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.
My questions are in bold italics and her responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
My spouse and I are both 39 years old and we’ve been married 12 years.
Do you have kids/family (if so, how old are they)?
We do not have kids. We thought we would when we were younger, but whenever it comes up we realize we love the life we have and don’t have a desire to change it so drastically by becoming parents.
What area of the country do you live in (and urban or rural)?
We live in a small town in the beautiful Pacific Northwest.
What is your current net worth?
Our current net worth is $1.1 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?
- $720K in retirement 401K, IRA, and Roth IRA’s.
- I recently started an HSA that has $3K, but will grow by the maximum each year.
- I hold $25K in stock with my employer.
- Our home value is around $575K
- We owe $190K on a mortgage.
What is your job?
My field is workplace safety and my husband is a diesel mechanic. I have recently become a manger of a small team.
What is your annual income?
Our combined annual income is $220K.
Tell us about your income performance over time. What was the starting salary of your first job and how did it grow from there?
I was earning $40K out of college. I maxed out my salary to $65K working for the government 6 years ago and have more than doubled my salary since moving to private industry.
What tips do you have for others who want to grow their income?
My advice is to go to a reputable college, but select a field of study that will result in employment opportunities that are in demand and with good income potential.
You don’t have to get straight A’s, but you need to have the degree. I worked my way through college, so straight A’s wasn’t going to happen for me.
Then, once you have your degree and have had an internship, always negotiate your salary during the job offer process.
Don’t be afraid to change jobs when you have maxed out your learning and earning potential. However, line up the next one before you quit the first. Quitting a job without another to move to is something I could only do now at this point of my career/net worth and it’s a luxury to have that freedom.
Through your career you are learning your technical trade, but growing leadership potential as a strong communicator, presenter, listener, and highly engaged employee.
Also, be willing to move to another location for your work.
What’s your work-life balance look like?
When I took on the management role, my work-life balance suffered.
I love my job, the freedom I have to shape it, and the people I work with. I am traveling more than I want to, but the salary is nice. It also allows me to live in a small town that I love. My plan is to work for another 5-10 years in a job that is more demanding of my time and energy, then retire early.
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 do not have any other sources of income currently. I have been giving this a fair amount of thought lately, looking for what this could be for us.
What is your annual spending?
About $110K. This is a very rough estimate.
What are the main categories (expenses) this spending breaks into?
This is tough.
- $32K home mortgage (10 yr)
- $6K groceries
- $8K dining out
- $10K auto
- $4K clothes
- $10K travel
- $5K utilities
- $10K home improvements
- $20K misc.
Do you have a budget? If so, how do you implement it?
We have saving goals and we plan for that together. We do not budget though. We just spend what is left after saving.
I still wish we were better at this, but I also see that our method has worked for us.
What percentage of your gross income do you save and how has that changed over time?
We have always saved 15% of our gross income, from 22 years old.
It’s been at 30% for the last few years.
When we were in our late 20’s we used Dave Ramsey’s advice to pay down debt, including the mortgage on our first home. We were putting 50% of our income to that for 7 years. We have always kept our expenses to a point that one of our salaries could meet that need.
When we bought our first home, we were young (26), our realistic lack of confidence in our re-employment ability if we lost a job and were tied to one area made us cautious. My husband narrowly avoided being laid-off during the recession, thankfully I was working for the government. Living below your means is the key here.
What is your favorite thing to spend money on/your secret splurge?
Good dinners out and first class flights every now and again.
I also splurge on clothes, partly because of my management type job, partly because I like cute shoes!
What is your investment philosophy/plan?
We have paid ourselves first in saving directly to retirement accounts.
We are invested aggressively, mostly in mutual funds heavily invested in stocks.
10% of the retirement accounts are index funds.
I’m now trying to build up our after-tax assets, because we would like to retire at 50 years old.
What has been your best investment?
The stock market in general. Dollar cost averaging, nothing fancy.
We have stayed pretty diversified in all of the sectors, I think that’s helped us.
What has been your worst investment?
Early on I tried “day trading”.
It was in the strong market of 2002, so overall I actually did fine. I did lose a fair amount at the time on Sirius stock.
Although this wasn’t an investment, I did learn to not “loan” money to family. If you can’t give it freely, just don’t do it.
What’s been your overall return? (rough estimate is fine)
10% I think.
How often do you monitor/review your portfolio?
I review it monthly now. If the market corrects, I’ll ignore it again because it’ll be disheartening to see the numbers go down.
Right now, it’s crazy to see our net worth is growing about $20K a month.
I started reviewing it at least every six months in 2006. Doing this is key to building wealth I think.
How did you accumulate your net worth?
Earn, save, invest.
We have always kept our expenses so that we could live off one partner’s income if need be.
We didn’t listen to mortgage advice to borrow as much as possible. We also paid off our first home ($200K) in 7 years.
We have saved in company 401k’s that are invested aggressively because we are many years from retirement.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
The market drop around 2009 was a time that we were continuing to invest 15%, although our net worth was going down.
We ignored it and continued to buy cheap stock, when it rebounded, it was very good for us.
What are you currently doing to maintain/grow your net worth?
We are reducing what we put to our 401K, realizing it will grow to more than we need if we just leave it alone until we are age 63 or so.
We are now looking for ways to bridge the gap between 50 when we’d like to retire (change careers, work way less, something different). We are building our after-tax investments.
Do you have a target net worth you are trying to attain?
$2.5M seems like more than enough to me. We see no point in leaving money to heirs, but probably will just because we won’t want to run out.
How old were you when you made your first million and have you had any significant behavior shifts since then?
We just reached a million.
We have started spending more. Using the rule of 72 and 7% growth if we stop saving completely now we’ll have 4 million at age 59. We don’t need that much and we are still saving, I think we need to loosen up. Buy the hot tub, new snow board, newer car, etc now.
We never started out to be millionaires, we just want the freedom that it brings.
If you could rewind to when you first started out, what would you do differently? I never thought we would accumulate this much wealth. I don’t think I’d do much different. I did cash out the $1,200 in a 401k I had saved from my first job. That was stupid.
If you had to give advice to ESI Money readers about how to become wealthy, what would it be?
I think Dave Ramsey said it best “If you will live like no one else, later you can live like no one else.”
Don’t buy the new cars and fancy houses when you are still figuring out your finances, wait for those things until you’ve secured your financial future.
What are your retirement plans?
Maybe flip houses, we enjoy doing that.
Then hike, garden, bike, ski, eat good food, cook, read the paper, watch the birds, travel a bit, and spend time with loved ones.
We have traveled all over the world and figure 13 days is the longest we enjoy being away from our home. So we likely won’t spend too much in travel, but it will be good trips that we take.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Healthcare is a big concern if we retire at 50. It seems to be the big unknown cost to us. We are staying healthy by living active lives and saving in an HSA account.
How did you learn about finances and at what age did it ‘click’? Was it from family, books, forced to learn as wealth grew, etc.?
I have to thank my aunt and uncle for planting the seed of planning for retirement and going to college.
When I was 10 years of age, my older cousin had just started her first job and mentioned that she was saving for retirement. At first I asked why, because that seemed very silly to me. I read books and the internet to know what I know on this subject.
I have tried to talk to others to learn, but our culture doesn’t really allow for that. Discussing money is taboo. I do make a point to strongly encourage young people to save 15% and don’t touch it. My husband does the same with his young co-workers.
Who inspired you to excel in life? Who are your heroes?
I think I was inspired by my parents to work hard. I also know that they taught me that being poor is really tough, so I didn’t want that for my life.
My heroes are strong women that make the life they want for themselves. People that speak up on treating women equally to men in the workplace inspire me. People that take calculated risks, live with courage, and have explored enough of this world to see other points of view and ways of life inspire me.
My close friends and family are people that I consider my heroes. They are everyday people that teach our children, protect us from harm, defend our freedom, and just live lives that bring goodness to other people’s lives.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
I give to Gofundme accounts when I find there is a need, usually someone in my community. I have been giving more recently, as I now realize I have an overabundance. It’s really only been a few hundred dollars a year though.
I pretty much give when asked, but don’t really seek out opportunities. My work schedule doesn’t leave room to give my time at the present. This will be a priority when I retire though. I sort of think if I leave an inheritance to charity, that’ll be my part.
Do you plan to leave an inheritance for your heirs? What are your reasons behind this plan?
We will likely leave enough to make life a little easier for our niece, she’s the only child in our family. We may also do the same for our best friend’s child. I think $100K would be plenty. The rest will go to charity.
I think paying for my own college and making my way in life has developed positive characteristics. I have seen others that have not had to do these things and I don’t think it was helpful to their character/lives in general.
Lily | The Frugal Gene says
For the first few questions I thought maybe someone knocked me out because I didn’t remember us giving our answers hahaha. Paying off a house in 7 years is impressive!
Btw, this is my 2 cents, but a $8k in dining out might sound like a lot but it’s really not. I think me and my husband tries to be very very careful with our eat out budget but it’s still $6k/annually in the Pacific Northwest too. Annnnd we’re greasy spoon types of diners!
(Btw, LOVE the new questions sets!!! They’re so in-depth!)
Thanks Lily! I feel better about the 8k in dining out now. 🙂
I will speak more to how we paid off the house in my reply to the next commenter.
The Physician Philosopher says
Really interesting interview. It left me with a few questions, though:
1) You said that only 10% of your portfolio is in index funds, but that you are heavily weighted in mutual funds in stocks. What’s the other 90%? Actively managed funds?
2) Do you regret paying down your mortgages so aggressively instead of putting money into the market? From 2009 til today you would have earned quite a bit more in the market than paying down a mortgage most likely (not sure what your interest rates have been). I sometimes think that Dave Ramsey’s advice goes a bit far to crush any debt before you invest, which isn’t always good advice. It sounds like you may have been doing both, though.
Thanks again for the interesting information and for letting us “take a peek” into how you go to where you are!
Paper Tiger (aka MI 27) says
TPP, I agree with your comment on Dave Ramsey. My philosophy has been to pay off all of your other long-term debt first so that the mortgage is all you have. Take out a 15-year mortgage and maybe pay it bi-weekly so you make that one extra payment per year, reducing your term to ~12 years. Then invest the rest until it hurts and you should be set.
The Physician Philosopher says
Completely agree with that tactic. Which should you do? Pay down your mortgage or invest.
Jeff B. says
You should max out your retirement savings before paying off the house. There is no reason to have debt and invest. Coulda Shoulda woulda on the last 10 years. My wife wanted to have the house paid off, so we paid it off, but we were maximizing savings so it was easy to pay down vs stuffing more into the market.
Thanks for the questions! They made me think.
1. My lack of financial savvy may show here. We have 10% in S&P 500 index funds that are directed exclusively by me in Ameritrade accounts. This is retirement accounts from previous employers. The remaining 401k & IRA’s is with current employer retirement accounts and is in “bucket” type selections of “Aggressive”. We are more limited by what is offered through the retirement accounts. The accounts do automatically rebalance annually to keep the correct proportions of “Aggressive” investments. It’s mutual funds and I guess those are managed. I am thinking I misspoke. My intention was that I have passed on the offers as of late from Personal Capital and TD Ameritrade to actively manage the funds that are not held with current employer retirement accounts.
2. It is true our net worth would have been more if we had not paid of the house in 7 years and had invested the money instead. The interest rates have been very low. Yet, here’s the kicker, we never would have had the discipline to invest that much money. During the house payoff years we were still putting 10-15% of our paychecks to retirement, but everything else was focused on “buying blue squares”. I’ll explain. I drew out the floor plan of our house on graph paper and colored with a blue highlighter the number of blue squares that represented the portion of our home that we owned free and clear. We put 20% down, so 20% of the floor plan squares were blue when we started. Each square was $219 dollars of principal. Each $219 dollars applied to the mortgage principal let is color in one blue square. This was posted on our refrigerator as a daily visual reminder of what the goal was and our progress to it. Looking back we we’re developing our saving habit. As we never intended to be millionaires a goal of saving money to grow net worth would have felt unattainable and not in line with our values. We would have succumbed to lifestyle inflation with the extra money. My husbands coworkers have nicer cars, snowmobiles, 4 wheelers, boats, etc and they live in doublewide trailers (nice ones and live perfectly happy lives and are wonderful people). It’s a matter of priorities and avoiding lifestyle inflation. We wouldn’t have avoided it without “buying” our blue squares and putting our money toward our net worth by accident really. Even now I struggle to leave that 10 year mortgage alone and only make the minimums. In my mind it is a chain that helps keep me in my current high stress job, yet I do love my home.
This blue squares tactic is absolutely brilliant. That is behavioral economics at its finest. Way to go.
The Physician Philosopher says
I love the blue squares idea. The biggest enemy to any financial success is yourself. The blue squares helps fight that.
I will say that actively managed funds may be stealing success from you through higher fees (expense ratios, 12b1 fees, loads, etc).
May be worth looking at your plans to see what you are investing in and specifically what the fees are for each fund. It’ll continue to cost you a lot through retirement and it sounds like you want to continue to save for another ten years. It’s definitely worth looking into.
I will have a closer look, thanks!
You are doing a great job? Just keep saving and let compound interest work for you. You wrote that your annual spending is over $100K. Is that mainly due to living in a high cost of living area?
Thanks! The annual spending over $100k is partly because of a higher cost of living area yes, but by choice also. Our area is nowhere near as high as Bay Area CA, but it’s no Flint MI either. We eat out at least once a week, often 2times, sometimes 3. While we don’t buy a lot of random stuff, if we want it, we buy it. Husband is saving for a $6K mountain bike. I just bought a $200 purse without batting an eyelash. We love where we live, so we won’t be retiring to the Midwest. We enjoy looking outside to see the water, hiking, biking, skiing all right outside our door or a short drive. It’s worth the higher cost of living to us. As you said, compound interest is working for us and only needs time, so we are spending more freely now days. I guess we are succumbing to lifestyle inflation, but still below our means. 🙂
Paper Tiger (aka MI 27) says
I like the fact that you are not obsessively focused on frugality as part of your overall strategy and enjoy some of the perks of leading a responsible and balanced life. You are saving and investing well and enjoying life on your terms. I think you are both responsible savers and spenders which is the way my family has also managed our affairs. There is nothing wrong with going a little overboard every now and then for something that makes you happy. If you’ve done the right things around the ESI principals, you should be able to enjoy the fruits of those efforts however you see fit.
Jeff B. says
I would find a ‘used’ mountain bike. $6K is crazy. 🙂 I found a $3,000 road bike on craigslist used for $1,500. Bikes don’t go out of style.
I’ll tell my husband that ;-). Just kidding, I am happy he’s gonna splurge. His first 3 bikes were Craigslist half price used ones. He assures me technology changes and they do wear out. He rides several times a week and mountain bikes take a beating that road bikes do not. He’s had his current one for 6 years, that’s excellent return on investment in my mind.
Jeff B. says
I can’t wait to retire and hang out in the PNW for a summer of biking everywhere.
[email protected] says
Congrats on your success so far. I fully understand your desire to save for the period between “early retirement” and full retirement age. Even so, it may be best to still max out your retirement accounts. With a Roth account, you can access your contributions penalty-free while profits grow tax-free. Even better, you could contribute to a deductible account (and get the benefit now when you have a higher tax rate) and then find ways to withdraw those funds penilty free. The Mad Fientist does a great write up on this. Check out his link here: https://www.madfientist.com/how-to-access-retirement-funds-early/
Thanks, that is a very good article! I do wish we would have been more consistent in funding the Roth IRA’s over the years. I consider that must do advice for readers making less than the income limit ($189K Modified Adjusted Gross Income I think is the current number). I haven’t figured our MAGI, but I think that ship has sailed with my current income.
You can still do backdoor Roth conversions. Make a nondeductible IRA contribution and then turn around and convert to a Roth.
At the beach says
Well done. Y’all seem like retiring at 50is very possible – but you’re sure gonna need those after tax savings & investments so you don’t have to be penalized for drawing down retirement funds early. Stick to your plan!
ESI, I have a suggestion regarding these interviews. Since you have standardized questions, I think it would be awesome to compile a “Millionaire Interview Benchmarking Table” in which you converted spending amounts into percentage of income. You could also create subtables by age and/or net worth amount. Just my two cents.
Thanks for sharing your story with us. Interesting!!! I’m with you ——paying off our first home has “cost” us some savings, I’m sure —–but, it’s allowed us to also buy a 2nd home (a rental – valued at $230K) that’s almost paid off (in just over 3 years) ——–
Although I’m much older than you ——my wife and I have followed almost your exact plan.
Earn – Save – Invest = comfort
Keep sharing with the younger generation ——-there’s so much need for financial education for our youth.
Nice job reaching your 1st million ——-now, onward to the next million and beyond.
For some reason, I find it encouraging that someone can have over a million dollars yet still have debt, even if it’s just mortgage debt. It makes becoming a millionaire sound so much more obtainable.
I am glad it’s encouraging! It is attainable. Discipline to the principles of ESI and time will get you there!
Mr. Shirts says
“My parents taught me being poor is tough” – Wow, that line resonates with me. Congratulations on the success! The only thing I can add is consider getting to $100,000+ in investments outside of your retirement accounts. We were in the same position as you four years ago and that was a great feeling of a safety net and allowed us to take risk.
Ironically after we did that, our idea on mortgage debt changed and we went from a nearly paid off house to doing an 80% LTV fixed rate mortgage when we moved geographically for my job.
Yes, I can certainly see how having the taxable investments in an amount greater than the mortgage would result in a nice safety net. This is definitely where we are currently focusing our energy. Thanks for the advice!
Nice post. Congrats on your net worth.
All the best,
Great interview MI 41. Your spending on food is about similar to ours so I don’t feel so bad. My question would be do you want to ramp up the savings even faster to get to FI. It might mean a little sacrifice in the interim, but then you can do the other things you want even quicker.
Thanks, I do struggle with that question.
I understand your desire to pay off the house, but it appears you have no taxable savings or investments. Getting emergency money out of a non-Roth retirement investment would come with huge taxes and penalties. This is a question/decision I’ve discussed with my son (he is about your age and has an income half of yours), and I advise building taxable investments until those are large enough before beginning a faster pay-off on the mortgage. How have you rationalized your choice?
The 25K in my employer stock is taxable and easily liquidated, but you are correct it isn’t much and the value could of course drop. We have at least that amount in Roth contributions also. We have always maintained very little cash or an emergency fund. Probably for fear of spending it. We rationalize this by knowing that if we needed to tighten the straps, we could do so and live off one of our salaries. (I would need either a severance or at least unemployment insurance payments, but it would work). We could also remortgage a lower payment if we had to. We are both highly employable at this point. I think loss of a job would be our worst emergency. The other realistic ones would set us back a couple months and would go on a credit card in that meantime. Our home repair emergency potential is minimal, as we’ve just rebuilt our entire home and my husband can repair anything as he built it. Not having kids also plays a big part into this decision to forgo the typical emergency fund. We do consider the 25K in my employer stock to be an emergency fund, as it’s easily liquidated. We have good insurance and really would be fine to slash spending if the times called for it. Worse came to worse, my employer has a very easy, penalty free 401K loan program that I could use. Great question! Keep on your son in case he doesn’t have the layers of protection I think we do.
freddy smidlap says
hell, we used to have a 10k wine spending habit and a taste for good restaurants. this was in our accumulation phase but we never had to buy a 100 dollar pair of sneakers for kids we didn’t have. we did it on relative middle class incomes and jobs too. funny thing is, that when mrs. smidlap lost her job a year ago we just cut those costs down and lived off my income and after the 1st month or 2 hardly noticed the difference.
well done on getting it done so young.
Yep, this is our first go to plan if something were to happen with a job. Nice to hear we wouldn’t suffer too long from drinking cheaper wine and switching to greasy spoons. 🙂
Sean @ Frugal Money Man says
Congratulations on hitting the millionaire mark in your 30’s!
It’s a great feeling when you know your nest egg is already getting to a massive amount before you even turn 40. I have no doubt you both will be multi-millionaires in no time.
I am also slightly jealous of your current location in the Pacific Northwest! I have a good college friend who was from the Seattle area and moved back there recently, and he always showed me pictures of how beautiful it is up there. I am definitely going to have to make a trip soon.
Somewhat off-topic, but I definitely like the splurging within margins . . . live and learn here. I call it sin a little or sin a lot, a core philosophy. A ten-year + casino lizard, I am utterly horrified at gambling and the lifestyle of gamblers. If there’s a stupider class of people on the planet, I haven’t met them, and yet the threat is relatively close to home: two degenerates in the family, who I am not in contact with, since they are chronically self-destructive and only wish to borrow money, except there’s no hope of it being repaid. Fair enough, but bear with me; I do buy WA state ‘basic’ lotto tickets 3x a week, $1 a piece, $156.00 a year. The way I see it, I’m already doing it (heading toward retirement) the hard way; an easier out would be nice. And while this could very well be perceived as a crazy, dim-witted latte factor, if I bought lattes and a snack instead three times a week (which I decidedly do NOT), it would be more like $1,560 a year. Also, after pumping 16% of my pre-tax money into a superior 401k (100% vested, S&P 500 fund with a .19 expense ratio), after getting a 5% dollar-for-dollar match, after taking another 15% out of my net for further cash protection, plopped directly into interest-bearing accounts, then paying all the bills, I still have a hundred or two to plop in my wallet for fun money. My idea of fun does not include going to a sit-down restaurant, having an early cocktail, main course, dessert, to the tune of $30. It involves a quick trip up to Mickey D’s, buying 2 McChicken sandwiches off the near-dollar menu, then a large black coffee, all for a whopping $4.36, then driving out to the ocean’s edge for ambiance. Sin a little or sin a lot, with an emphasis on SOME sin, versus none, the latter for hardcore ascetics and dry wits only. The other day, I had a $200 windfall out of the blue . . . nice. I drove directly to my credit union and plopped the full amount into savings. Normally I pull out a margin to blow recklessly, but I already had $86 left in my wallet, no need in sight. If push comes to shove, I could spend it on clothes I don’t need, at all, or maybe pretty new underpants for the gf–now there’s an ROI I can get behind (lol) . . . all kidding aside, it’s the only way to live, assuming all the other ‘marks’ are set, humming along very nicely. And yes, healthcare is the great unknown. Not nearly enough attention is being paid to that yet, here. I’ll see how the rest of these interviews go, with approximately 104 remaining in the queue.