Millionaire Interview 400

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.

I do want to pause for a moment to recognize the fact that we are at 400 Millionaire Interviews!!!! Who ever thought we’d make it this far? Not me!!!

Anyway, a big thanks goes out to the 400 people who have been willing to take the time and effort to share their experiences so others might benefit from their lives. Kudos to all of you!!!

Now let’s get to #400. As usual, 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 wife and I are both 49 years old, we have been married for 20+ years.

I will go back and forth in the interview between I and we when I refer to myself/ourselves. That is because we are a team in every sense of the word. We combine everything and have complete transparency around finances.

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

We have two kids, both teenagers.

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

West Coast — in suburbs in a high cost of living area.

What is your current net worth?

Current net worth is about $9.4 million, roughly half investible assets and half non-revenue generating real estate.

I have been focusing on building the investable assets over that past several years as I have been a bit heavy on the personal real estate side.

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?

• Real Estate $4.4M (primary home, second home and condominium)
• Investments $3.9M (taxable and non-taxable)
• Cash/CD $550k
• 529 Plans $600k

There is always some debate on Net Worth, what it means and what it does or does not include.

I no longer count my wife’s pension in my net worth calculations. In the past I used a contribution amount that was easily found on her statements. It certainly factors into future planning but it’s not an asset at this time, similar to Social Security.

I have counted the 529 plans in my net worth as it’s money that’s still mostly in my control. If I didn’t have the 529s then I’d still have to pay for college someday. I also count my primary residence as it’s a large asset that I could liquidate in an emergency.

I tend now to focus on investable assets rather than net worth. Investable assets are a much more meaningful metric of financial position. It’s also the primary driver of my income in retirement.

I have largely shifted to a 65/35 asset allocation with a focus on total market index funds. I am in several alternative investments but I don’t recommend them due to their limitations. They haven’t outperformed the market, they are hard to transfer to a different broker, they can be illiquid (mine are) and they may require K-1 tax reporting (mine do). My mid to long term goal is to exit all alternative investments as soon as I can.

We are debt free and paid off our primary mortgage about three years ago. We haven’t financed a vehicle or property in decades.

There is always a very active discussion in the FIRE community on whether one should pay off their mortgage early. I know what the math says, and it’s even more clear if you have an older lower rate mortgage in today’s environment. The peace of mind for me, a sometimes nervous investor, has been invaluable. I would gladly forego a few points on a mortgage and be truly debt free. As long as I can pay my property taxes, I will always have a home.

EARN

What is your job?

I am now retired, but was a C-level executive at a large tech company. It was incredibly rewarding and I was heavily focused on my career path but honestly my hard work was met with a lot of luck and good timing. I made it to the top of my field and am grateful for the opportunities I had.

I am surprised how little I miss it now that I am retired. I thought I would miss the title, the company recognition or the associated prestige and related self-worth but I have found a great appreciation in just being me. I do miss the paychecks, and my jokes don’t seem to be as funny as they once were.

What is your annual income?

No sources of income today for me, but my wife still works and will likely do so for many years. She loves what she does and has no desire to retire early. Her income is about $200k. She may reduce her hours at some point.

My income including bonus and equity compensation exceeded $2 million a year in the last few years but those were significant outliers. It was much less for most of my career.

When I look at income versus net worth, I have to keep in mind those outlier years came with significant taxes. It wasn’t the income that amazed me, it was the first time I paid more than $1M in taxes in a year.

The high income has made me feel like a FIRE fraud at times. I was very lucky. However, I know many people who were making the same money but were living an unsustainable life of luxury. They burned through it as fast as they could make it. Even if you make great money, you still have to practice restraint.

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 first entry level job was paying $35k with a small bonus but I was lucky enough to obtain a competitive role right out of college.

Tracking my annual salary using the Social Security website I have been working a W2 job since I was a teenager and have been earning consistently ever since.

I was able to receive solid raises throughout my career and roughly doubled my salary every 4-6 years.

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

I know there are mixed feelings about the usefulness of a college degree today. The economics are very different today then when I graduated college. I was lucky enough to get into a great school and to major in a very sought after field. There was and still is great demand for my skill set. I still think a degree differentiates people and significantly increases their earning potential. Don’t give up on college yet!

I was instantly addicted to making money. My career was very rewarding, I loved my latter career as a people leader, but at the end of the day I wanted to make as much money as possible and I was excited to develop skills that people would pay me for.

I was very hard working and volunteered for anything and everything in my early career. I got certifications that were relevant to my career field, I worked nights and weekends and found ways to make myself useful to my clients, to my team and to my company leadership. I was quickly known for being able to communicate complexity where others struggled.

This combination of substance and presence led to rapid advancement and career opportunities.

I also developed a very affable approach to people. At first, I was hard driving and competitive. I became so much happier and found work more rewarding when I developed an “everyone can win” attitude. There doesn’t have to be a winner and a loser — I try to help everyone win.

I didn’t leave jobs just for raises but left for development opportunities. I moved across the country twice and realized I could be successful anywhere and repeat that success throughout my career. I think changing companies can be very lucrative, but I found most of my success by progressing internally with some really great companies.

What’s your work-life balance look like?

I did not have any work life balance in my early career, but those were amazing times. I felt that hard work was like investing and saving. I was learning skills and receiving recognition that has helped me decades later.

I was fortunate to have a reasonable work life balance later in life. I attribute that to building a great team and getting out of their way. I have always had a view that work life balance isn’t always consistent or fair. I work hard when needed and always show up and do whatever it takes to be successful. When I am not needed, I quickly slow things down and adjust my pace. It’s a marathon not a sprint.

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?

I do not have a source of income other than appreciation in my investments and real estate.

I do not have a side hustle as my career was my sole focus.

SAVE

What is your annual spending?

As a family of four we spend about $200k a year living in a relatively high cost of living area.

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

Property taxes are my largest expense each year. I also pay for school, vacations and family activities.

We supplement the kid’s education with many different activities and opportunities such as sports, tutors and music.

Kids can be expensive — it always amazes me how fast it adds up.

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

We do not have a formal budget, although we do have a detailed spreadsheet of our annual spending.

As I approached retirement this was very important for me to have a deep understanding of where our money goes.

Spending has largely been by instinct and knowing how much I was able to save each year.

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

We have saved between 20% and 60% of net income throughout our lives.

I have lived by a very simple rule for the last 20 years, which is when I got more serious about saving and investing. I live on my base salary; it must cover all expenses.

My annual bonus could be used for large asset-related expenses like home improvements, a new car or adding to 529 plans.

Equity compensation always went straight into retirement accounts and was liquidated and diversified upon vesting.

On that topic, I encourage anyone with significant equity to always diversify — you don’t want everything tied to your primary employer.

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

I said it elsewhere, you must live withing your means.

I delayed a lot of gratification over the years and I never spent money I didn’t have.

I have seen many people leverage themselves because they wanted this or that and they had to have it now. I have never had that problem.

What’s your best tip for spending less money?

Buy quality and take care of your things.

Learn basic DIY skills. I was and still am the repair man around the house. I have done significant work on our homes to increase value and enjoy them more.

Don’t be a hoarder. The larger your home the more room to store garbage. When we last moved we purged heavily to try to reduce. We are not perfect but we try to be more intentional about what we buy.

Don’t buy things just because they are on sale. When I tell my wife I bought something and got a great deal on she always says “you know how you save even more money?, Don’t buy it!”

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

I am at the stage of life where I don’t want more things, I am no longer in the accumulation phase.

I spend most of my money now on experiences, especially family experiences while I have teenagers still talking to me and under my roof!

INVEST

What is your investment philosophy/plan?

My plan today is to keep it simple.

I don’t own any individual stocks, I can’t pick them anyway. I am all index funds and after years of having a paid financial advisor I am so happy I finally moved on. My suggestion, do not invest with an advisor who takes a fee on assets under management.

I am also done trying to time the market. Most research says put your money in the market as soon as you can and leave it there. I try to look at history and know that simple long-term investing is the most effective way to achieve my goals.

What has been your best investment?

Myself.

I have always invested in my career and building the required skills and certifications to be successful.

I don’t have a single stock or investment that exceeded any reasonable expectations.

What has been your worst investment?

I invested $250k in a tech focused fund that decreased more than 50% in less than a year. That wasn’t much fun, but I am hopeful that it will rebound someday.

My financial advisor at the time warned me it wasn’t consistent with my investment risk tolerance. He was right, but I still let him go.

What’s been your overall return?

This is difficult for me; I would say that my overall return is consistent with the market with a few mistakes along the way.

Now that I have consolidated almost everything into one brokerage it’s much easier to see the gains and consistency.

People talk about the snowball effect of compounding returns. It really is a thing of magic to watch. That is why it’s so important to invest early and invest as much as possible.

How often do you monitor/review your portfolio?

I am guilty of looking daily. I enjoy following the market and seeing what’s happening.

The challenge is it can affect my mood on bad days. I don’t think I will ever stop looking.

NET WORTH

How did you accumulate your net worth?

I became a millionaire by always living below our means. We were able to grow wealth by avoiding debt and making saving a priority.

The high income later in life allowed me to jump to savings levels I hadn’t thought possible. My career took off when I took a job that I wasn’t sure would be a good fit, but because I had a safety net and a supportive wife I was able to stretch and end up excelling in my career beyond my wildest expectations.

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 believe that you need all three, it’s such a simple and effective way to describe wealth building.

But if I have to pick, I would say Earn.

My strength was being able to differentiate myself and significantly grow my income. The high income makes everything else easier and can make up for a lot of mistakes along the way.

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

I haven’t had a lot of significant road bumps thankfully.

When I was young, I had to help my family quite a bit which limited my ability to save.

I was also hit by the Great Recession in 2008 but in reality, those became small numbers compared to the growth since.

Thankfully most of my mistakes came when the stakes were much lower.

My advice, don’t let road bumps get in the way, think of them as learning opportunities and try to avoid them moving forward.

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

I have consolidated my investments and am mostly in total market index funds. I do have a very nice individual bond and treasury portfolio. I have begun to eliminate unneeded complexity in my investment portfolio.

I plan on living off of a sub 3% withdrawal rate for the time being and hope that over time my investment portfolio will grow into retirement. On the Millionaire Money Mentor (MMM) forum we talk a lot about “why play the game if you’ve already won.” I don’t plan on changing anything, I don’t need to reduce expenses, I don’t need to take on more risk. Just need to stay the course and I will most likely have more money than I could ever spend.

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

I was hoping for about $13M before retiring, but that number had no real practical significance other than it was where I thought I could be by the time I retired.

Having pulled the plug a bit early I am happy with where I am, and believe it is more than enough to live on.

I would like to maintain my net worth so I will monitor expenses and adapt if needed.

I am a big believer in the 4% rule, if you follow the 4% rule and adjust spending when markets are down you increase your success rate significantly.

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

I was about 35 years old when I realized I was a millionaire. I have made very little significant behavioral shift since, but I have started tracking much more carefully.

I also started setting much bigger goals. It was about that age that I became very committed to retiring early. In fact, it was my desire to retire early that led me to ESI.

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

We have always had one rule, which is so ingrained in our being that it really isn’t even a rule it’s just how we live, always live within your means.

Our ability to scale and always live with limited to no debt is the key to our success. We have been debt free for years including mortgage free.

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

I have made several mistakes along the way, but I also believe that having strong earnings makes up for most mistakes if you course correct quickly.

I have probably spent more on a few things in life than I should have but at the end of the day those expenses were within our means and planned for.

Embarrassingly I panicked in 2018 thinking the country was doomed and pulled out of the market. I lost a few hundred thousand dollars. That hurt and still does but it taught me a valuable lesson that I was finally ready for. Don’t try to time the market. I look forward to taking gains against those losses someday.

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

The best life advice I could possibly give is to marry the right person. If you are not better with them then they may not be the right person for you. Gray Divorce, or divorce later in life, can kill retirement plans.

Invest in yourself. High earnings with the ability to pay yourself and save and invest is an amazing combination. You can become a millionaire by saving and investing a low or modest salary but the scale and speed with which you can do it is undeniable with a high income.

Work hard early, before kids. Lay the groundwork and that effort will pay dividends for years to come. This means picking a career that you feel has long term potential. Late career changes can have an adverse impact on earnings.

I chose a career with high income potential, was in demand and I enjoyed it for the most part. What I enjoyed about work changed over the years but where I really found joy was in the life that work allowed me to live.

FUTURE

What are your plans for the future regarding lifestyle?

I recently retired a bit earlier than expected due to corporate restructuring that was out of my control. I was pleasantly surprised by how well prepared I was for the moment.

When I started thinking about what would be next it was quickly obvious that full-time work was off the table. As Hannibal Smith from the A-Team used to say “I love it when a plan comes together.”

What are your retirement plans?

Now that I am retired, I am finding activities that I enjoy. I am trying to be active biking, hiking and playing golf. I even played some pickleball. I am going to the gym more and generally enjoying the activity.

I would like to focus on my kids as this is an incredible time to spend with them before they are off to college. I am also focused on general health and increasing longevity. I would like to meet my grandkids someday and play a role in their lives.

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

Generally, no.

I always have a bit of worry of do I have enough, do I have safety margins if things go wrong. I know the answer to these questions is yes, I am fine. Being adaptable is key.

I do plan on looking for some volunteer work or even paid consulting just to give me something to do and keep my mind sharp.

MISCELLANEOUS

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

I love to read real life examples of successful people. There is so much information available today.

In my early days it was just picking the brains of people in my life that I thought were successful and taking what I could from each interaction. I was surrounded early in life by a lot of people who were doing it wrong.

I feel you can learn just as much, if not more, from people who don’t do things well as you can from those that do.

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

I would say my mom.

She was a hard-working woman who taught me that there weren’t going to be handouts in life and whatever I wanted, I would need to earn!

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?

For people transitioning in their careers to leadership I recommend “What Got You Here Won’t Get You There” by Marshall Goldsmith.

I don’t enjoy most finance books; I don’t trust the writers, so I don’t read them.

I spend a lot of time on ESI and the MMM forum. I love hearing from real people who have done the hard work to achieve success. As I moved into retirement it was an amazing place to talk about what was happening and seek advice.

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

Yes, we do give to charity and volunteer quite a bit, but I don’t give commensurate with my income. I am sure I can do more and hope to be even more active in retirement with causes that I care about.

I also believe in the saying that “Charity begins at home.” We are very generous with our siblings and parents. We have helped with significant monetary gifts along the way.

My view is why wait until I am dead to leave them money, I want to help make their lives better here and now. We will also make sure that our nephews are helped with college expenses.

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

Yes, I would like to leave money for my children. I want them to have an easier life than I have had.

It is difficult to find the right balance. I think it will be much harder for future generations to own homes and be debt free. I also don’t want them to wait for me to die and spend my money.

My wife and I both grew up with little and we were hungry and committed to our education and careers. My kids don’t seem to have the same drive. I continue to teach them about finances and make sure they know how blessed they are for the life we have but this is a work in progress.