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.
My questions are in bold italics and his responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am 42 years old and I’ve been married for 18 years to my college sweetheart who is 41 years old.
Do you have kids/family (if so, how old are they)?
We have an 11 year old.
What area of the country do you live in (and urban or rural)?
We live in the southwest and are in a suburban community.
What is your current net worth?
Just over $1,900,000
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?
The largest part of my net worth is real estate.
About $1.2M is made up of 6 residential rental houses I own as well as my personal residence, which I have significant equity in.
The remaining $700k is distributed across 401k savings, various cash accounts and alternative investments including gold and equity investments in private companies.
The only debt we have is a modest mortgage on our primary residence and small mortgages on a few of the rental houses. We have been “snowballing” the rental mortgage payoffs with the cash flow from the properties.
What is your job?
I’m an executive (C) level M&A professional. My team and I buy healthcare businesses for a privately owned company that I am also invested in.
What is your annual income?
With salary and bonus I typically make between $350k-400k per year, not counting investment income.
How did you grow your income so high?
I have made strategic decisions in my career, with each decision and change developing my skills further toward achieving specific goals.
I work very hard and I’ve been willing to take risks on new companies and/or industries that I felt would help me progress forward.
I never dreamed I would earn what I do today, but I’ve always set fresh career goals each year and worked toward achieving them.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
Salary and bonus represent the $350-400k above.
We also receive about $3,700 per month in rental income that we reinvest.
What is your annual spending and what are the main expenses you have?
My annual spending is relatively high, although I continually save a reasonable amount.
- $36,200 per year primary residence ($17k property tax and $19.2k on a $300k mortgage-house value of $850k)
- $30,000 private school ($16,000 in tuition and $14,000 in charitable donations to the school annually)
- $25,000 per year in tithe and giving to our church and various charities beyond the private school donations
- $18,000 expenses for my child’s competitive activities/hobbies and private lessons
- $10,000 Insurance costs (life, disability, auto, umbrella liability, etc.)
- $49,400 All other expenses including food, monthly bills, auto expense, vacation, clothing, etc.
- $40,000 Savings from bonus and monthly budgeting
- $40,000 Rental income savings
- $18,000 401k
- $9,000 College Savings
How did you accumulate your net worth?
I’d say a combination of three things:
- I’ve always made reasonable money by focusing on my career and growing my income, just as you teach on your site.
- Secondly, I started investing in residential real estate in my 20’s, when I made a lot less money than I do now (the earlier you invest the better).
- Lastly, I track every penny we spend with a monthly budget and always force myself to save and live below my means, never accumulating debt unless it was low interest mortgage debt (also known as leverage).
What money mistakes have you made along the way that others can learn from (or something you’d do differently)?
I’ve made plenty of mistakes, but at the same time I try to not to dwell on them.
I really don’t know if I’d do this differently or not, but I do think about it from time-to-time. My wife and I both came from modest families and had nothing when we got married. In fact, we were both net liabilities with huge student loan debt and some credit card debt from college when we came together. If accumulating net worth were my primary goal in life (it is not by the way), it would have been smart to have not increased our standard of living as much as we have.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
Grow your income, take some calculated investment risks (for us it was rental properties and career choices), track your spending and your saving in detail, and set goals for each of these items each year.
One other piece of advice is to try to enjoy what you do at work if possible. It makes it so much easier.
What are you currently doing to maintain/grow your net worth?
I am doing all of the same things that have brought me to this point.
I work very hard, I continue to invest in our future (paying off rentals, investing in my company, 401k max, college savings, etc.) and I continue to track our spending and our savings.
Do you have a target net worth you are trying to attain?
Not really. I do have a plan to have all my mortgages paid off by the time I’m 50 and have enough passive income from my rental houses to sustain my standard of living.
This will likely include an additional 5-6 rental houses in my portfolio. If I had to target a net worth goal, it would be somewhere near $5M.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
Not in the immediate future. I see myself working just as hard for at least the next 10-12 years. That should be about the time my daughter is out of college, which will put me in my early 50’s. I may consider retirement at that time.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
For me, wealth accumulation was never my primary focus. My family and my faith are the most important things in my life. I think clearly defining your values and sticking to them is critical.
I think it is also worth noting that wealth creation is about the basics of working hard and saving. At one point in my life I felt that you had to have an impressive degree or come from money to be wealthy. I have neither of these, but with a little luck and many blessings here we are.
Finally, be grateful for what you have and treat others with kindness and respect along the way.
Chris @ Duke of Dollars says
I found it very interesting that an IRA wasn’t including in their savings each year, but a 401(k) was.
Do you think it would be possible to follow up with him on why that is? The extra 5,5K shouldn’t be hard for the overall financial situation.
Chris, I’ve considered the 5.5k for IRA over the years but honestly would rather forego the tax advantage and have that cash invested in things that aren’t tied up until I’m 60 years old and tied to the stock market. I fundamentally believe in rental real estate and the passive income it creates over the stock market. I realize my POV is contrary to what many might teach, but it has been a conscious one.
Razorback 14 says
Nice job M34
You’ve done well and you seem to have a good perspective on life —-
Thank you for taking the time to share all you’ve done with us.
You, your wife and your daughter are blessed —— sure wish other families would use the ESI model to prepare for the future.
Again, thank you.
Thank you for the comments, and yes, we have been quite blessed!
Mike at Balanced Dividends says
Thank you for the post and sharing your experience.
One item that stuck out for me – but not a surprise: “We have been “snowballing” the rental mortgage payoffs with the cash flow from the properties.”
Not sure of the exact numbers of your mortgages, but that’s a great benefit you’ve highlighted: creating positive cash flow to pay off debt while increasing income.
Thanks again for the post.
Great work. The advice of doing something you enjoy is very valuable. People who enjoy what they do grow their skills at a faster rate and subsequently their incomes.
Thank you for sharing. It’s always interesting to see how others have built their FIRE. I am curious, to those with several rental properties, do you manage yourself, or do you have a property manager who handles the day to day side of things; collecting rent, maintenance issues?
I’m not M34, but I own three rental homes and I’ll share my experiences. We manage the homes ourselves, and only engage with a property leasing service when we need to fill a vacancy. Our rental homes are about 80 miles away from our home, so close enough to visit if needed, but frankly we very rarely visit. We’ve had no turnover in the past 3 years, and our tenants let us know when something needs to be fixed. We have a handyman that we call for pretty much any issue. Altogether, between 3 homes we average maybe 6 or 8 “service calls” a year – nearly all handled remotely. The average service call takes a few rounds of calls/texts/emails to coordinate repairs and costs a couple hundred bucks. The tenants mail their rent checks. All in all, being a landlord for the past 7 years has been pretty painless for us. We could be a little more proactive on maintenance, but to each his own.
Jeff B. says
Just curious. Why not set up a bank account in the town the renters are in and just have them make the deposit to the bank account. Of course an account just for the rental payments.
I’m not sure I understand the suggestion. The tenants would have to physically go to this local bank and make a deposit? I can’t imagine why they would want to do that, and it is no inconvenience for us to deposit their checks. There are potential electronic rent payment solutions but as long as none of the tenants have a problem with the current arrangement, neither do we.
Jeff B. says
With the right bank, they take a photo of the check and it’s deposited. Saves time of the check getting lost in the mail and then you having to deposit the check. Might speed up collections by a few days.
Gotcha. Perhaps when I get big-time enough…For now, I actually enjoy getting a paper check in the mail and taking it to the bank. Again, if my tenants asked for something like that I’d be happy to set something up, but as long as they don’t I’m happy with the current setup.
Speaking as a tenant, I’d probably forgo renting from someone who wanted me to deposit the checks for them, even if it’s just taking a picture each month. I work very long hours, sometimes 120 hours per week for several weeks on end during busy season, so try to streamline as much as possible to avoid forgetting to make payments. If I couldn’t have my bank automatically send my rent check to my landlord each month, I’d find a different apartment.
Responding to a couple of questions on rental properties. For the first 8-9 years, I did all the management myself. My wife (stay at home) listed the properties, handled calls, showed the properties and wrote lease contracts. I personally did 75% of the maintenance on them on the weekends when I wasn’t traveling for work. The last few years, we’ve handed 90% over to the professionals. I have a realtor that specializes in rental properties list, lease and run background checks for a modest fee (1/2 of first months rent). I have a team of experts (HVAC, electrical, plumbing, general, etc.) that I trust to handle the maintenance. I still get to know the tenants and I still make all decisions on big repairs and upgrades. I made the transition to less hands on as I grew to 5 & 6 properties and realized I had enough cash flow to cover these expenses and still make money. I’ve been much happier ever since!
Hi, I too manage myself. its important to always have reliable repair people….plumbers are the number one reason for a call. They never charge me to look at my HVAC and plumbing and I always negotiate a good price. Once they move up to an expensive hourly rate, I look for the next hungry guy to get some steady work. Reasonable painters are also worth the money, although I mostly paint myself,
Thank you for sharing M34. You and I have similar real estate holdings, networth in the same ball park, and modest beginnings. The only difference is I am a decade older … Good Job and keep on doing what you’re doing. It’s definitely working for you.
Thank you Carlos! Congrats on your success as well! I wish you the best.
Millionaire Doc says
Good interview M34. Curious about your rentals- self manage or property manager? How much time do you spend on your portfolio?
Millionaire Doc, sorry I’m just getting back to your question. Used to manage 100% on my own, now we use a realtor to list and lease (and background checks), and we manage the rest of the year. We realized with 6 rentals (once had 8) that the largest time constraint was leasing and showing the properties, especially when multiple came vacant at one time. We likely spend less than 5-10 hours a month. Our time is only when we either need to do a make ready upon vacancy (possible carpet, paint, or other work), something breaks (rare), and depositing checks (quite fun). Even on the make ready and something breaking, all we are usually doing is evaluating the work and then calling our specialists we work with to do the work.
Paper Tiger (aka MI 27) says
Hi MI 34, I like your story and your philosophy on your wealth and your goals. You are conscientious but not obsessive about every dollar that comes in and out and I like the fact that you live and spend without being overly frugal. It seems to me you have a very healthy attitude about many of life’s decisions and challenges and that has to help keep your stress and blood pressure in check.
I also like that you have been willing to take reasonable risks to achieve your goals. You have your priorities well placed and that may be the best result of all. Well done and best wishes for continued success!
MI 27, thanks for the thoughts and kind words. I will say that I was quite frugal when I was younger, made less, and had a negative/low net worth. I have been willing to enjoy life a bit more as we’ve grown older and begin to see some of the fruits of our labor. Life is too short to not enjoy yourself. I wish you the best as well!
Sean @ FrugalMoneyman says
“At one point in my life I felt that you had to have an impressive degree or come from money to be wealthy.” That is what is constantly feed to us at an early age. What they don’t tell you is that institutional intelligence and financial intelligence are 2 completely different mindsets. You could have all the degrees in the world, and still not understand how to effectively handle your money. On the flip side, you could not have a single degree in the world and be one of the most wealthy individuals alive.
I heard a great line once on a sports podcast, “Don’t chase the diploma, chase the idea.” It isn’t the paper diploma that creates wealth for someone, it’s the consistent effort of investing your money and your mind into yourself and your dreams. The diploma may get you in the door, but that’s where it’s value stops. Its on YOU after that.
Thanks for sharing!
Couldn’t agree more. Appreciate the comments.
Congratulations on the wonderful success in your early 40s. Hope you continued success on your personal finance journey.
thanks Jason, I wish you the best as well
Some numbers must be missing. But, if they aren’t, I would be pretty uncomfortable with such a small amount of available cash or easily-convertible assets. You stated $700k of non-real estate assets so maybe the list is just incomplete. With your high income and high expenses the loss of your ability to earn would be a crisis.
Rick, you bring up a good point, and I didn’t list any detail on my liquid savings available, however listed my current annual savings rates. First of all, I’ve been intentional about pouring a reasonable amount of cash over the years into real estate, and only in the last 3-5 years has my income grown to its current level. I currently have $170,000 in liquid cash in various accounts available for a rainy day. Also, in the unfortunate event of a job loss, once I cut 401k savings, charitable giving/tithe, college savings, etc., I have enough cash reserves (combined with $3,700 monthly rental income) to survive just over 2 years without changing my standard of living and without needing to liquidate any investments. All-in-all I’m quite comfortable with my position and also realize I could change a few things on my expense line pretty easily and extend the 24 months considerably further. I appreciate your comment.
Relatively short, punchy, and straight to the point . . . like! Refreshing to hear a different perspective on the endless IRA, IRA, IRA or die parade. I find their tax advantage slight in light of their many restrictions, plain unwieldy and possibly critical at a moment when one’s mental faculties may not be all they once were. Keep it simple, I say; I’ve opted for six different accounts with little to no restrictions. Most restrictive of all would be the 401(k), my number one, though I really don’t mind . . . it is now 16% of my paycheck, never seen or missed, coupled with a 5% match by my employer, 100% fully vested in an S&P 500 fund with an expense ratio of .19; no rebalancing fees at 100%, one fund. Simple, not missed, and yet to say it’s galloping along ferociously in this hot economy is an understatement. Number 2 is credit union savings, directly attached to checking; a 1k+ emergency fund with dismal interest, but it serves a great purpose, keeping me calm. Number 3 is a money market account at same credit union, TwinStar (most beloved); it’s set at 3,666+, a car replacement fund for cash, used only, whenever that becomes a necessity. Number 4 is a Save to Win CD at TwinStar; it’s set at 10k+, a home maintenance fund with decent interest. Those three accounts, numbers 2, 3, and 4, serve a secondary purpose as, collectively, one year’s living expenses (14,666+) in case of a job loss. Should that happen, I will cease worrying about car replacements or home repairs until that income is replaced. For now, they are untouched in all categories and growing. Talk about an excellent feeling; thank you to Dave Ramsey and other early encouragers that got me going. Now back to the list: number 5 is a new account, high-yield online savings; it’s an educational fund for now, a property tax fund later. It gets 5% of my net, every two weeks. Last is my Vanguard brokerage account–NOT an IRA, thank you. It gets 10% of my net, every two weeks; it is the principal nest egg fund, one fund only, VGSTX. Thank you Paul Merriman, for that; talk about a smart f*cker. I got a lot more from Financial Fitness Forever than perhaps any other source; he takes it from the simplest of sound options to more complex ones, as needed or desired. Guess which one I took. Six accounts, baby, hit it or quit–thank you James Brown! I need guys like that to keep living, crazy as he was, not just how if you know what I mean. Quality of life, on your own terms. No exceptions.
The new wisdom is don’t overpay the mortgage, necessarily, unless there’s nothing better to do. For now, there is. Student loans get all the extra love for now; they’ll be gone in six years or less, the mortgage probably within ten by my current calculations, even though it’s a thirty-year. Snowballin’, baby; there’s more than one way to wield that ax, as we also learned here. Most definitely a mad woodcutter now, and a rainmaker–I like it!
Life insurance to cover the remaining mortgage debt, should I fall; that’s for the gf. Death benefit at work, for the gf. Every account I have, she’s the exclusive beneficiary. Got my living will, legal powers, medical directives and last testament punctuating all that as well. You really don’t have to get married unless you want. Finally, no long-term care insurance, ever. I think it’s a lark, for the ultra-rich (HNW only) with change to spare. There’s no guarantee it will be fulfilled or even touched, depending on a broad array of unforeseen circumstances. Much easier to stay single with a modest nest egg and all those other safeguards and protections; if I get deadly sick, it’s a bounce down to Medicaid, with little to no harm for her. In fact, she would benefit more greatly, a fact I DON’T readily advertise (lol). But the same goes for her; deadly sick or dying, she would bounce down to Medicaid. I would be heartbroken but otherwise unaffected. Sometimes it pays to be modest, barely out of the woods, I say. One day our nation’s healthcare structure may change; until then, best of luck, for real.