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.
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)?
My husband and I are 45 years old. We have been married for 11 years, and together for 13 years.
I have read ESI Money since the days of Free Money Finance.
Do you have kids/family (if so, how old are they)?
We have a 9 year old girl and 7 year old boy.
What area of the country do you live in (and urban or rural)?
We live in suburbs of a Midwestern metro area with rural areas nearby.
What is your current net worth?
Our current net worth is approximately ~$2.9M.
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?
I am filling this out on behalf of my husband and I. We were pretty set in our ways on how we track our finances when meeting “later” in life, so we still manage our own balance sheets and maintain multiple separate accounts.
- Total IRA: $1.3M
- Total Roth IRA: $70K
- Wife Roth 401K: $10K
- Husband 401K: $200K
- Husband Company Pension (Face value): $30K
- Total Money Market: $60K
- Taxable Stock/Equity accounts: $152K
- Wife company stock Company 1: $80K (Vested)
- Wife company stock Company 2: $9K (Vested)
- Wife company stock Company 3: $5K (Vested); Unvested: $47K
- ESPP: $2K
- Rental 1: $225K equity (no mortgage; our first townhouse that I bought in 2004 for $148K, worth $225K)
- Rental 2: $145K equity (30 year mortgage of $80K @ 3.75%, bought for $120K, worth $225K)
- Rental 3: $80K equity (30 year mortgage of $220K @ 7.5%, bought for $310K, worth $310K)
- Checking/money market: $30K
- Primary House: ~$450K equity (15 year mortgage of $250K @ 2%, bought for $500K, worth $700K)
No kids accounts are included, but we have roughly $8K saved for each ($16K total) as well as $20K in college funds for each child. This is an area where we need to strategize more. Do we try to fully fund college accounts (and how much should we aim for?) or pay off mortgages and try to cash flow college?
EARN
What is your job?
I am a Finance Director at a Fortune 20 company.
My husband is an VP at a top 10 bank.
What is your annual income?
My income is $175K annual base, with an annual bonus of 30% and $50K annual equity award (which vests annually over 3 years). I started this job earlier this year, so haven’t realized the annual bonus and equity part yet; although I did receive a $50K equity sign on bonus that vests monthly over 3 years.
My husband has a $133k base, with an annual bonus of 25% and $14k in annual equity award.
We also have 3 rental properties, and roughly net $20K annually after mortgages/expenses/management fees.
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?
I always wanted to make my own money and save as much as I could. I babysat in middle school.
In high school I waited tables and made tips. It was then I realized ways to reduce taxable income.
In college, I was a waitress at Applebees; and I could do closing shifts making $150+. I loved it—such a social environment and could make so much! Also was very flexible and I was able to save a lot in summers for the school year.
I went to a state college; but was unsure of my major. I ended up in Accounting slightly by default, graduating in a 5-year masters program, and got my CPA.
I interned and worked for a Big 5 public accounting firm for ~3 years, starting salary of $45K. Great client facing experience, but I knew I didn’t want to spend my life researching accounting theory. But having this on my resume was key to future career growth and I highly recommend public accounting at a Big 4 firm if you have an accounting degree.
I then moved on to a small (ish) public company as a senior Accountant @ $58K base, 5% bonus. In retrospect, this was one of my best decisions. The company grew rapidly through organic growth and acquisitions in the 2000s and 2010s. I started in Accounting/SEC reporting and stayed for 3 ½ years, no promotions. I enjoyed it and was able to learn the company and sit in on a number of C-Suite meetings discussing earnings releases.
I had the opportunity to move to Financial Planning and Analysis as a Senior Financial Analyst @ $68K with a 10% bonus, and it was a much better fit for me. I loved supporting the Sales team, and the fact that budgeting and forecasting were not as black and white as accounting was. I was promoted to Senior Manager the following year ($75K), and then Director two years later at $100K.
Our company made a major acquisition at this time and I received a retention bonus if I stayed 2 years ($40K of stock/stock options, vesting in two years).
Although very busy, this was one of the best times in my career and I fully enjoyed it.
Within 3 years or so, multiple levels of management changed, and I was not as happy in my role. I was able to move to Account Management with someone I had previously supported in the Sales Organization. It was such a different experience than Finance! Sales was much more flexible and virtual at our company. I learned a ton about the operations of our company and really enjoyed supporting the client.
The client eventually told us they were leaving in 3 years, so our company gave employees on this account a retention bonus to stay a certain number of months in order to support the client until the term (mine was roughly $40K). It was a bit of being in the right place at the right time, but I was very fortunate. After staying through that period, I eventually went back to Finance in a role for someone I worked with in the past.
Networking was key at my company—I could usually find a place to land and was no longer scared of leaving Finance and knew there were multiple opportunities within a large company.
Eventually we were acquired, and in 2021, my position was eliminated. I had the choice of ~8 months of severance (full pay), or look internally for another position. I was never a job hopper and always thought I would stay there for my entire career—so this was a shock for me. However, the company had changed since being acquired, and I did not love it as much as I did; so I made the decision to take the severance and see what was on the job market.
My ending salary in 2021 was an annual package of ~$142K base, 20% bonus, and $25K equity.
Thankfully, this was the year after COVID, so the job market for finance was great with a lot of opportunity. In February ‘22, I ended up taking a Finance director at a company in a similar industry and got a nice base pay bump to $175K, 20% bonus, although no equity. Unfortunately that was not a great fit (due to a number of factors: the culture, my boss and the insane amount of hours).
I was miserable, and my husband actually told me to quit 2 months in. Not being a job hopper, I was determined to stick it out. Ultimately, later in ‘22, I realized life is too short and decided to seek other opportunities. After a couple of months of interviews, I was offered another role in a slightly different industry with better pay and bonus structure ($175K base, 30% bonus, $50K annual equity, and unlimited PTO!).
I am happy with the culture and the company/job. The process of the last 2 years has made me realize that job changes and learning a new company is challenging and takes time (especially large Fortune 100 companies). I also lost out on a couple years of annual bonuses as well as 401K company match. As such, I would like to stay put until my next phase of my career (eventually doing something that is part time/consulting outside of the 40 hour weekly corporate grind).
My husband also graduated with an undergraduate degree in Accounting. He started in an operations role at a national brokerage firm for $21K. While working, he went to night school to earn his Masters in Finance, as well as obtaining his Series 7, 63, 24, 27 licenses & CPA. (I am so proud of him for this—his road in Accounting was harder than mine). He worked in various roles in operations and finance in brokerage firms.
He took the leap to do consulting after we met, which really expanded his resume and marketability. He has worked in higher level jobs in banking since his consulting days.
What tips do you have for others who want to grow their career-related income?
- Obtain a degree/trade which has value. Obviously we are big on Accounting as we both majored in this, but companies will always need people with a financial background, and you can do so much with this degree.
- Also, working at larger fortune 500 (50 if possible) companies—although a bit “safer”, they typically have a great bonus program, equity and benefits. Getting your feet in the door in your field is a great starting point, but once you develop your reputation/brand; it is easier to go outside of your career field within the company.
- Make yourself valuable at work by taking on projects no one else will.
- Ensure you have good change management skills—through acquisitions, learning different departments, networking, etc. Big companies continually change, and many are s*$% shows in the process (corporate America); but if you can manage through that, it can help you greatly.
- Networking is key—always make friends and put 1:1’s on calendars just to catch up and keep your ear to the ground. You never know when you will need a friend/colleague.
- My rule of thumb not to stay in one job longer than 3 years—move laterally to another area internally; or move up, but continue to gain experience and build upon your skills.
- Have an idea (does not have to be exact) of where you want to be in 5 years, no matter how old you are.
I would like to be able to switch to something more flexible in my early 50s. I would like to stay at my current employer until “retirement” from the full-time corporate life. I have been thinking more about transitioning out of the corporate 9-5 world in recent years. We have tried to save as much as we can, but I have really buckled down this year to assess our financial position and made improvements on where we could and what it will take to retire.
My husband plans to work until 60. We will probably meet somewhere in the middle. We both want to continue to do part time work after stopping the day to day corporate grind. We are trying to figure out what makes sense for us in a part time world.
What’s your work-life balance look like?
At our current jobs, our work-life balance is very good (not perfect).
My husband has busy and not as busy times, but typically it aligns with normal working hours.
I travel monthly with my new job, but it is flexible and manageable. My boss is flexible so it is helpful.
We do love to travel (especially me) so we carve out time for that every year.
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?
We own three rental properties; and we just bought the 3rd property within the last 6 months. For the rentals, we currently net ~$20K annually after mortgages/expenses. This will change a bit with the addition of the third.
We currently debate about aggressively paying down rental mortgages #2 and #3; or using capital to buy additional units. We do utilize a management company to manage these units—we like them a lot, and allows us no stress over these (especially with 2 full time jobs and young kids). Eventually, we may look at managing one or two of these ourselves.
This is an area I want to tighten up a bit—with the rentals and the management company, we were a bit out of sight, out of mind. We have great renters that have been in place for roughly 5 years for our first 2; so we did not keep up with market rents and did small increases. We want to balance treating our renters well along with keeping up with market rents.
The majority of the other savings have dividends/interest, which all get reinvested back into the various accounts.
The great majority of our income is W2. Our goal is to increase the passive income so we are not as dependent on the W2 income, and find additional ways for tax savings.
SAVE
What is your annual spending?
This question took us the longest to answer and is a bit embarrassing, honestly.
Outside of saving first and paying off all credit cards in full, we do not closely track our annual spending. After reviewing credit card annual receipts of various cards, we cobbled together a rough draft of annual spend.
We have let our spending creep up in recent years (especially restaurants!), but we have committed to reign in our spending and be more diligent.
But, this was definitely an eye opener for us, and we pledge to manage this better.
This excludes anything related to our rental properties:
- Income Taxes: $70K
- Primary residence mortgage/Tax/insurance: $34K
- Restaurants: $15K (Obviously an area for improvement!)
- Clothes/Household/Amazon: $10K
- Private School/Kids camps/Sports: $18K
- Travel: $14K
- Groceries: $13K
- Auto Maintenance/Gas: ~$5K (Both cars are fully paid off — my car is 10 years old, my husband’s truck is 4 years.)
- Bills/utilities: $10K
- Donations: $3K
- Health & Wellness: $2K
- Country Club: $8K
- 529 Contributions: $5K
- Lawn Care: $3K
- Insurance (auto, life): $3K
- HSA: $7K
Total: $220K
Do you have a budget? If so, how do you implement it?
Not a technical budget…
My husband and I married “later” in life at 34. We were each savers and had our own way of managing our savings/spending. We still have separate credit cards, bank accounts, etc. For us, this is what works.
I am high level—max the retirements, pay down mortgages, save for emergencies/non-retirement, then the leftover is ours. My husband is a bit more down to the penny to reconcile. At any rate, we each have our bills that we cover.
There are times I think joining everything would help us manage our spending better (we were shell shocked when we filled out the previous question), but for now we are leaving as is.
What percentage of your gross income do you save and how has that changed over time?
I save roughly 20%-30% in 401K’s, money markets, Taxable stock accounts and Company stock purchase programs. We always max our 401Ks. My husband’s level of saving is ~20% – 25%.
We really try to automate as much savings as we can to not think about it, and keep a healthy amount in money markets for future rental purchases. We bought our third rental property this year, and used the majority of our money market accounts to fund the 25% down payment.
Doing this exercise has made me realize we have the capacity to increase this rate (and decrease spending). We both feel we should be saving more, especially in non-retirement accounts as we would like to stop working ahead of true retirement age; so that will be a focus in the next few years.
What’s your best tip for saving (accumulating) money?
We have been fortunate to have incomes that have increased throughout our career and have professions are in high demand. This has allowed us to save a significant amount of money.
Automate savings! I grew up in a self-employed household, so they didn’t have a normal 8-5 corporate lifestyle. They wanted me to get a marketable degree and work for a large company, which I did.
When I started my first full time job after college, they told me to save as much as I could in my 401K, which I also did. I maxed my 401K for the majority of my career (2007-2010 I only did match as I had purchased my house and lived alone).
My husband did this as well—and we were able to “suffer” a bit in our 20s to obtain the power of compounding.
We both encountered people that said 401Ks are not worth it b/c they are so small, but that is simply not the truth; and they are likely not saving anything. It is by far our greatest investment.
Have no debt other than mortgages. Try to pay down mortgages: always put down at least 20% and aim for 15 year mortgages. Buy less house than you can afford.
Do not get fancy cars, pay cash if possible, and pay off as soon as possible. Drive them a long time! I have had 2 cars since 2005, and no car payment since 2008.
What’s your best tip for spending less money?
Ask yourself this question before you do anything, who do you want to make rich first, you or (fill in blank with whatever place you going to spend money at).
Automate it by maxing 401Ks and any company stock plans. Ensure saving in brokerage/aggressively paying mortgage. Always pay cash for cars.
Cook at home as much as possible. With kids, our life is hectic but we try to make as many freezer meals as possible to keep it easy during the week. Avoid eating out too much (as I said, we are embarrassed on this point in our spending summary above—it is a splurge of ours but we will work on it).
What is your favorite thing to spend money on/your secret splurge?
I love to travel! I do not splurge on cars and such, but I love to travel and explore new places. Really look forward to taking my kids new places as well as traveling more freely in retirement.
My husband loves to hunt and fish, and spends a significant time doing this.
We also love eating out and cooking; but our spend summary showed us that we need to monitor this more closely.
Outdoor time especially in the summer: Boating, swimming, hanging out with friends and entertaining/cooking with them.
INVEST
What is your investment philosophy/plan?
I haven’t spent a ton of time researching individual stocks/mutual funds. I would like to be better about this as we increase non-retirement savings.
We both simply maxed 401Ks in somewhat general mutual funds, nothing fancy.
My family made real estate purchases (buying open farm land as it became available), so I always wanted to try something similar, which is why I wanted rental properties.
I bought my first townhouse @ $150K a few years out of college at the height of the market—it was 2004 and I lived by myself. I put 5% down, took out a separate balloon loan for 15% of the value; and the remaining 80%: a 30 year fixed loan.
I loved the place, but the market crashed shortly thereafter, and it dropped in value to ~$120K; and did not catch back up to purchase price of $150K until ~10 years later. It was a monthly struggle and I kept a tight rein on my budget/spending. In retrospect, I would have saved more in the couple years I lived at home after college to avoid having a balloon loan for 15%, and put down 20% as a down payment. That being said, I paid off the balloon loan as soon as I could in 2008. Once I got a couple promotions at work, I was able to save a lot more and get my monthly expenses under control.
My husband moved in in 2011, and that is really when we were able to aggressively pay down the mortgage and paid it off in 2013. We were really able to stockpile money once it was paid off!
We then had our first child there. We would have stayed longer, but they were building new houses nearby in the area we loved, so we built a new house. We did not sell our townhouse as we wanted to use it as a rental. We were able to put 25% down on our new house, and began renting our paid off our first townhouse using a management company.
In retrospect, I would have bought more real estate in the 2010’s; but I was too conservative. Plus, marriage and 2 kids shortly thereafter put a bit of a strain on our disposable income.
What has been your best investment?
Maxing our 401Ks, regardless of the exact mutual fund (not a money market), really will make people millionaires. It is automatic, often companies offer a match, and it really grows with salary growth.
Our careers: I was fortunate to work at a Fortune 100 growth company that offered a 15% discounted ESPP plan, and eventually stock options and restricted stock as I progressed. We used that over the years to fund various house projects (house projects, Deck, decorating, etc.), but I have a significant portion left. I consider selling it to not have so many eggs in one basket, but haven’t yet.
Our second rental property was bought in 2016, which was near the bottom of the market, and has since doubled in value. We plan to hold on to our rentals for passive income for the long (ish) term, but that helps soften the blow from our first one being below purchase value for a number of years (although paid off completely).
We bought our third rental property in 2023. We have been looking for 2 years (not aggressively), but knew that the market was not prime for this, but we will be holding for the long term so monthly income is not our top priority, but building net worth and future passive income is our goal.
What has been your worst investment?
Although we aggressively saved, after our kids were born, we took a step back on actively managing savings and spending.
We should have paid closer attention to our investments and spending.
What’s been your overall return?
We don’t track individual returns super closely, but net worth has increased ~15%-30% annually (Very high level estimate).
How often do you monitor/review your portfolio?
Currently, we both do monthly.
However, we need to do a better job of reviewing things in total, and making strategic decisions. We improved a lot doing that this year, and plan to be more aligned for the future.
NET WORTH
How did you accumulate your net worth?
- We both got valuable degrees in high (ish) paying fields that are usually in demand. We have navigated our careers to get a reasonable amount of income for the work/life balance we want.
- For the most part, no student debt. I had scholarships to cover college: ~90% of room and board. My parents did help with spending and my transportation, and let me live at home for 2 years after college (probably too long). I should have stockpiled way more cash at this time in my life, but I did not.
- We did not get into credit card debt.
- We continually bought cheap cars, and did not trade up.
- We have maxed 401K’s for the majority of our careers.
- We have worked at dependable fortune 500 companies, worked hard, and built our careers.
- We bought rental properties at a reasonable rate. Not selling our first one when we bought our primary residence was a bit painful at the time, but we made it work.
- Paid off our first mortgage in our townhouse (rental #1).
- ALWAYS spend less than you make.
- We have not inherited money yet.
- 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?
- We both are natural savers, and have been our whole lives (although in different ways).
- While I think investing is important, I was pretty general on 401K savings and do not follow stocks too much. But, I do have a large amount of individual stocks from the companies that I have worked at—so I do follow those (sometimes wonder if I should cash more out and move to other investments). Always spend less than you make.
- My income and equity/bonuses have greatly helped me from 2010-present—working at a company for a long time gives so many positives: high PTO, company match 401K, merger bonuses, retention bonuses, equity awards, etc. I was able to reap a lot of rewards staying with the same company for 17 years and working my way up and adding value. Even when not moving up the ladder, I moved roles laterally to build my skill set and build new connections.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
Amassed ~$5K in credit card debt in the couple years after college while living at home.
I began reading finance books (Dave Ramsey, Automatic Millionaire, Millionaire next door), and decided to get into financial shape. I rapidly paid down my outstanding debt, and saved for a down payment for a house. Sadly, it was only 5% of my first house value, so living was extremely tight my first 3-4 years after buying my house. But, I was diligent for the most part and was able to come out on the other side.
Disappointments with jobs I interviewed for but did not get. Always be prepared with an updated resume and a list of accomplishments.
Always keep the lines of communication open at work even when not get something you interviewed for—often times, they come back down the road to gauge your interest in a future opportunity.
Daily diligence leads to long term wealth.
What are you currently doing to maintain/grow your net worth?
- We both max our 401Ks, and save in non-retirement accounts as much as we can (definitely could be better on this).
- We purchased our third rental property this year, which has slowed us a bit on non-retirement savings.
- Saving in 529 plans for our children’s college—this will likely a mix of cash flowing and using the 529 plans to fund. Would love feedback/thoughts around strategies on this.
- We struggle with strategies around paying down mortgages (Rentals of $89K (#2) and $220K (#3) as well as primary residence of $250K). I lean towards trying to pay down as much as possible while by husband thinks we should continue to expand our real estate holdings.
- Pay cash for cars, and drive them until they die. I have had 2 cars since 2005 (and still driving my second one—my husband is pushing me to get one with a third row but I am hesitant).
- Continuing to try to balance between saving and enjoying life. We splurge a bit on travel, but I love traveling and the memories we make as a family.
Do you have a target net worth you are trying to attain?
Well, we are still trying to agree on a number.
My husband thinks $8M without our primary home equity.
I think this is too high, and plan to retire ahead of this touchpoint (more in $4M-$6M range).
We are still negotiating this point. 🙂 But, save as much as we can and leave generational wealth to our kids.
How old were you when you made your first million and have you had any significant behavior shifts since then?
- First Million: Somewhere between ages 36-37.
- Second Million: Somewhere between ages 41-42.
- Third Million: ~45 years—hoping to hit it before we turn 46!
But what they say is true—the first million is the hardest, but then the habits pay off and it snowballs pretty quickly.
I do think we loosened the purse strings a bit once we hit 39/40—which I am glad we did, but also feel guilt when I calculated the spending question above—it is all about balance so I will try to maintain that.
What personal habits and/or traits have you developed that have made you successful at growing your net worth?
Try to develop a value of a dollar at a young age: Save, develop strong work ethic, start working when younger.
Both of our parents are in the same house as we grew up in and spend very little. But, they are extremely content. Our parents that were frugal in different ways; but they taught us how to appreciate the value of a dollar and how to save. Both of our parents had their own businesses in some sort of way…not sure if that is part of the reason we both ended up at larger companies with standard finance degrees (they thought it would be an “easier” path for us rather than self-employment?).
I have learned there are definite pros and cons of each career path.
What money mistakes have you made along the way that others can learn from?
- Eating out too much.
- Keeping up with the Jones—do not get into the lifestyle creep of neighbors and private school friends. This is hard—we have in some ways, but mostly kept in check.
- Speculating (Not Investing) in the stock market.
- Real Estate: Sometimes I wonder if we were too conservative with our rental strategy—instead of paying off the first one, should we have gotten another one when the prices were low in the early 2010s? But, you have to remember your life situation at the time, and I have never regretted paying off the first mortgage early. It really gave us a lot of flexibility for moves we made later as well as taking on risk.
What advice do you have for ESI Money readers on how to become wealthy?
Pretty basic for us:
- Always live below your means. You will have good years and you will have bad years, be sure that a bad year is a year where you do not save as much as you want vs. not saving at all (or needing get into your savings).
- Max your 401K—start with your first job, and develop your budget post savings—that way, you will not get used to a higher paycheck without saving.
- Do not have debt other than mortgages. Aggressively pay down mortgages.
- Pay cash for cars. Do not buy more car than you need unless you are old and debt free and a millionaire. Keep them a LONG time.
- Invest in company stock purchase plans if there is a hefty discount. Anything that was automatic really helped me to save without thinking about it.
- Limit eating out—this is a hard one for us.
- Network and broaden your career opportunity. This has been key to me: obtain a degree that is valuable and will always be valuable. Work hard, and opportunities will open up.
- Utilize rental property investments knowing that it may not be huge cash flow short term (hard to do these days), but for the future. You will likely have multiple income producing assets owned outright.
- Slow and steady wins the race. But don’t be afraid to take calculated risks.
- Marry someone with a similar enough financial philosophy.
- Balance saving with enjoying life.
FUTURE
What are your plans for the future regarding lifestyle?
We currently have a “range” for retirement net worth:~$5M-$8M. We are still debating which number makes sense for us.
My husband plans to work until 60; but I plan to “downsize” jobs in my early 50s to get a more flexible job. I want to continue working, but not the 8-5 corporate grind.
We both want to downsize our house in the future—we will have to decide timing on our kids/college—probably need to keep our current house until college or so—but we want to downsize and get into a smaller ranch, and snowbird eventually.
What are your retirement plans?
For me, travel and work part time. Be involved with my kids and my parents lives. My husband wants to extensively hunt. And travel with me.
Spend hours each day being active: Strength train, running, hiking, etc.
Gardening is something my father in law does that we started this year—we love it and used so many of our crop!
I would like to also take college courses outside of accounting business. I want to continue learning my entire life to keep sharp.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
My biggest concerns are health care, college, as well as a “bridge” fund in case we retire early—we are pretty heavily weighted in retirement accounts (and rentals). Also knowing the right age to retire, as well as the right savings amount.
No matter what, I want to be able to travel freely, and for my husband to be able to hunt and fish where and when he wants.
I also want to have a part time flexible job and ensure I continue hobbies to keep an active mind and body.
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
I always was interested in making money and saving, and being able to make my own decisions on both.
I grew up on a grain farm, so I got to see first hand that my parents ran their own business and made their own hours.
Towards middle school, I babysat as much as I could.
In high school, I worked in the summers during high school and college (carhopping, waitressing, babysitting).
My husband’s father owned his own small business so he got see a successful business from all sides. He started working part time when he was 14 and earning a paycheck and then having to pay bills makes life a lot simpler.
Who inspired you to excel in life? Who are your heroes?
I grew up in a rural area that was within ~45 minutes of a Midwest city. Both of my grandparents were Depression Era children; and kept many of those habits throughout their lives. They both were grain farmers. It really showed me that the 9-5 job is not the only way to make a living. However, both of my parents wanted me to get a good degree and a job in a corporation (maybe because they saw it as an easier path than self-employment).
At any rate, there are good and bad points about both. But both of our parents were similar: Spent little, lived in the same house their entire lives (still do), and are frugal. Those habits were instilled in us.
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?
We both love the Millionaire Next Door! This really taught me lifelong lessons I learned in college (it was recommended by a college professor to me).
I also liked Rich Dad, Poor Dad and the Automatic Millionaire. Basic lessons, but sometimes simple is what you need to maintain habits over a long period of time.
My husband recommends the Intelligent Investor.
We both love reading autobiographies—regardless of background/career: Sam Walton, Lee Iacocca, Stanley Tucci, the Busch family, Anthony Bourdain, etc. You can learn so much about someone’s success as well as pitfalls, no matter what their background is.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Yes. We give to our church/school primarily. I donate time and money through our PTL.
My husband went to a smaller college and supports heavily to them via donations and volunteer time. He also is a area leader for a large international conservation non-profit. Overall, he feels that as he is able, he should contribute to my community with both time and resources.
My husband is better about this than I am—I need to look at ways to give back/volunteer more than I do.
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?
Yes, I want to create generational wealth, with stipulations. I do not want them ever to be in a situation of being lax and depending on anything we leave them.
I also want to spend as I am older and not save it for when we die.
M says
You are doing well, but with three rentals and a house, there are a lot of moving parts to your finances. Since you’re both finance/accounting types, I’d recommend that you create a 10-12 year plan in a spreadsheet to really get your hands around it. It’s undoubtedly what you’d do at work
and I’m sure you have the skills.
While the plan will be wrong–they just always are–it should give you a much better idea of your cashflow and net worth in your 50s. The biggest thing I see is the relatively small taxable portfolio, but having 3 rentals may be a game changer if they’re paid off.
A plan will also get you a better handle on your spending, although I’d caution you against throttling it too much. If you read the “Die with zero” book, it would advocate for spending money in these years when you’re healthy and the kids are around for amazing memories.
Best of luck.
MI-385 says
Thank you very much for your comment. You are right that our skill set should theoretically make it easy for us to do that 10-12 year financial plan, but it really is intimidating. I like your comment that while the plan will be wrong and they always are–even if its not perfect, it will be better than doing nothing, and we need to bite the bullet and do a consolidated draft.
Agreed on your last paragraph…we have taken more trips as the kids have gotten older in order to make memories at their ages; and when we are healthy and able. It is definitely a balance to ensure saving enough while still enjoying life.
Thank you for the feedback, lots to think about!
JQ says
Your spending doesn’t seem excessive at all for a family of 4 with your current income and net worth. Obviously you need to include taxes for retirement spending planning purposes but I don’t know that you need to include it in your current spending analysis. Without the taxes, you’re mid-100s which, for a combined income of $300K, is very reasonable. Enjoy your life, tomorrow isn’t guaranteed.
MI-385 says
Thank you for your comment! The point you make about excluding taxes is a great way to look at it and makes me feel better about our spending.
Yes we could definitely spend less but it isn’t terrible for a family of 4; and yes, you only live once. Thank you!
MI-334 says
Sounds like you’re doing great.
In terms of 529 you get the most bang for your buck by front loading them and taking advantage of the tax free growth.
The only caveat is if you get a state tax deduction, I’d probably take advantage of that as well.
I would not stress so much about over contributing to 401ks etc. There are a multitude of options to access that money before full retirement age. I would certainly not be contributing to a brokerage account before maxing those out.
Finally, you mention wanting to learn more about individual stocks and mutual funds. Why? There is no evidence that picking individual stocks will ever come out ahead of indexing.
I think your problem more is you don’t have a financial plan or even better an investment Policy statement. You should work on these.
Without this it is tricky to know what you do with your next dollar. If nothing else you need an asset allocation; ie 90% equity and 10% fixed income or whatever you’re comfortable with. You obviously like real estate so that would be a part of your allocation. Good luck!
MI-385 says
Thank you for commenting! I went back and re-read your MI-334 interview and it was great to read your story, great job. I appreciated the parts about your spending and your young kids – many things resonated with me.
We do have a state deduction for our 529 – we need to fully maximize it…I feel this is one of the few tax deductions we partially leave on the table.
Filling out this interview was eye opening and a bit intimidating….especially with how many are well versed in specific investments…the “I” is my weakest part of the ESI equation–probably why I said I needed to learn more about it. Really I don’t have a strong desire to research individual stocks or mutual funds.
Good feedback on the 401K–My new company offers Roth 401K which I have never had; so I am maxing this, but it is harder as after tax.
Thanks for your detailed feedback. Agreed on the need for us to put together our plan and financial philosophy. That is on our to do’s! Thanks again.
Julia says
It is clear that you’ve made enough good decisions over the years to outweigh things like high restaurant spending. However, I have found it to be a good exercise to track spending every month in categories. Even if you don’t strictly budget, it helps you be aware of where your money is going to make sure it’s in line with what you want. As you implied, it can be quite different than what you had thought. It also gives you an idea of what your annual spending is so that you can better plan for transitioning to part time work, and eventually, retirement.
MI-385 says
Thanks so much. It is good to keep things in perspective around our spending and our years of being more conservative.
Do you have a preferred app/tool to track spending? It is one of our goals to implement more consolidated tracking of spending.
Thank you for your feedback!
Julia says
My bank and credit card apps automatically place spending into categories, but they’re not always correct, so I go through the previous month’s spending at the beginning of each month. Then I enter it manually into an Excel spreadsheet. I’m sure there are much more efficient ways to do it though 🙂
MI-385 says
Thank you. I need to just bite the bullet and figure out a way, knowing it will likely not be perfect and that is OK. It will be better than nothing 🙂
Financial Fives says
I have yet to read an interview that didn’t make me feel as if these net worth are attainable. You’ve both done a great job and it’s admirable how much you align on your money values. Most of the millennial generation like myself aren’t as fond or trustworthy of the largest companies to work for, yet it sounds like that’s been your successful strategy. Enjoy your life now that you’ve set yourself up so well!
MI-385 says
Thank you for the kind words Financial Fives! I just checked out your site – nice job!
We align on our values at a high level, but sometimes differ on the “how”…we are already trying to work on a better way to track spending and develop our long term financial plan (other than just save as much as possible!)
In regards to large companies…yes it has helped my path a lot! But, there are pros and cons. I did get a pay bump by switching companies, but it has been a hard transition to learn another company, especially a big one.
Thanks for your kind words and for commenting!
Phillip says
Please don’t beat yourself up about your spend amount eating out. Reads like you really enjoy it. I had similar guilt spending the same per year eating out but got over it and am really enjoying the variety and easier life without the burden (well my wife’s burden) of cooking. Since your savings targets are met, spend intensionally on stuff you enjoy. Do you really want to die with an 8 figure portfolio?
MI-385 says
Thank you for your comment. I realized through the reaction to my article that I need to not stress as much about spending on eating out. You are completely right about dying with an $8M portfolio…we need to balance what we spend now to enjoy it while ensuring our financial future reasonably.
Thanks again for your comment.
Joseph says
Congrats on a job well done! I echo the other comments about not feeling guilty about spending money. Reading the book Die With Zero would be helpful for you here. You’re worth nearly $3M. Eat whatever you like and enjoy it!
I’m curious if you ever get the itch to sell all the rentals and pay off your primary?
MI-385 says
Thank you very much!
I think one of my takeaways from the feedback (along with a long term financial plan/philosophy) is to read the book “Die with Zero”!
So, last year we actually thought about selling the paid off rental property to buy a 2nd vacation/VRBO home at a nearby lake. We planned to rent it part time as a VRBO. We would have likely only broke even on it though. In the end, another rental opportunity came up and that is when we purchased our third rental property. We also decided to try to aggressively pay down our primary mortgage.
I think if we sold the first rental we could pay the rest of our primary mortgage, but for now, we are trying to hold tight and pay it off on our own so we have the rental income for the future. But, it is definitely something to think about!
Thank you for your input!
MI-384 says
Congratulations on your interview you guys are doing great! We have talked about buying rental properties back in the 2010’s but were gun shy on making the investment based on our families past experience with bad renters.
We have struggled with spending money on poor quality food when we know we can make it at home for less money. Our tendancy is to either buy kid’s meals or share a meal so we can use that money to travel!
MI-385 says
Thank you MI-384! I read your interview last week, great job!
We have been lucky with our first 2 rentals, but our third has had more bumps (we just got it last year). We have tried to balance with investing in the market and rentals. Time will tell.
Love the kids meal idea–I often do that to get a smaller portion as well.
Thank you!