Millionaire Interview 442

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 am 57 years old and my wife is 44 years old. We have been married 13 years.

We met through some friends on Labor Day weekend and were married almost exactly a year later.

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

We have 2 boys ages 6 and 9 years old.

I had children a little later in life but can’t imagine life without my boys and wife.

They keep me busy but wow the cost is not what I budgeted.

People often mention there are some advantages financially to have children later in life. I am not sure. I just believe any time you can have them is a blessing.

We made the decision to live on my income so my wife could be home with the children. In most families we know both spouses work. We chose to make this work no matter if we needed to cut our lifestyle expenses.

My wife did have her own home-organizing business she started after our first son was born. Covid restrictions ended that business. Prior to that, she was a salesperson in veterinary medicine. It required too much travel all over three states by car that wouldn’t be feasible with young children.

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

We live in a high-cost-of-living beach town within Los Angeles County, CA. Everywhere in California is expensive from day-to-day living to taxes.

What is your current net worth?

Net worth is currently $10.2M. It varies month to month based on cash reserves.

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?Total Assets-$11.83M

• Real Estate (Income Property): $7M. Two Industrial buildings next to each other. One is $4M and the other is $3M
• Real Estate (Residence): $3.25M
• Real Estate (Vacation Home): $1.1M
• Cash: $251K
• Roth Ira: $156K
• Loans: $71K

Liabilities: $1.62M in mortgages.

• Rental Real Estate Mortgage $1.18M total $539K and $643K respectively
• Personal Residence: $330K
• Vacation Home: $97K

Some explanations:

• The industrial buildings previously were inhabited by my company. This all changed in September of 2022. I will explain later in this article.
• I include my house in my net worth as I believe it is an asset. This is especially where I live and the amount it has appreciated since purchased in 1999.
• The values I use for real estate are conservative and on the low end.
• I did not include our life insurance, cars, golf carts, boat, or my vintage 1965 Mustang ($40K -$50K) in net worth calculations.

EARN

What is your job?

I am currently retired.

Prior to retirement, I was the CEO/Pres of a second-generation family business in the publishing/printing industry. I decided to shut down my printing business in September of 2022 and switch to being a landlord.

What a long and protracted process that turned out to be.

I started as a display advertising salesperson in one of our trade publications. By the time I was 29 years old, I was managing two separate printing companies and two publications.

What is your annual income?

Income is difficult for me to define these days as a recent real estate landlord. Here are the numbers from my first full year of rental income in 2024:

• Gross Rents: $389,000
• NCF before Principal Payment: $269,000
• Net Cash Flow (NCF): $206,885
• Net Taxable Income: $164,000 but I have loss carryforwards, capex and more depreciation that will net zero income for a few years.

I use the cash flow number meaning the amount I would have in the bank after expenses each year to calculate income. That is the Net Cash Flow of $206,885 last year.

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 career job was selling ad space for our family business with a monthly trade publication. My dad offered me the job upon graduation from college in 1990.

Starting salary was $23,500.

While my dad hired me I did not work directly for him. I worked for the editor/sales manager of a trade publication.

We also printed the publication in-house. My manager who was one of the original investors (10%) of the family printing company taught me everything about sales.

In 1992 my manager semi-retired and handled only editorial while I oversaw all ad sales. Part of my job was also laying out the editorial and ads for each edition.

At one point I even handled the pasting up of the whole paper. That was all done with wax and exact-o blade cutting paper to paste on whiteboards.

Raises were not too much each year although I received small bonuses based on profits and a leased company car. Working for your parents has advantages but a high salary wasn’t one of them in my case.

In 1997 I took on a second job. It is a long and complicated story about court, family business, and remarriage.

I’ll try and keep it short.

The company was put into a trust for my sister and I when we reached 27. Inheriting the company was dependent when my grandfather’s new wife passed.

My dad left the company in 1975 to start his own because of the arrangement. He was running the company at the time and his father was retired and just remarried.

20 years later and a host of shady things that occurred the court put me as one of the trustees for the estate/company. Essentially it was to revive the company that had been mismanaged and plundered. I was 27 at the time.

By 1997 the board hired me to run the company. I asked for $100,000 they paid me $50,000 plus a year-end bonus of 10% based on net profit before taxes.

In 1997 I was making $39,000 from the ad sales job and $50,000 from the second job as president of a separate printing company. I’ll refer to that as my second job throughout this article.

I worked at two different printing plants across town from each other. Traveling to one in the morning and my parent’s place in the afternoon.

By the first year, I had successfully turned the second company profitable. The board authorized to raise my salary to $100,000 plus a bonus of 10% on net profit.

They also included a car lease, insurance, and a gas card.

Eventually, I just took over by what I call “osmosis” of the printing operations at my parent’s plant as well. My father eventually agreed to pay me to run the printing side with a salary of $100,000 and his idea of appropriate bonus calculation each year if profitable.

I think he began to trust my ability once I turned around and grew a second printing plant.

By 2000 I was making $100K from each company plus bonuses. 2001 was my biggest w-2 and my earnings peaked at 34 years old.

I thought it would just keep going up. Both companies made the top 50 fastest-growing printing companies in America that year. No. 7 and No. 11.

I learned a valuable lesson as I made the 2nd company $500,000 profit in one year and if I was the owner I would have netted close to that in pay according to our CPA. Made me strive to eventually be an owner.

The table below is my SS report on W-2:

You can see some sparse years starting in 2019. Also when we merged companies my salary immediately went from a $200K guarantee to $150K.

The merger hurt my earnings but helped the company.

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

Not sure I am the best as my career path was not normal. I think you need to advocate for yourself but make sure when you do you are ready to perform the work needed.

When someone asked me for a raise, I respected that but always held them accountable.

I think you need to take risks. Risks involve tasks you are not completely prepared or trained to do.

Always be open to learning new things. Nothing should be beneath you.

Treat everyone fairly no matter who they are. My original manager/mentor said to me “You pass the same people on the way down you passed on the way up.” So be kind to everyone.

In my case, I felt I had to work harder than everyone else. I was the boss’s son and felt rightly or not I had to prove I was worthy of the position I held, both to my dad and to employees of the companies.

I may have taken this to the extreme, but I’d do the same thing again. Do what it takes to get the job done than worry about accolades or pay.

My focus was sales growth and profitability to increase my earnings. Growth for growth’s sake is not good as it needs to accompany higher probability.

I also acquired a competitor’s client list to jumpstart growth. It was a good fit and we paid a percentage of the sales we collected.

We had the ability to upsell clients with more capabilities, so it was a good fit for us and the client.

What’s your work-life balance look like?

My work-life balance has been great now since retiring. In June 2023, I walked away from daily work and 1 ½ hour drive each way.

That drive alone I did from 7/3/91 was a huge drain. I started to do the math 32 years x 5 days x 52 weeks x 2.5-3 hours = !@@#$% I don’t even want to know.

Life is great now we spent the summer at our lake mountain house. I golfed, hiked, boated hung out with the kids, and had adventures for 2 months before school started up.

Threatened to take up tennis and pickleball but mostly golfed.

Prior to this, I worked an insane amount. Month end was tough because I had to get the publication out and that was often late nights or all-nighters.

At one point between the two printing companies, publishing, and travel I spent 39 hours awake.

It would have been tough to have a family in those younger days. By the time I met my wife, I had my work-life balance more under control.

I was only going to one plant as companies merged.

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?

All my sources of income currently are from my two commercial rentals.

Prior to that, I had w-2 income. I had income from an equipment leasing partnership. Equipment we purchased and leased to our company.

I also had some personal loans to my family and the company that paid me interest.

SAVE

What is your annual spending?

This is tough to track these past couple of years as there were huge investments into my buildings that depleted a lot of my savings. This venture changing my career was drastic and expensive.

Living expenses last year were $150,000.

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

• Mortgages: $32K
• Insurance: $20K
• Utils: $9K
• Restaurants: $3K
• Golf Club: $10K
• Car, Cell, and Gas: $10K
• Prop Tax: $19K
• All other expenses: $47K

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

I do not have a formal budget. I tracked my expenses in Quicken since I was 23 years old until they stopped making it for Apple computers.

I lost all the info. Really loved that application.

I do all the family financials and bills. Currently writing down how to handle everything in case something happens to me so my wife will be ok.

What an undertaking that has become.

I have always saved more than I spent so I did not have to do a formal budget. I was born this way.

I never not felt good spending money on myself or even my parents spending money on me.

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

At one point when I had two incomes I saved the entire income of the second job. It varied from 57% to 50% of income in those days.

My living standards did not change even though I was making more from another job.

Currently, I find it tough to save as I had some really lean years starting in 2019. Covid then inflation really did a number on the business.

Much of my savings went to cover cash flow. You can see in my wages table from 2019-2022 I made a lot less money trying to keep the business going.

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

Max out 401K if your company has that and IRAs as well. I think purchasing a house is forced savings in a way. Just don’t overspend on furniture and a remodel.

My best strategy was that when I got my second job I continued to live on my previous salary. I just banked my second salary.

I always had the down payment for a house but not the earnings. When I got the second job suddenly, I could get a loan.

In 1999 I purchased a house that I live in today.

Obviously living within your means. Earning more is great but be careful of increasing spending as your earnings go higher.

What’s your best tip for spending less money?

Company perks can be unbelievably helpful in curbing spending. I never directly paid for a car, gas, insurance, and cell phones until recently. I negotiated for those perks.

My hobbies were not expensive. Beach volleyball and surfing.

Now golf is another story.

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

I don’t really enjoy spending money on myself. I do however find joy and an ability to spend on my family.

I love golf but don’t have the newest clubs. My biggest splurge is our country club for golf.

Besides family, it brings me the most joy currently.

INVEST

What is your investment philosophy/plan?

Buy and hold. I haven’t sold any of my real estate yet. I am not sure it was planned just happened.

I invested in my company with the philosophy I was in control of my investment. When the company didn’t have the cash my father and I purchased equipment and leased it to the company.

I don’t think we ever used outside money.

I was 25 when we started our partnership and it was the biggest check I had ever written at that time. I was shaking writing that $22,500 check.

We were equal partners in buying and leasing equipment to the company.

Real estate is also a key philosophy. We owned the buildings in which we operated the business.

It was always the “pension” retirement plan. When my father developed dementia at 75 the rent was paid for his memory care facility.

What has been your best investment?

My house is probably my best investment. Although it is an expense, I purchased it for $692,500 and it is conservatively worth over $3M.

While I did not purchase the commercial buildings it was a very smart purchase by my dad.

What has been your worst investment?

Investing $200K in brother-in-law’s startup company. In the middle of the startup he got a job offer and just let the business go.

Never again will I be a silent partner. I should have been more involved.

A family vacation home that was given to myself and my sister after my mom passed. I never wanted it because I didn’t want the expense. I agreed to help keep it in the family.

It was a money pit right from the start from leak damage to bark beetle killing all the pines. After a year of fixing/remodeling at a cost of $240K the week it was finished it burned to the ground.

I rebuilt starting in 2008 and in the middle, we had the housing crisis. Bad timing.

The silver lining is that I own it myself now and the family enjoys time there.

What’s been your overall return?

That is so tough to define. I didn’t start tracking my net worth religiously until 2018 on personal capital.

It was $4M then now up to $10M.

How often do you monitor/review your portfolio?

I am guilty of looking daily at Personal Capital.

It needs to be less.

NET WORTH

How did you accumulate your net worth?

ESI plus I had a head start. I am not self-made but I did not rest on my laurels.

Save: I became a millionaire by first living within my means. I have never carried a balance on a credit card nor big spending on non-appreciating assets.

As soon as I qualified for a loan I purchased a house and never cashed out any of the equity.

Earn: I took on a second career/job to increase my earnings and saved that new income. I also could live below my means because I was single with no children for many years.

Much harder to do that now with a lovely wife and family.

Invest: I invested in myself and the companies where I worked and would eventually own. Sometimes for better or worse. I was pretty much all in!

I was provided the opportunity to join my parent’s company straight out of college. My earnings were lower working for my parents, but I always felt it was my duty to preserve/increase the business’s value.

Thereby increasing their net worth and the families’ net worth. I was looking long-term.

I eventually inherited a company that my father (at 15 years old) and grandfather had started. This was my second job and I turned around a failing company.

Eventually merged that company with my father’s to get 49% of the entire company. While it was inherited there would have been nothing left if I didn’t go to court and eventually work at the company.

When my father passed in 2020 I inherited his share of the company as the company was not worth much by that time. A tough business to be in, ravaged by covid and subsequent inflation I took that as part of my inheritance.

Once again I prefer right or wrong things I can control. My sister took the more tangible assets.

I gambled on the buildings thinking I could eventually rent them out knowing they needed quite a bit of deferred maintenance. I could only do this because I had saved quite a bit of cash all those years to spend on cap/ex for the buildings.

I deferred gratification guessing in the long run this would play out better than cash or assets that could be sold right away.

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?

Saving is my strength. My income peaked at 34 years.

I always thought it would keep going up. Luckily I always saved or was too busy to spend. This saving allowed me to purchase my first house.

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

So many along the way like everyone else I assume. Some accomplishments if I had known what it would take I may not have started.

The first was taking on a second job not knowing anything about running a printing business at the age of 28. I had publication experience but lacked printing knowledge and experience.

Turns out that selling a tangible product compared to intangible advertising was much easier. It was tough and the situation I entered was a hostile environment.

I never knew how petty even evil people could be. They didn’t want me there nevertheless within a year the company was turning a profit and the bad managers were gone. I learned a lot and became sadly a bit cynical.

My mom died at the age of 59. She had been sick much of her life and was lucky to make it this far.

I was very close to her, and she was an inspiration in many ways including her business acumen. She oversaw all the household financials as well as the company financials.

I learned so much from her about finance. She helped me with my taxes, investing in IRAs, and in general how to save and track expenses.

My dad was more of a big-picture person while she handled the details.

My father developed early-onset dementia at 76 years old. This was tough for so many reasons.

Financially this was a big strain. Assisted living and Memory Care facilities cost from 10K-13K a month depending on services. This was not a fancy place either.

He sold his house to cover assisted living expenses but after 5 years cash was running low. The business provided rent which was used to cover the costs each month.

The latest obstacle was changing from running a manufacturing business to real estate. If I had known the obstacles from Sept 2022 to June 2023 I may not have chosen to proceed.

I had 3 flooded offices in that year and spent almost $500K in capex to get the buildings rented.

For almost a year I had no income, no rent, and had to cover all building mortgages and property taxes. Both buildings were finally rented by July of 2023.

The last hurdle was Property tax reassessing my properties when they shouldn’t have. Bill went from $12K to $46K per year on each building.

I had to fight them to reassess back to normal values. However, in the meantime, I had to pay out 3 year’s worth of escaped taxes and wait for a refund.

That was finally resolved in November of 2024.

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

Nothing really. I made the change from running a manufacturing company to landlord.

Just trying to get a handle on real estate before I make another move.

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

My target was $10M. I don’t necessarily feel wealthy although I feel very blessed.

I think that is because my assets are not liquid. I would like to get to $20-25M.

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

I was 34 when I hit my first million.

It was really from the appreciation of my house, cash savings, taxable/retirement investments, and printing equipment values.

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

Perseverance. I will work as hard and as long as needed to complete the task.

I strongly believe in deferred gratification. I don’t feel I am the smartest or most talented but I’ll work as hard as anyone.

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

I would have diversified a bit more and invested in index funds early. I wish we had a 401K in the business.

Rent out one of my buildings much earlier than I did.

Tried to sell my company rather than shutting it down with most assets going to scrap.

Converted my IRA to a Roth. It was going to be my lowest-earning year.

However right after I converted the IRA the stocks dropped. I paid tax on higher significantly higher valuations than they were worth. Not the best timing.

Let more employees go than I did. I was not good at this.

I wasted money and time on employees that I should have let go especially after covid was over.

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

I think more people should start small businesses. The barrier is often the loss of income while you get the company started.

Over time I believe you can create larger wealth by running a business. Owning/starting a small business is not for everyone.

As a business owner, purchase the building you are in if you can. I know so many companies in my industry that shut down or filed bankruptcy after covid that would have fared way better if they personally owned the building they occupied.

FUTURE

What are your plans for the future regarding lifestyle?

My net worth allowed me to retire at 55. I must live off rental income as that is really the only source of retirement income I have.

If everything goes to heck I have appreciable assets I can sell.

My next move is to move towards more liquid assets, not just real estate. I have not been much of an investor when it comes to securities.

Most likely I’ll be buying Vanguard-type index funds and call it a day.

What are your retirement plans?

I am retired and manage two industrial buildings. I spend most of my time with my young kids.

Coaching sports and playing on the beach. I enjoy working out, golfing, surfing, and volleyball. However, golf has really taken over my life as far as recreation.

This past summer I spent 3 months at our mountain cabin golfing many times a week.

Charity is next on my list of endeavors.

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

Healthcare costs concern me. This was not an issue as my company covered those costs through our group insurance. I was not prepared for the cost to cover a family of four.

I do not have control of my earnings. With real estate, they are what they are.

Only so much forced appreciation one can do. I have always been able to or had the opportunity to increase earnings by growing the companies.

Rent is rent each month besides the yearly built-in increases. It is taking some adjustment.

My assets besides cash balance will most likely not depreciate. I am not depleting my net worth and it should remain or go up depending on real estate asset growth.

MISCELLANEOUS

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

I have always saved and have been conscious of spending. I drawer full of change as a child.

It was never to spend I was just saving or perhaps just not spending. I think it was almost too much this way. I would feel guilt when spending or even parents spending on me.

I sold erasers as a kid in 6th grade as my first business with my best friend to this day. I still have the little metal box we held them in.

I am trying to move into a more spending phase as learned from ESI and MMM.

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

My parents and grandparents. I learned so much from all four of them in different ways.

My parents for the unbelievable work ethic to start and grow companies. My grandparents for all the wisdom they both departed.

From a financial point of view, they were different. My grandfather worked for UPS in the beginning as a sales manager and purchased received stock early on that made them their wealth.

They were not entrepreneurs like my parents. I remember driving my Grama around to each bank to put money in CDs under the FDIC limit.

Perhaps that is why I started with CDs to earn money instead of stocks. Might have been from living through the depression as a child.

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?

The Millionaire Next Door. My dad gave it to me. It made total sense and perhaps helped me solidify my reasons for wanting to be involved in small business.

The Millionaire Mind. It really validated many of the things I already believed.

Rich Dad Poor Dad. The author is not a favorite of mine now. Once again given to me by my dad.

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

Currently, we give our kids public schools quite a bit. My wife also donates a considerable amount of time to school and charity.

Prior to that the Salvation Army was where most of my contributions went. My father was on the board of the Salvation Army and we printed their publication.

I saw first-hand how it was run like a business and trusted the money went where it should.

I plan to do more charity. Hopefully setting up something like I’ve read on ESI, MMM.

Trust or DAF. Not sure as I haven’t done the research yet.

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?

I do plan on leaving an inheritance to my children. I subscribe to buy, borrow, and die.

I hope to be able to keep my assets so when I pass my wife will get a step up in basis. She can decide to sell or get all new depreciation.

Then it will pass to my kids and they can decide to sell. My children will each get half the estate and can decide between themselves who gets what.

I have started the process of divesting from joint ownership of properties with my sister to make things easier should either of us pass.

I am super cognizant of how family money can end up with a second spouse’s family that had nothing to do with building the business or wealth. If there are still assets to inherit I definitely want to make sure they go to my children.