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 December.
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 46 years old and my spouse is 44.
We have known each other for 25 years and have been married for 21 years.
Do you have kids/family (if so, how old are they)?
We have two teenage kids and all I can say is that our life has become extremely interesting and unpredictable in the last couple of years.
My son is 15 and my daughter is 13.
What area of the country do you live in (and urban or rural)?
We live in the suburbs of a South-western city.
What is your current net worth?
Approximately $4.7M along with some Monopoly money as of the end of November 2023.
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
- Stocks: $1.4M
- 401K: $1.1M
- Roth: $475k
- 529: $250k
- Home: $1.4M (after accounting for Mortgage)
- Cash: $100k
Pre-IPO RSU: $700k (I consider this one as Monopoly Money. With the current challenges in fundraising for startups, this could either go to zero or worth a lot more in 10 years.)
EARN
What is your job?
I work as a Software Engineer for a large financial institution. I tried my hand as an Engineering Manager for a couple of years but it was never fun making others do their job. Some folks are responsible and self-motivated to do their job while others need to be constantly monitored to get the bare minimum work done. I realized very soon that I do not thrive with those responsibilities. So, I moved back to being an engineer and work life has been good since then.
My wife works as the Head of Product for a Fintech startup and the future looks bright for the company as of now.
We have both been working in IT for the last 20+ years. For all the problems that COVID caused, the remote-friendly work from home phenomenon change has helped our family find better paying remote jobs. We are also spending more time with each other and our kids. I can’t ever think of going back to full-time office work after getting used to this life.
What is your annual income?
Our combined annual income from the base pay is around $435k.
My wife’s bonus pay fluctuates approximately between 10-30k depending on how well the company is doing.
My wife also has a consulting business on the side that contributes anywhere between 5k-50k.
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 starting job was at a local library. It was one of the most fun jobs I ever had since I love reading. I would have even worked for free but I was paid $4.15/hour.
After graduating from high school, I have worked in several IT roles relating to Tech Support, Network Engineering and Web development. I prefer to stay with the same employer for a longer time. This helps me understand the business better and become a valuable contributor. It is also easier to work in different areas/roles and pick up various skills that are complementary to the ones that I already possess. Staying at a single employer also reduces the stress of having to prove oneself in every new job.
After graduating out of college, I have changed my employer only once so far. I get paid a little over $200k at my current job.
My wife started her career at a local sandwich shop with a starting pay of $3.75/hour. She held various jobs in her career and constantly switched jobs every couple of years to either find a better job or a better pay. She currently makes a base pay of around $235k.
What tips do you have for others who want to grow their career-related income?
I believe that there are multiple ways to grow career-related income. If we distill the wisdom out of the 400 or so millionaire interviews and updates, folks have grown their income in several different ways.
In our own family, we decided early on in our marriage that I will provide stability to the family by laying roots at a company and growing my income by building expertise in different areas and making myself extremely valuable to the company. In my experience, the surest way to become valuable is to pick skill set combinations that don’t have too many employees competing in the market.
My wife on the other hand moved jobs frequently to grow her income. I have heard from a lot of folks that it is easy to improve pay by changing jobs frequently. This is definitely a common phenomenon in the software industry.
Even though we took two different paths, we were able to keep growing our income over time.
Each individual has to decide on a path that suits their temperament and keep working at it. The key is to have a goalpost and keep working towards it and adjust the goals as things evolve around you.
What’s your work-life balance look like?
I have a really good work-life balance. I usually work 6-8 hours a day most of the time unless there are any production outages which are very infrequent. The pace of changes at my work is very gradual. People don’t like making frequent changes in this environment.
My wife gets a bit more busy with her work and trying to grow her side hustle. Her regular work doesn’t require any more than the usual 40 hours but growing her consulting business takes an additional 10-30 hours. She thrives on working longer hours and being busy. I have recommended that she slow down a bit but realize that it is her decision.
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 don’t have any additional sources of income right now.
We tried the real estate route by buying a rental property. We made the big mistake of not buying the right sized property in a good rental area and had to put in too many hours for very little cash flow.
So, we sold the rental property and have been focusing primarily on our regular work and my wife’s consulting business. This has reduced our stress levels and we still have the opportunity to grow the consulting business into something larger if we desire.
SAVE
What is your annual spending?
Around 150k.
What are the main categories (expenses) this spending breaks into?
- House (Mortgage, Taxes, Maintenance) – 45%
- Travel/Entertainment – 15%
- Groceries/Restaurants – 12%
- Car (Loan, Insurance, Repairs) – 8%
- Charity – 5%
- Health & personal care – 5%
- Gifts – 3%
- Utilities – 3%
- Others – 4%
Do you have a budget? If so, how do you implement it?
We don’t have a budget. However, we agreed on a simple framework earlier in our marriage.
If the expense is under $300, we will spend without thinking twice.
If the expense is between $300 and $1000, we would have to justify to ourselves whether the expense would improve the quality of our lives. For expenses under $1000, each of us can spend without consulting the other.
If the expense is over $1000k, both of us have to agree with the spend.
It took a bit of learning at the early stage to get both of us aligned with this strategy. I eyeball our spend at the end of every month to look at our spending trends.
What percentage of your gross income do you save and how has that changed over time?
On a month to month basis, the savings rate varies between 30% to 60%.
However, on an annual basis, we save approximately 50% of our income.
I am more frugal compared to my wife when it comes to spending. My parents are hard working small town folks who are extremely frugal to this day and I inherited frugality from them to a certain extent. Our spending habits stayed fairly consistent even when our income increased and this has allowed us to improve our savings rate over time.
What’s your best tip for saving (accumulating) money?
The critical thing is to figure out how to increase your earning potential whether it be picking up valuable skills or by looking for better opportunities.
Once you figure out your earnings strategy, the next step is to automate the saving process. I have set up money to be transferred from every paycheck to emergency savings, investments & 529 accounts. The remaining money from the paycheck gets deposited to my checking account for expenses. Whatever money that gets accumulated in the checking account after regular expenses then gets manually redirected to the brokerage account once every quarter.
What’s your best tip for spending less money?
We spend on things that make us happy.
I focused more on increasing our earnings and less on our spend. This has worked well for us.
What is your favorite thing to spend money on/your secret splurge?
In the last couple of years, we have been spending more on travel than ever before. We want to spend as much time as possible experiencing the world with our kids before they leave home for college.
During the early days of COVID, we had tons of family bonding time. Since then, we have been prioritizing quality time with the family over work and other non-essential things that don’t matter over the longer term.
INVEST
What is your investment philosophy/plan?
My philosophy has evolved over time similar to a lot of folks. In the early days of my investing, I focused primarily on individual stock investing. Over time, I realized that most investors in individual stocks underperform the market. So, I created an account at Vanguard and started investing in index funds.
I have automated money to be transferred directly from payroll directly to my Vanguard brokerage account. Money hits the brokerage account every other Friday and these funds get used up automatically to buy index funds. I keep it simple and allocate 60% of the funds to buy Vanguard Total Stock Market Index (VTSAX) and 40% of funds to Vanguard Total International Stock Index (VTIAX).
This is a simple boring strategy that allows me to invest money in the market on a regular cadence without getting influenced by market swings.
What has been your best investment?
I have bought some individual stocks like NVDA for under $10 in 2016. However, the investment amounts are low enough that the outcome does not have that much impact on our net worth.
I feel that my best investment is all the time that I spent educating myself on finances & investing. This education has changed my views of risk management and to put most of money in index funds and a smaller percentage (15%) on mid to large cap individual stocks.
What has been your worst investment?
When I opened my first set of investments accounts 7 years ago, I had chased hot stock tips from a bunch of different places. I bought FANG stocks, dividend aristocrats, small cap stocks, penny stock and stocks that had either pending merger or spinoff. I would look at my investment portfolio multiple times in a day. I would have multiple buy & sell orders some days. Over time, I realized that if I buy good companies, selling does not add any value at all from a long term perspective.
The rental property was definitely our worst investment mostly due to our inexperience and not putting enough due diligence before buying the property.
What’s been your overall return?
I have not explicitly tracked my returns so far.
Since most of my money is in index funds, I would assume that my return would be very similar to the market at a rate of 8-10% per year.
How often do you monitor/review your portfolio?
I calculate my net worth once every month.
Once a year around October, I look at the portfolio to decide if I want to make any changes. Most of the time, nothing major comes out of it.
If I do decide to make a change, conducting this review in October helps with some tax loss harvesting for the year.
NET WORTH
How did you accumulate your net worth?
Most of our net worth is accumulated from our salaries. We saved more than half our salary every year and invested it in the market. There were years where we earned more than $100k in bonuses and all of that money was invested for our future.
We drive our cars for at least 10 years before replacing them. Keeping our expenses mostly stable and not allowing lifestyle creep allowed us to push more of our savings into building our net worth.
With COVID, the value of our home has appreciated quite a bit too. We have no plans on selling it. So, I don’t necessarily add it to our net worth tracking from a retirement perspective.
We might get some inheritance from my parents but I am not making any plans based on us getting some inheritance. I keep recommending to my parents to spend some money on themselves and enjoy life but they stick to their frugal lives.
What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?
I feel we are equally good at earning, saving and investing our money.
I am investing most of our money in broad index funds and a good chunk of our net worth goes up and down along with the market.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
I would say the largest road bump is not having any knowledge of personal finance.
My parents never spoke about finance with us and I had no idea about stocks and brokerage accounts.
For the first 10-15 years of my career, any money that I earned went into either spending or saving. We accumulated money in savings accounts for a long time and used it when we had large bills or had to buy a car or a home. Only when our savings account ballooned to a large amount did I start thinking of what I should do with the extra money and stumbled into the world of personal finance.
For the last 10 years, we have created multiple accounts at different brokerages for different needs and have been investing heavily and growing our net worth.
What are you currently doing to maintain/grow your net worth?
Savings from our paychecks primarily help buy more investments in the market and the growth in equities increases our net worth. The growth is not linear but we are perfectly fine with it since we are not micro-managing the growth of our net worth.
I am helping my wife a little with growing her consulting business and it can become a lot more valuable with some upfront effort for a couple of years.
Do you have a target net worth you are trying to attain?
At the moment, our target net worth is $10M. I feel we should get there in the next 7-10 years if we keep doing what we are doing. If my wife’s consulting business grows as expected in the next 3-5 years, we might reach our target net worth a bit more sooner.
We are not in a hurry to reach our net worth goal since we are not planning to do anything different once we hit our goal.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I was 38 when we hit our first million. It is becoming more and more easier to grow our net worth over time with the snowball effect.
As our net worth increases, we have become more comfortable in thinking about work as one part of life and prioritize it appropriately since we are no longer worried about our financial situation if we lose jobs.
My wife always wanted to have her own business but she always postponed it because we were not sure how life would be if only one of us had a stable job. The comfort in our financial situation allowed my spouse to start her own business.
What personal habits and/or traits have you developed that have made you successful at growing your net worth?
Living within our means and not trying to keep up with the Joneses has allowed us to save a lot of our money for most of our careers.
What money mistakes have you made along the way that others can learn from?
It would have been really awesome if we had the opportunity to learn about personal finance in our high school. This would have allowed us to build our net worth a lot earlier.
For the first 3 years in my job, when the benefits team in my company contacted me about putting money in a 401k plan, I did not participate in it even though I was told that the company would match my contribution to a certain extent.
Due to my own ignorance around why a company would give free money with 401k match to their employees, I thought there must be some gotcha with this plan and ignored their calls and emails. Even after I enrolled in the 401k plan, I contributed less than the maximum amount because I incorrectly assumed the pre-tax contribution limit included both employee and employer contributions.
If I can do it all over again, I would start with educating myself by speaking with knowledgeable individuals and reading as many resources as available. Starting earlier would have made this process a lot easier.
What advice do you have for ESI Money readers on how to become wealthy?
Becoming wealthy is very straight-forward:
- Start with picking an area that you love to work on
- Figure out a niche in that area that is underserved due to lack of skilled professionals
- Grow your skills in that area
- Negotiate your pay hikes as you become more valuable to your company
- Change jobs if you have to. In most places, it seems to be relatively easier to negotiate a better title and salary with a new job rather than in an existing job.
- Keep saving a minimum of 30% of your pay. My target would be to consistently save 50% or higher. It becomes easier to achieve this target as our pay keeps increasing.
- Start investing early even if it is with a small amount. A small investment compounding over a long time period can turn into a decent chunk of money
- Invest consistently from every paycheck. Investment automation takes emotions out of investing and anyone can become wealthy over time.
FUTURE
What are your plans for the future regarding lifestyle?
I am thinking about retiring early and spending more time volunteering and hiking.
My wife has no plans to retire anytime soon and wants to become more busy with her business irrespective of our net worth.
What are your retirement plans?
I am thinking of retiring sometime around 60. I plan to volunteer at my local high school to educate kids about personal finance. In addition, I am planning to volunteer at our local library, county park and food bank. There are so many trails near my home. I would like to hike multiple times a week with my dog.
I have a few friends that I would love to spend more time with. However, this plan would depend on their retirement plans.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
I have not been physically active since high school and have been thinking about my health after retirement. I have started some physical activities (like playing basketball & hiking) with my kids in the last year or so.
My doctor recommended enrolling in a fitness center and working out but I haven’t done this yet.
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
I was around 36 when I realized that I needed to do something with my money rather than leaving it all in my savings account earning next to nothing.
Most everything I learnt about finances came from blogs, forums and podcasts created by the countless strangers on the Internet. I owe a ton of gratitude to the generosity of the personal finance community from around the world.
Who inspired you to excel in life? Who are your heroes?
My personal heroes are my parents who worked hard and saved a lot of their earnings. They live a very frugal life and never let lifestyle creep to occur even when they amassed a decent amount of wealth.
I learnt these valuable skills from a young age and allowed me to build my net worth by adding investing to the mix.
Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?
I favor online resources over books when it comes to topics of personal finance. Online resources benefit from the review and feedback from people with different levels of knowledge vs individual books written from the distilled knowledge of just a handful of people.
Bogleheads Wiki – A lot of my investment philosophy is borrowed from Bogleheads. I like the simplicity of this philosophy and it also feels like a natural extension of the fundamentals of working and savings that I learnt from my parents.
Reddit Personal Finance Wiki – This is one place in the entire Internet where you can find your own tribe that suits your personal flavor of investment style. Their personal finance flowchart was a very valuable tool for me in my early days of investing.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Yes, I do give to charity. I target around 5% of my earrings to charitable causes that resonate with our family. Every year, each family member gets an allocation of money for charity and each of us gets to choose our favorite charities to donate the money to.
I have recently created a donor advised fund (DAF) and transferred a bunch of highly appreciated individual stocks that I bought in 2016. My employer also provides equal matching contributions to my DAF.
I love donor advised funds for a couple of reasons – it is easy to track all my donations in a single place; I can send a large chunk of money to the DAF in a single year and deduct the entire donation to the DAF in the taxes for the same year even if I spread the donations from DAF to individual charities across a couple of years.
Once I retire, I intend to contribute both time and money to charity. As of now, I contribute money and let the charities do their job.
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 am planning to leave inheritance for my heirs.
I read somewhere that wealth belongs to the family and that each generation is a trustee of this wealth. As a parent, it is our responsibility to use part of the wealth for all our needs and desires appropriately, teach the next generation on how to use wealth to improve our lives and of those around us and finally pass the wealth to the next generation to do the same. This philosophy resonated well with me.
My kids are more knowledgeable now about finances and investing than I was at 30.
RE@55 says
Biggest take from this great interview, it is never too late to correct your money “mistakes”. All of us have made money mistakes over the years. You realized your “mistakes” and corrected it.
You didn’t start the matching 401k until later when you realized you were missing out. You then started the 401k.
You were saving a lot, but not investing. You then started investing.
You bought a rental, then realized it was not for you. You sold it and put the money into something you were more comfortable
In summary, we all have made money mistakes. Stock tips, investing in something we don’t know, spending too much, etc. It is how we correct these mistakes, learn from them, and keep moving forward.
Kudos to you and your wife!
Hope to see you on MMM!
RnR46 says
Thanks for your kind words
I couldn’t have summarized the interview any more succinctly than the way you put it.
I strive to be a lifelong learner and keep improving. Looking forward to meeting folks on MMM to learn and contribute back to the community.
MI-388 says
Enjoyed your interview and congratulations on your success!
The teenage years are interesting for sure! Great job giving them financial education early on!
I am a few years ahead of you. You are well on your way to FI and it looks like you are enjoying the journey. Make sure you listen to your doctor and take care of your health. It gets harder as you get older and chronic diseases can sneak up on you.
Best of luck!
MI-388
RnR46 says
Thanks so much! I’m grateful for the opportunity provided by this blog to tell my story.
Yes, teenagers these days are more smart and mature than how I was back in those days. I am extremely proud of how my kids are turning out to be.
The journey so far has been fun and fulfilling. I do agree about chronic diseases sneaking up with age. There is just a bit of a disconnect between what I know and what I do when it comes to my health. I have recently started with frequent walks around the neighborhood and getting back to hiking with the assumption that it is better to do something enjoyable than not doing anything.
Looking forward to meeting you on MMM.
Financial Fives says
What a great life you live, and such an impressive net worth by your 40s! Curious if you’d be open to share about what metro you live in, as when you say there are a lot of trails by your home it seems appealing.
Surprised to hear you ignored your 401k for so long given how much you have in there already. Way to go saving 50% of your income especially with 2 hungry teens!
RnR46 says
Life is good and the process of compounding aided by yearly contributions to 401k for the last 20+ years between me and my spouse has helped grow our 401k pot to what it is today.
Each of these desert metros (Vegas, Phoenix and Salt Lake City) have so many hiking trails that a weekend hiker never have to hike the same trail for a year or so. I think some of these desert hikes feel very similar to hikes that I did when I lived for a few months in SoCal long time ago.
We are fortunate to have been earning two healthy salaries between me and my wife. Living in a good school district helps keep the cost of education to a minimum until college. Both these factors allow us to save around 50% of our income.
Glad to have met you. I have a feeling we’ll have some interesting discussions on MMM.
Maverick says
Well done so far! Here, I’ll summarize; a big E enables a good S and I. That makes it ESI.
RnR46 says
I wholeheartedly agree with this summarization.