Millionaire Interview 434

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 August.

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 39 years old at the time of writing and will turn 40 in November 2024.

My wife is 36 and we have been married for six years.

I may use I/us my/our interchangeably in this interview, but everything is combined finances.

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

We have two boys.

One is 2 1/2, and the other is 10 months old.

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

We live in a suburban beach town in the Southwest.

What is your current net worth?

$1.9 million.

What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?

Investments:

• $518,000 Pretax retirement accounts (401k, 403b, 457)
• $274,000 Roth 401k
• $420,000 Roth IRA
• $424,000 after-tax brokerage account
• $64,000 HSA
• TOTAL: $1.7M

Cash $30,000

I’ll include our primary residence here. We purchased it in 2021 for $833,000 and will use this number for our net worth calculation (Zillow and Redfin say it’s valued today at ~$1.1M).

Liabilities:

• Mortgage on primary residence -$626,000 (interest rate is at 2.75%)
• Car loan on 2023 Honda Odyssey -$26,000 (interest rate is at 3.9%)
• Credit card balance paid in full every month -$6,000
• Additional credit card balance on 0% APR card until Feb 2025 (property taxes and medical expenses at the beginning of the year) -$6,000

EARN

What is your job? 

I work in analytics and engineering as an individual contributor.

What is your annual income?

I actually have two full-time w2 jobs.

Job 1’s base salary is about $180k with a 13% target annual bonus.

Job 2’s base salary is about $120k with a 5% target annual bonus.

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?

After I graduated college in 2007, I probably made $40-50k annually for 3 years in my first corporate job. I moved to the US in 2010 to get my MBA.

My first job post MBA in 2012 I was making $95k with a $17k signing bonus. Got a new job in a different state in 2015 making $120k with a 15% target annual bonus.

Moved to a different company in 2017 making $140k with an 11% target annual bonus. I’ve been with my current company for almost 7 years now getting two promotions that came with a 5% increase in salary, as well as nominal increases every year.

After I got my green card in 2019 (before that I was on a work visa that limited employment to the one company that was sponsoring my work visa) I added a part time remote work that brought home about $40k every year until 2022. And in 2022, I read about people working multiple remote jobs, so I gave it a try.

I ended up adding a second remote full-time job around summer 2022 with a salary of $165k with a 20% bonus potential. I was laid off in December of that year, so I didn’t get the annual bonus, but they did give me a 1-month severance package.

In April 2023, I found another remote full-time job (my current Job 2) that I’ve had for over a year now.

My wife is currently the primary caretaker of our kiddos. She also has a chronic illness that forced her to leave her full-time position in 2020.

She does have a volunteer position and had a seasonal part-time job in 2022/2023. She may work a bit more once the kids go to school.

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

Early in my career, I tried to get more technical so I can increase my value in the job market. My job in 2012 was an entry-level marketing role and it was really hard to differentiate myself from all the other employees doing similar work.

So every time I switched teams internally or switched companies, I acquired new skills by learning a new database language, program language, certifications, etc.

I’ve also taken advantage of various training opportunities available at work. All the Megacorps I’ve worked at have access to online classes that are relevant to my job function.

So I’ve done these on company dime and time to make myself more marketable in the industry. This has increased my salary at a decent rate for the past 12 years.

I’m currently a senior-level individual contributor. At this point in my life, I have my foot off the gas pedal.

I do use modern cloud technology at work so I stay relevant with the tech stack in my field, but I don’t spend extra time trying to add new tools to my tool box at the expense of time with family.

If I wanted to increase my salary, I suppose I could try to get a people manager job and climb the corporate ladder, but I don’t have any desire to do that.

What’s your work-life balance look like?

Work-life balance is pretty good even with two full-time jobs. I did a time audit a few weeks ago and I worked around 25 hours a week.

Some weeks are busier (30 hours plus a week), and some weeks are less.

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?

Aside from the dividends I receive in my brokerage account and my high-yield savings account, I play the credit card and bank sign-up bonus game that probably brings in $2-4k a year.

I also do mystery shopping and have print-on-demand t-shirts listed on Amazon, but these produce minimal income and are more like hobbies.

SAVE

What is your annual spending?

For the year 2023 it was $120k.

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

For the year 2023, the breakdown is as follows (please note categories are at a transaction level, meaning a given purchase at Costco may include groceries, entertainment, and childcare, but that one receipt will all be under the grocery category):

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

I do like tracking our expenses, but we don’t have a budget. I feel given the income level at this point in our lives, we don’t have to be pinching pennies with a budget.

My wife and I discuss at the beginning of each year what house project we want to do, so we have a rough estimate on how much we’ll spend on that category.

My wife also does a great job meal planning for the week which results in reasonable spending in both the grocery and restaurant categories.

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

I don’t have the exact numbers, but we save <50% of after-tax income. I think this has been pretty much the same over the years.

When we were making less money, we spent significantly less than what we do today.

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

What has helped me is to track our expenses. I have been tracking expenses since 2017.

Many people probably have a good idea of how much money they make yearly, especially if they are salaried, but I am willing to bet a lot of people don’t have a clue if they are asked how much money they spend per year.

What’s your best tip for spending less money?

I don’t go on social media. I have an old Facebook account I use only to sell stuff on Marketplace, but other than that, I don’t have Instagram, TikTok, or Twitter/X.

I think that helps because I don’t see ads, and also I don’t see what other people have.

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

Last year we started paying to have our house cleaned every month, which has helped save time.

INVEST

What is your investment philosophy/plan?

For the last 10 years or so, I’ve been a low-cost index investor, and plan to be for the foreseeable future. The last time I bought individual stocks was 2017.

Although those stocks (AMZN, GOOGL, META) have done well, I don’t plan to buy any more individual stocks. I sometimes get the urge to pick stocks, but I try to tell myself that at the level of net worth that we have, I should be happy with average market returns.

I sometimes get FOMO reading/listening to headlines of real estate investors in the FIRE community – “retired in two years with multi family rentals” etc, but I don’t know if I can pull that off in the part of the country where we live. I’m too scared to do long-distance real estate investing.

Either way, I think I would need to invest hundreds of hours to educate myself, and I don’t have time or the desire to do that at the moment.

What has been your best investment?

I don’t have any really great investment stories.

Above big tech stocks that I bought 7-8 years ago have almost quadrupled, so that’s pretty good I guess.

What has been your worst investment?

In the late 2000s right out of college, I started picking individual stocks based on some recommendations I read in a money magazine (including China stocks), or companies that I had heard of.

These all lost value during the Great Recession, and I needed to sell these investments to pay for my grad school tuition a few years later. I probably lost low 5 figures easily.

What’s been your overall return? 

For the last 10 years or so, it’s probably around 10%.

How often do you monitor/review your portfolio?

I review our net worth and our portfolio pretty much daily. Smartphone apps like Empower (fka Personal Capital) make it so easy to log in and check our net worth.

During extended bear markets, I tend to check less.

NET WORTH

How did you accumulate your net worth?

We accumulated our net worth the old-fashioned way with W2 jobs, saving, and investing the difference. We are not entrepreneurs or have real estate portfolios.

Hopefully, our story is pretty replicable for other people on the FIRE path.

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?

If we were to grade ourselves on a scale of average/good/great, I feel like we are “good” on all three. And it’s interesting that this has changed over the years.

I’ve become a better earner as I’ve gotten older, but our expenses were much less when we were younger.

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

Our annual expenses have gone up significantly over the last few years after we bought our house and our first child was born.

But given the level of our net worth, and also our season of life, we try to enjoy the money we have and not worry too much about how much money we’re spending every month.

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

Continuing to ride the index. I max out my 401k, HSA, my wife and I’s Roth IRAs.

I max out the mega backdoor Roth since my company offers it. And any excess cash left from paying the bills, we buy VTSAX in our brokerage account.

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

The next goal is $3 million.

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

I was 36 and my wife was 33.

No significant behavior changes.

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

After my experience having to sell stocks at significantly lower prices after the Great Recession, I was scared to invest in the stock market for a few years. My 401k was invested in target date funds, which in hindsight wasn’t too bad, and any excess after-tax money left over went to buying CDs and high-yield savings accounts.

Back then, the best interest rates on those were probably low 2% at best. And it took me until around 2015 to invest these excess savings into the stock market.

Fortunately, given my net worth level back then, the opportunity cost was not too big.

I also didn’t invest in my Roth IRA from 2012 to 2015 which could have grown tax-free.

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

Every year you can continue to live like a college student and keep your expenses low after you get your first job in your 20s will set you up for financial success the rest of your life. Couple that with the compound interest you can get from low-cost index funds, and your net worth will grow exponentially.

And you also don’t have to be perfect. In my case, I’ve made countless big and small money mistakes, and we’re still on track to be multimillionaires before we turn 40.

I understand we are all under different circumstances, but if you’re reading this blog and have sound ESI money habits, it’s almost a guarantee to be financially successful.

Lastly, I just hope ESI readers pause for a moment and realize how fortunate we all are…

The fact that we are reading a blog like this is a natural selection that we are financially conscious, and we will all be financially independent sooner or later. It’s never been easier to get personal finance (or any other) information online if you know what to look for.

I’m guessing most readers are living in the US or other developed countries which are incredibly wealthy. It’s never been a better time to make money online and/or to work from home.

I, too, have to remind myself how lucky I am.

FUTURE

What are your plans for the future regarding lifestyle?

I plan on working my current job(s) until at least we get to $3M net worth. At that point, I’ll quit my corporate job if our expenses are more or less the same, or will work a bit longer if we are spending more.

Hopefully, that happens in the next year or two, because as I get older, my time and my health is starting to become more important than my wealth.

What are your retirement plans?

I don’t have much planned yet. I want to continue to spend as much time as I can with the kids.

And hopefully be able to devote more time to biking, lifting weights, and going to yoga classes. Not that I’m currently unhealthy, but I’m hoping leaving corporate will have a positive effect on my physical and mental health.

I need to (continue to) be healthy if I want to live long enough to watch the kids grow. If anything, not sitting in front of a computer for multiple hours should help.

I can’t imagine that being good for you.

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

Healthcare. It is extremely important that we have good health insurance given that my wife has a chronic illness.

We would get ACA from the exchange, but I would really have to think through how much ACA subsidy we can get vs realizing gains by selling from our brokerage account/making money via side hustles/doing Roth conversions. I feel like this has not been talked about enough in the FIRE space.

MISCELLANEOUS

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

I am naturally frugal, so I’ve always been a pretty good saver. I’d still buy clothes or electronics/gadgets every now and then, but after I started making six figures in my late 20s, and especially after I found the FIRE concept around 2016, I desire less and less things for myself.

As for the investing side, I was exposed to low-cost index funds through the FIRE blogs and podcasts. I can’t get over how fortunate we all are to be living in a time in history where we can buy very low-cost and diversified index funds online, instead of having to call a broker over the phone to put an order in after checking the stock prices reading a newspaper.

It’s such a bummer that for most people, finances will never “click”. Personal finance isn’t taught in school, and often not discussed at home.

ESI readers including myself just happen to run into this concept by happenstance. If we hadn’t, I think it would have cost us 7-8 figures in net worth over our lifetime.

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

My wife and my kids inspire me every day to excel in life.

I’m also forever grateful to be born into a family and in an environment where they helped me to go after my interests and make my own decisions.

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?

JL Collins “Simple Path to Wealth” is my favorite money book. A light bulb went off in my head after I read it, and I’ve been an index investor ever since.

I try to re-read the book at least once a year to calm my urge to buy individual stocks.

I also would like to thank my favorite FIRE blogs and podcasts that have helped me on my FIRE journey:

ESI Money, Financial Samurai, Frugal Professor, Financial Panther, Stop Ironing Shirts, 1500 days, Retire by 40, Choose FI, Mad Fientist, Afford Anything, Bigger Pockets Money, Millionaires Unveiled, All the Hacks, Two Sides of FI, The FI Show, The Daily Churn, and Countdown to FI (RIP).

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

We give a small amount to organizations that we want to support.

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 don’t have any plans yet, but I suppose our children will inherit our wealth.

If we live into our 80s, then our kids would be in their 40s or 50s so it might make more sense to give them earlier than that.