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.
My questions are in bold italics and his 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 56 and my wife is 45. We’ve been married for over 5 years.
Do you have kids/family (if so, how old are they)?
I have a 13 year old daughter from a previous relationship. She lives with her mother in the Atlanta, GA area.
What area of the country (world) do you live in (and urban or rural)?
We live in the Rhine Valley of Germany. We’re currently into year 6 (of what was supposed to be a 3-year) ex-pat assignment. Home base remains Florida suburban area.
What is your current net worth?
$6.1 million
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
- 34%, retirement accounts (401K, IRA)
- 26%, stock dividend accounts (Personal Capital, former / current employer’s stock plans)
- 20%, 1 real estate (personal residence) owned outright, 3 rental properties and 1 land parcel owned outright
- 10%, non-retirement accounts
- 4%, cash (emergency fund)
- 3%, 529 plan
- 3%, P2P lending
We are debt free and only use credit cards for convenience and rewards points. All of our retirement and non-retirement accounts are managed via target age low cost index funds (currently, 65% stock / 35% bonds).
We also have vested pension benefits from previous employers and current employer with an estimated value of $5,000 per month starting at age 60 (excluding social security).
EARN
What is your job (type of work and level)?
I hold a senior executive technology level position at a large multi-national company
What is your annual income?
My base salary is $335,000 with a target bonus of $165,000 per year. I have over-achieved my bonus pay out every year for past 5 years.
My wife works as a community volunteer and has an internet-based small business (no profit yet).
Tell us about your income performance over time. What was the starting salary of your first job and how did it grow from there?
I enlisted in the U.S. Air Force at age 17 and became a commissioned officer at age 25.
After 12 years in the military, I joined the business world while serving the next 8 years as a weekend warrior. I retired from the U.S. Air Force as a reserve officer at 37.
I successfully translated my US military experiences into in the business world since then. I have worked for three multi-national companies each with roles of increasing management to executive level responsibility, took on ex-pat assignments to several countries with higher income from each move.
What tips do you have for others who want to grow their income?
I encourage people to be a systemic saver where every month they invest or save proportional to their age.
I also encourage them to save 50% of every salary increase received they receive.
The investment vehicles should be a blend of stock and bonds proportional to their retirement target.
What’s your work-life balance look like?
I have learnt the importance of life-work (not work-life) balance since moving to Germany 6 years ago.
I work about 50 hours per week and have learnt to leave my work bag in the office.
I also enjoy 6 to 8 weeks of holidays every year.
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?
Yes, about $120K per year (Investment Dividends of $70K, Real Estate of $30K and P2P Lending $20K).
I can only offer the good old basic insight of monthly systemic investment and see it grow over time.
SAVE
What is your annual spending?
We spend about $100,000 per year. This includes child care support and providing for charity and college scholarships to younger family relatives.
What are the main categories (expenses) this spending breaks into?
- 30%, child care support
- 20%, apartment rent, utility expenses
- 20%, charity, and scholarships
- 15%, life-work balance vacations
- 15%, groceries, eating out
Do you have a budget? If so, how do you implement it?
Yes, we have a budget which I created over 20 years ago. We update it every year based on potential upcoming events. We monitor it monthly to ensure we stay within our boundaries.
What percentage of your gross income do you save and how has that changed over time?
I have persistently saved something proportional to my age and saved 50% of every salary increase.
I have maximized all my 401K allowable and matching contributions.
I also maximized my IRA contributions and purchased into the company’s matching stock plans.
I have never touched the accounts once we added to them.
What is your favorite thing to spend money on/your secret splurge?
We splurge on multiple (8 to 10) 4-day weekends throughout Europe each year (about $1K each and a back pack).
We also like to eat out 2 to 3 times per week at great quality, reasonable price restaurants (about $1K per month).
INVEST
What is your investment philosophy/plan?
My philosophy is to invest 50% of my take home income every month.
I max out my 401K plan, max out on my company’s share matching plans (annual dividend of about 4%) and max out on IRA or 529 plan contributions (although no tax benefit).
The investment vehicles are Fidelity age targeted funds with a blend of stock and bonds proportional to my retirement age.
In past 10 years, I have divested into apartment rentals and some P2P lending (within my family).
What has been your best investment?
My best investment has been buying into the stock matching on the companies I have worked for.
I am fortunate to have worked for reputable and well-managed companies.
These have gone through a few stock splits over the past 20 years.
What has been your worst investment?
The work mistake was trusting friends or incompetent financial advisors with my money.
I lost $300K in two such cases over 10 years ago.
I broke the cycle of lending money to friends and started using reputable financial services providers.
There is no proven quick get rich scheme.
What’s been your overall return?
I have averaged a 13.6% return per year over the past 10 years.
How often do you monitor/review your portfolio?
I monitor my portfolio once a week via Personal Capital. I also review my portfolio every quarter for +/-5% corrections. I update my master 10-year financial plan at the end of each year.
NET WORTH
How did you accumulate your net worth?
I stuck with my early U.S. military career guidance on financial independence principles. I learned to live within my means. As my income has increased, I saved something proportional to my age and saved 50% of every salary increase.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
I learned to live the first 8 years on a U.S. enlisted military salary.
I lived within my means and never owned a credit card in those days.
I was fortunate to have the US military pay for my undergraduate degree via a scholarship. The US military also paid for 75% of my graduate degree.
What are you currently doing to maintain/grow your net worth?
I continue to save something proportional to my age and saved 50% of every salary increase. I maximize all my 401K allowable and matching contributions. I also maximized my IRA contributions and purchased into the company’s matching stock plans. I never touched the accounts once we added to them. I pay off my credit cards every month.
Do you have a target net worth you are trying to attain?
I initially set a goal to become financially independent by age 50.
I learned that by sticking to the two financial independence principles my savings have been doubling every 5 to 7 years.
I no longer have a target net worth. I am now focused on giving back by supporting my relatives to achieve a higher education.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I achieved my first net worth of $1 million by age 41.
I reached my second net worth $2 million at age 46 and a net worth $4 million by age 52.
On behavior shifts, I have learnt to gradually stop worrying about money along the way.
I have also learnt to smell the roses more often but frugally.
If you could rewind to when you first started out, what would you do differently?
No regrets! I would do all over again the same way. Perhaps, I would have completed a MBA rather than my technical graduate degree.
What money mistakes have you made along the way that others can learn from?
One must resist all get rich quick temptations (internet stocks in the 1990’s or bit coin today).
I made mistakes lending money to people living above their means, or in get rich quick schemes with high pay out promises.
If you had to give advice to ESI Money readers about how to become wealthy, what would it be?
Live within your income, only use credit cards for the basic day to day purchases, save something proportional to your change every month and save 50% of every salary increase you received.
FUTURE
What are your plans for the future regarding lifestyle?
I will retire at the end of 2018.
I am exploring part-time activities to stay mentally active (lecturing, consulting and board of directors).
I plan to continue with my health activities and learn new hobbies (like playing the saxophone and telescoping the stars).
My wife will continue to do volunteer community work and her small internet business.
We plan to live in a South America country to keep our expenses low.
What are your retirement plans?
I plan to draw from my investments about $6K per month (tax free).
I will have about $5K per month from a few pensions starting at age 60 (U.S. military and a Company pension).
I am not counting on my social security pension.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
I am concerned about the cost of health care and assisted living. I plan to live abroad where health care has better quality and more affordable.
MISCELLANEOUS
How did you learn about finances and at what age did it ‘click’? Was it from family, books, forced to learn as wealth grew, etc.?
I came from an economically challenged U.S. immigrant family. I learned to live the American dream – hard work and high rewards.
I learned early to be conscious of saving, living frugally and resisting the material temptations (i.e., no fancy homes, no fancy cars, no fancy technology toys).
Who inspired you to excel in life? Who are your heroes?
I believe my childhood poverty focused me to make enough so I would never have to worry again whether I have a job or not.
It has been a big driver and I feel more comfortable today to share it with others.
My father was my hero as he could make his factory hourly wages last a long way to care for my 8 brothers and sisters.
This has been a fantastic dream of being true to your personal values and financial independence principles. I did not dream it this way but it’s personally rewarding to be here.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
Yes, I give about 3% to 5% of my annual income to charities. I also leverage the internet to mentor and give back to my US military fraternity.
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?
In memory of my Father who only had a few years of basic education, I created a Family Scholarship inheritance fund to support 15+ nephews and nieces to have access to a college education. I am distributing my wealth already for this purpose.
What an awesome story. I love that he’s using his money for his 15+ family members to pursue higher education. It sounds very much like Asian cultural values we have from my home country.
It’s also crazy to see the power of 72 in action. His net worth doubles every 5 years as expected by his rate of return, yet the magnitude of the change still makes you hesitate. Goes to show that the more you save up your nest egg, the bigger in magnitude it can grow.
Hi Olivia;
I am pleased that you enjoyed the story. I have learned that the Asia and Latin America cultural values to be compatible.
Agree with your comment that the more you save, and live within your values, the bigger the potential to grow.
Take care,
I love that you are giving of your wealth to others to support them through college. Truly great.
I also like your 50% savings rule for salary increases. That’s solid advice and a great way for people to feel the effect of a salary bump (to make them feel good about their work) while still allowing them to save along the way.
It seems like you operate along the lines of “rules,” which I get… I made ten of them. And your 50% rule is similar to my 10% rule (https://thephysicianphilosopher.com/2018/01/05/the-first-decree-the-10-percent-rule/)
Thanks for sharing, and truly strong work on getting to where you are!
Dear Physician Philosopher,
Thank you for kind words. I learned the 50% rule from one of early military career supervisors (at age 18). It made it a golden nugget for life. I will review your 10% rule in more details.
German
Wooow that’s a big family. Aren’t they extremely blessed to have such a generous uncle!! Really incredible story.
That’s a fantastic salary and bonus! It’s very different from a lot of other military career stories, the transition to business sounded incredibly smooth. Would you say that confidence in more important in the world of business or military? Which one did you enjoy more?
Dear Lily
Wow, it’s one large and crazy family! I received great advice on my transition from the US military to a business career. The business world is all about results which gives others confidence and trust in your competence. I enjoyed both careers equally well but will take the military fraternity over the business world.
German
Thanks for sharing, and THANK YOU FOR YOUR SERVICE!
I always love to read veterans stories and how they transition into the civilian workforce. Growing up and working in D.C., I have always been surrounded (family and friends) by the military, and it is an AMAZING community.
The financial principles you established in the service are great financial lessons that every young professional needs to learn. Live below your means, invest a large portion of your paychecks, and then continue to do so with your raises/bonuses.
Congratulations on your financial success, and I wish you and your family nothing but the best in the future!
Hi Sean;
Thanks for your kind wishes!
My 20 years of service was a fantastic experience and would do it all over again. It’s a great platform for personal values and career shaping. I was fortunate to learn the financial principles early in my career, and stuck with them in good and bad times. Persistence in a value!
Cheers from Germany…
It’s getting more and more rare to see folks with vested monthly pension benefits. That is a really nice asset above and beyond the substantial net worth figure. Tom
Hi Tom;
Thanks and agree with your comment on a vested pension. It’s a hard earned but great asset for the feeling of financial independence.
All the best,
Congrats on your success. You have done exceptionally well for yourself and your family. Thanks for sharing it with us.
HI Dave;
Thanks for your kind words. I am glad to hear that you the story. We also need to thank Mr. ESI Money for this great sharing platform.
Take care,
What does he mean when he says “save something proportional to my age”.
Noticed that a few times, I understand the save 50% of salary increase, but this other comment is throwing me off. If it is good advice I would like to make sure I’m on top of it!
I believe he means that if you’re 40 years old you save 40% of your income. If you’re 50 years old you save 50% of your income. And so on…
That makes sense, do other readers out there find this attainable? I’m in my late 20’s and find it attainable to save at least 20% across different methods (401K, Roth, Cash, Mutual Funds), right now. But as life continues other attributes will factor in (home/mortgage, wedding, kids, etc). And I am wondering if this is attainable, or is it all proportional to raises?
I like to think in worst case scenario at all times (if my salary always stays the same, where will I end up). I’ve been fortunate enough to increase about 55% since graduating college 5 years ago. Is this a normal pace, not enough, etc?
Is there a daily/weekly/monthly forum for financial questions in general on this site?
Anyways, thanks for the response. Been following the blog for a little under a year and I think there is great content on this site.
I think this is a guideline for him and works well but not sure it’s a universal principle.
We had years where we saved more than our ages and years where we saved less. It worked out ok for us.
Also, if your income is growing at a rapid rate, it will be easier to save a large percentage as long as you keep lifestyle cost increases in check.
Hi Eric;
Mr. ESI Money has correctly captured my intent on the principle of saving relative to one’s age. I must also say that there are moments where I could and others were it was not possible. It’s more of an aspiration with a lot of sacrifices (perhaps too many) along the way.
Thanks for the question.
Congratulations. ! Very inspiring story about helping others, family, paying it forward. You have been hard at work making your future as bright as it is now.
I just read an analogy about financial independence and the farming cycle. In farming, you prepare the soil, you plant, maintain and weed, and then harvest.
What a great bump crop you are having. And now, you are preparing the soil for the next generation of your legacy. Congratulations. You have done very well.
Hi Carlos;
Thanks for sharing the farming cycle analogy! I can relate to every part of the cycle. I am indeed preparing the soil for the next leg of this great journey called life…..
All the best to you,
Great interview and congratulations son your success!
My question is what kept you motivated to keep working once your passive income started to exceed your expenses?
I just got a new job that will move me and my family from SE Asia to the Middle East later this year. It will be an interesting and a hopefully fun experience.
-Mike
Hi Mike;
Thanks for your kind words. On your question of what kept me going… I believe it has been finding my inner purpose (being a servant leader to unlock the potential of others) and taking on business roles that enable me to manifest this purpose.
I have lived in 3 continents which have opened up my mind…. I am learning that there’s more that I don’t know so I’ve become a life long learner…
Take care,
Thanks for sharing your story!
How did you deal with the separation that could put a dent in your earnings? In some states it’s 50-50 division of even the retirement accounts. Also, any thoughts on what the young folks can learn and be aware of, if they have to go through separation?
HI Sam;
By separation, I gather that you mean leaving the US military or through a personal relationship separation. Please clarify so I can share some thoughts…
I meant personal relationship.
Hi Sam;
Thanks for clarifying. Fortunately, we reached an amicable agreement upon separation so no ne d for lawyers. Our daigther’s healrh, education and prosperity reigns over any other differences.
I love that you are setting up your money to fund your nieces and nephews now.
Too many wait until death to fund their desires, which has two problems. First, by the time you die, the money may be less relevant to the recipients. Second, you don’t enjoy the benefit of seeing the benefit of your donations / contributions.
We are working on estate planning for people at the moment and this was a big point for people to absorb.
Congratulation, what a great post. Can you elaborate on your inheritance fund? Did you set up a trust?
Barelyfoot;
Thanks for kind words on the post. I have set-up a t yay to distribute my inheritance to nephews/nieces for college education l, at least a 3.0 GPA and up to age 25.
Trust this clarifies,
Hello Finance Stoic,
I echo your point is that best to address the estate planning with close relatives while still alive. I am reaping the fruits of the donations already as nephews / nieces are graduating from college and moving onto to successful careers. I can not bear the thought of family infighting once am no longer alive.
Take care,
Congrats on your tremendous success and thanks for your service!
AccidentalFire;
Thanks for kind note, and may FIRE guide us all forward!
I really enjoyed his story. It shows that with hard work and consistent saving over time, you can make it even from more humble beginnings. Having reasonable frugality is a good trait to have also and certainly helps along the way. I dont believe in blowing money on over-priced purchases or even experiences that dont matter that much just because you have the money.
Arrgo,
Here, here and appreciate ur kind comments. Persistence and hardwork can get one to places never dreamt of.
All the best to you,
Very inspirational. Currently 30 and working for my first international automotive manufacturing company in a respectable role. Your successes are aligned with my goals, and it is exciting to see a defined path of achievement! Congrats and keep killing it!
Zach,
Thanks, I am pleased that in your 30’s you already have your principles and goals clear. Now, this is a marathon with many 100 yard sprints so please stick to your values and plans, in the good and no so often bad times.
Take care,
So this has been on my mind since reading this interview at 4 in the morning on Friday:
Very cool what you are doing with your family scholarship. But please get yourself to Georgia as soon as you retire this year and live there until your daughter goes to college at least. As a child of divorce, that part of your story really struck me, and I can’t stop thinking about it. 13 year old girls need their fathers. So unless she has a wonderful step father and truly doesn’t need you, you should alter your plans for continuing to live abroad. In my buttinski opinion. You can afford to put off your geographic arbitrage.
Hi Nichole,
Thanks for your open sharing. I do make often to Georgia today to hang out with my now 14 year old daughter, as well as summer holidays and other holidays. Children these days have a mind of their own so my role is to set the conditions for her to blosoom, so far, so good. Digital natives so keep you busy at odd times!
Thanks again,
Wow, and congratulations on your adventure and positive approach to life. We hope to end back up in Europe soon. I retired from the U.S. Army 3 years ago and have been going back to school to become a Special Education teacher. I spent most of my adult life overseas. I always love to hear about individuals and families living the dream in Europe. The biggest challenge we wrestle with is leveraging the advantages of a military retirement (health care and pension) vs being brought up in a culture that is not big on being a risk taker. Our philosophy has been as long as we don’t reach into our investments and can live off the retirement we are doing good. Keep on inspiring – Tschuss!
WORD. Net worth of 6.1 million . . . any issues in retirement that concern you?
‘I am concerned about the cost of health care and assisted living. I plan to live abroad where health care has better quality and more affordable.’