Millionaire Interview 413, Part 2

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 May.

It’s a long one (which I love!) so I’m breaking it into two separate posts. If you missed part one, you can catch up by reading Millionaire Interview 413.

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

Let’s get started…

NET WORTH

How did you accumulate your net worth?

I came from a fairly modest upbringing. My parents divorced when I was young and neither one of them were particularly good about investing money.

My father managed to save enough to retire in his late 60’s, but when he passed his estate was only worth about $300k.

My mother worked hard and earned a good living but struggled to save anything substantial during her working years. She did the best she could and gave everything for her kids, so it’s why I feel an obligation to look after her.

I don’t want her to worry about money and want her to sleep well at night knowing that she’ll never go hungry or end up homeless.

I was never comfortable with having to ask for money or hearing “no”, so I started working as soon as I could. As I’ve mentioned previously, I saved or invested much of what I earned.

I earned degree in the technology field and worked hard to hone my craft. Early on in my career I would always volunteer for the work that no one else seemed to want to do, or I’d identify areas that I thought I could make an impact.

This allowed me to progress fairly rapidly once I graduated from college. Working throughout college in the tech field also helped accelerate my career and allowed me to avoid the post tech bubble burst of the early 2000’s.

I also pride myself on applying logic and reason to all of the major challenges I’ve faced at work. It’s amazing how many people lose control of their emotions and make bad decisions that impact their career.

Most of what my wife and I have earned has come from W2 work and investments in real estate and the stock market. I’ve had a few businesses over the years but comparatively they only provided modest gains in the grand scheme of things.

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 think it really depends on the time period in my life. When I was younger, I was very good at earning money, in particular out earning my friends.

As I got a bit older, I was very good about really saving money and as I got into my mid-30’s until now, I’ve really honed my investing acumen and discipline. I think it’s important that you learn and grow all three of these disciplines as they truly build the three-legged stool of success.

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

I never looked at any of them as “bumps” but instead learning opportunities. In my mid-20’s I invested $25K into an offshore oil and gas service business.

They serviced off shore oil rigs. I took $25K and turned it into $225K.I then promptly road it back down to $25K.

I was lucky to get out at even before it collapsed further. This “bump” taught me so many lessons early on. Know your investments, understand the macros of the markets and do more homework beyond reading the SEC filings.

The red flag I discovered later was that the CEO and CFO were married and the CFO used her maiden name. They used the company as their own personal piggy bank and played games with the financials.

I also suspect they were involved with a group that was pumping the stock on many of the stock boards in the mid-2000s.

This really led to me deeply learning about the stock market, understanding what I own and setting some personal rules about know the company, the market and continuously flipping rocks looking for problems.

It also taught me not to put all my eggs in one basket. This could have gone horribly wrong and left me near broke.

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

My wife and I both continue to work in executive jobs and we do our best to continue to save and invest. We also reinvest all of the dividend income that is being generated.

I’ve mentioned several times already that I intend to leave corporate America at some point in the next few years but I have no intention of retiring. I will get involved in a tech startup as an active investor, or I’ll buy a business.

I intend to stay busy even though the dividend income and stock market returns will fund our ongoing life style until the retirement accounts kick in.

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

It continues to be an evolving target. It was $2M but once we hit that it become $3M, then $4M. Now it’s sort of morphed into an amount that the investments can generate.

I think once we hit $150K to $200K of annual dividend income I’ll feel more comfortable, but honestly, we’re at a point where we could call it now and live comfortably.

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

We saved our millions as follows:

• $1M = Her 32 / Me 37
• $2M = Her 35 / Me 40
• $3M = Her 37 / Me 42
• $4M = Her 38 / Me 43

There haven’t been any significant behavior shifts – other than just trying to worry less about day-to-day spending.

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

I never think in terms of “cost per month”, I tend to always think “what return am I missing out on if I spend this money?”

That’s not to say that we don’t spend money but we both have gotten pretty consistent about buying things that will bring us joy, are excellent quality and will last.

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

Honesty I would have leaned into the stock market even more at a younger age. I really didn’t maximize what I could have been saving in my 20’s.

The other thing I would have done is not panic sold the market at the first signs of stress or issues. I can list many stocks that had I just held onto them they would have gone up 10x or a 100x.

I don’t regret any of it, but honestly “time in market” is the best path to wealth. It took me a long time to learn and accept that.

The sooner you start buying the broad market and leaving it alone the better.

If you do learn deeply about individual stock trading – really taking the time to understand a companies balance sheet and quarterly earnings, along with understanding how and why they make money – and what their moat is – is so extremely important.

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

For me it’s been straight forward. Try to increase your earnings every year and save until it’s uncomfortable. Invest that saved money and continue to invest the returns.

Delay purchases where it makes sense. Always work to be learning something new. Find a niche and make yourself valuable.

If you decide to start a business, make sure that it’s something that can scale.

FUTURE

What are your plans for the future regarding lifestyle?

I’ll definitely downsize my job. I’ll likely go back to work for myself.

I suspect we’ll eventually downsize our house, not because of the expenses to maintain a large home, but more to free up the time maintaining it so I can focus on something else. I’ve been in the “one more year” mode for the last couple of years but honestly believe I will call it at some point sooner than later.

What are your retirement plans?

I don’t want to do a conventional retirement. I want to work for myself on various pursuits. A business, managing our portfolio or something I’ve not discovered yet.

I have no desire to sit around and relax or play golf every day.

With that said I would like to travel a bit more and in larger stretches. My wife and I talk about staying several months at a time in the county side in France.

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

I’ve accepted that I don’t really want to retire. My desire is to leave corporate America to pursue my own thing again. Perhaps a business, or maybe it’s just managing our investment portfolio.

It took me a long time to realize this as previously when we would talk about retirement, I would get exceptionally anxious. For me it’s about freedom and working on the things I want to work on.

I also, and this probably sounds odd, enjoy making money more than I enjoy spending it. I like the challenge; I like the reward and I like to move onto the next thing.

MISCELLANEOUS

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

I learned how to make money at a very early age and I learned how to save it. I think things really clicked for me when I started working at Best Buy at 16.

My willingness to work hard and to take initiative led me to be able to influence the work I was doing. The money I saved was invested in the market or into hustles that also produced income.

These few moments have led to me never struggling financially and as I’ve gotten into my 40’s it’s allowed me to say no and put me at a point where I can walk away from Corporate America and not really need to work anymore if I don’t want to.

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

Growing up I looked up to my next-door neighbor. He was a physician and made a really good living. It wasn’t the nice cars he had or trips they went on; it was his ability to be able to do what he wanted to do.

As I would get older and develop a better understanding of what I was inspired by it was that money simply is a tool to buy freedom. Freedom of choice, of your time, of your ability to say yes or no to things.

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?

A few books that have helped me think about the stock market differently are “Manias, Panics, and Crashes: A History of Financial Crises”, “The Intelligent Investor”, and if you really want to go technical “Options as a Strategic Investment” and “McMillan on Options”.

While I don’t really do a significant amount of options trading – McMillan helped me forge an understanding in the space.

One book indirectly money related that influenced me greatly early on in my career is called Raving Fans. It’s dated at this point but the principles still apply. It’s about delivering strong and memorable customer service.

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

We make minor donations of household goods and clothing to a local charity. We also participate in various charity events via ticket purchases, raffles and so forth but the bulk of our charity goes to supporting family.

My mom worked hard but never earned a ton of money so without our help she wouldn’t be able to be retired. We provide her with a place to live and most of the expenses, along with some supplemental spending money as/when it makes sense.

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?

My wife and I plan to leave our money to her nieces as the rest of our family (parents, siblings, etc. are our age or older). With that said we do have some concerns that it could be a sizable amount of money. We have talked about how to mitigate the chances of ruining someone’s life with a large inheritance.

Our rough plan is to assess where our nieces are at in a few years and then setup a detailed plan that will have several stipulations to ensure they are capable of taking over the estate.

If they aren’t ready the money will remain in trust and doll out payments for school loans, maybe a car allowance, and so on until some criteria is met where the entire estate can be released.

We don’t want our hard work to be squandered and we want to ensure that they work to become sustainable human beings on their own prior to being given what is potentially millions or tens of millions of dollars.

Do you have any other miscellaneous financial adventures that you can share?

I had my wife proofread my interview and she reminded me that I’ve had a few other business adventures that I forgot to mention so I thought I would list them out in this additional section.

When I was in my early 20’s I was talking with a friend at work who mentioned he owned a small moving business and did out of state moves on the weekends for extra money. When I asked him what he meant he shared that he was doing household moves for people relocating.

He said the money was good and I should give it a go on my own. I had a pickup truck so I figured why not?

I posted ads on Craigslist offering to move large items for people. I found IKEA pickups and deliveries worked well and typically paid pretty good for a short amount of work.

I quickly begin offering whole apartment and home moves. I had the customer rent the truck and I would load it up and drive it. I promptly put a couple of my friends and roommates to work for me.

This grew fairly quickly and I took the first $5K that I earned and bought a truck from the friend who originally suggested I try it out. The funny part was I had to drive to Indiana to pick it up.

I phoned a friend and asked him if he would go with me to drive my vehicle back. On the way there he asked if the box truck I was buying was manual or automatic.

I told him it was a manual. When he asked if I knew how to drive a manual I said no but I’d figure it out on the way home.

He laughed and said he would drive it but wanted to be my partner and he handed me half of the amount I was going to pay for the box truck. I figured why not so off we went.

We were able to expand fairly quickly after that and in our final month we grossed nearly $40K.

I was young and ambitious but I failed to investigate the rules for in state moves. In PA, it’s governed by the utility commission and territories are “protected”.

When I filed for an official license, we were served with a 1-inch legal filing protesting our application. I didn’t have the money to fight this out in court so I withdrew our application and we shutdown. We sold off assets and came out okay.

While I didn’t make a “ton” of money I did learn an important lesson which is to make sure you understand the laws surrounding any industry you get into. This proved useful later on. More about this shortly…

Not long after I closed up the moving business, I begin attending a weekly Friday night happy hour with some long-time friends. We would routinely brainstorm business ideas over the first couple of beers, but rarely came up with good ideas.

One fateful Friday night I started our discussion by saying “what is the worst idea we can come up with?” and as we batted ideas around, I followed it on with “what are we good at?” which led to the mid-20’s realization that we were pretty darn good at drinking beer.

After the laughs died down, I said – what if we could get paid to go out and drink beer? This led to a novel idea of doing guerrilla marketing for beer companies.

You see a bar or a beer company can’t typically give away beer in Pennsylvania, but a 3rd party who is paid to market can.

With a little help from a family member, we were able to procure our first beer brewing partner. We would show up at locations throughout the city in a limo with models and a photographer.

We would then go into the venue and buy everyone a round of the sponsored beer. This went on for about six months until it became clear that we were drinking too much and after all expenses I was only breaking even.

The final straw was when my adventures came up at my day job. The owners of the company I worked for loved it and proceed to share the website on the projector in the main conference room.

I was honestly a little bit embarrassed because I wanted to be taken seriously in my career. As I drove home from work, I realized that this venture was not sustainable and so I shut it down.

After that I ended up starting a side venture doing web hosting and server management with a close friend. Eventually we worked with an offshore development team to build a backup application.

We had a great file sharing / backup tool but I had no idea how to market it and I didn’t have the time to spend on it because I was working at my day job full time. After some slow growth I eventually sold my half of the business to my partner.

He ran the business another handful of years and then eventually shutdown and got a W2 job as well. This was a very important lesson for me. No matter what you need to learn how to market and sell, or be able to hire someone who can.

The last side business I started was a PA Winery. Drawing on what I learned from the moving company experience I knew I needed to learn more about the legal aspects of the business. My wife and I took a yearlong program through Penn State University’s Extension.

We learned how to do commercial wine production and I learned enough about the legal requirements that I was able to successfully file all of the paperwork with the Federal Government, the State of Pennsylvania, the Department of Agriculture and the FDA.

We had intended to produce wine on draft but then COVID hit… We quickly pivoted, procured bottling equipment and bottled several thousand bottles of wine.

I begin marketing it on Facebook and via our website. We managed to sell through what we produced but realized that the only way we could scale would be to open a tasting room.

Neither my wife nor I wanted to leave our jobs so we decided to sell off the equipment and put the license into safe keeping. With the tax benefits we broke about even but did learn a lot and had some fun along the way.

Plus, my wife got her first taste of being an entrepreneur. She learned that she’s happy to support me, but didn’t love the chaos and risk involved.

I learned that if and when I get into another business, I have a much better understanding of what to look for from a scalability perspective. I’ve been lucky in all of my side hustles and business adventures as I’ve always made money or at least broken even.

As I’ve gotten older, I am being more cautious about what I get into. I really would like to avoid building another business from the ground up.

I also suspect I’ve quit too early on a few of these ventures because of my W2 job. I’m not sure I would change anything as sticking with the W2 has really enabled me to be financially free – and if and when I find something that I want to go do – I’ve built plenty of useful skills that I can draw upon.

My general advice is if you want to do something, research it and then give it a go. Take a calculated risk, have a safety net and see what happens.

The other useful thing is – if you aren’t sure how something works go find out and that includes asking someone who does know. I’ve gotten a lot of advice over the years simply by seeking out experts and asking.