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…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am a 45 year old male. I have been with my partner for 13 years. She is also 45 years of age.
My partner and I are financial opposites, therefore, as method of financial self-preservation and to maintain my sanity, we do not commingle our finances nor are we legally tethered together (atypical situation, I know).
Do you have kids/family (if so, how old are they)?
We have two children together, age 7 and 5.
What area of the country do you live in (and urban or rural)?
We are fortunate to live in the beautiful state of Colorado.
Our residence is in the foothills west of Denver.
What is your current net worth?
My current net worth is $3.6 million.
My partner’s net worth is an unknown, just like what lies beyond the other side of a blackhole. A singularity, which likely is represented by the number zero. This, despite her being a high income earner the entirety of her 20 year career. It defies the laws of physics (and accounting).
Therefore, all financial information that follows will be focused on my financials.
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?
NW: $3.6 million = Assets: $5.1 million – Liabilities: $1.5 million
I have no debt other than my mortgage debt on my primary residence and rental properties.
Real Estate: Equity $2.65 million (73.6% of NW)
- Primary: Valuation $1.45 million. Mortgage: $493K (@2.75%). Equity: $957K.
- Rental 1: Valuation $860K. Mortgage: $243K (@2.99%). Equity: $617K.
- Rental 2: Valuation $828K. Mortgage: $365K (@2.99%). Equity: $463K.
- Rental 3: Valuation $1.01 million. Mortgage: $459K (@2.99%). Equity: $551K
- Cash: $62K (1.72%). Most of my cash is kept in money market fund currently earning 4.88%.
- Taxable Brokerage 1: $171.5K (4.76%). Currently invested in 3-month T Bills and 3-month CDs at 5% APY.
- Taxable Brokerage 2: $54K (1.5%). Currently invested in four individual stocks. 2 winners (APPL and WFC) and 2 dogs (DKNG and PENN – always bet on humanity’s ability to get addicted to gambling especially when they entry point is accessed through another addiction, the smartphone. Things should turn around in the future for these two, diamond hands.)
- Roth IRA (Backdoor): $12.75K (0.35%). I recently learned about the backdoor Roth IRA and how to execute it. I wish I came across that information years ago.
- 401K: $477K (13.25%). Invested in VTI, VOO, and to a lesser extent VEU.
- I-Bond: 10K (0.28%). This money has been invested for 13 months. I plan to withdraw the balance at month 15 and invest elsewhere since the current rate of return has decreased beyond the risk free rate of return.
- Private Credit: $175K (4.86%). This money is invested in three projects. The company that I loaned the money to builds high-end storage facilities. The rate of return is 15% APR on two of the projects and 20% APR for the other.
- 529: 58K (1.6%). This is the aggregate for the two children’s accounts. Hopefully they get a scholarship. 😉
What is your job?
I am a Physician Assistant.
What is your annual income?
$225,000 per year.
I only work three days a week and have three-day weekends each week.
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 career started in the mid-late 2000’s. My first year I made $100K. The following year I made $125K.
For several years after that I made between $125-$135K based on how many shifts I wanted to work. My income growth or lack thereof was based on how much I wanted to work. I always strived to have a good work-life balance, so as my hourly rate of pay increased, the number of shifts I chose to work decreased to keep me in the $125-135K yearly pay range.
My salary significantly increased approximately six years ago when I changed medical specialties. I lucked into a niche sub-specialty working for a company that had difficulty recruiting medical providers and was therefore offered a very significant hourly pay raise, approximately twice the hourly rate I had been receiving at my prior job.
What tips do you have for others who want to grow their career-related income?
I strongly recommend becoming an independent contractor and refusing to accept W-2 salary, no matter what field you work in.
When I changed jobs, I negotiated to receive 1099 income instead of W-2. I had medical health insurance coverage through my partner’s benefit package, so this was an easier decision for me to make. I formed an S-Corp and LLC. The company I work for pays my S-Corp for billable hours and then my S-Corp pays me W-2 income. It may sound convoluted but the business expense write-offs and tax sheltering benefits are significant. As they say, a dollar saved is worth more than a dollar earned (due to taxes).
An added benefit to forming an S-Corp is that you can start an I-401K and direct the funds as you see fit. You are not constrained by your employer’s plan administrator’s limited offerings and not subjected to their lofty management fees which will significantly decrease your rate of return over the long run.
Furthermore, the best part of having an S-Corp and I-401K is that you can “triple-max” your yearly contributions. I am able to contribute the individual max of $22.5K + defined contribution of $22.5K + profit sharing of $22.5K for a total contribution of $67.5K (in 2023).
Shelter as much income as possible and let it compound interest free for years to come.
What’s your work-life balance look like?
My work-life balance is fantastic. I work approximately 5 hours per day, three days a week, that’s it.
I dictate my start and end time at work which allows me to be with my kids in the morning until they get on the school bus and I get home before the school bus drops them back off at home.
If there is inclement weather or other variables arise, I have the ability to work from home on those days.
I then spend my ample free time engaged in hobbies or doing whatever I please.
It is not lost on me how truly fortunate I am. I thank my lucky stars everyday for the situation I stumbled into.
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?
I earn semi-passive income from my three rental properties and passive income from private credit investments.
I also “house hack” and receive rent from my partner. Values below:
- Net Rental Income: $6K per month
- Private Credit Income: $2K per month
- House Hack Income: $2 per month (tax free)
Total: $10K per month (I anticipate this increasing by 1K/month when I re-lease my properties later this year.)
What is your annual spending?
I spend about $60-72K per year ($5-6k/month).
What are the main categories (expenses) this spending breaks into?
- Mortgage (including tax and insurance) = $2800/month
- Taxes (on income) = $1200/month
- 529 contributions = $1000/month
- Restaurants = $250/month
- Groceries = $150/month
- Automotive/Gas = $350/month
- Home maintenance = $200/month
- Travel = $420/month
- Healthcare = $100
Most of my living expenses (e.g. utilities, food, housing) get split 50:50 between my partner and myself. Therefore, I am able to keep expenses relatively low.
Do you have a budget? If so, how do you implement it?
I don’t really have a budget per se.
I have a decent spidey sense that alerts me if I am spending too much and tells me to reign it in. I am not the type that needs to buy a lot of consumer goods or bling for the dopamine hit to keep me happy.
I’m fortunate to have that personality type because it keeps expenses low without requiring me to expend a lot of energy restraining base impulses.
What percentage of your gross income do you save and how has that changed over time?
I save 100% of my gross income from my job ($225k/year). My semi-passive and passive income streams pay for my yearly expenses and then some.
That was not always the case of course. The pandemic afforded me the opportunity to refinance my four properties at very low interest rates while the housing and rental markets increased significantly.
Those two factors (lower fixed expense + increased rent charged) helped create enough passive cash flow to pay for my living expenses.
What’s your best tip for saving (accumulating) money?
- Multiple income streams – having passive income has been amazing.
- Tax Sheltering your income – 1099 vs W-2 income (see above) and max contributing to tax deferred accounts (401K and IRA). Also, rental income is tax advantaged more so than other income streams.
- Invest in low cost index funds and avoid actively managed funds that charge management fees (death by a thousands cuts).
What’s your best tip for spending less money?
- Vision (of your dream future – early retirement, world travel, Hawaiian beach house).
- Will Power and Delayed Gratification (needed to execute your vision).
I am not an ultra-frugal person by nature. Quite the opposite. My buying philosophy is “purchase high quality but then care for your items so they last.”
I am willing and able to forgo a lot of things I may want (e.g. new mountain bike, Sprinter van, Airstream, or Ski condo) and could likely afford (relative to what others are willing to spend based on their finances) because I have a vision of the future I want and I am determined to make it a reality. This helps keep my spending in check.
- My Secret Sauce (blessing and curse): I don’t like working.
Never have, never will. Doesn’t matter what the job is or how much I make doing it. I’ve been working in some capacity since I was 5 years old. I’m over it.
I am good at what I do and I help a lot of people in need, so there is some satisfaction there, but not nearly enough to make me want to continue.
I dream of early retirement and freedom…all.the.time. Anytime I contemplate making an expensive purchase I calculate how many shifts at work that equates to and then invariably the wallet goes right back into my pocket before it can be used.
What is your favorite thing to spend money on/your secret splurge?
- Bikes/Mountain Bikes: When asked how many bikes one needs to be happy I answer by giving a simple equation: N+1 (where N equals the number of bikes one already has.)
- Vacations: I love to travel.
I spent over 2.5 years backpacking around the world when I was in my 20’s. That is ultimate freedom. Once you get a taste of it, it will never go away.
Now that I am older and have a little kids, I still love to travel, but the flavor of it has changed. I’ve morphed from being a traveler to a vacationer. Gone are the bus rides filled with locals and their farm animals and nights spent in youth hostels. Now I find myself trapped at resorts in which my kids refuse to go play on the beach and ocean because the hotel pool is so fun and there is no sand that gets stuck in-between their toes…smh.
What is your investment philosophy/plan?
This has changed over time.
When I started my career and finally made enough money to save and invest, I was being counseled by my older colleagues to focus on maxing out my 401k and to focus on the stock market.
However, I moved to Denver during the GFC (honestly, I was almost completely unaware of what was happening financially because I had next to zero invested in the stock market and my career field is recession proof so job security was never a concern. If it weren’t for my near-retirement-age colleagues bemoaning that their retirement funds were being flushed down the toilet and therefore had to delay their retirement, I would have Mr. Magoo’d myself through the biggest financial calamity since the Great Depression).
Instead of taking the advice to max out my 401K, I saved all my money in order to buy a house. I had the awareness to recognize that housing prices were depressed and I had to take advantage of the timing.
For years after that, I continued to stay focused on saving money in order to buy more real estate over max contributing to a 401K.
It wasn’t until the pandemic that I started contributing more toward a 401K, brokerage, and alternatives (private credit).
What has been your best investment?
The cash on cash return of my first house (now a rental) is 64.3 this year. It has also appreciated over 2.5 times since purchasing it in early 2010. That is fantastic.
However, the best purchase I have ever made is my current primary residence. Great house in a phenomenal area. I could not have asked for more. It has also appreciated about 2.3 times since 2015.
What has been your worst investment?
I have been very fortunate not to have made any significantly bad investments to date.
I did play around with buying individual stocks during the early phase of the pandemic. I was too much of a noob to realize the gains I was experiencing were unsustainable. Therefore, I did not take any profits away prior to seeing the valuations drop like a stone.
For example, I had invested $15K in one stock and it rose to $75K in value but it has since dropped. I am now down $5K (I consider this more than a $5K loss. I should have taken the profits but I was greedy). I also took a shot on a Chinese ride hailing company at it’s IPO…then the Chinese government quickly decided to blow it up along with my investment.
After that event, I realized I was gambling and didn’t have the knowledge and experience to accurately value stocks. If I continued, I was going to get burned bigly. I then swore off buying individual stocks and have since stuck with index funds (with the exception of owning Apple stock).
In regard to real estate, I made a mistake in pulling back from a deal I should have made. I had an opportunity to purchase an amazing and undervalued property in my dream destination ski town. At the time, I was less than a year removed from buying my most recent rental property and did not have much cash reserves.
I would have needed to pull out from my 401K to have enough for the down payment. I got cold feet and thought it was too risky. Well, in the span of a couple of years, that property has more than doubled in valuation and now I am priced out of the town because all property values shot to the moon and are on their way to Mars by the time this gets published.
What’s been your overall return?
I am not really sure.
Every one of my real estate investments (4) have been home runs to date. The first has increased in value more than 2.5 times in 12 years, the second has increased in value 2.3 times since 2015, and the two most recent investment properties have increased by 1.5 times in the past five years. The cumulative cash flow from these properties more than cover my living expenses.
How often do you monitor/review your portfolio?
I track my net worth and cash flows frequently using Empower. Probably a few times a week.
I like to pay attention to my spending and see positive cash flow. It motivates me to keep saving and investing and reminds me that there is an end goal I am trying to achieve, financial freedom.
How did you accumulate your net worth?
As noted above, I recognized that the Denver area was undervalued and there was opportunity (when I first moved the city). Therefore, I focused my investments towards residential real estate.
After acquiring four properties, I then focused on paying down school loans and then started to invest more into the stock market and private credit.
What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?
I think SAVING is my greatest strength (by default).
Although I have worked hard and performed well my entire career, I am fortunate to have landed in a very high paying niche job (relative to others with the same degree).
Although I have made some great investments in real estate because I was able to recognize the undervalued nature of the city I moved to and had the fortitude to take risk, I was very fortunate by the nature of timing. I happened to move to the city during the GFC and at a time when I was starting to make good money. If I arrived in Denver a year or two earlier or later, who knows where I would be financially at this moment, probably not doing as well to be honest with you.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
Fear and uncertainty, indecision, as well as fluctuating tolerance to risk.
I go through phases in which I am committed to taking on leveraged risk and other times in which I feel I should be very conservative to safeguard what I have at any given moment. However, if I gave into the fear and uncertainty all the time, I would not have taken the risk. It is the risk and subsequent reward that contributed to my current net worth and financial success.
It is easy to mistake good fortune due to opportune timing with investment prowess. If you buy into your hype and develop an inflated ego it could easily lead to unwise investments and a rapid decrease of net worth. Therefore, I remind myself to stay humble and acknowledge good old fashion luck had a large part to do with my current net worth.
What are you currently doing to maintain/grow your net worth?
I am playing it safe for the time being.
Beyond contributing regularly to my 401K (indexing with ETFs), I am placing my current additional savings in 3 month T-bills and 3 month CDs at 5%.
Investing is as much about human psychology as it is technical analysis. At times, I find it hard not to be influenced by financial news and “expert opinions.” Therefore, I am trying to be patient, growing liquid cash pile, so I can pounce on either a stock market correction or dip in the housing market to buy another rental property.
Do you have a target net worth you are trying to attain?
Not necessarily. Although if I reach a NW of $5 million I’d probably retire at that point.
The majority of my NW (73.6%) is tied up in real estate and not liquid stock and bonds.
Therefore, as weird as it may sound, I don’t feel particularly wealthy and continue to live well below my means for fear of being behind the curve with liquidity.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I did not track my NW at all until the pandemic hit and I started using Empower.
Looking back and recreating my investment history, I probably reached a NW of 1 million around 38-40.
What money mistakes have you made along the way that others can learn from?
Don’t trade stocks on short term timelines.
Don’t mistake a post pandemic V shape recovery with your amazing individual stock picking prowess.
When the elderly neighbor tells you they just got into stock picking and they are hitting bullseyes on every stock, it’s a blaring red signal that a bubble is forming and sell off some of your gains before the inevitable correction in the market.
Don’t be afraid of taking a calculated risk because “no risk-it-no-biscuit.”
What advice do you have for ESI Money readers on how to become wealthy?
E.S.I is the foundation.
If FIRE is your goal, you have to be willing to take some risk if you want to make big gains and retire early with a hefty NW. However, they need to be calculated risk, don’t get so aggressive you could blow yourself up and have a negative NW that will takes years to recover from.
Stay humble and realize luck does play a role in your success (if you doubt that last statement, just realize that being born in the USA alone, makes you extremely lucky and already more advantaged over most people in the world.)
Keep your spending in check and contribute to retirement accounts regularly over time and compound interest will make you wealthy by traditional retirement age.
What are your plans for the future regarding lifestyle?
I really enjoy my current lifestyle. I only work 3 days a week so I have a decent amount of free time to do what ever I want when the kids are in school each day.
Once I reach my target NW ($5 million) or I reach the age of 50, I will likely retire. Then I can spend the summers taking my kids on some longer adventures.
What are your retirement plans?
I haven’t thought too much about that yet.
I love hiking and mountain biking and plan to do more of that in retirement. Biking the Colorado trail and hiking the John Muir trail are goals of mine.
I would also like to start traveling again like I used to in my 20’s, but this time exploring more of the world with my children.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
The financial unknowns.
Owning multiple properties could lead to significant upkeep expenses in the future, so that is always a concern.
I also fear that I have the potential to suffer from ‘one more year” syndrome and may doubt my decision to retire for a time after I actually do so.
How did you learn about finances and at what age did it “click”?
Growing up the only financial advice I ever received from my father was “Don’t worry, you’ll make the big bucks someday.” Seriously, that was it.
I spent my early adult years intentionally not thinking about finances. It was not until I had my first child (in my late 30’s) that everything changed. Although I had already begun to acquire real estate and a rental property by then, I really started thinking about the future a lot more once my daughter was born. I didn’t want to be trapped in an 9 to 5 Monday through Friday life and miss out on a lot of my kids’ upbringing.
That is when the idea of accumulating more even more semi-passive cash flows to allow for less work and potentially early retirement truly set in. I didn’t even know there was a FIRE community out there. I discovered that during the pandemic when I actively started reading about personal finance and investing.
Who inspired you to excel in life? Who are your heroes?
I inspired myself and did not have any financial or life-style role models.
I guess you could say I was “negatively inspired” by society in general. As a teen, I looked at the adults’ Monday through Friday, 9-5 work life and that sounded like a nightmare to me. I always desired a different life from “the norm.”
That manifested itself during my 20’s, as I backpacked around the world by myself intermittently for several years.
Later in life, that manifested itself in my desire to accumulate passive and semi-passive income streams so I don’t have to work full time and can retire early if I choose to do so.
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 have read “Buy This, Not That” by Sam Dogen.
I am currently reading “The Psychology of Money” by Morgan Housel.
That’s about it. I don’t plan to read too many more books about finances though.
Now that I have kids, the time to read is not there as much and when I get a chance to, I want to escape, not think about money.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
I have not given money to charity yet.
I prefer to make sure my family and I are rock solid with our finances (house paid off, 529s fully funded, etc.) prior to donating.
I plan to donate to environmental causes in the future, however.
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?
I have been thinking about this a lot recently.
I have already been teaching my children about finances and plan to incorporate them in the management of my rental properties when they get a little older. I think it is very important for them to learn the value of hard work and being responsible with their money.
I will likely use the rental properties as form of leverage to ensure they study hard, work hard, and become upstanding citizens. If they do, they will be able to inherit some of my real state holdings but if they don’t I’ll let them know I will donate it all to Greenpeace.