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 September.
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 very recently turned 38 (September 2024) and my wife will be turning 38 in December 2024. We celebrated our 15th wedding anniversary in May of 2024 with a nice getaway to Cancun.
We met our junior year of college, got engaged the summer before our senior year of college, and got married two weeks after we graduated.
Do you have kids/family (if so, how old are they)?
We have one child together. Our son turned 9 in August of 2024.
Outside of that we currently have one miniature schnauzer who is 13 years old. She very much is a part of the family.
What area of the country do you live in (and urban or rural)?
We live in the capital city of a mid-western state. I was born and raised here but met my wife in college in the rural southern US.
We then relocated back to this city after a couple of years living in the rural southern US. Although our address depicts the capital city’s name we truly live on the edge and live a suburban lifestyle.
What is your current net worth?
Our combined net worth as of August 2024 is $1,022,815.33.
We crossed the $1MM mark in July of 2024.
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?
Our net worth is made up of 4.75% or $49k Cash Assets, 2.26% or $23k Other Assets, 46.86% or $479k Stock/401k/IRA Assets, and 46.12% or $472k Real Estate Assets (net of debt).
A few additional notes on our net worth:
- Cash Assets – Cash assets are made up of general cash for everyday expenses, investment property cash/reserves, and general savings.
- Other Assets – The small amount of other assets are two family vehicles. I’ve gone back and forth on including them over the years but I like to include them so I can keep an eye on just how impactful they are to our overall net worth position.
- Stock/401k/IRA Assets – The breakdown of these assets is as follows: 58.30% or $279k is in pretax 401k/IRA assets, $33.27% or $159k is in Roth 401k/IRA Assets, 0.17% or $829 is in a brokerage account and Groundfloor RE Investments, and 8.25% or $40k is in a teacher retirement pension plan.
- Real Estate Assets – We own three total houses with two being paid off rental properties. Our primary house is the only property with debt still on it.
All houses including our primary are included in the net worth numbers above. Our two investment properties are valued at 85% of Zillow/Zestimate valuations.
There obviously is some subjectivity to this estimate, however I believe it to be relatively conservative. Both are located in the same metropolitan area as us and are located in very established neighborhoods thus the valuations don’t tend to fluctuate that significantly.
EARN
What is your job?
I’m the Chief Financial Officer (CFO) of a mid-size financial institution located in our metropolitan area. I’ve been in this role a few years and prior to that I was in a similar but lesser role (Controller) at a different financial institution for 5-6 years.
I am a licensed Certified Public Accountant (CPA) after having obtained it shortly after I graduated college.
My wife also has a degree in accounting; however, she went a very different route. She chose to become alternatively certified and became a teacher shortly after we relocated back to my hometown.
Her time has been primarily spent at the junior high/middle school level, but she has spent a few years at the high school level as well.
What is your annual income?
Our current annual income is around $264k collectively in salary alone or up to $300k including bonuses. My salary is $208k and my wife’s is $56k.
I also enjoy the opportunity to receive an annual bonus of somewhere between 15-20% of my salary or around $31-42k annually. This is based on various company metrics however it has been consistent since I started employment here and believe it will be consistent moving forward.
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?
Both my wife and I worked various jobs during high school and college, however, no real wealth accumulation occurred during this time. My first “real” job was an accounting job straight out of college in May of 2009.
I made around $33k at that point in time. I worked to become a Certified Public Accountant and was officially certified early in 2011.
This resulted in no salary increase and future job prospects remained limited. My wife worked odds-and-ends jobs upon college graduation ($20k a year) as we were still located in the rural southern US.
We made the call to return back to my hometown in late 2011. We arranged interviews at companies back in my hometown/capital city and came in for an extended weekend trip.
By the time we returned back to our home in the rural southern US we had multiple job offers. We then ended up relocating back to my hometown/capital city late in 2011.
At the time of relocating our salaries were in the range of $55k for myself and $40k for my spouse. At this point she was not yet alternatively certified and was working office administrative jobs.
The next change occurred when both my wife and I changed jobs around 2013. I was recruited into oil and gas (still as an accountant) and my pay increased to around $70k.
During this same time, my wife elected to pursue becoming alternatively certified to teach and her salary changed to around $38k.
I was laid off in 2015 and elected to follow in the footsteps of one of my parents and went into the financial institution industry (again, still as an accountant). My pay upon accepting the role was around $70k.
Over the next 5-6 years I received a variety of promotions and pay raises and ended up around $100k prior to leaving the company in 2021.
My primary reasons for leaving were:
- My boss was relatively young as well and had no intention of leaving which then limited my growth opportunities
- I felt I had basically learned all that I really could in my position and was ready to take the next step
- I began being recruited pretty heavily by 2-3 other local financial institutions which helped push me into pursuing what else was out there career-wise.
My wife’s pay during this time increased to around $48k due to length of service and other step ups (her pay is negotiated by the teacher union).
I ended up accepting a position offered at my new employer which was a step up in terms of role/responsibility and was offered a starting salary of $150k (a huge increase over my previous $100k salary). I accepted it with no real expectation of bonus opportunities (as I hadn’t had them in previous roles) however was pleasantly surprised when I also was offered a 15% prorated bonus at the end of my first year.
My salary has since grown to $208k over the course of the last three years and my bonus potential has also increased up to 20% in the past year. My wife has continued to receive various length of service increases and basis increases and currently makes around $56k.
What tips do you have for others who want to grow their career-related income?
1. Always work to develop and refine your skillset.
I think too often people believe it is solely their employer’s responsibility to do this.
I believe your employer should help you and provide opportunities, but it truly takes the drive of the individual to want to continue developing their skillset. I believe in all roles and tasks you can instill in yourself extremely valuable personal and career-related skills.
Often it can be hard to see in the moment, but I do routinely reflect back on some of the more menial tasks that I did during my early career and see a lot of value in them.
2. Obtain worthwhile certifications.
Early in my career, there was no push from my employer for me to obtain additional college credits or dedicate substantial amounts of time and money into becoming a CPA nor did my employer pay for it.
I, however, knew that it would be vital to my career progression assuming that I wanted to stay on the accountant track. I was fortunate to have a very understanding spouse and spent a substantial part of 6-9 months studying 2-3 hours a day to obtain the certification.
At the time I didn’t make much of it however as I have continued throughout my career, I have seen the opportunities that I have been given that many of my peers have not given this one certification obtained 10+ years ago.
3. Know when to take the leap and bet on yourself.
I wasn’t actively looking for a job a few years ago when I was recruited by a few financial institutions here in my local market.
One job opportunity came through an industry contact that I had worked with for several years in the past. The others were companies utilizing recruiters and/or just job announcements.
The timing didn’t work out perfectly with the job interview processes and I actually turned down the two other job offers while still working through the interview process with my now current employer. I had a different feel from this company and also the role itself was more of an immediate increase in role and responsibility rather than a lateral move to larger financial institutions with discussions and hopes of future promotion opportunities.
I think it worked out quite well.
What’s your work-life balance look like?
My wife and I both enjoy healthy work-life balance.
I’ve actually been pleasantly surprised to find a far healthier work-life balance in my current role even with the additional responsibilities. I’ve come to realize that company culture and your boss can play a pretty dramatic role in how healthy your work-life balance really is.
I routinely work 40-45 hours however those hours are pretty flexible. I work hybrid and maintain normal office hours a few days a week and attempt to work remotely at least one day a week.
I am able to leave the office earlier than normal to be home when my son gets home from school and then routinely find myself booting back up in the evening for an hour or so of uninterrupted time.
My wife works normal teacher hours however her school is on an earlier schedule. This works out quite well in that we all leave the house at the same time each morning, but she gets off work at 2:30 PM each day.
Being a teacher, she also gets summers off and enjoys that time with our son.
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?
We’ve had a variety of other sources of income over the years. The most substantial has been our real estate investment portfolio.
With both investment properties paid off we currently receive gross rent of $2,575 ($1,150 for one and $1,425 for the other). Taxes and insurance work out to around $500-600 leaving us with around $2,000 for capex/repairs/etc. and the rest we just continually roll into the business for future real estate investment.
Long term we do plan to live off some of this income but not until we retire.
My wife still does some various things on the side to create some “fun money” for her. She enjoys using a heat press and making t-shirts, dabbling with Merch by Amazon, etc.
We ran a quite successful eBay “flipping” business for around 5 years before our son was born and then when he was very young. This would involve us purchasing various items in garage sales, thrift stores, Facebook marketplace, etc. and then reselling for a profit.
It was fairly time-consuming and as our careers escalated and our son grew, we saw our time and efforts into this steadily decline. At the peak, we were able to easily make around $2,500 a month doing this.
SAVE
What is your annual spending?
Around $150k.
There probably is a lot of room to bring this number down but we feel comfortable with our current spending levels and the life that allows us to live.
What are the main categories (expenses) this spending breaks into?
Unfortunately, our data is going to be a little rough here as we don’t get super granular on a lot of our expenses.
As you can see there is a very substantial “Misc/Other” bucket. This is effectively everything else that doesn’t fit into the other categories.
This would include gas, eating out, groceries, birthday presents, shopping, etc. Early on in our marriage we had far more tracking on that spend.
At this point, we merely monitor the total monthly dollars spent just to ensure that we aren’t routinely exceeding our net take-home from our W2s.
Do you have a budget? If so, how do you implement it?
We do not put as much effort into budgeting anymore. Early on in our marriage, we used a variety of solutions to help budget (Mint, EveryDollar, etc.).
We went away from the practice around 5 years ago given the time spent categorizing charges, etc. I still have a very high-level “money” spreadsheet that shows if we are going to overspend or underspend relative to the money we have coming in.
That allows us to make some adjustments mid-month or have discussions about staying more in line in future months.
Budgeting falls on me and I share how we performed at month end. She gets involved at year-end when we reevaluate our monthly spending needs and larger saving goals.
What percentage of your gross income do you save and how has that changed over time?
My current calculation shows that we save easily 25% ($79k) of our gross income. The math on that is $23k maxed Roth 401k, $23k maxed Roth 403b, $5k investment property savings, and $25-30k net proceeds from my annual bonus that we normally choose to roll into a future investment property.
I would venture to guess that our savings rate has always been 10-15% even early on in marriage, however, it has elevated in recent years with the increase in compensation.
What’s your best tip for saving (accumulating) money?
I couldn’t come up with just one.
Save first, designate a certain amount of your monthly take-home pay to be allocated to various larger ticket items (vacations, Christmas, car repairs, new car fund, etc.). This ideally then prevents you from just blowing through this money.
My wife and I move these funds into a separate savings account so that the funds aren’t just sitting in our checking account.
Invest early and automatically. Invest as much as you can early in your career and continue increasing the percentage and/or dollar amount until you are able to max out your retirement contributions.
I was fortunate in that my first job mandated that an 8% retirement contribution be directed into a pension plan. I then kept that 8% minimum threshold for retirement contributions through another job or two.
I eventually had a job that would match 15% of my own 401k contributions. That then set the minimum percentage floor for future 401k-related contributions in future jobs.
What’s your best tip for spending less money?
Sleep on it. Too often impulsive purchases result in regret (at least for me personally).
I’ve found that if I just give myself a night to sleep on it I often have far more time to think about if I really want that item.
What is your favorite thing to spend money on/your secret splurge?
Ours as a family is vacations. This year we’ve spent time in Mexico at an all-inclusive resort and also Yellowstone/Grand Teton area.
Last year we spent some time in the Seattle area and then went on an Alaskan cruise.
We’ve also begun increasing our spending on a couple additional lifestyle splurges. We’ve had season tickets to a local college football team for a few years and recently obtained season tickets to a local performing arts group (musicals and plays).
My personal splurge is related to video games. The monetary spend is not a lot and it is something that I enjoyed growing up and now enjoy doing with our son.
We recently purchased a PS5 to play the new NCAA football game but have picked up a few family games as well.
INVEST
What is your investment philosophy/plan?
401k/IRA/Stock – This has migrated over the years. Early on in our investing career we put everything into pre-tax Vanguard Target Retirement date funds.
Over the years we’ve elected to get a little more aggressive for a variety of reasons. The primary reason being that my mindset has shifted on bonds and also as our real estate portfolio has grown, I’ve felt more comfortable accepting more risk in our normal stock portfolio thus have migrated to S&P Index or Total Market Index Funds.
We’ve also shifted from pre-tax contributions to post-tax (Roth) in nearly all cases. This might not be the most tax efficient at this point, but I like the prospect of tax-free growth and tax-free withdrawals later in life.
Real Estate – We are buy and hold real estate investors. I know it doesn’t make the most sense from a deploying capital position, but we also do enjoy our paid off real estate.
We have thrown around owning 10-15 separate single-family homes. With how things have changed for us professionally I don’t know that we will achieve that number as I no longer feel the pressure for that to be the main way for us to reach a “financial independence” number.
We like purchasing cash flowing real estate (easier to find 5 years ago) within around 10-15 miles of us. We currently manage these two ourselves, but I do have thoughts of moving them to a property manager to free up more time as we move forward.
What has been your best investment?
I’m going to go with our first real estate investment property for a variety of reasons.
- It’s appreciated to effectively 2x it’s value in the short time we’ve owned it (since 2015).
- I had read countless real estate investing books since graduation, but it took 6 years to finally feel comfortable to actually pull the trigger. I believe this investment then paid dividends in terms of our comfort in future similar investments over the years.
- It’s also been an investment “type” that my wife and I seem to both enjoy thus creating a shared experience. She really is very hands off with our 401k/403b/IRA investments but will offer opinions and thoughts on this particular investment class.
What has been your worst investment?
Litecoin (Cryptocurrency). I took an entire bonus ($1,000) around 2015-2017 (I don’t recall the exact time) and invested in a time of craze in Cryptocurrency.
It’s one of a few times that FOMO set in. At the peak that investment went up to around $1,300 but had decreased to $300 by the time I liquidated it.
Overall, a very insignificant part of our net worth at the time or currently but I learned quite a few lessons from that involving FOMO, sticking to what you know, and trusting the process.
What’s been your overall return?
I would venture to guess around 10% and that’s both our investment portfolio and real estate portfolio appreciation and debt paydown.
We’ve never invested in individual stocks, etc., where you could expect a higher risk/return.
How often do you monitor/review your portfolio?
Too frequently but I enjoy it. I look at our stock performance and real estate values at least weekly if not every 2-3 days.
Very infrequently do I actually shift investment strategy though.
NET WORTH
How did you accumulate your net worth?
It’s truly been a slow and steady approach. First, my wife and I started our journey with both obtaining college degrees to be more desirable in the workforce.
We then continued our schooling to obtain my CPA or my wife’s MBA. All along this time we continued focusing on improving our skillset and making job moves when we thought it best fit our needs at the time.
Throughout this time, we were focused on savings even early on in our careers. Even as low-income earners early in our marriage we took on odd jobs/side hustles to be able to max out a traditional IRA or to help pay for vacations.
Along the way we started building our 401k investments as we could by increasing the percentage invested along the way. We also avoided any substantial hits to our net worth along the way.
We haven’t fallen for any of the scams or get rich quick schemes that our couple friends have chatted our ears off about over the years. We’ve avoided nearly all consumer debt for years now.
We drive older vehicles (mine is 7 years old and my wife’s is 12 years old) that are extremely reliable.
We’ve avoided keeping up with the Jones’s. We live in a very nice house in a very nice neighborhood, but we know we could afford something probably 3x as nice.
We live well below our means and spend a lot of time focusing on end goals of retiring early and traveling. We’ve been benefactors of the bull stock market run over the last few years and the rapid appreciation in the housing market however we positioned ourselves to be able to take advantage of that given our investments in the market when that occurred.
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 believe our greatest strength in the ESI wealth-building model is earning. Up until about two to three years ago I would have teetered between saving and investing.
Although I selected earning, I do think that without the stable base of saving and investing that earning does very little for you as an individual. I just chose earning as I think that has created a jet fuel that I don’t believe we would have had with saving or investing alone making what we were making previously.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
The only significant road bump that came to mind is when I was laid off from an oil & gas job less than a month or two after our son was born. In the moment this job loss seemed extremely devastating and was very unnerving.
I remember (and probably will never forget) the sense of embarrassment I felt when telling my wife (who was still off on maternity leave). I took a day or two to collect my thoughts, a day to update my resume, and then hit the ground running looking for a new job.
I was able to find stable employment quickly and we were able to turn “lemons into lemonade” by utilizing various aspects of the financial package I received due to being laid off to better ourselves. This was actually how we ended up saving the down payment for our first investment property.
We’ve had larger repairs ($5-10k) to our own personal home or an investment property from time to time but have paid cash on the spot or obtained financing with 12 months no interest and paid it off during that time.
I do find it a bit interesting that my wife and I have recently started having discussions on taking some larger risks as it pertains to investment properties and investments. Those conversations have centered around the fact that we are now in a place where even if we were to take a $25-50k financial hit on a bad purchase it wouldn’t be nearly as detrimental to us as when we were just getting started.
What are you currently doing to maintain/grow your net worth?
My wife and I are still working and don’t necessarily have plans to quit in the near future. Most of our net worth growth comes from having stable jobs that then allow us to invest into 401k and 403b plans.
We currently are maxing out one 401k plan (Roth contributions) and one 403b plan (Roth contributions). In addition to these investments, we also put around $400 additional a month into a savings account for future rental properties.
We’ve seen our investments (stocks and real estate assets) increase substantially over the last few years and honestly our own contributions to these efforts are starting to diminish in terms of the overall impact. In a lot of ways, I feel our current net worth path is on autopilot which is a great feeling.
Do you have a target net worth you are trying to attain?
This is a completely arbitrary number but when we first started our net worth journey, we wanted to accumulate two million dollars.
Obviously, a lot has changed over the years in terms of our standard of living, inflation, etc. I believe our target net worth number now has moved more toward three to four million.
I haven’t actually calculated one of the various “financial independence” numbers for us. Three to four million would produce around $120-160k income annually using the 4% rule which we feel comfortable with.
How old were you when you made your first million and have you had any significant behavior shifts since then?
My wife and I were 37 when we made our first million and it just happened in July of 2024. Given that, no significant behavior shifts have occurred since then.
I’ll be curious to reflect back (if given the opportunity for a Millionaire Update) in a few years and see how our mindset or behaviors have shifted. We are still in accumulation mode, so I really don’t anticipate many changes.
What personal habits and/or traits have you developed that have made you successful at growing your net worth?
Keeping the slow and steady mentality. Continually funding our 401k/403b/etc. plans as much as we could afford to.
Trusting the process that eventually all of those contributions would begin to snowball, and the retirement portfolio would compound on its own.
Being able to avoid jumping in on the ever-changing “next best thing”. I strongly feel that at the point everyone is talking about an investment that the right time to buy in has already passed.
Digesting as much material on personal finance/investing/real estate/etc. as you can. Prior to taking the leap into rental properties my dad would joke that I read 100+ books about the subject over the previous 5 years.
I truly believe knowledge is power.
What money mistakes have you made along the way that others can learn from?
I can’t think of any large mistakes that we’ve made. I previously alluded to the small loss on cryptocurrency that we experienced years ago and haven’t dabbled in again.
Something I would do differently is feel comfortable taking the most recent job leap a year or two prior than I did. After a job layoff in my past, I was too afraid to give up a “good thing” and instead stayed longer than I should have.
The last year or two I was not gaining any sort of meaningful job experience or skills. Everything has worked out just fine since the job leap, but I almost certainly gave up a year or two of higher earning years had I left my previous role sooner.
What advice do you have for ESI Money readers on how to become wealthy?
I believe the best advice is to really utilize all ESI aspects to accumulate your wealth. Each on their own really will not bring wealth as if you have minimal earnings you will struggle to find money to invest.
You can make a solid income yet if you struggle with saving you again will find it very difficult to amass a lot of wealth. Each part of ESI is very vital in accumulating wealth and the sooner you start building health earning, savings, and investing habits the better off you will be.
FUTURE
What are your plans for the future regarding lifestyle?
My wife and I do plan on retiring early. Earlier in our marriage we set a goal of retiring by 50. Only time will tell if that occurs though.
The primary emphasis behind that age was to be able to then relocate easily should our son choose to go off to college or live elsewhere. Also to be able to take extended vacations in the United States or throughout the world.
If our net worth gets to a certain point, I could see my wife choosing to retire earlier. Other things might come into play sooner than that time with our aging parent’s health.
I believe it is probable that I will receive a golden handcuff offer during my career at my current employer that could prolong my working years. Even when I was presented with a plan (that ultimately didn’t come to fruition) I negotiated the length of service requirement down (which came with a reduced retirement benefit) to where I would retire at 55 instead of the proposed age of 62.
We do not live lavishly now in terms of our home so I wouldn’t anticipate future plans to downsize.
My family has started taking more or extended (10-14 day) trips throughout the year. I still have a bit of sticker shock at the expenses but also do recognize the need to “treat ourselves” along the way.
I alluded to our Yellowstone trip earlier. Last year we went on an extended Seattle/Alaskan Cruise vacation.
We’ve also started taking in more of the local state parks around us and will enjoy two 3–5-day overnight trips to these destinations staying at Airbnb’s along the way.
What are your retirement plans?
Financially – Ideally, we will rely initially on investment property cash flow to fund our retirement in our early years. It’d be less than ideal but we could also look into liquidating one or more rental properties to create additional cash.
We continue contributing a lot to our Roth 401k/403bs such that we will be able to tap into those prior to normal retirement age; however, I’d like to delay this so as to not stunt future growth. My wife and I have often found ourselves doing various side gigs so I also wouldn’t be surprised if we have some slight income coming in from a variety of sources.
Eventually, we will begin to draw down our retirement funds at a reasonable 3-4% rate.
Activities – See previous notation of more travel. Hopefully spending more time with aging family and able to just take in a morning coffee or a bite at a local diner and enjoying just sitting there chatting for a couple hours.
I’ve recently (last 2-3 years) gotten into running. I would enjoy being able to keep that up and be able to elect to do it whenever it is convenient for me rather than having to “fit it in” to an already busy schedule.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Healthcare costs and transitioning from earning a stable W2 income to relying on our planned retirement funds. My wife and I are still a decent bit away from retirement such that I honestly haven’t given too much thought to potential issues.
I think these will move more into the forefront of our minds when we are within 5-10 years or retirement.
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
Honestly unsure, I’ve always had in interest in money. My parents insist that I would frequently sell belongings that they paid for even in my teenage/early adult life (books, games, etc.).
I’d say that I really started consuming a lot of personal finance blogs and books right after college so around 2009. I remember listening to the Dave Ramsey radio show for a couple hours a day at my first accounting job.
Then I became pretty obsessed with things under the Rich Dad, Poor Dad umbrella (which is probably where my interest in real estate came in). I wouldn’t really say things clicked until about 5-7 years ago.
It’s at that time that I think everything sort of came together and rather than solely focusing on real estate investing, traditional/Roth contributions, etc. I began to think about everything holistically.
Who inspired you to excel in life? Who are your heroes?
My father. Some of the values I hold closest to me are ones that he instilled in me. Doing what you say you are going to do.
Being a provider for our family and being able to provide a life much better than what he personally grew up living with. I’ve also somewhat followed in his footsteps given that he was a career-long worker at a financial institution.
While we didn’t always see eye to eye on things (in my younger years) I know that he was always there pushing me even when I didn’t believe in myself and also pushing me to feel comfortable being uncomfortable.
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?
Yes, I find myself listening to more financial podcasts these days but still do find time to read a book here and there. The most impactful financial books on my journey have been.
- The Total Money Makeover by Dave Ramsey – This was the start of my financial journey. Although we are not debt averse, I do believe this instilled a healthy respect for the part debt plays in people’s financial journey.
- Rich Dad, Poor Dad by Robert Kiyosaki – This book was initially “out there” for me. It took me a couple read-throughs to comprehend it more fully. I credit this book with making me more comfortable thinking about building wealth through different avenues than just your normal 9-5 job.
- The Simple Path to Wealth by J.L. Collins – Early in my life and career I had far more time on my hands. With a young family, successful but at times stressful career, I’m in need of suggestions for “set it and forget it” type solutions. I credit this and a few other books/podcasts/blogs to helping me feel comfortable making the switch in our investing strategy to be a little more aggressive than I had been historically.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We do give a small portion to various charities. We donate to a local church that we attend.
I also am strong-armed into donating to a local financial institution PAC. Outside of that we also have minor donations to various charitable organizations through our employers.
At this point our donation is primarily financially focused and not much time focused. I do hope to do some time-based donations/giving to charity in retirement.
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 are quite a bit away from having significant planning for this. I’m not personally opposed to leaving an inheritance to our child and/or grandchildren at that point in time.
My wife and I have discussed starting the transition even prior to death with some of our real estate investments (by incorporating him into the business). I also have some pretty strong feelings about not wanting a large lump sum inheritance to be received by one of our heirs.
Rather, I’d much rather have it be received in some form of an annuity or something so that they receive amounts for the future as I worry about the ramifications of the receipt of something that substantial.
Your story is somewhat similar to mine. Both CPA’s, Both CFO’s ( however you are on a better earning schedule than I was, as I worked for a small not for profit). My wife also a CPA worked in the business office of a school district. I didn’t start saving seriously (maxing out mine and my wife’s 403b’s) until I was 45 so you have a great head start. You also have Roth 403b that was not available to me. A maxed out traditional 401k/403b is an income tax trap once you start withdrawing money. I urge everyone pay the tax now or you’ll be sorry later.
I had some real estate too but the hassle if “running” them made me give it up. Although it is nice to have a renter paying off the property.
Anyway you will be a very rich man in the not too distant future far surpassing you current nest egg estimate. I know because in 20 years I went from essentially nothing to an eight figure nest egg, sadly substantially all in non Roth retirement plans. Currently still doing annual Roth conversions and paying extremely hefty taxes on that, in addition to gifting about $100k a year.
I suggest being as aggressive as you can in your investment choices while you don’t need the money for ten or fifteen years. I averaged + -13% return over 20 years and still do today because I stay aggressive (even if I lost half of what I accumulated in a down turn I would still have more than I need)
Congratulations you wont believe the net worth you will accumulate in the next 10 or15 years
I appreciate the kind words and hope for the next 10-15 years!
It’s interesting to see a similar path! I had a couple influences earlier in life that had me contributing substantial amounts of money into retirement early and started me on a nice trajectory. 1) From the get go of my first job (16 years old) my father was in my ear encouraging me to capture that employer match. 2) My first “real” salaried job had mandatory pension/retirement contributions equal to like 8% of my pay. Finally, 3) my time in Oil & Gas also came with a lucrative 401k match (I believe 10-15%). All were substantial nudges to contribute as much as I possibly could.
I can agree on RE. 99% of the time I love it. Those 1% of times you have to send a contractor out I have stressful days. Thankfully we’ve had pretty solid tenants. It’s been good to us but there are days I also think about simplifying our lives and liquidating.
Fingers crossed on the net worth estimates! I’m appreciative to see someone who doesn’t think I’m crazy for going as aggressively as we have gone into the Roth. I know there are mixed feelings on it within the community. We can afford to pay the taxes now and I’m optimistic for that tax free growth and tax free withdrawals later in life.
Great share and congrats on your success.
I couple of things stick out here to me. First, your household is a a “high-earning W-2” household. You failed it list it but your largest expense is your tax bill. You also mention that your best investment is real estate. I’d agree. You mention that you’re interested in more real estate – something you can do together.
Given this – have you looked into the “real estate professional” designation for your wife? You’ll have to acquire more property – but you’ve mentioned this as your intention. As with most people, they get “tired of the hassle”. That’s “most” people. The tax-savings that you guys could experience over time (to help defray that big / growing W-2 income) would be worth the so-called hassle. Think – 3 figures. You guys are young and once you are able to meet the requirements – I believe it’s 750 hours per year managing and tending to your RE business, the tax savings would be worth more than the income she earns.
Had a couple of friends who are married – Dr. and Dr. Had this same dilemma. She quit her practice to manage their RE because the tax savings was higher than her income.
If you want to have true wealth – not just shaving 4% per year off of a 401k that you cobbled together, you’re going to have to save on your taxes and you’re going to need RE. It is, with a bullet, the best asset class you can find. Contribute to your 401k ( that pays you 30% return every year you contribute in the form of tax savings). But certainly use the RE to as a tax hedge and to build meaningful wealth. If that’s your thing. No other asset class comes close if you do this right.
My CPA is my most valued advisor – well her and my estate attorney. I use my CPA to guide me through tax savings with real estate. I own another business as a 1099 but I have saved several million in taxes now from using this “real estate professional” designation.
Go get em. I look forward to your follow – up interview in 3 years !
Thanks for the response!
I agree that your assessment of my largest expense being taxes is accurate. I also haven’t necessarily worked to minimize it by moving to traditional options in lieu of Roth though.
Regarding the “real estate professional” designation – This is something that is on my radar but we haven’t actively pursued it for a couple of reasons. My wife really does enjoy teaching and has expressed her intentions of staying at her school at least until our son makes it through her school (she teaches junior high). That’d put her on a timeline of at least 5.5 more years at her current school. We aren’t currently reflecting paper losses in our RE but I do believe we could get there with additional RE investments and choosing to perform things like cost segregation studies, etc. I don’t think with her working currently that we could get over the hours requirement but I could see her easily meeting the criteria upon leaving the normal workforce.
It might be worthwhile eventually for us to utilize a CPA tax professional with significant exposure to real estate. I’m a CPA myself but have never worked in tax thus am unaware of truly how to optimize our situation.
I hope I get an opportunity to provide an update in 3 years and look forward to it!
Best of luck to you. We sort of “evolved “ toward that and I give so much credit to my accountant. I still have a “main thing “ but RE has been rewarding.
Hope you stay in touch with your progress.
It’s comforting to hear other’s achieve this milestone have not done so without bumps in the road. I can only imagine the fear of losing one’s job just after welcoming a child into the family. I also appreciate how you don’t shy away from spending what makes you comfortable and enjoy life because you are also disciplined about reaching your goals. All about balance. Nice work.
Thanks for sharing! I liked your comment, “Although I selected earning, I do think that without the stable base of saving and investing that earning does very little for you as an individual.”
Many with large incomes seem to think they’ll always have lots of money and so continue their spending and borrowing ways, but without investing for future needs and to cover costs for troubles that could happen and do happen to people at various points in life, lots of them wind up in far less comfort later in life than they thought they’d have. Some even become poor. Being a financial teacher in my Church for many years, I’ve heard story after story with some saying they don’t know how they got their. Long-term investment would have mad a huge difference in providing the same or greater comfort during their senior years (I’m talking about 50’s and beyond).
The simple plan I share with people is to (a) budgeting to know the state of their income, expenses, assets, and debts and using that info to motivate them to curtail unnecessary / unreasonable expenses and spend well under their net income and to seek no cost low cost ways to increase income, (b) using discretionary cash flow to build a reasonable emergency fund, (c) then pay off their non-mortgage debts while putting at least 10% of their gross income into no-load low-expense large cap, mid cap, and small cap stock index mutual funds longterm, (d) then paying off their mortgages, (e) all while tithing and giving to honor the Lord and allow Heavenly windows to be opened over them. This is how I became a millionaire by 48 on a lowly state government public servant salary and retired at 55 a multi-millionaire. There’s certainly man others who out-shine my accomplishments, but this is a plan that can work for anyone.
Thanks again for sharing. May the Lord bless you and draw you nearer to Him!