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 her 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 45 and my husband is 40. We’ve been married for almost 15 years now, been together for 18 years.
Do you have kids/family (if so, how old are they)?
No kids.
What area of the country do you live in (and urban or rural)?
The Pacific Northwest
What is your current net worth?
$1.8 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?
- Savings – $48,000
- Retirement Accounts: $240,000
- Portfolio: $1.1 M
- Home: $490,000
EARN
What is your job?
We’re both experienced software engineers.
What is your annual income?
Mine is 120k/year + 10% bonus. Husband’s is 160k/year plus stock compensation
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 starting salary was 40k/year when I first started in the industry 15 years ago, and husband’s was about the same.
We grew our salary by working hard, getting promotions, and switching jobs (somewhat normal for tech industry).
What tips do you have for others who want to grow their income?
Learn to invest wisely and do so as early as possible. I wish we had started that at least 10 years earlier…We’d probably be fully retired at this point.
That being said, we were wise enough to pay off debts quickly so that more of our money went to savings (and eventually investment) instead of towards paying interest.
Our marriage started off with two expensive student loans and a new car loan. After those three loans were paid off, we were able to save up some safety net.
Then it was a time for us to buy a house. We decided to pay off the house as soon as possible, too. We ended up paying it off in just under 3 years and have been debt free for the past eight years.
What’s your work-life balance look like?
Honestly, not so good. We’ve both been too busy at work. We also commute longer than we’d like, which makes us exhausted at the end of the day and keeps us busy with house work on the weekends. This is a big motivation for early retirement for us.
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?
We just have what we earn from our portfolio. At this time it is not income focused, though it seems to generate about $2000 per month on average.
SAVE
What is your annual spending?
We recently calculated this for 2017, which was a bit different from usual because we had rented an apartment for a year in downtown to cut down on our commute and experience the city life a bit.
Subtracting that came down to about $30,000.
What are the main categories (expenses) this spending breaks into?
Our largest regular monthly expense is food and dining. We nowadays end up spending about $700 per month.
That is much larger than it used to be, since we’re now just trying to experience more of the great restaurants area or save ourselves cooking effort in the evenings.
At its peak in the winter, utilities or other regular bills end up costing us about $400 a month. This includes electricity, water, sewer, garbage disposal, natural gas, internet and cell phone bills. During summer months, natural gas expenses decrease by about $100.
Do you have a budget? If so, how do you implement it?
Not really. We once had a $50 per month allowance for each of us (eventually increased to $200), but we’re really not spenders. So we eventually stopped it.
What percentage of your gross income do you save and how has that changed over time?
Before investing, when we had our house payment and limited ourselves to a small spending allowance, my husband calculated that 80% of our paychecks went towards paying off our house.
We spend a little more now, though we’ve also gotten pay raises and now have the additional income from our portfolio. A rough calculation shows that about 84% of our gross income goes into our investments these days.
What is your favorite thing to spend money on/your secret splurge?
We both enjoy going out to bars and restaurants. Our city offers a LOT of good places to eat at. Wife likes to splurge on clothes as well.
INVEST
What is your investment philosophy/plan?
We try to maintain a balanced portfolio based on ETFs, leaning towards being passive and tax-efficient.
What has been your best investment?
Just getting into investing was the best investment that we could make for ourselves.
Being risk averse, this was a huge leap for us. We made the decision to do that after Personal Capital
laid out an approach that seemed worth trying with just a portion of our savings.
Eventually we went all in and educated ourselves to the point where we now manage our portfolio ourselves.
We’ve also been fortunate with employer stock options, ESPPs, and RSUs. No windfall profits but nothing to sneeze at.
What has been your worst investment?
My husband made early attempts to dabble with individual stocks and options… though that was probably more akin to speculation.
He also tried to sell options for income, though that seemed to just take too much time and was difficult to do in the low volatility environment of the time.
We were fortunate to come out about even in those attempts, and fortunately that was done with a limited amount of funds.
What’s been your overall return?
Our portfolio isn’t targeting aggressive growth. It’s yielded over 8% per year so far and hopefully that continues!
How often do you monitor/review your portfolio?
At this time it is relatively frequent, though it is becoming less so.
With each paycheck, we look at our current portfolio allocations and invest that money towards getting us closer to our targets. This will be ongoing, as well as periodic checks for tax-loss harvesting and portfolio rebalancing opportunities.
The shift away from Personal Capital to a self-managed portfolio did leave us with over 100 individual stocks to deal with. Early on, a lot of time was spent trying to change those investments over ETFs in a tax efficient manner.
NET WORTH
How did you accumulate your net worth?
Hard work, switching jobs, getting pay increases, saving as much as possible, and watching our spending.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
I would say the bump was me, because I was against investing in general for a long time.
Also, during the 2008 crash we sold our 401ks in panic, and we didn’t get back into the market until well after it recovered.
What are you currently doing to maintain/grow your net worth?
We are still employed and investing most of our gross income.
Do you have a target net worth you are trying to attain?
Still trying to figure out how much we’ll need for both of us to fully retire, but I would personally feel good when our portfolio reaches 2 million.
How old were you when you made your first million and have you had any significant behavior shifts since then?
Ignoring the value of our house, it wasn’t that long ago that we crossed one million in our savings and investments, around Spring of last year.
What money mistakes have you made along the way that others can learn from?
The biggest mistake is that we didn’t start investing much sooner (we started in spring of 2014).
I’m originally from Japan, where saving is considered to be the most important key to building wealth, investment is often considered more like gambling, and only for those who with expertise.
I still get reactions like, “Are you sure you want to do that?” from my Japanese family and friends whenever I tell them that we invest our money in the stock market.
So we missed the 2008 recovery, which has been the biggest investment opportunity, because I thought investing when everything was down was the scariest idea. I thought it would only keep failing at that time, and had no idea that the market tends to recover and go up eventually.
Had we invested at that time, we probably would’ve had $200,000 to $300,000 more today???
If you had to give advice to ESI Money readers about how to become wealthy, what would it be?
I would say, education, education, and education about personal finances for the reasons that I mentioned in the mistake section above. Also, if you have a partner, being on the same page with him or her about money is also crucial.
When we graduated college together, initially my husband was the only breadwinner in our household, and we had three loans as mentioned earlier. We were also starting our careers a bit later than most people… I was 30 and husband was 25. I wanted to watch our spending as much as we could, whereas he wanted to enjoy his first consistent paychecks a little bit. We often had arguments about how to spend money, so much so that I actually wondered if our marriage would last.
I think we are now on the same page in just about all aspects of our finances. These days my husband can actually be more frugal than I am 🙂 We both feel that we can be frugal in our daily life, though it’s ok to spend generously on what we truly enjoy – great food, traveling to Japan, and having great times with our family and friends.
FUTURE
What are your plans for the future regarding lifestyle?
Early retirement is our goal, though we’re not entirely sure when that will happen. Still, we’re confident that we can at least start working less hours and choosing jobs that better align with how we want to live. Part time jobs might help us prepare for retirement, pay for our monthly expenses without relying on our investments, and keep skills sharp in case we need to go back to full time.
What are your retirement plans?
I will first do absolutely nothing for the first few weeks, and then figure out what I really want to do. Just not having to go to work at all sounds really good right now. I also have quite a few books that I’d like to read (but not enough time right now), and do a lot more hiking. I’d also like to enjoy shopping or going to cafes on weekday mornings when other people are working. 😉
My husband hopes that we’ll travel together more, see friends and family more often. He’s also looking forward to playing tennis and exercising more. He will also have plenty of time to improve his Japanese and cooking skills. 🙂 He’ll probably always have an interest in technology and may use that time to create things he’s never had the time for.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Definitely health insurance. The healthcare system in the U.S. is very scary and concerning to me (again, I’m from Japan where they offer universal health insurance like Canada). We are trying to learn about individual health insurance (I keep reading your blog post about it). We also haven’t ruled out to move to Japan.
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.?
We knew enough to save and avoid being bogged down by debt. However, it didn’t “click” for us until recently, after educating ourselves while taking a chance on a portfolio managed by Personal Capital. We became more motivated as we saw Personal Capital’s monthly fees increase as our portfolio went up in value and as we invested more and more of our savings.
My husband spent much time trying to understand Personal Capital’s approach and doing things like reading through the guides shared by Reddit’s investing community.
Who inspired you to excel in life? Who are your heroes?
My husband is grateful to his mother and father. They had him when they were young and neither graduated high school. However, they gave him a loving home growing up, focused on his education, and showed him the value of hard work and determination.
For myself I would say my parents, also. My dad was a public school teacher. Public school teachers in Japan are required to relocate to a different school within the same province every so often. When I was 7, he was relocated to a school too far from my parents’ house to commute daily. Since my older brother told our parents that he didn’t want to move, my dad decided to live by himself near his school during the weekdays and came home on the weekends. That lasted for about 12 years or so.
During that time both my brother and I went onto college. He lived in a dorm, and I lived in an apartment. Additionally, my younger sister went onto a nursing school. At that point my dad’s income sustained four different households. My mom says that was the toughest time for them financially. So my frugality definitely comes from them.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We’ve started donating to breast cancer research. My husband lost one of his aunts to it, and my younger sister has been diagnosed with it recently.
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’re not yet sure, mainly because we have no kids. Perhaps we’ll think about this after we retire.
Wow, $30k spending for two is impressively low! I’m single and I spend that, maybe more some years.
And sorry to hear that you sold in the ’08 downturn. I gritted my teeth and held. That’s a tough lesson to learn, but when the next one comes I’m sure you’ll be ready.
Somehow we seem to keep spending lean and doing things we enjoy. Cord cutting, Meal prep Sundays, and not really having spending habits and hobbies.
Selling in the ’08 downturn and missing a good chunk of the run back up until ’14 is certainly a bummer in retrospect. Since then we both are more knowledgeable, and hopefully we’ll have enough grit next time around 🙂
Not really, if you have NO mortgage or rent to pay. I spend $12K and rent consumes half of that.
Except property tax, insurance and maintenance does create expenses. It’s not cheap here in the Northwest (Seattle area). I assume they live around here since they are SW engineers. I’m impressed at their frugality.
I too am incredibly impressed with your saving rate. That is just stunning. 84%?????
Great discipline on your parts!!!! Keep at it and some day soon you will rule your world! Congrats!!!
Ha ha, thank you!
We’ll stick to the saving, but ruling the world sounds like way too much effort 🙂
Aww that’s such a sad story with both of your parents. My parents are against investing too. Its quite disappointing because even if you did everything right in life, if you don’t invest, it’s essentially trying to swim upstream without a full set of fins. But they don’t believe me.
I was a high school student in 2008 and haven’t been through anything but upward trending times since. Can you explain your thought process during the fear and panic? When did you start regretting?
(PS we’re in the PNW too! Traffic is terrible in Seattle proper. That’s fuel enough for FIRE. Will you guys be relocating after retirement or staying since the house is paid off?)
Information or education on personal finances were simply not available for my parents when they were growing up, I suppose. Nowadays I try not to give too much details on our finances to my family and friends, unless they are seeking some advise.
I started regretting about my fear and panic when I finally got educated on investing and personal finances, which is not too long ago. Once I learned, everything that my husband was telling me back then suddenly made sense.
Good to know another ESI reader in PNW! We keep playing with the idea of moving somewhere else, while renting out our house.
My commute is normally tolerable (20 mins tops each way on a bus) but every once in awhile the road construction causes major issues and I get stuck for an hour and it DRIVES.ME.INSANE so I can see the drive to rent something closer even though the cost is hard to swallow
Impressive savings rate, 2 million might not take that long if you get some market help saving that much
We live on the outskirts of the city and have to commute downtown. My commute is about 40 mins each way on a good day, sometimes longer depending on traffic, etc. My husband a short commute distance wise. He takes light rail and has about a 45 min commute each way. In the near term we’re thinking about how to cut down our commutes.
Since we don’t want to cut into our savings / investments too much (or at all) it leaves us with a bit of a conundrum since moving closer in will likely cost a decent chunk unless we make some tradeoffs. e.g. move closer and get a much smaller place, or get new jobs closer to where we live (or ones that let us work remote).
Market wise, we’ll gladly take all the help it will give us!
Move to Vashon or Bainbridge. Commute will be approximately the same time, but like 3x or 4x or 10x better, and cost of living can be lower depending on the house. Bainbridge is expensive. Vashon less so, but getting worse like all Seattle areas. I commute Vashon to your husband’s employer, less than an hour door to door…
Thanks for the info!
We’re pretty similar numbers to y’all (DINKs) but your spending is impressive given you live in such an expensive part of the country. So nice job! We’re going to focus on that over the next few years to see how much we need to bring in to not touch our investments. I noticed you mentioned part-time jobs– that is at least my plan as well for semi-retirement.
Thank you! We’ve done a decent job at keeping spending in check without feeling like we’re going overboard. Looking at the spending trends in Mint really helped us here, as well as eliminating spending on things we could do without (e.g. cable).
Part-time jobs seems like a decent way to ease into retirement while hedging a bit. We think we could bring in enough income to cover our expenses and will have some play money. It would hopefully keep our skills sharp enough in case there is a need to go back to full time.
We haven’t pulled the trigger on this yet, but we’re hoping to do so soon. My husband is waiting for another round (or two) of RSU’s to vest.
Uncertainty/fear about what we’ll specifically do about health care is also a factor, since we’ve only ever had employer subsidized insurance. Any thoughts / suggestions on this would be most welcome!
Excellent story! Love the build of equity and calmness around it!
Point of clarification because I am already curious about PC since all the bloggers endorse them….Personal Capital had you invested in over 100 individual stocks…and that was on a one million dollar portfolio… in addition to ETFs?
Thank you
Thank you! It has taken us time and been quite a journey!
We initially invested the minimal $100,000 with PC. At that time they created a portfolio that had about 50 individual US stocks, and they used ETFs for other asset classes e.g.
* SCHF, VSS, VEA, VWO for international stocks
* BND for US Bonds
* IGOV or BNDX for international bonds
* DBC or PDBC for commodities
* IAU for gold
Roughly about two years ago PC communicated that they were going to increase the number of individual US stocks within portfolios. Coincidentally, around that time we had invested much more of our savings and were approaching the $1 million dollar mark in our portfolio.
At times it seems like PC used ETFs for US Stocks, too, why we still have SCHA, SCHB, and IWM in our portfolio.
Selling during 2008 and not getting back into the market until well after it recovered is a common investing mistake. I hope others take notice of that comment and avoid that mistake in the future. Remember that 95% of the market gains between 1963 and 1993 stemmed from the best 1.2% of the trading day. Big gains happen immediately after big corrections and crashes so don’t miss out on all the gains by jumping in and out of the market. Learn this rule now and be rich sooner.
Agree! This is the type of thing that we wish were taught pro-actively in schools.
Great interview. Your net worth is impressive for someone your age. One thing I noticed was that you panic-sold your 401-k during the financial storm. I recommend that you allocate your assets according to your risk tolerance and not your age or your approximation to retirement. If a 500 or 1000 point market flash crash concerns you, then you have too much allocated to equity funds. Pare this back and hold more cash, CD ladders or short term bond funds.
Thank you the advice! Thankfully, we are better educated these days and have allocations aligned with our risk tolerance, as you’ve said.
Congrats on the great accomplishment. I mean with 30k spending you all could FIRE right now, but I understand if you want a cushion, particularly moving to Japan where things could be more expensive in some ways.
Thank you! We feel we’re on the edge of FIRE, though there is enough uncertainty to prevent us from outright pulling the trigger. Building up a cushion just in case and to allow us to do some traveling here an there seems to make sense for us.
Thank you!
As mentioned in another comment, we might ease into FIRE by doing part time work. Maybe contracting jobs here and there so that we can pay for our expenses and travel in-between.
Healthcare is by far the largest factor. Our next home and the prospect of relocating to Japan are also factors. Ideally the next place would be cheaper and let us cash out some of the equity in our currently home.
What an awesome savings rate! Best of luck on your journey. Have you ever considered other investments such as real estate?
Thank you! We have thought about but only lightly.
As it stands, we have a lot of equity in our home and a small portion of our portfolio in REITs. To go beyond that has seemed like it would require more effort or risk than we’re willing to take at this time. In particular, we’ve decided to favor liquidity and avoid over-concentration in real estate.
It’s not an area that we’ve explored in depth. Suggestions that would help us become more educated would be welcome!
Your story is very impressive given you missed out on the stock market recovery for the most part. Your savings rate and salary will have you in multi-millionaire status quickly. You are definitely in the FIRE ballpark and I can understand your hesitation to jump into it both feet.
Congratulations and best wishes.
Thank you, Carlos!
Loved the post. Healthcare always a concern. I always wish I started investing earlier too. We never learn what compounding does in just ten years
Thank you, Mark!
Warren Buffett is right when he advises investors to buy stocks as though they were purchasing companies (not taking a flyer on whimsical wagers) – and ignore the financial headlines. When the markets dip (as they invariably will), turn off CNBC, etc. Those shows play into the panic. This is what happened in 2007-2008, etc. The talking heads we’re interviewing experts who said, “All is lost! Get out of the market! Save yourself! Run for cover! You’ll lose everything if you don’t act now!” Later, those same people were saying, “Oh, you should have stayed in the market. Why did you sell?” Etc.
The WSJ and other publications will run a story about stock X and how awful its prospects are. A month later, they are running a story about how wonderful stock X is and how everyone should own it. Often, these stories are written by people who are not seasoned investors. They follow a lead that may or may not pan out. They rarely know any more than the average person. Their goal is to attract eyeballs – in my opinion.
In short, you had plenty of encouragement to leave the market in 2008 and not come back until the coast was clear.
Do your own research and follow your own instincts. In the long run, you’ll be fine.
Yeah, awesome savings rate . . . and once again, the demon in every household, for the rich, poor, and very point between: the withering, dangerous cost of US healthcare and its insurance. It will eventually reshape the political landscape. Probably not the next one, but the word is out i.e. millions of households compromised during their most vulnerable years. I’m all about free market solutions, but these are not free market products, more like gas stations engaged in collective gouging while declaring innocence. Big tobacco more like . . . I mean really, what’s the difference if it’s not exactly a monopoly. Better to be ripped apart by one grizzly bear, or a pack of ten wolves? Versus not at all, as with other developed nations. This will not stand. If nothing else, the mortal suffering of boomers may perhaps finally clarify it for all the unknowing.