Millionaire Interview Update 69

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 March.

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

OVERVIEW

How old are you?

I’m currently 47 years old. My husband is 52.

We’ve been married for 22 years.

Do you have kids?

We have two sons.

One is a junior in a public high school and the other is a sophomore in a private high school.

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

We still live in New York City, although not in the same apartment as when we gave our previous interview.

Very urban.

What was your original Millionaire Interview on ESI Money?

MI-239, over 4 years ago.

NET WORTH

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

Current net worth is 3.33M, which is 1.4M more than our original interview.

The above doesn’t reflect 38k sitting in a donor-advised fund for our charitable giving.

Funny enough, I went back to reread our original interview, and it said our original target for retirement was 3M. It also said, “We’ll see the 3M target number come and go and when it happens, not much will change”.

It was true and not true. The details of life are very different, but the bigger picture feels the same.

And I am definitely not retired yet.

What happened along the way to make these changes?

It’s really interesting to see that the numbers above have doubled in almost every category.

A lot has happened since our original interview.

In the area of jobs, my husband and I are still at the same places of employment, but both of our incomes have increased. One big change for my husband is that he now has access to an employer-sponsored retirement plan, so we’ve been able to save more on the retirement account front (also adding in the extra contribution thanks to turning 50!).

In the area of real estate, we purchased and sold a second home in the last four years (it was a pandemic purchase). We paid off the mortgage on our first investment property (because I didn’t want to deal with the paperwork on it anymore) and purchased a second investment property (we were in contract for the second one during our original interview).

We also sold our primary residence and are renting [a bigger, nicer place] now.

We acquired and then got rid of an automobile in the last four years and our youngest started attending a new private school. Between the second home, car, new private school and market rate rent, our spending has increased during the last four years.

But amazingly, we still hit the next two “million” milestones since the original interview four years ago.

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

We’re still doing the same thing we’ve been doing – which is to earn & save (maximize our contributions to tax-advantaged accounts) and live within our means. We haven’t been doing anything new or different to maintain or grow our net worth.

The biggest change is that our incomes have both gone up (more below).

In fact, selling our primary residence was probably going in the opposite direction of growing our net worth since it was below market rate when we bought it and after 10 years, the mortgage and maintenance was a really small fraction of our income.

EARN

What is your job?

I’m still a software engineer at the same company I was working for when I gave my original interview.

I was promoted to a more senior position after the original interview.

What is your annual income?

Our annual income for 2024 was around 900k.

My base salary has increased to just over 320k, and my husband’s has increased to 127k. My bonus this year was 98k.

My vested stock in 2024 was 370k, thanks to stock performance. I received a similar stock grant this year, and if the price stays similar, I anticipate getting about the same amount in vested stock this year.

There were also smaller streams of income, like 7k in interest and dividends, 15k in rental income, and 1k from a budding side gig.

How has this changed since your last interview?

The biggest change to our income is the increase in my compensation, which came from a promotion and taking on increased scope at work as well as strong stock performance for my company.

When I filled out the original interview, I had just gotten a promotion and thought I was done climbing the corporate ladder. I had achieved one level higher than the “expected level” for software engineers to reach in my company and thought that I could be comfortable there for the rest of my career.

But life had other plans.

Organizational and project changes at work landed me in areas of larger scope and responsibility. I rose to the challenge and it led to another promotion and achieving a level of compensation I had never dreamed of.

It does mean that I’ve sacrificed a little bit of the work/life balance I used to have.

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

The rental income from investment properties has grown in the last 4 years. The first property has a higher cash flow now, due to a combination of no more mortgage payments and higher rents.

The second property is slightly cash flow negative, which we anticipated when we first purchased it. But overall, our net income from rental properties has grown.

I started a side gig last year but then promptly did not have much time to devote to it (due to my day job). It generated 1k of profit last year, and I anticipate the same if not a little more this year.

SAVE

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

Our annual spending has gone up significantly: 442k for 2024. Eek!

Mint shut down, so I no longer have a tool to automatically categorize my spending. I did my best to cobble these numbers together based on account cash flows and credit card bills (which is where almost all of our spending flows through):

• Housing: 90k
• Donations/gifts: 84k
• Private school tuition: 82k
• Travel: 46k
• Car: 14k
• Everything else (food, shopping, bills/utilities, etc): 126k

What happened along the way to make these changes?

The two biggest changes to our spending come from housing and private school.

Our housing costs started to rise when we decided during the pandemic to purchase a second home. It was outside of the city and made sense at the time to have a place with more space.

The intention was to keep the home for longer, but circumstances didn’t work out the way we thought. The market happened to be ripe for us to sell, so we decided to sell it after a few good years of use.

(We also got a car around the time we got the second home and also got rid of it once we got rid of the house).

Then after we sold the second home, we also decided to sell our primary residence. We were able to purchase our three-bedroom apartment for a steal and raised our family there for the last 10 years.

We went from owning with a dirt cheap mortgage (refinanced during the historic low rates) to renting in a very expensive, amenity-full building.

Being on the cusp of becoming empty-nesters, we decided to pass along the blessings of an affordable home by selling it to a young family. The cost of the new apartment exceeds the old apartment and second home combined, but we decided to splurge for the remaining years the boys were at home, until we figure out what the next phase of life brings, housing-wise.

As for the second largest change, one of our sons has special educational needs and we were fortunate to have access to a private elementary and middle school for free. When it came time for high school, we decided to look around at all our options and the school that we thought would be best for him would not be covered for free.

Our income and assets were such that we didn’t qualify for financial aid.

Lastly, we spent a lot on travel last year as we took a big trip abroad and decided to splurge on that as well. We’ve never been on a trip this big before and not sure if we’ll ever do it again.

The theme of 2024 was “splurge”. Going forward, I expect housing to go up and on top of private school, we’ll add college tuition.

But the car expenses are gone, and I expect travel to be a much smaller amount.

INVEST

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

Our current investments are not too different from our original interview. In terms of taxable investments – they are in VTSAX, VNYTX and some dividend stocks.

In terms of investment properties – we went from one to two. In terms of company stock – while the amount increased, it is still a small percentage of our net worth.

We are holding the proceeds of the sales of the two properties in CDs and high-yield accounts while we figure out what our next move will be.

What happened along the way to make these changes?

One major change is that I used to take part in a 10b5-1 trading plan (automatically selling company stock). This allowed me to convert my stock compensation into other types of investments and not have to wait around for stock trading windows.

But with a large charitable giving pledge we recently made as well as losing our mortgage interest deduction, we decided to start taking advantage of using a donor-advised fund to maximize tax savings, which includes donating appreciated stock instead of just donating cash. So we stopped using the trading plan and started accumulating stock to donate instead.

MISCELLANEOUS

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

It doesn’t feel like we’ve had any financial challenges since the last interview. Life circumstances have changed, income has gone up and we’re on the cusp of the next phase of life.

But managing money feels boring – keep earning, saving and investing. 🙂

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

Not gonna lie, it’s been nice to splurge so much since the last interview. Between the second home, the big trip and the new apartment, I cannot complain.

What’s “worse” is how much more we’re spending as a percentage of our income. But I don’t regret any of it.

I believe that money is meant to be spent, particularly when that spending aligns with your values. And our spending and splurges have allowed us to share more time and memories with friends and family.

With the larger space we have hosted a lot more. With the increased income, we’ve been able to be more generous.

What are your plans for the future?

In the immediate term, our plan is to empty the nest. The next two years will be devoted to figuring out which schools our two boys will go to.

As mentioned above, we made a large charitable giving pledge, so I expect that will curtail our spending in the coming years and even reduce our savings rate (I usually do a mega-backdoor Roth IRA contribution every year, but I will not be doing that in the coming years).

Once we figure out the boys’ schooling, then the next step will be to figure out where we will live for the next decade(s) of our life.

In our original interview, I said I might work for 10 more years, to pay for the boys’ college. Specifically, I am considering leaving my job the year I turn 55 to take advantage of the rule of 55, which is in 7 years.

The major snag in this plan is the fact that we sold our primary residence. If we decide to purchase another place and depending on how expensive it is, I would need to keep working more than 7 years to pay it off before retiring.

According to my forecasting spreadsheet, we should be close to 6M by the time I turn 55. I guess that makes that our new “target number”.

But I think “target number” doesn’t mean much to me anymore, knowing that our previous one came and went and… nothing happened.

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

Regarding work, one piece of advice is to remember that the corporate ladder isn’t necessarily a straight ladder that only goes up. What could look like “stalling” at a particular level or moving laterally could also be a period of preparation.

If you compare my career to that of many of my younger colleagues, you could argue that I’m “behind”. Growing skills for the next level of work doesn’t necessarily line up with when those opportunities come.

And for me, the years I spent at my more junior levels allowed me to be well prepared for when the right opportunity came along.

Money is a tool. It is not an end in and of itself – don’t let it fool you.

It’s fun to talk about (and read about) people’s tips to grow their net worth. And because in the earlier years (especially prior to the first million), we spend so much time and energy on accumulating wealth, it’s easy to forget why we needed that wealth in the first place.

Remind yourself from time to time why you are growing your net worth and most importantly, ask yourself – “how much would be enough?”