Millionaire Interview 428

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)?

I’m 34, and my wife is 33.

We’ve been married a little over 9 years.

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

We have no children, but we do have two dogs.

We’ve come to the unpopular conclusion that children just aren’t for us.

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

We live in a suburb of a major city in Upstate New York.

We’re 20 minutes from the heart of the city, and we can walk to dozens of eateries.

What is your current net worth?

We just recently ticked past $1.25 million.

It would have been much higher by now had I stayed in my last job, but I chose a different path (more on that later).

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?

We’re split across stocks, real estate, home, and retirement accounts. Our breakdown is roughly the following:

• 37% in (post-tax account) real estate investments (rental properties)
• 20% in (post-tax account) stock investments
• 18% in primary home value
• 13% in (pre-tax account) stock investments
• 12% in (pre-tax account) real estate partnerships

We have mortgages for about 50% of the value of all of our properties combined, but that’s excluded from the numbers above (since we’re talking about net worth). Our actual assets are just under $2M.

EARN

What is your job?

This is where it gets interesting. I’m in the cybersecurity part of the tech sector, and–having recently decided to close down my latest bootstrapped, one-person startup–I’m technically unemployed right now.

That said, it’s a little different than having been part of recent mass layoffs, both because I decided to close down and because I don’t have a cozy severance package!

Level-wise, I’m a pretty senior individual contributor who can speak both business and bytes. I’m just as happy to code as I am to build a slide deck that helps everyone see my vision.

What is your annual income?

Right now my income is close to $0 (besides sipping from stock market gains and having a very supportive and understanding wife). However, I’m currently interviewing for some positions that would pay me between $300k and $450k across salary, bonus, and equity grants.

The lower end of the range is because some of those companies are not public companies, so I consider the value of their equity grants to be $0 until proven otherwise.

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’ll include professional jobs only:

• Internship #1 (2009): $12/hour
• Internship #2 (2010): $18/hour
• Full-time role #1 (2011-2013): $74k/year
• Full-time role #2 (2013-2015): $94k/year to $100k/year
• Full-time role #3 (2015-2021): $140k/year (plus equity grant) to $160k/year salary + $140k/year equity (post-acquisition)
• Co-founded startup #1 (2021-2022): $0/year
• Solo startup #1 (2022-2024): $25k/year to $15k/year

The change between internship #1 and #2 is explained by moving from a local company to a world-renowned R&D lab. I actually stayed with that R&D lab through graduate school (2011-2013) and worked for them for a couple of years afterward (2013-2015) to pay back their tuition assistance (and because I enjoyed the work!).

In 2015, I was head-hunted by a recruiter for a Silicon Valley startup in cybersecurity, so even though my income increased dramatically, the real change was much smaller due to cost of living increases. I went remote in early 2017 and continued to climb into a more senior role until I chose to leave in 2021.

The last 3 years were part of my attempts to build my own startup. The first one went nowhere due to absolutely no product-market fit.

The second one started to show real life and was gaining momentum, but a few key deals didn’t land. I decided that the impact I was having (which is the main thing I wanted to increase when I left my job in 2021) wasn’t worth the paltry paycheck.

It remains to be seen where I will be next (or when I will get there), but I’m confident that it will work out. I’m being very intentional with my search, and I’ve got a lot of people from “past lives” who are helping me (side note: it really pays to have a strong network).

Also, I’m not including any cash-flow from our real estate investments because it has so far been unreliable. While the individual properties have appreciated quite a bit, COVID-era eviction moratoriums caused us to barely be able to pay our mortgages and expenses across the last few years.

We’re finally about to dig out from that hole, but it’s been a slog.

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

In my opinion, there are two main things to pay attention to: things you can do to move up in your company, and knowing what a fair income is for a position like yours.

If you’re stuck in a “do your time” kind of organization where the correlation between raise/promotion and individual performance is low (like the R&D organization I was at), you’ll likely want to look elsewhere. If instead your company financially incentivizes high-performers, either figure out what aspects of your boss’s (or your boss’s boss’s) TODO list you can knock out of the park (so that they look great and want to pay you more), or figure out and excel at whatever is most important for justifying your current position.

For example, in my roles during 2015-2021, I simply took on more and more responsibility and kept outperforming multiple other people in my organization. I became the go-to person for the hardest problems across the organization, worked hand-in-hand with the founders and executive team, and even pitched the board of directors once or twice!

I count most of those people as friends to this day.

The second thing to do is actually communicate with other people in similar roles (they don’t have to be at the same company) about what they’re being paid. I’ve found that people generally are open to sharing if you approach it within the context of helping each other to figure out what’s fair.

Additionally, thanks to California State Bill 1162 (passed in 2022), jobs that are eligible for remote work that may hire someone in California are required to share compensation ranges. As a remote worker, that’s helped me to better understand what my actual market value is.

Finally, remember that public companies can often (but not always!) pay more in real money than startups, and the earlier you are in a startup, the more compensation will be shifted to equity (i.e. “lottery tickets”). There’s also very big differences in work/life balance among companies in different stages of private funding vs. public companies.

I’ve written more about this on my semi-anonymous blog here.

What’s your work-life balance look like?

The way I think about work-life balance has changed tremendously in the last 10 years. At the beginning (and mostly through 2020, a.k.a. before I started my own company), I used to be quite annoyed when I was expected to work more than 40 hours/week.

I’m really highly organized and I have a lot of self-discipline, so I was able to pull that off while moving up the ranks (otherwise I would’ve likely stunted my career growth for a bit).

Since then, however, I’ve come to think of it much differently. Imagine you had a shoe box on a table in front of you. In that shoe box, I’ll put three rocks. These are my non-negotiables, which are:

• time for close family (spouse, siblings, parents, pets)
• time for health (fitness, important health appointments)
• time for restoration (sleep, time away from work)

I’ll fill the rest of that shoe box with sand. This is where everything else in my life–work, travel, friends, and so on–goes. As long as the sand fits among the three rocks, within the shoe box (my overall capacity), and aligns with my values, I’ll do it.

That way I always prioritize the things that are absolutely the most important in my life.

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 mentioned earlier that I have a rental property portfolio. While it hasn’t provided a lot of steady cash flow, it has contributed handily to our net worth (both in the properties appreciating and in paying down the mortgages).

We currently have 14 units across 6 properties, though we’re in the process of selling an underperforming duplex.

If they were to cash flow as anticipated, we would (monthly) have $6000 left over after absolutely necessary expenses (mortgages, taxes, management, utilities, insurance) and roughly $3500 left over after funding our reserves.

I acquired these properties by becoming interested in real estate in the mid-late 2010s, spending far below our means, and shoveling most of our remaining investable cash into properties. After I got the first one stabilized, I built out a team (lawyer, real estate agents, insurance agents, property manager, and similarly-minded investors) to help vet and close the remaining deals.

Whenever possible, I bought properties that were not yet on the market. That said, I haven’t bought any since the multiple-offer, $100k above listing insanity started happening during the pandemic.

That’s also why we’re pretty heavily in the money on those properties, as their valuations have soared (and remained high).

With the exception of the one we’re currently selling, the rest are long-term holds for us. They’re in up-and-coming neighborhoods that have been turning safer and more family-friendly by the year, and we have a couple of local changes coming that will help to boost some of their neighborhoods even more.

SAVE

What is your annual spending?

Right now our spending is roughly $72k/year, and–once I get settled into my next position–we’ll increase it to about $84k/year (replacing our 10 year old car with a new one).

We want to target having $100k/year available for us to spend as we continue to move farther into our working lives. This is what we feel will allow us to be comfortable-but-not-extravagant in the long term.

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

When I add in the car payment (which we anticipate happening soon), our breakdown is as follows:

• Home and Home Improvement: 23%
• Food and Drink: 21%
• Car-Related Expenses: 17%
• Travel and Entertainment: 16%
• Utilities and Services: 5%
• Health and Fitness: 5%
• Charity and Gifts: 4%
• Pets: 4%
• Shopping: 3%
• Miscellaneous: 2%

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

We do have a budget, and I’m the one who created it and have always managed it. That said, we talk about things briefly every month (i.e. “we way overspent on that, why was that?”), but otherwise, we review things closely together at the end of the year.

I usually review everything, come up with proposed changes (raise/lower this category, add/remove that category), and then show it to my wife to make sure that she’s comfortable with it.

I will add that while we only review closely on an annual basis, we communicate throughout the year about what is important to us and adjust accordingly. If we significantly overshoot or undershoot a category at the end of the year, it’s usually because of a change to how we value that category.

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

Right now the answer is negative (i.e. we’re sipping [not gulping] from investments to help bridge the gap between ending the company and finding the right next role). Generally speaking, the answer is about 20% of our gross income since becoming professionals, though for the short amount of time where I made roughly $300k/year, our savings rate was about 33%.

Additionally, any lump sums we receive (such as when the company I worked for was acquired in 2021) are invested as soon as practical.

Thinking ahead to a projected annual (family) income of somewhere around $350k to $500k, we’ll essentially invest anything that we don’t need. At worst, that means our gross income savings rate will be roughly 40%.

It’s important to note that it’s not necessarily the percentage of gross income that one saves, but rather whether they’re saving enough real dollars (especially in the early years of their professional careers) to allow for whatever quality of life they aim to have in future years. We’re far from super savers who are living on rice and beans, but we (having both grown up poor) understand the value of a dollar.

It feels like we’ve already “won” and escaped the poverty that affected our parents’ generation, so now we’re focused on enjoying within the constraints of our goals. It’s all about balance.

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

It’s far from groundbreaking advice, but earn as much as you can in a job that you (ideally) enjoy.

Beyond that, spend less than you earn; I cover detailed thoughts on this in my next answer.

What’s your best tip for spending less money?

I have a few important tips:

• Be intentional about what you want and need instead of just doing what everyone else does (much more on that here).
• Wait a day or “sleep on it” before making a major purchase (even if it’s not going to materially affect your net worth). Too many people buy too many things that either don’t get used like expected or just take up mental space in your brain.
• For things that function well even when used (such as bike racks, weed trimmers, lawnmowers, etc…), consider buying something used vs. buying new. It (when done right) reduces the cost you pay and is good for reducing material consumption!

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

My wife and I both really enjoy visiting coffee shops wherever we go. I love coffee and the atmosphere of a good café (as well as the people-watching afforded by them), so we end up spending a relatively high amount of money on those items.

I used to order 100% Kona coffee beans from a coffee farm we toured on our honeymoon in Hawaii (seriously good coffee), but it was one of the things I cut back on when I started my own company.

INVEST

What is your investment philosophy/plan?

As you can (hopefully) tell from our portfolio breakdown earlier in this Q&A, I’m a big believer in real estate. I have a lot of confidence (which has been reinforced by migration trends once the US got COVID under control) in my city and region for long-term growth, and I want to be a part of making that growth happen by providing great housing options to people within our city’s neighborhoods.

But I also want to be exposed roughly as much–at least for the foreseeable future–to the stock market in order to be diversified. My plan is to primarily hold index funds, though I do (and likely will continue to, at least in the near-medium term) hold some individual stocks that I believe in.

I also have a very small (i.e. less than 1% of our net worth) stake in the cryptocurrency space as a “lottery ticket.”

This gives us a balanced mix of stock market growth, local real estate market growth, and some small bets that could grow exponentially (though, at this point, they wouldn’t likely impact our net worth materially).

What has been your best investment?

Size-wise, real estate has been my best investment. Our portfolio has probably doubled in value in the time we’ve held it.

Percentage-wise, stock from my former employer has been the winner by a mile (more on that in a moment).

What has been your worst investment?

If we’re speaking strictly financially, it was deciding to leave my last employer after 2 quarters (out of 16, more or less, guaranteed quarters) of RSUs vesting. While the size of the RSU package was good-but-not-tremendous when I received it, the stock has become roughly 7 times more valuable (as of today).

That means I left literally millions of dollars on the table.

What’s been your overall return?

If I’m being honest, I don’t know.

We’ve lost clear access to cumulative historical ROI data over the years due to needing to change platforms, so I can’t really pinpoint a number.

How often do you monitor/review your portfolio?

I monitor it most days, but I only review it annually for any major allocation changes. Note that my daily monitoring does not mean that I’m an active buyer or seller.

With the exception of our current situation (where we sometimes need to take advantage of positive market sentiment), I haven’t bought or sold anything in a knee-jerk way for over a decade.

NET WORTH

How did you accumulate your net worth?

We built our net worth through continually growing our earnings, keeping our expenses far below our net income, and investing the rest.

For a while we maxed out my 401k with low-cost funds and put it on auto-pilot. Never having that money in my paycheck made us never miss it, and we unknowingly took advantage of a pretty strong bull run.

Once we started accumulating more money than one 401k’s worth of investing, I turned my focus to real estate. We bought low (relative to today’s prices), which was simply dumb luck.

Who’s to say whether today’s prices will look cheap in another 5-10 years or if we’ll go sideways (or down) for a while. We bought in a market where our investments can create cash flow (see earlier discussion for nuance here), so the actual appreciation is just gravy.

The acquisition of my former employer gave us a reasonably nice chunk of cash (about $125k after taxes, which we invested by buying 8 rental units), and the RSUs from our first 2 quarters (before I left the company) grew tremendously in the time since.

The only inheritance I’ve ever received were a couple of personal effects from a grandparent. There’s a chance that we’ll get some sort of inheritance from my wife’s remaining grandparent and from our parents in the (hopefully distant) future, but we assume $0 and keep focusing on our plan.

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 the obvious one is Earn, as I’m in a high-paying field (cybersecurity) with a resume and personal network that gets me access to exclusive opportunities.

That said, I think Save is not far behind, because we naturally don’t spend anywhere near what we earn (and honestly have no plan to). We know what “enough” is for us (and I’ve written much more about it here).

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

I guess the biggest road bump I faced was having to come from a lower-class family in an economically depressed part of the country where few people “made it out.” I can’t remember if we ever had to actually use food stamps, but I do remember always qualifying for free lunch in school.

Related to this, I never personally knew anyone who was “rich” while growing up, nor did anyone ever teach me any sort of financial literacy. I was also part of the first generation in my family to attend college, and I had no guidance about how to prepare (to do well on SATs and AP exams, for example), apply, or excel.

Fortunately, my Mom (who was a single parent up until I turned 16) really believed in me. She’s still one of my biggest cheerleaders, and I owe her a lot for her emotional support throughout my life.

My aunt and grandmother also gave me a lot of attention and affection, which absolutely influenced my emotional IQ. Beyond that, I had a few teachers along the way who saw something special in me and challenged me beyond standard classwork.

I owe them much gratitude.

It’s kind of funny thinking about it, but even though I grew up generally lacking self-confidence and sometimes feeling like an outcast, I never really doubted that I’d get out and make something of myself. I don’t know where that came from (perhaps just the crucible of growing up poor and wanting something different?), but I’m incredibly resilient.

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

Right now while searching for my next role, we’re keeping our expenses a little lower than we would otherwise. Once I find something that fits right, I’ll be shoveling any excess money we have into investments.

We have some improvements we’d like to do to our home (since we’ve decided it will be our forever home) in the next 12-24 months, but we’ll otherwise likely focus on stock investments (unless a perfect opportunity comes along in real estate or elsewhere).

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

I’ve said to my wife that if we hit $10M net worth we should truly take a good, hard look at what we want to spend our time doing. But realistically (even if you use a SWR of 3%) we can get to $200k/year (to account for up to a 50% tax rate on our desired post-tax income of $100k/year) at $6.7M.

Realistically, we’re focused on enjoying life today while also hitting our financial goals.

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

This is actually a really important thing to mention, and it was not quite about the magical million-dollar mark. Most of the time we see either the FIRE movement (where someone usually wants to retire super early) or we see people shoveling money into investments with no real plan.

I think about things way differently.

Back in 2019, I was still consuming a lot of the FIRE content of the time. However, instead of properly retiring early, I had decided that I wanted to reach a certain amount of income (between my wife’s earnings and our investments), leave my corporate job, and go be a full-time (non-tenure) college professor.

I spent a bunch of time working through how to achieve it, and I settled on what path I’d need to take: buying more cash-flowing real estate.

I actually built out a significantly complex spreadsheet, called it Plan 2025, and modeled how much we could spend (for us) vs. invest (and in how many properties) between the start of 2020 and December 31, 2024.

At that point we’d have enough cash flow to keep investing into new properties (or leveraging 1031 exchanges to move up into bigger properties) while living off my wife’s and my (future professor) earnings. It was a pretty awesome plan!

Of course, 2020 changed everything. First, COVID happened, which changed my job considerably (for the prior 4 years, I had flown to California one week each month for in-person meetings; that was now out of the question).

That then caused me to do a little soul-searching, at which point I decided that I actually would rather try to start my own company (a thought that I had summarily dismissed earlier in my career). Finally, the acquisition of my (then current) employer was announced.

Interestingly, the acquisition gave us enough money to buy just 1 fewer property immediately than what my model had aimed for by the end of 2024, so we were able to contract that plan to 1 year instead of 5. We (through the good fortune of a market rise) hit our first million in mid 2021.

I want the above to point out that you don’t need to think only about some far-off, distant place when you’re considering investing. It’s important to think about whether you can leverage what you’ve already built to give yourself some of what you want (a better quality of life, more career challenges, etc…) today.

Not everybody gets to retirement age, no matter if it’s early or on-time.

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

I think the habits of doing a lot of research, making an informed decision, and committing to something for the long-term have made me successful at growing our net worth. I’m not “trigger happy” with our investments.

That said, if I’m given clear evidence that something is not a good investment or choice, I will make a change. This happened recently with an ESG fund that was severely underperforming the market for a considerable amount of time.

I chose to ignore the sunk cost fallacy and reallocate into something I trusted more.

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

I don’t mean to sound arrogant, but I don’t believe I’ve made any major mistakes. Yes, I lost out on a lot of money by leaving my former employer, but we didn’t “need” it, and I gained an incredible amount of skills through my self-discovery and journey these last 3.5 years.

I believe that–for someone with the right skills and the right outlook–it’s easy to make more money. When I’m (if I’m lucky!) 90 and looking back on my life, I won’t have to ask “What if I had bet on myself and started that business?” How many people can say that? That’s far more valuable to us than a couple extra million dollars invested today.

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

Understand what it is that you actually need right now. If it’s more than what you can afford, figure out a way to either make more money or go without something.

Put the rest into trusted investments (index funds if you don’t know what you’re doing, or get more sophisticated if you’re going to give the subject the attention it’s due). If at all possible, start your career maxing out at least one retirement account from the beginning (that way you’ll never miss the money).

FUTURE

What are your plans for the future regarding lifestyle?

At present, both my wife and I love the kind of work we do. While that stays true and doesn’t interfere with our three “rocks” (see earlier), we’ll probably stay fully employed.

I personally really like to stay busy (for example, while closing down my current company and searching for a new position, I’ve started a blog and begun thinking through other new side projects), so part-time work probably isn’t for me. I do really like to help people though, so as time goes on I may move into more opportunities where I can advise and mentor.

What are your retirement plans?

We are targeting having about $100k/year (in today’s money) available to us after tax, which means that we should be afforded some lifestyle flexibility from our current spending.

Whether we actually ever fully retire is to be seen, but I’d anticipate us spending more time traveling and in nature. We both love hiking and long walks, and I’m an endurance cyclist, so we’ll likely continue doing those things!

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

There aren’t any major issues that we’re concerned about right now. We’re both focused on staying as healthy as possible (for things that are within our control).

One risk I’ll likely shore up in the near term is finding a way (for example, through life insurance) to make sure that my wife is set for living our current lifestyle if I were to die prematurely. As is true in every dimension of my life, I’ll do my proper diligence and make an informed decision.

MISCELLANEOUS

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

Honestly, I think I first started getting into serious financial planning when I discovered the real estate investing website Bigger Pockets (circa 2016).

Before that, I had an intuition that I shouldn’t spend more than I made, but there’s no clear event that I can remember.

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

If I had to really be honest, I think what inspired me most is my desire not to be like everyone at home. I didn’t want to be stuck in an economically depressed area living paycheck-to-paycheck.

It sounded (and still sounds) miserable.

I don’t really have heroes. I appreciate certain qualities and capabilities of many people, and I do have mentors whose advice I regularly seek, but no single person comes to mind as a North Star.

In my personal opinion, most heroes are just people who rose to the occasion in whatever challenges life gave them. They’re just people who unapologetically knew what they stood for.

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?

I really don’t have any money-focused books that I’d recommend.

I’ve learned most of what I needed to know from online research, trial and error, and having a general intuition about spending much less than I earn.

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

In recent years we have given very little (while focusing on building bootstrapped companies). Generally speaking (and when things settle [hopefully] in the near future), we do give to charities that are important to us.

Our giving is mostly monetary and is focused on nature, climate, cycling advocacy, and a couple of local animal-related charities. Each year, we usually pick one or two of those charities where we’ll donate more ($500 to $1000, perhaps), and the rest will receive between $50 and $250 each.

As time goes on and we hopefully have a bit more flexible income, I do envision us donating more to a few local charities that are really important to us.

We give now (as opposed to later) because some of these topics (climate, for example) are now problems. Beyond that, we’re looking to strengthen the organizations that have values aligned with ours so that they can better serve us and other supporters today.

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?

We aren’t having children, so we won’t be passing on any wealth that way. However, we have siblings and close nieces and nephews for which we’ll likely consider leaving an inheritance.

That said, it hasn’t been something we’ve meaningfully talked about at this time.