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)?
Female, 49, never married
Do you have kids/family (if so, how old are they)?
What area of the country do you live in (and urban or rural)?
Just across from Washington DC in Virginia
What is your current net worth?
About $2.1 million, or $2.5 million if you include the value of my residence
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?
- Trust Account (ETFs mostly): $1,625,000 (Equity $917,000, Bonds $682,000, Cash $26,000)
- Roth IRA: $149,000 (Equity $147,000, Cash $2,000)
- TIAA-Cref (non-profit work savings plan): $36,000
- Brokerage Acct (individual stocks): $192,000
- HSA: $5,100
- Savings Accts: $135,000
- Checking Acct: $8,000
- Primary Residence: $400,000
- Mortgage: ($199,000)
What is your job?
Work in organization/visitor research for a non-profit
What is your annual income?
Tell us about your income performance over time. What was the starting salary of your first job and how did it grow from there?
My first full-time job was in 1992. I had graduated from college in 1990, worked in Colorado at a front desk of a rental condo complex for a ski season, then moved back to my home area, was temping for a while and was eventually hired.
That first job was at America Online in marketing and my salary was $28,000, but I did get stock options.
My max salary when I left six years later was $54,000, so what I earn now, but that was in 1998. However, all my wealth came from the stock options and low spending.
What’s your work-life balance look like?
I am not really great at this, I probably spend more time at work than I should because I tend to get off topic and spend longer doing things than I should.
Hopefully I can work on this more and prioritize myself more.
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?
CRUT $273,000 (Equity $218,000, Bonds $51,000, Cash $4,000) – 6% paid 2x annually, approx. $16,000; principal will be given to charity when I pass
What is your annual spending?
Not sure. My rent had been $1000/mo but just bought a place, so is going up to about $1500/mo (mortgage + condo fee), but hope to get a roommate for the 2nd room who will cover the mortgage, so housing cost will hopefully be reduced to closer to $600/mo including utilities.
Then, it is just cell phone, gym, food, general life expenses. I don’t have any car payment, student loans, or on-going things like that. I can live well on about $28,000-30,000, I think.
What are the main categories (expenses) this spending breaks into?
Like I said above, housing is probably the largest cost, then, just food, gym, cell phone, going out to dinner, clothes, drug store stuff, travel, but I think I probably don’t spend more than $2500 per month and it will be less once I get the roommate.
Do you have a budget? If so, how do you implement it?
No. I just try to keep expenses down as much as possible.
What percentage of your gross income do you save and how has that changed over time?
I had been saving 18% of my salary and my employer matches 12%, but am upping this in 2018, since I turn 50 and want to try to max out the savings plan as much as I can.
What is your favorite thing to spend money on/your secret splurge?
Not sure if I have one. I do like to travel, but I usually figure out how to do this as cheaply as possible.
What is your investment philosophy/plan?
Probably buy low, sell high, or really just diversify appropriately, and then buy and hold.
I don’t really follow any sort of true plan, but I do use external financial advisers who probably think about this more than I do.
What has been your best investment?
Taking a job in 1992 at a 150 person company making online communities.
It wasn’t anything I would have planned for myself, but it worked out great.
And I really took the job because the people were nice and fun and the work was different and interesting, no more premeditated than that.
What has been your worst investment?
I had a windfall situation which doesn’t happen to too many people. The stats are pretty dire about lottery winners losing everything in rapid fashion.
My situation was a little different because in a lot of ways it was fake money, just numbers going up and down and not really something that I could see or touch.
I think when you are young and don’t know much about money, this can be a challenge. I tried to get expert advice, but I wish I had the money I spent on overpriced advisers back again, because they bought Enron, and didn’t really seem to know tons more than I did, but they had the patina of wealth and that is attractive.
I made a loan to a boyfriend and lent money to family without getting enough information, but after slightly damaged relationships, those things did get remedied. And I haven’t engaged in that again.
What’s been your overall return?
That’s a hard one, because again with a windfall, I always remember what my stock was worth at the peak and how I didn’t have an adviser pushing me to diversify at the idea time, so that number went down and now while I am well-diversified, I still haven’t returned to that 2000 peak of about $3.2 million in net worth (and at that time I had left the company and so my shares were owned outright and no longer options, but I was in a fairly consolidated position.)
How often do you monitor/review your portfolio?
It really depends on what else is going on. I will probably check things every few days, if not daily, but I don’t check on my phone. I don’t usually need to see things that urgently.
How did you accumulate your net worth?
As I mentioned I was given stock options at my job at AOL.
I worked there six years. The options vested over four years and I was given subsequent tranches over the years working there, so I while I was fully vested for most of the options, I did leave with money on the table.
It had become a bit of a golden handcuffs situation, and I decided I wanted to go to graduate school, do other things.
Making a lot of money, while a wonderful byproduct of my time working there, had never been a driving interest in my life, so I was fine to leave and explore other things.
Given that my situation was rather unique, I’m not sure what principles readers might be able to apply. However, I did try to not spend as if I had a large net worth (and still don’t), so while I had a leased car for a few years while working there (on advice of my stepfather, totally think leases are dumb), I then paid cash for a used, low mileage, Volkswagen Golf which was a 1996 and I finally got rid of that in 2011, to buy a used 2006 Prius, which I currently drive, so the things readers can do is keep your life as small as you can without feeling like you are depriving yourself.
Also, it important to understand the tax implications for the exercising of options and buying out of shares. I think understanding that is very important. I had coworkers who were above me going to no income tax states to set up residence and elaborate things like that. I didn’t get advice like that, so wasn’t that informed.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
So, I have been a millionaire since 29, so 1997, and I think I’ve stayed that way all this time; maybe during the great recession, I might have dipped to high $800,000s, don’t remember.
I think that is telling, I know I was lower in the past, but that number is harder to remember than my peak number, so maybe that’s informative.
I did get pessimistic around the 2007/8 time again with financial advisers not knowing anything and having me in all these banking stocks, so as I transitioned out of some investments I told them to keep things in cash. Also, when I left that adviser (which had me in individual stock positions), I kept the ones that were understandable businesses (McDonald’s, Coca-Cola, Proctor and Gamble, etc. – in the Warren Buffett mold) and these stocks are what are in my brokerage account, which I control and make trades in very infrequently-maybe 2-3x a year, but usually just let hang out and grow.
And the cash I had I used to buy a condo outright to live in. This way my living expenses were low as I figured out my work situation.
What are you currently doing to maintain/grow your net worth?
I have a small firm that manages the Roth, the CRUT, and my investment portfolio. I was keen to move away from the 1% of assets management fee structure and was able to get a retainer agreement in place with a new firm. That is saving me about $6k a year.
Then, I have the brokerage acct which I generally ignore, but has grown well since the 2007/8 trough.
This year I am putting close to the max into my work savings plan (403b-type thing) and do the max for the Roth.
I am nervous that the markets may stop growing so rapidly, so keeping some cash on hand to soften any potential shocks. And I plan to get a roommate for the second bedroom of my condo, so I can keep costs down in my living situation.
Do you have a target net worth you are trying to attain?
No, not really. Once I pass my 2000 peak number, I know I will have really “arrived”.
How old were you when you made your first million and have you had any significant behavior shifts since then?
As I said I think I was 29, but it was just on paper as stock options and their projected value.
I still feel like I am the same person.
Currently I am hemming and hawing about buying a new sofa because I don’t want my credit card bill to be too high next month.
If you could rewind to when you first started out, what would you do differently?
Ask more questions.
Don’t assume that family members have your best interests at heart, so ask them what they are doing or better yet, don’t get mixed up in financial dealings with family.
Skip the snooty “wealth management” people and go with low-key people you can trust, who want to explain things, are a fiduciary, and charge a flat fee not a percentage of assets.
If you had to give advice to ESI Money readers about how to become wealthy, what would it be?
Don’t assume that family members will be happy for you or supportive when you have the stress of a windfall.
Try to not feel guilty that you have more than people get over a lifetime of working from six years of work. Remember you have been incredibly lucky, but you didn’t mastermind this situation in order to make others feel somehow lesser. It just happened.
Also, remember to enjoy yourself some, and also know that everything could be gone tomorrow too. I have two AOL friends who are both putting houses on the market at the start of 2018 in order to avoid foreclosures. So, everything is a crap shoot at the end of the day.
What are your plans for the future regarding lifestyle?
I do plan to retire early. In the next two years would be ideal.
I didn’t work as a FTE for many years over the life of my career, so the Roth amount came from rolling over my AOL 401k and a savings plan when I was teacher for one year.
My financial adviser counseled me to max the savings plan at my current job, so I have retirement account that is pre-tax too, since unlike most people who building their wealth through working, I don’t have that much money is specifically designated retirement accounts. Therefore, the plan is to max those savings in these last two years of work.
Even after no longer having a 9-5 job, I think it could be fun to teach classes at a gym or be a cashier at Trader Joe’s. I would probably do those jobs now, if I could, but must think about the savings perks of current position and enjoy those for a bit longer.
I don’t see my lifestyle changing that much, although I do sometimes think about doing the Peace Corps or possibly fostering or adopting an older child. I feel like giving back is important, so I will think about how to do that in the future.
I might fly business class once just to experience it, although the idea of paying for that seemed to make no sense. Better if someone with miles could upgrade me.
What are your retirement plans?
I would like to stop working in 2020.
I have an idea of spending 6 mos a year in Europe (most likely France, because I could get on their healthcare plan from what I’ve read and it would be fairly economical). I speak French and Italian, so living in Europe isn’t that daunting.
I am fortunate to have family with places in Colorado, Hilton Head, Delaware beaches, on a lake in Virginia, on a lake in NY state, so I could pop around seeing family when in the states.
I could probably rent out my condo completely, or still keep the one room as a crash pad, and let the roommate be on their own most of the time.
I also have friends who live in nice places, like Napa, SF, Palm Beach, Lake Tahoe, Hawaii.
I may buy a place in the south of France somewhere, but want to live there for at least six months before I do that, to find a place that I can see myself living in long-term.
I really think it is important to take a holistic approach to retirement. I have lots of things that I want to do when not working full-time, but I can see people who only focus on work and family and don’t have much else going on. Read some novels, work out!!
I think that if people took better care of themselves, then retirement could be a heck of lot more rewarding. Having lavish, expensive hobbies aren’t the key, but having close relationships and your health will make those golden (or even early silver) years much more pleasant whether you are sitting on a pile of cash or not.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
I think staying in the U.S. the big unknown is healthcare. As I said, if I can live in France, that major issue could be alleviated.
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 feel like it was mostly from reading on my own, some spotty bits from family members (my dad pointed out the estimated taxes issue on the options conversion), and just building awareness as I went along.
I have always been very DIY, so like to do my own taxes using TurboTax.
I think that having the situation I had was strange because I had a much larger amount to deal with right from the start and most people have things grow over time. Also, I didn’t really understand that my situation was not the norm because I was surrounded by people at work who also had the paper wealth thing happening, so it seemed normal.
I really didn’t understand anything about property, so getting my hands on $50k for a down payment on a home would have been very easy, but didn’t realize that was all it took to own something. I guess I missed the boat there, but I feel like the whole mortgage process is very antiquated and ripe for some overhaul. It certainly doesn’t seem up to date for people with lots of resources, at least that was impression when being raked over the coals recently with the place I just bought.
Who inspired you to excel in life? Who are your heroes?
I can’t really say that I’ve excelled that much in life. I was just lucky and knew enough to ride something out.
I think anyone who cares about the planet, lives in harmony with it, tries to follow the golden rule, those people are all heroes.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
I do. I have more money tied up in the CRUT which will go to things at my passing, but I do some annual giving as well. I like to volunteer when I can too. And I work for a non-profit, so that’s charitable too.
Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?
I did do the estate plan thing because the advisers want you to, and while it has turned out that I don’t really have any heirs, I do have some nieces now that I will give some money to, but probably most of it will also go to charity.