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. 😉
Today we have the OG himself, Millionaire Interview 1.
This interview took place in May 2020.
As usual, my questions are in bold italics and his responses follow…
How old are you? (and spouse if married, plus how long you’ve been married)
We are now 53 and 50 respectively.
Do you have kids?
We have a 22 year old son on the autistic spectrum and a neurotypical 18 year old daughter.
Our son is an engineering major at a research university in the north east, and while it is taking him a bit longer than normal to graduate, we hope he will do so in Spring of 2021.
Daughter will graduate HS in June 2020 and enroll in a medium size state university in the NE which offered her a substantial scholarship. She was admitted to 12/12 schools from Arizona to Colorado to the NE and elected to stay about 5 hours from home.
What area of the country do you live in (and urban or rural)?
High-cost northeast suburban area.
Is there anything else we should know about you?
I don’t think so.
What is your current net worth and how is that different than your original interview?
From the original interview, our net worth was $1.56MM.
Our current net worth is ~$3.045MM comprised of the following:
- Retirement accounts (including 401K’s, SEP IRA and rollover IRA’s): $1.45MM
- Non-retirement taxable brokerage (100% in Vanguard Dividend index fund): $97K
- Cash: $510K
- Property in Iowa: $30K
- Equity (unvested) in company: $225K
- Equity (vested) in Wife’s medical group: $200K (approximate)
- Home: $875K (with a mortgage balance of $338K). This is lower than previously reported, and may be on the conservative side.
Not included in that number is any personal property including automobiles.
We’ve also paid off my wife’s medical school loans and have no auto loans nor credit card debt.
What happened along the way to make these changes?
I’ve continued to work for the same multinational health care company and performed well in my role.
We’ve made sure to prioritize saving, maxing out our 401K’s and SEP-IRA (my wife has this given some consulting work she is able to do).
The other significant events have included vesting in my company’s equity, and my wife’s multispecialty medical practice merging with a large chain of urgent care clinics coinciding with a large private equity purchase.
That event paid out approximately $180K in cash (after taxes) and resulted in her equity in the new medical group entity (that is likely a conservative estimate of the value of her vested interest. As an example, in 2017 we invested $12K in the entity and in the merger, those shares paid out $180K+ shares in the new entity. We also made a new investment of $35K in the new entity which is included in the $200K estimate).
On personal fronts, our children have had some struggles.
Our daughter suffered from clinical depression and was hospitalized briefly. She has been continuing to recover, and continued to perform well in school which enabled her to be admitted to all the colleges on her list, many with academic scholarships.
My son also struggled at school, and had been taking the semester off when the pandemic hit so they both have been home. He’s been taking classes locally which will transfer to his school, and the current plan is for him to return full time in the fall.
Their respective therapies (outpatient talk therapy) is covered by my very good health insurance, but there are still out of pocket maximum’s to manage which isn’t an issue. However, it does make it clear that for those with more limited means, getting the help they need may not be as easy, which is troubling.
What are you currently doing to maintain/grow your net worth?
We continue to work hard at our current jobs, which are the primary source of our income.
Otherwise, I have been considering real estate, but frankly, given my non-work interests, I’m not sure I have much appetite to put in the time it would take to be successful at developing a real estate portfolio, or even a few rentals.
What is your job?
I am a Director level scientist in a large multinational healthcare company and my wife is a primary care physician to adults.
What is your annual income?
Last year, our income was $1.4MM including the payout from my wife’s medical practice private equity investment.
My W2 income was $380K including my base salary of $250K + $74K bonus and $64K in stock vesting.
My wife’s income was responsible for the rest, with about $350 in “salary” and the share payout accounting for all but $20K of the balance.
As I previously reported, my wife is on a straight productivity compensation schedule, so she takes a “draw” against her “RVU” (relative value unit which is bench marked against Medicare reimbursement) and then every 6 months she either owes or is paid out the difference between her draw and the RVU balance. She also receives a multiplier based on her quality and patient satisfaction scores. My wife is a wonderful physician, so generally these both max out.
She also received an extra $20K which came from her contract nurse practitioner supervision (which has waned somewhat since the last report).
I anticipate that this year our income will be between $650-$750K.
Once our area closed due to COVID, well and sick visits literally stopped for about a week and then my wife started back with telemedicine. Since her group is so large, they steered patients with COVID symptoms to their urgent care centers, so she wasn’t seeing any of those patients in person.
Her office has now reopened, and the she is still on a somewhat reduced schedule although it is picking up.
Two months ago she took a 30% reduction in draw, which is fine as 1) we had a large cash position to allow us to weather unforeseen situations like this and 2) we’d much rather be owed than owe the group money.
How has this changed since your last interview?
I’ve generally been awarded fairly standard raises and good bonuses with a company multiplier based on business unit and corporate performance metrics.
I’m hoping that I’ll be promoted within the next 12 months, but even that won’t come with a very large salary bump. It will increase my target bonus by 5% (from 25% to 30%).
At this point in my career, I’m not looking to get to the VP1 level, as the headache associated with it isn’t worth the financial payoff.
I’m looking to continue to contribute to programs that can advance our ability to diagnose and treat cancers that are among the top 5 leading causes of mortality globally. But I like to execute more than I like to strategize, and the VP + level roles are heavily balanced to strategy.
My wife’s compensation has obviously been impacted by becoming a shareholder in this group and the subsequent corporate merger.
I was very vocal about her trying to make the leap from her small 3 provider practice to this large multi specialty group. While she would give up some autonomy, it would provide substantial resources to avoid being concerned with much administrative chores, and focus primarily on patient care, which is what she enjoys.
The large group is run by very business savvy clinicians, and one of our investments was directly the result of that group recognizing a need in the medical market and starting a company to perform that role, not only for my wife’s practice, but also as a vendor to other large medical groups. I recognized this right away.
While it was hard for me to understand the exact potential value on a numerical basis, I knew that it made sense, so we invested as much as we could afford comfortably at the time. (basically, the company provided back-end support for physician practices like scheduling and billing, and each shareholder in her group paid a % of their revenue to this company in return for those services. So it was like paying ourselves…)
Have you added, grown, or lost any additional sources of income besides your career?
We have not added much beyond our equity investment in her medical group, and the likely next payout will not be for some time.
What is your annual spending and how has it changed since your interview?
I outlined our spending as a part of the last interview. Relative to that, our spending is neutral.
That said, we don’t have a strict budget or closely track our spending. Occasionally I will calculate our recurring bills, but I am not terribly interested in doing that.
We are not frugal by any stretch of the imagination, but we live well within our means, and I subscribe to the theory of enjoying today while also saving for tomorrow.
Relative to our income, our housing costs are substantially less than we are capable of paying, which allows us to spend more on travel and my hobbies (photography, furniture building, poker, snow skiing).
We have no debt besides the mortgage, which we contribute slightly more each month. We went through a town-wide reassessment in 2019, and our taxes went down by approximately $4000 which was the result of me (nicely) questioning the assessor’s report on how he came to the valuation.
We like to travel, and I travel for work frequently too which provides good status on airlines and hotels, making pleasure travel easier.
Medical expenses are somewhat higher given healthcare cost inflation, and therapy for the kids.
Regardless, we are able to save substantially outside of maxing our retirement contributions. Typically, we save nearly 100% of my bonus and stock grants as well as all of her semi-annual disbursements of her. What we don’t save is usually spent on new camera gear, or trips to fun places to ski, or photograph landscapes or wildlife.
What are your current investments and how have they changed over the years?
Our retirement accounts are heavily invested in equities (nearly 100% in total market, S&P500 or dividend focused index funds). This has remained constant.
What has changed is the small post tax investment, and the cash position.
While I’m sure the amount of cash we have on hand right now 1) raises eyebrows and 2) is a missed opportunity, I sleep very well at night and in the context of our total portfolio, it is relatively well balanced. It is in a high yield saving account, so not easily accessible but available quickly if needed.
Otherwise in taxable savings we have a dividend focused Vanguard fund as well as the investment in my wife’s medical group. We are not counting on that investment for anything, so if there is another equity event like the first, it will be a nice surprise. If we retire first, then we get our original investment out.
I typically sell my corporate equity when it vests as our investments in the total market contain shares of my company. No need to invest twice.
What happened along the way to make these changes?
Again, the biggest change has been the equity even of my wife’s medical group and to a lesser extent my vesting in the corporate equity.
What other financial challenges or opportunities have you faced since your last interview?
Nothing really new, just trying to figure out how to manage our financials to maximize/balance our current lifestyle with what we want that to look like in the future.
This means seeing where our daughter went to college (we had begun looking at vacation property in CO near a ski resort, and that’s on hold now given that she is remaining on the east coast.)
Overall, what’s better and what’s worse since your last interview?
Our financial situation is significantly more secure and our children are overall doing a bit better, but on likely a longer path to independence.
I’m about to vest into my second pension plan, which if I continue to work for 5 more years will yield ~$3000/month on top of my other pension of $~1000 month.
What is worse is my mother passed during the height of the COVID pandemic, so her burial was very small, and grieving has been strange given my inability to spend meaningful time with my father and sister.
What are your plans for the future?
We don’t really have firm goals regarding retirement and post retirement planning.
We foresee working until our early 60’s as we are in significant accumulation mode, but want to balance that with stopping in time to maximize our ability to enjoy our next chapter.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
Chop wood, carry water. Keep working hard, keep your priorities in mind, don’t inflate lifestyle with increased resources. People first!