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Today I have an update for you from two 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. 😉

We begin today with Millionaire 24.

You can/should read his initial post for specifics before you read this one, just so you have the proper background.

This update was submitted in August 2020.

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

OVERVIEW

How old are you?

I’m 63 and my wife is 53. We’ve been married for 27 years now.

We have no children, just a ferocious 7 lb. Yorkie Poo we’ve had for the past 7 years, and a Golden Retriever we had in the first 8 years of our marriage (I was that dog’s person for 5 years as a bachelor). And we took that Golden with us when we moved to Australia, which was neither simple nor inexpensive.

So you could say we’re dog lovers.

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

We live in an 800 square foot beach cottage a couple blocks from the Pacific Ocean in Orange County Ca

Living at the beach in a no-crime area is paradise. Even in the lockdown.

What was your original Millionaire Interview on ESI Money?

I was M24 back in October, 2017.

The same month I started my consultancy – more on that below.

Is there anything else we should know about you?

My wife and I lived overseas for 15 years. Twelve in London and three in Sydney.

There were loads of envious reader comments about the expat lifestyle in response to my first interview. So I’d like to make a reflection on being an expat for so long.

IMO it has some parallels to being an astronaut: from liftoff until achieving orbit is both exciting and terrifying – visas, new currencies & taxes & bank accounts, new accommodation, cars with steering wheels on the right-hand side, new work & social cultures. Far away from family and friends. It can be tough on a marriage.

But once you’re in orbit life is pretty great – you get to see yourself, your country and the world in an entirely new light. And eat some great meals and drink some great wine!

But when it’s over finally, re-entry is fraught with peril. Your company will have changed, and so did you. My employer got acquired a month after we returned to the USA in early 2012, by an avaricious PC company. It ruined our company’s culture and turned my boss into an obsequious drama queen.

The next three and a half years were lucrative misery until I was made redundant in late 2015 at the age of 58. After that I lost any desire to be a full time employee ever again.

NET WORTH

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

Our net worth is pretty easy to calculate: I take my E*TRADE balance and add $1.0M net for our house (1.25M less $200k loan and $50k selling expenses).

My total balance at the close yesterday was $3.75M, so with the house our net worth is $4.75M. And the house is probably worth a couple hundred K net more than the $1.25M, but I’m never moving so I’ll round down!

In October 2015 our net worth was $3.4M — $2.6M in financial assets and $800k for the house.

What happened along the way to make these changes?

Wow, have we been lucky!

We bought the house at the bottom of the housing market at the tail end of the Great Recession. And that was after we made $450K on our London flat that my wife refurbed.

And it seems a lot of our stocks have gone crazy during the past couple years. More on that below.

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

Sitting tight at 33% cash to see how the country and markets behave in November and beyond.

Most investments seem very speculative in late 2020 and we haven’t purchased any shares since January 2019.

EARN

What is your job?

My original line of work was Sales Operations, primarily International, but I’ve not been a full time employee since October 2015.

In October 2017, after a couple years of doing nothing except playing the harmonica, going to the beach and walking the dog, I got what may have been the best part-time job in America at a small local software company. It was supposed to be a four week consultancy but due to numerous personnel changes it ended up lasting 28 months with no hourly rate change!

What is your annual income?

During those 28 months I was earning $175 an hour and working 50 hours per month — $8750 per month, or $105K per year.

I pretty much came & went as I pleased with no obligation to participate in politics or hierarchy or @rse kissing. Did my job and went home.

Truly a great job that helped me get over the emotional trauma of watching my career ladder turn into a career seesaw at the avaricious PC company.

How has this changed since your last interview?

I was finally let go from the consultancy due to COVID in May 2020, after even lasting two months of the pandemic working from home!

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

The Republic of California, being the center of the gig economy universe, has granted me COVID unemployment relief of $450 a week for 39 weeks, plus whatever money the Feds throw in.

I’m not complaining. And my harmonica playing is really starting to improve.

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

Mortgage, insurance & property tax are $47k a year.

California Obamacare is $21k per year.

And we usually spend another $4k or so per month on a very modest, non materialistic beach lifestyle. (But like most folks, our entertainment and food expenses are way down in the pandemic).

All that may seem expensive to some readers, but it’s cheaper than living in London!

INVEST

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

I’m going to explain our financial assets of $3.75M in a slightly different view than is usual:

  • Post tax cash (high yield & checking) = $650k
  • Cash in rollover IRA and individual 401K = $602K
  • AAPL & AMZN shares = $1.25M
  • MA and BRK.A shares = $655K
  • GOOGL, NVDA and CRM shares = $377K
  • Seven other share investments = $216K

Some of the shares are in an IRA and some in a brokerage account, so they will be subject to different tax rates whenever sold.

What happened along the way to make these changes?

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I’m certain some readers are looking at those share allocations and thinking that I’m foolish about diversification. But I’m not. In fact, I’d say that most of what people have learned about diversification is flat out wrong.

We’re taught to diversify for risk. I disagree! IMO we should be trying to diversify for reward. Like a movie production company does – spread your money around to find some blockbusters!

For me, AAPL, AMZN, GOOGL and MA have been blockbusters. I’ve owned some of them for 15-20 years and earned 1000%+ on all of them.

BRK.A has been solid.

NVDA and CRM are going good crazy in 2020.

And the others are earning their keep – in fact, we’ve only got one investment that has earned less than 100% and it’s a REIT with a great yield and tax benefits.

Admittedly, I’ve made more than just a few mistakes along the way – as I mentioned in the first interview I’m a great buyer and a lousy seller. But I’ve held onto enough of the right stuff for long enough to be in a pretty good position right now. And I don’t believe in mutual funds or ETFs — you’ll never get rich in them.

Some may think I’ve got too much cash. But with bonds having such low yields and capital risk I feel better having cash to be ready for some bargains if the market gets weird after the 2020 elections.

MISCELLANEOUS

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

None. We are blessed.

Seems like every time a door closes another one opens. Which means we don’t have to sell investments and they keep on appreciating.

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

I am extremely fortunate in these crazy times that my marriage is stronger than ever.

The pandemic has made us a better team.

What are your plans for the future?

Stay married and healthy!

I bought most or our shares either just after the 2000 tech crisis or after the Great Recession. If things get crazy once again I will become a buyer again.

Like Warren says, be fearful when others are greedy and be greedy when others are fearful.

—————————————–

Next we have an update from Millionaire 15 who was interviewed in August 2017.

This interview was conducted in August as well.

OVERVIEW

How old are you?

48, 22 years married

Do you have kids?

Still have four kids.

Three older ones that are out of the house (two in last year of college and a younger one in elementary school.)

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

I still live in suburban area in the east coast.

We live far enough from the big cities that we can go visit, but can still live in an affordable community.

NET WORTH

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

In the original interview, I was at the $5 million mark.

As of today, we are slightly above $6 million.

What happened along the way to make these changes?

Since the original interview we have made some changes.

By the end of 2019, we were embarking on a diversification plan, as our stock holdings were very heavy on one stock position. We lowered that one position by 50% and bought other stocks and mutual funds. Additionally, we had saved cash and decided to invest in two real estate properties with the intent to rent.

In the beginning of 2020, we started out well into the $7 million mark. This was my original target goal for triggering retirement. Then the Covid-19 pandemic hit and our portfolio got hit pretty hard. We lost 50% of the stock and mutual fund values.

We also knew that our tenants would likely be impacted as some of them were not working in “essential jobs”, so we made a decision to proactively reduce rents to help them out and to avoid potential for them to break their rental agreements. Although it was scary, we weathered the downturn primarily because we do not carry any debt.

The portfolio has since recovered somewhat but we are still a million below our high point earlier in the year. Ironically, if I had not diversified my portfolio and kept the one large stock holding, I would be looking at being near the $8 million mark today. The timing of the decision to diversify was pretty bad.

On the plus side, the value of our real estate holdings have held fairly strong as demand from people exiting big cities near us has maintained the real estate market in a strong position. We lost only one tenant, but were able to find another one within a month.

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

On the investment side, we have been keeping all dividends in cash. In addition, if I get a bonus at work or any other income source, we are saving in cash as well.

I believe that this pandemic will continue to impact us for at least the next year and I want to make sure that we have a cushion if there is any further market shifts.

Additionally, we have two college students in their final year and I want to make sure we can pay the tuition.

Because of all the uncertainty, I decided to be a bit more conservative on our investing. I also made the decision to stay in the work force. My company is an essential business and it would feel weird for me to quit when we are in the middle of a crisis that requires the products my company makes.

We still have a diversified portfolio and this year we have decided to cut a lot of expenses. Working from home is allowing us to make significant cuts in our expenses.

EARN

What is your job?

I still work as an executive in a manufacturing company.

What is your annual income?

Around $500k, including around $50k in passive income (down from $105k in the original interview).

How has this changed since your last interview?

Our company has grown and I was promoted to reflect the expanded scope. I work with a wonderful team and am very happy there. I have been able to switch to working from home and that has been a blessing.

The total income experienced a decrease from rental income and dividends, offset partially by salary increase.

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

We added rental income with two more units, but this year our overall rental income has decreased.

We reduced the rent to our tenants by almost 50% in order to help them weather the quarantine and to minimize impact of people breaking rental agreements.

We also lost dividend income, as a couple of companies temporarily cut dividends or reduced them as a result of the pandemic.

I also have long-term incentive compensation that I may decide to cash-in this year to further bolster cash reserves, but have not decided yet if I want to do this. It will depend on the timing of raising rents back up to normal.

SAVE

What is your annual spending and how has it changed since your interview? What happened along the way to make these changes?

In the original interview I stated: “We are debt free and our strategy does not include borrowing money for investments. I know some like to borrow to make money in real estate, but I sleep very well at night knowing that I do not owe anything to anyone other than discretionary spending, which we can cut if needed.”

With COVID-19, we did just what we said then. We cut discretionary spend by at least $25k per year. The quarantine has allowed us to cut expenses associated with haircuts, restaurants, vacation trips, cleaning services, lawn services, dry cleaning, extra curricular activities like organized sports, etc. We are saving a lot of money that way and I enjoy the DIY approach we have taken.

My wife was furloughed but we took advantage of that so that we could homeschool our youngest son.

It’s amazing how much money we were spending on things that were unnecessary. For example, haircuts are saving us at least $700 per year. We were spending a lot in restaurants (at least $5k per year) and now I am trying to cook gourmet food at home. It’s fun and it allows for time with family.

On the flip side, I have spent more this year on food, alcoholic beverages and Amazon.com purchases, but the savings more than offset these increases.

INVEST

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

We diversified our portfolio as mentioned above. We also shifted cash into real estate.

Otherwise, the proportions of our investments remain essentially the same.

What happened along the way to make these changes?

One thing we did do was hire a financial consultant to do a review of our portfolio. He gave us some recommendations regarding our investments (such as diversification…) and confirmed for us that we were on the right path.

This consultant wanted to sign a deal with us to “manage” our portfolio for a hefty percentage fee. We politely declined.

MISCELLANEOUS

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

We have had some family situations where we decided to financially help out and I am glad we could help. I also made an emotional decision and bought a nice luxury sports car (pre-owned of course) when I had a perfectly ok daily driver.

I bought the car at 50% off sticker, but it has gone down a further 20%. There are days I kick myself for doing this thinking about the opportunity cost, but other days I am glad I bought it because I really enjoy driving it.

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

I am happy that our sacrifices and hard work have enabled us to continue to grow financially in spite of the economic downturn. I am also happy that we had a contingency plan that we executed this year and as a result our lives have not been greatly impacted.

It has been sad to see so many people brought down by the COVID-19 pandemic repercussions. I know there are many struggling to pay mortgages and rent and I wish there could be something more we could do help out.

One thing I wish I could do is help more people take ownership of their finances and start to go down the path of financial independence. In the last three years I have tried with four different friends when they brought up the topic and none of them have taken my advice. It makes me sad to see them struggle make decisions as simple as fixing a car versus an A/C unit in the middle of the summer because they do not have the cash flow (even though they make good money).

I know politics is not something you do in your website, but the current situation where people from the extremes in both sides of the political spectrum are screaming over each others heads makes me very anxious. I know we have more in common than differences and it pains me to see the direction we are taking with intolerance and lack of morals and decency.

What are your plans for the future?

I am 48 and current goal is to work to 50 and then evaluate retirement.

Working from home these days is really not a burden on me and I don’t feel I am missing out on life, so happy to continue to earn a good salary.

If at 50 I feel like it, I will retire. No rush and no pressure.

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