To read more millionaire interviews, check out my millionaire interview category.
My questions are in bold italics and their responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I’m 51 years young. My wife is a couple years younger. We’ve been married for 16 years.
Do you have kids/family (if so, how old are they)?
We have two children – 15 and 11.
What area of the country do you live in (and urban or rural)?
I was born and raised in the San Francisco Bay Area. Cost of living is high compared to the rest of the country but most of my family lives here so no plans to move. Surprisingly, my house and neighborhood would be considered rural. All my neighbors have large plots of land and some own horses.
What is your current net worth?
Around $1.1 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?
I use Yodlee to track all my financial accounts which allows me to get a snapshot of my net worth.
- Home – $600k
- Emergency Fund – $60k
- College Fund – $10k
- Checking Account – $10k
- Retirement Accounts – $650k
- Stock Options – $90k
- Home Mortgage – $300k
- Credit cards are paid off in full each billing cycle.
- I didn’t list my cars or other purchases as assets since they depreciate over time. We own a 4 year old minivan and a 5 year old hybrid both which we paid cash for.
- Although I’ve owned my home for over a decade, the principal has not declined much since I’ve refinanced over the years. My original rate was over 7%. We just refinanced to a 15 year mortgage at under 3% and are on track to pay it off around my retirement. The monthly payment ($2000) is the same as when I first bought the house. I have done many improvements including kitchen remodel, bath remodel, backyard remodel and replaced all the windows.
- My emergency fund is currently in CDs and Money Market account. I don’t consider this fund an investment but it sure gives me peace of mind and allows me to sleep through the night. I also pay all my bills as soon as I get them including credit card bills, property tax, insurance, etc.
- My college fund for my children is low but I’ve always heard it’s more important to save for retirement than college. I do have relatives who have college funds earmarked for them which eases some concern.
- My retirement accounts consist mostly of Index Funds. Just turning 50 this year, I’m contributing the full amount to a Roth 401k ($17.5 + $5.5k catchup). The Roth contribution is post tax which allows me to save more now since I won’t be paying taxes later. I have other retirement accounts that are non-Roth so I’ll have to assess which accounts to draw from when start withdrawing money.
- Although stock options can be volatile, they only account for less than 10 percent of my assets. I’ve cashed in other stock options in the last few years.
What is your annual income?
$150,000. My wife stays at home with the children although she spends most of her time driving them around to activities.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
My job is my main source of income.
What is your annual spending?
My general budget is:
- PITI (principal, interest, taxes, insurance) Mortgage – $32k
- Home repair – $4k
- Utilities – $6k
- Auto Maintenance (repair, gas, insurance) – $8k
- Groceries – $7k
- Entertainment (eating out, vacation, etc.) – $8k
- Clothing – $2k
- Medical/Healthcare – $4k
- Charitable Giving – $14k
How did you accumulate your net worth?
Slow and steady wins the race. I never made more than $25k a year until I was 28 years old. I made $40k at my first job out of MBA school and felt rich. For a year or so, I got into a little credit card debt but after I came to my senses, I paid off my school loans ($12k) and my recently purchased car ($13k) so I could purchase my first home when I was 31 years old.
Spend less than you make. I’ve always looked at how to save money including purchasing used cars instead of new, living in a less expensive house/neighborhood than a bank would say I could afford and buying things on sale or used. Some would say living on one income in the SF Bay Area is impossible but we’ve done it and still been able to save.
Always be grateful for what you have. I’ve been tithing (contributing 10% of my net income) to my church for the last twenty years. Since my mindset is to live on 90% of my income, it’s helped me be disciplined in my other financial responsibilities.
Take advantage of financial opportunities at work outside of your base income. For example, if your company has a 401k match, contribute at least that much to gain the match. I used to have an ESPP (employee stock purchase plan) at work and even though my budget was tight, I’d buy company stock at 15% below market rate and then sell six months later if I needed to pay expenses.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
Surround yourself around like minded individuals. It’s important to have a few close friends/family that you can discuss financial matters. I’m inspired talking with people whose net worth is greater than mine. I’m encouraged when I can help others get their financial house in control.
Consume blogs, podcasts and books on finance. I’m constantly reading finance blogs, listening to podcasts or reading finance books. Must read is The Millionaire Next Door. This changed my and many others mindset of what millionaires look like.
What are you currently doing to maintain/grow your net worth?
Stay the course. Invest fully in 401k.
Do you have a target net worth you are trying to attain?
I’d love to retire with $1.5-2 million net worth. I feel comfortably on track as long as we don’t have a financial meltdown near my retirement age.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
I hope to get a less stressful job in the next 5-10 years. My emergency fund allows me to stress less if I ever get downsized.
To see more interviews like this, check out my Millionaire Interviews category.
If you want to reach financial independence, check out my free ebook Three Steps to Financial Independence.
This millionaire interview was first published on a previous site.