Millionaire Interview 407

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

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

I’m 51.

I’ve never been married and have no children.

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

I live in a high cost of living area on the west coast.

What is your current net worth?

Bounces between $2.6-2.9 million.

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?

These are my main assets taken from January 2024 balances:

• Stocks: 1.55M
• 401K/Retirement accts:1.1M
• Life Insurance cash surrender value:170K
• Only debt is a house owned with my siblings

EARN

What is your job?

I’m currently an account executive (sales) for a hardware tech company.

What is your annual income?

With a variable comp plan, it has ranged in the past 6 years from $225K-450K.

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 real job that wasn’t babysitting, or chores was during high school age 15. I tore my ACL playing sports so while waiting for surgery, I worked with 2 friends as a janitor cleaning pre-K classrooms and a church. I believe I was getting $3.50/hr.

During college I was enrolled in a work/study program that paid me $4.25/hr and increased every year by a whole quarter!

My senior year I also bartended at a local bar 2-3 nights a week. There was no hourly wage, I just worked for tips which being a college bar ranged from $40-$100/night.

Throughout college I had summer jobs that didn’t pay much. The best internship, I received $5K working for an environmental foundation. The best experience was working at an environmental educational center in MN as I was able to take a week long canoe trip in the boundary waters.

Another fond memory was working as a ski instructor during winter breaks. After the first season and some prodding from the ski school director, I earned a level 2 certification with PSIA (Professional Ski Instructors of America).

I wasn’t sure about a career direction after graduation. I had a BS in Biology and the environmental foundation where I interned offered me a full-time position for $5/hr. I was raised in a state where someone pumping gas earned $9/hr. Needless to say I realized that working in the life sciences field wasn’t going to be my calling without an advanced degree.

My dad was able to get me a job with a company working at a warehouse. Your basic laborer using a barcode scanner to check inventory in and out. I did learn to drive a forklift and luckily the manager realized I was capable of more so one day he asked if I had a suit and shipped me off to the main office in NYC for a project.

Being at HQ, I was exposed to different managers and I took any role offered. I gained lots of experience within different aspects of the company but the one that sent me on the technology trajectory was working in a department that configured networking hardware. During my 5 years at this company, my salary ranged from $30K-60K. Every winter I also worked at a local mountain as a ski instructor. I was only paid when I taught lessons but the perk was a free season pass and pro-deals on equipment.

My sister had a college friend who called every year right before the start of ski season telling me to move west for amazing skiing. Every year I brushed off his tall tales until the offer of housing was dangled. So to the amazement of my manager and the support of my family I moved west! I was able to get a job at a big resort working the lifts and teaching skiing. The pay wasn’t great but skiing 120 days that year and learning how to ski “big lines” was definitely worth it!

When the season ended, I didn’t have anything lined up but I knew another season working at the resort wasn’t in my future. I went back to visit family for a bit and took a bouncer job 2 nights a week to earn some cash.

The dot.com boom was in full swing so with my experience in networking, I was able to land a job for 120K. Being an end user, I had sales teams constantly calling for me to evaluate their products. I was approached by one of the engineers to interview for a position as a pre-sales engineer. I was bored at my current company as all the upgrades were completed and my days were spent documenting the network and writing BRP’s (Business Recovery Plan). It was an easy decision to take the offer at the new organization.

The next few paragraphs represent 15 work years. My salary at the new company was $150K plus commission, a healthy dose of stock options, and an employee stock purchase plan. Unfortunately a few months into my role, the company decided to exit a core business. The timing was horrible as the implosion of the dot.com era (dot bomb) occurred at the same time so I scrambled within the company to avoid being laid off.

Things stabilized and the company found their niche until being acquired. My stock options were worthless but the new company was a juggernaut within the industry so I was optimistic that things could turn around.

The pace of innovation during the 2000s was amazing! Unfortunately that innovation doesn’t always translate to success. When partnered with a great sales rep, the rewards included nice commission checks and company recognition. Being successful, I was shared across multiple sales reps with commissions tied to the performance of the team.

As one can imagine, being tied to team performance instead of a single rep wasn’t always great so when the opportunity arose to take a managerial role and run a technical marketing team, I jumped. The structure of my compensation changed since I was no longer in a sales facing role. I lost commission but my salary was increased to $190K and I was eligible for a year end bonus based on the company’s performance.

This lasted for 3 years but corporate restructuring came knocking and the good people that I enjoyed working with left the company. While I could have easily gone back to a pre-sales engineer role, I decided to apply for a sales account executive role. There were a couple months of uncertainty as upon accepting the role and notifying my current manager, we acquired a company and their sales management team took over. I had to reapply for the position and the incoming manager was hesitant to hire someone with a lack of sales experience. Ultimately I made it through and was back to a base salary and commission structure of $150K base with the potential to make $200K+.

What I quickly learned was the sales reps that made the job look easy (i.e. taking customers out for lunch, happy hours and sporting events) did lots of work on the back end that I was naive about. Luckily for me, the incoming sales management adopted a sales methodology that resonated with me and provided the foundational skills needed to be successful.

The passing of each year provided me with new skills as I gained experience and grew into the role as a sales professional. I never had a sales 101 intro nor did I come through the inside sales ranks, so I was always cognizant of asking basic sales questions or strategies. This fear of being “found out” was real since my lack of sales experience was an initial reason to not hire me. Luckily I had friends and previous sales reps to ask these 101 questions. During one of these calls, a friend who was a sales manager had an opening on his team and told me to apply.

I’ve been at my current company as a sales professional since 2017. My base salary started at $120K with an adjustment to $125K a couple years ago. In the last 6 years my lowest year was $225K. The commission structure doesn’t require a PhD to ensure you’re getting paid correctly but the down side is there’s no lucrative accelerators when you overachieve quota that make it possible to earn 1M+. The mantra is “If you want to make more sell more.” As I write this there’s company changes which might find me seeking a new role.

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

When I entered the work force, my mentality was work hard and the company will recognize your efforts and reward you. I learned that wasn’t always the case and while I still believe in working hard, I have adopted the work smarter not harder mentality.

Looking back I should have actively looked to switch companies sooner. I had a stable job but staying at a company and getting incremental raises or hoping that the sales person or team would exceed their quota doesn’t move the needle as quickly as moving onto a new company.

Having a passive income stream is also something that I learned about much later in life. Looking back, this is an area that I wish I knew more about when I was younger as it seems to play a pivotal role in providing an income stream that can last as long as you wish.

What’s your work-life balance look like?

Currently I have a great work life balance. I started my career commuting 1.5-2 hours to an office 5 days a week dressed in a suit and tie. Except for 2 years, all my West Coast roles have been from a home office. My commute increased as the territory I covered was fairly large, but customer meetings were scheduled during off peak times to avoid traffic.

Thanks to the pandemic, the casual observer might see my balance as skewed too much towards life. My pandemic project was building out a van that includes a Starlink setup allowing me to extend weekend adventures.

A recent hobby has me associating with younger professionals. I look at their balance and feel I could push the “life” side even harder but the realist in me says that I should focus more on work and make the push to be FI.

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?

No, but I’m kicking myself for not having something and exploring potentials to add this in.

The passive income that other folks generate is pretty amazing. Whether it’s a rental portfolio, blog/podcast, or something else, with the benefits of hindsight developing an alternative income stream makes sense.

Looking back I should have tried to acquire a couple rental properties. They could have been sold or consolidated and I believe I would be at a better net worth.

SAVE

What is your annual spending?

Between $110-125K.

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

I don’t have an easy method for viewing this. I used Mint as an alerting tool where I set thresholds and got alerted if I went over them. Now that this is being deprecated, I’ll have to find another tool to use although I wasn’t really using it to track detailed expenses. Maybe I should try that, any recommendations? I also leverage year end credit card breakdowns to broadly track spending and see where I can reduce spending.

The largest singular expense is a family home I share with siblings. The annual break down is $50-55K. Yes, this is high but it also includes a promissory loan back to our dad when we purchased the home from our parents, necessary upgrades that every house eventually needs and taxes for a separate undeveloped lot. This expense should be reduced to around $25-30K by 2026 at the latest as this is when the promissory note will be paid.

In 2023 the top 5 categories from my credit card spending report are below. One thing to note is that I use this credit card for work expenses that get reimbursed. Yes, I could have a separate card for that but I’m trying to maximize rewards.

• Shopping: $13.9K
• Food: $11.1K
• Bills: $9.7K
• Gas: $7.4K
• Travel: $6.9K

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

I don’t have a strict budget but I do monitor my spending and when the credit card statement gets too high I tend to stop spending on luxury items.

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

In 2023 47% of my take home pay.

This has increased over time. In my 20’s all I did was choose the highest contribution percentage rate to my 401K.

In my 30’s I added a brokerage account via Amex advisors which probably got me in the 15-20% ballpark.

In my 40’s till 48 I moved the brokerage account and started investing in EFTs.

Now I contribute monthly to different accounts, company ESPP, company 401K only up to the match percentage and a HSA started in 2022. I try to increase my monthly contributions to my brokerage account annually as well as make sure I contribute the maximum to my HSA and Roth IRA as those amounts change with the federal guidelines.

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

Automatic deductions.

A friend has a phrase “save till it hurts.”

As my paychecks vary each month, the simple thing I look at is my bank balance. If it’s over a certain threshold, I’m not doing enough and I’ll increase the auto deductions. I’ve gone too far a few times but that’s easy to correct.

What’s your best tip for spending less money?

Live within your means.

My younger self tried to keep up with the Jones’s. While I never put myself in the hole with credit card debit, accumulating stuff or supersizing things (TV, stereo, car) was great for the short term but I realized that the money could have been used more wisely.

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

Hobbies. Apparently I enjoy expensive hobbies: skiing, biking and kiteboarding are the current ones.

In my youth I tried my hand at road racing motorcycles and when I “retired” from that I enjoyed tracking cars. While I don’t buy new gear every year for the current hobbies, I’ll spend on experiences and travel destinations.

INVEST

What is your investment philosophy/plan?

I’ve never been great with investment strategies so I use “experts” and I have automatic deductions going into a variety of accounts.

The main buckets are:

• Brokerage accounts: $56,400/yr
• Work IRA: $5,827/yr
• ESSP: $12,500/yr
• Variable Life Insurance: $5,760/yr
• HSA: $3,000/yr or whatever the balance is once work adds contributions
• ROTH IRA: I learned about backdoor Roth’s 3-4 years ago so have been funding the max annually since then.

What has been your best investment?

Rather than a specific investment I’m going to say time.

What has been your worst investment?

Trying to pick my own stocks, variable life insurance, not learning about investing at a younger age.

I took up a free session with an Amex advisor from my corporate card. They thought my worksheet was incomplete as I had no debt. The only advice was investing in one of their funds and setting up VLI which was what “rich” people did for retirement.

What has been your overall return?

I only started tracking this around 2018.

I suspect if I tracked this since entering the workforce it would most likely be a single digit number.

How often do you monitor/review your portfolio?

I look at the balances monthly and tend to make adjustments yearly with my advisor.

The changes I make most are to my checking account. If the balance gets above a threshold, I’ll make one time contributions into my brokerage account so that it can be invested.

NET WORTH

How did you accumulate your net worth?

It’s all 3 tenets of ESI.

I’ve rarely been without a paycheck since entering the workforce. The consistency of earning a paycheck, and saving a portion into investments is what got me to $1-1.3M with dumb luck and no financial acumen.

The only large “windfall” was when I sold my primary residency in 2019 which got me across the $2M mark.

I also paid off all my students loans quickly so that I was debt free early on.

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.

I’ve been fortunate to never have been without a job for any lasting period of time. Even when I was “transitioning” from ski bum back to the workforce, I still had a small income so that I never relied on savings or withdrew money from retirement accounts to live on.

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

When I entered the work force in 1994, company pensions were on the way out and 401Ks were the “new” investment for retirement. When I first started the advice was to invest the maximum into this account and continue investing till you retire. At 65 you’ll have enough money for the rest of your life.

With no financial knowledge and poor literature from the HR department on investment options, I was throwing darts at the board blindfolded. This led to poor choices as my rationale as a young adult was “I have 40+ years to invest so let’s take the highest risk investments because they provided the greatest returns.”

The promise of compounding interest was akin to a rock rolling down a hill and building momentum. Your money will just snowball into a huge amount! Well if you take high risk investments that grow negatively…..all the compounding interest in the world isn’t going to turn your losing investments into big money gains no matter how much time you give them!

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

Making sure that I’m maximizing how my income is working for me.

So the first step is to continue to review and increase savings, and then making sure the money is invested and not sitting idle as cash. Yes, I realized having emergency cash on hand is important and that’s how I use my checking account today.

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

Napkin math put this around $3M but there’s FOMO that maybe I need a safety net of $5M to minimize the risk of running out. I think $4M would provide enough cushion.

As many that have already retired (early or not) will probably attest, the number seems to be less than what you calculated…but that’s a big leap of faith!

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

I never tracked net worth until 2018 so if I had to guess I was probably in my early to mid 40’s when I made my first million. Since then I’ve learned more about investing and retirement. I’m more active in how my money is working and always look for ways to ensure I’m growing it.

I’m not sure “mature” is the right adjective but I’ve realized what brings me happiness and I look to maximize those things while reducing things that don’t. This is a behavioral shift from when I was 20-30 where the definition of success usually involves driving a fancy car (Porsche, Ferrari, etc) living in a prestigious neighborhood, and being seen at all the trendy nightlife spots. I still like nice things and having those dreams and aspirations in my youth was great, I’m now more discerning on what those things are.

The other shift was education of finances thanks to the news coverage of the FIRE movement which seems to have brought financial talks out in the open.

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

The only habit that comes to mind is auto deductions to savings.

I also avoided credit card debt.

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

• Investing in the wrong areas
• Not investing enough
• Trying to pick stocks
• Universal Life Insurance
• Not moving jobs enough to maximize earning potential
• Too trusting of professionals and friends in the Finance industry. That they had my best interests when recommending investments

Almost all the articles I’ve read look back at the history of the S&P 500 and the investment strategy of continually investing in a low cost funds like VTSAX versus a stock broker. Had I taken an interest in learning about finance and investing at 35 or 40, I feel my net worth would be substantially higher without making any other changes in my lifestyle.

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

Educate yourself. There’s lots of online content that can help you learn enough to make informed decisions on investments as well as tax loopholes.

Have a number. The napkin math I referred to earlier is a simple calculation that I never heard of until I was in my late 40s. You’re getting a concrete number FOR YOU versus hypothetical scenarios like can I retire with $X? The number might change but at least you know how you arrived there and what tweaks need to be made for you. Example you need $100K a year to live and plan on living till you’re 90 with a retirement age of 65. 90-65=25 years and 25*100K=2.5M.

Don’t boil the ocean. Don’t overwhelm yourself. Break things down into smaller manageable chunks. You’ll get things moving in the right direction and have small wins that will keep you motivated to continue on your journey.

FUTURE

What are your plans for the future regarding lifestyle?

I’m hoping to retire early and enjoy my current hobbies and life before my body fails me.

I can also see a path of semi-retirement where I’m working part time for benefits until 60 and then sailing off into the sunset in search of endless powder runs!

What are your retirement plans?

Right now retirement to me is enjoying the hobbies I have and maybe picking up new ones or learning new skills.

Traveling for these hobbies is also on the list as I can hopefully afford to spend as much time as I want or a visa allows in different countries. I’ve heard that folks who aren’t happy in retirement haven’t found their purpose.

This is different for everyone but those that don’t find it might be tempted to re-enter the workforce!

Financially, it will be trying to maintain and grow my net worth to avoid the pitfall of running out of money.

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

I think everyone has similar concerns. Do I have enough, how do I pay for healthcare before I’m eligible for Medicare, will Social Security still be around? How to protect your net worth from poor market conditions?

Early retirement: I have my assets evenly split between tax and tax deferred accounts. Using the 4% guideline on the total net worth should provide me with the necessary yearly income. The crux is that the tax deferred accounts cannot be accessed without penalty in early retirement. This is something that I hadn’t thought about before so I’ve been working to increase the worth of my taxed accounts and continue to contribute and let my retirement accounts grow.

Exploring Relocation: Possibly to an international location where the cost of living is substantially less for a portion of the year. Also moving my primary residence to a state with no income tax.

Education: Gaining knowledge about these different areas. I feel like you don’t have to be an expert but you want to be educated enough so you can navigate the bureaucracy or call BS when experts come knocking to sell you the next big thing. I also need to start researching about how to withdraw funds during retirement.

MISCELLANEOUS

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

I only learned the basics as I entered the workforce and had to pay taxes, student loans, and rent.

I still don’t think it has completely clicked but the proliferation of the FIRE movement in news feeds and starting to read financial articles and books around 48 is when I seriously looked at what I had, what I was doing, and how I could do more.

Assisting my aging parents with their finances has also opened my eyes to ensuring that I have a plan in place.

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

As a child, I had sports heroes and dreams of playing professional sports!

As an adult, my brother who has become a successful business person is someone I admire.

My parents are also people I thank. As they were 1st or 2nd generation they did a great job raising us to be successful adults.

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?

• The Millionaire Next Door 
• The Richest Man in Babylon 
• Lots of blog and websites that spoke to the FIRE movement. (MMM, Financial Samurai, ESI, Millionaire Money Mentors)

All of these remind me that there’s not a silver bullet to solve your retirement goals. Time is your friend as is investing regularly.

In this day and age it’s hard not to compare yourself to others. Remember what you consider “winning” is different from others.

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

Minimal donations to charities that I care about and donations to goodwill for clothes and other items that are just taking up space.

I’m not confident that a monetary contribution will be put to good use to make this a regular thing.

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 have a small immediate family so I plan to leave everything to them.

I haven’t thought much about whether to leave a portion to a charity or a cause I’m passionate about but will remain open to changing this plan as life unfolds.