I thought you’d enjoy this interview with another person who grew his net worth to over $1 million.
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.
Assets
- Home – $600k
- Emergency Fund – $60k
- College Fund – $10k
- Checking Account – $10k
- Retirement Accounts – $650k
- Stock Options – $90k
Liabilities
- Home Mortgage – $300k
- Credit cards are paid off in full each billing cycle.
Some notes:
- 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.
Erik @ The Mastermind Within says
I completely agree that you should hang out with like-minded individuals.
It’s the concept of “you are the average of the 5 people who spend the most time with”. Another favorite quote on this subject: “if you want to become a millionaire faster, then hang out with billionaires.”
Thanks for sharing ESI
MI7 says
Thanks Erik!
Besides hanging out with like-minded individuals, I read a number of blogs, listen to podcasts and borrow personal finance books from the library.
I also took Dave Ramsey’s Financial Peace University Course at my church a number of years ago. I’m glad to say, he confirmed most of what I already knew and was following. Glad to report I’m at Baby Step 5 although we’ve always followed Baby Step 7 (build wealth and give!).
From my vantage point it’s easier and rewarding to make one time donations to organizations and individuals in need.
Mike says
I always like to see the detailed numbers of how someone got where they were. I thought it was interesting that he was using Roth 401 at age 51 and with a 150k salary. We only use Roth ourselves, but we’re in our early 30s.
What year did you interview him?
ESI says
Not sure. Likely 2-3 years ago…
indio says
His max contributions to 401k + catch up contributions is higher now than the $23K he contributed a few years ago. I think it’s at $24k now.
MI7 says
Hello!
MI7 here. I was happy to see another Millionaire Interview and then I realized it was me!
Here’s some updates on my financial and personal life.
First, thanks to ESI for rerunning my post. This interview was from July 2013. Five months after it was published I was laid off from my dream job with a major media company (think mouse ears).
It took me six months to find another job but because of a nice severance package and an emergency fund, I never worried about finances. This is where I’m currently working.
As stated in the interview, I live in the SF Bay Area (jobs o’plenty) so I was fortunate to not have to uproot the family. This job is lower stress level and I don’t put as much of my self worth in this position. One of the great perks is a healthy 401k match and bonus. As I max out my 401k, I’m saving around $50k per year for retirement in this plan.
Another major update is because of the strong housing economy and stock market, my net worth has increased to $1.7m. I still carry no debt except my house ($190k). I feel comfortable in reaching FIRE but plan to work a few more years in my corporate job. After that I’d like to find a transitional career to retirement. The salary won’t be as important as finding a rewarding position helping others.
Feel free to ask any follow up questions and I’ll try to answer them.
ESI says
Thanks for commenting!
I’ve done so many of these (and this was so long ago) that I lost track of who did this one.
Appreciate your willingness to update us!!!
Liz@ChiefMomOfficer says
Thanks for the update! Looks like you’re well on your way to meeting your financial goals, despite the temporary setback with the job. How has what you’ve saved for college changed since the interview?
MI7 says
Thanks Liz!
I’m saving $400 per month per child in my 529 accounts.
Not enough to have a fully allocated college fund for them so I’ll have to pay for some college inline and determine other creative ways to pay for college (shout out to ESI’s current post – https://esimoney.com/how-to-save-on-college/).
Mustard Seed Money says
That’s amazing how quickly life can change. You said that your net worth is at $1.7m and previously you said you’d feel comfortable retiring at $1.5 – $2m. Is there a new FIRE number for you?
MI7 says
Probably still $2m. I still have college expenses which is why I’ll continue to work.
Life is much more enjoyable knowing I’m set for retirement with the exception of any major life changes.
Amy @ Life Zemplified says
Another good one ESI, thanks for sharing!
MI7 says
Thanks for reading Amy!
The magic bean counter says
Great interview. Its always good to read about how people become successful.
MI7 says
Glad you enjoyed MBC.
Ray says
This is the first of the millionaire interviews I have read where I can really see myself in interviewee. I am not a millionaire yet, but I can see myself with a similar net worth when I reach 51.
I also am dependent on earning a salary and my wife stays at home and home-schools the kids. I have a similar amount saved for the kids education due to the same thinking. My kids are a few years younger. I would be VERY interested in a follow up to see how college costs have impacted this millionaire now that his kids are close to attending. (ESI – I wouldn’t mind following up privately if the subject is willing. You could pass along my contact info.)
One big difference is that my house is much less expensive (due to the real estate market where I am located) and so is paid off. That’s allowed me to max out my 401k and IRA contributions.
MI7 says
Ray,
Glad to hear you’re on your way to financial freedom!
Funny you should ask about college because my older son and wife are on college tours this week! FYI, I have about 50% saved up in their college funds. I plan to fund the rest in line or have them take out loans. Haven’t figured that out completely but I’d like to have some skin in the game even if I help them pay off their loans after they finish college.
I’m looking forward to paying off the house but I’ve got a few years. As I mentioned in a previous comment, the property has appreciated about 50% in the last few years so I’m not too worried.
I’m comfortable with ESI forwarding your email to me and we can continue our discussion offline. I listen and read a lot of financial literature and happy to help others out where I can.
Matt Miller says
This shows that you can build a sizable net worth even if you don’t make a ton of money. $150,000 may seem like a lot but when you have a family, it goes quick. He also made much less early on in his career.
I heard an interview this week on Afford Anything about how most people can’t build this kind of wealth (the guest’s argument). That may be true if you’re just starting at 55. But most people actually can build this kind of wealth even at a lower income. It’s how much you keep.
MI7 says
Slow and steady wins the race. Spend less than you earn and invest the rest (right ESI?).
ESI says
You’re singing my song!!!!
Coopersmith says
I do remember this one from your other site.
Always good to review.
MI7 says
Thanks Coopersmith! As you can tell, I’m a long time fan of ESI as well.
RetireSoon says
In 3 years from $1.1M to $1.7M
(Another major update is because of the strong housing economy and stock market, my net worth has increased to $1.7m. I still carry no debt except my house ($190k).)
… it’s amazing the impact a good market run can have on networth in a relatively short period! 50% jump in networth on a big # in 3 years is great!
MI7 says
RetireSoon,
How the $600k increase happened in three years:
$300k house value increase (crazy real estate market in SF Bay Area).
$150k 401k increase (generous company match and 401k bonus).
$150k stock market appreciation. You need to ride the waves out.
RetireSoon says
Congrats again on a methodical approach to get in a great position.
Arrgo says
I really enjoy the Millionaire Interview posts. It gives you some insight into what others have done or are doing to get there. Very true, slow and steady can win the race. Thats what worked for me and I never really made that much. Try to start young and set your contributions on automatic. After 20+ years my accounts are pretty huge and I havent put that much effort into it other than the going to work part. I think a positive for you is that you dont seem to mind working. Those extra years of income should really help. Having some money coming in isnt a bad thing these days even if you arent really dependent on it.
MI7 says
Thanks Arrgo!
I do enjoy my daily work but corporate politics can be wearing and stressful. I hope to determine my exit strategy in the next couple years.
I just talked with a friend who retired from corporate work and then put another decade in as a teacher. I’m sure he was grateful to do rewarding work without worrying about saving for retirement.
Jeff B. says
If both the wife and I didn’t have pensions to vest in, we would be done ASAP. Seems silly to throw away free money. I have about 3 years left and the wife about 2 years. We will probably have to force ourselves to spend money since we could spend $100K a year and go for 40 years on it. So we will travel and donate a ton of money to charity and still be just fine.
MI7 says
That’s true financial independence!
Professor says
Perfectly said. What I really like about this article is that it makes FI approachable. Isn’t that what is really needed?
Apologies in advance ~ but a lot of the PF resources available today can be intimidating (thus scary, too aggressive). Huge transformations and incredible monthly income reports (~cue and play monster truck show commercial in your head~) are great motivators for some, but certainly not all . . . I tend to think the slow and steady approach highlighted above is way too often overlooked.
Being purposeful and intentional goes a long way. Again, great article.
MI7 says
Thanks Professor!
Jason says
I love reading this millionaire interviews. I have to agree with the other sentiments that slow and steady wins the race. Moreover, you don’t need to make a ton of money to reach FI status. I only wish more of my colleagues bought into that idea.
MI7 says
Agreed Jason!
This wasn’t that hard to do. Just have a plan and stick with it.
Rachel M says
Just finished reading your interviews. Fascinating. I am thinking of answering your questions just for my own enjoyment. I was waiting for someone to drop a ‘get rich quick’ joke in there but no luck. ?
ESI says
Ha!
Stay tuned if you like these — I have 10 more coming between now and the end of the summer!
MI7 says
Looking forward to reading more!
Phil says
ESI
These interviews are great. If you are planning to do 10 this summer I would be glad to be interviewed. I am about to start my 30th year as a W2 earner and like MI7, I simply started early and had a savings plan and a number in mind and managed to keep it all on track. Like Mi7 I live in the Bay Area so even though I have benefitted greatly from the real estate boom, the house equity isn’t what will put me over the top
As usual, I am enjoying the site.
Phil
ESI says
It’s one of my most popular series.
I already have ten loaded into my blog software and another 3-4 working on them, but I’d love to have you included. I’ll send you an email.
Dan says
I’m new to ESI and have enjoyed reading this interview thread (my first one). I’m 48 and have a story that is becoming more and more common perhaps. After 15 years (post-MBA) in the corporate world in the SF Bay Area, I quit my job, rented my house, and have been traveling and volunteering in various parts of the world – searching for more impactful work than just grinding out spreadsheets and powerpoint presentations. I’ve recently returned to the Bay Area where I’ve taken up a part-time job as a sailing instructor. MUCH more fun than corporate life. I’m basically FIRE (or at least FI) since I do work part time. With no wife or kids or pets, getting to FI was perhaps a bit ‘easier’ for me..but I agree with so much that has been said above. Start early, have a plan, stick with it, live below your means, etc. And I’d be happy to do an interview, ESI, though I probably wouldn’t get into specific numbers. (My parents taught me never to talk about money.) That said, I find that “taboo topic” a bit old school. In many ways, it’s refreshing and encouraging to hear people talk so openly so that we can all help each other. Anyway… great thread, great site! I’ll be reading…