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 September.
It’s a long one so I’ll be breaking it into two posts to keep things manageable.
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 51 years old, and my dear wife is 41 years old, but she’s 10 years more mature than I am.
We have been happily married for 11 years.
We dated for 5 years before that, so we have been together for a total of 16 years.
Do you have kids/family (if so, how old are they)?
We do not have kids. We had already decided before we met that we did not want to have kids.
We are both in our second marriage, no kids from the previous marriage. Had we met when we were younger, things might have been different.
We are very happy with our decision not to have kids. It has worked out very well for us, and for our parents too. We have been able to care for our parents and one grandparent, who are elderly, disabled, and chronically ill. Had we had kids, it would have been much more difficult, if not impossible, to spend as much time and as much money as we have spent taking care of them.
We recently purchased our first and only rental property very close to our home. We are going to rent it to a parent whom we care for.
Not having kids has also helped us reach our financial goals sooner, although that was never a reason for us to not have kids.
We do have nieces and nephews whom we love very much. We stay in touch with them, spend time with them, and we send them money for birthdays, Christmas, graduations, wedding gifts, and baby shower gifts. We are their cool, rich aunt and uncle.
What area of the country do you live in (and urban or rural)?
We live in a small town in the southeastern part of the US.
We like it here. The cost of living is low, summers are not too hot, and winters are not too cold.
The town is not too small, too large, or too populated. We are a two-hour drive from several major cities.
What is your current net worth?
Our current net worth is $1,439,138.
We crossed the $1,000,000 mark on Thanksgiving Day, 2020.
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?
- US stock index funds: $1,108,363
- Home: $216,900
- Real estate (1 Rental): $195,000
- Cash: $26,375
- US I bond: $20,000
- Crypto: $7,500
- Mortgage on rental: -$135,000
- Other debt: -$0
EARN
What is your job?
I have worked in Information Technology (IT) my entire career, as tech support staff, system administrator, and software developer.
What is your annual income?
Last year my career-related, annual gross income was $132,349, including one annual bonus.
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 base salary starting out in IT about 26 years ago was around $33,000. That was a very good starting salary for someone in my field at the time, so much so that friends and family wanted to work for the same company after I told them. I know, I had not yet learned the value of Stealth Wealth at the time. I did learn that lesson later, the hard way.
My salary grew decently from there. Except for one year, I have received at least one pay raise every single year of my career, sometimes twice in a single year. Some of those were as high as 10%, while others as low as 2.5%. The average in the past 17 years has been around 4%.
It could have been a lot better had I done more to grow my career. I have never been interested in climbing the corporate ladder or being the best of the best at my job. My identity has never been tied to my job or my career. My identity is tied to my faith, my family, to personal health and fitness, and to other personal interests outside of work.
I did not want to move away from family and friends, so I did not look for better opportunities away from home. I believed that loyalty to my employer was a good thing and that it would be rewarded. So, I would stay with the same employer for several years, until a better offer came to me. I did not go out and look for those better offers, they just came to me one way or another. I valued stability too much and did not take many risks.
I never even asked for a raise or promotion until after reading several blog posts by ESI Money about growing my career and tips on asking for a raise, and that was only 3 or 4 years ago. Until then, I just was not bold enough to ask, and did not know how to ask.
I did not cross the $100,000 base annual salary mark in my career until then, 20 years into my career and in my mid-40s. I have since asked for a raise and promotion a second time and received them after being persistent for over a year, following up and negotiating. The ESI Money blog posts gave me the knowledge, tools, and boldness to ask, and to ask in a way that increased the likelihood of receiving what I asked for.
I believe the reason for my lack of ambition, other than my identity not being tied to my job or my career, is that I had no goal and no plan in my youth. Retirement was too far into the future for me to even think about. I thought I was already making more than enough money, and that spending 40+ hours a week in front of a computer monitor in exchange for wages was not labor intensive enough that I could not do it until I am 70 years old…how naive of me.
I did not read about the Financial Independence Retire Early (FIRE) lifestyle movement or the book “Your Money or Your Life” until I was in my 40s. I wish I had known about and read that book when it was first published in 1992. Now that I have learned about financial independence and early retirement, I have a goal and a plan to grow my career-related income so I can earn more, save more, and invest more to become financially independent and to retire as early as possible.
To make up for the lack of ambition in my youth, I am blessed to have chosen a career and worked for employers that have paid me well and provided good benefits, provided stability, and provided many job opportunities. Having a good work ethic is very important too. To this day, I have never been laid off or fired from any job, and I have never had to take a pay cut for any reason. I believe the pay raises, bonuses, and promotions I have received over the years are not bad for someone who until very recently never asked for them.
What tips do you have for others who want to grow their career-related income?
Start by choosing a college degree or trade that will pay well, provide good benefits, stability, and job opportunities.
Have a goal and a plan, to become financially independent as soon as possible. After that you’ll have the freedom to do what you want to, not what you have to.
Do not do as I did. Do not stay with the same employer very long, especially when you are young. With remote work-from-home these days, especially in IT, it is much easier to find better paying jobs away from home and in higher cost of living areas without having to move.
Educate yourself in the proper way to ask for a raise and a promotion, then go and ask boldly.
What’s your work-life balance look like?
I believe it has always been good. I always had time to go to the gym before or after work, spend time with family and friends on weekends, and go on at least one weeklong vacation a year.
There were rare times when I worked long hours on a project. In preparation for a big project, I remember once reading a thick book to learn a new computer language while sitting at the beach on my one vacation that year. On another occasion I had to write software for another big project while visiting family out of town.
These days, working from home full time makes work-life balance even better. My wife and I get to spend time together weeknights and all weekend.
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?
Yes, I do have another source of income besides my career, my wife’s career. Her gross income the year before this interview was $100,370, including regular bonuses. She works in healthcare.
We receive interest and dividends too from high yield savings accounts and a taxable brokerage account. Including $3,688 from these, our total household gross income was $236,407 in 2022.
As stated above, we recently purchased our first and only rental property.
SAVE
What is your annual spending?
Our annual spending last year was around $106,000.
What are the main categories (expenses) this spending breaks into?
- Charitable giving: $25,000
- Income Tax: $25,000
- Food/drink, and other Costco purchases: $18,000
- Amazon purchases: $9,000
- Home: $8,000
- Health care: $6,360
- Transportation: $5,341
- Travel: $4,000
- Career/Job (Disability and liability Insurance, licenses, association fees, etc.): $2,600
- Other (Life/umbrella insurance, password manager, online backup, etc.): $2,400
- Phone service: $600
- Entertainment: $300
- Millionaire Money Mentors (MMM) forum membership: $209
Do you have a budget? If so, how do you implement it?
It is complicated, but the short answer is No.
I grew up in a Christian home, attending church weekly, reading The Bible, and praying daily. So, my first lesson in budgeting came from a document written thousands of years ago:
“Bring the whole tithe into the storehouse, so that there may be food in my house. Test me in this,’ says the LORD Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it.” Malachi 3:10
So as soon as I learned this as a kid, I started budgeting 10% of my income for charitable giving, and 90% for me. “Pay God first” was my motto.
Later, as a young adult, I read the book “The Richest Man in Babylon.” This book said “Pay yourself first” 10% of my income. So now I was budgeting 10% of my gross income for charitable giving, 10% contribution to my 401K retirement plan, and 80% for everything else. “Pay God first, pay myself second, then pay everyone else” is my new motto.
Other than that, I have tried many times and failed to create and implement a more comprehensive budget. Every time I have tried creating a budget, I start creating subcategories of subcategories. This ends up making it too complicated, so I give up. Maybe I don’t know what I’m doing, or maybe I’m OCD or too much of a perfectionist.
I have been using the free online software Mint to track my net worth, since the time when it was bought by Intuit. I tried their budgeting feature for a little while, then gave up.
The closest thing to budgeting we have done was knowing how much we needed per year for charitable giving, property taxes, insurance, travel, gifts, etc. We then opened a few high yield savings accounts and set up automatic transfers to those accounts every time we got paid. This worked well for us for a few years, but now that the Vanguard money market fund yield has increased to over 5%, 5.28% as of this writing, we have moved the money in all those separate savings accounts to a single money market fund.
Other than that, after taxes, charitable giving, and retirement savings, we did not monitor or follow any budget and just spent what was left on everything else.
What percentage of your gross income do you save and how has that changed over time?
Last year we saved about 60% of our gross income, and about 65% the year before that. Several years ago, we started maxing out our 401Ks and our individual Roth IRAs. After turning 50 last year, I started taking advantage of the catch-up contribution limits.
Before maxing out our retirement accounts, we were saving about 40-45% of our income.
I do not remember what percentage of my income I was saving when I first started my career in my mid-20s, but I know it was at least enough to get the employer match. Other than that, I was not a very good saver at the time.
When I purchased my first home around 2006, someone advised me for the first time about having an emergency fund in cash. So, I started building my emergency fund then and eventually saved $100K cash.
Around 2008, I read the book “The Ultimate Cheapskate’s Road Map to True Riches.” Although the ideas in this book were too minimalist and extreme for me, the book did get me interested in minimalism, spending less, and saving more. It also got me interested in reading and learning more about personal finance.
So, then I read the book “The Richest Man in Babylon.” This book recommends saving (Paying yourself first) at least 10% of your income. So, I started contributing 10% of my income to 401K. Then someone recommended I contribute 13% minimum to my 401K, so I did.
Although I was reading and learning more about, and getting better at, frugality and saving more, I had not yet developed an interest in reading and learning more about investing. I had several books about investing in my Amazon wish list, but I never got around to purchasing and reading them.
In 2014, at the age of 42 and 17 years into my career, I saw a headline that caught my attention. It said that for a limited time only, Amazon was offering the Kindle version of an investing book for free. Because I like free stuff, I rushed to get it.
This book recommends contributing 15% of income to retirement accounts, but I did not increase my retirement contribution to just 15% after reading this book. I increased it to much more than that, as much as I could, and continued increasing it every year after until I finally started maxing out all my retirement accounts. I then opened a taxable brokerage account and started saving and investing there too.
The book title is “If You Can: How Millennials Can Get Rich Slowly” by William J Bernstein. Although I am not a millennial, this book had an impact on my personal finances like no other book ever had. Not only did it teach me about investing, but also got me interested in reading and learning more about the subject. This is the one book that got me started on my mission to become financially independent and to retire as soon as possible, and it got me interested in reading other books on the subject: The Four Pillars of Investing, The Millionaire Next Door, All About Asset Allocation, and others.
What’s your best tip for saving (accumulating) money?
Pay yourself first, after charitable giving. Set it and forget it.
Take advantage of your employer retirement plan and its automatic deductions.
Open a high yield savings account and set up automatic transfers.
What’s your best tip for spending less money?
- Spend less than you earn.
- Avoid lifestyle creep: Do not spend more when you get a raise but save more.
- Practice Stealth Wealth: Be wealthy, but do not look wealthy.
- Spend only on what you really need and on what really adds value to your life.
- Move to a low cost of living area.
My wife and I decided to spend very little on a house, vehicles, and clothing, so we can spend more on health and fitness, nutrient dense delicious foods, travel, and giving.
What is your favorite thing to spend money on/your secret splurge?
Food and travel.
We eat out once a week, sometimes less than that. We love Brazilian steakhouses. We grill steaks at home almost daily.
We love going on cruises. We have been on five cruises, and our cruise to Alaska has been our favorite so far. We would like to try a Canada New England cruise next.
INVEST
What is your investment philosophy/plan?
Keep it simple, and protect your assets from excessive and unnecessary taxes, inflation, and high fees. We have been able to accomplish this by investing most of our money in low-cost, US stock index funds in tax sheltered accounts.
When I first started investing in 1997 by participating in my employer 401K plan, I had no clue what I was doing. I knew a financial adviser at a big financial institution at the time. I showed him my options and asked him what I should select. He highlighted the funds he thought I should invest in and wrote down the asset allocation percentages. I invested as he told me without asking why and without educating myself as to what the funds were, and I never rebalanced.
Years later, after finally educating myself about investing, I looked and realized I had been very fortunate that he had me invest the bulk of my 401K plan in an S&P 500 Index fund, the only index fund available to me at the time. He had me invest the rest in several actively managed, stock mutual funds (small cap, mid cap, and international), no bonds.
So, I invested very aggressively all those years without knowing what I was doing, which is great because my 401K grew very fast, and I realized I was risk tolerant. Ignorance is bliss.
After reading the book “If You Can”, and learning the difference between stocks and bonds, and following the author’s suggested asset allocation for millennials, I changed my asset allocation to equal amounts of US stock index funds, US bond index funds, and international stock index funds across all our retirement accounts. We kept this asset allocation and rebalanced yearly for about five years. So much for “Keep it simple.”
One day I read an ESI Money blog post about asset allocation saying the author does not like bonds, does not invest in them, and why. I thought “Wut???, but, but the book ‘If You Can’ and John Bogle, author and founder of Vanguard, said investing only in stocks is risky and we must all invest a portion of our portfolio in bonds”, or at least that was my understanding of what they said. Then I joined the Millionaire Money Mentors (MMM) forum where Nords, Apex, and other members shared how they do not invest in bonds and why. So, I dropped the bonds shortly after that and went back to my original asset allocation of only US stock index funds and international stock index funds.
About a year after joining the forum, I created a thread about investing in international stocks. Now that I understood investing better and was watching my investments more closely, I had noticed US stocks seem to always outperform international stocks, and the expense ratio of international stock funds was higher too. After reading what the members had to say, the pros and cons of investing in international stocks, I dropped the international stock funds.
Now each of our retirement accounts is invested in a single US stock index fund, with lower expense ratios, no more rebalancing, and we are back to keeping it simple. We have kept this asset allocation throughout the current bear market, and we are very happy with our decision.
America, Heck Yeah!
What has been your best investment?
By far VTSAX, Vanguard Total Stock Market Index Fund.
I wish our 401K plans offered this as an option. Instead, my wife’s entire 401K plan is invested in an S&P 500 index fund, and mine in a Russell 1000 index fund.
What has been your worst investment?
Crypto and individual stocks.
I have purchased a handful of individual stocks in the past, some of them meme stocks such as GameStop and AMC. I held them only for a short time, less than 2 years, then sold them at a loss. Thankfully, I only invested very little on these, less than 1% of my net worth at the time, so I did not lose much. The reason I did not keep them longer is because they did not perform well during the time I held them, and all they did was complicate my taxes. I prepare and file income tax returns for my wife and I, and for my parents.
I invested 1% of my net worth in Bitcoin and Ethereum a couple of years ago. I am down 75%, and it is not looking good so far. These I do plan to hold for now, although they too have complicated my income tax return. Remember, I like keeping things simple, and this is not helping.
I see the above as a small price to pay for educating myself. Now I have more than confirmed that I am much better off sticking with low-cost, US stock index funds. Heck, my money market account, high yield savings account, and I bond investment have more than outperformed my crypto and individual stock investments.
What’s been your overall return?
Since the bulk of my investments have been in US stock index funds the past 26 years, it should be very close to the US stock market return.
How often do you monitor/review your portfolio?
In a bull market, I monitor my portfolio almost daily because it is encouraging to see my net worth grow daily.
In a bear market, I monitor my portfolio weekly or monthly because more often than this is a little discouraging.
I do not practice market timing, so I buy shares of US stock index funds whether the market is up or down. I will buy more shares when the market is down if I have extra cash from bonuses, overtime work, etc.
—————————-
What a great story so far, huh? And we’re only half way through!
To read the rest of the story, see Millionaire Interview 382, Part 2.
Mr. Hobo Millionaire says
Good stuff MI-382. Congrats!
Do you have a FI number you’re trying to reach?
Zach Brewer says
Also, as a soon to be retiree living in the cold north of Wisconsin, if you are able to share where you actually live that would be great, because it sounds wonderful!
Diogenes says
Hi Zach! I would prefer not to say in order to remain anonymous and for the sake of stealth wealth. Are you a member of the Millionaire Money Mentors forum, so I can contact you there directly and share this information with you?
Diogenes says
Thanks very much, Mr. Hobo Millionaire! You’ll have to wait until Part II of this interview to get an answer that question. 🙂
Kid-Free McGee says
A devout 10% tither who voluntarily chose to marry twice and not “Be fruitful and multiply” in either marriage? You may be one of a kind!
I’ve chosen not to have kids as well (not a Bible-following tither though).
You don’t have to get into it if you don’t want to, but I like human interest stories – why no children?
Diogenes says
Hi, Kid-Free McGee! Why no children? The short answer is I really don’t know.
I was always indifferent to the idea of having children. Growing up I always wanted to get married, and I thought having children was just a normal, natural part of it. Although I looked forward to getting married someday in the future, I never really looked forward to having children and never really thought about it much.
When my ex-wife told me she didn’t want children, it didn’t make any difference to me one way or another. Then, by the time she changed her mind and told me she wanted children, our marriage was failing. I didn’t want to bring a child into an unhappy marriage that might soon end in divorce.
In many ways, I have often done what I believe is right in my own conviction, doing things my own way, rarely conforming to popular beliefs or societal norms. My wife is the same way. Maybe that has something to do with it.
As I said in my interview, my wife and I are very happy together. Had we met when we were younger, we might have had children together. Shortly after we got married, we became caregivers for her grandma, my mom, her dad, and now her mom too. They are not the reason we don’t have children, but it has worked out well for all of us.
None of the churches that I was a part of throughout my life really taught having children as a commandment. Jesus didn’t have children, and even implied it was better for devout Christians not to marry. His apostles didn’t have children, that we know of. Paul clearly discouraged devout Christian from getting married, but encouraged them to get married only if they lacked the discipline to remain celibate. In this particular teaching from Paul, the purpose of marriage was to avoid sexual immorality, not necessarily to have children.
Tithing, on the other hand, was taught by example by Abraham long before the Mosaic law. And Jesus mentions tithing in a favorable way too. As I said in my interview, I learned tithing as a child, motivated by the promise of financial reward, although that’s no longer my motivation. Unlike having children, tithing was something I could start practicing right then, as a child.
I hope that answers at least part of your question. 🙂
Kid-Free McGee says
It does – I appreciate your response. The pressure to have children in our culture is overwhelming, as there aren’t many of us who choose not to (and fewer of us who look forward to the prospect of not having someone to look after us in our final days/years), so it’s always interesting to hear the backstory.
Emily says
Thank you for this thread and your candor. I’m 34F and agree the pressure is overwhelming! Why is the question always why you wouldn’t have kids instead of why would you?
Diogenes says
You are welcome!
MATTHEW w TABOR says
fantastic read–you get the feeling that this fellow would be a good friend, neighbor, etc.
much congrats to you and your bride. Enjoy this next chapter. 🙂
Diogenes says
Thank you!
Financial Fives says
It’s encouraging to see how even without a six figure salary and enjoying your life you were able to reach this milestone. I also like how forthcoming you are about your decision not to have children and what that means for your future and lifestyle. I just looked up that If You Can book, considering it came out 10 years ago and is quite popular, how nice the author wants to get it into the hands of people for free!
Diogenes says
Thank you!
Mike says
Great interview so far, I really like the ones where people are building wealth but still giving considerable amounts to charity along the way, rather than saying they’ll leave it to charities when they die.
Diogenes says
Thank you!
ESI says
These are favorites of mine as well!!!
Maverick says
Why do you rate “along the way” higher? Couldn’t that be considered more selfish as you get the “privilege” of seeing the recipient get the gift. Maybe giving from a will is less selfish and the amount gets a longer chance to compound. Just a thought…
ESI says
You don’t see anyone get the gift — at least I never do. I give to established, efficient charities who do great work. It’s not like I drop off a bag of money at someone’s house. Hahaha.
And here are my thoughts on giving on the way to FI:
https://esimoney.com/the-case-for-giving-on-the-road-to-financial-independence/
Maverick says
You missed the deeper meaning (s) of “seeing”, I should have put it in quotes. It includes things like a tax deduction, a thank you note, etc. There, I made it ESI to comprehend John. (Wink)
ESI says
Did you read my post?
As for “seeing” (aka getting any benefits), anyone who gives anything to get a tax deduction or a thank you note is making a bad investment. Literally no one I know (or have ever heard of) gives for those reasons. They give to help people — now — not at some imagined time in the future 30 years from now when the money could have helped so many in those 3 decades.
If people don’t give, I DO NOT mind that at all. It’s their money and they can do what they want.
But coming up with some sort of reason why they give now in order to make it less noble is weak IMO.
Maverick says
I give…UP. 😉
ESI says
Hahahahaha…
SMB116 says
Great interview MI 382!
I really enjoyed reading your interview and look forward to your update. Good luck to you and your wife in achieving your FI number!
Diogenes says
Thanks very much, SMB116!