pay.
She has always been frugal and a good saver, as a counter reaction to having grown up with parents who were not so good with money.
What is your annual income?
150k package for both of us.
Bonuses, while potentially unlimited in the current role, haven’t been as generous as forecast.
My wife can take on extra shifts when available but has no other levers to increase her income. Social work is not known for its bonus structures.
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?
My starting salary as an 18-year-old programmer was minimum wage ($10 USD) who then became a PC support desk worker when the software development opportunities didn’t pan out. Then, I just wanted to earn some cash to go travel (Europe and Asia) on my own. However, girlfriends came along, and I didn’t manage to get travelling until my now wife encouraged me to follow her just before I turned 21.
In the UK I tripled my income and chased the highest paying contract where I developed software, executed testing, and conducted IT system administration. I never really was smug about the type of work. Instead, I sought work for the earnings and the opportunities it afforded and not the glamour or “meaning”.
When I returned to Australia in 2003 post the dot come crash, I couldn’t find any work and did manual laboring and started freelance software and web development in desperation to stay in the industry. Eventually, the IT job market improved but I never forgot the experience of being unemployed and going through demanding three-four round interviews and missing out. It’s an experience that motivated me to pursue savings and investments to this day.
After a couple of years, I did a business degree (night) and again chased any role that offered high salary and excellent possibilities for marketable skills.
Unfortunately, I feel my current role as a senior manager for a small company which they brought me on to assist in a quick exit has been unsuccessful. Which is unfortunate as I have a stake in the company which would have vastly accelerated my net worth.
My wife lived very economically while we lived overseas and came home in minor debt but with great memories.
She worked part time while pursuing further studies in Psychology (and accruing more student debt) before joining a global management consulting company. While this was intended as a temporary sidestep from the path to becoming a registered psychologist, the lure of an ever-increasing pay packet and the lifestyle that afforded meant she stayed on until our twins were born.
In reflection she feels she would have changed careers sooner if it had not been a balance of job security leading up to planning our family and the promise (and financial necessity of maternity leave). She did not chase promotion or consider changing employer in this time for these reasons and in hindsight somewhat regrets this as our family did not come as quickly as we thought it might and there were some ‘stagnant career years’ in between that could have been more profitable.
Since returning to the workforce in 2020, her earning potential is lower but her happiness has increased, both at work and at home.
What tips do you have for others who want to grow their career-related income?
For careers or work, I figure you can choose:
- Meaning
- Status
- Income
Most jobs offer one or two of these factors, max. I think a surgeon is perhaps the exception that proves the rule.
For the rest of us, I feel whatever happens work sucks and if you must eat s##t then you might as well make it high grade.
My wife recommends not hitting the breaks on your career for a family until you have a family. Then, all bets are off.
What’s your work-life balance look like?
Pretty good, but I think about work all the time.
My mind churns over problems constantly and not infrequently invades my dreams.
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?
Apart from investments, no.
SAVE
What is your annual spending?
It’s expensive right now at 88k PA. We have been finishing a few projects for the house and hope to keep it tighter in the future.
However, we typically have been spending around 70k PA and hope to reduce further when we decide to retire to around 45k when the kids are independent.
What are the main categories (expenses) this spending breaks into?
- Groceries: 17.60%
- Shopping: 17.10%
- Auto & Transport: 9.30%
- Mortgage & Loans: 9.20%
- Health: 7.70%
- Services & Utilities: 5.80%
- Personal Care: 5.40%
- Home: 5.10%
- Other Expenses: 4.50%
- Dining, Bars & Cafe: 4.30%
- MISC Categories (< 4%): 14.00%
Do you have a budget? If so, how do you implement it?
We don’t have a budget; however, I monitor our spending loosely.
In the past, I used to monitor a monthly budget but there was always something special required. I didn’t want to object because I’m the one usually advocating the spend.
I’ve been wondering if a yearly budget is perhaps more feasible… However, I expect to budget much more closely once retired.
What percentage of your gross income do you save and how has that changed over time?
We have always tried to live off one of our salaries plus retirement savings. I think when I went deep into trying for FIRE ASAP, we potentially achieved a 50% savings (NET) rate.
I would like to bring our savings rate higher but as our portfolio grows, I question if we will get to the next level of saving while our kids are young and am increasingly wondering if we need to increase our saving as we lean on our from our portfolio.
At times I have pondered on why I am trying so hard to save and reach a predefined number at which I will be comfortable to retire, and I am uncertain if I would even pull the trigger once I hit my ever-increasing retirement goal target number. Will I ever feel that I have enough? Will I ever feel comfortable to explain an early retirement to friends and family? Am I leaving money on the table? What will I do with my time?
My wife on the other hand claims she would be quite happy to retire tomorrow. She has already taken a career change in search of greater meaning and work life balance and has concluded that meaning or money is not satisfactory enough and that the freedom to define your own days is the greatest goal.
What’s your best tip for saving (accumulating) money?
For us, it has been saving and owning your own property. The Australian property market has been on a 20-year-bull market.
But who knows, maybe that’s about to end as we enter a higher inflation / high rates era.
What’s your best tip for spending less money?
I have travelled extensively, privately, and professionally, but my best tip for saving money is to not travel. Buy a house you like to spend time in and in an area that is nice you could day trip from.
On the weekends, our suburb is almost deserted. There seems to be a compulsion to leave your house every weekend. It seems absurd to me; we have the most expensive real-estate in the world in Australia, yet everyone is desperate to escape it.
Many of our neighbors not only travel extensively on their holidays but almost every weekend to camp. I like the idea of camping but when I arrive with the other urban escapists and must deal with all the problems of high density (noise, smells, traffic, etc.) in the middle of nowhere. I cannot see the point beyond appreciating my home even more.
Note: I’m not against travel, I just want to make it deliberate.
My wife finds that who you surround yourself with is a big part of your spending habits. She is grateful that her long standing friends from school days are all relatively frugal and this makes shared holidays and social outings more manageable. Socializing with friends from her management consulting days can be more expensive.
With this in mind she has gravitated to likeminded mums in our suburb and school who prioritize the simple pleasures in life. We have seen too many friends get caught up in the lifestyle associated with their pay level and end up in financial strain despite earning very high incomes.
Basically, don’t try and keep up with the Jones, find the people you already keep pace with and have fun instead.
What is your favorite thing to spend money on/your secret splurge?
My secret splurges have the potential to be terrifyingly expensive and I try and work with my wife to keep them under control:
- Cars – I turn over cars and I like to race them occasionally. I have made profit on cars so while I get a hard time over it, it’s not nearly as expensive as people think.
- Renovating the house. We are trying to be more deliberate here also and made a “program of work” to spread out the projects and avoid new projects while we still have unfinished ones.
My wife wanted me to note that she is not the one giving me a hard time about the cars. She in fact greatly supports my love of cars and the social outlet it gives me.
Weirdly, it is the neighbors and our family who are the first to offer an opinion whenever a new vehicle appears in the driveway. We haven’t yet figured out why this bothers other people so greatly, would love to hear if anyone else has found their personal hobbies intrigue others so much!
INVEST
What is your investment philosophy/plan?
My investment philosophy is diversified and low cost. We use low-cost investment managers and a blend of active and index investing.
I have more control of our personal portfolio where I have a slight bias for income from Australian Shares and REITs, so while overweight for the local market is still 50%.
What has been your best investment?
We have had three properties, which have all been our primary residences. The first one doubled in five years, the second one lost 3% in two years and the third doubled in ten years.
IMO in Australia a property has many advantages:
- No capital gains tax
- Low capital cost and high leverage
- Imputed rent (rent expense is not taxed)
What has been your worst investment?
Worst investment was selling my stock options from my work when they vested and putting it into an index fund.
What’s been your overall return?
I would guess around 7-8%.
How often do you monitor/review your portfolio?
Every month.
I do my best not to check much more beyond that.
NET WORTH
How did you accumulate your net worth?
All three ESI, constantly earned, diligently saved, and stayed invested.
I wish there was a secret because I would double down on it on the last stretch.
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. I could save decent sums on low and high wages.
Investing is great and all, but it takes time and isn’t as lucrative as portrayed.
There really is so many opportunities to spend money, resisting the urge to inflate your lifestyle to your colleagues, neighbors and friends is very difficult.
Additionally, retirement or building a portfolio really is just so far into the future, so it’s hard to stay motivated.
For most of the time, I had no real purpose for the savings, I just wanted the security and optionality saving provided.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
In retrospect, I should be much wealthier, than I am. So many investments not taken, businesses not started and wrong career moves.
Conversely, there have been many possibilities of wipe out that I also dodged too.
I think you only get so many chances, it’s best to cover your bets with simplification and diversification and be happy with average.
What are you currently doing to maintain/grow your net worth?
- Work, save a bit.
- Hope the investments grow
- Reduce expenses
Do you have a target net worth you are trying to attain?
- House paid off
- $1.5M total portfolio
For each year we work and don’t retire the less money we need, which I have estimated to be around 22k PA.
So, if we retire at 50, our target will be less, of around 1.3M.
This reduction is for two reasons: one, we will be older have less time to live, two, with young children this is our most expensive years; once we become empty nesters, our demand will be less.
Happy to hear opinions on this idea, as I suspect it could be controversial since I don’t hear too many people talk about this.
This concept of a reduced portfolio as we age is sped up by the compounding of the portfolio, which makes working hard for high income harder to justify and is something I am trying to come to grips with.
At this stage, I am embarrassed to admit, I have doubled down and focus on earning as much as possible until I have a better idea.
How old were you when you made your first million and have you had any significant behavior shifts since then?
Around 35 is when we had a net worth of a million USD.
In the past few years, we have relaxed and are spending more. Time moves so fast and we have realized that there are only so many more years before our kids won’t want to spend time with us, so we are trying to make the most of this time with outings and small (and sometimes large) trips.
We have also invested in remodeling to create a fourth bedroom out of our existing footprint so that each child has their own room.
We would like to create a space where all our children feel comfortable to stay through university (the standard in Australia is to live at home while studying) and beyond while they save for their own homes.
What money mistakes have you made along the way that others can learn from?
Be careful buying a house, try to stay there for as long as possible. We bought our second house on a whim; it was lovely on the surface, but the reality was it was a money pit. Once we had children and we couldn’t make the housework, we cut our losses and moved back to my hometown suburb which is lovely but unglamorous.
After a few years, we suffered some sort of status anxiety and looked for a suburb with better schools that was posher. After, a series of failed auctions at the bottom of the market we left with our tails between our legs.
We made peace with our suburb and now love it. A couple of years later I wanted to “downsize” our house again to speed up FIRE, but luckily this time my wonderful wife stepped in, and we stayed put and we love it here.
Downsizing is an option in the future once the kids have finished high-school.
What advice do you have for ESI Money readers on how to become wealthy?
Have a goal, chip away and do your best not to compare yourself with others. We have seen the biggest wealth destroyers are around ego, which result in messy divorce, loss-making business (restaurants, pubs) and mega renovations and/or houses.
I have my own rules of thumb for spending metrics which I know blogs like Financial Samurai and banks advocate. A few of mine:
- No greater than 3 months NET salary for a car
- Don’t renovate your house beyond 20% of the house capex (excluding land)
- A holiday should be cost neutral for full time employees (i.e., 1 week of net salary is 2500 then a weeklong holiday should not cost more than 2.5k). For something fancier, I allow banking staycation funding. Meaning, for every week we don’t travel when taking annual leave, we can allocate those funds towards a future bigger trip.
FUTURE
What are your plans for the future regarding lifestyle?
Our net-worth has enabled my wife to go part-time but while we have the portfolio to enable the option for both of us to go part-time or even change career, I plan to stay the course as much as I can grin-and-bear my current IT career.
We expect our expenses are at or near peak with the five of us (three kids). While we have debated about downsizing the house or performing some sort of geoarbitrage, we just don’t want to move from the family, friends, and quality schooling. We just feel it’s too big a risk and we really love our house. All our parents live within 20 minutes of us and as they enter their 70’s we also feel the pressure to stay close by to support their needs.
In terms of lifestyle, we plan to:
- Walk
- Live simply
- Travel
- Garden
- Sport (bowls, perhaps?)
- Grassroots Motorsport
- Prepare for the end (Spirituality)
A couple of these I felt needed a longer description:
- Travel, both of us have travelled extensively for leisure and work. Including a three-month sabbatical across Asia and Europe with the family. We hope to repeat another trip like this before the kids are too old. Once we are empty nesters, we hope to take a few long slow trips to places we have loved previously but want to get to know better.
- Motorsport, my current hobby is motorsport. I’ve always loved cars, but nothing is like getting them on the track and put yourself to the limit. Motorsport is undoubtably an expensive hobby, but I try to keep it at the lower end of costs by focusing on my performance and not comparing myself to (much faster and much wealthier) others.
- Spirituality, prepare myself that I will die, get ill and so will everyone I know and to accept this fact.
What are your retirement plans?
Financially, I plan to source income from:
- Work until FI
- Investment Account (private)
- Superannuation (retirement fund) from 60
Back stopping this plan is to downsize the house which will be a bitter pill, but our current house is huge for a couple. So, I think we will be happy if the time came.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
My biggest concern is never reaching the freedom from work. It feels like my working life has been a long journey already, and it still feels so much further away.
My other concern is the government changing the rules, changing the age when Superannuation is accessible, which is currently 60 which is 7 years from the official pension age (67).
There are many in the government and certain think tanks who want to increase the pension and Superannuation accessible age to 70. This means a personal portfolio is going to need to last a decade. I think this legislative risk scenario is unlikely, but the politics is worth monitoring.
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
I have always been a saver and so has my wife. Despite saving we never really pursued increasing our Netwealth, it was really to fund future lifestyle or options.
However, I distinctly remember one night in 2015 when I was hunched over my desk, assessing my life, three very young kids, a stay-at-home mum and me deeply unhappy with the prospect of having to wake up at 4 am to travel to the airport to catch a flight for work. I started to think there must be a way out of this.
Then, something obvious occurred to me, expenses == servitude (i.e., the greater my expenses, the more I need to invest). I remember I was so excited, yelling out to my wife, “I’ve got it, the less expenses you have, the less you need to retire.” She struggled at the obviousness of my statement, but to me I had never really connected them.
Months later I discovered Mr. Money Moustache and by the end of the year, I was convinced that FIRE was possible and made a significant effort to reduce our expenses.
Who inspired you to excel in life? Who are your heroes?
I feel a tad awkward about this question, I wouldn’t say I have excelled on balance, but we have certainly worked hard and been fortunate. Overall, we have largely followed the path expected, work, study, save and work more. I’m also disappointed that I have not reached financial independence. Conversely if I was to retire early, I wonder how I will deal with jumping off the life script of maximizing production.
Dave Gow from Strong Money Australia is in my opinion, a bit of a legend. He retired at 28 as a forklift driver. While younger than me, he is highly rational, and I respect his determination and passion for freedom.
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 Denial of Death by Ernest Becker – This is a book you cannot unread and once you read it see the world in the same way. Not only do I reflect on this book daily as it helps me understand my motivation and human nature in general in a more accepting and positive way.
Fooled by Randomness by Nassim Nicholas Taleb – Argues that randomness has a bigger factor in success than we like to acknowledge. In Anti-Fragile he argues for a bar-bell strategy with most assets in safe ones (bonds, cash, etc.) and a small amount in the riskiest investments. While I don’t subscribe to this portfolio on lifestyle and focus on:
- Minimizing debt
- Maintain a margin of safety
- Seek freedom
- Go for walks
- Be aware of traps such as status (remember status can also be a job, company, role)
Overall, like Taleb, my overreaching financial goal is to avoid people telling me what to do.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We donate to charities on an ad-hoc basis, plus my meditation group.
Otherwise, we donate based on personal connections to the cause.
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 have no specific plans to leave an inheritance.
But we intend to follow the family tradition of passing on any inheritance we receive to our children and not spend it on ourselves unless we have an emergency. We view inheritance as a form of inter-generational insurance.
PEScott says
Great to have another interview from down under! Out of curiousity, your health category made up 7.7% of your spending, is that strictly health insurance? I thought Austrailia had a socialized medicine industry that made it more affordable. But if it’s 7.7% of you $88K spend, then it’s not horribly expensive, but not as good as I had thought.
I was fortunate to visit Austrailia back in the early 90s. I really enjoyed the area and the people…and chuckled everytime someone said I had a funny accent.
No. 326 says
Thanks for the comment.
Perhaps being a family of five and maybe not the healthy people on earth is the reason? 🙂
The health system appears to be decent for emergencies and the like but it doesn’t include anything else. So dentistry, pharmaceuticals and other therapies are excluded from the government and these services are not cheap!
No. 326 says
Thanks for the comment.
Perhaps being a family of five and maybe not the healthy people on earth is the reason? 🙂
The health system appears to be decent for emergencies and the like but it doesn’t include anything else. So dentistry, pharmaceuticals and other therapies are excluded from the government and these services are not cheap!