Millionaire Interview 440

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 November.

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 58 years old and my spouse is 57.

We have been married for 31 years and dated for almost five years before getting married.

I always tell my wife that if she leaves me, I’m going with her!

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

We have two kids.

Our daughter is 23 and lives at home with us. She graduated from college in May 2024 and now works full-time.

Our son is 18 and is a college freshman. We miss him so much!

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

We live in a rural area in a mid-Atlantic state.

What is your current net worth?

$1,000,010.

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?

Assets:

• House $290,000 (90% of current value)
• Two Cars $24,000
• Taxable Brokerage $16,000
• High-Interest Savings Account $10,000
• 529 Account $14,000

Retirement:

• Roth IRA $392,000
• Wife’s IRA $233,000
• Traditional IRA $134,000
• Wife Pension $43,000
• SEP IRA $7,000

Debt:

• Mortgage $150,000
• Car Loan $3,000

I used the Investopedia definition of net worth which includes cars and 529 plans. I know some people in this community don’t like to include these items in their net worths, so be it.

You can do the superior dance if that makes you feel better! I don’t buy the logic about not including 529 plans in net worth.

Yes, that money will be spent in the future but so will a percentage of all future liquid assets. By the same logic, we shouldn’t include retirement accounts since we will spend them in the future!

As a retired state employee, my health care is totally covered for the rest of my life. At age 60, my wife’s small pension will start, and her health care will be totally covered for the remainder of her life (She worked for the state for 10 years before we started having kids).

While our pensions and health coverage are not part of our net worth, these benefits are worth hundreds of thousands of dollars or more over our life expectancy, and we are very grateful for them!

EARN

What is your job?

I retired from my job as a state employee after 30 years of service. I began receiving a monthly pension from a defined pension plan in July, 2019.

The plan also offers family health care coverage at a very reasonable rate. I am so thankful for this!

I work for myself (yeah, no more bosses!) as an educational consultant doing the same type of work I have done since 1992. I now work mostly in other states and with various national initiatives.

What is your annual income?

$90,000.

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?

Here is how my income changed over the years:

• 1989 – 1992, High school teacher
  $21,000 – $25,000
• 1992 – 2005, Adult ed instructor
  $25,000 – $48,000
• 2005 – 2010, Administrator
  $56,000 – $62,000
• 2010 – 2019, Professional development provider
  $52,000 – $62,000
• 2019 – Present, Pension plus gig worker
  $60,000 – $90,000

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

I am a poor role model for this. My first job was as a high school social studies teacher.

After three years, I moved into a role as an adult education instructor. I took the same salary I made as a ten-month employee to a 12-month job without any negotiating.

At the time, I was so glad to get out of teaching high school that I would have accepted almost any salary that I could live on!

After teaching for 16 years, I moved into an administrative role (similar to a principal). This resulted in a significant pay increase, but the job was very high-stress.

Our funding was always uncertain, and I had direct responsibility for over 70 employees at numerous class sites in six rural counties. To leave this role, we moved across state, and I accepted a new job at a university with a $10,000 pay cut.

Again, I did no negotiating since I was so happy to leave my former job.

My advice: Learn how to negotiate your salary and raises and believe in yourself enough to do it!

What’s your work-life balance look like?

It is great now that I’m not working a full-time job anymore. I love working for myself and setting my own work schedule.

I can say no to projects I don’t want to do and can mostly focus on what I like to do or am willing to try. I usually work 20 to 30 hours per week.

My wife and I are solidly in the sandwich generation. Our 23-year-old daughter lives with us (yeah!) and we both have elderly parents.

My 94-year-old Mom lives on her own (still drives!) in Florida and my wife’s parents live about 35 minutes from us. I manage almost all of Mom’s finances and all of my in-laws’ investments.

My wife regularly takes her mom and dad to medical appointments, and we help them with their home maintenance and repair.

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?

• Dividends – $2000 (This comes from the $16,000 invested in NLY, PFF, T, AGNC, and PCN and the high-interest savings account at CIT Bank)
• Citi Credit Card Double Cash (2% cash back) – $750
• Understanding America Study – $800

My wife and I both do surveys throughout the year for this organization. It provides date night money!

SAVE

What is your annual spending?

$60,000.

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

Housing, taxes, charitable giving, tuition/room and board, car related

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

In general terms yes but in specifics no. We know our fixed monthly expenses and pay off our credit cards every month.

For a few years when I taught Crown Financial courses at my church, I did a monthly spending plan. That time was our best for saving, debt payoff, and investing.

I want to get back to doing a monthly spending plan!

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

This has definitely varied over time, and I have never monitored the percentage of money saved. Let’s break it down into life phases:

Me as a single guy (ages 23 to 27):

• I saved a lot.  I was influenced by a chart I saw in my 20s that Dad sent me that was something like: Sally Saver saves $2000 every year in her 20’s for her retirement and then contributes no more.
• Peter Procrastinator waits until he is 30 and then saves every year until he is 65. The chart then showed Sally having a significant amount more saved at age 65 than Peter.
• I tried to be like Sally. I well remember writing those $166.67 dollar checks to Vanguard every month (the $2000 IRA contribution limit at that time divided by 12).
• I paid myself first and spent little. I lived in a modest apartment and walked to work most days.

Married with two incomes and no kids (ages 27 to 35):

• Financial priorities included saving for retirement, a home down payment, and paying off my wife’s college loans. We continued to max out retirement accounts and do some taxable investing.

Married with one income and one kid (ages 35 to 40):

• My wife stopped working in 2021 when our oldest child was born. I was worried about how we would survive on one income, but God blessed us significantly.
• I enjoyed several years of significant raises, and we were still able to save and invest a more modest amount during this period.

Married with one income and two kids (ages 40 to present):

• I had my higher-paying administrative job until I was 45. We were still investing in retirement accounts and the kid’s college funds but not as much.
• I stopped investing for retirement in my early 50s. With my pension and current job as a gig worker, our income has climbed steadily since 2020.

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

Start saving as young as possible. We set both our kids up with Roth IRAs in their mid-teen years.

This allows them to take advantage of compound interest for the long term. Many people miss out on their best investing years (teen age and 20s) because they are spending money on cars and consumer goods and taking out loans for college.

College isn’t broken. Taking on huge debt for a non-marketable college degree is broken.

Look for scholarships instead of loans. You can negotiate with private colleges for decreased tuition and other costs.

What’s your best tip for spending less money?

Be naturally frugal (smile). Over the last 40 years I have: Tried to make a game of spending as little as possible for food on work per diem trips.

I could eat for $1/day by having breakfast in the hotel breakfast bar, getting a bagel with peanut butter and an apple for lunch at the breakfast bar, bringing and eating a $1 can of pasta with an orange from the breakfast bar for dinner.

We saved a lot of money by being sensible with transportation. We bought used cars and are grateful to the first owners who absorbed the initial depreciation.

We view cars as a way to get from point A to point B and not as a status symbol. We held onto cars for as long as possible.

I drove my ’89 Toyota Corolla for almost 20 years. I drove my 2001 Toyota Camry (bought in 2010) for 14 years. It doesn’t make financial sense to put money into depreciating assets.

We don’t eat out as a rule. When we do eat out, we drink water, use coupons, and go out for lunch instead of dinner.

College expenses can be decreased significantly by community college classes. Our eldest completed her first two years at a community college.

All her credits transferred to the four-year college where she began as a junior. She completed her degree almost fully online so there were no housing costs.

Many high schools now offer dual enrollment programs with their local community colleges where classes count for both high school and college credit. There are nominal fees for these classes and students can rack up significant college credits during their high school years.

No one really needs the latest iPhone. We buy several generations back and use TracFone for service.

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

I am borderline ADD (attention deficit disorder). I’ll spend some money on my hobby fixation of the moment, but I’m allergic to spending a lot of money on things.

Lately, this has been a pair of high-end running shoes.

INVEST

What is your investment philosophy/plan?

Buy index funds and invest for the long term. Warren Buffett is not necessarily a great investor.

What he has done well is to start saving and investing early (age 11) and take advantage of compounding over the long term (80 + years).

What has been your best investment?

Marrying my wife. When I was young, I thought I wanted a subservient wife who would do my bidding.

I’m so glad this is not what I ended up marrying! I married a great friend who is very wise and loves me despite my many faults. I always say that if she leaves me, I’m going with her!

My best financial investment was putting money in growth mutual funds with Vanguard in the early 1990s. Though this hurt financially at the time, converting my traditional IRA to a Roth in 1998 and paying the taxes over four years.

What has been your worst investment?

I have done some reframing here. I now consider all mistakes to be OFLAGS (opportunities for learning and growth).

I am not going to beat myself up over past errors. Instead, I’m going to learn from them and not make the same mistake again. I’ll make other mistakes, and that’s OK!

What’s been your overall return?

I have never tracked this. I’ve been invested in index funds for most of my investing career.

I would say one or two percent less than the average market return since I started seriously investing in 1989.

How often do you monitor/review your portfolio?

Lately, I have spent a lot more time monitoring my mom’s and in-law’s investments. I review ours a few times a year.

I do believe in set-it-and-forget-it and using a simple portfolio of primarily index funds.

NET WORTH

How did you accumulate your net worth?

The key was saving early and investing aggressively. I maxed out retirement contributions for years beginning at age 23 with my first full-time job.

I worked to dollar cost average every month and continued to invest when values were both crazy high and gut-wrenchingly low.

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 have never been a high earner, and my salary was under $50k for many years. I’ll earn about $90k this year which will be our best earning year ever.

The greatest strength was saving early and investing early.

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

Market downturns always tested my resolve to stay invested, especially the madness of 2008-09. I ignored the noise and kept my head.

I read somewhere about imagining you are a cork floating on the water. The sea may be turbulent below, but you float above the raging water.

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

I continue to work part-time. I plan to continue to work in some part-time capacity going forward. We are leaving our retirement accounts invested.

We are in a challenging time with helping both kids graduate college debt-free. One finished debt-free in May (yeah!) and the other has seven more semesters of tuition and housing.

We are still looking for scholarships and increased institutional aid for him.

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

No. These net worth goals tend to become moving goalposts that are never reached.

NYU Professor Scott Galloway defines someone who is wealthy as one who has a passive income greater than their burn rate. This is a goal we would like to achieve.

We were completely debt-free from 2016 – 2021. We would like to be debt-free again. I love to see people do their debt-free screams on the Dave Ramsey show!

What I am trying to attain is contentment. The Bible says, “Godliness with contentment is great gain.”

Constantly striving for more leads to anxiety for the future and being miserable in the present.

The goal I really want to achieve is to give away one million dollars over the course of my lifetime. I have a long way to go to reach this goal but believe it is achievable.

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

I was 58. We crossed the millionaire barrier very recently.

I was updating our net worth spreadsheet and received a cell overflow error. When I enlarged the cell, I realized we were now millionaires.

While this was a nice milestone, it wasn’t as big of a deal as I thought it would be. A smile and a feeling of gratitude were the immediate results.

I also took some joy in sharing this milestone with my wife. We are not sharing our new status with others in our circle as we wish to be the anonymous “millionaire next door” and continue to live a frugal lifestyle.

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

I am naturally very frugal. My wife likes to use another word that sounds a lot like cheap!

While my wife is more of a spender, we are on the same page financially.

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

Moving from finance guru to finance guru and thinking they had all the answers. I now like to cherry-pick bits and pieces from many different gurus.

At times I blindly followed my dad, Dave Ramsey, Larry Burkett, Chuck Bentley, Warren Buffett, and others.

Paying cash for my first car. I wish I had invested most of that money in taxable funds and paid the car off over a few years.

I opened a 403(b) account as a young teacher and never looked at the fees it charged. I would have done better investing in an index fund in a traditional IRA.

I took out a 401(k) loan to pay off the mortgage on our first home. I got impatient to pay off the house and thought this was a way to pay interest to ourselves instead of the lender.

I missed out on some capital appreciation by doing this. Thankfully this was not a large amount of money.

I bought some poor individual stocks with eye-popping yields. While these stocks paid handsome dividends, the principal loss when I sold them offset much of the interest gained.

I took a level pension. After five years, I see the value of it has already eroded with inflation. I’m thinking I should have taken the higher payout earlier/less payout later option and invested the earlier proceeds.

After reading multiple articles in the early 2000s, I choose to save for the kids’ college expenses in our Roth IRA. What I didn’t realize was that pulling the money out from the Roth, though tax-free, is considered income and would hurt our ability to receive need-based aid.

I now do all our college savings in a 529 plan. Advice for those with kids who plan on college: save early and often and invest aggressively for the first 14 years.

It’s not really saving for college; it’s investing for college!

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

I hope our story serves as encouragement to others with modest incomes. It is possible to achieve wealth over the long term by saving and investing early in life.

There is a tradeoff between working in a public sector vs a private sector job. The private sector job pays more but entails a higher risk of burnout, layoffs, and unemployment.

A public sector job pays less but has stability and benefits like defined benefit pension plans. To receive the pension, one usually must work for 20 to 30 years for a government agency. This is a less exciting path to wealth but Dad and I proved it can work.

I listened to a podcast recently where a father of several children encouraged them to save money for a down payment on a rental property instead of a car. He wanted their first major purchase to be an appreciating asset versus a depreciating one.

I love this kind of thinking!

Building wealth is an exercise in patience. My father (who passed recently at age 96) became a millionaire after he retired.

He turned modest savings, a retirement settlement, and a defined benefit pension into over two million dollars through diligent research and regular investing. This is contrary to our culture who want hacks, tips, and tricks to become instant millionaires.

Most millionaires do not achieve wealth instantly, but that’s what we want. Dad was still reinvesting his dividends at age 96, and he lived off his pension, social security, and RMDs.

FUTURE

What are your plans for the future regarding lifestyle?

I have downsized my job. I left full-time work at age 53 and have worked part-time for myself since then.

I’ve worked an average of 20 to 30 hours per week since mid-2019.

What are your retirement plans?

I believe we were created to have regular rhythms of work and rest. When we do too much work or rest, we compromise our health and jeopardize our longevity.

I’ve heard too many stories of people dying within two years of their retirement because they no longer have a purpose in life. We need a purpose to get ourselves out of bed every morning.

Riley Moynes has a wonderful TED talk on the four phases of retirement (vacation, loss, experimentation, and reward). I see myself experimenting on this and seeing where I end up.

I am definitely not planning on having a vacation-only type of retirement. I will continue to explore what my purpose should be and act accordingly.

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

I want purpose in retirement. I want to have a meaningful last 30 years and not just sit around waiting to die.

I will explore this as we continue to serve our elderly parents and pour into our kids during the sandwich generation phase we are now living.

MISCELLANEOUS

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

My father taught me a great deal about investing. He helped me buy my first stock in General Motors back in the 1970s.

Things really clicked with me as a very young person. I was always a saver and investor instead of being a spender.

I love to read about personal finance and educate myself by reading books, articles, and watching videos on YouTube. I love to explore new perspectives and explore problems from different angles.

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

My father helped shape the investor I am today. He primarily invested in active management funds and believed you could beat the market (seeing his finances convinced me that we cannot beat the market over time).

He provided my early financial education and gave me two important books: Common Sense on Mutual Funds and The Templeton Plan: 21 Steps to Personal Success and Real Happiness.

Dad discovered in his 40s his love for investing. Working in New York City fueled a desire to become a stock broker.

Ultimately, he decided to keep his stable mid-level management job at the telephone company since he had a family to support instead of pursuing his dream. There is a man I’ve known for years who I would like to emulate.

He stopped working for pay in his 50s and invested his life in overseas missions work and mentoring younger men. He orders his life around these priorities, and this is exciting to see!

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?

• Common Sense on Mutual Funds by John Bogle – No investor beats the index over time because of regression to the mean.
• I Will Teach You to Be Rich by Ramit Sethi – Little wins with money in key areas can make a big difference.
• The Psychology of Money by Morgan Housel – Doing well with money has very little to do with smarts and very much to do with behavior.

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

Yes, we do. I strongly believe in the biblical concept of the tithe.

My wife and I give at least 10% of our income to our church and other ministries. We give between 10 and 15% of our income every year.

I do believe that one day we will stand before God and give an account of our lives.

I don’t think God will ever say to anyone, “Hey, great portfolio though maybe you were a little light on bonds. You did a wonderful job of accumulating great wealth!” It will be more like, “What have you done with what I’ve given you? How have you helped relieve suffering, sickness, and hurt in the world around you?”

Giving is something we get to do, not something we have to do. Our lives are much richer when we give and much poorer when we don’t. Just ask Ebenezer Scrooge!

I know many in this community hold Vanguard index funds. During his high-earning years at Vanguard, Jack Bogle gave half his income to charity every year.

Winston Churchill is quoted as saying, “We make a living by what we get, but we make a life by what we give.”

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?

Our kids are the beneficiaries in our will. As noted above, we plan on giving away as much as we can during our lives.

We will follow: “Do your givin’ while you’re livin’ so you’re knowin’ where it’s goin’!”

An important thing is to continue to do financial education with the kids so they can make solid financial decisions when they inherit money. I don’t want my kids to be waiters (drifting in life waiting to receive their inheritance).

I’m proud of my daughter who has fully funded her Roth IRA for the past two years and spends wisely. My son and I watched videos about economics and investing together during one of his high school years.

That really resonated with him, and his college major is Trust and Wealth Management. He is doing well in his business courses as a college freshman.

To sum up: If you think you are all that and have pulled yourself up by your own bootstraps, read Outliers by Malcolm Gladwell. In that book, you will see how factors like when and where you were born have a huge impact on your ability to create wealth.

I look at my father as an example. Born in 1927, he was drafted into the army right at the end of World War II.

He never saw combat, served 18 months, and enjoyed all the GI benefits like college tuition assistance. He began investing heavily in the early 1980s, just as the great bull market of 1982 to 1999 was beginning.

Life may have been far different for him had he been born in 1917 (faced World War II combat) or 1907 (important early investing years swallowed by the Great Depression).

Thanks for reading this!