Today I have an update for you from a previous millionaire interview.
I’m letting three years pass from the initial interviews to the updates, so if you’ve been interviewed, I’ll be in touch. đ
This update was submitted in May.
As usual, my questions are in bold italics and their responses follow…
OVERVIEW
How old are you?
Iâm 50.
My amazing wife of 25 years is 42.
Do you have kids?
We have one daughter who is 21.
She just finished (in May) her sophomore year of college and is back home for the summer.
Her mom and I are very excited about that. đ
What area of the country do you live in (and urban or rural)?
We live outside of a coastal town in the deep southâour home is a rural 7 acre hobby farm about 25 miles outside of town, so lots of fresh air and privacy, but still just a half hourâs drive from our church, my office, restaurants, movie theaters, shopping, etc.
What was your original Millionaire Interview on ESI Money?
Is there anything else we should know about you?
Nothing terribly specialâitâs a bit cliched, but truly, if I can become a millionaire then virtually anyone in this country who is willing to work can do it.
I had no special skills, no STEM degrees from fancy schools, and am fairly introverted. I just figured out how to do one thing really, really well and did it a lot of times, over and over.
Routines and regimens are important. That plus time and compound interest make up the secret sauce.
In 2014 I began hiring and training folks to do it the way I did it, which multiplied my production. The money was a side-effect.
I would say that for as far back as I can remember, I have enjoyed the plod. The slow, steady building upon yesterdayâs work, which built upon the day beforeâs, which built upon last weekâs, etc., has always just appealed to me in a deep, meaningful way. Atomic habits are the most recent buzz-word typifying this, but I have always just called it the plod. And I love it.
If I call this many people a day, have this many face-to-face meetings a week, write this many thank you notes per evening, send this many videos, ask this many existing clients for referralsâday after day after day of doing it over and over and over makes for millions of dollars.
Itâs really remarkably easy when you think about itâif you just commit to the plod in this industry, you can drop out of high school and come pick up a phone and be a millionaire in ten years.
Iâm a planner and a plodder. I think this is perhaps the primary characteristic I have that has driven my income up. That, and having a remarkably sweet and supportive wife. I hit it out of the park with her. I married really, really well.
NET WORTH
What is your current net worth and how is that different than your original interview?
$9.7 million, which is almost $7 million to the dime more than when I did my initial interview some 3 years ago.
This doesnât include our home, which according to Zillow is worth around $650k (owned free and clear, no mortgage). We arenât moving, as this is our dream-home, and beyond being a wonderful place to live we donât consider it a financial asset. One day our daughter and her family will do something with it after my wife and I are gone.
In my previous interview I left my companyâs value out of the calculation as I was not sure how to accurately valuate it, but since then there has been an equity event on that front so Iâve included that in these numbers.
Here is the breakdown, 3 years ago versus today:
- 401kâs/IRAâs — $530k (Vanguard index funds); Today — $925k
- HSA (used as a retirement vehicle, never withdrawn from for medical expenses) — $25k; Today: $77k
- Taxable accounts — $850k (Vanguard index funds); Today: $4,000,000
- Cash — $550k (Vanguard money market fund); Today: $680k
- Gold/silver (physical) — $50k; Today: $300k
- Valuation of my remaining portion of my business — $0 (did not value this 3 years ago); Today: $3,000,000
- 529 — $0; Today: $175k
- Daughterâs legacy fund — $0 (Vanguard index funds); Today: $490k
- Daughterâs wedding fund — $0 (Vanguard money market); Today: $60k
Total Net Worth: $9,707,000
Our home is owned free and clear, and we have no debt.
What happened along the way to make these changes?
A few things.
- Covid
- A rip-roaring stock market
- Equity event with my company
What are you currently doing to maintain/grow your net worth?
I havenât changed much of anything at this stage. As Iâll explain below, my income has dropped a good bit since April 2022 when I sold half my company, but we are still dumping money into our investment accounts.
Moving forward, weâre investing 4k/month into our retirement accounts (401k, mine and my wifeâs nondeductible IRAs, HSA account, in that order until each is filled), as well as 3k/mos into our daughterâs legacy fund (all VTSAX).
EARN
What is your job?
I own a small (23 employee) mortgage company. I was very hands-on up until 12/31/2021, when I began the process of selling 50% of the company and restructuring the other half (more on that below). That deal was finalized in April this year, so now I work Mondays and Wednesdays, and have my #2 running the day to day. (He is also a partial owner now).
I meet with my managers (sales, marketing, ops) once a week each, and manage the books, but beyond that I am largely out of the day to day, and ecstatic to be so.
Details on the equity event…
Prior to Covid, which had an incredibly positive impact on our industry (rates dipped into the high 1% range for a series of weeks in summer 2020, and were in the 2âs for much of the year), we were doing around 8 million a year in gross revenue with profit at around 1.5 – 1.7 million.
Covid turned everything upside down in our businessâpeople started moving down South at a much faster pace than normal, rates dropped so folks refiâd to lower their payments, and we had many, many people pulling cash out to upgrade their homes. We couldnât keep up with the business coming in in 2020 and 2021âour loan pipeline stayed literally triple its normal level from April 2020 through November 2021, and everyone on the sales side of the company (all our salespeople are 100% commission) made gobs of money.
My sales manager made 900k. I had two salespeople make over 700k. My #3 salesguy made 450k and it was only his 3rd year in the business. I had three first years make 150k, which is unheard of in the rookie year. These were years where if you could answer a phone and take a loan app you could make 6 figures.
As a company, where we were generating pre-Covid around 1.5 million in profit on 8 million gross revenue, in 2020 and 2021 we generated over 10 million in revenue each year, and profit shot up to 3.5 million per year. Anything over 8 million a year in gross revenue is almost 100% profit.
Prior to Covid, it had been my wifeâs and my long-term plan to get out of the business (though I was never certain how we were going to structure that) on 12/31/2020 so that we would have time to do the other things we love like travel, working out, gardening, working on our hobby-farm, etc. Then Covid hit and the volume of business skyrocketed so I decided to ride it out one more year because I knew this was a once in a generation opportunity to generate revenue and income at that level.
And the income was truly silly. Iâm a W2 employee of my company (so I pay a boatload of taxes), and 100% of the profit is mine. In 2020 I made just under 2.5 million in W2 income. My lowest monthâs earnings that year was 92k. I had multiple months at 250k. In November 2020 my check was 330k.
2021 was not quite as good but almost. (1.68 million W2 income that year.)
But thereâs a price for all that and itâs paid in timeâyou reach a point, and for me it was turning 50âwhen you realize in a really salient, down to the DNA way that you can always go find more money, but you canât make more time, and at the end of the day itâll be the time you wish you had more of, not the memory of working more or making those additional dollars. There is also a point of diminishing satisfaction, I have found. 500k to a million in net worth is a big and fun jump. You feel that one. But the jump from 4 million to 5, or 7 million to 8, doesnât really move the emotional needle that much.
So I began getting the word out a bit in my industry that I was interested in selling my company, and a few months later I got an offer from a larger bank that was not ridiculously generous but hit all the buttons for me. In truth, if I had not found a buyer and it came down to my continuing to work it or walk, I would have shut the doors and walked.
I think the one-more-year syndrome is very real, and can turn what could have otherwise been a delightfully early and enjoyable retirement into a traditional mid to late 60âs retirement. Nothing wrong with that if thatâs what you want, but it was never my wifeâs and my plan. We were always intending to get out on 12/31/2020. I was willing to give it just one one-more-year because Covid made the money so easy to be made, but that was it.
They offered me 3.6 million for 50% ownership, with the requisite that I give 50% of my remaining 50% away to my top three salespeople on a 5 year ramp up so as to lock in their production to the company for the remainder of their careers. This would slowly draw my ownership down from my current 50% to 25% by end of year 5, where it would stay. It also came with a 30k monthly salary for as long as the company exists.
Each quarter we distribute profit based on ownership percentageâin 2022 itâs tracking for bottom line profit of around 2.25 million. Thatâll be whacked up based on ownership (this year, 2022, my end of that would be 45%, next year 40%, then 35%, then 30%, and finally bottoming out at 25% 5 years from now as the other threeâs ownership increases commensurately.) Itâs still just a projection, but probably my 45% of the profit in 2022 will come in around 800-900k.
What is your annual income?
Here is the year by year:
- I got into the business in January 2005 and made $61k that year.
- 2006â121k
- 2007â115k
- 2008 (the mortgage meltdown was rough) â 107k
- 2009 â119k
- 2010â230k
- 2011â170k
- 2012 â 190k
- 2013 â 323k
- 2014â 230k (this is the year I opened my business and went from being a one-man outfit to growing a team and leveraging other salespeopleâs ability instead of relying only on mine)
- 2015â488k (2014 was a growth year, as I hired, invested in the company, etc. This year, 2015, is when those hires began hitting their stride and bringing in a good bit of revenue/profit.)
- 2016â788k
- 2017 â1.3 million
- 2018â986k
- 2019â1.1 million
- 2020â2.45 million
- 2021â1.68 million
- 2022âup through 5/31/22 itâs 400k. Subsequent months will be 30k/mos salary and then my share of the profit, which is based on ownership as described above.
How has this changed since your last interview?
Re income: it used to be (up until the sale) that 100% of the profit was mine. Revenue came in, salaries and commissions got paid, marketing and admin and ops were covered, and the remaining money was profit which was mine to take. Typically I would take 80% of it home as W2 income, and leave the other 20% in there as reserves.
As detailed above, 2020 and 2021 were silly with the income, but those years really are over now.
Moving forward, my salary is fixed at 360k/year, and Iâll get profit distributions quarterly based on my ownership percentage (which is 45% this year, and declining 5% a year until it hits 25%, as enumerated above).
I probably sold my company for less than I could have gotten had I held out, but my timeline was, by my own design, short. It was find a buyer or close the doorsâmy wife and I are ready for the next chapter, and we arenât interested in trading time for money being part of that next chapter. This deal enabled me to monetize the company long term without having to work it full time, which is tough to do in our industry.
The bank got a good deal out of me, but the deal made my wife and me near-decamillionaires and locked in 360k/year for as long as the company exists, so I am good with it. Our intention is, of course, to live off the 360k/year cash flow, continue investing, and let the net worth grow.
About 5 million of the 9.6 million sits in VTSAX. This was about 1.4 million when I did my initial interview back in late 2018, so itâs grown around 3.5 million since then. For the past 40 mos we have averaged 30-50k/mos deposited into that account. That plus the tremendous growth VTSAX experienced during those years turned 1.4 million into 5 million.
We also have been dumping 5k/mo into our daughterâs legacy account, also in VTSAX, and thereâs just under 500k in there as of today. Sheâs in college now so doesnât need it, but one day may want to buy a home, start a business, etc., and provided she remains as responsible and mature and grounded as she has been her entire life (all credit to my wife on this front) I have no issues distributing part of our estate out to her before we pass.
I have never really understood the logic behind folks with millions sitting on it until they pass, when their heirs are oftentimes in their 60âs and 70âs and past the years when they really could have used that money. We intend to keep putting money in that account until it hits a million dollars, then will let it sit until whenever our little girl needs it.
We are sitting on just under 700k of cash right nowâthatâs a lot, but much of it is earmarked. 300k of it is sitting in our âtravel account,â which we intend to use for our vacations over the next 12-15 years (until I start drawing social security). 200k of it is set aside for house projects my wife has lined up (kitchen remodel, bathroom remodel, etc.)
And the other 200k is just sitting there. A pile of cash is a comforting thing.
I like precious metalsâI canât really explain this one, and have heard all the arguments against them, but I still like buying them. Probably something to do with the tangible nature of the metals. Currently I have about 250k in gold and another 50k in silverâactual bars and rounds, physically held. It is an easy way to flow wealth quietly from one generation to the next, which is also sort of neat.
And the other 3 million represents my 45% of my companyâif production/profit stays flat, then this asset will reduce in value each year for the next 5 years, but itâs entirely possible I sell my remaining shares between now and then. Current valuation on that 45% is 3 million, which is why I used that number. And if one of my employees (or several together) offered me a buyout at that level I would take it. There is discussion in that direction currently, so it may well happen this calendar year.
That would reduce my 30k salary to zero, and reduce my profit distributions to zero, meaning I would truly have no cash flow beyond what my assets produced. Assets in the neighborhood of 10 million would produce plenty, but it would be a psychological shift for me to start withdrawing from assets as opposed to cashing paychecks and distribution checks.
Have you added, grown, or lost any additional sources of income besides your career?
Over the years Iâve spun off a few ancillary business that are related to mortgages. Biweekly payment plan sales is one, and title insurance is another. The biweekly payment plan sales was making me about 30k a year until Covid hit and we got so busy with mortgage business that all of my sales guys just quit selling it (I paid out 40% of the commission to my sales guys if they sold it to their borrowers.) It dried up to zero to where there is no income here anymore.
The title insurance company I started has tripled in revenue since Covidâitâs gone from about 1k/mos to over 3k/mos since 2020 due to our increased volume. All of this money is profit to me as there is no overhead, no employees, etc.
SAVE
What is your annual spending and how has it changed since your interview?
Our monthly budget is around 9k/mos. We have done some large household projects over the past couple years but thatâs covered by money allocated and set aside for that and not part of the actual budget.
- Property taxes on house, cars, home insurance, life insurance, personal liability ins, etc.: 1000/mos
- Groceries : 1500/mos
- Elec: 350/mos
- Car ins: 400/mos
- Car gas: 300/mos
- Date money (750), play money (750), my wifeâs monthly allowance (500), my monthly allowance (200) etc.: 2200/mos
- Lawncare: 1300/mos
- Pool cleaning: 175/mos
- Internet/cells/streaming services: 325/mos
- Miscellaneous stuff that doesnât fall in any of these categories: ~1000/mos
Separate from above, we tithe 10% off our net, dump 4k a month into our investment accounts (now that our income is much lower than previous to the sale) and 3k/mos into our daughterâs legacy account.
INVEST
What are your current investments and how have they changed over the years?
See above. No real change beyond continuing to dump money into them faithfully, every paycheck. The rest was market-based appreciation.
I have avoided the crypto craze, and I donât like owning real estate I donât live in. I know this is counter to many ESI readers and many millionaires, and my hat is off to them all. I have bought a number of homes in my life and sold all of them for a loss. I believe thatâs me, and not the market or the investment. I either bought wrong, sold too quickly, didnât do my due diligence, or some combo of all of it.
Real estate doesnât interest me, so I avoid it. I also make too much money to get any tax deductions from it. And the craziness that came out of the CDC as it pertained to rental payments during Covid didnât do anything to change my mind.
We may buy a 2nd home somewhere else (Caribbean, central America, etc.) one day, but if we do that itâll be for us to enjoy and wonât be an investment.
Whole-life, forex, NFTâs, Peer-to-peer lending, puts and calls and all the restâthere are some super smart folks who make a lot of money on these vehicles, I have no doubt, but Iâm not built for it.
VTSAX is my speedâno drama, and literally every employee of every one of those companies is working hard to make me money, every day. That suits my plodding nature well.
Gold/silver, because I can touch it and because it is (especially gold) a dense store of wealth thatâs portable.
Three years expenses sitting in cashâprobably a better way to deploy that money, but I like the security of knowing itâs there, piled up, just in case.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview?
As detailed above a bit, Covid was a challenging time of governmental overreach and mass hysteria, in my opinion, but it was incredibly lucrative for our industry. It cost me an extra year, pushing my retirement out to early 2022 instead of 12/31/2020, but I made the calculated decision to trade that year for that money so that I wouldnât have to do any more of that again in the future. Moving forward, the time is what I want more than anything.
I have wrestled with how to best exit my company for the past few years, and finally did figure out the right move (explained above) for our family. Probably I could have held out for a more lucrative offer, but itâs time to move on to the next chapter and my wife and I are really excited about it.
Overall, what’s better and what’s worse since your last interview?
Financially and from a life-balance perspective, everything is better since my last interview. We have what JL Collins refers to as F.U. money, and are free to pursue this next chapter and discover how we can be a blessing to others with our time, energy, and resources, and I was able to do it without closing the company (and therefore not just preserve everyoneâs job there, but provide the opportunity for the three employees turned minority owners to grow extremely wealthy as well.) Thatâs quite gratifying to me.
The country is worse-off, economically, socially, culturally, and I ruminate upon that in my quieter moments insofar as how best, if at all, to respond to that. We have considered purchasing a property elsewhereâCosta Rica, Bahamas, USVIâs, etc.âas a safe-haven should it keep getting as wonky as itâs getting now, but Iâm not sure those places are managed any better than this one, to be honest.
What are your plans for the future?
Weâre going to volunteer through our church, catch up on household projects and upgrades, travel a decent amount, hit the gym each morning, work our land and garden.
I may get involved in a couple political campaigns here in town, and am looking forward to joining both a beekeeping club and a book club.
My wife is considering going back to school to get certified as a master naturalist so she can teach and lead tours at the many state parks and sanctuaries we have around our property.
We also want to be freed up to be available for our daughter and any family she creates down the line.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
- Commit to stashing x percent (start with 10 if you need to come in low, then work your way up to 30 or 40% if you can) of your income into your nest egg for retirement. Take this money off the top, the day you get paid, and let it sit and grow for you. Your future self will thank you.
- Spend a little time learning about investments. Itâs a lot simpler than the financial industry wants us to believe, and knowing that can save you a lot of money over the years.
- Own it if youâre able. I was an employee for someone else in this business for 9 years, and while the money was good and I was certainly compensated fairly, the really high dollars started coming in when I took the shot and began leveraging other peopleâs labor. There is risk to this, to be sure, but thereâs risk to being someone elseâs employee as well. You have less control, less freedom in most cases, and at the end of the day in many instances if youâre someone elseâs employee the most youâll ever make is the least amount your employer thinks he can get away with paying you.
- Marry well and stay married. The latter seems miserable if you skip the former, so donât skip the former. Marry well and invest time and energy in making sure your spouse did as well. đ Keeping this front and center in my life has made all the difference.
- Give. Whether itâs because youâre led to by your faith, as my wife and I are, or because you believe in karma, the reciprocity principle, or just plain leaving the world a better place, you will make more money and end up richer if you give and give regularly. I have shared this with others in my circle whose reply is often that they pay an enormous amount of taxes, which is true. But the government is a miserable allocator of resources and a terrible money manager (though they are an outstanding revenue harvester) and very often is spending that money on causes youâre not likely to agree with anyway. Besides, when you pay taxes itâs not voluntaryâwhen you voluntarily write a check to a cause you believe in, there is something intimate and personal about it, and it brings you closer to the cause and changes the experience of giving. It also changes your relationship with money, as you begin to realize that itâs not all about you, that you already have more than most of the people living on the planet today. I would say that giving money to needy people and worthwhile causes is one of the most personally rewarding things Iâve ever done with money.
- Avoid lifestyle creepâas you make more, invest more. Consider that youâre purchasing future time and freedom with those dollars, instead of whatever the most recent hot trend may be. I told myself this back in 1998 when I entered the workforce (31k per year) and began investing (50 bucks a month) into my 401k. Those dollars from that year are still sitting in VTSAX working and growing for me, and nowâ24 years and 9.6 million dollars laterâit is almost overwhelming how wonderful the freedom feels.
- Donât plan to be poorâwhen I read about millionaires twisting themselves and their finances into knots so as to qualify for Obamacare subsidies, I have to shake my head. Itâs what my grandfather called tripping over dollars looking for pennies. Put that energy into making/growing wealth and you donât have to worry about government hand-outs. And, if you do truly need it, then Iâm glad itâs there for you. But for everyone elseâyou can buy health insurance just like you buy everything else in life, and you can stop worrying about your health care as you age.
Wind says
I really like “Donât plan to be poor” section.
Thank you for sharing your story. đ
m-121 says
thanks for reading. it is one of my chief beefs with the fire movement–it seems to be largely centered around staying poor on paper so one can qualify for subsidies and handouts.
i have been very poor on paper (and real-life), and comfortably rich as well, and it is much, much better being rich than poor. and–to the extent that it’s a personal choice–it’s more ethical as well. those who are wealthy pull the wagon and contribute to helping the folks who really are poor and need it.
these fire-folks who build their lives around staying poor on paper so as to keep their hand in the trough are a plague on the whole system, in my opinion.
Hospitalist says
I agree with you 100%, I consider multimillionaires manipulating their income to get ACA subsidiaries unethical, even though they are technically following the rules of the game.
D says
Agree… My husband and I were able to prepay for our health ins prior to retirement. I am so grateful that I had that opportunity with our employer and was smart enough to take advantage of it. It is very nice to own my life and my time… đ
M-124 says
This is solid top to bottom. The âoutro â struck me. âDonât plan to be poorâ.
Build the business- sell the business and get income in perpetuity! Great.
I also loved the comment on scaling your business and saw your income increase astronomically by hiring others.
Just a great share. Enjoy your life !
m-121 says
thank you. it’s an exciting next chapter.
Middle Aged Investor says
Great update! I have a lot of respect for mortgage bankers. They help most people realize the American Dream of property ownership. I have owned 3 houses in my lifetime and I hope to buy my 4th in the next few years when my wife and I downsize. Thank you for sharing your updates.
MI228 says
You call it âploddingâ, I call it discipline. Congratulations!
charlie @ doginvestor.com says
Great interview, definitely inspiring to see the leveling up achieved through your own business.
You must have a fantastic lawn đ.
charlie @ doginvestor.com says
also, as at October 2022, has the mortgage market business changed with rates going up?
Clay says
Property taxes on house, cars, home insurance, life insurance, personal liability ins, etc.: 1000/mos
Lawncare: 1300/mos
First one seems low, next one should be 130 I assume?
M-121 says
No, lawn care is 1300/mos. We have a lot of land (7acres) and it takes a crew of 5 half a day to bang it out.
We also live in a fairly low cost of living state. Property taxes run 2500/year.
Joe says
Thank you for sharing an update and congratulations on your exit. Curious about the legacy fund, as it allows you to gift 60k to your daughter each year. Does it allow you to avoid the 30k gift limit? Would appreciate any info.
M121 says
I am not sure how best to deploy that legacy fund for her just yet. Right now we are just putting money into it and letting it grow. Will figure out the best structure re tax minimization etc when we get closer to passing it off to her. Sheâs still in college so we have a little time.
M-121 says
Very much. Rates are miserable right now. Low 7% range for well qualified borrowers. We are approximately 70% off our volume last year, with commensurate reduction in revenue. Itâs likely had I not done the deal when I did, before this miserable market really kicked in, that I would not have been able to sell at all, in which case I would have just closed up shop and called it a day. So the timing, in hindsight, worked out well for us.
ol70 says
Congrats on your timely sale! So have you written down the value of the remaining $3M interest of your business or do you feel it will come back around and youâll be able to divest the rest? Hopefully this market turns around for all of us!
charlie @ doginvestor.comx says
Ok, it makes sense that it would swing like that (definitely with such moves in such short a time frame)
Fortuitous timing on the sale but also great to have gotten the run up in savings prior to that.
Hope it stabalises over time for the companies sake, but I’m sure your decision to take a step back has 0 regrets.
Alex says
Hi there.
First, congrats. I think it takes extra discipline not to inflate lifestyle making over 1M/year. And second, I was wondering if you are open to connecting offline (phone, zoom, etc.)? It is my goal to open a successful business. I am interested in learning about your experience. If you are and have free time, either live a comment and I leave my email address, or we can ask ESI to connect us.
In any case, best of luck.
Thanks