Millionaire Interview 425

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 July.

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)?

My wife is 38 and I’m 37.

We have been married for 6 years.

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

We have two kids (5 and 2) that keep us on our toes.

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

We live in a suburb of a Midwest city.

What is your current net worth?

Our net worth as of July 1, 2024 is $1,546,052.

I track this monthly and it has doubled since July 2021 ($793,862).

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?

• Checking = $10,000
• Brokerage Accounts = $137,115
• Tax Deferred Accounts (457, Educator Pension and 401K) = $442,693
• Tax Free (Roth IRA’s, 403b-Roth, HSA, and HCSP) = $641,610
• House Equity = $280,925 ($521,400 value)
• 529 Accounts for our kids = $33,709

The only debt we carry is our 2.75% mortgage payment. We have 16 years left until this is paid off.

We have approximately $240,475 left on the loan. We paid cash for our two cars and plan to drive them for as long as possible.

EARN

What is your job?

My wife and I are both career-focused. She has been with the same company for four years and enjoys what she does as a Communications Manager.

I have been in education my entire career. I started as a teacher/coach and progressed to a dean of students, assistant principal, and now lead principal.

I also serve as an adjunct professor at a few local universities.

What is your annual income?

In 2023, our annual household gross income was $322,792.

This is broken down as follows:

• Communications manager=$116,279
• Principal=$184,000
• Adjunct professor=$22,513

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?

My wife and I have both worked hard to get where we are. We have each averaged 12% increases in salary year-over-year since we started our first jobs out of college.

Some years that was 2-3% increase and others it has been 35% plus. We have found that in order to get the substantial jumps in pay we desire, we have had to move to new companies/ districts.

My first salary as a teacher and coach was approximately $40,000. I taught five different courses, coached multiple sports, and pretty much slept at the school.

It was extremely rewarding, but I knew it wasn’t sustainable as I got older and wanted to have a family. I went back to school to get my administrative license after my first year of teaching and landed a dean of students position a year later.

I moved up to assistant principal after two years as a dean and have been in a lead role for the past four years. With each advancement, I moved districts, which provided me a chance to cash in on some of the benefits in the contracts, such as sick leave and PTO payouts.

Many educators never look at their contracts, but there are substantial differences in benefits even when the districts are a few miles apart. Some contracts even incentivize you to leave if you are in the early part of your career!

I received my doctorate and I’m currently pursuing my superintendent license. These educational attainments have provided great networking opportunities and improved my career outlook.

My wife was not exactly sure what her direction would be coming out of college and bounced around to a few different companies working in a variety of business sectors. She settled into Marketing/Communications about 10 years ago and has seen her income rise steadily after she solidified her path.

She has landed with a company that provides her flexibility and has a great culture. She feels valued and that means more to her than a higher paying salary.

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

Network – Carla Harris did a great TED Talk about how to find the right person to help you get ahead at work. The talk is all about finding sponsors/mentors who will pound the table for you during important times.

I find this to be so important. These relationships will also make you better at your craft!

Hungry – You have to be hungry to improve yourself, your team, and your ability to lead. I listen to podcasts and audiobooks daily.

I also share articles, blogs, etc. with many friends and family members. This shared accountability to enhancing ourselves helps us all improve.

Humble – I have not received every job I have applied for, but I have surrounded myself with good leaders who believe in me. Be ok with asking questions, observing how others have thrived, and replicating those behaviors.

Luck is when preparation meets opportunity.

Smart/Self Awareness – Be reflective. Know when to “hold um’ and when to fold um”.

You should know if you’re well respected and if the company has a plan for you or not. If you don’t know, ask.

Be aware of where you stand and make moves accordingly. When you learn an answer you’re not happy about, don’t be afraid to explore other options.

Be Kind – You can have high expectations for yourself and others while still being kind. A smile goes a long way.

Seeking to understand before you’re understood is key to moving the work forward productively and collaboratively.

By embracing these characteristics, you will open more doors than you ever thought possible for your career.

What’s your work-life balance look like?

In the summer months, my work life slows way down. I still look at emails and reflect on ways we can improve constantly, but as a school principal, the magnitude of emails and phone calls from parents and staff are much less in the summer.

During the school year, I work a lot. I pick my kids up from school every day and we have family time until they go to bed.

There are plenty of nights that I pick the laptop back up after they go to sleep, which I’m fine with because I enjoy the work.

My wife has a lot more flexibility. She still goes into the office 4-5 days a week, but many of her projects are not urgent, so she is able to plan her schedule a few weeks out.

She is also much better than me at shutting the computer for the night, putting her phone away, and being present for our family. This is something I really need to start prioritizing as our kids get older.

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?

Outside of our main jobs and my adjunct professor positions, we do not have any other income.

We have discussed dabbling in rental properties, but we feel with the current uptick in the housing market and the uncertainty of if we will move into a larger home ourselves, it is probably best to just stick to mutual fund investing and keep working our plan.

I am interested in learning more about serving on a Board or getting into Venture Capitalist opportunities, but those are more of a dream than a reality at this point.

SAVE

What is your annual spending?

We currently spend between $140K and $150K per year.

The cost of daycare ($31,000) and increased grocery prices have driven up our spending quite a bit in the last few years.

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

• Mortgage/Utilities/Insurance = $31,940
• Daycare = $30,548 (yes, our daycare bill is almost as high as our mortgage)
• Grocery = $10,875
• Target = $8,600
• CostCo = $7,140
• Health care = $6,871 (We pay healthcare out of pocket and let our HSA grow. This was a high year for us because of my son’s surgery)
• Restaurants = $5,200
• Home Improvement/Repairs = $5,100 (new washer and dryer with a few other things)
• Travel = $5,000
• Gym Membership = $3,240
• Amazon = $3,120
• Gas = $2,280
• Internet and Youtube TV = $2,000
• Car maintenance = $1,000
• Misc. (entertainment, gifts, clothing, furniture, kids sports, kids clothing, cell phones, etc.) = approx. 20-25K

Our spending has increased by about $40K since we had kids.

We attribute this to increased food costs and consumption, being a little easier on ourselves for buying the food that we want instead of what is the cheapest, and all of the kids’ toys, diapers, and activities. Kids are expensive!

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

Yes, I keep track of our budget and savings monthly. My wife does not like talking about finance (it stresses her out), so we plan two sit-down meetings a year to review our expenses and investing plan.

During our two finance meetings, I pour her a big glass of wine and we sit down to review our current net worth. We discuss our short and long-term goals with money to make sure our investing plan is aligned.

We enjoy planning our future together as a family and making adjustments along the way.

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

We currently save 35% of our gross income. This has fluctuated slightly as our jobs have changed, kids, and the cost of everything in today’s world.

Before kids, we saved roughly 40%. I would rather save more now and have options later.

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

Be disciplined – Pay yourself first. Set up a plan and automate it.

We have maxed out both Backdoor Roths, HSA, 457, 403, and 401K for the last four years and our net worth has doubled. We also only have a certain amount of money go into our checking account each pay period.

The rest goes into our Vanguard Brokerage. This requires us to stay disciplined with the money we have and not get enticed by a large checking account to buy junk.

Know what you’re investing in and where – We prefer VTSAX and have most of our resources in that diversified mutual fund. We also appreciate the low-cost management fees and user-friendly platform that Vanguard provides.

Regardless, know where your money is going and what you are buying for all of your investments. Track your account performance and make sure it is optimized based on your risk tolerance regularly.

Always be buying – We, nor can you, predict market fluctuations. We buy every other week through our retirement accounts and set up automated monthly investment pulls for our kids’ 529 and our brokerage accounts.

We believe TIME in the market is more important than TIMING the market.

Enjoy life along the way – Life is too short. We have identified what we really enjoy and prioritized our money to support that.

For us, gym membership, good food, reliable cars (not luxury, but solid), and experiences with family and friends are what we splurge on. We also want to make sure our kids understand the value of money and will work to teach them about this as they grow older.

What’s your best tip for spending less money?

Live within your means.

Drive reliable cars that aren’t expensive, live in a great community in a modest home, and think about what your money can do for your family down the road if you invest it instead of spending it.

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

Experiences – We enjoy planning trips, barbecues, and activities with our family and friends.

The laughter, stories, and pure jubilation this causes are worth every penny.

INVEST

What is your investment philosophy/plan?

We are big fans of The Money Guys Show and their Financial Order of Operations. This plan has served us well when we have needed to decide where our next dollars should go.

Below is how we are investing our money this year, in the specific order we prioritized.

Our Plan:

• Maintain at least three months of expenses in a Vanguard Money Market account approx. $35,000.
• Max out both employee-sponsored retirement plans (403B-ROTH and 401K-Traditional) $23,000+23,000 + employee matches.
• Max out the second retirement plan for educators (457- traditional) $23,000.
• Max out both backdoor Roth IRAs at $7,000/year.
• Max out dependent care of $5,000 and maximize HSA of $8,300. Invest in HSA and pay medical expenses out-of-pocket.
• Contribute $250/month to each kid’s 529 accounts.
• Create and maintain a balanced budget that shows how much we are spending, saving, and net worth. Update monthly.
• Spend less than $150,000/year.
• Save a total of $120,000/ year.
• Add additional funds over the safety net (step #1) into our VTSAX brokerage accounts.
• Consider tax-loss harvesting with investments for tax purposes from Oct.-Dec.
• Maintain a two million dollar fixed term life insurance policy for me (20 years) and one million for my wife (15 years).

We are optimizers at heart, but know we should also be saving more into a brokerage account, so we have more flexibility as we need it. With additional income raises, we plan to add more to our brokerage account, so we have more liquid assets.

What has been your best investment?

My best investment was marrying my wife. A partner that has a similar outlook on life and happiness.

Someone who is willing to work beside me to create the life we want for our family. She is a great partner and I’m very lucky to be with her.

The person you marry is probably the most important decision you will ever make from a happiness and financial perspective. I made a great decision!

What has been your worst investment?

When I was in my early 20’s, I thought I could pick stocks. I picked UCO (a triple-leveraged oil stock) and threw $1,500 in the fund.

Five days later (I’m not exaggerating), the stock went under and I lost it all. I have stuck to low-cost mutual funds ever since then.

What’s been your overall return?

Overall, it is between 9-11% depending on the investment.

I started tracking our net worth, savings, and budget four years ago. I think it was COVID that really pushed me to start focusing more on our finances, even though I have always been a saver.

Over the past four years we have seen the following returns for our net worth: +57% in 2021, -6% in 2022, +35%in 2023, and currently +17% in 2024. The numbers seem high, but they’re accurate.

How often do you monitor/review your portfolio?

Way too often.

I track spending and saving monthly, but I look at the accounts a few times a week.

NET WORTH

How did you accumulate your net worth?

My parents were not great with money, but my grandparents (on both sides) grew up through the Depression and were very avid savers. Their practices influenced me to be a saver.

I have always saved enough to max out my Roth IRA since I was 18 years old. Other than that, my savings number has escalated as my income has increased.

As I have had more disposable income, I have wanted to be intentional to maximize the likelihood it will grow. I’m still pretty basic and don’t splurge on much.

I value experiences over things. I also get excited to see my net worth number grow.

My wife came from an affluent family but was not handed a silver spoon. She has always been very disciplined and conservative with her money.

When we started dating she had all of her savings in a checking account and she has evolved her understanding and willingness to invest as she has grown older.

Neither of us were taught about investing and have had to forge our own way over the years. We are both conservative with money and tend to stick to low-cost mutual funds as our main investment vehicle.

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?

Save – we both value the security and flexibility wealth can provide. Our goal is to get to 4-5 million in investable assets before we downshift our yearly saving goals.

We believe this number will allow us to do what we want with our jobs and continue to live a great life.

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

In our early 20’s there were so many unknowns. We were not certain where our careers would take us, who our significant other would be, or what challenges were in front of us.

We have tried to stay persistent, dedicated, and focused on our careers while also enjoying life. Through our 20’s we became more aware of our goals and worked hard to pursue them.

We networked, volunteered, and were not afraid to do the little things to earn promotions. All of these life lessons helped prepare us to take more control of our finances as we entered our early 30s.

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

My wife is working to move into a senior-level position that would improve her salary. I’m obtaining my superintendent’s license and may explore opportunities in a few years.

Other than that, we are maintaining discipline with our plan. With employee contributions, we plan to save $120,000/year for the foreseeable future.

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

We would like to get to 4-5 million dollars invested before exploring other career opportunities or early retirement. We prescribe to the 4% withdrawal rule that many people in the FIRE community preach.

So when we get to that number, we believe we will be able to live comfortably and have options from a career and overall life standpoint.

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

I was 35 and my wife was 36.

We have not changed much, but do feel less stressed when it comes to spending money.

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

Knowledge – I read books, blogs, and articles daily, listen to podcasts weekly, and talk with my friends about what they are investing in and where they are putting their money. This shared knowledge has improved my confidence and competence in personal finance.

I feel like I’m driving my own ship now, instead of being a passenger on the deck below, hoping I’m on the right track, but not really knowing where we are going.

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

I was not aware of financial planner fees until I got into my late 20s. My financial planner had me in an expensive term life insurance policy.

I was frustrated when I finally figured it out, but chalked it up to a learning lesson. I now do all my investments myself and do not pay an advisor.

Although, I do plan to work with a fee-only advisor every 5-10 years to make sure the engine is dialed!

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

Know where your next dollar will go. Have a detailed plan that you review often.

As your wealth grows, stay consistent and hungry. Always reflect on where you are and where you want to be.

Pursue your goals with focus and dedication. As you’re on the journey, don’t be afraid to celebrate your successes.

FUTURE

What are your plans for the future regarding lifestyle? 

Our tentative plan is to have my wife work until she is approximately 50 and me 55. My pension, which is paid through the state, is based on my highest five years of salary and total years of service.

I need to work a minimum of 30 years in education to realize the max benefit. From 55 to 62, we plan to use our brokerage account to bridge the gap to when I will start drawing my pension.

We will need to grow this more aggressively as we enter our mid-40s. We reevaluate our plans often, but we are content with our current net worth trajectories and enjoy what we do professionally, so we are planning to continue to ride the wave.

One challenge we are currently faced with is we are in a starter home at a 2.75% interest rate. We are in a solid school district and have enough bedrooms/bathrooms for what we need, but it is not perfect.

Moving to a bigger house might make sense from a lifestyle perspective, but I’m having a really hard time digesting a larger mortgage payment, interest rate, and taxes. I’m fearful of lifestyle creep, but also want to provide a comfortable and enjoyable childhood for my kids.

This decision is probably the most challenging money decision we are faced with right now. We also realize this could impact our long-term plans and want to make conscious decisions that prepare us to be mortgage-free by 55 years old.

What are your retirement plans?

We would like to have a paid-off house, flexibility to spend time with friends and family, and travel. We have a family bucket list that we try to enjoy while the kids are young, but there are some unique locations around the world my wife and I would enjoy visiting.

Other than that, we are active (hikes, walks, golf and pickleball). To me, there is no better way to enhance your relationship with someone than to do something active together.

We hope to do this as much as possible now and when we retire. Why wait?

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

The cost of healthcare, inflation, and our own personal health are the items we think about. To prepare, we are trying to build a nest egg that will support us in facing these unknowns.

Also, we try to live in the present, enjoy each other’s company and plan fun activities for our friends and family.

MISCELLANEOUS

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

My family instilled the “saver” mentality into me, but I taught myself about investing. I became an avid learner about personal finance around 30 years old.

With a little trial and error and a lot of reading and listening, I have improved tremendously in my understanding of wealth building.

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

My heroes are family members and friends. I believe you are the sum of the five people you spend the most time with.

I have always tried to surround myself with people who are smarter and wiser than me.

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?

So many!

Books:

• The Simple Path To Wealth,
• Millionaire Mission,
• Die with Zero,
• Millionaire Next Door, and
• Rich Dad, Poor Dad

Podcasts:

• ChooseFi
• The Money Guys
• Millionaires Unveiled
• I Will Teach You to Be Rich

Blogs:

• ESI Money
• Mr. Money Mustache
• White Coat Investor

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

We do not give to charity for tax write-off purposes. We give to causes we believe in or are a part of.

Many times that is for friends/family who come across hard times or work-related causes (school fundraisers, Girls Scout cookies, etc.). We have also volunteered our time for Make-A-Wish and other causes we care about.

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, making sure our kids are self-aware and prepared to manage their own finances is very important to us. We want to teach them along the way and be a sounding board when they start their own wealth-building journey.

We have discussed potentially doing a dollar-for-dollar match into their Roth IRAs as they start making money, paying for a majority of their college with a 529 plan, and making sure they are launched out of college with minimum debt. Making sure our kids have what they need to pursue their dreams and still enjoy their lives along the way is important to us.

The book Die With Zero does a nice job articulating how we could do this throughout their lives and not just at the end of ours.