Millionaire Interview 378

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 August.

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 am 50 years old as is my wife.

We have been married for 28 years and together for 32 years.

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

We have two daughters.

One is 22 years old — she graduated from a top UK college and started a job in Europe.

The other is 17, in high school, and lives with us.

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

We live in the suburbs of a large city in the South of the US.

What is your current net worth?

Our net worth is currently 1,481,300$ (end of Q2 2023).

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?

• Cash = 22,000$
• 401k (traditional and Roth) = 143,000$ (started in 2021, more about this later) – combination of S&P 500 index funds and US Treasury bills.
• Roth IRAs = 12,000$ (we started to contribute in 2022 – more about this later) – combination of dividend shares and bonds
• Investment accounts = 160,000 (total market ETF)
• US Treasury = 65,000$ (I Bonds for now)
• HSA = 6,300$
• Foreign pension fund, invested in stocks and bonds = 73,000$ (we can access this after 65 years, in installments or as a lump sum)
• Cars 115,000$ – fully paid, 2 were bought new, one used for our daughter. I know some people would not include them in NW. I decided to include everything that can be transformed in cash at any given moment. For cars I use the most conservative KBB valuation, adjusted annually.
• House = 885,000$, fully paid. I use the lowest valuation available, adjusted quarterly.

We do not have any debt, just credit cards we use for rewards and that we pay in full every month.

I did not include in NW:

• Another foreign pension (Social Security like) – This will kick in at 65. I value that at 1,500$ per month in income in today’s dollars. If I die before, my wife will get 50% of that amount. My wife will have something similar, a much smaller amount as she worked less years than I did. Hard to know now how much this will be, therefore I decided not to include it.
• My wife’s inheritance from her father – This is a percentage of a property where her mother lives.
• Any unvested Restricted Stock Units from my current employer – They will be reset to 0 in case I leave or get fired. Technically I do not have anything until they vest.
• Any other valuables – like jewelry, some high-end electronics etc. Moving quite a bit in the past years we realized that you could get at most 30% of what you initially paid so decided to value them at 0.
• Anything related to life insurance – this is from my current employer.
• Anything we got as cashback, rewards, etc.– these are small amounts.
• Any money our kids have – these are their savings, not ours.

EARN

What is your job?

I work as a senior manager in Customer Service for a Fortune 1,000 company.

My wife stopped working several years ago to take care of our daughters.

What is your annual income?

My income today is made of 220,000$ salary, a 25% bonus target, RSUs vesting annually at a rate of approximately 100-150,000$, depending on how many I get each year and how the company stock performs, and some 6,000$ dividends and interest income which are reinvested.

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?

We are from Eastern Europe and lived there most of our lives. In the past 10 years we decided to take advantage of some job offers I got and moved in 4 different countries – this was an extraordinary experience for us as a family — it really opened our eyes and made us better.

Given the fact that we lived in our home country for most our lives, the income was very different than what you would see in U.S.

My first salary was 75$ per month, working as an IT technician at a startup. From there I moved into management and worked in various industries in the past 20 years.

In the past 15 years my gross income went above 100,000$ with a peak of 620,000$ a few years ago (a combination of a very big bonus and some capital gains on a series of stocks that I bought during the pandemic at a very low level and sold at a very good gain).

During the pandemic, the company I work for now offered me a job in the U.S. While our moves in various countries in the past 10 years were not good financially on the short term (taxes, cost of living, etc.), they proved to be good in the medium term so we decided to accept the offer. We sold our cars, our properties in our home country and came here.

After renting for a while, we decided to buy a house. Financially, with 62% of our today’s net worth being the house, this is a classic “mistake” you read about in the books as it does not help much with net worth growth. We see it differently. Having our own house has always been something important for us — we owned a property from the day we got married. We take very good care of our properties, keep them maintained and functional and spend money on the things we enjoy to have in the house and around. The house is quite big for our needs, but we could not find one that was smaller and move in ready to our taste.

The house for us goes under the YOLO (You Only Live Once) philosophy. I have a rare form of cancer that has no cure (it’s something that most people live with, unlikely to die of this but you never know with these things). My wife’s family has a history of cancer. She does her checks regularly and all looks good on her front. So we decided to do a mix between saving, paying off the college costs for our daughters, and live our life now as we see fit.

The house has a pool, a high-end home theater, a gym, a game room – and enough space for all of us when all the kids are home. It is in a safe area, with very good neighbors and very well-maintained properties and public spaces which should help with the property value.

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

For me, what worked was always to volunteer for the jobs that other people were scared of as they thought would be hard, businesses impossible to fix and so on. This brought me the reputation of a “fixer”.

I only looked for the first job in my life while I was a student. All other opportunities came my way without me looking for them – friends recommended me, former colleagues, former bosses wanted to work with me.

The other thing I did (and do) was to continuously learn. A few months after I graduated, I got into management – this prompted me to go to a Master in Management to learn more. Later I was asked to manage a small company for a PE fund – I decided to go do an Executive MBA to learn more about Finance, Accounting, Marketing and so on. I allocate a couple of hours every weekend to learning something new, to keep myself up to speed with the latest in my area of work.

When I was very young, my manager at the time told me that I should always work hard to make my immediate manager very successful. If she/he would be a great leader, this may help get her/him promoted and I could benefit as I worked hard for them. If she/he would be a terrible leader but successful, could still get a promotion and thus get her/him out of my way. Either way I win.

Every manager I had appreciated me and looked after me. During my professional life I got three offers from my previous managers as they moved to other places. I accepted two of these and went back to work for them.

What’s your work-life balance look like?

It’s varied a lot throughout the years. In general I always worked long hours. I was lucky though to be able to make my own agenda – if I needed to go to my kids’ events, I was able to. In general the type of work I was in allowed me to mix my personal and professional life in a way that worked for me and my loved ones.

Now I would say my work life balance got better. I have a larger team, they are great professionals, know how to take care of the business. I always kept week-ends for my family, we took extended vacations every year (at least 2-3 per year of 1-2 weeks plus shorter trips). So all together, I am happy with my work-life balance.

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?

At this moment I have the income from my work and a small dividend from my investments.

Prior to moving to US our income was more balanced – the dividend income was much higher, plus we had some rental properties bringing in some additional cash.

SAVE

What is your annual spending?

We spent about $135,000 in the past 12 months.

This is lower than what we usually spent in the prior years as we reduced the holiday and restaurant costs.

I did not include here the costs associated with buying the house – we set a total budget for the house that included any repairs that were needed, purchase price etc. Also, I did not include here any costs for my oldest daughter college as we gave her all these money in advance a few years ago – only things I included were her travel and cost of living while staying with us during her breaks.

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

• Food, house supplies = 27,000 (this went down as we are now 3 instead of 4)
• Restaurants = 2,400 (we used to spend 10-15,000 in previous years)
• Child school (supplies, trips et cetera) = 4,000
• Charities/family help/gifts = 7,000
• House: taxes, all bills (electricity, Internet, maintenance, Netflix, mobile et cetera) = 35,000 (higher than usual as we had a few months when we paid rent for our previous home while living in the new house)
• Clothes = 2,000 (this went down significantly ever since I started to work from home. 80% of my wardrobe I do not use anymore). Plus we bought a lot in the previous 3-4 years so no much needs.
• Various services (vet for our dog, hairdresser et cetera) = 5,000 (higher than normal as our dog had to go through a surgery this year)
• Healthcare (deductibles, co-insurance, dentist) = 8,000 (we decided this year to pay everything out of pocket and keep the HAS money for later needs)
• Cars (insurance, gas, maintenance) = 8,000
• Other miscellaneous = 3,000
• Travel = 30,000

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

We always had a budget, from the day we decided to live together.

We tracked all our expenses for the past 30 years, we have a very good idea where the money go.

In the past 10-15 years, the budget was used to give us some guidance, we earned enough to cover all our costs and saving targets.

Since we moved to US, we are paying a lot more attention to our spending as cost of life is much higher than what we were used to.

My wife is responsible for our monthly budget and spend, she takes care of paying the bills. We check our spending vs budget 1-2 times/month and adjust accordingly.

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

In the past 3-4 years we saved about 50% of our gross income on average (had years with 40%, years with 70%). This was much smaller in the past as our income was not at the current level.

For most of our lives I would say we saved about 10-15%.

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

Automating it.

We are maximizing now, since we moved to US, our 401k contributions (getting the maximum from my company as well), backdoor Roth, Mega back door Roth – all these are deposited directly from my salary, I never get to see these dollars.

Before U.S., I would do the same, every salary, bonus – the money would go automatically to a different bank account or to my brokerage account.

Having a budget, controlling what you spend, to make sure you also save.

What’s your best tip for spending less money?

Marry wisely. My wife has a saver profile, inherited from her family.

I am more of a spender, I pay a lot less attention on how much things cost. I am also the impulse buyer in the family, so it helps to have my wife do most of our shopping. I also do a lot of research on the big items (appliances, cars, electronics) – we buy good quality things that last a very long time.

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

Cars and travel. I used to spend a lot of money on cars. I would keep them for 1-2 years, sell them at a loss, obviously, and buy a new one. Did an estimation – probably lost somewhere around 200,000$ in the past 15 years by selling new cars after owning them for a year. Not anymore now, I do not have the same desire — I am happy with the car have and intend to keep it for 10 years or so.

Travel/vacations – this is the area where we spend most. For the past 10 years we spent 40-60,000$ per year on vacations and travel (I include here everything we bought during vacations – like gifts, clothes, etc.). This is a lot, it’s an area where we spend less lately – as we need to get our finances back on track after buying the house.

INVEST

What is your investment philosophy/plan?

I invest in the S&P 500, total market, bonds – and a few dividend stocks in my Roth IRA.

I am not chasing the biggest return, but rather want to follow the market.

I intend to continue like this, balancing between index funds and bonds as we get older.

What has been your best investment?

Here are a few:

• I once bought an apartment and sold it 8 years later at 15x versus what I paid, right before the 2008 financial crisis. Those were some crazy times, it was just luck.
• Myself. I continued to learn, paid for additional classes, courses.
• Buying certain tech and energy stocks during the pandemic – return was fantastic – some at 3-400% versus what I paid.
• I consider though that the best investment I made was me going to a top U.S. Master’s degree program later in life. I paid everything myself, these things are not cheap. It totally changed my life, my view on life, my circle of friends. The second best decision I ever made, after marriage.

What has been your worst investment?

Like probably many investors, at the beginning I tried to do too much – dividend stocks (chasing yield), trading, some options, futures, commodities, currency trading. The worst investment was some obscure company (do not even remember the name) – they went bankrupt – I lost the money – it was only 1,000$ but I learned the lesson.

One thing I did though from the beginning was to make sure my portfolio was diversified, never had one single stock that was more than 5% of my portfolio.

In the last 3 years I sold most my single stocks and moved to S&P 500 and bonds.

What’s been your overall return?

It is difficult for me to calculate, as I had to change brokers with my moves in various countries.

I would say around 8% to 10% for the past 10-15 years.

How often do you monitor/review your portfolio?

I would say once every month.

I used to do it every day when I had individual stocks and a much larger amount invested (part of which we used to buy the house).

I rebalance as needed 1-2 times/year. In general not needed as I continue to invest new amounts every month and buy either index funds or bonds as needed to balance.

NET WORTH

How did you accumulate your net worth?

After we got married we started with 2,000$ which were the gifts we received at our wedding. We used the money (and some borrowed) to buy our first “home”, a small studio. From there, everything we got was from our work – getting better jobs, saving, investing – for the first 10-12 years in CDs and real estate. We did not have any inheritance.

Our net worth really started to increase in the past 3 years, after I started to work for my present employer. I got very generous RSU grants, stock of the company increased significantly in the past 3 years, my salary continued to grow, I saw some opportunities during Covid to buy some tech and oil stocks – all these helped us get where we are today.

Now, should I have stayed in my home country, our NW would probably have been close today to 1.8-2M$ (more taxes in US, different cost of life, income not significantly higher than before) and its structure different – a lot less under the house item and more under taxable investments. We do not regret this, we believe it’s not all about money in life but also about embracing new experiences.

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 my greatest strength was Earn.

I made the right moves in my career which allowed me to increase my income in the past 10-15 years.

Now we try to focus on the saving side.

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

The biggest challenge was the income. Living in a country where income is generally much smaller than in U.S. – I never thought I would be a millionaire (my first salary was barely enough to get food and transportation). This seemed impossible to achieve.

The other challenge was our spending. We did not have a clear financial strategy until 8-10 years ago. We would buy things, spend on cars, save some money, had a few rentals – but no real objectives. Once we started to plan for it, things got clearer, we aligned more our spending with income and started to see more progress.

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

We continue to invest, watch our spending (cars, travel) and investment performance.

We are maximizing contributions to both 401k and Roth, which is important, as we started very late due to us landing here recently.

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

Somewhere between three and five million.

This will depend on if we decide to stay here in the U.S. or move back to Europe.

The costs are much higher here – healthcare, cost of living, etc. so we would need more money.

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

I was 48.

I remember the day very clearly – I bought a bottle of champagne, told my wife that our NW is now 1M$ – and that was it.

Since then we started to pay more attention to spending.

What personal habits and/or traits have you developed that have made you successful at growing your net worth?

All we have come from our work. Being very good at what I do helped me get better paid jobs, allowing me to save more.

Letting my wife manage our spending was a great move, as she values the dollar more than I do.

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

Investing in individual stocks, chasing dividend yield.

Spending too much on big ticket items (cars in my case) without a clear financial plan.

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

Find your passion, get very good at what you do, continuously invest in yourself. This should help with your Earn side.

Live below your means (I did experience lifestyle inflation). Save. Invest.

Repeat.

FUTURE

What are your plans for the future regarding lifestyle?

Prior to moving to the U.S. my plan was to retire at 56 when my youngest would finish college. The 3-3.5M we would have had (on top of the house we had) should everything go normally would have allowed us to live a good life and travel throughout Europe.

After moving to the U.S., the same amount would not be enough (higher taxes, cost of living). We have not decided yet what we will do. We will wait for our daughter to graduate and meanwhile we will see.

The opportunities I had totally changed our plans – i.e. move to various countries, change jobs, employers, so we will wait 3-4 years before deciding what to do). I love what I do at work, got a few promotions, changed a few jobs – I want to continue with my current employer for as ;omg as I can.

What are your retirement plans?

If we would live in Europe, we are thinking that 3-4M$ would allow us to live a good (modest) life. We might get a small apartment in a Mediterranean city and use it as a base to explore Europe, which we love.

Should we decide to stay here, we will see – I am thinking downsizing the house, travel the U.S. for 2-3 years while we would still be in good health then probably retire somewhere near a beach (maybe Florida although a bit too humid for us). I have started to look at properties there. Should that be the future for us I would like to buy something in the next 3-4 years and rent it until we will get to use it.

Our daughters’ locations may also play a role in the future – we may decide to get closer to where they would live.

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

In the U.S. – healthcare cost is a concern. We are trying to take advantage now of the very good insurance that we have – we are doing a lot of preventive checks. Also trying to get and stay in shape is the best healthcare insurance you can get.

The other one for me would be to find the right activities to get involved into. I am very active professionally, I like what I do, I would imagine I would try to find something I saw my father in-law do (he took a consulting job after retirement and kept it until he was over 80). My mother went the same route, retired and after a week her employer asked ger to come back – and she continued for another 15 years. So hard to say – don’t think I will do the same, but I am thinking what will I do with more time in my hands during those years.

MISCELLANEOUS

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

I did study in college – but it did not click. It looked “foreign” to me, as my income was so small those years.

It really clicked after my MBA, when I got exposed to options, trading, investments in general. This was late in my life – I was around 30.

And it really solidified when I got my first stock options – I was 33 years old. It was a small amount but to me it was a lot – and I understood the power of RSUs/Stock Options. Until I was in my 30s, all I did with savings was to buy CDs and real estate properties. My last Master in U.S. helped me to put everything together.

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

My heroes are my parents, parents-in-law and my grandparents. They all taught me to work hard, to never harm anyone, to give 110% every day for me – not necessarily for my bosses, other people – but for me. If I do something, I should do it very well and be happy with the result.

They also taught me resilience. My grandparents lost everything after the Soviet Union occupied my country and brought us the “gift” of communism. They lost their properties, small businesses, everything.

They started again from scratch, learned new jobs, raised their children, put them to college. And later on in life, worked diligently to try to recuperate some of their lost properties. They did all these whiles making it sound easy for us, their grandkids. Always smiling, always encouraging us to study, to be good citizens, human beings, good Christians.

When my last grandfather died, I was absolutely impressed by the service at the church, where the local priest went through all the things he did for the community and the Church. And even more impressed by the hundreds of people who came to say goodbye, some from very far away, all having stories of how he helped them and their families.

My other grandfather fought in WW II, he managed to get back home and worked extremely hard to raise his children and help my father go through college, his only child to do that.

Both my grandparents taught me how to work around the house and do things myself – I do not know everything but always tried to tackle every job around the house – being plumbing, electrical, fixing things, repairing electronics – I rarely get someone do these for me.

My grandmothers taught me to be good, to help those who are in more need than me, even if I have very little.

Both my parents further educated me towards the same principles.

I lived in harmony, nobody in my immediate family ever divorced, they went through good and bad together, always smiling and always being optimistic. They did everything they could for their kids to succeed and I will do the same.

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 like the “classics”:

• John Bogle, The Litle book of Common-Sense Investing
• Benjamin Graham – The Intelligent Investor
• Thomas Stanley – The Millionaire Next Door

While they are old and seem outdated, I enjoy reading them every year.

I do read many blogs – and I have to say that ESI Money played a significant role in me deciding to plan differently my financial future.

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

We give less than what we used to as we are still trying to understand what organizations are active in our area.

We volunteer for different causes (animal shelters, events to attract kids to STEM).

We gave money to animal shelters, to organizations helping the Ukrainian refugees (which my company generously matched dollar for dollar), to organizations involved in healthcare emergency services and to various individual that needed help in our community.

I would say we volunteer as a family about 150-200 hours/year and give right now some 3,500$/year to charities and various causes. We also send about 3,000$ to our mother-in-law to help her with some healthcare expenses.

Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?

We will leave all we would have to our daughters. This should not be enough to have them not working and encourage them to build their own future. Each would get 50%.

Should they have any children, we would set some money aside for their education.

Our oldest graduated from college debt free – we picked the bill for everything she spent. She had some internships and other jobs – she saved some of that money, used some to travel through Europe. As a graduation gift, I gave her a book on investing and 10,000$ (which I grew from an initial 5,000 her grandparents gifted her) to invest – we chose together two index funds, now she happily checks every month how her investments are doing. We plan to help her with some $ for the advance payment on her first house and other big expenses she may have. Our parents did the same with us (very different amounts those years but same effort from them as their income was very small). She is a good kid, graduated from a top college in Europe, started working for a good tech company – at a salary which took me more than 15 years to get to.

The youngest is in high school, she got the same 10,000$ sum from her grandparents’ initial gift, she put her money in U.S. treasuries for now. She makes a few dollars doing various highs schooler jobs. We will support her through college as we did with her sister, will pick up the bill (up to a certain amount) and educate her on ESI concepts.

I hope that exposing them early to financial planning, ESI concepts, will help them get a head start versus our own trajectory. They are good kids, well educated and with good, solid values.