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)?
I am 53 and my wife is 48.
We have been married over 20 years.
Do you have kids?
We have two wonderful children, 18 and 16.
What are of the country do you live in?
We currently live DC but as a military family, we have moved all over the country throughout a military career that is over 33 years (reserve and active duty).
What is your current net worth?
Our current net worth is $3,134,000.
What are the main assets that make up your net worth?
Retirement accounts:
- 401k(TSP): 873k
- Roth (mine): 322k
- Roth(wife): 218k
After tax investments:
- Stocks/bonds: 803k
- Real estate syndications: 150k
- 529s: 212k
- Cash: 74k
- Home Equity: 450k
Other (art, jewelry, etc.): 36k
VUL Life Insurance: 146k
Debt: House, 150k (currently a rental, plan to move back to)
Not included in here is a military pension, which all depends on how long I live.
If I live until 80 and retire next year, it is worth well over $3,000,000 in today’s dollars, and it is indexed to inflation (not included in that $3 million estimate). If I do not make it to 80 though, of course it is worth less.
There is a survivor benefit plan that you can pay into for your family, and I intend to carry this since my wife will likely live much longer than I will, she will get 55% of my pension. Uncle Sam is nice in that the cost for the survivor benefit plan is taken out pre-tax on your pension.
EARN
What is your job?
I am a military physician.
What is your annual income?
Salary, 280k, which is close to what I would make if I was a physician in my specialty outside the government.
But realize that is not all base pay if you looked up officer pay on a pay table — that includes basic allowance for housing and bonuses I get for being a board-certified physician and also signing contracts to stay in the military. I am in the last year of a 4 year contract currently.
We also have some income from the house we intend to retire to which is currently being rented out at a profit.
Once a military physician finishes the time they owe for any military scholarships they took and/or residency training, the military offers special pay contracts for 2, 4 or 6 years for most specialties, with more money for longer contracts and those in more demand. These are not meant to match civilian physician pay, but it helps close the gap some.
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 story goes back to around the age of 13. My family spent a few years in East Africa when I was younger, and I came back with a strong desire to work since it was pretty much impossible for an American teenager to earn anything there when a grownup could be hired to do yard work for 25 cents an hour.
At the time, my father got into trouble with the neighbors for paying that wage for help, since neighbors complained he was “paying too much”. So, I started with my own lawn mowing and snow removal business in a northeast city suburb, limited by how many blocks I was willing to travel. How many people pushed their lawn mower enough for the wheels to need to be replaced? I did, twice!
I then picked up one newspaper route, followed by another.
Once I turned 16, I started working at a local grocery store, which I returned to at times during college.
Upon graduating high school, I joined the Army Reserves to help pay for college.
After college, I had a year before I started medical school and I installed security alarm systems, that was my first full time income.
During my four years of medical school, I was primarily living off loans and once I took a health professions scholarship for the last three years of medical school, the stipend as well.
When I graduated medical school with about 120k of debt, I started out as a Captain in the Army beginning a Family Medicine internship. That year, I made $22k, the following year, $41k.
Each year brought some pay raises with inflation and some with time in service, the next big jump was graduating from residency, when I started receiving additional pay as a residency trained physician.
Becoming board certified also helped bump things up a bit, and then once my three years of payback for the three year scholarship were paid back, I was able to start signing multi-year retention bonuses which really bumped up the pay. The amount of those bonuses has increased with time, along with promotions and pay raises we get every two years, in addition to annual cost of living increases in pay, housing, etc.
I can honestly say that I intended to serve my three years of payback time after finishing my residency training and then exiting the military into the civilian sector. But I was offered a job in Germany just has my three years pay back was almost done, I had only been married for a bit over a year, and we decided it would be a great experience. Since then, it has just been one great job after another, some better than others, but getting to work with some fantastic people along the way.
What tips do you have for others who want to grow their career-related income?
I think many of my tips are going to sound familiar. Find something that you enjoy doing and put the time into being good at it. I went down a track on the administrative side of medicine, and obtained a MBA and MHA, I also became involved in organizations to improve my healthcare leadership skills.
Search out jobs or positions that are out of your comfort zone, do not just go for the “easy” jobs that you feel very well prepared for. The jobs that are out of your comfort zone are the ones that you will personally grow the fastest in since they challenge you more. Those skills you pick up in the more challenging positions will serve you as you pursue positions of increasing responsibility and authority, which normally are also rewarded with a higher compensation. A mentor once said, “you can either help steer the ship, or you can be along for the ride, but if you are along for the ride, don’t complain about what direction the ship is going”.
With more experience in whatever your field is, whatever extra training, degrees, or certifications you can obtain, more doors will open to you, often associated with a higher income.
What does you work-life balance look like?
This has varied over time. One of the bonuses of being in the military is 30 days of leave (vacation) a year, on top of getting federal holidays off, and depending on the job, “training days” off around a federal holiday, making a three-day weekend often four-day weekends.
However, I held many leadership positions, often putting in 10-12 plus hour days. When I had the opportunity to run hospitals, I would go in on holidays to thank the staff that were there taking care of patients.
But I am also thankful for the many places our family has been based, and the opportunities we took to explore different parts of the country, including Nords backyard on Oahu for two years.
Currently I am in a senior administrative position working in the Pentagon, in many ways, more responsibility, but less authority since that lies with the senior leaders of the military at this level. Still 10–12 hour days, but plenty of opportunity to explore DC and the surrounding area with my family.
Do you have any sources of income besides your career?
Primarily just investments and one rental property that we intend to return to.
I have just diversified into real estate syndications in the past year, that will produce some additional income.
I was an owner in a franchise for several years, more about that later, it was a costly education instead of the windfall I thought it would be.
SAVE
What is your annual spending?
$159k.
What are the main categories (expenses) this spending breaks into?
- Housing – 47k (DC is expensive)
- Groceries – 18k (two teenagers)
- Utilities – 6k
- Restaurants – 10k (eating out with two teenagers)
- Travel – 14k
- Entertainment – 6k
- Insurance – 6k
- Education – 7k
- 529’s – 6k
- Auto – 10k
- Misc. shopping – 22k
- Gifts/Donations – 7k
Do you have a budget? If so, how do you implement it?
Not really, never had one, just make sure to pay our retirement accounts first and live within our means.
I have always paid off our credit cards the month we use them and pick and choose which card to use based on the points/benefits.
What percentage of your gross income do you save and how has that changed over time?
The last two years, closer to 30% while getting into real estate syndications, but it has traditionally been 20%.
What is your best tip for saving (accumulating money)?
Pay yourself first. Set up automatic withdrawals while you are earning money, and if you get any additional bonuses, windfalls, put a similar percent of that toward your retirement. I am a big fan of dollar cost averaging over most of the year, buying on the ups and downs that way.
The majority of my investments are in large ETFs or similar vehicles in my retirement accounts including the TSP, with about 20% in individual stocks. I do take some risk in holding a significant amount of APPL (9% of all my securities holdings), but I am aware of the risk.
What is your best tip for spending less money?
If you are living within your means, paying your retirement and investment accounts first, then just do your best to limit taking on too much debt.
If you are taking on debt to buy a large purchase, like a bigger house, a car, etc., and that is going to mean you will not have enough left over to still invest in retirement accounts, then consider putting off that purchase. Do you really need the new car, or can you keep your current car or make do with a used car so you can still invest in your retirement?
What is your favorite thing to spend money on/your secret splurge?
Travel first. We enjoy at least one or two big vacation a year with 2-3 smaller ones.
I would say next up is tools. I have been building up my collection to be more able to fix/build things in retirement one day.
INVEST
What is your investment philosophy/plan?
It has changed over time, starting with mutual funds for probably the first 10 years of my investments.
Then it branched into some individual stocks once I obtained an MBA/MHA a bit later in my career.
In the past 8 years, gradually moved away from mutual funds to ETFs.
What has been your best investment?
I will say with many others, marrying my wife. She has helped our family through many moves, deployments, and homeschooling two kids the last eight years (which really paid off during COVID!).
My next best investment has been learning more about personal finance and finance in general.
What has been your worst investment?
By far, the franchise experiment, that is about 50k basis lost, never mind what that could have produced over time.
I invested with a friend of the family, that was my first mistake. The next was assuming that someone who was a good manager will automatically be good owner. The last is not having a lawyer look over the contract to protect me better. I chalk this up to a very expensive education and am currently taking the 3k max deductions as I try to eek out some minimal tax benefits to recoup a bit of the loss.
I made this investment around the 2009 stock bubble bursting, if I had left it in investments, it would worth over 150k today, not a 50k loss (and a lot of grief over many years trying to recover the investment, along with a ruined friendship).
What’s been your overall return?
Looking back 20 years (about the earliest I started keeping a spreadsheet), just over 11%.
This may not be fully accounting for a few windfalls partially put toward investments in that time.
How often do you monitor/review your profile?
Weekly if not more often.
I cannot help myself, and it’s so easy with online tools these days.
I also maintain an investment and net worth spreadsheet that I update the beginning of every month.
NET WORTH
How did you accumulate your net worth?
First part is picking a decently paying career as a physician, although there are plenty of physicians that make way more than I do.
It has been primarily consistently paying ourselves first.
I have made other mistakes in investing that have been a drag on our net worth. I invested with First Command for many years, not realizing how much I was losing in management fees to them (3-4% between their fees and the mutual funds they had me in). Around 2017, I started using the Personal Capital dashboard and realized how much I was paying in fees. I switched over to having Personal Capital handling my Roth IRA accounts, while I continued to use the TSP and my Schwab brokerage account to handle over half of my overall investments.
While I know I could manage my Roth IRA accounts myself, I get a bit of peace of mind that if something happened to me, I have an investment manager who is aware of my various investments, the ones they help with and the ones I manage, and who would assist my wife if I was not here. She does not have the financial bug that I do.
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?
First, I would say earn. I have had a good career with regular increases in pay, allowing us to increase investments over time while compounding did its magic.
Next is save, consistently paying ourselves short and not raiding our investments for big purchases when we could avoid it.
Lastly, is invest. I am a lot savvier today, but it is after many hard lessons along the way. No doubt, if I could go back to 1996 when I bought my first mutual fund share with the knowledge I have today, it would be a much higher net worth today, probably more than 4 million.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
I would say paying fees that were too high earlier in my investment timeline (which hurts compounding even more) and seeking too high a return/taking on too much risk with the franchise investment (and not protecting myself better).
What are you currently doing to maintain/grow your net worth?
Diversifying into real estate syndications.
I’m still making investments into retirement accounts to protect the investments, although going all Roth in retirement account contributions these days due to the pension I will receive and already having significant traditional TSP funds that will need to be drawn down or taken out to convert to Roth in the future.
Do you have a target net worth you are trying to attain?
The goal posts keep moving.
First it was 1 million in investments, then 1.5, then 2.
When I look at where we stand today, what I expect in a military retirement, we are at the FI part of FIRE, but I am not quite ready to enter RE. Not necessarily at FAT FIRE, but at least FIRE, with the ability to cover core expenses with the pension if the market took a serious downturn and allow capital to rebound.
That said, I am now aiming for 3 million in investments, that will create a significant cushion in retirement, or allow for some “FATTER FIRE”.
Net worth wise, that will probably be closer to 3.75 to 4 million.
How old were you when you made your first million and have you had any significant behavior shifts since then?
47 was $1 million, and as the first ESI post I read states, the first million is the hardest.
Hit $2 million at 51.
What personal habits and/or traits have you developed that have made you successful at growing your net worth?
Reduced investment fees being charged, increased the amount being invested with income increases, and being careful on what debt we are taking on.
At this point, the only outstanding debt is the mortgage on our rental/retirement house, which we are not in rush to pay off at 1.75%.
What money mistakes have you made along the say the others can learn from?
Being aware how much you are paying in fees for investments and their management and avoiding costly mistakes chasing high returns without learning more about the risk you are taking.
What advice do you have for ESI money readers to become wealthy?
The formula works.
Earn a decent salary, the more you earn, the more you can invest (if you keep spending in check).
Avoid high fees for handling your investments, and avoid costly mistakes, chasing high returns, getting divorced, etc.
FUTURE
What are your plans for the future regarding lifestyle?
While I will not retire as early as others, I still plan to retire earlier than the average American.
We would like to do a bit more traveling with more free time in the future.
What are your retirement plans?
I am retiring from military service by the fall of 2024.
While the numbers tell me we are in FIRE territory, I plan on working a few more years. Two kids heading into college, and while we have some post 911 GI bill along with 529 money saved up, I want to ensure they graduate with zero debt.
I am less worried about leaving them money later in life, more focused on making sure they start out with good educations and minimal to no debt.
Are there any issues in retirement that concern you? If so, how do you plan to address them?
As any retiree should say, sequence of risk is a concern. Many “experts” out there expect lower returns in the next 5-10 years (or more), however we should be able to fairly easily maintain a 3-4% withdrawal rate once we start pulling on the investments.
The next big concern in what I will do with the free time when I stop income paying jobs. Travel will be part of the answer, but I do not see myself sitting on the porch sipping lemonade. Volunteering is going to be in the picture, but what to volunteer to do, still must figure that out.
Another consideration is pursuing a formal personal finance certification to help others. As many of you have probably experienced, there are plenty of people in all our lives (never mind outside our circles) that have little to no personal financial knowledge, and they struggle with what we would consider simple financial concepts in managing their own finances or having a retirement plan.
MISCELLANEOUS
How did you learn about finances and at what age did it click?
Around 2000.
Although First Command charged me excessive fees during my time with them, my first advisor recommended I read Ric Edelman’s book, “The Truth About Money”, that started my desire to find out more about personal finance. I continued to learn more though the years, other important milestones were while I earned my MBA and the next milestone would be finding The White Coat Investor and starting to digest the many other personal finance blogs out there, ESI included!
It was clicking in my 30’s, but I learned more about handling things on my own in my 40’s.
Who inspired you to excel in life? Who are your heroes?
My parents helped produce my work ethic, but personal finance was not their strong point.
I would say another influence was a manager at one of my first regular W2 jobs, working in a supermarket. That was another place to learn a strong work ethic, along with beginning to pick up leadership skills at an early age, or at least see good managing and leadership skills.
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?
Books, The Millionaire Next Door. I am also currently reading a book on Warren Buffett, “The Snowball” The Business of Life, great to learn a bit more about such a successful investor. I will never be a Warren Buffett.
In today’s day and age, blogs have become important teaching tools:
- ESI and MMM, for the many millionaires and the retirees interviewed along with the discussions on both sites.
- White Coat Investor, this is where my online blog education started.
- Physician on Fire, I read The Sunday Best every week, and looked forward to them each week while deployed to Iraq for over a year. Leif and his team do the work for you of going to find articles worth reading each week.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Yes, but I know it is not enough.
We have set up a DAF via Schwab with about 45k in it. We give about $3k a year to charities with plans to do more in the future.
This is only about 1% of our income, a far cry from the 10% churches recommends, much of the focus has been on save and invest to reach FIRE sooner and some gifts to various family to help them out.
We do volunteer our time when the opportunities arise, but plan to do more of this in the future as well.
Do you plan to leave an inheritance to your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?
We plan to leave some money to our heirs, but we plan on using it to help others between now and our deaths.
As I said before, getting our kids to start out in life with good educations, the ability to have a good career in whatever they choose and essentially debt free is our focus for them.
We do not intend to leave them so much that they may be inclined to not be successful on their own without any inheritance. There will hopefully be weddings, grandkids, and other events along the way that we can help with.
g says
You wrote you will retire from military medicine this year and transition to a new job for a few more years. What do you plan to do? Stay in medicine? If so, thoughts on riding it out until retirement in the military? Private practice can be a grind, especially starting out in your 50’s.
When do you get to start receiving your pension? Will you move away from the high costs of DC? I’m sure you’ve done all the math! Great interview and congratulations!
G
MI-387 says
g, good questions. Planning on staying with medicine for a few more years, working on a federal government service job as a physician. I definitely considered staying in a bit longer, a promotion to general officer was possible, but that would likely come with at least two moves in the first three years, where we are with the kids, we did not want to do that. Even if I stayed in and avoided promotion, military may have moved us once or twice more. Once you hit 30, it is mandatory retirement unless you get an exception to the policy, so I could have tried for 4 more years, but wanted to avoid the moves. It just seemed to be the right time to retire from active duty. Pension starts right away, as does VA disability. Intent is to move away from DC, back closer to my wife’s family (which of course is my family after all these years). I feel we are in the “FIRE” is possible window now, but 3-4 years of additional work would get us into “FAT-FIRE” range, assuming it is a decent salary and the markets do not take a turn for the worse.
Amanda says
Congrats and thank you for your service. When I read your volunteer and interests, I couldn’t help but think of my own AARP Tax Aide volunteer work where we help prepares taxes for free. There’s a retired pediatrician in our group that just loves it and his previous skills (most likely dealing with a variety of patients) translates really well in this volunteer role. Most of us are retired professionals from a science, education, or finance background. You may enjoy it and learn lots.
MI-387 says
Thank you Amanda, it has been a honor to serve. That is a great idea, I will remember that, I had not heard of that before. You hear all sorts of misconceptions people have about money, I just heard of a military dentist today who avoided taking a retention bonus because he was afraid it would put him in a higher tax bracket, I think because he believes all his income will then be taxed at a higher rate. So many misconceptions out there, plenty of opportunities to share all we have learned over the years.
MI-325 says
Welcome to the I survived First Command (USPA/IRA in my time) club! My post also includes the drag that investment choice had on our portfolio.
I hope you join us on MMM as there are a fair number of us military types and I definitely see things you could bring to the discussions, as well as some topics we could discuss about your situation.
Like why are you planning on working when you get out? Your net worth and pension should fully support you upon retiring (assuming you are AD now). If it is for the love of medicine, great but talk to a number of people before making the decision. I fully retired as I was shocked at how unhappy folks were in private practice as well as the VA (although I was looking more at CMO type jobs).
Speaking of VA, lots of lessons learned there! Apply early and for everything. Let the VA sort out what counts. I was shocked at what they approved and stunned at what they denied.
Good luck and thanks for sharing!
MI-387 says
Hello MI-325! In order to “come to terms” with the money I lost to high fees with First Command, I chalk that up to an expensive financial education. I certainly learned a lot over the years investing with them, and always peppered the advisors with plenty of questions when we met. Just wish I had learned I did not need to pay the high fees for financial advice sooner!
Why work? I wrestle with that a bit. Part of it is working since I was a teen (or working in school studying). Part of it is a bit of OMY syndrome. I want to get to our retirement area, more mid-east coast so in theory should be lower cost of living than DC area, and see what our annual expenses are there. While I have been watching for a few years now, inflation definitely had an impact, so want to make sure we are good if I fully stop. I intend to cash flow the kids college the next year or two, then I should be able to use the mix of GI Bill and 529 funds to help get them through college and if they go that route, grad school. I am much more focused on that, getting them through school debt free, than anything we will leave them (although I bet they will still get quite a bit one day).
Thanks on the VA insight, I have a good friend that worked for them as well. He left after a few years, was not happy with the different constraints he faced with the fiscal challenges they were working within.
MI-325 says
I felt the same way about First Command. They got me to increase how much I was investing and I understood things better because of them, but I stayed with them far too long.
OMY is real, but looking at your numbers, you are in Fat FIRE range already, especially once you leave DC. Your inflation adjusted pension is going to be very nice (28 years for me) and your investments will easily kick off an annual amount in the neighborhood of your pension (not even including the value of the house). That puts you at 150% of your current spending, before any of the VAs tax free, inflation adjusted disability (which guys in their 50s commonly get).
Happy to chat offline on the MMM forum or ask ESI for my email.
Financial Fives says
Great job serving in a rewarding career and a fulfilling family life. I wish the military had more publicity when I was in school, the different career paths that were open, and more people you could talk to. It seems like a great way to serve but also play to your strengths and participate in a way that sets you up for success and give you another perspective in life. You sure sound alike a very ambitious young man, pushing that lawn mower!
MI-387 says
Thanks Financial Fives. Boy, I wish I still had the body of that ambitious young man pushing the lawn mower, I definitely feel it a lot more after two or more hours doing yard work these days! Yes, the military can offer great benefits to those that use them, while they get to serve their country. One of the medics who deployed with me to Iraq was interested enough in medicine that he completed college, got out and entered med school on his GI Bill, he is now a urologist in private practice. A great way to get an education on Uncle Sam’s dime. The concerning part these days is that with our more overweight society and the many health challenges that brings, the military is having a hard time finding enough healthy applicants. That with an economy at historically low unemployment rates is making recruiters jobs pretty difficult these days.
MI 343 says
Thanks for sharing. I like your comment, “We do volunteer our time when the opportunities arise, but plan to do more of this in the future as well.”
Volunteering at our church and for other ministry to our community has allowed me and my wife to help many others over many years and provided personal growth for us as we find some of the people we minister to help us in more ways than we anticipated. We also feel like the tithes and offerings we give to our local church and other charities that do local, national, and worldwide ministry are well spent serving as our hands and feet where we cannot physically serve.