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’s guest is Mr. Shirts who writes at Stop Ironing Shirts, he goes into nice detail about growing a network and how he increased his income as a white collar professional.
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)?
We’re both 35! I technically married an older woman, but only by three months.
We met at eighteen, married at 22, and have been happily together since.
She was an acquaintance of my ex-girlfriend and we were an early adopter of “Internet dating” using AOL Instant Messenger with our colleges being eight miles apart.
Do you have kids/family?
Not yet…we’re working on that.
What area of the country do you live in (and urban or rural)?
We live in Texas currently.
We’ve lived in both rural and urban areas with my job (4 total locations) and prefer the urban environment. It’s a lot better for my career and earning potential to live an urban area, even when accounting for the higher cost of living/housing costs.
What is your current net worth?
As of this writing (November 2017), it is $1,452,000.
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?
We are pretty basic in the composition of our net worth:
- Taxable Accounts: $255,000
- Retirement Accounts: $1,016,000
- Others (Vehicles): $7,000
- House: $174,000 ($650,000 house, $476,000 owed)
Contributing the maximum to every plan available does pay off over time.
What is your job?
I work in banking, specifically for a regional bank making loans to privately held businesses.
I now lead a team of nine people and have been doing that for the past three years.
My wife took a career-break from being a veterinarian which has turned into early retirement. (Editor’s note: I’ve always wondered if we’d see someone create VetOnFire.com).
What is your annual income?
It can vary a little year to year with performance bonuses and stock awards (and their vesting schedule), for 2017 it should come in around $250,000.
How did you grow your income so high?
This question is why I was really excited to see this interview series and wanted to chime in. I think there’s a lot people can learn from my journey.
In an employment environment where people seem to jump companies every three years (and many career bloggers encourage it), I chose to stay with the same company out of college and still work for them today.
Instead of jumping companies, I chose to be geographically mobile and figure out who the really smart people are in my company and befriend them. I didn’t befriend them as being “that guy” on the golf course or going out drinking until all hours of the night, I would ask them for their advice, act on it, then show appreciation. It’s not difficult.
Three years into my career I knew (and was advised) that I needed to get to an urban environment to learn, so one of these mentors connected me with a great boss. I worked there for seven years and then followed another up and coming leader in the company for another geographic move. (He has since been promoted to one of the top eight positions in a fortune 500 company).
There were specifically two inflection points in my compensation, I surpassed five years of experience and became incrementally productive as a lender/banker for my company (and clients) and was rewarded.
Quality, productive commercial bankers earn $125,000 – $200,000/year. It’s a skill that takes five or more years to learn and you have to be both analytical, solve problems, and sell.
I liken the first five years of this job out of college to a physician’s degree and residency, except without the student loan debt. My hours were long but I worked hard and learned! Fortunately and unfortunately, there are a lot of lazy people in this industry. The person who comes in early and stays late in their 20s gets noticed quickly if with the right leaders.
I also found out that entrepreneurs really value seeing their “banker” hustle as hard as they hustled in building their business. Who wants to leave someone a message six times for them to call you back? I figured out an entrepreneur respected that, returned my call, and wanted to do business with me before I ever walked in the door.
It turned out clients had the same perspective of my industry as I did, lazy. This got my compensation up in my late 20s and afforded me a leadership opportunity at 31.
Now I’m almost four years into leadership and it’s added another $100,000 to my total compensation.
If I say in my current role, compensation starts flattening out between $300,000 and $350,000. That’s a heck of a living for a business degree from a low-level state college.
What is your main source of income?
Our income is primarily from my job and we’ve received zero inheritance. I don’t view it as income, but we’ve been happy to see our portfolio stacking on an extra $80,000 to $120,000 in investment gains over the past four years.
We didn’t go into 2009 with much of a nest egg, but it was nice to see our incomes accelerate and we invested the difference at the market bottom.
What is your annual spending and what are the main expenses you have?
We’ve never been huge spenders on “lifestyle”.
I was lucky to read the Millionaire Next Door early in my life. We aren’t misers, I own a truck, we have cable television, and we take nice trips and like going to live sporting events.
Our current expenses look like $2,000/mo plus housing and travel.
We have a 10 and 15 year old paid for car. I also got mileage reimbursement as part of my job when I drove more to see clients, which nicely offset the cost of car ownership.
I say $2,000/mo plus housing because we had to start looking at it that way with my last geographic move. I really hate commuting, so we choose to live in a small house on a very expensive piece of dirt with high property taxes. Our current mortgage payment with escrows is $3,725/mo, with $1250 of that being the property tax escrow.
In exchange my commute is less than 10 minutes and I get to read/write with a cup of coffee in the morning instead of being stuck in horrible traffic.
How did you accumulate your net worth?
We spent the first three years of my career in a small town and nearly broke, with me earning an entry level, rural banker’s salary and my wife in veterinary school.
We got by, I carried all the living expenses and used student loan debt for school. School was tough and we wanted “stuff”, but looking back we had fun.
When we moved and both started working, our lifestyle inflated with a new car, house, but we didn’t stretch ourselves significantly.
I would say to start, we did the basics, didn’t borrow too much, still contributed to get the match in retirement accounts, be reasonable on spending (even though we spent hard on vacations and eating out).
2009 was a real shock to us, my wife’s employer started experiencing money challenges and I worked in banking and saw layoffs of my peers at other banks. We realized this nice slow and steady path could in the words of the great 1980s philosopher Mike Tyson “get punched in the face”. (You know, everyone has a plan until they get punched in the face). We had roughly a $100,000 net worth (made up mostly of a housing gain plus my 401k) earned $120,000 combined, but were spending a bunch of money going into 2009.
The year turned out okay, my wife was able to move employers, got a nice pay increase and shorter commute, then my income really accelerated and we never spent more money. We also started figuring out that neither of us might want to do these jobs into our 50s. We took our first trip to Hawaii and said “it’d be nice really not to have to go back to work”. At that point we were focused on saving and investing, then add finding MMM in 2012 and we realized it was much closer than we thought.
The biggest piece(s) of advice I have is:
- Save $100,000 to $200,000 outside of retirement accounts. Early on I missed on a number of investment options (residential rental real estate) because of my fear of lack of liquidity. There were also no borrowing options really available in 2009. Now I find myself making long-term decisions and it removes the psychology of “I can’t afford this” and moves it to “I choose not to buy this”.
- Utilize all of your tax advantaged options. This is more than just maximize the 401k. Depending on your industry, it’s also worth finding an employer with a deferred compensation/457 plan. Utilize your Roth IRAs early because you’ll probably out-earn them. Fully fund an HSA. Thanks to the pre-tax cushion we now have above, we defer 40%+ of my salary + bonus into pre-tax accounts.
What money mistakes have you made along the way that others can learn from (or something you’d do differently)?
I’ve made the laundry list of errors that would make personal finance experts cringe, but we’ve just managed to out-earn those early errors and avoid getting trapped.
I bought a new truck and 2800 sqft house at 25, signed up for a painful commute, spent thousands of hours analyzing individual stocks to only meet the market’s return, and panicked and slowed investing new money and instead paid down 2-4% fixed rate debt in 2009.
We missed out on a once in a lifetime real estate investing opportunity in suburban Atlanta where we lived from 2009-2012 and I worked close enough in that business to know it was a deal, we were just weak and valued security over risk.
I’ll chime in one lesson from my wife: Be very careful which professional degree you pursue and look into the income potential carefully.
She always wanted to be a veterinarian, but also enjoyed earning/saving money. The economics of that profession are very tough (at the time it was 8 years of education for a $55,000 starting salary) and you’re usually working for an entrepreneur with their own money challenges. You need to be an owner in that profession to be rewarded appropriately compared to the time spent in school. We had to make a decision five years into her career if we wanted to borrow a significant sum of money and start a practice or if she was going to be the secondary source of income and be geographically mobile. She chose the latter and it’s worked out okay.
What have you learned in the process of becoming wealthy that others can learn from?
“Wealthy” to me is more about the money, wealthy to me is being able to provide significant value to your employer or clients while enjoying what you do.
I can’t say enough about the value of developing a “professional network”.
It doesn’t matter what your profession is, develop the network. Keep a spreadsheet of the people that you know and like and when the last time you talked to them is. You never know when those relationships will return value, but most of them will.
Stay in touch with former co-workers, social media and text messaging makes this so much easier than a phone call, especially if you’re a natural introvert like me. Pick up a copy of Dale Carnegie’s classic book and learn how to take an interest in other people.
This is also not a short-term gain, you won’t get value out of a network in the first six months and some may take five years to provide value, just stay in touch. Staying in touch with someone develops trust and people only approach people they trust with opportunities. You trust people who call you just to catch up and see how you’re doing, not the people who only call when they need something.
One example I’ll use is a local photographer. He is charming, personable, and decided to completely ingrain himself in a local city. He showed up to every Chamber of Commerce event, was always willing to volunteer on fund raising, consistently got coffee with a different person 3-4 days per week, and started making introductions connecting people inside his network.
In exchange, whenever there is a photography need, he’s now the first name that comes to mind. He also does photography for not for profits, but is sure to negotiate an in-kind benefit in exchange and provide that to one of his paying clients (ie – If he’s doing photography for a black-tie event, or golf tournament, he’ll ask two tickets in exchange for his fee then give those tickets to his best clients, who he then sees that night).
Here is a photographer, a profession that has nearly been replaced with the iphone, living out his dream every day and who’s generally friends with all the people he’s interacting with daily. To me, that is a “wealthy” individual and he did it all through his professional network.
What are you currently doing to maintain/grow your net worth?
We are boring investors and have slowly converted all of our investments into low cost index investing and are adding some bonds and REITs to our asset allocation to buffer a little against the next downturn since preserving capital is becoming as important as growing. My income level affords us the ability to save a significant amount of money each year.
Do you have a target net worth you are trying to attain?
Our target has always been $1,200,000 in investment accounts plus a free and clear house into retirement.
We’re basically there other than figuring out where we want to live in retirement and the quandary that is health insurance. I also have the backstop of a small pension that I can start drawing at 55 (just over 19 years away, $1,200/mo not inflation adjusted).
We’ve always talked about living in Hawaii — that would require getting our net worth closer to $2,000,000 due to housing costs.
We will likely just utilize the excess to support charitable causes and we already have a donor advised fund. We can’t see a reason we need/want to have our net worth grow over $2,000,000, especially with a pension backstop. We plan on giving away earnings above that number.
What are your plans for the future regarding lifestyle?
We are close to early retirement, based on how my compensation is structured 40%+ of my income is paid out in the first quarter of each year then I earn an additional year of pension service in the second quarter of each year. This means March or June each year are when we should retire. It may be 2018, but more than likely it’ll be 2019 before I pull the plug. I am generally enjoying what I’m doing each day, but would like to have more time off and longer vacations. We don’t have kids yet, but I’ve said to myself if it that happens I won’t be an absentee parent due to work.
When I declare early retirement, at a minimum I’ll tell my network I’m taking a career break and spend six to eighteen months off deciding what I really want to do. I know there will be some interesting opportunities for my skill set and through my network. I love the game of business, I enjoy developing people, I just don’t enjoy it to the point that I want to continue doing it for 40-55 hours per week.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
You must enjoy the journey and enjoy today. You never know when your life is going to change in an instant. Hug your spouse, hug your family, throw the tennis ball for your dog, and enjoy today. Go for a walk in the morning without music and take in the world.
We had the perfect “plan” in place, then we were working out at the gym and my wife suffered a rare and under researched spine injury that was disabling for the good part of a year. We were getting close to permanent disability and “mystery” chronic illness before the incredible team at Duke University were able to repair it after a number of failures elsewhere. She’s not yet 100%, but we’re attempting to enjoy each day and appreciate what we have.
This has also made us more charitable and realize there’s more to life than just hitting a number and retiring early. I’ve worked hard to develop my “human capital” and can generate a lot of value for a company and be paid accordingly for that value. I can do a lot of good both family and charitable causes and it’s tough to walk away from this level of earnings.
Mr. FWP says
A great addition to the series. I especially like your last point about valuing life today.
I also really agree about networking. When I was in business for myself, that was vital. I was surprised how I obtained good business from people I wouldn’t have predicted, but who I had a good relationship with over the years. It’s also invaluable if you ever do switch jobs, careers, or the like.
Thanks for sharing about that photographer, too…that’s a good story.
Mr. Shirts says
I’m thankful to ESI Money for allowing me to share my story. “Networking” gets this bad reputation sometime, I’ve been surprised at all the business I’ve gotten from it. Don’t forget to keep up with former coworkers too, it’s been amazing how those relationships have helped years later just through keeping up with people.
Lily | The Frugal Gene says
Great honor to read through this. Thank you for sharing with us and thanks for one of the most honest piece of career / income growth advice I’ve heard in a very long time. Show care and respect others, you’ll get the same care and respect back – who dun thought! 🙂
2009 took a bite out of a lot of Americans. I talked my mom out of a house at the bottom of the market. I still feel a bit bad about being risk aversive when we could be 300k richer right now. Oh well, no tears lost. It’s still a wonderful world 🙂
Mr. Shirts says
Thank you Lily. It’s interesting, now in my current position I have tons of employees who “want to talk to me about their career” and more often than not it ends up being very generic. I recently gave one of the highest potential employees the advice of “Don’t just ask about your career, if someone is willing to give you thirty minutes to an hour, ask them specific questions about things you know they’re an expert in. I tried to never waste any of my scheduled time with good leaders or mentors.
Mike says
Great interview. This is one of the best in the series. I really like the career advice.
Mike at Balanced Dividends says
Agreed with Mike – this is one of the most helpful posts I’ve found in the series.
The expanded career advice and background on how to getting the current income was very insightful.
Mr. Shirts says
Thank you both! I have a pretty basic philosophy about earning money, you need to have a marketable skill set, learn how to lead and inspire people, and you have to be able to sell, either to generate revenue directly or sell your ideas/content. Most people who can get to at least two of those three things do really well. I made it 10+ years in direct sales as a natural introvert.
Jason says
“Enjoy the journey” is a mantra all of us, particularly me, need to keep sight while on the path to FI. I fully admit to getting fixated on the end goal, when there really isn’t one per se, but multiple ones along the way. That is a gift that MI35 has and one I wish to learn to create.
Mr. Shirts says
I’ve struggled with that too. One thing I’ve come to realize is I rarely remember the “work accomplishments”, but I do remember the relationships I developed with people. Clients, coworkers, friends, leaders . Sometimes the “events” that develop those relationships are painful in the short term (do I really want to go to happy hour or do I really want to stay out late after this meeting instead of sleeping), but you won’t remember the sleeping like you’ll remember the interaction with others.
Chris @ Duke of Dollars says
Wow great interview! 250K salary by 35, not too shabby!
My favorite thing about these interviews has been that most of them have stories we can relate to, and also be inspired by. They are not an abnormal superhero, but regular people who take fundamental steps towards reaching F-You money!
Thanks ESI money!
Mrs. Adventure Rich says
Awesome interview. I enjoyed hearing about how the interviewee focused on growing his network and sticking with one employer (by being flexible, expanding connections and moving around). I am coming up on 6 years with my employer. It is my first job out of college but I don’t feel the need to do the “millennial thing” and jump around every two years. I have a job I really enjoy with people I respect and learn from at a company I believe is doing good in the world.
Thank you for sharing, today!
Mr. Shirts says
Leadership matters, for both the quality of life at work and the career growth. If you’re with a decent sized company, you’ll find great leaders, then you have to take that opportunity to learn from them. Sometimes circumstances do require changing, I have a former co-worker/friend I keep up with that had to leave the company four years in and we are now in identical roles even though he’s at a competitor. He didn’t have a path to work for the right leader at our company, but knew and validated the person he was going to. The career advice is try to validate what someone is like to work for prior to doing it. Moving internally inside a company can give you that chance.
Millionaires Unveiled says
Such a great interview. Hind sight is 20/20. Interesting that “boring investments” gets you to this point but also a missed opportunity and calculated risks (i.e. real estate investment) could have accelerated the process.
Mr. Shirts says
Thanks for reading. Hindsight is 20/20, it’s easy to see the upside now, but I have to put myself back in that situation and be comfortable I made the right decision at that time based on all the information I had. (little liquidity, still vet school debt, stable but not entirely secure employment). Neither my wife or I really have a family safety net to fall back on too, which has made us pretty risk adverse until this point. I’ll probably retire soon, but eventually peruse some entrepreneurial ventures now that we have this level of a safety net.
Dave says
You both have amassed a high net worth at a young age. I agree with about building up a substantial amount in taxable accounts. If you want to retire early, it is nice to have liquidity. Great job M35.
Mr. Shirts says
Thanks Dave! It’s easy for me to get addicted to the tax breaks today, especially with the wonderful benefit of having a way to defer a bunch of my compensation.
Laurie@ThreeYear says
How great that you can be in a position to be fully present when your kids are born. Thanks for the great advice and wonderful story. I’m so sorry to hear about your wife’s back injury but how great that the doctors at Duke could help her so much. It sounds like you had a huge reminder of the truly important things in life. It sounds like you’ll probably spend many years, retirement or no, developing people and being involved in business ventures–sounds like you have a passion for it. Thanks for sharing your story!
Mr. Shirts says
Thanks Laurie! I do have a passion for business and hopefully I’ll find a good outlet for it once I retire. The challenge will be staying disciplined and not letting it consume me
Debbie says
This is one of the best interviews of the series. Thank you for such good old fashion common sense advise. Networking not only adds value down the road but also makes one’s career much more enjoyable. Thoroughly agree with your wife regarding education and career decision. I was between two majors long ago. I picked the one that would continue to be in high demand and with a few years paid moderately well. I probably will top out at $100K salary but I could close my eyes, throw a dart at the map and easily get a job. I make a good living for a 4 year degree and though I do have a boss I report to, my job is very independent. Made a wise choice for my other choice does pay better but hours are very long and job market choppy.
Also, agree about keeping a focus on building a good amount of liquid net worth in taxable accounts. It is Peace of Mind to have in times of need, in times of opportunity and mental healthwise to have F. U. money.
Mr. Shirts says
Thanks for reading Debbie. I remember and value the relationships and interactions with people far more than most of the actual deals.
Julie says
Totally agree! This is one of the best Millionaire stories I’ve read. Good, down to earth people with sound advice and life experience. Thanks for sharing!
The Physician Philosopher says
I can relate to the delay in time to good money except I (like most physicians) did experience the high medical school debt. Glad you didn’t have to suffer that, and hope my three kids won’t either!
Great advice and example of how smart investing can be done well! Stay the course.
I also appreciate the advice on having enough liquidity available to be able to jump on a good investing opportunity should it arise.
Thanks for the interview!
Mr. Shirts says
Thanks for reading! We did also suffer the student loan debt, we married between her first and second year of vet school and I think our student loan debt at its highest was $96,000 between the two of us. That might be considered peanuts now 12 years later compared to some of the numbers I see people posting about today. That was one of the reasons we didn’t have much liquidity, every time we’d get a little more money we would throw it at student loan debt, even though it was all sub 4%. Finally paid it off in full in 2015, eight years after she graduated.
The Physician Philosopher says
I feel you. We came out just below average for medical school debt at 180k. We are hammering away at that and hope to pay it off within two years from finishing training while still maintaining about 25-30% of AGI into investments.
The going will be a lot easier once the medical school debt is paid off.
Accidental FIRE says
Congrats on your success! Another plug for the 10-15 year old paid off car. The patterns in these interviews keep revealing themselves. The new-vehicle treadmill destroys so much wealth in America.
And great comments about professional networks. Mine has paid off for me in numerous ways and I’m currently considering more part-time teaching opportunities simply because I was recommended by someone in my network.
Mr. Shirts says
“Net vehicle treadmill” – Big fan of that term, I may use it. I credit Mrs. Shirts more for that, she’s driven the same car since 2002 and if it starts and goes, she’s pretty happy.
One other comment I’ll make that I didn’t get to say in the interview, networking isn’t just about “sales”, everyone should network inside their own industry. The non-sales side of banking has been contracting quite a bit, but the people who are active with the American Bankers Association and Risk Management Association are almost always employed quicker when disruption happens. Almost every industry has their own association…and a special shout out to PT Money for establishing FinCon a few years back for professional finance writers.
I can even make a direct correlation between entrepreneurs involved in their association and ones that aren’t with their businesses performance.
Jason@WinningPersonalFinance says
Congratulations MI35. I think I found the secret to your success in this post. You said “wealthy to me is being able to provide significant value to your employer or clients while enjoying what you do.” I’m pretty sure you grew your income because of this focus on providing value. It’s a fantastic skill and the correct way to think about work. The fact that you are able to enjoy yourself along the way only helps!
Mr. Shirts says
Thanks Jason. I have to admit it has become more enjoyable once I reached FI, but I have focused on providing value. It really wasn’t an option because when it comes down to it, I’m only selling money and most bank’s prices/terms in what I do are roughly the same.
Patsy says
Great interview. Love the good, old-fashioned advice of hustle, keep expenses in check, and save. Networking and being deliberate in charting career growth (including being mobile) are more “modern” principles, but definitely sound ones. Thank you for sharing your journey with us.
Mr. Shirts says
Thanks Patsy. I enjoy this series because a lot of the content out there in personal finance is what I call the “last 5%”, optimizing taxes, HSA account hacking, getting another basis point off an index fund fee. There’s still the good old fashion work hard, spend less than you make, invest the difference, and you’ll be okay. The last couple years have helped accelerate our FI number/net worth, but we would have been okay without the promotion from a few years back and making a lot less.
Earlyout01 says
Excellent interview. Very interesting to me especially, as I am a Veterinarian. I am older than you but five years into practice having made $30k per year, and being the primary bread winner of our household, I chose to incur the debt of being a practice owner. It took a lot of hard work and was very stressful but it has paid off financially in the end, albeit at an older age than you all. We are now 50 and our NW is $4m, which we are very happy about. But if you all were to continue on your current trajectory and continue it to 50, which I don’t expect that you will choose to do, you would be way ahead by choosing the path that you did so excellent decision.
One question that I have which probably shows my naivety, how do you achieve in excess of $1m in retirement accounts at your young age? I just don’t understand how it’s physically possible using traditional methods such as maxing 401k’s and ira’s?
Mr. Shirts says
It’s wonderful to see a Veterinarian as a reader. I observed they never taught much in school about leading people, running a business, or client communication in school, which is far more important to a veterinarian’s long term income as a practice owner than just practicing medicine. Congrats on your success, you have done a lot better than many veterinarians struggling to sell their practice today without a net worth built up outside their practice.
The breakdown on the retirement accounts are roughly today: (2 months of market growth since I wrote the interview)
My 401k ($504,000) – Maxed for about nine years, always contributed before. I get a 6% match, which has grown to over $10,000/year.
DVM’s Rollover ($150,000) – 2 yrs at nearly the max at a 401k, 5 years maxing a simple IRA at $12,000/yr
Roths ($197,000).
We were really addicted to the tax savings on 401ks early, especially with two incomes, no kids, and living in a state with high state income taxes. That unfortunately came with the offset of minimal liquidity.
We actually took on a little more student debt while she was in school just to make sure the Roths were funded. At that time our income was below $50k and there was a tax credit for funding them that was worth more than the interest carry for borrowing the money. Crazy thought at the time, but I said we could always just withdraw the contribution out and pay the debt and keep the difference. We were living on just my salary, so she wasn’t taking nearly the max that other students were.
We turn 36 early in 2017 and I got a one year head start on work by finishing undergrad in three years.
Earlyout01 says
Great commentary. I was very green as a business person straight out of vet school, but I definitely had the drive and passion to be a business owner so I learned by trial by fire and made many mistakes along the way but I am a fairly astute small business owner now without the benefit of any formal training. Most people don’t understand how underpaid the majority of veterinarians really are, graduating with an average student loan debt of $195,000 and making $65,000 per year. That math is really crazy bad. I try to help and counsel my young associate DVM’s that care to listen. I can teach them in an hour what it took my about 10 years to figure out on my own.
Mr. Shirts says
The economics of the vet business still blow my mind. One other thing that specifically drove our decision to follow my career is we lived in suburban Atlanta, the market was overrun with struggling two doctor facilities that couldn’t get any type of scale. I had looked at a few vet clinics as a banker and pretty quickly realized that you could only make reasonable money compared to the risk by either running a small practice efficiently but being a gregarious owner, or you needed to have a 4+ doctor practice with scale to spread all those costs over. It just wasn’t there. I’m shocked at the number of private equity backed clinics now where I live (Texas), I guess money got interested once Banfield sold to Mars then VCA was taken private.
I wanted to clarify your original question on retirement accounts, around $150,000 of the $1mil is in a 457 deferred comp plan that not everyone has access to. My company match has also averaged $9,000 over the past six years, which is on top of the $18,000 limit. I’m also a huge fan of front-loading the Roth IRAs, so except for a couple years we were ineligible, we would fund those on January 2nd each year.
RetireSoon says
I was wondering the same … $1m in tax deferred at 35 is great!!
MH7 says
I’m not the interviewee, but regarding building up 401K/IRA assets, if you’re able to max out a 401K/403B and also get a fairly generous match (which I’m guessing a lot of banks or financial firms offer), you could be adding something along the lines of $24k/yr (eg 18k contribution, 6k match). I just checked and for Jan 2008 – Jan 2018 the overall annual return of VTI (total stock market ETF) was a bit over 10% with dividends reinvested. 24k/yr at 10% for 10 years ends up in the ballpark of $400,000. Add some Roth IRA contributions for the early years when the income level allowed, and add a second earner doing the same thing… that’d get you there or close to it in about 10 years.
I’m way oversimplifying (may have lower contributions in early years due to less available income at that point in their careers, so might need more time than 10 years), but at least in the recent bull market it’s in the realm of possibility with two earners both contributing as much as possible.
MH7 says
As an addendum, the interviewee also mentioned 457 plans… I don’t know much about those, but do know that you can contribute to BOTH a 401k and 457 plan at the same time if they are both offered by your employer, increasing the maximum tax-advantaged contributions for a year well beyond the limits of a 401k alone.
Stop Ironing Shirts says
Your math is near spot on. On the 401k, I think the balance was around $50,000 going into 2009 then I’ve been putting away $20,000+ since 2009 including the 401k match. That account alone just crossed $500,000. Mrs Shirts has another $150,000 from her years of practicing then the balance is in Roth IRAs and the deferred comp plan.
Mr. Shirts says
The one thing I’ll add to your math is the 10% wasn’t straight line. Picking up 21% in 2017 was a huge boost to the IRAs
Vaneita says
Thanks for reminding me about the importance of constant networking. You are right, with work and family and constantly trying to “produce” while at work, networking happens only when I need something or as a second thought. Bad idea. Thanks for the reminder.
Mr. Shirts says
I think this is credited to Steven Covey, but the highest performers know how to work in the area of “High Importance, Low Urgency”. Networking is extremely important, but it is almost never urgent. I’ve found taking a committee position or board position (while politely passing on the President, Vice President, ect roles) helped increase the sense of urgency/importance to keep me going even when I didn’t want to that day.
I’m an introvert at heart, so it’s a constant battle to attend. I even have those moments of hesitation after going to thousands of these.
Sean @ Frugal Money Man says
Thank you for sharing your insights!
I really appreciate the advice of saving $100,000 – 200,000 outside of retirement accounts. This will be the first year my fiancee and I began to fund our taxable brokerage account, on top of our 3 maxed out retirement accounts. Also I appreciate your advice on maxing out your HSA. I am very unfamiliar with the HSA, but I here about it alot in these discussions. I will be turning 26 in a couple months and have to fund my own health care costs soon. It sounds like the HSA is the way to go and I will definitely read up more on it
Mr. Shirts says
I cannot emphasize the importance of this enough, you never know when an opportunity will come up. I had a client making overtures on hiring me eight or nine years ago, but it would have been a low pay/high return scenario. The lack of liquidity made that virtually impossible to consider then. Things worked out okay, but I know that would have been a good path.
Look into the HSA options as soon as you can, it’s important to get head of the funding schedule. You can only put $6400 or so per couple in, but the plans have a much bigger out of pocket maximum. If you can get past the first 2-3 years on an HSA, you’re in good shape.
CB24 says
MI 35,
Awesome NW at 35! I’m a few years behind you and you’ve given me a bold target to try and match!
Quick Q: you menteiond that “Thanks to the pre-tax cushion we now have above, we defer 40%+ of my salary + bonus into pre-tax accounts”
How are you getting $100k (40% of $250k annual income) into pre-tax accounts?! I don’t want to know, I NEED to know how to do that!!!
RetireSoon says
I’m guessing he has the option to defer Comp based on his senior position?
CB24 says
As in receive restricted shares in his bank instead of W-2 wage? Perhaps, but what does that have to do with the amount of tax deferred savings he’s already amassed? Maybe he just grew more comfortable taking the risk in holding large sums of restricted bank stock to avoid taxes bc he had a high NW already.
Sorry, just extremely curious here!
Stop Ironing Shirts says
Actually I don’t own any of my company stock. I get restricted shares annually but sell them immediately. It’s only been 15% or so of my total comp, but goes up next year if I keep working
Mr. Shirts says
Different employers offer different types of deferred compensation plans. The Millionaire Educator talks a lot about using a 457, which is the commonly known public sector employee deferred comp plan.
Larger for-profit employers often offer a deferred compensation plan that you get invited to join when your salary hits a certain level. The plan designs are different depending on the employer, but mine is very attractive. Funds are retained as a company asset, but invested in trust in an asset of my choosing (Vanguard S&P 500 fund), then paid out based on how I chose at the time of enrolling in the plan. It’s a nice tack-on to my 401k plan. I chose a 15 year payout after separation, Some people choose lump sum.
It is awesome, but I only attribute about $45,000 of our net worth to having this plan (contributions less federal rate). Just ask your HR rep if the company has a deferred compensation plan.
Kristy says
I enjoyed your interview. You made some really good points and career moves. I enjoyed the photographer’s networking analogy. Haven’t read the book — but you offer great tips on networking.
Mr. Shirts says
Thanks for reading Kristy. Remember above all else, leadership matters. Figure out which leader gets the highest results, lowest turnover, and has the most people promoted off their team. Ask well respected people “who would you go work for if you were in my career position?”
JTC says
Many congrats on doing so well at a young age. If I read this correctly, you mentioned you wan to retire in the next year or two. Be careful! You plan to start a family = huge future cost. You currently have a Jumbo mortgage. You both are likely live into your 90’s – that is 50+ years of living (Hawaii = expensive) and healthcare expenses. Your spouse is not working. We are 8 years deep into a bull run – all of us should be ready to see a reduced net worth as the market corrects in the next 18 months.
Candidly – I dont see it possible to retire yet. I share your goal of reducing stress and working hours – just be careful for trading your high paying job for a lower paying job that could creep up to 40+ hours.
Congrats again for all of your success and wonderful maturity at such a young age – just be careful to plan wisely for 50 more years of expenses (college, healthcare, etc..)
Stop Ironing Shirts says
Thanks JTC.
Retire is the interesting term, I expect I’ll earn something after leaving full time work, but all those variables and costs you speak of are real! I’ve had a lot of entrepreneurial ventures I’ve wanted to try, but been unwilling to without a near failproof safety net. I had a few entrepreneurs I worked with early that made a significant amount of wealth after putting in that safety net.
JimCalf says
Fantastic interview MI35. You have a very good head on your shoulders. You showed far more maturity than I did at your young age, which gave you the discipline of someone normally much older. One question for you though; you note that your monthly spending is about $2,000 outside of housing, so only $24,000 per year. What do you plan your total annual spending need will be in today’s dollars, including housing, after retirement?
Mr. Shirts says
Thanks for reading Jim. I should probably clarify and say our expenses run about $2,000 month plus housing, but healthcare will be added in that once we retire. Healthcare premiums have just been deducted from my paycheck up until retirement.
My really rough numbers involve retiring with a net worth around $1.8mil, paying $300,000 for a free and clear house, then having a portfolio that’ll generate at least $55,000/year at a 3.75% withdraw rate. I try not to spend too much time on that part of it, the reality is I’ll end up making some money post-retirement and that’ll be a moot point. I enjoy the game of business too much to not earn anything after leaving the day job.
JayCeezy says
Love it, M35! My takeaway is that one can really learn how to ‘take an interest in others.’ That outward focus has served you and your wife very well.
Can confirm on the career-track for Veterinarian. This may seem hard to believe, but in the ’80s it was actually more difficult to get into Vet school than Medical school. Have a family friend who has been in school and interning with a specialty in Equine. She loves horses, but never valued or understood money (her parents paid for her lifestyle until she was 30). She’s getting married now, and the issues of financial goals, management, and independence are a big hurdle for her and her future husband. So great that you and your wife got your values and goals straight, early.
Stop Ironing Shirts says
Vet school still challenges med school for the toughest doctoral program to get into. Living on my salary alone and saving hers was helpful to our success, but I give as much credit to her for “playing defense” (saving) as I take for earning an income
Paper Tiger (aka MI 27) says
Great interview and clearly a well-placed head on the shoulders of MI 35. Terrific outlook and attitude about people, networking, helping others and a definition of wealth that is both practical and healthy.
Let me be the one old foggy here and make a suggestion. You say you have a job you enjoy, people you respect, an opportunity to expand your network on a daily basis, no kids currently, living in an area of the country you love (and no sales tax) and making a terrific income. If I had all of that going for me I’d try and hold out another 5 years before early retiring. Even if 2-3 years down the road you have a kid, you have a wife that is retired and you could finish out whatever is left of the 5 years and then join her. Based on your current NW and the annual savings rate, you could easily double your net worth in the next 5 years putting you between 2.5-3M and probably have a good chunk of your house paid off.
Five years goes by fast and retiring at 40 with that much in the bank and little to no debt would be a tremendous accomplishment and allow you to more comfortably fulfill your goals. I had my one and only child at 41 and she is now 19 and a freshman in college. Parenthood has been an awesome experience and she turned out great, even with both parents working full-time careers. I’m 60 and still putting in 5 more years on my own small business after retiring in 2015 from a 36-year career in medical devices.
I also like your thoughts on sticking with one employer. Of the 36 years, I worked for one employer for eight years and another for eighteen years and both provided my wife and I pensions (working for the same companies). The only time I ever changed employers in my career was when one company was sold, one laid me off and one wanted me to move. I only left one other when the culture changed and it was no longer a company worth my time and loyalty.
Congrats on your early financial success and continued good health to you and your wife!
Stop Ironing Shirts says
Thanks for reading my story and I love the question. I don’t enjoy the weekly time commitment the job requires and aren’t in love with where I live. That plus the inability to take a month + in a row off are probably the two biggest things driving the retirement decision. We don’t find a ton of value in the additional money. I may approach the company about taking some additional unpaid time off later this year to see their reaction, the ability to save the kind of money we are saving is difficult to walk away from.
You aren’t being the old foogy at all, the advice is real and things change monthly in my job that make me enjoy it both more and less. I’m more optimistic today than I was three months ago about the future of the company.
I also think I may end up doing some advising on deals in exchange for being able to coinvest in the transactions post retirement, hopefully that leaves me with a larger nest egg than I expected.
Amy @ Life Zemplified says
Great interview! I like your thoughts on your early retirement and the excellent advice for us all. Best wishes on your wife’s continued recovery and your desire to start a family. Thanks for sharing your story.
Stop Ironing Shirts says
Thanks Amy – A lot of credit goes to ESI Money and me being the 35th person answering the questions, I was able to put a lot of thought into this!
UCLABruins says
I really enjoyed your article, thanks for taking the time to share career advice with the rest of us… i was in the same place as you 8 years ago, career and money wise, i also thought about retiring early but decided to work part time (0.5 hour a day) and started investing in real estate. Now 8 years later, i’m 43 years old, net worth at 5.2M. If it’s ok with you, I want to shared something with you that might help you along the way.
1)read tim ferris’ “4 hour work week”
2)reading, traveling around the world, and learning new things are the only thing that keep me happy and motivated everyday, i should have started reading way younger 😛
3)invest in apartment complex, it will pay off !
4)i also do not have any kids, and plan to keep it that way 🙂
5)choose to be happy, every minute of the day
6)workout every morning and drink lots of water, staying healthy so you can enjoy your fortune 🙂
Mr. Shirts says
Thank you for the advice UCLABruin. I’ve recently been reading Tools of the Titans by Tim Ferris, but need to pickup his flagship book soon. I enjoy a lot of what I do, but I can’t figure out how part time would be feasible with my company. It’d be especially nice to do and collect out some restricted stock then place that money in some business investments. Apartments have some appeal, but commercial real estate in general and small businesses are what I’ll invest in, especially since I’ve been looking at those deals for 15+ years.
You’re absolutely right about enjoying your fortune, there’s such a balance to strike between how much you work and how much time you have off and what level of income that is exchanged for. Thank you for reading and feel free to email me sometime.
UclaBruins says
I read about 10-12 books on commercial real estate when considering investing in the field, but decided against it since I don’t know the market and was afraid of losing my shirt over it. But since you having been in the field for so long, it might be a great new career path for you.
I’m like you, really live way below my means, drive an used car and live in small house that i own free and clear, the only big expense I have it when I travel. My 2018 goal is to travel to 5+ new countries this year. I learned early to only spend money on “experience” and not on material things.
Yes, it would be good if we can keep in touch since I think we can really learn from each other sharing new experiences. Not sure what the rule on this website is, we can just exchange email ?
Jeff B. says
I agree with the no kids thing. 🙂 we will retire in 2.5 years with hopefully around $6M and we will start to travel even more than we do and staying in Europe or wherever for a month or two at a time. MI20…..
UclaBruins says
Traveling is great! Went to florence and Venice last year, highly commended for the scenic and michilin restaurants. Will hit Barcelona and Switzerland first half of this year. My goal is also around 6-7M, hopefully get there by end of 2019. After that we will just live off about 20k of monthly rental income. Isn’t life just amazing when traveling whenever and as long as we want? 🙂
FIRE Marshall says
@UCLABruins, I’m curious what makes up the rental income? Is it residential? How many units?
UclaBruins says
Multi family. 100+ units, leveraged
Mr Defined Sight says
Wow, this is my favorite one in the series so far! I really enjoyed reading about how you networked with the “higher ups” without necessarily compromising your integrity. It’s amazing how much a person can learn from others by just taking a tactful approach and then showing appreciation.
A great read, ESI and Stop Ironing Shirts!
Mr Shirts says
One thing that was eye opening to me was how very good mid-career and late career leaders enjoy developing people. I’ve had a couple people mention to me that “money just becomes a scorecard” and the legacy they leave behind will be the people running the company when they’re off enjoying retirement.
Andrea says
Very interesting! We have quite a bit in common. I like your philosophy on life and relationships. We are 42 and have 1.4 M… met in college… no kids. We vacationed many times in HI from Texas. Then we decided to move there – why wait till we retire? Got jobs… and really enjoyed our time. We moved back to Texas after 4 1/2 years in Oahu. (Missed family and the ease to travel other places- so we sold our Waikiki condo.) But I know exactly how you feel- few people are willing to explore that “jump.” 🙂 It set us back a little in money- HI is expensive, but it was worth it.
Mr. Shirts says
That’s an awesome story and thank you for sharing! We also love the mainland in the US, just not in January. If I were betting, I think we’ll end up in the mountains and do the long winter vacations there.
Miguel (The Rich Miser) says
Incredibly informative. As a fellow introvert, the lessons about developing a network really hit home for me. I’m very good with people at parties and dinners, but bad at following up over time, unless they’re within my closest circle of friends.
There’s always room for change and improvement. Thank you for giving this interview; it’s made me realize where I have to redouble my efforts to improve.
Mr. Shirts says
Expand the circle – I got to know one of the other sales guys in our district really well eight or nine years ago and we never sat in the same office. We’re now peers at a higher level, I can’t begin to say how many times that has paid off, both through exchanging reasonable advice and sending deals to each other. The key is to find people you like and they become part of the circle of friends, even if you never get together much. Thanks for reading
Siva says
Thank you for sharing your journey with us and thanks for one of the most best advice on career and networking. Staying in touch with former colleagues through social media and text messages is another great idea which nowadays most peoples do not do. One of my first employer colleague, contacted me to LinkedIn for a job opportunity, that was a great example how social media can be used in a proper way. We see the younger generation use Social media for time pass. Apart from that they have to use it for developing their career too.
Thank you ESI for bringing such great interviews.
Mr. Shirts says
Thanks for reading – I love you brought up Text Messages. I actually think Text Messaging is the new “Thank you note”. One of my mentors once told me when someone sends you business or makes an introduction, always send them a quick text immediately after you meet with that person to say “It went great, thank you for the introduction!”. You’re showing them that you valued their introduction. Its a small thing that most people just don’t do.
Hugh Kennedy says
Terrific story. I consider early retirement a lot. I think I just like my job too much.
Mr. Shirts says
Thanks for reading! Its always good to be prepared for that day you decide you don’t love your job enough to trade your time for it.
snowcanyon says
Love your series! I have some heartfelt (and hopefully gracious) suggestions to make your awesome column even better.
I’d love to hear more from the women in the couples (most of the interviewees seem to be men), single millionaires of each gender, and also same-sex couple millionaires. Also would love if you could have more diversity in your pictures (they seem very white and heteronormative).
Thank you!
ESI says
FWIW, who appears is a function of who volunteers to be interviewed. And the picture is selected based on something in his/her story.
UclaBruins says
May be I should volunteer to be interviewed. Chinese American, couple where wife is also part of the business, mid 40 🙂
ESI says
Would love to have you!
Send me an email if you’re interested.
snowcanyon says
Oh, I am absolutely sure that’s the case, and have no doubt this was unintentional!
Diversity isn’t something that comes easily- I know that, and we tend to know people like ourselves. But I bet if you reached out to Asian/Latino/Black/LBGTQ/women’s advocacy/entrepreneurship groups, you would find some willing subjects and even more readers!
See, you already have one new willing minority interviewee! Success!
Elizabeth says
Thanks for sharing your story! My husband and I are both bankers living in Texas as well. I think commercial banking is such a great and overlooked career path. Even in business school no one promotes it much – it’s all about investment banking and private equity. In our late 30s now we are both making nearly as much as our attorney/physician/consultant friends – but with about half the stress and two thirds of the hours they put in.
Not saying the job isn’t stressful at times, but it’s hard to find an intellectually challenging, well paid career these days that only requires a “normal” 40-45 hour work week. Any “extra work” is usually just networking and relationship management – which is basically company-paid fun. Nice lunches and happy hours with clients and referral sources, golf tournaments and conferences, professional group happy hours and charity luncheons, etc. If you’re people person it really is a great career with plenty of perks.
Finance Stoic says
Great read, thanks.
I love that you used the term inflection points as it relates to your career and earnings, I’m a big believer in your approaches.
Good luck as you continue your journey!
Mauricio says
You really make it appear really easy together
with your presentation but I to find this topic to be really one thing that I think I might by no means understand.
It kind of feels too complex and extremely large for me. I’m having a look forward for your next
publish, I’ll attempt to get the grasp of it!
Richard says
I’d argue that healthcare and the insurance of such is, oddly enough, not just a quandary, but a mortal threat to most everyone. I would pass GO, collect $200 and keep running like hell till I hit the 4 million mark in this current rate and situational climate. Basically 2 million + to conservatively invest, for living expenses and private health insurance, a dream FI bid, but then at least a 2 million buffer, more aggressively invested (S&P 500 perhaps), for ‘cash’ protection and growth potential versus the constant threat of medical catastrophe and astronomical costs . . . little signs of ceasing there; they seem to far outpace salaries, wages, inflation rates, and sense and reason itself.
Robert - MI 35 says
I appreciate the thoughts….I did actually leave my job in April of 2019.
Heathcare has turned out to not be *that* big of deal. I’m currently on COBRA, have decent options on the ACA, and may still work out a consulting deal at salary minimum with someone that comes with benefits.
I’m happy not to be grinding away at a job I was burned out in. Whether this turns out to be a career break, early retirement, or transitioning into remote/part time work, leaving my job after almost seventeen years with nearly $2mil in the Bank is one of the best decisions I’ve ever made.
Like ESI said, early retired years are like reverse dog years. I feel like I’ve gotten so much of my life back!