Millionaire Interview 369

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)?

I just hit 47, my wife is 48.

We have been married for just under 25 years.

Do you have kids/family (if so, how old are they)?

We have two boys.

Ages 12 and 16.

What area of the country do you live in (and urban or rural)?

We live in an urban-ish area of a state that Google tells me is located in the “South Central” region of the United States.

What is your current net worth?

We are currently hovering around the $4.5 million mark, including home equity.

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?

• Retirement accounts: $595,000
• After-tax investment accounts: $2,959,000
• Real estate syndications: $200,000
• Cash: $42,000
• Home equity: $750,000

EARN

What is your job?

I am an attorney; general counsel at a publicly traded company.

What is your annual income?

This is embarrassing to type, but it is just north of $2 million.

However, that is a recent phenomenon due to a promotion

About 3/4ths of the compensation is “at risk” (i.e., it is tied to company performance).

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 first job was around the age of 12. I made income two ways. First, I passed out flyers for local dry cleaners and real estate agents. I also worked at the Hialeah/Opa Locka flea market down in Miami-Dade County every Saturday and Sunday. I made about $5 an hour delivering flyers. Working at the flea market was a cool $70 a weekend, which actually came out to about $3.50 per hour (even though minimum wage was $3.80 at the time).

Once I was a “legal” age to work (at 14 years old) I landed a job as a busboy in a Greek restaurant. That ended up not paying too much more than the flea market gig, but I really liked the owner who became a mentor and influence in my life.

Ultimately the restaurant went bust so I ended up securing a job at Walgreen’s for $3.80 an hour, with a bump up to $4.25 an hour when Florida raised its minimum wage.

Then, I got my first big break! The owner of the Greek restaurant landed a job as a manager of a TGI Friday’s in the area and hired me to work as a busboy. This was back in the day when TGI Friday’s would have a waitlist on weekdays of 45 minutes or so and a couple of hours on the weekend. I would clear $100 to $120 in tips some nights. I was 16 at the time and this was crazy money to me. Regretfully (or maybe not), I was working all the time, so I never had time to spend any of the money. Because it was all cash, I would compile several thousands of dollars in my bedroom before depositing it in the bank.

I then left for college and did not work my first semester. I did not receive any money from my parents for college, so I was living off of all of the savings I amassed in high school. At that time, I did not really know what I wanted to do with my life and I was watching my bank account dwindle due to college costs for a degree about which I was undecided. So, I decided to drop out after on semester.

I headed back to TGI Fridays (this time as a waiter, fancy me!) and just kind of plodded along. Then, one day, a former waiter from the same TGI Fridays saw that I had dropped out of college and asked if I would help him run a used jeans store located near the University of Florida. He offered to pay me $100 per day, six days per week. Just over $30,000 a year. I was all in.

The jeans store was co-owned by a father and son. The son was the former TGI Friday’s waiter (who was great), but I did not get along with the father at all. One day, the father put a cigarette out in my unfinished drink (a “biggie” Diet Coke from Wendy’s). When I complained to him that I was still nursing that drink and did not appreciate his using it as an ashtray, he said “you don’t tell me what to do, I tell you what to do, you work for me.” At that moment I had an epiphany. I knew that if I did not go back to college and get a skill that the market valued, I would be at the mercy of guys like him for the rest of my life. I resigned the next day.

Back to college I went and received a degree in computer science. I was not passionate about computer science, but this was in the late 90s and it seemed like a good degree that would provide me with the marketable skills I knew I needed.

While in college, I worked multiple jobs, but the one of most note was as a bartender in a quaint dive bar near campus. I probably made anywhere from $80-$120 a night, four or so nights a week. But, the best part of the job was that I met a super-cute bartender there who ultimately became my wife!

After graduating from college, I landed a gig working as an engineer for a tech company outside of Atlanta, Georgia. The initial pay was $55,000 a year with a $5,000 signing bonus, plus some stock options. I could not believe my luck! I kept thinking “$55K is over $1,000 a week! If I blow a grand one week, it doesn’t matter because they give me another grand the following week!”

After many years of slumming it in college with hand-me-down furniture and living in really shoddy rental houses deep within the student slums, my wife and I took the $5,000 bonus and furnished our apartment with brand new furniture from Rooms-to-Go (we had a couple grand left over and put it in the bank). We really felt like we had made it.

I was doing really well at the engineering job, receiving steady raises and promotions over the ensuing four years. Then I hit my next internal crisis. As I stated above, I was not really passionate about computer science. I just picked it as a major to avoid people who put cigarettes out in my drinks from having sway over me. Turns out I was pretty good at it, almost doubling my pay in four years to about $100,000. But, I did not really feel like it was something I wanted to do for the rest of my life. So, on almost a lark, I decided to take the LSAT to see if I could get into law school. I did pretty well on the test and got into a few schools, quit my job, and away we went.

I only worked in the summers during law school, making the equivalent of about $125,000 to $145,000 annually (the going rate for first-year attorneys at big law firms), but only for about 2.5 months. I left law school with just shy of $100,000 in student loan debt. I then clerked for two federal judges for a year each (a federal district court and a federal appeals court judge). Those jobs paid under $100,000 a year.

After clerking, I ended up at a fancy-schmancy law firm where they paid me about $165,000 base with a bonus of nearly the same, so I was pulling down about $330,000 to $350,000 a year. I absolutely hated working at a law firm. The pay was good, but the hours were atrocious. We had our first kid right as I graduated law school, making him about three when I started at the firm. I would go days without seeing him awake. I was at work before he woke up and home after he went to bed. I did not enjoy my life. I was good at my job, which meant the reward for good work was more work. So I was always slammed.

Miraculously, one day I received a call from a headhunter asking if I was interested in becoming an in-house attorney for a very large aerospace company located in the Pacific Northwest. I jumped at the opportunity and, after many tense months of eagerly longing for the offer and escape from law firm prison, my family and I were off to a new adventure.

That in-house job paid about $200,000 base, with bonuses that ended up paying pretty well for several years, so I was able to make between $400,000 to $500,000 per year while there. I loved the job! I was sure I would be there for the rest of my career and was targeting a ten-year horizon, where I could save a good amount of my pay and then decide whether to retire or keep going. I hadn’t really learned about FIRE, but I was on that path. I was 38 or so at the time.

But you know what they say about best-laid plans . . . About five years ago, a colleague of mine took a job as the general counsel of a Fortune 100 company and asked if I would consider joining her. We had not worked on the same team at the aerospace company, but were both in the legal department, and she came to know the caliber of my work. As a new general counsel, she was looking to bring someone she trusted with a good work ethic, but ultimately had to settle for me (joking!).

My initial pay—base and bonus—was about $700,000, but that is a little misleading as over half of that was in stock or options that vested over a three-year period. I received a few raises over the years and was brushing up against $1 million when, five years into the job (which was just several months ago), I was promoted to general counsel, and my pay was increased to just over $2 million (again, with more than half of the compensation subject to restricted vesting periods).

What tips do you have for others who want to grow their career-related income?

First, have marketable skills.

Second, do your job very well.

Third, be someone who provides real value to others. What I mean by this is that you should strive to be a good colleague, bring solutions to others’ problems, raise your hand to take on difficult matters, and be curious and interested.

I am where I am today because I took an interest in some of the issues one of my colleagues was struggling with at the aerospace company. I offered to help her not because she was my boss or had any bearing on my career at that company, but because I generally was interested in helping her. Little did I know that she would become general counsel of another company and ask me to join her team, directly resulting in the position I have today.

Don’t get me wrong, hard work and marketable skills do not always lead to higher income. There is a good deal of dumb luck involved. But, as many have said before me, being ready to take advantage of that luck when it presents as opportunity can be the key to success.

Also, don’t be afraid to make a change. As mentioned above, my undergrad degree in computer science provided me with a great job out of college, and I have no doubt would have made for a great career if I stuck with it. But I was not passionate about that path and so I made a change. Making that change set me back financially in the short term, but in the longer term is has panned out. Again, your milage may vary, but if you can find a marketable skill that you are also passionate about, you will likely have a much better time doing really well at your job and being seen as a go-to problem solver.

What’s your work-life balance look like?

Way better than when I worked at a law firm, but I still work a lot.

Some of it is because of the needs of the job and some of it is just because I tend to be a worker. I cannot help it, which is why FIRE is so appealing to me.

I have convinced myself that I will take a step back when I retire. My wife thinks I am deluding myself, and I suspect she is right, but self-delusion is keeping me moving forward right now.

I manage a lot of risk in my job, so even when I am not in the office, the gears are always turning. This is why I am looking forward to hitting the Appalachian Trial once I pack it all in (see below).

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?

Unless you count the “passive income” from investing returns, no.

I am fortunate that I am at a point where each element of ESI is firing on all cylinders. I know it won’t always be like this. So, I am making hay while the sun shines.

SAVE

What is your annual spending?

We do not keep track of our annual spending, but I did some rough math after digging around my credit card bills and other outflows, and I would put it at around $175-$225K.

I know that’s quite a swag, but there were some capital projects in some years (i.e., three new A/C units last year) and one kid transitioned from private school (a waste of money) to public school.

What are the main categories (expenses) this spending breaks into?

The standard stuff:

• House payment ($3,100 per month)
• Home insurances and taxes (about $15,000 a year combined)
• Car payment ($900 per month for a new Toyota Highlander Hybrid, but the financing is at 1%, which is why we did not just pay cash)
• Private school (now $15K for one kind, was paying $30K for two, next year it will be $0 as the second kid is following his brother into public school)

And then all of the other odds and ends (food, utilities, entertainment (video games!), travel, nonsense Amazon purchases).

Do you have a budget? If so, how do you implement it?

No budget. My wife and I have, fortunately, always lived well below our means. The only time we really spent beyond our means was on my law school tuition (but that turned out to be a sound investment).

As I mentioned previously in the interview, early in my working life I was compensated through cash tips. This meant I had a lot of cash on hand that would accumulate.

When I met my wife, we were both bartenders in college, and our busy schedules (classes by day, slinging drinks by night) meant we did not get to the bank often. This meant cash would pile up on the dresser in our bedroom. We would just take a few bucks from the pile to cover whatever expense popped up, and simply always out-earned those expenses.

We are not materialistic and do not value fancy things (like fine dining or pricey hotels). We have always been wired to want for far less than we’ve earned. Which means we never needed to have a budget, because the bank account (and dresser piled with cash) always stayed in the green.

Of course, this isn’t to say our spending has not increased with our means. It certainly has. For example, we now have a $3,100/month mortgage, in college we lived in a trailer that cost us $400/month. But, as you can see from the answer to the next question, our earnings have far outpaced our lifestyle creep.

What percentage of your gross income do you save and how has that changed over time?

Prior to becoming an attorney and starting to make six figures, I would estimate our savings around 20%. Once I started making over $100,000, my savings moved to around 50%. Today, I estimate we are saving over 75% of our post-tax earnings.

Some of you may be scratching your heads as how I can say that I am saving 75% of a $2M yearly salary, and only have $4.5M in net worth.

First, the $2M salary is relatively new.

Second, much of the compensation I have vests in three-year periods. So, I am just now receiving compensation for a pay level I was at three years ago.

I do not count any of my un-vested compensation in my current net worth. In other words, I may be saving a big chunk of my salary, but I don’t realize a good slice of it (or control of it) until three years thereafter.

What’s your best tip for saving (accumulating) money?

Live below your means and earn as much as you can.

As many ESI interviewees have advised, pay yourself first. That said, I am all for enjoying at least some fruits of your labor along the way.

Those who ascribe to FIRE/ESI risk suffering the “delayed life syndrome” in which they plan for the happy times ahead and forget to live in the present as well (I am an on-again-off-again sufferer of the syndrome myself). Some of us who save for the future may not make it to that future.

What’s your best tip for spending less money?

Want less. Spend on things you truly value and enjoy but moderate your lifestyle to your current means.

For example—best not to get into expensive wines if you are good with less-expensive wines (or no wine). But, if you do get into expensive wines and truly enjoy it, then enjoy it relative to the amount of money you have for expensive wines. For some that may be lots of money, for others it may mean indulging once a year.

What is your favorite thing to spend money on/your secret splurge?

No secret splurges.

I spend money on video games and when I was recently promoted I indulged myself with a pair of handmade leather shoes (online from Columbia, $200). Pretty wild stuff.

INVEST

What is your investment philosophy/plan?

Mostly low-cost index funds.

I have our assets spread across a number of brokerages (Fidelity, Vanguard, etc.). I almost exclusively invest in their ETFs, which have a zero cost to trade and very low administrative fees.

My funds of choice are generally S&P 500, total domestic stock market (excluding S&P 500), and total world stock market (excluding US markets).

I also have some investments in dividend yield funds and just started dabbling in real estate syndications (about $200K between two projects).

I park the money and just let it do its thing. I don’t trade often if at all.

What has been your best investment?

Probably law school tuition, as it enabled me to attain the job I currently hold.

Otherwise, pretty vanilla stuff as described above.

What has been your worst investment?

Back in the late 90s I made some tech stock investments. Pretty sure they went belly up.

It wasn’t much, probably around $5,000.

What’s been your overall return?

Largely tracks the S&P 500.

How often do you monitor/review your portfolio?

When the market is going up, I look daily.

When the market is cratering, I go months without checking.

NET WORTH

How did you accumulate your net worth?

I have to attribute my accumulation primarily to the E(arn) part of ESI.

Changing careers and going back to college for a law degree really hit the reset button on most any accumulation we amassed after undergrad. And, even then, I did not truly start socking away real money until probably six or so years into my career as an attorney (the years I spent clerking were lean years).

Without a steady increase of responsibilities (which came with increased compensation), I would not be where I am through saving and investing alone.

Of course, once you start earning you have to save (and all the better that you also invest wisely) to accumulate and grow your assets.

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?

Although I attribute the accumulation of assets to earning, I think I am probably strongest when it comes to disciplined investing.

I wanted to say saving, but in truth the savings was relatively easy once the income grew. As stated above, we don’t really have expensive tastes, so we do not have much to spend our money on. Would I be as diligent of a saver if I was making $75,000 or even $100,000? Likely not.

Also, as to earning, my growth in income is not because of any thoughtful strategy I deployed. I just happened to be good at my job, met a few people who appreciated my work, and lucked into some good opportunities.

So, that leaves investing. Other than a few dumb dot-com investments when I was an undergrad, I have been pretty disciplined in not trying to beat the market or jumping into any fad investments. Vanilla, methodical, patient investing year after year. It isn’t sexy, but it works.

What road bumps did you face along the way to becoming a millionaire and how did you handle them?

I guess the biggest bump was switching careers and returning to college. I was doing pretty well as an engineer and my wife and I had a pretty good life. Uprooting all of that on somewhat of a whim I think qualifies as a bump.

Might be worth sharing a little more of the decision to drop engineering and go to law school. Above, I talk about how I was not passionate about computer science, getting the degree only because I wanted a decent job. That is true, but what I left out was that I also did not have any real direction from adults in my life (on pretty much any subject, including careers and college). I was the first in my small family to go to college and no one ever spent much time discussing what options I might consider. No knock on my family, they just didn’t really know.

And, while I was naturally “smart” (meaning I had the aptitude to learn), I was never pushed to put those skills to use. All my mother cared about when it came to high school was that she not get called to come to school for any discipline or other problems. If she was left alone by the school, all was good as far as she was concerned. (Let’s just say that my mother wasn’t really keen on being a mother to me or my sibling.)

So, I get this computer science degree and land a job as an engineer, and that’s where I meet a bunch of really high-performing, intelligent people who work alongside me. These were people who went to stellar schools, were super sharp, and could work anywhere they wanted. And I was there with them. And, in some cases, not only was a I keeping up, but I was outperforming some (but definitely not all!) So, I got to thinking: I wonder what I would have done with my life if I thought I could be anything I wanted to be.

That made me turn to what the cliché view of success was for me growing up—either a doctor or lawyer. I didn’t want to take the time to get a medical degree, so that left becoming a lawyer. And, as they say in Britain, “Bob’s your uncle.” Here I am.

What are you currently doing to maintain/grow your net worth?

Continuing to earn and socking away as much as I can.

Do you have a target net worth you are trying to attain?

This is a tough one. The answer presently is yes. But the goals keep moving as the opportunities keep materializing. Initially, it was to have a net worth of at least $1M. Then that turned into $2.5M. Now I am bearing down on $5M. I tell my wife that $5M is the end goal, but in my mind I have already moved the goal to $10M.

However, I have spent more time recently trying to convince myself this is an unnecessary goal. I’ve read “Die with Zero” and spend time on MMM reading posts by the likes of Nords and others who implore us to stop once we’ve already won the game. I know that is sound advice, but I need to warm to it a bit more.

How old were you when you made your first million and have you had any significant behavior shifts since then?

I don’t remember my exact age, but probably about 40 or 41.

What money mistakes have you made along the way that others can learn from?

Other than those silly dot-com investments early on, I would say one is not maxing out my student loans when they were at very low interest rates.

Also, I refinanced my house last year and the bank asked if I wanted to refi only the outstanding mortgage balance or the entire value of the home. My interest rate is just above 2% but for some reason I had a brain fart and only chose to refinance the outstanding mortgage balance. I left over $600K at 2% (in this inflationary environment!) on the table. Curses!

What advice do you have for ESI Money readers on how to become wealthy?

As I mentioned above. Have marketable skills, do your job extremely well, be a solution for people (not a problem).

This doesn’t work for everyone, but it primes you to be someone who Opportunity finds.

As Edison stated, “Opportunity is missed by most because it is dressed in overalls and looks like work.”

FUTURE

What are your plans for the future regarding lifestyle?

The plan is to retire early.

What are your retirement plans?

The fantasy is thus:

• First, I hike the Appalachian Trail. I fantasize about having no obligations to anyone for six months, and all I have on my schedule is walking north.
• We then buy a small house on 10+ acres in a wooded area in a state with no state income tax. I spend my days improving the land, which basically means I cut up the trees that fall and occasionally regrade the gravel driveway.
• We also buy/rent condos wherever our two children end up. My wife visits them often for long swaths of time, but I am busy chopping up trees, so I only visit for a week here or there. When not chopping trees, I am playing video games and doing other frivolous things.

As for finances, we live off of the investment returns from our portfolios.

Are there any issues in retirement that concern you? If so, how are you planning to address them?

Like others, healthcare is a concern, but we will simply factor it into our expenses.

MISCELLANEOUS

How did you learn about finances and at what age did it “click”?

Back in middle school I came into possession of a print copy of the Wall Street Journal on my walk to the neighborhood bus stop. I brought it to school just to pretend like I was a fancy stock trader. Contrary to my plan of just being goofy, I read some of the articles and at least became aware that there was this whole big world of banks and business out there.

From that time onward I at least paid attention to the economy and learned about the stock market. When it got to the point later in life that I had some money to invest, I already knew what mutual funds were and the ills of funds with high fees. So, my very first investments were in no-load mutual funds through a broker that my grandfather knew. I liquidated those accounts when I left for college.

Not sure there was a moment when it clicked.

Who inspired you to excel in life? Who are your heroes?

I don’t have a good answer for this. I’ve thought a lot about it. I have always been very grateful to those who have taken a chance on me. People who have given me jobs and promoted me. I feel a great obligation to prove to them (and myself) that they made a good decision. It is very important to me that I exceed their expectations.

I did not grow up with very good male role models. I mentioned that I worked at a Greek restaurant around the age of 14. The owner had a big impact on my life in a seemingly small way. He was always dispensing little tidbits of advice about this or that, but one day he and I disagreed on something. He was sure he was right; I was sure I was.

Later that day, he came back to me and told me that he had been mistaken and that he “was sorry.” Never before in my life had I had an adult, much less a male adult, apologized to me for a mistake they had made. It was truly a seismic moment for me. In that one act, I saw the type of person I wanted to be. Someone with the strength to apologize when they were wrong and someone who valued the thoughts and opinions of others, no matter who they were. It really impacted me in ways that are hard to describe.

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?

I do not have any favorite money books.

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

Yes. We donate time and money to places and causes that we value.

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?

Generational wealth and leaving money for my heirs is not something that has factored into my planning in any way.

That said, despite reading “Die with Zero,” I likely will not die with zero and assume I will turn to estate planning at some time. But presently, I have no plans or burning need to leave a legacy.