Millionaire Interview 414

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.

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 am 53 years old and have been unmarried since 2004.

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

I have two children. One is 24 and the other is 21. Both are in college in a different city.

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

I live in an extended suburb of a large Midwestern city.

What is your current net worth?

My net worth as of early April 2024 was approximately $ 1.8 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?

• Retirement Account: $704,000
• Brokerage Account: $670,000
• Cash: $100,000
• Home: $287,000
• Crypto: $45,000

Total: $1,806,000

EARN

What is your job?

I am a software engineer for a large company in wellness. I was formerly an independent consultant.

What is your annual income?

My annual base salary is $180,000. There can be an additional bonus up to 15% depending on how well the company and my business unit performs.

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?

I came to America for grad school, and my initial foray into the workforce was humble—a campus job paying a modest $5.50 per hour.

I secured my first role as a software engineer, earning $42,000 annually. This offered the opportunity of building computer applications of coding, debugging, and collaborating with other talented men and women.

However, thereafter, I relocated to India, where salaries were markedly lower. Until 2011 it was $25,000 per year (which is a very comfortable salary there).

In 2012, I returned to America and found work as an independent contractor/consultant averaging $120,000 per year.

The consultant (contractor) model is good when one gets a stable long-term project. However, it can get bumpy if projects are short-term and if it takes time finding a new project after the existing project ends.

This creates a sense of constant learning, which can make it easier to find the next assignment. This gave me a hobby – which I continue till today.

I spend 30 minutes each day studying. This was one intentional thing that led to reduced downtimes finding the next set of work.

After several years of working as a freelance software developer, I have found my current job.

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

My tips are consistent with the “Earn” section of this website. If someone were to follow the foundational articles in this portal, they would come out on top.

Put in the time, and do the work. Everything else will fall in place over the course of several years.

Max out tax-advantaged accounts (keeping debt to a minimum) and this itself over a decade will put one in a string position.

I have found that it is much better to do the actual work first thing in the morning. Work on your number 1 priority for the day, distraction-free, for 60 minutes.

What’s your work-life balance look like?

It is very good. I work approximately 9 hours each weekday. There is no work on weekends.

There is always a possibility that our computer systems may encounter issues and then extra work would be required – whatever it takes to bring them online.

However, thus far, there have only been only few occurrences of such failures.

Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?

I do have 401k and brokerage accounts – but they have been funded directly by my primary job (or contract work). I tried side hustles but was unable to get them off the ground or make them financially viable.

SAVE

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

My approximate annual living costs for the past 2 years are below. Presently, both my children are in medical school, and I am supporting them as much as I can.

• $30,000 home expense daily living
• $5,000 travel
• $120,000 college education for children
• $50,000 taxes

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

My large expenses are known and hence planned for a few months in advance. However, I do not have a formal budget.

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

I used to save as much as 30% of my income when I was working as a contractor. The savings were automated – e.g., in retirement accounts and in non-retirement brokerage accounts.

Currently, my savings are low due to college expenses, but the savings rates will improve in a few years.

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

Saving money is crucial for financial stability. This must be automated though. Otherwise, money will get spent and saving will be difficult. Here are a few tips:

• Set up 401(k) Contributions (or equivalent e.g., 403 B, SEP IRA, etc: Arrange automatic
  deductions from your paycheck to retirement accounts. Start small and gradually increase.
• Emergency Fund Automation: Regularly transfer funds to an emergency fund. Calculate 3-12
  months’ worth of necessary expenses.
• Avoid Over-Automation: While automation helps, periodically review and adjust your savings
  plan to ensure it aligns with your goals.

What’s your best tip for spending less money?

Below are a few items which have helped me:

• Prioritize Paying Off Debt. Debt eats into your income, preventing you from saving.
• Automate Your Savings: Set up automatic transfers to your work retirement account. This is the single most powerful wealth building tool available to vast sections of the workforce. If this is not available through work, then self-IRA plans are the next best option. In many cases, people can avail both.
• Buy Generic: When shopping, opt for generic brands. They often provide similar quality at a lower cost.
• Meal Plan and Pack Your Lunch: Planning meals in advance helps you avoid impulsive dining out and grocery shopping. It saves both money and time. Also, it can be quite healthy, especially if you cook your own meals as you can control the ingredients. In many cities, lunch outside costs over $15, and dinner can be as much as $40 per person.
• Cancel Subscriptions and Memberships: Review your subscriptions—streaming services, magazines, gym memberships—and cut back on what you don’t truly need.

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

It is travel. This has created many positive experiences including:

• Personal Growth: It pushes me out of my comfort zone.
• Break from Monotony: Daily routines can be monotonous; travel adds excitement.
• Long-Lasting Impact: Money spent on travel has created lasting impressions and stories.
• New Opportunities: Travel experiences have opened doors back home, personally or
  professionally.
• Familiarity Abroad: Certain things seem less foreign anymore. People are more similar (than
  different)
• Fresh Perspectives: Travel reshapes how I see the world.
• Life Enrichment: Ultimately, travel enriches your life in countless ways.

INVEST

What is your investment philosophy/plan?

My investment philosophy is basic and can be explained in these 4 steps:

• Pay off debt.
• Have an emergency fund.
• Have a good health insurance plan.
• After living expenses, invest the rest in tax-advantaged accounts in low-cost Target Date funds

What has been your best investment?

My education and career. On this site, it is mentioned that a person’s career is their most important financial asset. I could not agree more.

What has been your worst investment?

Here are 2 that come to mind:

• In 1999, I bought dotcom-based stocks and aggressive mutual funds which lost more than 90%
  of their value and did not recover.
• In 2020, I bought cryptocurrencies, which were down as much as 85% in 2023, but since then have recovered (although not yet near the price paid).

What’s been your overall return?

Here is the breakdown by asset class of my annual return(s):

• Brokerage portfolio return is about 8%. Retirement portfolio is about 8.5%
• Crypto was down as much as 80% but has recovered and is up 8% (but volatile)
• Home has appreciated about 8% per year since 2021 Until 2020 this was appreciating at 3%.

How often do you monitor/review your portfolio?

I review once each month. Frequent trading actually leads to worse performance; hence it is recommended that the less you review, the better.

How did you accumulate your net worth?

I accumulated my net worth in a boring manner. I had contracts and later a full-time job paying approximately $10,000 each month.

The stock market has done well over the past several years and this helped.

Additionally, I purchased my home outright, avoiding the burden of a mortgage, it is entry entry-level starter home, and have stayed there for over 9 years not upgrading.

To put it differently, I have not taken any major risks, have just had regular jobs, and invested in Target date funds via tax-advantaged accounts such as 401K and IRAs.

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 have had somewhat above average earnings which have resulted in somewhat greater savings and there has been the luck of a good stock market run. My investments are very basic.

The important thing to note is that all 3 of the ESI model are crucial – earning a decent wage, saving a portion of this, and parking this to generate good compounding. Each is foundational.

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

I was a contractor and have been deceived and lied to on a few times. Assignments were terminated without notice. Legal options are expensive, so I just moved on.

Most contract assignments were with good people and companies, honoring signed contracts, but there were a few times when this was not the case.

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

The 2 main things I do are:

• Invest 30 minutes daily in (work related) study.
• Do work related things before other pursuits.

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

I do not have a fixed number. Historical annual returns have been around 7% for target funds and up to 8% for broad based Index funds such as S&P 500 Index funds.

Based on this, it is possible to estimate the amount necessary to invest and time frame needed.

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

I was 49.

It has been said that achieving the first million isn’t just a financial milestone; it’s a significant psychological one. It instills confidence and a belief that you can achieve even more.

This mindset shift becomes the catalyst for more significant risk-taking and pursuing larger opportunities. This allowed me to fund the college education of my children.

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

The following habits have served me. While the habits below are for software engineers, these will serve
others.

In my industry, these are expected. I have not acquired all of these and am working towards
these:

• Curiosity: Curiosity is vital for a software engineer. Not only about technical topics but also about the context in which your code runs, its impact on people, and how it changes their world. Embrace curiosity—it will drive continuous learning, problem-solving, and innovative thinking.
• Persistence: Learning to code and debugging can be challenging. Persistence is your ally during those tough moments. When faced with seemingly insurmountable problems, persistence keeps you going. Coupled with curiosity, it transforms obstacles into opportunities for growth.
• Ability to Learn: The tech landscape evolves rapidly. Successful engineers adapt by continuously learning tools. Be open to learning, whether through formal courses, self-study, or hands-on projects.
• Focus: Software development demands concentration. Cultivate the ability to focus deeply on tasks. Minimize distractions, set clear goals, and allocate time effectively. Focused work leads to efficient problem-solving and better code quality.
• Pragmatism: Balance idealism with practicality. Understand trade-offs.

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

I have made the following 8 mistakes in some way shape or form:

• Neglecting Emergency Funds: The initial focus was on investments and overlooked building an emergency fund. Having 3-6 months’ worth of living expenses in a liquid account is essential. Unexpected events like job loss or medical emergencies can disrupt finances.
• Ignoring Retirement Contributions: Delaying contributions to retirement accounts (such as 401(k) or IRA) is a mistake. Start early—even small amounts compound significantly over time. Take advantage of employer matching if available.
• Lifestyle Inflation: As income grows, avoid immediately upgrading your lifestyle. Instead, allocate the extra income toward savings, investments, or debt reduction.
• Not Negotiating Salary: Failing to negotiate starting salary or annual raises can cost significantly over time. Research market rates, practice negotiation, and advocate for fair compensation.
• FOMO Investments: Fear of missing out (FOMO) can drive impulsive investments such as Crypto investments which were made due to exuberance. Avoid chasing hot trends or speculative assets. Stick to a diversified, long-term strategy.
• Not Learning About Taxes: Understand tax implications of investments, stock options, and side hustles. Tax-efficient strategies can save you money.
• Underestimating Health Costs: Health expenses can derail finances. Invest in health insurance and consider a Health Savings Account (HSA) for tax advantages.
• Skipping Professional Development: Stagnation harms earning potential. Invest in continuous learning—courses, certifications, and conferences wherever possible.

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

Study and try to integrate into your professional life the links on this page. These contain powerful tactics and strategies to achieve wealth. Follow these as closely as possible.

FUTURE

What are your plans for the future regarding lifestyle?

Continue doing what I am doing, working at the same organization. After a few years, I would like to take 3-month sabbatical each year.

Right now, we get about 1 month paid time off each year which is also very good.

What are your retirement plans?

I am working on such plans, formulating the. With the help of articles from this site and elsewhere, I am evaluating Life Fulfillment Metrics: which include purpose, relationships, and personal growth.

I am planning for partial retirement, e.g., taking longer vacations or sabbaticals and asking for pet projects etc. at work (taking slightly more risks).

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

Yes, here are the two that are important:

• Being healthy. While this is not related to retirement, in retirement this will be a greater priority due to increased age and potentially reduced income.
• Purpose – my job provides good structure, good purpose. I know people who were focused and busy in work lives but in retirement did not have such structure, growth challenges and opportunities. So how to find good structure and purpose in absence of work could be a concern. Many hobbies are good for leisure but may not allow an individual to spend entire retirement.

MISCELLANEOUS

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

I got the context of this in my early 30s reading books by David Bach. These are extremely simple and can be finished in less than a weekend. Later reading books by Jean Chatzky also re-enforced these ideas.

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

My upbringing was shaped by invaluable lessons from both my parents. I won the parental lottery. Their wisdom and guidance continue to resonate in my life.

My mother embodied the essence of hard work. She tirelessly labored to ensure my success as a student.

Her mantra, simple yet profound, emphasized avoiding wastefulness and nurturing a strong work ethic. Through her example, I internalized the significance of discipline and perseverance.

My father introduced me to the realm of calculated risks. With a discerning eye, he navigated equities and real estate.

His advice extended beyond financial gains, touching matters of the heart. He instilled in me generosity and kindness, emphasizing compassion over profit.

His act of forgiving struggling tenants’ rent left an indelible mark on my character.

In this blend of hard work and wisdom, I found valuable lessons for life.

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?

Here are three books that have helped me understand the financial world better:

• Against the Gods by Peter Bernstein. This provides an engaging exploration of risk, its history, and its impact on our society.
• Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay – fascinating early study of crowd psychology.
• Stocks for the Long Run by Jeremy Siegel. The book covers essential topics related to long-term investing, historical market behavior, and strategies for achieving meaningful stock returns over time.

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

Yes, I give some financial contribution to our local meditation center (they teach meditation based on Buddhist teachings, while I am not a Buddhist, their techniques have proved beneficial).

I also volunteer my time there. I also give some to my alma matter. I am also volunteering in library to help people write resumes.

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 children will have a part of college paid off. Beyond that I have not thought currently as to the distribution.