Millionaire Interview 359 – ESI Money

Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.

If you’d like to be considered for an interview, drop me a note and we can chat about specifics.

This interview took place in September.

My questions are in bold italics and their responses follow in black.

Let’s get started…


How old are you (and spouse if applicable, plus how long you’ve been married)?

I am 47 and my wife is 46.

We have been married for 16 years.

Do you have kids/family (if so, how old are they)?

We have three kids, aged 15, 13, and 11, and a dog.

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

We live in the inner suburbs of a large metropolis in the southern United States.

When we moved here 20 years ago, it was a low cost of living area. It is now one of the highest cost of living areas in the country.

What is your current net worth?

Our current net worth is roughly 3.4 million dollars.

It feels weird even writing that.

What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?

Our assets are mostly in low-cost index stock funds in taxable and non-taxable accounts (401k, Roth 401k, Roth IRA) and some company stock from an employee stock purchase program (ESPP) and restricted stock unit (RSU) program.

Our home is likely worth much more, we bought it 11 years ago, and I haven’t adjusted the value much at all.

Our only debt is our home mortgage, which is at $89,000. With no change to my current payments, it would be paid off in about 4.5 years.

We recently paid off our college loans – hooray!


What is your job?

I work as a manager in the technology industry.

My wife is a writer. She has run her own business as a freelance writer since before our children were born. This has given her and our family an incredible amount of flexibility.

What is your annual income?

My salary with bonuses is roughly $240,000. It is fairly stable.

My wife’s business generated $12,000 in revenue last year. It varies between $10,000 and $20,000 per year with expenses of less than $2,000.

Tell us about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?

My first job was as a software developer out of college. I made $55,000, which seemed like so much at the time. After a few years, I transitioned into a management role and have changed responsibilities several times. I have been with the same company the whole time, which is like a unicorn in the technology industry.

I am happy with my salary now, but surely could be making more elsewhere. I have turned down higher paying positions at other companies several times because I appreciated the flexibility my employer provided me with work-life balance.

In my performance reviews and goal setting, I always made sure that my manager was very clear on what my goals were, and what would exceed those expectations. I made sure when I exceeded those expectations to make sure my manager and my manager’s manager knew about it. Usually I would publicize it as an accomplishment on a company-wide post as well.

I have almost always received above average performance ratings, but would not say that I am a super-star performer. At my age, the super-star performers are CEOs and CFOs.

My wife worked a standard 9-5 job when we met. She didn’t love it, and we knew that she wouldn’t keep the job once we started having kids. So, she proactively started her own business, at first as a side-gig, and then eventually quitting her day job.

When my wife began her business, she had to really search for clients and took almost every job that was available. After doing a great job and building up her portfolio, almost all of her business comes from referrals. She can now be extremely picky about which clients she chooses, generally preferring the ones that are easy to work with and pay higher rates.

She can ramp her workload up or down on a monthly basis depending on what else we have going on as a family. This has allowed her to stay home with the children, volunteer a lot, and generally provide a very stable home life for us all.

What tips do you have for others who want to grow their career-related income?

I think the technology field is a terrific place to grow a career with great income. There never seem to be enough software engineers, and it is one of the few disciplines where you can grow your career in the non-managerial or managerial paths. Having so many options gives the employees great leverage over their employers for salary, working conditions, and benefits. I regularly recommend software development and engineering to high schoolers.

At the same time, I am also super impressed with my wife’s business. She has a great hourly rate to do something that she enjoys. She followed her passion and turned it into money and flexibility. I believe that good writing is also something that is always in demand if you know where to look. This is a good opportunity for side-gig income.

What’s your work-life balance look like?

Amazing. Even before COVID, I worked much less than my peers at other companies. My job didn’t have an hours worked requirement, just a task requirement. I tried to get things done efficiently. This has allowed me to volunteer for many of my children’s clubs and activities, be on local bond committees, and other community involvement.

After COVID, I work exclusively from home which has provided me with the opportunity to do fun things even between meetings. My wife works from home during the day as well, so we often spend time together doing fun activities – watching a movie, going for a bike ride, taking a walk, or doing a puzzle. I feel almost semi-retired.

Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?

Not direct income, but our assets’ capital appreciation is now equal to my job income.

I have been wondering if I should look into alternate streams of income (like real estate syndication), but index funds are so easy.


What is your annual spending?

I always “pay myself first”, so I include those payments/deposits to savings and investing accounts in my spending categories.

The total comes out to around $198,700.

However, if I take out the savings and investing categories, it works out to $116,400 of annual spending.

What are the main categories (expenses) this spending breaks into?

Here is our 2021 spending, which is pretty typical. My categories aren’t exact; I classify all Costco purchases as grocery, for example, even though we buy a lot from there that isn’t food.

Do you have a budget? If so, how do you implement it?

We have a loose monthly budget, tracked in a Google Sheets spreadsheet. I created it and monitor it. My wife does most of our spending, but she has a general idea of what we should be spending per month.

I am sure we could spend less, but this is a great time to be doing fun things with our children, so we tend to splurge on kids’ activities. Our spending on kid activities has definitely gone up as our kids have gotten older.

The majority of our spending is on a couple of credit cards, which we always pay off every month. I can pull that into Mint and it automatically categorizes the spending (with reasonable but not perfect accuracy) and I use that to fill out the Google Sheets spreadsheet. If I notice our spending is out of line with what we planned, I let my wife know and we review that together.

What percentage of your gross income do you save and how has that changed over time?

I save about 40% of my gross income. I have always prioritized “paying myself first”, by maxing out my 401k, my Roth IRA, and my Employee Stock Purchase Program, having those directly deducted from my paycheck before it ever hits my checking account.

As I’ve gotten older, I’ve added the Health Savings account and 529 college savings plans to this.

We also set aside around $10,000 for charity.

Once we’ve contributed to that, I feel very comfortable spending every last penny of the remaining money without any guilt.

Paying myself first has allowed me to keep my savings rate consistent over time.

What’s your best tip for saving (accumulating) money?

Pay yourself first by deducting from your paycheck before you ever see the money.

I took the approach of maxing out my 401k and Employee Stock Purchase Program with my very first job out of school, while I was still used to living like a broke college student. I also had an amount directly deposited from each paycheck equal to maxing out my Roth IRA contribution.

As my income has grown, I have continued to max out those deductions before I ever see the money to spend. This has allowed be to increase my lifestyle and budget while still having a very high savings rate.

Another important one is to stay married. Divorce just destroys accumulated savings. That means both choosing the right spouse, and being willing to grow and compromise.

What’s your best tip for spending less money?

During my earlier years, I saved a lot of spending by getting a lot of credit card bonuses, and using those for airline travel and hotel stays. As a busy father, I don’t chase those as much anymore, but you can get some great values there.

Avoid buying new when you can. We have always bought used cars, usually around 3 years old just before their warranty runs out. Then take them to a mechanic, get everything fixed while still under warranty, and you’ve got a practically new car for a fraction of the price. We also like to buy used furniture off Facebook Marketplace and Craigslist. The quality is often way better than what you can get new anyway.

One area I have avoided is credit card interest. That always seemed like a huge waste of money. Pay off your credit cards every month or don’t use them.

What is your favorite thing to spend money on/your secret splurge?

Our kids are involved in a lot of activities.

We spend a lot on things like scouting, sports, debate club, and guitar lessons. It seems to bring our kids joy and keeps them busy and happy. Plus they are learning important skills.


What is your investment philosophy/plan?

I invest in low-cost set-and-forget index funds. I have learned this the hard way.

When I first started investing, I tried picking stocks with almost comical failure. I followed investing gurus and bought and sold with regularity. I lost a ton.

I started reading financial blogs, including the precursor to ESI, which clued me in to the value of low-cost index funds. That was so eye-opening for me. All my investments – retirement and non-retirement, taxable and non-taxable, HSA and 529 college funds – are all in low-cost index funds.

What has been your best investment?

The low-cost index funds have had great returns over the past 20 years.

What has been your worst investment?

Individual stocks have always been awful for me.

But I haven’t bought an individual stock in more than 15 years. I learned my lesson.

What’s been your overall return?

I have reasonable records going back the past 16 years or so.

In that time, my portfolio has a 6.3% annualized return rate.

How often do you monitor/review your portfolio?

I add up my net worth once a month, which includes a review of my portfolio.

But I rarely, if ever, adjust the portfolio since it is just low-cost index funds.


How did you accumulate your net worth?

Both my wife and I went to college and came out of college with slightly negative net worths due to student loans.

Neither of us have inherited any money.

Both of us spent well below our means, saved our money, and invested in low-cost index funds. The power of compound growth over time is amazing.

What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?


The pay yourself first philosophy eliminated any need for me to think about saving as whatever is leftover after spending.

I don’t make more than most of my peers, but I am sure my net worth is higher than most of them. And it isn’t due to any fancy investing, it is because I save a much higher percentage of my income.

What road bumps did you face along the way to becoming a millionaire and how did you handle them?

There were of course some minor blips in the market in 1997, 2001, and 2008. They didn’t feel so minor at the time though and it felt like the bottom was falling out of all of my savings. But I didn’t panic and the markets eventually recovered.

Having insurance (home, health, auto, life, disability) has enabled me to avoid any potentially disastrous situations.

Staying employed, by being in an industry that is growing and performing well, has also been helpful.

Marrying someone with similar financial perspectives and goals was extremely important.

How do you track your net worth?

I started tracking my net worth consistently in a spreadsheet about 16 years ago, and now update it every month.

Seeing the graph go up and to the right is motivating and helps me visualize where my assets are.

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

Just more of the same right now.

I am still working at my job and angling for excellent performance reviews to turn into good raises. I will keep my savings rate high with those raises.

And my wife continues to find higher paying clients and drop the lower paying ones.

Do you have a target net worth you are trying to attain?

I don’t have a target net worth, but I do have target amounts for my retirement and non-retirement investment accounts for what I would consider Financial Independence.

Our annual spending is roughly $120,000. So, based on the 4% withdrawal rule, I would like to have 25x that amount, or $3 million in our retirement accounts.

Since that money is generally only accessible at age 59.5 (I know there are exceptions for Roth contributions and rule 72(t)), I also want to have enough in my non-retirement investment accounts to cover $120,000 of annual spending until I reach age 59.5.

I am guessing that will be in 2-5 years, and something like $3.5 to $4 million, excluding our home value and 529 college savings funds.

How old were you when you made your first million and have you had any significant behavior shifts since then?

I was 36 years old when our net worth finally crossed $1 million. So, it took 14 years of earning.

We hit our second million just 6 years later, and our third million just 3.5 years after that, so it has been amazing watching our growth accelerate.

We haven’t really changed our behavior much. We still buy used cars and eat at home as much as possible. We do spend more now on time-savers – we pay someone to take care of our yard or do more complicated home repairs rather than doing those things ourselves.

From a saving perspective, I shifted my 401k contributions to Roth 401k contributions.

What money mistakes have you made along the way that others can learn from?

Stop trying to outsmart the market. There are plenty of professionals who play this game for a living and even they can’t do it.

Just buy low-cost index funds.

What advice do you have for ESI Money readers on how to become wealthy?

Pay yourself first.

Be patient. Time is amazing in what it can do for you.

Marry thoughtfully.


What are your plans for the future regarding lifestyle?

I definitely want to retire early.

I like my job, but I love the idea of being able to do more travel, especially internationally.

I hope to be fully retired before my last kid starts college.

My wife enjoys her work and could do it even while we travel, so she is likely to keep her business.

What are your retirement plans?

Financially, my plans are to spend from our non-retirement accounts to keep our same standard of living until age 59.5, and then withdraw 4% of the retirement funds for our yearly spending.

As far as activities, my wife and I would like to do more traveling internationally.

Once all of the kids are in college, we plan to move. There is nothing tying us to our current location; we’d prefer to live in a different climate anyway.

It is possible both of these things would intersect, and we could move and live in a different country; or we could do something like move to a different state, but travel 6 months out of the year. It probably also depends a bit on where our kids go to college.

Are there any issues in retirement that concern you? If so, how are you planning to address them?

Our biggest one, like everyone else, is Health Insurance. However, I was excited to recently read Retirement Interview 36 where the author is using GeoBlue for affordable Health insurance. That seems like an option we will definitely be looking into. Otherwise, we’ll try to reduce income as much as possible and see what we can get from Affordable Care Act Insurance.

We will soon have three children in college at the same time. While we do have some money saved up in 529 college savings funds, I have no idea if it will be adequate. I would prefer for them not to have to take out a large amount of loans. We have encouraged our kids to go out-of-state for college to broaden their horizons. That also means more expensive tuition, and more travel expenses. We don’t have a solid plan around this yet, other than stashing money in the 529 plans.


How did you learn about finances and at what age did it “click”?

My father was an accountant and fairly conservative financially. I learned the basics about balancing a checkbook and saving from him.

But when it really clicked was when I started learning about financial independence, saving for retirement, and minimizing investment costs. That was probably around age 28 or so.

I started learning by reading finance blogs. The precursor to ESI Money had a huge impact on me.

Who inspired you to excel in life? Who are your heroes?

My father. He was a great dad and provider for our family.

I aspire to be as good of a dad as he was.

Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?

  • The Millionaire Next Door by Thomas J. Stanley was life-changing for me. I recommend this book to anyone who ever asks me about finances. It is simple, backed with evidence, and a fairly easy read.
  • The Richest Man in Babylon by George S. Clason helped reinforce some simple but important money concepts. It blows me away that this book was written more than one hundred years ago.
  • Naked Economics by Charles J. Wheelan. A fun book to help understand how money works in the economy and how government policies affect us.

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

Yes, we donate around $10,000 a year to various organizations.

Most of our donations come from a Donor Advised Fund that I contribute to with appreciated company stock. This has been a great way to get high tax efficiency from our donations.

We contribute to a variety of organizations, mainly supporting social causes and education.

More than our money though, my wife and I contribute a lot of time. We both volunteer a lot with our children’s activities and in local community organizations. We both have leadership roles in volunteer organizations. We have found that we both have a lot to offer in terms of talent and time, and can make an impactful difference that way.

Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?

Yes, I have a whole life insurance plan my grandmother bought for me when I was born. While it isn’t an investment I would make, it is pretty much paid-up at this point, so it doesn’t make sense to sell it. The proceeds from that will be passed on to my heirs. Note that the majority of my life insurance is through a different term-life policy that I expect to get rid of once the kids are self-sufficient.

Our current will provides for all of our assets to be equally distributed among our children, but as the kids get older and more self-sufficient, we will probably switch to donating a portion of that to a few charitable causes that we support. One idea was to set up a charitable trust or something that the kids could use to donate to causes. But I haven’t really explored that option much yet.

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