Millionaire Interview Update 54

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. 😉

This update was submitted in January.

As usual, my questions are in bold italics and their responses follow…

OVERVIEW

How old are you?

I’m 49 (turning 50 in a few months) and my spouse is 52.

We’ll celebrate our 20th anniversary in 2024.

Do you have kids?

We have 16 year old twins that are starting the college search process. We’ve hired a private college counselor to assist them since the whole process is so different than when my wife and I went through it a few decades ago. Right now they’re both planning on going to four-year universities following their high school graduations next year.

There’s a chance that could change as one of them may be a good candidate to start at a community college before transferring to a traditional four-year school or taking a gap year to work. We’ve encouraged the kids to think about the skills they want to learn and the value they want to develop for an employer or themselves if they want to be entrepreneurs rather than stressing about getting into particular schools.

Speaking of schools, we have a great public education system in our area. Our kids were never interested in private high schools which has helped us to save and invest additional funds (as well as stock away money in our 529 plans).

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

We live in the suburbs of a Northeastern city. We also have a second home in a Mid-Atlantic beach community where we spend about half of the summer and long weekends.

We may explore selling our primary suburban home when we become empty nesters as I can work from anywhere but we aren’t under any pressure to do so. We live on a great lot in an established community with a desirable school district which has helped keep the housing prices inflated here.

What was your original Millionaire Interview on ESI Money?

I am Millionaire Interview 185 which I’d encourage anyone interested to take a look at as I consider this to be the Part 2 of that story.

I also wrote in two years before I shared my initial millionaire story to solicit feedback from the ESI audience here. As you can tell, I’m a big fan of this site as well as the Millionaire Money Mentors forum.

Is there anything else we should know about you?

I’m writing this update on January 1st 2024 following a year with two big personal developments.

First, I have just completed the highest earning year of my life with over $1.1M in total income. I led the development efforts for the largest single new business sale in my company’s history in 2022 and started reaping the benefits this year. As well, I’ve helped build out a new practice group at my company which generated a separate large new contract this year.

I’m expecting another large income year in 2024 with $900k-$1M in income. There’s potential for sizeable annual earnings in future years, though nothing is guaranteed in my role if I don’t sell new business.

Second, I finally pulled the trigger on going back to school. I was accepted into an industry-specific program offered by an Ivy League university that I’ve been interested in for some time. I’ve now completed the first of four sections and have enjoyed the material as well as learned a lot from the instructors and my classmates. The additional Master’s degree (I earned my MBA years back) will provide additional credibility in my field and help me further expand my network.

But perhaps the biggest reason that I moved forward with the additional Master’s degree is that I have a long-term interest in teaching at the college level. There’s a need for instructors to teach the next generation of professionals in my industry, and I think I’d be a good instructor based on my passion for what I do as well as my skill set. This Master’s should help me round out my credentials for a role at a college or help me create a program focused on my field.

NET WORTH

What is your current net worth and how is that different than your original interview?

My current net worth and the values from almost four years ago (I wrote the original post in March of 2020) are shown below:

• 401k Balance: $362k (was $129k).
• Brokerage Account: $596k (was $124k).
• Traditional IRA (consists of primarily of rollover 401ks): $812k (was $463k).
• Roth IRA: $70k (was $40k).
• Wife’s 403B from prior employers: $248k (was $146k).
• 529 Savings: $326k total, $163k per child (was $176k total or $88k per child).
• Savings Account: $100k (was $20k). We’re planning to buy a new replacement car for my wife which will take this down, but I plan to reload it with a sales bonus that’s coming in Q1 2024.
• Universal Life Policies: $49k cash value (was $35k) .
• Primary Home: $550k net: $711k current value less $161k remaining mortgage (was $293 net: $520k market value less $227k mortgage). The mortgage will be paid off in 2030.
• Second Home: $615k (was $430k. I paid off the small mortgage we had years ago which I discuss in the “Help a Reader” column from 2018).
• Company Discounted Stock Purchase Program: $106k (new since 2020). I started participating in this program a few years ago and the stock has done very well.
• Deferred Compensation: $134k (new). My company offered this to me a couple of years ago when I started consistently earning a higher income. In short, it allows me to defer a portion of my present earnings to a later date. As well, the company matches a healthy percentage of what I defer. This year, I was able to defer $85k until the years when I’m considering retirement and will likely have a lower income which helps a bunch from a tax perspective. All of the proceeds would be paid out if I leave the company before the distribution dates that I elected.
• Stock Options/Performance Awards: $348k which vests between 2024 and 2028. I don’t normally include this in my net worth as these options go away if I leave the company before they vest.

Net Worth in 2018: $955k (this is when my income started taking off and we ramped up our savings).

Net Worth in 2020: $1.856M (though that was in March 2020 during the COVID market depression).

Net Worth Today: $3.968M (not including the $348k in future options and awards).

A few comments:

• All of our holdings are in low-expense index funds or Target Retirement investments through Vanguard (all personal investments) or the company-provided investment firms (401k and deferred compensation).
• I have just under 7 years left on my primary home mortgage at a 2.625% interest rate. My heart tells me to pay it off, but my head says that the historically low interest rate that we have dictates that I should continue to direct my money towards other investments.
• It can be argued that we have too much in our 529 accounts. However, both of our kids have expressed an interest in private colleges and one has already talked about graduate school. The recent changes to how 529 funds can be used has alleviated a bit of the overfunding concern. Having said that, we aren’t planning to put more money in until we have a better view on the anticipated future costs of our children’s education.
• The universal life policies were taken out by my Dad when I was a kid. They haven’t proven to be great financial investments, and I set up the dividends to pay the premiums years ago so they don’t appreciate in value very much. But the early termination penalties make closing down the policies undesirable and the life insurance component is still a benefit. My wife and I have term life policies that cover our primary needs in this area.
• Compound interest and market growth have clearly been our friend. I’ve been able to stock money away over the last four years (and especially this year) but we’ve ridden the wave of growth since 2020 to new heights.

What happened along the way to make these changes?

The biggest thing we’ve done has been to focus on earning more income through my sales career while not increasing our spending dramatically and investing the difference (Earn, Save, and Invest. Sound familiar? 🙂 ). The growth in our personal brokerage account, Traditional IRA, 401k, Deferred Compensation, 529s, and savings accounts are largely attributable to putting money away once it’s earned as soon (or before) it hits our personal account. My income growth over the past 5 years has allowed us to do that more aggressively than we had previously forecasted.

It helps that we don’t live extravagantly at all. I think our friends and neighbors would be surprised to hear about our net worth or about how much I’ve been earning over the past couple of years.

I have also learned the hard way about living paycheck to paycheck. We probably bought too much house when we acquired our current residence during the height of the local real estate market back in 2006. I’ve also lost one job and had another change its compensation structure suddenly over the last 20 years which has given me an appreciation for squirreling money away.

Lastly, we never developed expensive tastes or a desire to keep up with our neighbors when it comes to spending or toys. I imagine that many of our friends don’t have much in savings when I look at their expenses relative to what I’d assume they make based on their occupations.

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

The biggest thing I’m doing right now is continuing to focus on my career and growing my practice group. I took a risk in coming to the firm I’m at several years ago, and have been fortunate that the market has turned in favor of my company’s focus area. Economically, we’ve decided that the best thing for me to do is to continue to ride this wave for the next several years.

We’re also keeping our spending low, though we’ve been setting up a few more expensive vacations and not worrying about the cost as much. Our kids won’t be home for much longer and we want to capitalize on the time we have together as a family.

EARN

What is your job?

I am still a senior level sales professional in the financial services industry.

I am considered a top producer for my company which is one of the leading firms in our industry sector.

My wife has been a terrific stay-at-home Mom since we had our kids which has made the travel required for my job more palatable.

What is your annual income?

I just earned $1.1M in 2023 which is by far my highest income year yet.

I’m forecasting $900k-$1M in 2024 based on business that I’ve already written, and then we’ll see how things progress in future years.

How has this changed since your last interview?

I reviewed my career and earnings over the years in my first post if folks are interested in more details.

Here’s a look at my income growth over the last decade:

• 2013: $155k
• 2014: $158k
• 2015: $215k
• 2016: $185k
• 2017: $201k
• 2018: $409k
• 2019: $582k
• 2020: $375k
• 2021: $315k
• 2022: $800k
• 2023: $1.1M
• 2024: $900k-$1M (forecasted)

There have been two big reasons for the increase in my income over the years.

First, I was let go from a firm that was acquired in 2013 and fortunately landed quickly with a stable job at a longstanding regional company. I could have stayed there for the rest of my career, but in 2015 I was recruited to help launch a new practice group for a global competitor. I took a risk and made a business decision to move to the new opportunity. That has paid off, as I never would have had the income opportunity at the regional company that I have now.

Second, I really pushed myself once I joined the global firm to work to be one of the best in my field. It’s been an eight year journey, but I feel that I’ve reached a level where I’m considered to be one of the key personnel in a specific niche for a leading company in my field. Of course, now the challenge becomes repeating that success year after year. But, as the saying goes, pressure creates diamonds.

Have you added, grown, or lost any additional sources of income besides your career?

My primary source of income has always been my sales career. I’ve never had a true side hustle, though I do occasional consulting calls in part to get market intelligence on the aspects of my industry that investment firms are looking at for a relatively nominal amount of money.

As previously noted, we made the decision years ago that my wife would stay home to raise our twins. That wasn’t our original plan, but the cost of child care in our area would have absorbed the vast majority of income that my wife would have brought in had she continued her career.

I’ve never felt that I had the time – or candidly the sincere interest – to look into rental real estate or similar side investments. I’ve always been focused on growing my career and spending my personal time with my family. I don’t regret that at all – especially now as my kids are 20 months away from potentially leaving home for college – but there’s risk in being the sole breadwinner.

In 2013 I was let go with two weeks of severance when the firm I was at was acquired. In 2009 another employer went through a restructuring that led to my bonus – 30% of my income – being eliminated. Changes like that hit hard when a family is relying solely on one income.

SAVE

What is your annual spending and how has it changed since your interview?

We have never meticulously tracked our spending. I found it interesting to see that most of the other millionaires featured on this site don’t either. Instead, my wife and I are generally thrifty people with a good mutual understanding of how much is too much when it comes to spending.

One thing we’ve done well has been keeping our spending relatively consistent despite the growth in earnings, especially over the last 5 years.

I would say that we’ve done a good job of not increasing our spending as my earnings have grown. Also, we try not to spoil our kids too much though my Mother-in-Law would say that we’ve failed in this area.

What happened along the way to make these changes?

The biggest thing I’ve done has been to focus on getting a little bit better every day in my career. That’s meant taking on new and challenging assignments, pushing myself to do the things that others don’t want to do (and not many people want to do commercial sales), and networking intentionally over the last two decades.

I didn’t see true results for a long time. If you look at my earnings history, I didn’t experience a meaningful income difference for a number of years. But I hit an inflection point a few years back and now I’m seeing a lot of the seeds that I planted start to grow in terms of both new business and long term professional relationships.

I’d recommend the book “Atomic Habits” to anyone interested in learning how to truly progress in anything. A lot of the principles ring true to me – especially the concept that consistency trumps talent over time. I’m not the smartest person in my industry, but I’m pleasantly persistent and have outworked many of my competitors.

INVEST

What are your current investments and how have they changed over the years?

I have always been a believer in the Warren Buffett School of putting your money into low expense index funds since the vast majority of mutual funds and actively traded stocks don’t beat the market with any consistency. I largely “set it and forget it” as I try not to look at my investments too frequently.

This is a good place to mention another change: I started working with a personal financial advisor. My company offers a benefit to folks in my income range where they pay to have a high net worth advisor provide advice and analysis. I’ve always been reticent to work with an outside party but I haven’t been pushed to buy any products yet and I’ve been clear about my risk appetite and long-term focus. So far, my advisor has helped in two big ways.

First, he’s helped me pull a complete financial picture together and provided forecasts on various retirement scenarios. As well, he’s provided useful tax advice as I’ve moved into a higher income bracket. That’s been very helpful to me and my wife.

Second, he walked me through how to maximize my company’s deferred compensation program once I became eligible. That allowed me to earn the company match for several years which was nice. But it really paid off this year when I was able to defer income from my highest earning year to the future which will help a good amount from a tax perspective.

What happened along the way to make these changes?

I’ve read and would recommend many of the same self-study investment books that have been recommended on this site. I’d also suggest that I haven’t fallen into situations where I’m working for a start-up and a lot of my potential earnings are tied up in stock options that may or may not ever become reality.

Instead, I’ve worked in a great but unsexy industry doing great work and going the extra mile for what’s turned into several decades.

I also listened to my Dad who encouraged me not to invest in things that I didn’t understand or hand my money over to sole investment professionals that I didn’t trust implicitly. I did invest early on with an old drinking buddy from my 20’s who was a nice guy for a while. But I look back and see that my comparatively small account had a lot of movement between investments on a quarterly basis which drove up my expenses. I ended up moving those funds (largely 401k rollovers) to Vanguard over a decade ago.

He later confessed that his firm didn’t pay him much for accounts under $250k at the time so there were no hard feelings. I think he’d be stunned to see where my investment volumes are now.

MISCELLANEOUS

What other financial challenges or opportunities have you faced since your last interview?

When I wrote the initial post in March of 2020, the COVID lockdowns were beginning to dramatically impact the economy. I said then that I expected my industry to slow down which would have a corresponding effect on my income.

Instead, and much to my surprise, the opposite happened. Many companies that hadn’t considered our practice group before started reaching out as they weighed alternative solutions to the challenges that the economic slowdown created.

I’d say that I was in the right place in the right time. But I also feel it’s fair to say that I took a risk in coming to my current employer and worked hard for several years to be in a position to receive the opportunities when they came. Those opportunities drove my higher earnings over the last several years.

Overall, what’s better and what’s worse since your last interview?

Better – my earnings level, net income, and overall financial outlook are much better.

I’ve cut down some on my traveling to capitalize on being around my kids more before they leave for college. I work from home and have a lot of say in how I spent my days. I also largely get to set up my travel schedule to I avoid missing family activities. We’re also traveling more as a family which I really enjoy, and I’ve been able to spend most of the last few summers at our beach house when I’m not on the road.

Worse – my job is stressful and nothing is guaranteed.

This is a true first world problem but I’ve been feeling a bit stagnant in my current role. There isn’t a realistic promotional opportunity at my current company, and they strongly prefer that I remain in an individual contributor role as I’m one of their top people. As well, the number of management jobs in my industry has shrunk over the last several years.

Everyone needs a top producer, and that’s preferred to more managers. Plus, running a sales team again would mean a drop in income at a time when I’m at the peak of my earnings. I’d say I earned roughly 3x what my manager did in 2023.

What are your plans for the future?

Great and timely question. I had the age of 55 circled in my mind as a potential soft retirement date for much of my 40s. My kids would be four years out of high school by that point, and I would have told you then that I’d like to have $5M in net worth and be in position to take a step back.

I still think I’ll work until 55 as I’m not sure I’d be comfortable not having a steady income while my kids are still in college. I’d also like to have more in net worth – say $6M or more ideally – before I step back.

My wife and I would like to travel more in retirement and not be concerned about going out to eat more or enjoying the finer things when we have more free time. I suppose Fat FIRE is a target goal now.

I mentioned my desire to teach. In an ideal world, I see myself stepping back from my current role (or an equivalent one) in 5 years to teach students about my industry at a college in a desirable location. I’d focus on improving the employment prospects for college students by day while refereeing soccer games, working out, and playing a lot of golf in my spare time to stay in shape.

Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?

I saw this statement in an article I read recently and it’s stayed with me:

Most advice stinks. It’s given without context for the specific people or situations involved. Also, it’s often a reflection of the person giving the advice rather than helpful feedback for the person asking for it (though the advice in the Millionaire Money Mentors forum tends to be highly specific and targeted).

I gave a lot of advice in my original interview. Here, I’d like to share a couple of thoughts:

• Trust Your Own Gut: I’ve had a lot of people tell me negative things about the path that I had chosen in my career. I stayed the course and feel good about the results I’ve created. I’ve had plenty of failings – heck, I’d argue that I’ve largely learned from the School of Hard Knocks more than anything else – but my actions and choices are mine. I hope your actions and choices are yours as well.
• There’s Danger In Moving … And Danger In Staying: You have to take risk to get rewards in life. Many people see risk in leaving a stable company for a new job. But there’s also risk in staying where you are. I’d argue that the two biggest misses in my career were staying in two different jobs for a year too long each because of vague promises made by my managers at the time. I wouldn’t have nearly the income or personal freedom that I have today if I hadn’t bet on myself and moved to a new opportunity eight years ago.
• There’s No Such Thing As “Safe” Anymore: Things are constantly changing whether you see it now or not. Be your own life manager. Don’t let yourself get stagnant or rely on your company to develop your career. I’ve seen too many people get complacent only to have Don’t be afraid to take risk – in fact, I’d argue that you should be afraid of getting too comfortable. Your life is half chance, so make the best decisions you can with the information you have and keep moving forward.

Thanks for taking the time to read my story. I’d love your comments and plan to respond to each note that I receive.