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Millionaire Interview 203 - ESI Money 2Just wanted to note that the Millionaire Money Mentors membership sale ends today. You can find details here.

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 June.

My questions are in bold italics and his 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 58 and my wife is 57.

We will celebrate our 35th anniversary later this year.

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

We have five kids. Ages 29, 27, 21, 19, 16.

The oldest two are launched and well established in their own careers. The younger three are in college/high school.

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

We live in the Mid-Atlantic area in a medium sized metro area.

We have lived here 10 years after having moved around the country frequently during a 20 year military career.

What is your current net worth?


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?

  • Cash – $143K
  • CDs – $331K
  • Int’l Bonds – $72K
  • US Bonds – $153K
  • Int’l Stocks – $230K
  • US Stocks – $569K
  • REIT – $23K
  • Home – $416K
  • Debt – none


What is your job?

I am in Corporate Real Estate at the Director level.

My background is in engineering and my developed expertise is managing large scale complex construction projects/programs.

What is your annual income?

$250K Total:

  • $200K total compensation from my corporate job
  • $45K in military retirement pay
  • $5K wife’s tutoring income

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?

I worked a variety of jobs to pay my way through college. I made enough to ensure I graduated debt free, but by the time I did graduate, I had about $300 left in my bank account. So I was debt free and broke!

From college I went into the military where I made about $21K per year as a newly commissioned military officer. This was in the mid-eighties and a new officer today would start at about $68K per year.

The nice thing about the military is there is a very well defined pay chart that shows increases for longevity every two years as well as pay for promotions. This really helps for planning as the family grows with associated living expenses. I stayed in for 20 years and by the time I retired I was making about $113K ($158K in today’s rates).

After I retired from the military, I joined a Fortune 25 financial services company where I worked in the construction management in the corporate real estate department. I was in a niche specialty area that leveraged my graduate engineering education and technical and leadership expertise gained in my military career.

My total compensation started at $150K per year and climbed consistently to a high of about $280K per year by the time I left nine years later. These numbers included base, cash bonus and restricted stock units but not my military retirement pension.

Due to corporate outsourcing/downsizing, I left the mega-corp and became a consultant to a well-known tech company for a couple of years and then moved to a real estate services firm where I am now.

My total compensation has drifted downward in the last five years primarily due to my inability to relocate (by choice) for new opportunities. If I were willing to move, I could increase my income by 1.5X where I am now (at least pre-COVID-19).

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

My career is broken into two parts: military and corporate.

On the military side, the key to success to growing your income in the military is to gain promotions in rank. The military system is an up or out system, so the incentive is to continue to get promoted. Success for me was to work very hard, perform well in the job, take the hardest next job, be ready to move anywhere at any time, have a positive service reputation and build a network at all levels. I was promoted regularly and tagged by my seniors for the most demanding future jobs.

On the corporate side, I built on my strong performance and capabilities gained in the military, but had to adapt to an environment that has no set promotion path. You are really on your own to build your path to success in the corporate world.

My success was to realize no one cared about my prior military rank or experience and to adopt the mindset that I had to re-establish my reputation from ground zero which meant doing tasks that I hadn’t done since I was a junior officer and building relationships. I leveraged my capacity to work hard, and gained a reputation for strong knowledge and performance.

I also was willing to move and that was the key to a promotion and significant pay increase. If you want to grow your career and compensation, you have to be willing to move. I have counseled many folks that worked for me in the corporate world who were frustrated that their careers were not moving as fast as they wanted and the primary reason was they were unwilling to move.

What’s your work-life balance look like?

Overall the work life balance is good. As I write, we are in the midst of the COVID-19 stay at home orders. I work from home normally, but the biggest change is no travel. So my work and life are blended together at home.

Normally I would travel about 25% and work at home the remaining time. This job is the least demanding I’ve ever had, but it is also the least fulfilling. Funny how those two factors are related.

My wife recently took a part time job since we only have one child remaining in high school (we have homeschooled all of our kids through high school). I’ve been able to pick up more work around the house. It’s been a good change for both of us. New challenges for my wife, and a trial run at retirement for me.

I am using this time to evaluate when I’ll retire for good or at least work only in areas that interest me. We are getting close to pulling the trigger on that decision.

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?

My military pension is my only other source of non-career income. I’ve been collecting that for fifteen years while working my second career.

Having multiple streams of income is an area I wish I had developed earlier in my life.

I’ve been risk averse on owning rental property.

We are looking at how to generate other streams of income so we are engaged during our retirement in interesting work and providing extra buffers once I leave the corporate career.


What is your annual spending?

Our baseline annual spending is $69K. That is for everything it takes to run the household and includes property taxes, but does not include income taxes or investment contributions.

Above the line spending varies but includes things like college tuition, significant major purchases, vacations (beyond local travel).

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

Here is an extract from our budget tool showing the last 12 months of expenses:

  • Gifts & Donations: $25,617
  • Groceries: $9,711
  • Bills & Utilities (internet, phones, utilities): $4,739
  • Home (maint, projects, HOA): $4,506
  • Shopping (household supplies, home goods): $4,505
  • Property Taxes (house, cars): $4,161
  • Personal Care (clothing, haircuts): $2,558
  • Insurance (life, umbrella): $2,288
  • Auto (gas, ins, maint, tolls): $2,251
  • Travel (vacations, regional travel): $2,067
  • Entertainment (eating out, video services): $1,961
  • Medical/Dental (copays & gym): $1,890
  • Misc Expenses: $1,389
  • Education (homeschool): $732
  • Business Services (postage): $217

Total: $68,597

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

Yes, we started budgeting about 8 years ago so we could understand where every dollar was going in our spending. The goal was to pay off our house early and get to FI to lay-off proof our lives.

Prior to implementing a detailed budget, we always made sure we paid off our credit cards in full each month and were mostly debt free (except for the house) and prioritized saving, but we didn’t really know where the leaks were in our spending.

Moving to a budget was miraculous in helping us drive our spending down, and savings/investing way up.

We work together to create the budget. We both monitor it via an app that gives us instant visibility to spending against budget line items. We review it at month end to discuss how we did and any changes to make going forward.

At the end of every year we do a big finance review where we look at investment performance, goals for the next year, and changes to our financial plan we want to make.

Working together to articulate and agree on the common goals and outcomes has been instrumental to getting to FI. I work the strategic side (earning and investing), and my wife works the tactical day-to-day (spending) and we each understand how the others’ efforts contribute to the goals.

Together we have significantly grown our net worth; increasing by nearly $1MM since we started this process. Of course, the market has been very kind these past 8 years!

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

The average for the last 8 years is about 25%, with the trend going up over the last few years as we get closer to retirement.

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

We are simple in our tastes and desires. We have tried to spend more on experiences as the kids have gotten older. We did a family trip to the UK last year and had a trip to the west coast planned for this year until the COVID 19 pandemic changed those plans.

Occasional weekends away are always a nice splurge for my wife and I.

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Otherwise we like to spend money on quality food for home cooking and occasional eating out (or carry out these days) to mix things up.


What is your investment philosophy/plan?

My investment philosophy for the first 27 years of my career was to pick “winning” mutual funds (Fidelity Magellan anyone?) and contribute to those regularly.

We maxed out IRAs but did not have access to the Thrift Savings Plan (military 401K) until the end of my career.

Once I moved to the corporate world, I maxed out my 401K each year and contributed what I could to IRAs until I hit the income limits.

About 8 years ago, I discovered Bogleheads. That was life changing in my approach to investment philosophy. I follow that approach now and it has greatly simplified my decision making and anxiety around picking the best funds.

My philosophy is to select an asset allocation I can live with so I don’t sell in a panic. That was tested recently as the market dropped 30% due to COVID 19. I not only didn’t sell, I bought on the way down and back up.

What has been your best investment?

The best investment by far has been my wonderful wife. Without her, I would not have been successful in my career, investments, and life! She is my biggest supporter and together we make important decisions that have had huge positive impacts on our life.

My next best investment was graduating college debt free and then staying in the military for a full career. Having the pension in my forties and military health insurance has been hugely important to building our wealth.

I almost got out of the military a couple times because I thought the grass was greener on the other side, but thanks to the wise counsel of a family friend, I stayed in until retirement. That was the best decision I ever made!

What has been your worst investment?

Probably buying too many cars early on in our marriage. Nothing overly extravagant, but I didn’t realize the drain on our future finances that cars would have.
I read an article in the WSJ about six years after we were married that explained the negative impacts that buying a car every few years has on building personal wealth. After that, we did a great job buying cars (albeit brand new) and holding onto them for 10-12 years.

Later we realized buying a slightly used car for cash was even better.

What’s been your overall return?

I don’t calculate investment return. Rather, I calculate net worth annual growth rate; which is 12.6% over the last eight years that I have been keeping detailed records. This includes investing and savings contributions as well as home equity (which only increase at about the rate of inflation in our area).

My goal has been to have 25X my expenses as a gauge for retirement readiness. We are much greater than 25X now and that is before factoring in social security.

My focus is on asset allocation and the risk I am willing to take, and the fact that I have moved most investments to low fee index funds which consistently perform to the market average rather than trying to beat the market.

How often do you monitor/review your portfolio?

Too often! I use a dashboarding app that gives near real-time updates to my portfolio. It is helpful to see how things are doing during market volatility, but at the same time can cause me to focus a bit too much on finances and not enough on life (my wife keeps me in check!).

I do a quarterly manual calculation of my net worth and portfolio review using a homegrown spreadsheet. This forces me to go into my accounts, verify access and update key information as needed.

I also use this time to update my wife on our quarterly performance. We look at net worth growth, cash flow, and over all measures to FI. We crossed the FI threshold (25X expenses) in 2017.


How did you accumulate your net worth?

We grew the gap between our income and expenses, and then saved and invested that money consistently over many years.

We’ve had no inheritance or windfalls.

I would also add that we have been consistently generous. As people of faith, we believe in faithful giving and seeing the principle of sowing and reaping come to pass in our lives.

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?

It is really all three. We have always saved and invested no matter how small and then increased that as our earnings increased.

If I had to pick the top item, I would say saving. If you can’t save, then investing won’t happen.

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

I would say not really understanding how to become FI early enough in my career.

I plodded along saving and investing, but it wasn’t until a few years ago that I plugged into the resources that really helped us grow our wealth.

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

I continue to max out my 401K, contribute to a back door Roth, and analyze my asset allocation for retirement readiness.

I’m at 55/15/30 Stocks/Bonds and am looking at de-risking down to 40-50% stocks as I enter retirement to reduce the sequence of return risks.

We are also looking at social security draw strategies.

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

$2MM in investable assets would be nice, but the reality is we have enough.

We are making decisions now as to whether to pull the plug and just retire soon. I am suffering from the “one more year” syndrome, but it is becoming more apparent that I am trading valuable time for a job and the benefit of that trade no longer favors continuing to work.

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

I was 52 when I hit $1MM net worth (including the house value).

I was 54 when I hit $1MM in investable assets.

We have continued to save aggressively.

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

Bought too many cars and houses that were bigger than needed.

We recently downsized from a 4,000 SF home to one about two-thirds the size to help become debt free and free up cash for investments.

We also did not have a budget for the first 27 years of our marriage. As I stated earlier, we were really good about minimizing debt, but we didn’t realize how much more we could have saved if we had been aggressively reducing waste in our monthly spending earlier in our life.

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

Learn as much as you can about personal finance and develop a strategy to grow your wealth. It is a skill that everyone can develop, but it takes effort and knowledge.

Start as early as you can to take advantage of time to work for you in compounding growth.

Some other thoughts:

  • Marry well and stay married to one person. Divorce is expensive.
  • Pay cash for cars.
  • Don’t overbuy on house size.
  • Continue to grow your work skills to grow your income.
  • Invest in index funds to keep it simple.
  • Don’t time the market.
  • Don’t try to get rich quick. Slow and steady over a long time is the key.


What are your plans for the future regarding lifestyle?

We are the typical sandwich generation. We are close to being able to retire, but we still have kids at home and aging parents to care for. Our immediate future is tied to finishing parenting well and being there for my parents.

Although I may stop working soon, we don’t see us making a major change for the next 5 or so years as far as location or downsizing our home.

We do see ourselves traveling more now that grandchildren are arriving and our kids at home are more independent.

What are your retirement plans?

Eventually, we’ll downsize and move from the area. We are in a very busy suburban area and would like to move to a smaller sized town that is not so hectic. We are beginning to explore areas and options.

We would like to slow travel the US, and travel to visit kids and grandkids. Maybe a Class B RV?

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

The biggest area is health.

The job is taking a toll on my health, so I am making changes to preserve my health including possibly retiring in the next 6 months or perhaps do some part time consulting to stay engaged.


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

I’ve always been a good saver and a hard worker. That began early in my life when I started working my first job at 15.

I didn’t really learn about investing until I was in the military in my mid-twenties. There, some of my peers introduced me to the concept of investing. I heard about index funds way back then but everyone was all about beating the market. If I had only known to invest in index funds then, I would likely have been further ahead.

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

My Dad is the biggest influence in my life. He modeled hard work, integrity, and perseverance. Those attributes have served me well in life.

I have an Aunt who inspired me to dream big and not to settle for mediocre. Her story of dreaming and doing big things is inspiring. She is still very influential in my life today.

My maternal Grandfather always made me feel like I was special and thought the best of me and people in general. He was the eternal optimist.

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 (book) – This was the first book I found that really described the characteristics of normal millionaires.
  • Can I Retire Yet? (blog) – This is the first blog I found that gave a checklist to help determine readiness to retire.
  • Financial Samurai (blog) – I just like the unique story and perspective that Sam has on finances. I don’t necessarily follow his advice and approach, but he has interesting ideas.
  • Bogleheads (forum) – One of my go-to resources for getting sound financial advice.

That’s more than three, but those are some of my top favorites.

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

We give 10% to our church/ministries and another 1% (or so) to those in need in our lives.

We try to live by the principle that “to whom much is given, much is required.”

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?

We’ve told our kids that we would help them get through college debt free and that by doing so we were spending their inheritance early to help them prepare them for life. So, we never planned to leave an inheritance to our kids.

But as we look at our finances and run some models, it looks like we’ll have a fair amount left at the end of our lives. So, we need to think about what an inheritance would look like and how it would be best distributed.

We’re thinking about things like: contributing to their IRAs or setting up 529 accounts for the grandchildren as they start arriving.


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