Today I have two updates for you from previous millionaire interviews.
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
These updates were submitted in August.
As usual, my questions are in bold italics and their responses follow…
OVERVIEW
How old are you?
I am 52 and my husband is 61 years old.
We’ve been married 24 years
Do you have kids?
We have one child, almost 23 years old.
What area of the country do you live in (and urban or rural)?
Urban Southeast.
What was your original Millionaire Interview on ESI Money?
NET WORTH
What is your current net worth and how is that different than your original interview?
$12,759,000 million.
Net worth is up nearly $6 million since original interview.
What happened along the way to make these changes?
We continued to earn, save and invest. I have decreased my hours at work since the original interview. I cut back to 80% time.
The stock market wasnât so kind this current year, but we havenât changed course at all. We have been through several bear markets and the great recession. We always kept with saving and investing regularly.
What are you currently doing to maintain/grow your net worth?
We are past deliberate accumulation phase and starting more to focus on wealth preservation and legacy.
While we still contribute to retirement accounts and maximize, outside of those we are very thoughtful about diversification and preservation.
The largest risk to us is taxation.
EARN
What is your job?
We are both employed physicians.
What is your annual income?
- Physician salaries: $1,088,000 (reportable income, doesnât include our retirement contributions).
- Military Benefits: $64,799
- Investment income: $110,000
How has this changed since your last interview?
Our income is higher just over 10% since the prior interview.
I was promoted at work and given a decent raise with that new title. Then I decided to cut my hours a few years ago. However, with successful negotiation, I didnât decrease my salary by the same percentage.
We had one year of âcovid salariesâ in 2020 which meant neither of us received a bonus due to our practices trying to salvage their finances due to shut down. Like most physicians, our income has not kept up with inflation even in the face of dwindling reimbursements.
Unlike that income, the military benefit continues to add a cost of living adjustment and has risen accordingly since last interview.
Our investment income (from our taxable investment account) has grown, and it remains all reinvested. We also have real estate income (keep reading).
We had overall $1.3 million in income before taxes last year.
Have you added, grown, or lost any additional sources of income besides your career?
Our investment income has now diversified into passive real estate.
We took some sidelined unused cash during the pandemic (less travel, less entertainment, etc.) and invested in several real estate syndications. We invested $1 million into these investments. These are early investments, so we have yet to determine our return; but we are content of this diversification strategy headed into retirement.
SAVE
What is your annual spending and how has it changed since your interview?
We continue to pay just under $400K annually in federal taxes.
After taxes our spending is $200-220K annually. Three years ago, it was just under 200K. I would say we are status quo on spending with some increase in the last few months due to inflation. Our child is in his last year of college and those expenses will terminate soon.
The largest expense continues to be travel ($63K) followed by personal care ($19K), home maintenance ($15K), groceries ($14K), restaurants ($9K), pets ($4K), insurances ($8K), charity ($6.5K), clothing ($6K), rent ($5K), auto ($3K), cable ($3K), telephone ($2K), utilities ($3K), gas ($1.5K), and other random miscellaneous categories.
What happened along the way to make these changes?
We havenât really changed our spending habits.
INVEST
What are your current investments and how have they changed over the years?
- Employer retirement accounts $882,000 in 2018 to $1,724,000 current.
- Taxable Brokerage account $4,735,000 in 2018 is now $6,485,000 (allocation 75% stocks, 25% cash/bonds)
- IRAs $650,000 in 2018 to $1,171,000 now.
- College 529 plan $120,000 in 2018 to $70,000 now. Last year of college.
- Bank Account $147,000 in 2018 to $242,000
- Annuity $949,000 (new since 2018)
- Cryptocurrency $27,000 (new since 2018)
- Home $350,000 in 2018 now $554,000 (latest Zillow estimate)
- Real estate syndications $1,225,000
We have no debt (2018 to current).
What happened along the way to make these changes?
We were accumulating cash faster than our spending, so we diversified into real estate syndications, purchased a low-cost tax deferred annuity, and bought some cryptocurrency.
All our asset buckets have pros and cons. Our retirement accounts wonât likely be as tax advantaged as we anticipated when we started funding them decades ago. I really donât think our tax bracket will drop significantly by the time minimal distributions are forced out. We are not in an advantageous financial position to do Roth conversions either.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview?
I discussed the real estate syndications above. That has been one of our biggest changes into a new pot of assets since the last interview. They are not cash flowing as much as I thought they would because of creeping interest rates, but they did have minor impact on our taxes with some of the real estate taxation benefits. Minor. Hopefully they will appreciate nicely.
We likely will have an estate tax problem if we live long enough. We have been working with our CPA, advisors, and estate attorneys to try to mitigate future estate taxes and provide legacy wealth. This is not a cheap endeavor to establish. We already have a revocable trust; but now with the estate and potentially another 30 years of growth we must do advanced planning.
Vehicles I am adamant about steering away from, such as permanent insurance policies, are now frequently entertained into estate planning. Alternative investments are the other vehicle. Costs and fees are slowing our pace on these decisions. I feel we have âwon the gameâ without using some of these costly estate planning tools, but as our net worth gets very high it also feels like the tax problem is looming and we need to at least mitigate a bit.
Overall, what’s better and what’s worse since your last interview?
My work hours are surely better. I really enjoy the extra time I have.
Obviously, we went through a global pandemic since the last interview and much of how we function is different and maybe how we think about our health and future.
Inflation sure isnât pretty either at this point.
What are your plans for the future?
We really are getting closer to thinking about retirement.
The healthcare landscape has changed to the point it really is no longer enjoyable compared to when we started decades ago. That is a completely different topic; but the exodus out of medicine is real. If we have another follow-up in 5 years, I doubt we will be employed.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
These are some of my favorite words of wisdom:
- This is a journey. Not a sprint.
- Nothing is free.
- If it sounds too good to be true, it probably is.
- You canât take it with you.
- Health is wealth.
- Donât keep up with the Jonesâ.
- No one cares more about your money than you do.
- Trust no one.
—————————————–
OVERVIEW
How old are you?
My wife and I are both 33 and are approaching our 10 year anniversary!
Do you have kids?
Yes, a 5 and a 2 year old.
What area of the country do you live in (and urban or rural)?
Suburbs of a warm state with no income taxes.
What was your original Millionaire Interview on ESI Money?
NET WORTH
What is your current net worth and how is it different from your original interview?
$3M, which is up from $1.4M when I wrote my original interview 3.5 years ago.
What happened along the way to make these changes?
One major life change for us was building a house! It was fun to design it from scratch. It cost $850k and is worth around $1.25M now. It’s 2800 sq ft and has a pool, splash! After moving in, we sold our old house.
Financial independence enabled us to own two houses at once, making the whole process as smooth as possible. Other than that, we buy stocks and the stock market has gone up.
What are you currently doing to maintain/grow your net worth?
Same old same old.
We take the majority of our after tax income and buy index funds and reinvest all dividends.
EARN
What is your job?
I’m a toy inventor. đ
In my last interview I wrote I was an industrial designer, but I don’t mind getting more detailed now. I help lead a small team of toy inventors. We come up with ideas for toys, make working prototypes, and sell them to all of the major toy companies worldwide for royalty income. When you walk the toy aisles of Target and Walmart you will see some of my inventions.
We left San Francisco four years ago to escape a high cost of living with regard to taxes and home ownership. This made me the only designer at my 700 person company working remotely. I thought this move would cause my career to stagnate, that I would not grow into a leader within my company. The opposite happened and I ended up growing my position and salary.
Then covid came along and everyone went remote and had similar experiences to me.
My wife stopped working a few years ago when our second kid was on the way.
What is your annual income?
It’s been around $250k the past couple of years.
How has this changed since your last interview?
My income has almost doubled since my last interview.
My bonus is based on our team’s profitability, which has been good the past few years. We’re always working two or more years ahead in the toy invention business. Toys I invented in 2020 (or earlier) come to market in 2022 and that’s when the royalties start rolling in.
I’m also in a leadership position now so my base salary has increased some, but my bonus is 40-50% of my total salary.
Although my salary has increased, our household income is about the same since my wife stopped working and earning a salary.
I don’t include dividends and capital gains in my income, but they have been increasing.
Have you added, grown, or lost any additional sources of income besides your career?
Here’s a quote from my last interview:
My wife and I have always talked about starting a business together, combining our unique skills. I hope to make this happen at some point.
Well, this hope came to fruition. đ We started an NFT project last year which made $1M in revenue one day. After paying our partners and taxes we kept a minority portion of this in cryptocurrency, which I consider “play” money and therefore do not include it in our net worth. We still work a lot on this project since it’s fun and the technology is interesting.
SAVE
What is your annual spending and how has it changed since your interview?
I don’t pay much attention to spending these days. Personal Capital keeps track if I were ever inclined to look closely.
We spend around $80k a year, up from $70k three years ago.
What happened along the way to make these changes?
I wrote a pretty detailed breakdown of our spending in my last interview. The biggest changes are kids starting to do things that cost money, and our larger home mortgage. Otherwise, the categories are probably about the same.
Since our house is new construction our energy bill is less than before even though our new home is over twice the size of our old one. And we have solar panels which produce as much energy as we consume.
Saving and investing over 70% of our after tax income for years has been the key to our financial independence.
INVEST
What are your current investments and how have they changed over the years?
There have been three notable changes since my last interview:
- Tipping point. We’ve reached the point where the majority of our stock portfolio is unrealized gains. We’ve “made” more than we put into it. We’ve purchased about $1M worth of stocks over the past ten years and it’s now worth about $2.2M. This is pretty exciting to me and I’m interested to see how this plays out and changes in the future.
- Home equity. We had $100k equity in our previous home, which was worth $400k total. Now we have about $750k equity in our new home. We have a 30 year $500k mortgage at 2.6% which we do not plan to pay off early. I’ve listened to tons of interviews where people talk about sleeping better at night knowing they don’t have a mortgage even though they realize they would have more money if they didn’t pay it off. I have no problem sleeping at night.
- Dividend aristocrats. I had been reading about and considering investing in aristocrats for some time. Then the market corrected 30% when covid hit in March of 2020. I jumped in and bought 25 aristocrats; $10k of each for a total of $250k which is currently sitting at $415k, about 20% of our stock portfolio (the remainder are mostly index funds and a few REITs). I made my purchases based on dividend yield relative to price at the time of purchase and high dividend % increases over the previous 5-10 years. Some of these funds came from cash we had sitting around just in case we needed it when building our house and some came from tax loss harvesting proceeds. My plan is to own aristocrats in lieu of bonds. When the market struggles, my aristocrats will hopefully continue to pay and increase their dividends.
What happened along the way to make these changes?
Growing up in our early 30s and living out typical life experiences like having kids, owning a home, and being around for a longer duration of the stock market.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview?
In our ten year investment history there’ve not seen many major tax loss harvesting opportunities.
I had been waiting to try it out when the March 2020 correction came along and I executed my aforementioned harvesting and reallocation into aristocrats plan, carrying forward the losses.
Overall, what’s better and what’s worse since your last interview?
Lots of fun life stuff!
Kids being born and growing up. Building and living in our custom home. Feeling even more financially independent as time goes on.
What are your plans for the future?
Financially, I don’t plan to put any more money into our kids’ 529 accounts. After front loading, they are currently worth a total of $175k which I expect to grow to a sizable amount over the next 15-20 years.
My fat FIRE goal is to be able to live off of stock dividends which would be around $4M in total stock holdings.
We still own one car and plan to stay in this house for many years. We work from home. We live within walking distance of good public schools. We intentionally designed our lives this way. This is why we worked hard to reach financial independence relatively quickly.
I’ve been running almost every day for 15 years and hope to keep it up.
I mentioned in my last interview that I had not donated much to charity, but hoped to do so in the future. We donated $35k to charity last year, so that’s a start!
Enjoy your path to, or life of FI, and all the freedom it enables!
M says
Awesome job to the physicians and toy inventor! To the physicians, what area of medicine/specialty do you practice? Have fun planning the retirement!
SMB116 says
Applaud the physicians and toy inventor for their ability to grow their wealth to such fantastic levels since their last interview. To the physicians, would like to understand the main drivers you are seeing in your profession as I agree, there is an exodus of health care personnel which I worry is increasingly going to impact our lives especially those who are older and in need of treatment.
Scott H says
The major change I have seen in healthcare-as a now retired Nuclear Medicine Technologist-is the elimination of pensions by hospitals. People used to work 30-35 years at a hospital, knowing they would have a nice pension when they retired. Now, nurses, etc., have 401k’s or 403b’s that accompany them when they quit.
MJ says
Great job to both of you. The physicians are just killing it. You guys zoomed past ur own expectations. And the toy inventor, wow! So young w such a robust net worth. You sir, have the potential to have a very robust net worth, when itâs all said and done. Congrats to you both. Thank you both for doing the interviews.
Charles Marks says
Interesting reading. Noted: income north of $1.25 million, charitable giving of $6500. 1/2 of 1%. Just the facts.
Mike says
MI-235, First off awesome job on your charitable giving last year! Secondly, as a 50 yr old who still LOVES toys, that sounds like a fun job! I’m a security test engineer, perhaps the only thing I can imagine that would be more fun is a Toy test engineer. đ
Charles Marks says
I think it’s interesting that Mike believes that charitable giving in the amount of 1/2 of 1% of yearly income (and, in this case, five ten thousandths of total wealth) is an “awesome job on your charitable giving”. Everybody has a different idea of what is “awesome”.
MI 132 says
I believe Mike is referring to my charitable giving, I’m the second interview đ
MI 132 says
Thank you! Toy test engineers like to drop them and see what happens when the hit the ground, haha.
Financial Fives says
Very intriguing updates on both ends. Never knew physicians made that much, but it sounds like they own their own practice. With the cost of medical school, and as they say it’s not much of an enjoyable profession anymore, I wonder what the landscape will look like in the future when needing care? It’s already hard in rural areas to get healthcare.
And how does one wake up one day and decide they want to be a toy inventor? The author seems very enthusiastic in all areas of life, which is refreshing. Quite a staggering net worth just 10 or so years out of college from just saving and investing!
MI 132 says
I just like making things and there need to be new toys on the shelf every six months so someone’s gotta do it!
CB says
Thank you to both interviewees for sharing updated details. Quite interesting to read.
MI-343 says
Like the interviews and details. May the Lord continue to bless and use you all in serving others!