Millionaire Interview 76

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 67 and my wife is 70.

We will celebrate our 40th this July with a nice Hawaii trip. This is already paid for. We said we would do this for our 10th anniversary but time does fly. We just hope the lava stops.

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

We have two children, a daughter 36 who has a master’s in intercultural communications and runs an online business/blog with 62,000,000 downloads. She teaches English to people all over the world.

My son is 34 and has a master’s in electrical engineering. He is a project manager for a large defense contractor working on guidance systems for cruise missiles/air guns.

Both children went to state universities and that certainly helped.

We are very proud of our children as you can tell. Very hard workers.

We have always tried to give our kids an awareness of money and how delaying gratification pays off in the end.

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

Our primary residence is southwestern New Hampshire (Zillow value $316,508), which is pretty much rural. It is a town of about 20,000 with a branch of the state university — close to lakes and mountains. This enabled us to become a ski family.

Mortgage has been paid off for 10 years but we have a vacation house in Scituate Ma on the harbor/ocean. This value is $625,000 and has a mortgage of $284,000 and has 10 years left on a 15yr. 2.87% financing. This we have owned since 2010. It is pretty much metropolitan Boston.

My wife grew up on the shore in southern Connecticut and has always wanted to return to a beach area. She had taught in elementary schools so we were familiar with the area. We spent every weekend for two years looking for the right place. Once we saw the harbor off the deck in the back and the ocean across the street that was it!

One issue though is flooding. Have been on the national news twice in the last three months, for massive Atlantic storms.

What is your current net worth?

Current net worth, per personal capital, is $4,410,759.

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?

Cash in banks: $225,100

Investments: $3,587,886 total. This consists of:

• U.S. Stocks $2,206,659
• International stocks: $587,036
• US Bonds $250,613
• International bonds $22,820
• Portfolio Cash: $387,864

Alternatives: (real estate and cash through mutual funds and stocks) $11,389

Other assets besides real estate are cash values 2 Life insurance policies, health savings accounts, art, rugs etc. This totals $174,559.

These investments are about 65% retirement (traditional IRAs, Simple, Sep IRAs and 403bs) and 35% non-retirement.

The only debt we carry is the vacation house mortgage of $284,000 and a life insurance loan of $217,000 at 3.87% that was taken out to pay all debts in the optometry practice I sold in 2014 for $1.287 million

EARN

What is your job?

I am now an optometrist currently working part time.

What is your annual income?

$40,000/yr.

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 was working for three years as an employed full time optometrist at $26,000/yr. This was in 1979.

My take home pay when I was the practice owner varied between $190,000 and $295,000 annually. This was artificially reduced by large capital equipment purchases that were an immediate tax deduction. This of course varied from year to year, so on average the income was about $30k higher than the above values. Of course, this was recouped when the business was sold.

This was between 1979 and 2014. The practice was quite successful with one other hired optometrist and a staff of 12.

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

As far as tips for increasing income, WORK HARD.

I feel the efforts you put into your profession will be paid back many times over if you do what you love and apply yourself. There are no guarantees but an investment in your own business could not be beat if it was sensible and had a good ROI. There are a thousand questions that arise if you own your own business.

There were many times in the beginning that I wondered if I was going to fold due to a crazy payout schedule (paying the former owner three times my house mortgage, a miserable economy in 1981 and dealing with student debt.

What’s your work-life balance look like?

As far as work/life balance, owning your own business can be tough. People quit, steal, don’t care, etc. etc. and it did involve a lot of hours.

On the flip side, we did lots with or kids including ski vacations, Disneyland trips, at least one major summer vacation, European trips. So it was pretty good. Neither of my kids was interested in following my profession, with the exception of a small loan my daughter is paying off for a loan to help her with her business.

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?

I do not have additional sources of income outside of optometry, with the exception of a small loan my daughter is paying off for a loan to help her with her business.

However my wife who has a doctorate in education was paying the health insurance, when she was teaching and contributing every penny of her salary into 401/403 plans. This enabled us to sock away a lot of money tax free and just forget it.

She also inherited about $190k in the late eighties. After teaching at the college level for 6 years she became an avid investor and a disciple of Morningstar to the tune of 2-3 hours a day. Made some shrewd investments. She has not worked outside of the home for 10 years.

SAVE

What is your annual spending?

Our annual spending over the last 5 years has averaged $140k, tracked both by Mint and Personal Capital. I expect this to go down to $120k/yr when retired.

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

Major categories have been household (doing a major renovation on our vacation house), taxes and travel.

Of course in the beginning when the business was new, our idea of an outing was going out on Saturday mornings to the dump. My wife has been an amazing bargain hunter on everything from food, clothing etc and still cannot pass up a coupon. This frugality has served us well, since I am a bit of a spendthrift.

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

We do not officially have a budget but I am catatonic at monitoring balances and watching cash flows.

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

Traditionally we have saved 15-20% of our income, but it has gone up to 40% since I have gone to part-time work (although the dollar amount is a lot less).

In the beginning it was a question of purchasing equipment for the business vs. retirement funding, always a tough call.

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

Travel is our hot button and we are pleased to know that thanks to Personal Capital, we have come to realize that we can allocate $30,000/yr into travel and still have a 98% chance of meeting our financial goals until age 95.

INVEST

What is your investment philosophy/plan?

This will sound pretty simplistic, but investment philosophy has been saving as much as you possible can. I have spent a lot of time recently looking at retirement websites and am appalled by the fact that 50% of the population has less than 10k saved for retirement. We have been fortunate but I cannot imagine not looking more towards the future.

What has been your best investment?

Best investment has been broad index mutual funds. I am a real fan of Vanguard and we have about 70% of our total investment in their funds.

Also recently Netflix has done very well.

My wife has about $300k of individual stocks/funds.

What has been your worst investment?

General Electric. I bought it when it was “on sale” Apparently it is still on sale.

What’s been your overall return?

This is a total guestimate, but I think around 9% has been our rate of return.

NET WORTH

How did you accumulate your net worth?

We accumulated our net worth through good investments.

Salary was pretty good but dedication to continuously investing is what really made the difference. Being fortunate enough to totally invest my wife’s salary was a tremendous help. Health insurance was also covered by her job for us. I have tended to select and stay with the same broad index funds. Obviously monitoring but it has been beat into me that trying to time the market is futile.

Our only inheritance was received in the late eighties and was less than 5% of our current net worth.

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

Road bumps? Nothing major that I can come up with. Life is always a challenge but we have been blessed.

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

As far as maintaining net worth, we need to re-allocate. Currently we are in 70% stocks which I know is way too high for people near 70. Also living within our means.

I plan to retire in one year. I have run about a dozen retirement calculators all of which tell me I am in great shape but I guess I am a doubter, having been raised by parents who were out of work a lot.

Retirement will involve travel, but I do have concerns about developing enough non-work interests. I have traditionally got a major sense of self-worth from my work environment. Without that it may be tough. Probably will do some volunteering.

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

Not really, I think 5 million which would have been a fantasy 20 years ago would be nice. All of our retirement scenarios tells us that that will happen. Most importantly we need to maintain our health,

We have both had some significant challenges this year and it does put into perspective what is most important. All the money in the world is worthless without your health.

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

First million happened in 1996. It has been a hoot watching that grow. The first million made me realize that deferring things that were not really important translated to much more value later on.

This was a value shift. That new Beamer was not as important as 50k more in net worth.

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

Biggest money mistakes was early in our marriage, having to go out to dinner three times a week was really dumb.

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

Think about the future. It will be here sooner than you think.

I remember when we purchased our dream house in 1987, which was something we never thought we would be able to do, coming home the third night and saying to myself “Is this all there is?” Realizing that so many fabulous possessions lose their shine very quickly has helped me to tone down

Silly aspirations for “things”.

FUTURE

What are your plans for the future regarding lifestyle?

We plan to enjoy our retirement to the max. Our savings has allowed us to do that.

What are your retirement plans?

We plan to travel, enjoy our granddaughter, and see more of family. Take some courses online and at our local college. Get back to my guitar.

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

I have gained a lot of my self-worth from my job. This may be a hard transition, when you are no longer the “go to” guy.

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 was totally self-taught in finances and it started to click in my early thirties.

Get Rich and investment books mostly. Now there are so many different financial sites that it is amazing.

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

I had a great English teacher in high school who always encouraged students to do their best. Something about him was very motivating.

I was not sure I was even going to go to college, but he was very motivating.

Warren Buffet is my hero. World’s best investor of all time but level headed and never flaunts his wealth. A class act.

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

We have given to charity: Alma Maters, Dana Farber, Local Food Drives, local homeless shelters.

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 have a will in place for our heirs. We have not shared with them the size of our assets. I want to see them continue to excel on their own.

Thanks for being given the opportunity to share. This is a great site and I have learned so much from it.