Millionaire Interview 403

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 February.

My questions are in bold italics and their responses follow in black.

Let’s get started…

OVERVIEW

This is actually the 3rd time I have done an interview for ESI Money. Going back and re-reading my own interviews has been really cool to see how life has changed along the way!

I did ESI Scale Interview 41 in 2018 and Six Figure Interview 10 in 2021.

This will give me another great “point in time” view to look forward to reviewing again in another few years!

How old are you (and spouse if applicable, plus how long you’ve been married)?

I am a 38-year-old single female.

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

Nope. To the dismay of my mother, I am child free by choice. (Don’t feel too bad for her. My sister is going to be promoting her to Grandmother in summer 2024.)

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

I live in a medium-sized city in the northeast.

This is my hometown, but I have also lived in Germany and one other US city in the last 5 years.

What is your current net worth?

$1.2 million as of the end of 2023.

Here is the trajectory of that growth over time:

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?

Assets:

• Brokerage: $599k
• 401k: $406k
• Owner-Occupied Duplex: $280k
• Vested Company Stock: $61k
• Roth: $43k
• HSA: $10k
• Cash: $30k

Liabilities:

• Mortgage on Duplex: $220k

EARN

What is your job?

What a fun time to ask me this question!

I worked for 15 years for the same company doing a multitude of jobs, lastly serving as a “Senior Director”. However, I resigned from my position in August of 2023 to take an indefinite sabbatical.

Retiring “as soon as one can” is a topic we talk a lot about on the MMM Forums. I definitely wouldn’t consider myself retired, however, I realized that money is a tool, not the goal itself, therefore I have elected to take some time now to enjoy life.

I certainly could have grinded away for another 5 years and achieved my FI#, but why wait!

But back to my profession…the first 5 years or so I was in Product Management roles and in the last decade it’s been more Project Management roles/teams. I expect that when I go back to some version of paid employment it will be in one of those areas.

What is your annual income?

TL;DR:

• $193k in 2023
• $15k rental income + $20k German pension reimbursement + ??? in 2024

In 2023, my annual base salary was $192k with 20% bonus target + RSUs. Most years I received much higher than the targeted bonus percentage though – due to good combinations of company and personal performance. For example, in 2023 my bonus was $72k or 38% and I received $40k in RSUs.

Had I stayed in role for the full year, that would have put my 2023 income just over $300k. Since I left paid employment in Aug 2023, my take home for 2023 was ‘only’ $184k as I had to walk away from the recently granted RSUs & I only had 8 months of base salary instead of 12.

Who knows what 2024 will look like since I don’t know when or how I will re-enter the workforce. I’m considering returning to full time employment, part time employment, and/or starting my own consulting business. I’m also looking at temporary roles for some “passion work” (e.g. some stuff that pays very poorly but would be very fulfilling). Being on the FI journey has allowed me this grace period to figure that out and I couldn’t be more grateful!

At minimum, in 2024 I expect $15k in rental income for one unit of my duplex to offset much of my housing costs. (I guess some would call this “house hacking” as the income from the second unit covers over 70% of the mortgage/taxes/insurance.) I also am expecting a reimbursement of over $20k from my contributions to the German Pension Program from my time working abroad.

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 salary in 2008, straight out of school for engineering, was $45k.

Per my calculations, this puts me at over 13% CAGR for my salary over 15 years.

Below you will find the 15-year history of my income.

I grew this income while staying at the same company for 15 years. I did, however, bounce around between 4 different business units in 3 different cities across 2 continents. I consistently took on additional responsibilities & climbed up many levels in the company’s career framework.

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

I shared a lot of tips in my Six Figure Income interview but I will reiterate some of my favorite ones here.

• Invest in yourself. Be sure gain new skills and insights every year. I did this by taking advantage of all the training/education I could get for free via my company. Sometimes this is through internal courses, and sometimes companies have a budget for external courses and certifications up to $5k/year (sometimes more!).
• It’s not enough to just ‘do good work’. You have to promote yourself as well. This is especially important for women and introverts of all genders who tend not to ‘share’ these desires with their managers as much as men and extroverts.
• Build a “Credibility Bank”. You need to make more deposits than withdraws when building relationships with people. I hate “networking” in the classic sense, but I love building relationships with people all across my company.
• Negotiate your salary!! Gah, I wish I did this more often when taking new roles – I’d be in an even better place now!
• Read! I listed some books in my other interview, but here are a few more I have read since then that helped me with my work: Multipliers; Atomic Habits; Grit; Own Your Career, Own Your Life; Mistakes I Made At Work; Creativity Inc.

What’s your work-life balance look like?

Now, it’s all life, baby!

When working it was still pretty good. Like many others, I went to work from home (WFH) in March 2020 and besides a year in a role where I was hybrid, I had been WFH again since Oct 2022. I wasn’t traveling too often in my last years.

That being said, I front loaded by career working long hours and traveling very often. The first two years of my career I travelled 35+ weeks a year and certainly didn’t have the right balance. Early on, I was willing to put in extra hours, BUT I never gave up a PTO day, had solid flexibility and autonomy in my roles and felt on the whole, I had a decent balance.

As I gained seniority in title and tenure, I took a lot more liberties in managing my time, therefore I’d say I had a pretty good work life balance in the last couple years.

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 have occasionally mentored an MBA class that pays me $3k/semester. This is at the school I did my own MBA at with a professor I built a professional connection with.

This was more to stay engaged than for the money itself (though I wasn’t going to turn it away!)

SAVE

What is your annual spending?

My average annual spending has been about $65k the past few years with the exception that in 2023 I bought a duplex and incurred an additional $37k in expenses. This included $17k for the Purchase Costs (taxes, fees, initial escrow payment, etc) and $20k Renovation Costs (2 new kitchens, refinishing of floors, entire inside repainted, etc.).

I should note that I bought the duplex from a family member and therefore was “gifted” equity in the house. This is what allowed my purchase costs to be so low. I basically put next to nothing down to get to the 80% LTV ratio to avoid PMI.

I have been tracking spending for well over a decade. Here is that historical view along with my budget/estimate for 2024.

From 2011 to 2018 I was sharing major expenses with my ex so I was able to keep spending pretty low. (I also was making a lot less and therefore naturally spent less.)

From 2019-2021 I lived in Germany where housing costs were expense & I also wasn’t sharing those costs anymore, therefore expenses went up.

They have stayed up, but how it’s spent has changed (e.g. housing costs down but travel spending up).

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

It’s very easy to see where I spend my money. More than 40% of my expenses are for housing, more than 20% for traveling, and about 15% for food and drink.

Here’s a few years as examples.

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

I don’t necessarily budget where I stop spending once I’ve hit the desired amount, rather I would classify what I do as more of a “forecast”. Each year I layout a detailed forecast of expected spending/savings. In some cases, I force myself to spend more on certain categories.

For example, I love traveling but I was being more restrictive in spending in that category that I needed to be. I’ve been upping my planned spend in that category every year to incentive myself to spend more! I nearly doubled my spend between 2022 and 2023 in that category.

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

I moved to Credit Karma recently, so I have unfortunately lost some of my history.

This wasn’t a metric I tracked in my own spreadsheets until 2018, but this will give you a good indication of my saving habits.

Obviously, earlier in my career when I was only making $45-75k, I was nowhere near these levels of savings. I would estimate that my savings rate early on was only about 5-10%. Once I completed my MBA and increased my salary significantly, I was inching closer to 15-20%. It was only after I paid off my student loans that I started to hit these high savings percentages.

Next year I don’t expect to save much, if any, of whatever income I bring in given that I don’t even have any plans to generate income in 2024 yet.

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

Beware of lifestyle inflation!! Don’t let your spending grow at the same rate as your income growth. As I noted before my income CAGR is about 13%. My spending CAGR is only about 6%.

Another tip is to remove barriers to savings through automation. Early on, I automated my 401k to add an additional percentage savings each year.

Later I automated moving money into my brokerage account each month. If you put these systems in place, it’s “Set it and Forget It” and helps to ensure you continue to save.

It also has helped me not to have kids. Those are incredibly expensive! That certainly wasn’t the main reason I chose to be child free, but it does help with the accumulation of monies. I am not advocating that those who desire to be parents forgo it for financial reasons, I’m just acknowledging that it’s absolutely a factor in my ability to save and why I’m 38 with $1.2m.

What’s your best tip for spending less money?

Want less. Seriously, it can really be that simple. Reduce your consumption of stuff. Your pocketbook and the environment will both be better for it.

Some books that helped me with this mindset include: Your Money or Your Life, The Psychology of Money, and Taking Stock. These all helped me to align on my personal values and what was worth of spending money on.

Also, keep your fixed expenses low. I could almost immediately eliminate $20k (1/3) of my spending if faced with some difficult life circumstance. My fixed expenses are less than $40k a year because I live in a very modest house, drive a used car, and spend very, very little on material items.

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

100% traveling and the occasional high end sushi meal!

INVEST

What is your investment philosophy/plan?

I have an incredibly simple index fund approach to investments. Though I am technically in a few different funds, they are all largely total market funds.

Over the past few years, I have maxed out my 401k, HSA, and performed a backdoor Roth IRA conversion. Additionally, I was putting roughly $5k/month into my Vanguard account.

The duplex investment is quite new and it’s also my primary home. It’s quite possible that I will move into another home in the coming years and rent out the second unit, but only time will tell. I don’t have any immediate plans to continue to acquire more real estate.

What has been your best investment?

Despite leaving them, my company stock. Haha. When I started in 2008, the stock was trading around $60/share. It’s now >$450.

For most of my tenure I participated in the ESPP which gave me a 15% purchase discount and continue to grow significantly while I waited for them to become long term capital gains. I still have $62k in vested shares which have cumulative gains of 37% in the last 2 years.

I am waiting until those become long term holds before selling to save on capital gains tax.

What has been your worst investment?

Overall, I’ve been very lucky not to make any really dumb money mistakes/investments.

I guess my big “mistake” is that I probably should have invested more earlier instead of holding so much in cash – which historically I have had a lot of. I earn and save really well, but I lost out on our good friend, compound annual interest.

What’s been your overall return?

That’s a great question. I don’t know and I’m not sure I trust the calculations on Vanguard / Fidelity.

How often do you monitor/review your portfolio?

I look at the balances a few times a week.

Formally reviewing and making adjustments is more in line with my annual review/planning that I do each year.

NET WORTH

How did you accumulate your net worth?

Through typical W2 employment income.

No inheritances, no lottery winnings, etc.

I accumulated my net worth through sound ESI principles and a little bit of luck along the way.

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?

Earn and Save.

I was able to significantly and continuously grow my income while managing lifestyle inflation. Spending $70k as a single person is certainly not frugal, so if I had to pick one, I’d say Earn.

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

Honestly, not too many. If anything, I’d say $100k in student loan debt (for both undergrad and MBA) was quite the valley to climb out of.

I alluded to an ex before…We were together for 9 years, but never married, never fully combined finances and we were also both successful in our careers. We were DINKs for sure. Separating didn’t have much effect on either of our personal finance situations.

I’m sure there have been some other bumps, but nothing that’s coming to mind right now – therefore they couldn’t have been too challenging. I haven’t taken any swings for the fences or invested in anything sketchy.

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

As you have read so far, I am not currently contributing to grow my net worth, rather I am leveraging it to take time off. With net expenses of $45k and almost $700k in liquid-ish assets, I have plenty of time to putz around and figure out what path I want to take next.

The privilege I have to be able to wander through life at the moment without detailed plans or goals is not lost on me. I’m the type of person who maintains a 28-tab Excel spreadsheet to track all of my financial wellbeing topics, so this lack of knowing what is next is an quite an experiment for me. As of the time of this writing I am almost 5 months into this experiment and I am loving it! 😉

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

This is something that keeps changing. In my last Six Figure Income Interview, I said:

“Longer term I want to get to FI status by age 45 so I can have more options open to me. For me FI will be a combination of about $1.5m in cash/investments and/or $25-50k of passive income streams.

I love the idea of working part-time or maybe starting a consulting business where I could take a few months off from client work to do some traveling or volunteering on occasion. Basically, I don’t think I will join the RE part of FIRE too early, but I want the option to!”

In early 2021, I joined the MMM Forums and learned a TON from the mentors. At that point, my target NW changed to $2.5M, due to reducing my risk tolerance and adjusting for some other factors (like taxes for which I wasn’t accounting for!). At that point, I was thinking about FIRE in a traditional sense and I felt like I needed to achieve complete and total financial security before exploring other ways of living my life.

Since then, through tons of reading, exploration, and self-reflection on the topic of financial independence, I have shifted my views that FIRE isn’t necessarily a destination but a journey. If you absolutely had to categorize me, you could put me in the bucket of Coast or Barista FIRE currently.

I realized that I didn’t need to wait to hit the magical number to start living a life that was more enjoyable to me. I was already in a position to do that now.

Don’t get me wrong, if I wasn’t already a single-female millionaire under the age of 40, I highly doubt I would have the beliefs I do today, nor would I have the confidence to experiment! Maybe my target net worth was really just $1m…. 😉

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

Age 37. I hit millionaire status in Jan 2023 and at the time, other than celebrating with the MMM community in our “2023 Two Comma Club”, nothing changed. Fast forward 7 months later, and, BOY, did life change when I decided to take my sabbatical.

I’m not suggesting everyone quit their jobs the second they hit $1m, but so far, it’s working for me. 🙂

Check in with me again in a year – by then I will very likely be back to some version of paid employment.

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

Well, professionally it helps being an ‘eldest daughter’ and having a classic ESTJ personality! I’d say I’m relatively extroverted, have (or maybe had) an achievement syndrome, and I’m moderately intelligent. A lot of that is just the genetic lottery that swung some professional successes in my favor.

More tactically I’d say I had the natural habit of continuous learning and I coupled that with a very unnatural habit of evaluating my emotional intelligence. There’s absolutely some classic pitfalls with my personality style, but especially since I became a people manager I have spent a lot of time trying to control those potential derailers.

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

I certainly am not perfect, but I don’t have any material regrets when it comes to ‘money mistakes’. As I described in the topic of “road bumps”, I certainly would have preferred not to take on so many student loans, but that education got me where I am today, so it was a worthwhile investment for me.

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

I don’t think it can be summed up any better or more simply than the title of this site: Earn, Save, and Invest!

Look for ways to grow your income (there are many paths), beware lifestyle inflation and how you are being marketed towards, and do your best to balance your investments to not take on extreme risks.

FUTURE

What are your plans for the future regarding lifestyle?

This is a difficult question for me to answer at the moment given this experiment / career break I am in. Unfortunately, I am not yet at a NW level for which I will never have to work again, but I do hope to more heavily balance ‘life’ over work in the future. Simply stated, I would like to keep my lifestyle level where its at, with or without work/employment.

That being said, I must admit that I have become somewhat jaded in the world of Corporate America in the past couple years. (Maybe Gen Z vibes are rubbing off on me haha.)

It’s not worth getting into the details on this, but I just don’t have the same “drive” I used to around the culture of capitalism in the US. My time in Germany, Covid, and achieving a level of financial independence has really given me good reasons to assess what I want out of life.

Therefore, moving forward any work/employment that I take on will very likely look different than it has thus far where I worked full-time(+) under W2 employment. I haven’t made any decisions yet, but I am weighing options such as (1) part-time W2 employment of 20-30 hours a week or (2) contract employment where I’d work full time, but intentionally take extended breaks (e.g. at least a few month) off in between contracts.

I’m open to other suggestions on this!

What are your retirement plans?

Some might call me semi-retired now! 😉

Originally, I planned to hit my FIRE # somewhere between age 43-45ish, but taking this time off has made me realize it’s not a race to this magical number. I suspect I wont FULLY retire until later (maybe 50+?), but I’m just pulling forward some of those “retirement years” to the present.

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

Beyond “will I run out of money?”, I don’t think I have a lot of concerns about retirement itself, rather just concerns about aging in general.

One thing I worry most about is loneliness. Maybe you have seen this graph before?

I plan to retire early, I am currently single and I don’t want children; therefore my personal graph will have me spending even more time alone every year than this somewhat depressing view!

Regarding “time spent with partner”, I have dated a lot since my ex and split up, but nothing longer than 6 months. I know I’ll be okay if I never end up in a long-term relationship again (though I do expect to and I stay optimistic about that), but I do worry about loneliness and feeling sense of community. My older relatives have so few friends – it makes me sad.

Obviously, there are plenty of you out there with thriving friendships and who are part of meaningful communities, but I see so much loneliness in my circle that it weighs on me. I have some great friends, but as you can see, the average person doesn’t spend too much time with friends (e.g. me!)

Also, since I don’t want my own kids I need to be considering what old age care might look like for me. I haven’t spent enough time considering what this will look like, but I hope to stay close to my siblings, nieces, and nephews over time so that they will have my back when the time comes.

MISCELLANEOUS

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

I am definitely self-taught. I am not only an eldest daughter, but I was the first grandchild in my mom’s family (and was so for almost 7 years!) and only the second of about 15 in my dad’s side. This led to some early spoiling for which my mom can’t believe I overcame. I also didn’t have any family members who were “good with money” to look up to, at best they were average and at worst they were VERY bad at managing it.

I can’t say exactly what age it all clicked, rather there have been multiple “ah-ha” moments throughout life. Early in life I saw some struggles of other family members that made me be extra appreciative of being “smart” with money.

After I graduated from university I had another watershed moment about debt. I had tens of thousands of dollars of student loans that I decided to pay off as quickly as possible. I then did the opposite at first, going back to get my MBA.

Upon graduation from said MBA in 2012 I had just over 100k in loans to payback. That being said, I was able to do that in less than 6 years, saving myself HUGE amounts of interest over my lifetime.

Once I paid off the loans, that’s where I really kicked my learning into high gear. I became obsessed with personal finance, consuming every book and blog I could get my hands on.

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

I think if anything I have some anti-heroes in my story.

Both sets of my grandparents were small business owners, but neither was incredibly successful. My paternal grandparents did alright, but unfortunately my maternal grandfather’s 40+ year old small business was shut around the same time I was graduating high school. My grandfather was a very stubborn man and they poured WAY too much money into trying to save the failing business without being open to doing this differently. My grandfather is now 83 and still working, which is a shame but he was always a workaholic and probably would never have it any other way anyway.

That significant change in my grandparents’ circumstances, coupled with my mom (who birthed me at the young age of 18) being financially (and emotionally) dependent on others for the first 30 years really made me want to be independent in all ways. I was probably mid-teens myself when I resolved to be successful on my own. I am now HYPER independent to a fault.

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?

ONLY three!? I read probably 15-20 non-fiction books a year and at least half of them are related to personal finance and/or living a life worth living!

If I must narrow it down, these are three that truly changed my perspective on my own financial journey / life overall and how I want to live it.

• Die with Zero 
• The Subtle Art of Not Giving a F*ck
• The Pathless Path

Caveat, these are not “getting started” books for your journey. In fact, I am grateful that I read them when I did at the point of my own life journey that I am on. There’s something about being in the right time and space to read something.

Post college I went back and re-read a lot the classics we (were supposed to) read in high school. Now that I was doing it for my own enjoyment and not for a grade, I was able to enjoy them so much more and understand them more broadly.

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

Monetarily no. I guess I’m just not that charitable. I suppose I’m suppose to feel bad about this, but I haven’t felt bad enough to start donating.

I do however ad-hoc volunteer my time with multiple organizations, usually for big events. Selfishly I enjoy the aspect of interacting with people at these events, so if I can do that and also help the organization out at the same time, great.

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?

I certainly hope I have a long life left and that I end up applying a lot of the “Die with Zero” principles over the next 40+ years so I haven’t spent too much time planning this out yet.

As I mentioned before, I don’t have/don’t plan to have any heirs myself and I am also currently unpartnered so that eliminates standard/default options.

If something were to happen to me tomorrow, my assets have my parents set as the beneficiaries. Assuming they go before me I will probably divide the assets amongst my siblings, nieces, and nephews.