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)?
Both 46, been together 26 years, married 23.
We are both first generation immigrants, but from different countries and truly are the “multi-millionaire next door.”
Do you have kids/family (if so, how old are they)?
One child in college, one starting high school.
What area of the country do you live in (and urban or rural)?
Midwest, suburban
What is your current net worth?
$3.9M
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?
- $1.37M – Retirement accounts (Roth IRA/Roth 401k + Taxable IRA/401k), $400k of this is liquid & needs to be reinvested – will cover this in the mistakes section.
- $185K – Brokerage, Comprised of individual stocks and index funds.
- $700k – Company Stock, Obtained through RSU’s, stock options, ESPP. Has seen phenomenal growth in the past 5 years. This is the source for our charitable giving.
- $38k – College account, You can see we haven’t done much here & after setting it up for the first child, didn’t contribute regularly. Haven’t done much for the second child. Completely realize this was a missed opportunity for our older child to have funds grow tax free for college. Child #1 goes to a state school & received an academic scholarship that covers half of the tuition. We haven’t tapped into this account to pay for college right now and will let this grow for child #2 to use.
- $453K – Lump sum pension, From two pensions, if we wanted to withdraw a lump sum vs. taking a monthly payout at retirement. The plan is to take a monthly payment for life.
- $260K – Home equity, We only count the actual equity we have in our house vs. market value.
- $122K – Home equity overseas (renting it out), We paid cash for this property for sentimental family reasons. After spending a good amount for renovations we are renting it out.
- $781K – Cash, Yowza you say – are they crazy? Yep! We really don’t have a good answer to why we have so much in cash. Somehow it has built up over the years, even though we keep plowing in plenty each month into the market….this is in laddered CD’s and obviously has made paltry returns in the past decade. We’re working on a plan to get this back into the market, with rededicated efforts to focus on our finances.
Only debt is $200k for our primary mortgage.
EARN
What is your job?
Me – individual marketing contributor in a tech company. Highest education level MBA.
Spouse – Researcher. Highest education level Ph.D.
What is your annual income?
$438k in 2017.
Tell us about your income performance over time. What was the starting salary of your first job and how did it grow from there?
First job out of school when the job market was depressed (early 90s) was $32k.
I stopped working after my first child was born. Went back to work several years later, made a career change and started at $15/hr (hard not to let ego get in the way in this situation); that hourly rate job with the same company turned into $188k last year.
Work ethic to stay employed & relevant with the same company for 15+ years and luck that the company is doing extremely well financially.
Spouse’s first job after doctorate paid $86k (in 2000). A job change 10 years ago boosted income by 50%, now at $250k, with another boost coming this year should take it to $300k.
I worked full-time while my spouse completed his doctorate, so we were one income (and not that high) in our 20s. As mentioned above, I stopped working for several years after our first child, so we were one income still. We’ve been dual income for 15 years.
What tips do you have for others who want to grow their income?
Look for opportunities in your company where you see a gap.
If needed, volunteer initially to take on the responsibility.
Showing your boss & others you have drive and looking for ways to make some type of improvement leaves a lasting memory come review time (bonus/promotion, etc).
What’s your work-life balance look like?
For me, it has always been good since going back to work after child #1, that is one reason I love the company I work for.
One of us has always been able to be home when the children come home from school (attend their school events and even volunteer at school) and we have a homemade family meal together each night.
As a couple, now that we are well established in both of our careers, actually really good, and that is why we both still work even though technically we wouldn’t need to.
My spouse is nearly as flexible. He has many opportunities to generate consulting income, but has chosen NOT to pursue this, another $50-100k a year isn’t worth the time, stress and being away from family.
Even with all of the flexibility, we certainly go through times of stress. I took a 3 month sabbatical from work last year after a particularly long/stressful project. It was a way for me to assess whether I was ready to make a change and leave the corporate life.
The 3 months were great to reset and re-energize. The time off made me realize that I wasn’t ready to stop the corp life quite yet. I missed the interaction with colleagues and felt I wasn’t as productive personally, because I didn’t have a routine.
Kids were in school, spouse at work, friends were working or had their own daily routines, so it felt lonely at times. I am in the process of still reassessing whether I will take a less rigorous corp job for less money, we will see…..
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?
Close to $10k in interest income & $6k in rental income annually.
SAVE
What is your annual spending?
We have been pretty consistent the past 5 years of annual expenses of approx $130k (not including charitable giving).
What are the main categories (expenses) this spending breaks into?
I do not track expenses to the dollar spent (sacrilege for many, I know!), I am considering setting up Mint to really have a lens into individual categories. This does NOT include our charitable giving.
Broad categories:
- Mortgage (15 year at 2.875%) = $2.3k/mo.
- College expenses for child #1 = $1.5k/mo
- Credit card payment (this is my catch all for all of our spending: food, entertainment, any bills that can be paid by cc, travel, etc) = ~$5-6k/mo. The cc is paid in full each month.
- Additional income tax of ~$10k/year (we always hit AMT, will be curious what will happen in 2018 on this front)
- Property tax of $12k/year
Do you have a budget? If so, how do you implement it?
Interestingly we have never had a budget. Neither of us are big daily spenders. We are very similar in our money philosophy and we came into the relationship that way.
What percentage of your gross income do you save and how has that changed over time?
Since becoming dual income ranging from 30-40%.
What is your favorite thing to spend money on/your secret splurge?
Travel and high end restaurants.
As you can see from our annual spend, we don’t restrict ourselves. It’s an interesting dichotomy, we are not daily spenders (no daily Starbucks, no bi-weekly manicure/pedicure, no eating out multiple times a week) BUT we do take several international trips each year as a family and fly business class.
I follow travel blogs and am always on the lookout for deals and we actively use points/miles to fund these trips. We are fortunate that we have opportunities to piggyback on work travel (one airplane and hotel are covered) when we can.
We have been to some amazing places and will continue to have many opportunities to do so in the future.
We also enjoy gourmet dining experiences; I don’t blink at spending $250/person for a meal every couple of months, but consider paying $60 for 4 of us to get hamburgers a total waste.
INVEST
What is your investment philosophy/plan?
It has been pretty passive: buy index funds and let them do their thing.
In the late 90s we were buying/selling individual stocks like crazy. As the bubble burst and we had kids, we gave that up.
What has been your best investment?
My company stock through the ESPP at work. 15% discount and a 6 month look back. Capped by IRS at $25k/year. Have only used it to fund charitable donations (more in the charity question).
Any financial advisor would say this is a singular mistake to have so much tied up in a single stock. I would have a very hard time divesting this stock because of its performance (first shares have appreciated 1200%) over the past 15 years.
What has been your worst investment?
My spouse’s colleague had a sure bet on a new cancer drug and he personally knew the people running the company behind it. He himself invested $200-300k in stock. He sold a lot of co-workers on it. He sold me on it, but NOT my spouse.
I thought what the heck and invested a small sum of $2k, this was 7 years ago. It is worth $300 now. Obviously no financial impact for us, but the fact I was willing to blindly listen to someone was a good lesson never to repeat again! The colleague has lost ~70% of their investment.
What’s been your overall return?
Yikes, I’m not sure, but estimating 8%.
How often do you monitor/review your portfolio?
I track our net worth monthly and we discuss any significant changes.
We haven’t been great at rebalancing. When the children were younger we went years without rebalancing. The past 5 years we’ve been rebalancing annually.
NET WORTH
How did you accumulate your net worth?
Investing in higher education which lead to solid incomes.
Fields that have provided continuous employment with big growth at various times.
Continuing to invest in the market regardless of volatility.
No inheritance & we hope both our parents use their money to enjoy their lives to the fullest.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
We have been very fortunate that we have always been employed (when we wanted to be) and haven’t had any major financial or health challenges in our life or in our extended family.
What are you currently doing to maintain/grow your net worth?
Max out 401k’s, start investing our bundle of cash back into the market via index funds. Let the rest keep doing its thing.
Do you have a target net worth you are trying to attain?
No, none of this seems real to the both of us. It feels like it keeps “magically” growing.
We’ll keep working until we don’t want to anymore and then we’ll enjoy and share whatever we have with others.
How old were you when you made your first million and have you had any significant behavior shifts since then?
- $1M – age 39
- $2M – age 42
- $3M – age 45
- $4m – in the month or two
Behavior change:
Allow myself (and I say me, because my spouse has never had this problem) to spend without agonizing over it.
I am getting better at it, but it isn’t in my nature. I can get hung up more on spending $3 on a pint of ice cream than spending $2k on a plane ticket. Weird, I know and I can’t really explain it.
The realization of how right it feels (for both of us) to donate to charity at the rate we do and not think twice about it (more below on that topic).
What money mistakes have you made along the way that others can learn from?
Not actively pay attention to our portfolio at least 2x a year and making adjustments accordingly. I think we have given up at least $500k+ by not doing this.
Another mistake I made in December 2016 was an emotional reaction to the presidential election results (it’s funny that the “big recession” didn’t cause any panic for me, but the election sure did). I was convinced that the market would tank, so I moved $500k from my 401k into a stable fund. I was going to reinvest when everything went south.
We all know what the market did in 2017, I easily gave up $100k+ in appreciation. I take full responsibility for this decision, though my spouse knew I was doing it. I should’ve stayed the course and have been pumping big chunks back into the market on big downward turns.
If you had to give advice to ESI Money readers about how to become wealthy, what would it be?
Education & personal drive are key! We stress this with our children, education simply provides you options and opens doors for opportunities, it is one’s personal drive that can make something happen.
Both in the couple need to be engaged and on the same page.
Max out everything you can (401k, IRA’s, ESPP).
Live below your means.
Don’t buy the most expensive house in the neighborhood.
Don’t try to keep up with the Jones’.
Learn about investing.
Don’t pay advisor fees.
Teach your children!
Take an interest in your personal finances, if you don’t, who will?
FUTURE
What are your plans for the future regarding lifestyle?
We have achieved financial independence, but since we both enjoy our work, we have no plans to retire early at the moment.
Once child #2 completes high school, I will consider pursuing another path (personal finance coach maybe?) and my spouse may consider a position with less responsibility with the same employer until age 62.
What are your retirement plans?
My spouse will have 2 pensions to claim when he retires (if he works until 62 & starts drawing at that time) this will equate to nearly $13k/mo.
If Social Security is still around, we’ll get about $5k/mo. So, potential of a pretty sizable monthly amount coming in of $18k before we even have to touch any of our savings.
I don’t foresee our activities in retirement changing drastically from what we’re doing now. The only big difference is that hopefully we gain the luxury of time in retirement for extended travel, we can rent a place and stay for longer chunks of time. I’m all up for following MI 22’s lead with all of the travel adventures!
Are there any issues in retirement that concern you? If so, how are you planning to address them?
The issues on our mind aren’t necessarily for retirement but anytime coming up: taking care of our parents as they age. Thankfully both of our parents are in decent health and are financially stable. If they need help in the future, we want to make sure we can meet that need in whatever form (financial, time, parents moving in with us).
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.?
For me, it was through my father and my personal interest. I came to the US when I was young. My dad came with $10 in his pocket to go to graduate school and both of my parents worked their butts off to give me and my siblings the middle class life we had.
Coming to a new country and not knowing all of the “rules” to play by is a huge barrier, but my parents did it. They had challenges, my dad was laid off in the 80s, just as they built their first home.
I was always aware that we spent money differently than “American” families. We didn’t go out to eat (going out for pizza was a treat). We didn’t spend money on designer things. We drove our cars until they died. My parents discussed how much things cost and how much they earned, so I was very aware of numbers from a young age.
Looking back, we weren’t denied anything (as a child we traveled internationally even on my dad’s moderate income). My dad invested in the stock market as soon as he had some extra income to do so, he’s a proud KO shareholder for 40 years!
My spouse is also a first generation immigrant to the US, coming for graduate school. We are of different ethnicities/countries/cultures. For my spouse, finances weren’t really discussed in his family nor in his culture growing up. His parents were middle class and spent frugally. He has a background in finance and is savvy in general.
We are doing our best to teach our children by example. They know some aspects of our lifestyle is “bougie.” Though they also know this is an active decision to spend our money differently than peers.
We live in an upscale neighborhood, but have one of the cheaper houses. We have old cars and won’t replace them until they die. We talk about money decisions with our children and always emphasize want vs. need.
Track record so far with child #1 is good, started working at age 16. Saves 60% of income. Has invested in index funds. Gives monthly to a charity. Continues to work in college (when majority of friends didn’t this past year). We are contributing to a Roth 401k for earnings until college is finished. We’re very proud of child #1. We hope that this is the beginning of good life-long habits.
Who inspired you to excel in life? Who are your heroes?
Experiencing my parent’s initial challenges in this country and seeing what they have achieved now is the biggest motivator I’ve had in my life.
If you have a can-do attitude and gumption, you’ll find a way to do it.
My spouse would say his parents as well, they were hard workers and provided an opportunity for him to continue his education when that wasn’t the norm in their extended family.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
YES!
Currently, we donate 15% of our gross income and we’re looking into upping that.
This active commitment started 15 years ago (the first time we had a dual income). It gives us a sense of purpose to be able to support educational and hunger relief efforts. We give anonymously in our community and have set up an endowment.
The endowment is funded by donating appreciated stock (one of the best financial tactics we use, no taxes paid on appreciated stock, get a tax deduction on the charitable donation).
The charitable giving is actually a huge part of why I continue to work. My employer has an extremely generous donation match, which I take advantage of. Knowing that I don’t have to work, but choose to and that choice allows us to help others in need.
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 an answer to this question yet and struggle with it.
We were both raised middle class. Our parents paid for our undergraduate degrees and we are extremely grateful for that. We will do the same for our children.
All of our net worth, we’ve achieved on our own and that accomplishment is a good feeling. We want our children to have the same work ethic and money values we grew up with. We hope that our greatest gift to them is providing the framework for them to stand on their own feet and achieve whatever happiness is for them (which we know isn’t necessarily financial).
We firmly believe and tell our children, choose whatever you want to do in life, but also accept the lifestyle that it brings with it (for a lot of people more money means more stress, for others less money means feeling like you are always behind).
We don’t feel a strong pull to leave vast amounts of wealth to our children, we want them to experience the same pride of doing it on their own as we did.
Since our net worth will likely continue to grow significantly, we will revisit this decision sometime in the future on how much to leave the children and other extended family members.
On a separate note, one item that is of concern is how our children will approach their relationship with finances as they grow up. We are laying a good ground work so far, but who knows if it will last? What type of career will they choose? If they have a partner who doesn’t share their same views how will it affect their finances?
Questions for ESI Money readers:
I have only gone through half of the Millionaire Interviews so far, and have only found two written by women (MI 26 addresses this same concern). For all the men out there reading this, how are you engaging your wives in the investing/planning process? If ever there is a situation where you are unable to manage your net worth, will your wife be able to take over? Even if the husband takes the lead or enjoys it more, I think it is SO important for wives to be aware and engaged in the entire process. I have so many female friends that are extremely educated and not participating at all. This makes me sad and frustrated.
I am curious how other financially independent people with older/grown children spend/give? Do you pay for family trips? Are you funding grandkids college funds? Are you buying homes for your kids?
Has anyone freely shared how much their net worth is with their grown children? If yes, at what age? Our children obviously know we have funds, but I think if child #1 knew our net worth or our annual salaries, it would come as a big surprise.
Strategies to handle stock that has grown significantly? There will be long term capital gains on 75% of the value of my company stock. As MI 27 discussed his experience with GE stock, I want to be conscious that our company is doing well with the leadership of a charismatic CEO with excellent business and people intuition. When he decides to move on to whatever is next, the stock will take a hit (next in line is trying to emulate the CEO, but there is no comparison). We already use this bucket to fund our charitable donations with stock transfers, but I’m not ready to move shares to a donor advised fund.
As you see from the interview above, we have a big chunk of cash on our hands, would like to hear thoughts on the best strategy to invest it in the market and over what period of time.
For those that have already retired, how does it feel to start drawing down from your nest egg?
Man… I was going to say something about the stuff at the top (like how impressive it how quickly you went from 1 to 4 million)…
And then my heart got stabbed with the question at the bottom. My wife is not too involved in the big picture finances, and would have a challenge taking it over if I died. I’ve tried to talk a lot about it, but her interest is minimal. Your question makes me want to try again, because you are 100% right. She needs to know what’s going on.
I suppose she could just read my site to get my thoughts, though, given that I am a very open book on there about what we have, where we are going, and how i plan to get there.
Really good post!
Thank you for the kind words. I’m glad my question about spouses being involved gave pause to reflect. Since this interview was completed sometime back, I’ve had a chance to catch up on many of the posts on this site and notice you’re usually the first one to comment! I have many physicians in my family, so have been sending over links to your site with “if you’re interested.”
All the best with reengaging your spouse in the process!
Very good read. I am very impressed with the wife’s involvement and knowledge here! My wife could take note! As noted by someone else here, I struggle to get my wife involved/interested in our finances. For her benefit (just in case) I have created an excel file called the “keys to the kingdom” with all the account numbers and relevant info, i keep it up to date and on external drive we share. We have set up a living trust and will which also has all this info, however I wonder how my spouse would manage it all if I kicked the bucket.
Thank you. I have no magic answer, but am glad to hear you have all of the details documented somewhere.
I share your pain about your wife not interested in finances. How I’ve handled this was by writing her detailed quarterly household financial summaries (including all our financial accounts, mortgage and equity, net worth, etc). I started doing this 2 years ago, and this has greatly increased her interest and she gets to ask some questions and even takes the lead in setting some goals (like paying off our mortgage early). I also have a book where I’ve written our IPS, it also contains all the websites and passwords to all our financial accounts, 529 accounts,Term-life insurance log ins and passwords, all the Index funds we hold and in which account they are held, yearly financial goals, etc and it’s stored in our safe, so she can access it and review for herself, if need be.
At least, now she knows our current state of affairs financially, even if she has no desire to participate actively in it.
Sounds like a great idea to proactively reach out to encourage dialogue and engagement! Well done!
Not a bad idea, at all.
I do a quarterly net worth update on my site. So, this should be pretty easy to set up.
Thanks for the idea!
Definitely not a good idea to have spouse involved in your finances. Greedy is human nature, even in a marriage. I revealed my net worth and I believed that’s a major cause of my divorce. Just don’t do it !
Oh my. My first hunch would be that there might’ve been other things happening in your marriage that caused the divorce?
Anyway, I’m not sure what happiness is to be gained from a marriage when one chooses not to share things about oneself (certainly NOT limited to money).
I wish you happiness.
I am hoping your concerns about women not being in charge (at least in part) of family financials will be reduced with every generation. My sister (age 32) and I (age 29) both out-earn our husbands and are in charge of financial aspects of the home. I am married now, but I bought my own house at 23. I know my mom and dad shared responsibility, with my dad taking the lead. However, my mom was a high school graduate who empowered my sister and I to go to school (her a Masters in business, me a PhD in Science). So my mother’s mantra for us was always to maintain the ability to be independent. Getting married was secondary to school and establishing our careers. This means we learned a lot about all aspects of life along the way.
Emily,
Yay! I love it!
I also hope the same. Parents can be such an amazing force of encouragement. In a family of girls as well, both of my parents stressed education above all else.
Thank you for the kind words. I’m glad my question about spouses being involved gave pause to reflect. Since this interview was completed sometime back, I’ve had a chance to catch up on many of the posts on this site and notice you’re usually the first one to comment! I have many physicians in my family, so have been sending over links to your site with “if you’re interested.”
All the best with reengaging your spouse in the process!
So my wife is 24 and I am 26. We have been on our current financial path for about 2 years now.
I was the one who started us on our FI adventure, and she has been GREAT and on-board with everything I have been telling her we should do. This is great, but the scary part is I do not believe she would know how to run our entire financial ship, if I were to kick the bucket unexpectedly.
What she has taken an interest in, is listening to Dave Ramsey’s podcast while we are taking long car rides. She specifically listens to the “horror stories” and the callers who call in to ask Dave how to get out of a financial mess. She tells me that those podcasts/stories are why she is so happy that we are taking care of our finances now, instead of waiting for later.
Eventually I will have to sit her down, and combine all those horror stories podcasts she listens to and our own financial situation, so that she can run this ship on her own.
Great post!
Thanks for the comment. Good to hear that your wife is involved and aware (that’s already a huge step from some of my friends). I realize that finances aren’t that exciting for everyone. Hopefully the angle that you can use is that it’s prudent to gain all of this knowledge (especially if kids are ever in the picture) that she can continue the success you’ve built together.
“Choose whatever you want to do in life, but also accept the lifestyle that comes with it.”
Such good advice. I’m in my early 30s, just at the point where differences in lifestyle due to income/job stress are becoming apparent. I wish everyone has internalized this, instead of acting grumpy that not all careers afford the same lifestyle!
Agree too on that advice. I’ve always told my kids to chase what they want in life but yes- they need to be prepared finically if they decide to pursue writing, acting, etc. They could hit it big but they need to survive on less initially for sure! Indeed one of my sons is pursuing the arts and it’s hard to watch him struggle with money.
This wisdom came from my Mom when one younger sister was a teenager and considering a career as a makeup/hair stylist. My mom told her the above. I use the same with my kids. That sister is now a physician.
I think a lot of people believe that financially security happens by magic, vs. ones choices (education, career, spending, saving).
Good luck as you choose you make job decisions, balance everything, because nothing is more important than ones health and happiness.
Given that you have so much cash sitting around, you should at the very least pay off your mortgage. While the mortgage interest is still fully deductible for you under the new tax law due to your high charitable giving, you should consider funding your endowment in alternating years, such that you’ll take the standard deduction of $24k every other year (this will maximize the tax benefit associated with your charitable giving). If you were to do that, the mortgage interest would no longer be fully deductible, which would make paying it off that much easier of a decision.
As my post below says I am in a very similar position. I need to look at this more. That could make a lot of sense. Thanks.
All very good points and something we’ve discussed on and off. We’ve been making almost double payments the past few years to use up some of that additional monthly cash that accumulates. We just need to make a decision whether to plow the cash into the market with a long term horizon with hopes of returns higher than our mortgage interest rate (pretty low at 2.875%) or pay it off and know that we have $200k less to think about how to invest.
More often than not, we end up doing the default of not doing anything. Have to get over that lethargy.
Great job both you! I really like the way you are bringing up and teaching your children about working, saving and giving. Most kids these days are ONLY focused on consuming. I’m currently reading Dave Ramsey’s Smart Money Smart Kids book to also learn how to bring our children up in a way that they are grateful for what they have and also how to handle money. You’ve done what most of the book is teaching so again, awesome job!
Regarding your question: “Would like to hear thoughts on the best strategy to invest our cash in the market and over what period of time”.
I’ll side with Tyler above. Why not become DEBT FREE, pay off the house, keep 6-12 months of expenses in cash and invest the remainder in index funds?
Thank you for the comment! I have to say we are both pretty proud of child #1 who is making conscious decisions about finances already. I’m not sure at their young age they are “grateful” for what they have right now, I think that realization usually happens when you have a family/kids of your own and realize how things aren’t that easy and finally get it what our own parents did for us!
Yes, to the comment about paying off the mortgage, have to pull the trigger one way or another. Invest all of the cash or use a chunk to pay off the mortgage. Since I did the interview (2 months ago), I have been investing large chunks in the market, but there still plenty to go.
Great interview. I am just a couple of years behind you and In a similar position although being in California have more net worth in housing both primary and an investment property. But very similar with two kids and two incomes.
Great job. The growth from the first million to the fourth is something and it really puts perspective on starting early. I’ve had the same experience. And really see the next three years as big push years.
I also believe that donating tax appreciated stock is one of the best things going. I also believe strongly in giving back, both to the community at large but also helping out my close family. I wasn’t as fortunate nor my wife to have parents who reached any sort of financial independence.
Lastly I had the same reaction to the election as you and have a similar amount of cash, just put 20% back into the market but it’s hard to do. I don’t want my investments to drop 40% like they did in 2008. The rest is in shorter term CDs at 2%. Not going to help with early retirement.
Keep teaching your children and good luck. I always ask my wife if she wants to learn more, she doesn’t. She is very bright and successful but not into finances. We have a will and estate but I need to write a “goodbye letter” that explains a few more things and where everything is. Although I keep everything pretty aggregated for this very reason.
It looks like we are quite similar! How the emotions can control over common sense at times! It’s all good though, to be emotional is to be human and we continue to learn as we go. My husband reassures me that it was hedging our bets and that yes, we lost some potential earnings but in the grand scheme it’s been just fine (always kind of him as I second guess decisions).
As far as your wife, there is no easy answer when a person just isn’t interested. Good-bye letters are the responsible thing to do. When I think about it though, if one is in a situation of losing a spouse who handled everything, now you are doubly overwhelmed – dealing with your loss + figuring out how to manage something you’ve never been interested in! Tell her she doesn’t have to love it, but the “responsible” thing for her to do for herself and your kids to be aware and participating in the discussion/process. My two cents :).
All the best to you as well!
Great job. You’ve done very well. And great questions for us. Shows that no matter how well you are doing there are always questions. I don’t think there are right answers for everything.
My wife has no interest in following investments, etc. It frustrates the hell out of me. I track everything, have all the account passwords, etc. Even to HER 401K plan! I have flat out asked her what would she do if I kicked the bucket.
We do see a financial planner so she’s have a good resource to use if something happened. This is one of the primary reasons we even use a financial planner. But nonetheless it’s very frustrating. Fortunately our kids are grown up so it’s “less” of an issue.
Our kids don’t know how much we have and I don’t have any immediate plans to share this with them as I don’t know what our future brings. My in-laws have shared their plans of leaving us money but honestly I’d rather not know. When they pass I’d rather not have ANY thoughts about what they are leaving us. I’d be lying if I told you it doesn’t cross my mind now and then- they are very nice people and that’s all I want to have in my mind. I understand it’s not always that simple and someone has to be executor….
Thank you. You are correct, there isn’t a 100% right answer, each persons personal situation and approach to finances is unique. I also have all of the passwords for all of our accounts!
It’s interesting to hear your perspective of I’d rather not know. I don’t know how I feel about it still. I think it will be our responsibility to tell our kids at some point, just don’t know what age that is. If our net worth continues to grow with the projections we have, it could be a sizable sum that’s left at the end and would like our kids to know and be aware.
All the best to you!
Great interview. I am in my late 40’s like you and have a very similar situation. Advice I might offer would be to maybe connect with a financial firm you believe in (mine – Truepoint Wealth Council in Cincinnati has my family in an asset allocated mix of index funds, I am an index fund investor for sure!) Much like me your cash balance has gotten way too high. You state your rate of return is maybe 8%, but its much lower for your overall portfolio because of your cash. As the numbers got bigger, I got more nervous about making mistakes and then ended up with too much cash. Intellectually I knew that was a mistake so my firm (which is very low fee) takes that concern away from me and I’ve been fully invested for the last 10 year bull market. This has more than paid out the cost of the firm (not to mention the other benefits of the firm that come with it like estate planning, etc.) As your net worth is getting larger, you might give that some thought. Awesome story though, I enjoyed it!!
Thank you. After doing this interview and realizing our continued net worth growth potential, it has definitely made us think more about estate planning, tax implications for the future. I don’t think we ever thought we would be at the level we are now, so it’s eye opening now to realize what other implications there are!
Glad to hear that your choice with the firm was the right one. Having guidance and peace of mind is important.
Thanks for the post. Interesting question about adult children. I’ve wondered the same things. To what extent do similarly situated folks plan to pick up expenses for adult children. Beyond college room and board, do you pay for plane tickets back and forth, do you buy them a car, do you pay for their car insurance, do you pay for family vacations while they are in college, and what about once they graduate and are adults? When do you take them off the family cell bill and insurance plan? Do you help with graduate school? When does one truly become an adult these days?! And do most spouses agree on these points or is it a source of contention?
Yes, yes, yes. When you can afford it, and have all of your other “needs, wants or potential needs, wants planned for” what to do with the money? Not to worry, I realize how ridiculous that sounds. It is on my mind though (mine more than my husband), his belief is that we can help them if they really need it, otherwise let them go do. I’m onboard with that, but we’ve worked hard to get to where we’re at, I would like to enjoy it with my family even when they are adults.
I retired early at 53 and my wife is still working part time for an accountant. She is a former CPA herself. She let’s me handle the investing side but is still very active in our finances. We track to the dollar and she is a good saver and doesn’t care too much for material things. She struggles a little more with withdrawing from our nest egg but it makes for a good balance to me who thinks he can get 10 percent returns forever ?.
Yay! So glad to hear this. Go give your wife a peck on the cheek and glad that you have the balance between the two of you. I feel fortunate to have them same in mine!
Amazing interview and fantastic job you guys have done. Quite inspirational! I just want to make one point. You mention to avoid financial advisers, but a good financial adviser isnt there to outperform the market, they’re there to make sure their clients dont make mistakes like going all in cash on a knee-jerk reaction to one of the most pro-business presidents weve ever seen. If the advisor could have kept you invested the lost 100k would have been 10 years of fees on $1m, the rest of their service would be free time with a professional. Just something to think about..keep up the great work!
Yep. Took me a while to figure that out too. A good advisor helps you manage all your assets, future planning, insurances, etc. Gives me a good kick in the butt when I forget to do something important. LOL
Thank you and you are absolutely correct. I responded above to a similar comment. It is something we will have to start investigating as our net growth trajectory continues as we anticipate for the next 15 years.
Great interview and I applaud you for having saved to the point you have a significant net worth at such a young age. Like you I enjoy vacations to wonderful places and I enjoy a gourmet meal as well!
I am also holding a large pyle of cash awaiting reinvestment and I encourage you to NOT be in a hurry to reinvest it. It’s nice having lots of liquidity. The markets are trading at all time highs and based on various long term valuation models (CAPE for instance) the future returns from equities will be subpar for a long time. Dollar cost averaging in your case makes a great deal of sense. Also note, the best investment I’ve ever made was investing a college 529 plans; now all 3 of my kids’ college expenses are fully covered. I encourage you to aggressively save in this vehicle for your high schooler.
Note to ESI, I enjoy reading millionaire interviews with females. They look at markets, saving, investing differently than males. Their appreciation for risk and mitigating risk seems higher as well.
Thank you for the kind comments (especially the one about at a young age 🙂 – sometimes I don’t feel all that young)!
My husband would agree with you 100% that having liquidity isn’t a bad thing right now. I have read the pros/cons of DCA vs. lump sum investing and in the end I think my personal risk tolerance aligns with DCA, so that’s what we’re doing.
Thank you for the guidance on the 529 plans, I agree, we dropped the ball on this one.
Another great article and discussion – well done MI81 for all of your success and also for stimulating a thoughtful and relevant discussion. In the last couple of years I have had only two conversations with my spouse about our financial situation:
1 – After Taxes were completed:
– ” Honey – how much do you think we earned last year?”
– I don’t know – $X?
” Actually it was four times that”
2. “Honey – this is what I am doing with the investments…”
-” Look, thank you for doing that, I don’t care about it and I don’t want to be involved – I trust you that you are doing all the right things”
This is definitely a red flag and we need to get on the same page.
My two cents about adult kids is, once their bachelors is paid for they are on their own – i might provide an incentive to join us on holiday – but they need to be able to stand on their own two feet – and too much enabling them – or them knowing too much about how much we have – it absolutely not in their best interests.
One final point MI81 – I also really like the fact that you are enjoying your work, the people, the challenges and what it allows you to do, in terms of charity etc – that is a point of view we do not hear enough what can sometimes be interpreted as the Race to get out of the Rate Race and get to RE…..
Thank you! I hope the conversations go well with your wife, as I commented in my OP, I think it’s SO important for both parties in a marriage to be aware, even if one takes the lead. It’s just one of those things that I strongly believe is the right thing to do. Maybe you can offer a trade (she engages with you on finances and you do the same for something that she normally handles) :)?
Appreciate your perspective on adult kids, I agree completely on raising kids to be able to do it on their own. There is no better feeling for my husband and I to know what we’ve accomplished is our own doing after college. I definitely want our kids to have that sense of pride as well.
Thank you for your last comment as well. Yes, in most of the FIRE blogs (who knew there are so many out there) with the obvious focus on RE, I personally feel that’s the wrong end goal to strive for. I’m all about the FI part and that it gives you power and freedom to do what you want to do. That is obviously different for each person. I’m grateful to know we’ve reached a stage where we work because we want to vs. have to. The sabbatical experiment was also eye opening in the realization that I do enjoy working!
It is wonderful to read a woman’s post on ESI! I have just joined this site and appreciate what I have learned in such a short amount of time. As the finance controller in our family, I have had to learn by doing as my background is in healthcare, not finance/economics/investing/etc.
It’s encouraging to know that there is this common thread of: 1.) parents setting a strong example, 2.) working hard and 3.) living on less than you earn that I share with the millionaires on this site.
Thank you for sharing your story!
Thanks Ellen. Glad you are on the journey to learn and grow as well. There are so many resources out there and I also enjoy reading and learning from others experiences.
I’ve also notice a lot of similar tendencies from those that post or follow these blogs (like minds), so there might really be something there as initial steps to FI.
Wishing you all the best!
Thank you for your comments on uninvolved wives. I am 77 and thought myself in excellent health. Unfortunately in April, I had a cardiac arrest on my front doorstep. No one was prepared for this. Fortunately our house was paid for and I had worked as a teacher till I was 76 and am now a substitute teacher. Now I am back in good health. I had saved in 403b and my husband in 401k, maxing out. Also putting spare money in Roth IRA. So we are both involved.
I am glad that the house was paid for. My parents believed in this. My father paid £25 deposit in the UK in 1935, all he could afford. My mother kept the mortgage going till his return from WW2 in 1946. On their deaths, I rolled my share of the house into our mortgage. Houses are emotional and represent the physical center of the family. Now I am recovered, I am so thankful for its presence. Something solid for our three children.
You never know what life is going to throw you. We emigrated to the US when my husband lost his UK job and basically start over with our three children. Now we are doing well but spouses have to work together. My “happening” has had us sort out our finances. We already have a living trust etc.
We have been married for 55 years, I am so glad to have a husband who has always been there for me. Ladies, you have to do your share in providing for your families. There is no excuse for foisting the work on to someone else. Read the last three posts. They are ideal for thinking through the finances of today.
And please make sure that you have adequate healthcare – one of my big questions for the midterms. Women are shafted by the present system and its up to us to change it.
Love, love your comment Stealth Wealth! Thank you. Couldn’t agree more there shouldn’t be any excuses either from men or women in the couple to know and participate in the overall financial health of the family!
I am glad to hear that you are back in good physical health, there is nothing more important. I am fondly looking forward to saying I’ve been married to my husband as long as you (we’re at 23 years, so still some time to get there) and completely agree what a wonderful feeling it is to say that he has always been there for me as well.
I’ll put in a plug to go vote and be informed in all of the primaries and upcoming mid-term – everyone’s civic duty!
Wishing you continued good health!
Great write up! Esp loved the endowment part. We are looking to setup something similar next year.
I chuckled at your question re: spousal participation. We review some usual financial business at weekly meetings, just not the big stuff. My wife has begrudgingly agreed to semi-annual reviews (she prefers 15 min or less) after I told her annual really wasn’t frequent enough, but I’d much rather we discussed big picture stuff more often. I often joke (and she agrees) that I could run off with her money and she would never know what is missing. So last year I made a pretty detailed breakdown of things and gave her a copy. I update it at these semi-annual meetings.
She is the one that me into personal finance and investing, but then let me take over. The funny part is I make less than half what she does… really more like 1/3. But she trusts me and seems content to just be updated from time to time.
Thank you George. We like the endowment as well, it’s a good feeling knowing it will continue on to fund scholarships well past our time.
Glad you’re able to convince you’re wife to more frequent check-in’s!
Great interview and I love the questions back to the ESI readers as well at the end and wish there was more diversity.
It is interesting as my wife is not that involved in the finances as it never really interested her that much but I have some recent changes in my investment strategy over the summer and made many changes to diversify and realized she would have no idea if anything happened to me (even though she was beneficiary on all the new accounts) as a combination of CD’s at different banks, 3 new hedge funds, personal investment accounts etc. So I pulled together all the information in an excel spreadsheet with amounts and contact information and websites and we went over it together. It also got me thinking I should start the process on the living trust (currently have will) as been on my to-do list for few months
There is a good Q&A about telling your kids in my interview in the comment sections as something I was interested in hearing about as well as well and got some great feedback.
https://esimoney.com/millionaire-interview-73/
Thanks MI73, I went and read through your comments with the discussion about kids. I agree that money should not be a taboo topic and it certainly isn’t in our household. Just not sure what age to divulge the full story to our kids. It’s good to hear different perspectives and experiences.
So, several comments so far today from men have all said that their wives aren’t interested. I’m still mystified by that a bit. For some reason this frustrates me (maybe because it plays into typical stereotypes). Sigh, maybe back to the question posed to the wives of what is your strategy to manage the finances if something (god forbid) were to happen to me?
Living trust is important! We finally made one several years back. All good things to bring peace of mind that your financial house is in order.
Really liked your interview BTW – I enjoy reading everyone’s unique story!
Cheers!
Incredible interview, my wife are I are almost immigrants. We were brought to the US when we were toddlers. I am VERY impressed with your ability to grown your income from $15/hour. I have an MBA from a top ten school but struggle with growing my marketing career. I recently switched into the software from the hardware world, which was difficult but made me more marketable. What tech sector/marketing role are you are in? What would your recommend to grow my compensation?
Hello Bhavani,
Glad you are seeing some traction with the switch you made to a software company (also same area). Thoughts around growing compensation: are there areas of the business (new product, new geography, etc) where you could get assigned? Making a contribution and impression in an emerging area of the business can be a big factor come review time. It also usually means crazy hours.
Wish you continued success!
This was a phenomenal interview. And the comments are also full of great thoughts and wisdom. I’ve listened to Dave almost as long as he’s been on the radio, and follow Michelle S. I’ve garnered a few more quotes to add to my financial wisdom list as I share with my (adult)kids! I agree that spouses should be involved, and not be totally in the dark should something happen to the primary bookkeeper/check writer/banker in the family. Sadly, it’s not always easy to include the unwilling spouse in things.
Thanks Kristy. I enjoy all of the comments as well and to hear different thoughts/points of view. It will be an interesting journey in the coming years as our kids get older and the future conversations we’ll have as it comes to finances.
All the best!
MI 81, congrats to both of you on your success and on your outlook on life and finances. We share many of the same thoughts and attributes discussed in your interview. I will make a few comments below around some of the questions you asked for feedback.
In my interview #27, I noted that my wife preferred not to really engage in the management of our finances. She has a very demanding career that involves travel and we tend to split responsibilities around things that one of us likes more, or is better at doing, than the other. Managing our portfolio, expenses and taxes have fallen on me.
Like most others have noted, I keep detailed records and have a file that outlines access to everything we have, passwords, who to call, etc. in the event something happens to me. As our net worth has grown, so has the complexity of managing everything. I’m 60 now so I’m really beginning to look at tax implications and simplification as new priorities that I need to address. Once the portfolio shifts from accumulation to preservation and becomes more consolidated and less complex, I’m hoping my wife will feel more comfortable and willing to engage a little more frequently, at least from a knowledge and understanding perspective around what we have and how we are managing for the future.
As far as what we are doing for our children, we have one daughter who is about to turn 20 and is a Sophomore in college. Our feeling is you do for your kids what you can afford and by what values you want to establish in them. We are paying for her college and will ultimately pay for her grad school with money for both that is already set aside in a 529 account. The maturity level of our daughter is such that we do not worry about her feeling entitled or needing to help her establish a strong work ethic. She already has that and she understands the value of money and the sacrifices we have made along the way that she will benefit from. Our goal was to give her as much of a head start in life as we could. We don’t want her to have to deal with student loans or debt. She does contribute to her discretionary spending expenses from her summer job savings.
We do plan to supplement the 529 for future grandchildren from whatever is still left in the account after her graduate school and we will consider helping her with a down payment on her first home if needed. Being as independent as she is, I expect she will want to do as much as she can without our help because she takes pride in her achievements and wants us to be proud of her as well.
For now, I see more negative than positive when it comes to sharing net worth details. In 10 years when she is 30, we will probably be more willing to have that conversation, as I will be 70 at that point, and it just seems to be a good time when she will understand and appreciate more of that discussion and how it pertains to her.
Regarding company stock doing well under a superstar CEO who is retiring soon. You rightfully mentioned my GE experience so you can anticipate what I’m going to recommend. You should begin to diversify that position now and ramp it up the closer to the transition period from old CEO to new CEO. You mentioned the new CEO is not close to the old CEO in charisma and experience, no matter how hard he is trying, so your inner voice is already alerting you to the fact that you need to count your blessings and get your chips off the table. You don’t want to be “all in” when the baton is passed. What happened to GE is not necessarily what will happen in your company but why risk it if you don’t have to. You’ve had a nice run in the stock so don’t get greedy and talk yourselves out of what you already know is probably the right thing to do.
Last, I agree with everyone else about dollar cost averaging your cash position around your own strategy for risk and diversified investments. For the money that has a longer horizon to grow, you could be a bit more aggressive in getting it in the market now vs. later. Fundamentals are still very good for the US and appear to be for a number of years to come. There will always be geopolitical and other risks out there but the US looks to be the best game in town for the foreseeable future. With your mortgage being so low you could put some money in fixed income that is paying 2X what your effective mortgage rate really is when factoring in the interest left on your amortization schedule and your tax benefits. Remember interest is front loaded which means you are paying less interest on the later years of your loan so your effective interest rate is lower than the stated rate at the beginning of your mortgage. With this being the case, you could set aside money in CDs, savings bonds, etc. that cover your mortgage but don’t lock up a lot of liquidity in your home. This is just a peace of mind thing that I am doing. Knowing I have my mortgage covered in accounts earning more than the mortgage interest I am paying makes me feel just as good as not having a mortgage at all because I’m making money in risk-free accounts and still have that secure feeling that my mortgage is covered if something bad happens.
Great interview, and best wishes for your continued success in life and finances!
Thank you Paper Tiger for taking the time for a thoughtful and thorough reply. It gives plenty to think about. My biggest concern with the stock is the immediate tax hit we’d take, we’ll have to decide how much we designate for charitable donation and consider moving that out into a DAF sooner than later.
I agree with you on holding off to tell the kids as they are older. I think 10 years from now is a good time to reassess with our kids, they’ll be out of school and hopefully on stable feet themselves.
Nice tip on how to think about the mortgage. We’re leaning towards investing the dollars vs. paying off the mortgage right now.
Wishing you continued success as well!
With respect to spousal involvement, let’s just say that once we were married my wife tossed me her credit card bill and bank account statement and told me to handle it. Her debt was 25% of our gross salary that first year. To be clear, I was no frugal saint looking to FIRE, I just worried a bit more about money so ended up taking control of the bills and eventually the investing and overall savings. She gets updates, but prefers to be in the dark for the most part as long as we are doing okay and has actively resisted efforts to include her. This and some of her spending patterns have been an ongoing issue over the years. It has been very challenging to say the least.
With respect to letting your kids know your net worth or income, I found when they were little if they know then likely your relatives and your kid’s friends and parents know, they have no filters. If you are okay with that, then let them know. With respect to how the knowledge affects the child, IMHO depends completely on the child. I’ve seen kids get snarky wondering why “they” aren’t getting more and foolishly assuming all that money is disposable income. I’ve seen kids get inspired and knuckle down harder. I’ve seen kids shrug and not care much. I’ve had one of my children exhibit all three behaviors as they’ve matured from teenager to self sufficient adult. I will state that I’ve made it clear they are expected to earn their own living and not depend on me.
With respect to vacations and family trips, I’ve seen friends with kids have a great time with parents and in-laws and others have a tough time. My primary comment on this is even if you provide a full ride for the venue (e.g. Disney Cruise for everyone) it shouldn’t mean you can use it as a hammer to demand everyone do everything according to your schedule and your desires or that everyone has to do something together every single day. IMHO the better vacations I’ve participated in and heard about were best when there were a few “all in” activities during the vacation (all saw the same play or spent the day at a beach, etc.) and other days where people with different desires could head off to enjoy those (e.g. going deep sea fishing) and typically get together for lunch or back together for dinner. Now this may depend on both the vacation and the family, but those are my thoughts and I think the parents enjoy bringing the family together and for the most part my friends and grandkids enjoy participating but enjoy it much more when they don’t feel the hammer.
Beyond that, purchasing a child a house or other type of issue, I can’t tell you. I can tell you I really appreciated my parents coming through and helping us with our first home down payment and providing enough that we avoided PMI. I have told my kids, if they don’t get it from me while I’m alive, don’t expect it from me when I’m dead. Another way to consider it is if I or their mother live to be in our 90’s, they’re in their 60’s and they darn well should be ready to retire on their own because we’ll still be using our money!
With respect to grandkids, I see no issue with putting money into education funds, into helping with extracurricular things, etc. provided my kids want and are willing to accept that help. Additionally I have no intention of using such generosity as a means of control. For example, I have no issue paying for a college tuition plan, however I don’t believe that gives me the right to tell my grandchild which college they must attend and what type of degree they must get. While I may council them by giving them my opinion, which I’m likely to do and I would hope they would be likely to take into consideration regardless of whether I’m paying or not, I will not make my love and acceptance conditional on their obedience to my will for them to receive my monetary support. That said, if they do what my one high school friend did and blow the college fund in a month long spending spree of hedonism, well, they are very unlikely to get any more from me. I provided them an opportunity, they blew it.
Thank you getagrip for taking the time to share your thoughts. Very good call outs on not trying to control family members by dangling a carrot of “we’re paying for it.” I think that is very good advice and something for us to remember. Giving should be just that, without any strings attached.
We would like to help our kids where it makes sense as they get older, we will definitely revisit as the enter new phases in their lives. It will be exciting times, that is for sure.
All the best to you!
Awesome interview and congratulations on your accomplishments and financial success. Just wondering if you wouldn’t mind sharing which travel blogs you follow.
Hi SB, thank you! Here are a couple of blogs I follow:
https://onemileatatime.com/
https://thepointsguy.com/
Here’s a good forum:
https://www.flyertalk.com/forum/premium-fare-deals-740/
I use google flights to track airfare and watch for deals as well.
Happy deal hunting!
Great story. Great read. I really liked the follow up questions added to the end of the interview. If this was ESI’s idea, good one. If this was MI81’s idea i suggest ESI make this part of the standard interview format. Great to stimulate good conversation/comments. I have a few similar questions I would love to have answered by readers here. Good idea!
Thank you FtMaster.
I believe I inquired whether I could ask questions & ESI replied yes, if you would like. I think I’ve seen a couple of other interviews with questions.
I like to hear different perspectives, and was very interested in getting thoughts on questions that are top of mind for us.
In every interview I have a line that reads:
“Feel free to add any questions you think I missed that I should have asked.”
It gives the interviewee the option of adding whatever he/she wants, though few take advantage of it.
A friend told me about this interview and asked if it was me! Kind of neat to find a personal finance doppelganger!
It was fun to read through and there are definite similarities:
-A woman who takes the lead on the household finances
-Married the same amount of time
-Husband and I are both immigrants
-I love good food, traveling & looking for deals!
-Have a good amount of money tied up in company stock (don’t want to deal with tax liability of appreciated stock)
-Charity is super important to us as well (I give 50% of my take home income)
-We’re working on FI & hope to see the kind of success you’ve experienced
Wishing you continued success!
It very interesting to see a lot of millionaires share very similar traits and characteristics, even enjoy the same hobbies and have exact same attitudes on money. That’s one of the reasons why I enjoy reading this blog so much, to see I am not the “black sheep” and there are others like me doing the same things I am doing and achieving great success financially.
https://esimoney.com/millionaire-interview-77/