Millionaire Interview 441

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 January.

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 52. Spouse is 49.

We recently celebrated our 20th wedding anniversary.

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

We have two amazing, high-energy teenagers.

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

We live in a HCOL suburb of a large Mid-Atlantic city.

What is your current net worth?

Overall, I’d peg it at $4.3 million.

But my personal definition of “net worth” is liquid net worth — so in that sense, we just crossed $3 million.

While we do have home equity, we don’t plan to sell or move. And I consider our 529 college accounts “pre-spent” and don’t count them either.

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:

• Brokerage account: $925,000
• Cash Balance Pension Plan: $955,000
• My 401k: $922,000
• Wife’s 401k: $72,000
• My Roth IRA: $150,000
• Wife’s Roth IRA: $157,000
• Home equity: $1,100,000 (per Zillow estimate, which feels about right)
• 529 accounts: $460,000

Debts:

• Mortgage: $394,000 (10 years left at 2.125%)
• Credit cards are paid off monthly and we own our cars outright.

EARN

What is your job?

I’m a writer and editor for a specialty trade publication in the finance space. I also write books, consult a bit on the side, and do some paid speaking.

My wife is a freelance consultant.

What is your annual income?

Our combined income last year was $475K.

But it’s highly variable — a lot depends on whether I have outside book or speaking income (last year I did) and how much my wife works.

Tell us about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?

My first job was delivering newspapers as a 12-year-old for $50 a week, plus tips at Christmas time (for readers under 40: in the olden days before the internet, people read the news on folded paper delivered to their homes by children). I was instantly hooked on earning money and went on to work as a burger-flipper, mover, car wash attendant, putt-putt golf employee, bar back, and waiter before graduating from college and becoming a journalist.

After college, I moved West and worked at a series of small newspapers and magazines. My first full-time job paid $24,000.

But early on, I discovered I could make extra money by writing freelance articles on the side, mostly for local alternative weeklies and business publications. So before the term even existed, I developed a “side hustle” that appealed powerfully to the capitalist in me and generated an extra $10,000 – $20,000 of income.

Plus, it was fun. Much of my writing for alt-weeklies involved profiling bands and reviewing concerts and CDs, so not only did I get free press passes to shows, but I often got to hang out backstage afterward.

Music journalism is a young man’s game. In my twenties, I was single, living in a group house with my buddies, and capable of maintaining a veneer of professionalism by staying out till dawn and still showing up to my day job on time.

But eventually, the lifestyle catches up with you. It caught up with me right around the time I met my wife, which was a happy coincidence.

We moved east, I settled into a “normal” job as a magazine editor (paying about $60,000) and redirected my freelancing energies into writing for magazines, which paid better than alt-weeklies and didn’t require me to be in a club at 2 a.m. Probably a worthwhile tradeoff.

I job hopped a couple of times to boost my salary to $115,000, grew my freelance income as high as $50,000 (in good years), and wrote a book, which elevated my profile in the industry and led to my first paid speaking gigs. All of this had a flywheel effect on my career.

Visibility led to job offers and new writing gigs.

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

I don’t work in a field that mints too many high earners. But the lesson of my career is that your income needn’t be limited to what you earn at your day job.

Not only does a side hustle bring in extra money, but it can also open doors that advance your main career. Several of my full jobs came about because editors saw something I’d written and reached out to me.

The other thing I’ve done well is leverage the offers I’ve gotten to improve my salary, tailor my job description, negotiate book leave, and even choose my boss. This is one part of my experience that may be useful to folks following more traditional career paths in the corporate world.

An early mentor told me that “the appearance of scarcity” is the best leverage you can have over an employer. If other outlets want to hire you, you’ll instantly become more attractive and valuable to your current employer — even if that employer didn’t previously evince a ton of appreciation for you, and even if you’re not actively looking to leave.

His point was that in the same way, a girlfriend gets possessive when others flirt with you, your employer will be much more interested in making you happy if they’re aware that others are trying to poach you.

He coached me through a script I’ve used successfully at several points in my career. When an outside offer comes in (or even outside interest), go to your boss and say, “Listen, I’ve been approached with this great offer, but before I make any decision, I wanted to check in and get a better understanding of where things stand for me here and what you think my future looks like in terms of opportunities and salary.”

The implicit message, delivered in a friendly, non-confrontational style, is that they might lose you. The subsequent discussion will include tangible steps they can take to keep you, hopefully including a raise.

Obviously, it helps to have an offer in hand that eclipses your current salary. Both times I brought one, my employer matched or beat it.

But the nice part about framing the discussion this way — as an informational chat, rather than an ultimatum — is that it’s useful even if you’re secretly not looking to leave. I’ve gotten raises and other benefits (including ridding myself of a bad manager) simply by notifying my boss that I’d been approached and letting the conversation flow from there.

If you’re a valuable enough employee and easy to work with, my experience is that bosses will go to surprising lengths to keep you happy, if they can.

My mentor also had valuable advice about how to conduct the other side of the discussion, with the potential new employer. When approached, he told me, always respond by saying you’re grateful, but that you’re quite happy in your current gig — and it will take a lot to pry you away.

This politely pressures them to improve their offer before negotiations have even commenced. This tactic, more than any other, has been immensely valuable to me and accounts for a great deal of my earnings over the years.

Funny addendum: The one time I didn’t employ these tactics was when I left my last job for my current employer. I went in to thank my boss and tell him I was leaving.

He looked grim and asked me, “Is this a negotiation or a goodbye?” Even though it was goodbye, the exchange underscored for me how willing employers can be to negotiate if approached in the right way.

What’s your work-life balance look like?

It’s currently pretty good, but that’s a relatively recent development.

Before we had kids, I maintained a pretty grueling freelance schedule that was great for growing our income, but murder on work-life balance. Even after I dropped the late-night arts writing, I worked many nights and weekends churning out pieces.

Some were enjoyable, but I could feel myself beginning to burn out. But instead of slowing down, I took on bigger projects.

As a young family striving to buy a house in a good school district in a HCOL area, the self-imposed pressure to just keep producing and earning felt inescapable, at least for me. When I was offered a $40,000 advance for my first book, I didn’t even consider saying no.

Adding kids to that equation intensified everything. They’re expensive! They’re also awesome and my wife and I didn’t want to deprive them of great experiences. So I kept grinding.

The other big stress factor, then and now, is that journalism is a shaky industry in long-term decline that offers little job security. I’ve had countless talented friends and colleagues get laid off, many who struggled to find new jobs.

Psychologically, I had a hard time turning down freelance work because I always feared I might be next — and this fear would send me spiraling, worrying about how I’d support the family, whether we’d default on the mortgage, etc. Not healthy!

Several things have alleviated that pressure — somewhat. First, I was recruited to my current job and used everything I’d learned to negotiate a much higher salary ($240,000).

Then my second book sold very, very well, which led to paid speaking offers and TV appearances. At this point, I felt financially secure enough to stop freelancing (good).

But the years of constant grinding had taken a toll on my health and my marriage (bad) and left me completely burned out. So about a year ago, I went on an indefinite hiatus from side hustles and am happy to report that my quality of life and overall family happiness has improved dramatically.

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’ve laid them out. Freelance writing is highly variable, as is book writing.

A lot depends on your professional profile, how your last book sold, whether you specialize in a topic people want to read and talk about, whether that topic is sufficiently appealing that companies and universities will pay you to come speak about it, and (frankly) whether you’re good at TV and public speaking.

In terms of writing, my pay scale has ranged from $25 for a CD review (in the ‘90s) to $10,000 for a long magazine piece. Book advances have been $40,000 and up.

Haven’t kept great records on speaking fees, but mine have probably ranged from $1,000 to $8,000.

SAVE

What is your annual spending?

Lately, around $200,000.

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

• Mortgage: $34,000
• School tuition: $36,000
• Property Tax: $13,500
• Home/Auto/Umbrella insurance: $5,600
• Home improvements: $14,000
• Kids’ sports: $12,000
• Tutoring: $5,000
• Medical/Ortho: $18,000
• Grocery: $17,400
• Restaurant: $7,000
• Travel: $9,800
• Clothing: $3,000
• Professional services: $6,200
• Cable/internet/streamers: $2,400
• Phones: $1,700

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

We did early in our marriage.

But we realized we’re on the same page when it comes to spending and periodically have check-ins to ensure we stay that way.

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

I honestly don’t know and haven’t kept track. Partly that’s because our incomes fluctuate so much and there’s only so much math a man can handle (remember, I work with words, not numbers!).

But it’s really because we’ve always lived below our means and automatically saved and invested as much as possible.

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

Pay yourself first. We max out retirement plans early in the year, always do backdoor Roths, never carry a credit card balance, and buy cars in cash — basically, the things you learn on good finance blogs like ESI.

But I have to credit my accountant for what’s probably been our best savings vehicle: a cash-balance pension plan for my 1099 earnings.

For those who aren’t familiar (I wasn’t), these plans basically function as gigantic traditional IRAs. When I started earning real book and speaking money, my accountant had me set one up.

They’re a bit complicated in terms of paperwork and administrative costs. But they’ve allowed us to make (and invest) tax-deferred contributions as high as $100,000 annually, which come on top of the 401k and Roth contributions.

The pension can later be rolled over into my 401K.

What’s your best tip for spending less money?

Embrace stealth wealth. Establish a mindset where you don’t feel the need to keep up with the Joneses.

The Yoda-level advance I’ve made recently is to focus on the freedom and security that investing — rather than spending — money can bring you. I was excited to invest the entirety of my last book payment because it pushed us above the $3 million mark.

I literally did not spend a penny of it, and couldn’t have been happier. This might strike people as odd.

But it’s a useful outlook to adopt for the purpose of limiting spending.

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

Our secret splurge is travel sports for our kids. Both are serious, highly committed athletes who play on high-level teams and get a great deal of enjoyment out of it.

Travel sports often get criticized for valid reasons — cost, time commitment, exclusivity, etc. But our kids have both flourished: they’re healthy, athletic, constantly outdoors, and have developed close friendships with kids from different backgrounds and places — friendships where a phone screen isn’t the primary means of communication.

It’s helped build their self-confidence and instill a work ethic that’s translated into the classroom.

The second splurge is private school for my youngest, who has a mild learning disability and fell behind during the awful, Covid virtual school years. He’s thriving now, so we’re more than happy to pay the tuition.

Third and final splurge: straight teeth for the kids. Good Lord is teenage orthodontia expensive!

INVEST

What is your investment philosophy/plan?

I’m a committed Boglehead and avid follower of the ESI principles.

I wouldn’t buy Bitcoin at gunpoint.

What has been your best investment?

A wife who shares my financial outlook and values.

Beyond that, low-fee index funds all the way.

What has been your worst investment?

A few years after college, flush with freelance earnings and having no clue what I was doing, I started pouring money into a leveraged technology fund because it seemed exciting and only went up. My $20,000 investment climbed to six figures.

Then the dot-com bubble burst. I was staying on a friend’s couch and vividly recall watching the CNBC ticker bring steady news of my declining wealth.

I think I ended up selling for well under $10,000. After that, I turned my money over to my parent’s financial advisor to invest for me.

What’s been your overall return?

After discovering FIRE from a New Yorker profile of Mr. Money Mustache in 2016, I politely fired the financial advisor and began managing my own portfolio, eventually discovering ESI, White Coat Investor, Financial Samurai, The Compound and “Animal Spirits,” and others whose personal finance wisdom has been invaluable.

Per Vanguard, my overall return since I set up the account in 2016 has been 9.3 percent.

How often do you monitor/review your portfolio?

Daily. Sometimes more than daily.

Okay, okay — most days more than daily! Can’t help it, since I work in the financial world.

In my defense, I never trade impulsively and have ridden out every market crash since the GFC. In fact, as I was reviewing my finances for this interview, it struck me that I’ve never sold anything since 2016 for reasons other than tax harvesting.

I’ve always rebalanced with new contributions.

NET WORTH

How did you accumulate your net worth?

We grew our net worth fairly slowly and steadily by following the ESI principles, even before I even knew what they were. Then I had a series of big earning years, mainly due to book writing, that were supercharged by the long bull market.

Owning a home in a HCOL also helped, since the home equity gains have been substantial.

Finally, when it comes to personal finance and lifestyle, I’m a fanatical optimizer. It’s just part of my personality.

That’s helped us to build wealth in small ways (let me bore you for hours talking about cash-back credit cards) and large ones (we’ve refinanced our mortgage six times).

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?

Unquestionably, earning was my biggest strength going back all the way to my childhood. It still may, even though I’ve semi-retired from side hustling.

But over the last 7 or 8 years, thanks mainly to personal finance sites like ESI, I think I’ve gotten nearly as good at the investing side of things. By this, I don’t mean picking stocks or trying to beat the market — I don’t own any individual stocks and have no interest in trying to beat the market.

What I mean is that I’ve developed the knowledge and self-confidence to guide my family to financial independence by investing in low-fee index funds, allocating those investments to the appropriate accounts, and taking advantage of the mechanisms (e.g. backdoor Roths) that help speed up that journey.

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

Other than my early misadventures in leveraged tech funds, I really haven’t faced many road bumps. In this regard, we’ve been very fortunate.

It helps having parents who both worked full-time jobs and modeled good financial behavior.

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

Staying on the ESI path. At this point, especially given the stock market’s performance over the past few years, a significant part of our income is coming through equity gains.

My goal is to leave that money untouched while adding as much as we can reasonably manage with what’s likely to be reduced work earnings in the coming years, as I scale back the freelancing.

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

Originally, I’d been aiming for a $5 million liquid net worth, enough to furnish a $ 200,000-a-year income while adhering to the 4 percent rule. But given the recent run-up in inflation, I think $6 million might be more appropriate.

This isn’t a question that’s really burdening me or my wife since we both enjoy our work and are more interested in reaching “FI” than “RE.”

Unless something pretty drastic happens, I expect we’ll get there fairly easily.

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

My best guess is we crossed that barrier around 2014 or 2015, due mainly to home equity.

But that was before I discovered FIRE, so we were unaware of the milestone and didn’t change our behavior.

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

I’ve always innately understood that you have to work to earn money and live below your means if you want to save it, so that’s been my mindset since childhood. It’s really the best foundation for reaching financial independence.

I’d also add that working so many different low-paying service industry jobs when I was young underscored for me how difficult blue-collar work can be. The experience motivated me to be more serious about my studies and work hard in college to set myself up for a career that would be both intellectually stimulating and allow me to earn a good living.

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

Well, I’d love to time-travel back to early 2000 and sternly instruct the younger me to diversify out of that leveraged tech fund, pronto. It’d also have been nice to discover FIRE a few years earlier and save those needless advisor fees.

But I’ve been fortunate that I really haven’t made many big missteps.

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

Start early and stick to the principles. The earlier you establish good habits, the easier it is to maintain them.

I really didn’t figure this out until I was in my late 30s/early 40s. If I’d known in my 20s what I know now, I’d be much wealthier — not that I’m complaining.

With this in mind, I taught both my kids about finance at a young age and can see that it’s clicking. Both work summer jobs and are the only ones in their friend group with Roth IRAs.

FUTURE

What are your plans for the future regarding lifestyle?

As astute readers may have gathered, I have a hard time easing up and slowing down, even when the numbers show pretty clearly that I can. One nice thing about curbing the side hustling is that it’s freed me up to spend more time with my family, which suddenly feels more important as my wife and I realize that we only have a few more years before both kids are off to college.

My plan is to spend as much time together as a family as we can. And with that goal in mind, I’ve put aside a $30,000 travel budget to do some fun trips before they fly the coop.

One thing that reading the millionaire interviews on ESI has really emphasized to me is that experiences are more valuable than reaching the next financial milestone a little bit quicker. So I’m trying to be more conscious about putting that lesson into practice.

What are your retirement plans?

Great question, and I don’t have a clear answer yet. I’m not particularly worried about the financial side of the equation.

But I do worry quite a bit about the activities and lifestyle component, especially for me. One unfortunate byproduct of the hardcore freelance lifestyle is that it can be very isolating; you’re alone with a laptop writing all the time.

My wife has a ton of different friend groups — book club, neighborhood moms, exercise friends, PTA, and a half dozen others. I really don’t have anything similar.

Partly, this owes to the fact that I don’t participate in the most popular male-bonding activities, like golf or pick-up basketball. Nor do I have any real outlet for sharing my interest in personal finance (which is one thing that led me to do this interview).

In my personal and professional worlds, people are very private about their finances, and the fact that I’m probably doing much better financially than many of my coworkers makes it even more taboo. This is something I definitely need to figure out before retirement.

But my wife and I both love to travel, so there’ll be plenty of that. We’ve talked about getting a second place near wherever the kids wind up.

But overall, my post-retirement future feels very unfocused, and I’m not quite sure how to rectify that.

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

I know the popular answer is healthcare, but that doesn’t particularly worry me. Aside from the social issues I’ve mentioned, what also worries me is what I’ll do when I reach a stage where I can no longer manage my own finances — especially if that comes suddenly (e.g., hit by a bus).

Lately, this scenario has been weighing on me because I’m watching it happen with my parents.

Over the last year, both of them (mid-80s) have pretty visibly begun to lose their cognitive abilities. Particularly my father, who always managed the family finances.

Thankfully, they recognized this and at Christmas asked if I’d take over their finances since I’m set to be the executor of their estate. Of course, I agreed — which led to the somewhat surreal episode of me firing the same financial advisor for a second time.

But for some reason, taking responsibility for their finances feels more daunting than managing my own, perhaps because they really wouldn’t have any kind of recourse or trusted ally if something were to happen to me.

This has also led me to realize that I should have a clear succession plan for handling my own family’s finances. My wife has made clear that she isn’t interested in learning about finance.

So I’ll have to figure something out. If readers or MMM members have experience navigating this sort of thing, I’m interested to learn all I can about the best way to approach things.

MISCELLANEOUS

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

Having a paper route at age 12 gave me early experience tracking money. That helped a lot.

But I was also influenced by watching my father. He was a teacher, who subscribed to an investing publication called “Fabian’s Telephone Switch Newsletter.”

It was run by a guru-type named Dick Fabian whose financial philosophy held that you should be in stock mutual funds when the market was rising and money market funds when it was falling. Subscribers would call an 800 number to learn if they needed to buy or sell.

My dad would let me call and listen to the recorded message. Writing it out now, this story sounds so crazy that I went back and checked to make sure I wasn’t imagining or embellishing my memories.

I wasn’t! I found this wonderfully daffy Washington Post story about the Fabian newsletter, memorably titled, “When the Fabians Twitch, Thousands Switch, But Are They Getting Rich?” 

So as weird as it sounds, this Fabian fellow had a profound impact on my financial journey. I vividly recall sitting in my dad’s office as a child, reading the newsletter, and poring over the tables of mutual funds to see how they’d performed.

It instilled in my young brain the idea that there’s a mystical wisdom about money that some people possess — and others don’t — that is the key to amassing great wealth. I still think that’s true.

But now I know that adhering to the principles of earning, saving, and investing are the keys to building wealth. Not some shady, market-timing newsletter lol.

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

Definitely my parents. Both drilled into my head that I should find my passion and follow it, regardless of money.

They explained that as long as I earned and saved, and lived below my means, I could have plenty of money. While they never had an extravagant lifestyle, we were comfortably middle class and often traveled overseas.

I’m glad I followed their advice.

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?

It’s more than a bit ironic that although I write books, I don’t really read them for financial advice. For whatever reason, I prefer blogs and websites.

That said, I did read and enjoy Morgan Housel’s “The Psychology of Money” and also plan to bribe my kids (and maybe my wife?) to read J.L. Collins’s “A Simple Path to Wealth,” just to ensure that they have a basic foundation of financial knowledge. Who knows?

Maybe the personal finance bug will bite and they’ll take a bigger interest in money, like I did!

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

We give to several local charities and school organizations we care about. In the past, we’ve both tended to volunteer our time coaching, running swim teams, and that sort of thing.

Partly, we enjoy the time with our kids and the great families they associate with. But it’s also because our professional situations always felt so tenuous, so time was easier to give than money.

Now that we’ve achieved some financial stability, I expect we’ll give more.

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 plan to leave an inheritance to our children, and, if we have them, grandchildren. One great thing my parents have done for our kids is make monthly contributions to their 529 accounts — both are retired teachers and value education.

That’s been remarkably beneficial as we approach the college years and see today’s astronomical tuition rates. I plan to do the same.

Both our kids are well on their way to mastering the ESI principles. So I’m pretty confident they’ll be responsible stewards of any wealth we bequeath them.