Millionaire Interview 52

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 am 58 and wife is 59. We have been married for 35 years.

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

No kids, just a pack of rescue dogs.

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

We live in the Southeast US just outside of a major city.

What is your current net worth?

$1.3M

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?

• Individual Stocks $6K
• 401K/SAR-SEP $1.2M
• ROTH IRA’s $18K
• Misc Assets $76K

EARN

What is your job?

I am in sales and my spouse is accounting/office work.

What is your annual income?

Mine is variable averaging $40-$60K as a 100% commissioned salesman and spouse is about $45K-$50K with overtime

Tell us about your income performance over time. What was the starting salary of your first job and how did it grow from there?

My first job out of school was as an electronics technician at just over $11K/year. I worked my way up to middle management over a 20+ career and a salary of $60K. The company was located here in the SE but was foreign based.

Near the end of my career, I felt the company was starting to struggle so I began looking at a career change. I have been with the current sales organization for 18 years. Unfortunately many of our target customers have moved offshore over the past decade or so and my income has dropped rather significantly but I enjoy the team I work with and the customers I call on so I have stuck with it.

In addition at nearly 60 years old, stability is sometimes is a good thing as many companies are less inclined to hire someone this late in their career.

My wife worked for many years for family owned small companies which did not provide for large salaries or benefits. She has only had access to a 401K for the past 5 years. She is now working for a national company with far better benefits and finally a 401K.

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

We have never been big income earners. That is one reason I wanted to participate in this interview. I wanted others to know that with bull markets and the bear markets, if you start early and stick with it, you can still attain a Millionaire status.

I read some of the comments from others stating they just can’t do it because they don’t make enough money. I’m here to say it IS possible! It just takes time and patience.

What’s your work-life balance look like?

I think my work-life balance is fairly balanced. I do travel for my job, spending 40-50 nights on the road. When I started this career path, we looked at the sales territory, evaluated a good central location so I could travel (almost all by car) and get home most nights. This has helped tremendously with the work-life balance.

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?

Other than my career, I enjoy the outdoors and yard work so I also work handyman jobs and lawn maintenance for a few neighbors. Again, nothing sophisticated but adds a couple grand in income that is used specifically to add to the Roth IRA’s and maintenance of the yard equipment.

SAVE

What is your annual spending?

Our annual spending is estimated to be around $50K.

We do not live in an extravagant house, purchased 18 years ago for $139K, now worth about $175K. Two cars, one 18 years old purchased new, one just purchased new to replace a 15 year old daily driver that was also purchased new.

We also have an RV which is how we spend our vacation time. By traveling with the RV, we do not have the cost of boarding for our dogs. The RV has been able to be written off as a 2nd home (I think the 2018 tax laws may change that) so even with payments, it works for us.

We also own a 10 year old motorcycle that was purchased used and paid for in cash.

The balance of our expenses goes towards food, clothing etc.

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

• Mortgage
• Transportation
• Food
• Clothing
• Misc

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

We do not run off a hard fast budget but we do utilize Quicken and Quicken bill pay to track spending

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

From my early 20’s, I began investing through my 401K. I started out with 6% to capture the companies match. Since I was single at the time, every pay raise went straight to boosting 401K until I maxed it out at 15%.

When my wife and I got married, she worked for small family owned companies and did not have access to 401K plans so I kept investing everything I could into our retirement plan and eventually started a Roth IRA as well. About 10 years ago, I finally convinced the company my wife was working with to take an extra payroll deduction and monthly electronically deposit it into a Roth I created for her. Finally we were both moving forward in investing!

Five years ago, she was forced into the job market due to a layoff. After a year of job searching while the unemployment rate was sky high, she landed her current job for a company with a national footprint. (During her layoff I still contributed the max to my 401K, we just cut back on other expenses) The new job finally offers a 401K and she is contributing 12% to that. Our total percentage is 27% to our 401K’s plus an additional 3%+ to Roth IRA’s.

In addition, I have a Scottrade account that I play with on some individual stocks. I use what I call “found money”. This is dividend checks that do not get automatically reinvested, birthday money, rebates, etc. Even if I buy something and have a change of heart and return it, I take the money, since I was willing to part with it at one point, and it now becomes found money and gets slated for the Roth or the Scottrade account.

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

We love to travel with our RV. The US has so many beautiful and interesting places to see. When we finally decide to stop the full time careers, we plan to travel the country. For now, we continue the grind and invest incrementally until we decide we have had enough.

INVEST

What is your investment philosophy/plan?

I would say I am moderate to slightly aggressive.

I can’t say my heart doesn’t sink when we see market corrections of 1175 DOW points like it did recently but I don’t panic either. [Editor’s note: This interview was conducted in mid-February 2018.]

I did move some cash into some stock that I have been watching and picked up a good sale price on them on the day of the correction.

What has been your best investment?

My best individual stock investment was to buy some shares of Bank of America (BAC) back during the financial crisis. I bought in 3 times at 5.80, 6.75 and 7.22 per share. It is currently trading around $31/share.

What has been your worst investment?

My worst investment was not so much an investment but a poor decision to borrow against my 401K back years ago. I understood I was borrowing from myself and paying myself back but it never occurred to me the impact of the missed compounding of interest. Worse yet, today, I don’t even know why I borrowed the money.

What’s been your overall return?

Overall it has averaged a little over 8% which has been helped out by the recent bull markets.

In my early years as I was learning about investing, I failed to look closely at expenses and carried some mutual funds that were very expensive. Now, my most expensive mutual funds are around 0.7% with some being under 0.5%.

I also played VERY aggressively early on which on the run up is nice but brings back reality when the markets take a turn for the worst. At 59 years old, we maintain a 60% stock, 40% bond mix these days.

How often do you monitor/review your portfolio?

I have an Excel spread sheet that I track nearly daily. If the markets are down, I want to know so I can look for some “found money” to invest. If the markets are down for an extended time and I am getting nervous, I will stop tracking for a while to keep me from making irrational decisions.

NET WORTH

How did you accumulate your net worth?

We have never been exceptionally high wage earners so it has been the slow, consistent investments in our 401K.

We are proof that by living below you means and methodically and intentionally moving forward you can become a millionaire.

We don’t feel like millionaires, and we don’t live like millionaires.

The secret is just to stick with it. Invest what you can, when you can, increase your contributions a little at a time until you max them out so you don’t feel the pain all at once.

We do buy new cars but drive them 15-20 years or more if they will still keep going. That makes the new car feel that much nicer. Oh, and we don’t buy fancy cars. A pickup truck with a low level trim package and the new car for the spouse was a $20K Hyundai. Nice car but it does not break the bank.

We don’t live in the best house on the block either. It is just enough for us and we don’t have to impress anyone.

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

We have had “life” hit us a few times, made some bad decisions etc and ran up credit card debt. We are still working our way out of it but nearly ready to see the light. THAT will be a great feeling.

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

Today we continue to invest through our workplace 401K plans, invest what we can into our Roth IRA’s and play with a little side cash from time to time in my Scottrade account. Basically, just working the plan!

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

Not formally. It has been a moving target all along. Early on it was to hit $500K, then $1M. As of today, my next target is $2M. By maintaining lifestyle, if we don’t hit it, I’m OK, but I believe you should always shoot for something higher to keep you motivated.

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

I was 58 so we haven’t been there too long but since it never felt any different, we haven’t change our lifestyle.

All it has done is make me feel much better about where I stand in preparing for retirement vs the average Joe. We won’t be able to spend at will, but we should be able to maintain the current lifestyle.

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

1. Have an emergency fund so “life” doesn’t slap you in the face and you run up excessive credit card debt.

2. Retirement accounts are for retirement. Do not use them as a bank. Do not borrow from them!

3. Do not live above your means. Nobody cares if you keep up with the Jones’.

If you had to give advice to ESI Money readers about how to become wealthy, what would it be?

For those of us who are not high wage earners, it is a process. It takes time.

The real fun begins after years of saving and investing when you can see market swings make big gains (and losses).

Invest/save deliberately…every pay check. Look for places to make a few extra dollars and save that too! Small contributions over the year add up!

Does that Starbucks REALLY taste that much better than your $0.50 home brewed? (I’ve had one Starbucks coffee and someone else bought it at a business meeting. It’s just not that important to ME.)

FUTURE

What are your plans for the future regarding lifestyle?

We are not planning to retire early. I like what I do and frankly can’t see myself retiring to a rocking chair. My idea of retirement looks more like finding something where I can work at my pace so I can travel etc. I will continue to be active whether it be a “job” or volunteer. My spouse does want to retire but her plan is at 65 or 66.

What are your retirement plans?

Other than travel for the early years, the book is wide open. It just needs to be engaging and fun.

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

Health care is always a concern. I am currently looking at long term care costs and coverage. If anyone has suggestions, I’m willing to listen!

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.?

My parents instilled the basics of saving. From there it was books, blogs, and the internet spurred me on as I began to see my 401K balances grow.

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

I’m not sure I have anyone in particular. I love to listen to Zig Ziggler audio tapes as I travel. I am always intrigued by Warren Buffet and there are so many bloggers that have very interesting reads.

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

We do give to charity but are quite select. We do not look at it from a percentage. It is more a feels right at the time. Some of it is in donations and some is in time.

I have some specific charities for cancer, suicide prevention and Alzheimer’s that have affected family and friends that are close to our hearts.

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 don’t have children so I am not particularly concerned about inheritance but I do want to leave some type of legacy. We have not decided how that will play out yet.