Millionaire Interview 419

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 51 and my spouse is 50 and we’ve been married for 24 years.

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

Yes, we have 3 kids.

We have a son who’s 22 and has recently moved out, and 2 daughters, one is 18 and just graduated high school and my youngest is 16.

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

We live in the mid-Atlantic region of the US in a suburban area.

It happens to be a very high cost of living area.

What is your current net worth?

Our current net worth is $1.09 million.

We just recently hit the million dollar mark.

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?

About 80% of our net worth is in various IRAs/401ks with the remainder mostly in home equity. So it breaks down as:

• IRAs: $620k
• 401ks: $200k
• Cash: $19k
• House: $425k (this is what I believe I’d net if I sold it, Zillow says it’s worth about $500k)
• Cars: ~$25k

Liabilities:

• House: $180k @ 2.75%
• Car: $11k @ 0%

My daughters each have a few grand in their Coverdell ESAs but I don’t count them towards our net worth.

EARN

What is your job?

I’ve been working as a Cybersecurity Test Engineer for just over a decade.

What is your annual income?

I just recently got a raise to $188k.

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?

So I grew up in a fairly poor family, we rented an apartment and we were on the free breakfast/lunch program at school and occasionally we were on food stamps and such. So I did some odd jobs when I was a kid once in a while like collecting cans for recycling and stuff, for some play money.

It wasn’t until high school that I started working regularly. I started out helping out some elementary kids with their homework a few times a week. And that gave me some regular spending money.

But my first W2 job was at an ice cream/fast food restaurant when I was 16 which paid about $3.35 an hour which I think was pretty much minimum wage back then. My senior year of high school I quit that and got a job as a security guard which paid about $6 an hour.

From there I landed my first computer job as a Computer Operator at a Fortune 500 IT company when I was 18. My starting salary was $16,500 and they would reimburse all college expenses and had medical benefits which meant I no longer had to go to school full time to stay on my dad’s insurance and work full time.

Since my company was reimbursing me for college this eventually allowed me to graduate debt free. I worked my way up to about $87k at various IT companies and was about maxed out as a System Integrator/System Admin.

I could make more going into management but didn’t want to do that. Then my company decided to push towards people going into cybersecurity. This sounded like a lot of fun, so I jumped on the bandwagon.

I researched the most highly paid certifications in the cyber field and went out and got them. My first job in the field as a Security Engineer I got $110k in 2011, so a nice jump but I did have to change companies which was hard after over a decade at the same one.

But it all worked out and it felt awesome to make a six figure income for the first time. Even when my wife and I worked full time before my son was born we never hit anywhere near six figures.

A couple of years later I landed a position as a security test engineer and had the most fun at work in my life!

I was basically getting paid to try out new software and systems and try and break them and then write a report about it. Who knew people would pay you for trying to break stuff?!

So over the past decade I’ve worked for a few different large IT companies doing the same type of work and I decided that I would just do that the rest of my career. 

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

I think I’d say find your niche and work hard at it. I can really only speak to the computer industry, but it has been great for me.

I didn’t like programming classes which was what it seemed like most of the computer industry was when I started out in high school.

But I stuck with it because of an article I read in Forbes magazine when I was 18 about how the computer industry was going to explode in the future and there were not enough people interested which translated to big bucks.

But now there are just a ton of things you can do in the computer realm. I’d say I was never the smartest person, but I did my work and tried to be a good team player and communicate with management.

I think doing those things helped me out a lot.

What’s your work-life balance look like?

It’s actually really good and pretty much has been my whole career. When I was in my early 20s I’d occasionally work overtime.

But for the most part of my career I’ve stuck to only working 40 hours a week. I’ve been able to attend just about all of my kid’s school activities, sports, concerts, etc.

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?

Nope, just my job for now. My wife hasn’t worked outside the home since my third child was born except for a bunch of volunteer work with church and school.

We did do a rental for a few years, about 2 years before covid I bought a half a duplex with $35k from my Heloc. Spent another $9k fixing it up and hired a property management company to manage it for us.

I had read a bunch of books on real estate so I felt really safe about doing this. The monthly payment to our heloc was like $300 or so.

The first year we made about $3000 I believe and it all just went towards the heloc. The 2nd year we sort of broke even due to a capital expenditure we missed during the inspection process a year previous.

The third year is when covid hit. Our renter stopped paying rent.

It took almost 2 years to get him evicted since this was during covid. None of my books warned me about that!

Good thing was the housing market went up considerably, so we sold it as soon as he was out. We paid off the heloc and our car at the time.

The rest of the money was used to open and max out a Roth ira for my wife for 2 years since this was before April and the rest went to my Roth ira for the year.

SAVE

What is your annual spending?

I would say about $120k but last year maybe $130k.

We had some major housing expenditures and much higher than normal medical bills which I’ve recently changed insurance so hopefully things will be back down this year.

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

So going mostly on last year it appears our housing was crazy at like $50k (this included some major renovations). Normally this would be more like $30k.

I think we did about $14k to charity, about $18k to food (we eat out way too much), $8500 to personal and pet stuff, $12k to recreation/vacations, about $10k to transportation, and about $6500 to utilities, and $8600 to medical expenses (this was abnormally high as well).

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

Yes, my wife does it. We used to look at it monthly about 15 years or so ago, then it changed to maybe quarterly, and now maybe once a year.

We sit down and discuss any major issues/purchases. But she does the weekly shopping and really enjoys the budgeting part of things.

I gave her Quicken like 16 years ago and she just took off with it. She still uses it. I do all the investment stuff and update her on where we’re at on that occasionally.

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

We currently save 12% to my 401k which I get a 5% contribution from the company. Then we’re putting another 3% or so into our savings to build up some cash.

We’ve only been saving a total of 15% not counting any matches for a few years now. This has increased over time from about 8% a few years ago (the minimum to get the full company match), and from 6% prior to that.

I started my 401k pretty late, in my early 30s. Back then I’d contribute 6% and get a 3% match. 

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

Hands down, automate it! The 401k has been our main way of accumulating money.

Whenever I leave a job I roll it over to an IRA. We also automated our savings account as well.

What’s your best tip for spending less money?

So my wife will calculate all the best deals when she goes shopping. I’ll try and wait a bit before purchases to make sure it’s something I really want, or maybe even wait for a sale.

We’re also always looking for coupons.

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

Hahaha, well we kind of have two, eating out and vacationing. Although we’re trying to cut down on the eating out part.

We love doing vacations a couple of times a year mainly down south to the beach with the family.

INVEST

What is your investment philosophy/plan?

Automate it by contributing to 401k, I moved all monies in IRAs to mutual funds.

I mainly contribute about 25% to S&P 500 fund, 25% to mid-cap fund, 25% to small cap fund, and 20-25% to international growth fund.

What has been your best investment?

So several years ago I took about 5% of my portfolio and decided to play with it by investing in about 10 individual stocks.

This was during the longest bull run in history. So of course it went really well.

One stock I bought into was Nvidia and it took off like a rocket, I believe it did a 4 for 1 split and all that. That was my best investment.

It grew to dwarf the rest of the funds in the portfolio from like $2000 to $8000 in just a few years so I sold off about $2000 of it to invest in some other stock which leads to the next question.

What has been your worst investment?

So I took the $2000 from Nvidia stock I sold and invested it in Roblox. This was when the metaverse was all the rage and Facebook even changed their name to Meta.

I thought Roblox would go crazy, but it didn’t and I finally sold it for less than half of what I bought it for. Oh well, I don’t play with individual stocks anymore.

It was fun for a while but that was it.

What’s been your overall return?

Over the long term (10 year period) it has ranged from 10-12%. On a year by year basis, it swings wildly.

I think my best year was 2013 at about 33%, and my worst maybe 2022 I was down about 20%. This doesn’t include the great recession, I don’t recall how fast it was exactly but during that time I remember my portfolio was cut in half.

I had only recently started my 401k so it was a whopping $60k when the great recession hit and I remember seeing it down to about $30k.

How often do you monitor/review your portfolio?

Whenever it is up, I watch the market daily and as long as the market is up I like to check my portfolio. I use a tool called Full View that lets me see my net worth in a snapshot.

I enjoy watching the market and seeing why it goes up or down, sometimes for nonsensical reasons. When the market is down I try not to look at all.

I only make note of my net worth once a year on the first, which is when I rebalance my portfolio.

NET WORTH

How did you accumulate your net worth?

No inheritance, at least not so far. So to try and set myself up, I started college right before my graduating high school and I went to college full time and worked full time to pay for it.

I was doing community college of course, majoring in Information Systems. After about a year of doing this I applied for a job at my first IT company and landed the position of a computer operator as mentioned above.

I switched to part time college and after graduating with an Associates degree took a year and a half off of college for good behavior. I hated school, I just wanted the piece of paper so I could make money.

Went back and got my bachelor’s in Computer Science and graduated in 2000.

But mainly through contributing to my 401k and living on less than I made which didn’t really start happening until my mid 30s. Before my mid 30s we were kind of a financial mess.

We took a class which I’ll discuss later which really straightened us out.

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?

Definitely investing, we’re pretty horrible at saving. There seems to be always something with the house or something to spend savings on.

I think I’ve done fairly well on earning. If I had gone into management I know I could have made more.

For a while I was like a contract lead and I got to somewhat see what Project Coordinators and such made. But those jobs seemed so boring and horrible to me.

I didn’t even like being a contract lead and thus don’t do it anymore. I pretty much don’t want to be responsible for other people in that regards.

So investing I guess would be our strong suit and not because I’m some Warren Buffet type but because I just invest fairly boring but consistently which most everything I’ve read points to becoming a millionaire fairly easily, yet only about 10% or less of people do it.

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

No real major road bumps I guess. Yeah, there was the occasional capital expenditure on the house like a new roof or something that would come up.

Like I mentioned we’re usually not flush with cash, so I’d just take out a 0% interest credit card and throw the expense on there and pay it off within a year or whatever the 0% was good for.

We also have a HELOC that we can access for real emergencies.

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

Pretty much the same thing, investing in my 401ks and trying to be more conscious about building up a cash savings account.

I might try doing a rental property again, but it won’t be in this state! More likely maybe I’ll invest in a real estate syndication deal at some point.

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

Yes, and this is something you probably don’t get much but it’s gone down. It originally was $2 million.

I believed that is what I’d need to retire based on the 4% rule and some online retirement calculators. But after reading some articles and a book that I think was read on this site called Die with Zero I started reassessing if I really needed that much.

While I’d still like to hit a target net worth of $2 million, I’ve rerun calculations and believe I could probably retire on about $1.4 million in liquid assets. This is based on me paying off the car by the time I retire and selling my house, so I’d have zero debt.

I’ve run some online calculations and it seems to work well. I’ll talk about this more in the retirement section.

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

I was 51, hehe…we just hit that number in Dec. 2023. If you recall earlier, I mentioned I record my net worth on the first of the year.

Although honestly, I was anticipating it for a couple of months with the run-up in the markets so it was no real surprise. No, not really any changes.

Plan to keep doing what we’ve been doing so I can retire as early as I can.

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

Is being boring a personal habit or trait? I guess being consistent.

So spoiler for the “when did it click question”, taking a financial class in our mid 30s and following 85-90% of the advice given in the class consistently has probably had the biggest impact.

It also helps that personal finance has become somewhat of a hobby and I love reading books/articles/this website on it.

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

Oh man, pretty much everything I did or didn’t do with money in my 20s and early 30s. I remember getting my first real job at 18 and HR threw all these benefits at me.

No one ever explained what I needed. I signed up for the best of everything!

I don’t think I ever went to the doctor/dentist in my 20s but I had the most expensive medical and dental plans.

Also had a 6 figure life insurance plan…for what? I had no wife or kids at the time.

I didn’t really understand personal finance, why were there no courses in high school or college in this stuff? Or did I just miss them all?

I got a bachelor’s degree in Computer Science but don’t remember ever taking a class on how to balance a checkbook and types of retirement funds, etc. Most stuff I learned in school I never used.

I remember learning to sew a book bag in home economics. I’ve never sewn anything since.

Know what I do use almost every day of my life? Money!

That all being said, I used my house as a bank where we’d refinance every few years to get a lower rate and take cash out to support our lifestyle. Not a good idea.

I didn’t contribute to a 401k and missed out on contributions for a while. I paid too much in taxes and got a big rebate at the end of the year, thinking giving the gov’t an interest free loan was a savings plan.

I’m sure there was much more. We ran up the HELOC, credit cards, etc. I mentioned we had $60k in my 401k by the time the great recession hit.

We also had $60k in debt besides the house, mainly on credit cards, a car payment, and a heloc.

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

Educate yourself first and foremost, but make sure you’re doing so from a reputable resource. I asked an older coworker about a retirement savings account once when I was younger (this was before the internet made everything so easy).

He explained it as the company taking some of your money from your paycheck and then giving it back to you when you’re old. He’s like you don’t want to do that, you want your money now.

I was like that’s right! Wrong!

There’s also a lot of “gurus” out there who will teach you to get rich quick, but really just drain you of money and time. With the internet out there and sites like ESI it’s easier than ever to get good advice and information.

Don’t fall for the get rich quick schemes, or the negativity of some people who are like the market’s gonna go to zero and we’ll be in a dystopian society soon. We can’t control the future, all we can do is plan for a better one.

Build wealth slowly, consistently, and don’t be afraid to be boring in your wealth building. If it takes you 30+ years to get there, you’re probably still ahead of 80+% of the population as I think less than 10% of the US population are millionaires.

FUTURE

What are your plans for the future regarding lifestyle?

So I’m hoping to retire early. I was aiming for 59.5 as that is when I can touch my money without the 10% penalty from the government.

But I spoke to a financial advisor who mentioned retiring even earlier so I did some ‘googling’ and learned of the rule of 55. Apparently you can take withdrawals without penalty if you leave your company after the age of 55.

So running some calculations it seems I could possibly live off my 401k for a couple of years and leave my IRAs alone until age 59.5. This would allow me to possibly retire as young as 57.

But it all depends on how the market does over the next 5 years, etc. But who knows exactly what will happen.

My wife has a saying if you ever want to hear God laugh, tell him your plans for your life. Hahaha. His are always better anyways.

What are your retirement plans?

So if all goes according to my plan, I’d sell my house at age 57 and retire assuming I had at least $1.4 million in IRAs/401ks. I have done a mock up budget with no mortgage or debt and think it could work if we move to a lower cost of living area.

Specifically I’d buy a house in all cash down south near the beach where we vacation a couple times of year. The older I get the more I really like the warmer weather.

Plus the cost of living is WAY lower. I think the median household income down there is like $60k or so.

Houses are much cheaper than where we live, taxes are way cheaper, etc. So if we could live on $80k or so then I think we’d be doing well down there with no debt.

Yes, I realize that $80k on a portfolio of $1.4 million is quite a bit more than 4% withdrawal rate, but that would be somewhat temporary. I’d start taking money out of my IRAs at age 59.5 and then that withdrawal amount would go down as I’d collect social security at age 62.

My wife worked enough before our 3rd child was born that she’d get some social security as well, plus when I turn 67 I get a small $400 a month pension. For medical I’ve been looking at one of the Christian healthcare ministries which I first learned about on this site.

I’ve read some books as well as all the articles on this site regarding retirement. One of the books was on retiring successfully and mentioned having 3 main passions or activities.

So besides hobbies, such as my son and I really being into RC trucks and there being a RC track near our vacation spot, I have at least 2 other main things of interest.

I really love biking. I HATE exercising. But several years ago my weight was really getting up there. I knew I had to do something, and then I started biking.

It’s fun and relaxing and hey it’s good for your health! But don’t call it exercise! I really like doing rail trails although I have a XC mountain bike so I can just go anywhere.

So I’d like to do a lot more biking in retirement as I never have enough time now as I can spend hours biking in a day. I’d also like to do some swimming and I’d have to buy a house within a community with a pool and maybe even a hot tub and lazy river!

And I’d really like to do more volunteer work. When I was a teenager I spent my high school summers as a summer missionary teaching kids the gospel via Bible lessons.

It was mainly volunteer work, however my second and third summer I did get some money as I raised enough support to get some pay.

I have already checked down south and the organization I did this with exists down there. So I’d probably go back to work with this organization on a volunteer basis.

I’d also continue and possibly expand on my volunteer work in church ministry. So I think I have plenty to keep me busy!

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

Like everyone else, probably health. I plan to do fun outdoor activities more to stay healthy like biking and swimming and some walking on the beach. But not exercising. 😉

As for the costs, it sounds like a Christian health share ministry will be a good option for us.

MISCELLANEOUS

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

Ah, so this was a question I was waiting for. We were about 35 when our church decided to do Financial Peace University.

I was like what the heck is this, and who in the world is this Dave Ramsey fellow? Another charlatan? So I looked him up on the internet.

I started reading about him before the class started, even though the class was cheap at $99 for like 9 sessions over 9 weeks. When I started reading his financial baby steps and stuff I’m like wait, this all makes sense!

My wife and I attended the classes together. As mentioned above we started the class with $60k of debt excluding our house and had about $60k in 401ks.

The rest of our net worth was whatever equity we had in the house at the time. We bought our house in 2000. Houses in our area were going up like crazy in the 2000s up until 2008 so that was the one good thing we did.

We fully jumped on board of the class, we had our $1000 emergency fund before the class started. We cut up a dozen (no joke!) credit cards leaving only one I believe.

We started the debt snowball, we pulled our credit reports, we called insurance companies (found one insurance I was paying for I didn’t even need), we redid my tax exemptions (no more gov’t loans interest free and giant tax returns at the end of the year) all that money was now in our monthly debt snowball.

My wife and I started doing a zero based budget. The only thing I didn’t do was discontinue my 401k contributions.

At this time the great recession was starting and some friends said stocks were going on sale and my company increased the match from 3% to 6% if I contributed 6%. So a 100% match was too much to pass up when stocks were going on sale.

So this class is what made it all click and over the next 16 years we grew our net worth from whatever equity was in the house to what it is today. Oh and it was not long before this class that I think we started tithing to the church on a regular basis. 

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

Who inspired me to excel in life, probably a bunch of different people. My heroes? Jesus Christ.

On a side note, I used to say that Cathy Truett was my hero. I like stories of people who have done really well but were not born with a silver spoon. If you don’t know he was the founder and CEO of Chick-Fil-A.

He was pretty poor growing up and faced some major setbacks when trying to start Chick-Fil-A but obviously he succeeded. He wrote a few books and I read a couple of them, one was on how he founded Chick-Fil-A and basically how he started it based on the principles of his faith.

Another book was about one of his many philanthropies and titled something like better to build boys than mend men. If I ever became stupid rich I’d want to be a philanthropist and so I enjoyed his books.

To put the icing on the cake, I was watching Barrett Jackson Auto Auction and the camera panned over to a bidder on a car and it was Cathy Truett in like his 80s bidding on a car. I hope to be alive in my 80s and never mind bidding on a classic muscle car in the middle of a desert in Scottsdale AZ.

I thought it was funny to see him enjoy his money in this way and I was like he’s my hero! 

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?

Well I’ve read a TON of them over the past decade and a half. But I’d have to start with Total Money Makeover by Dave Ramsey.

Next I’d say The Automatic Millionaire by David Bach. I remember telling my wife why don’t we just automate our savings like our debt payments. She did that and was like that was great!

And finally would be Thomas Stanley’s The Millionaire Next Door.

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

Yes and yes. My wife and I have been involved in children’s ministry in our respective churches before we even met.

After high school she helped teach middle schoolers at her church. I was working with a program called AWANA in my local church with elementary school age kids.

When she moved out here she joined me in this. Now we’ve been team teaching Sunday school classes in our local church for maybe 15-20 years and also work in the VBS program for the past decade.

Our kids assist us as well, my youngest works in nursery. My wife currently is the church secretary and has been doing that for several years, this is totally voluntary.

We also give a tithe to our church as I mentioned previously.

In addition, several years ago I felt like I should give part of my raise to something and God led us to Compassion. I did a lot of research on this organization and so we sponsor a child in Peru on a monthly basis.

Then a few years ago our church was invited to tour a local crisis pregnancy center. We went and were just blown away by the work they were doing.

They not only helped women with medical exams and provided counseling and such during pregnancy but offered classes on child care and even financial literacy. The women could earn credits with these classes to use to buy stuff in their store which was full of baby stuff that was all donated.

So no actual monetary cost to the women other than time learning to care for their children and finances and such. So we give monthly to that as well.

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?

Yes, but I need to do a detailed will. I expect to give away most of my money while alive, but they will each get a third of whatever is left.

We’ve taught our kids finances for about 15 years now. They’ve been giving, saving, and then spending what was left of money they’ve made pretty much all of their lives. So I’m pretty confident they’ll know how to use any money they get.