Today we have our latest interview with a reader who has grown their income to at least $100,000 annually.
If you’re interested in participating in this series, please drop me a note.
This interview took place in November.
My questions are in bold italics and their responses follow in black.
Let’s get started…
Tell us a bit about yourself (age, marital status, kids, where you live, etc.)
I’m 47, remarried, and between us we have three kids with split custody arrangements.
So we have a good blend of 1:1 time and family time, and thankfully the three kids get along great & have lots of fun together. Very thankful for that.
We live in in a suburb of a major city in the mid-Atlantic.
What do you do for a living?
I’m a finance executive for a large public company. I’ve been in my field for just over 25 years, and have been with the company now for close to five years.
It’s the 4th company I’ve worked for out of college (more on that later – I think that’s a big reason for my success). I chose the company I work for now as much as they chose me, and I’m planning on it being my last stop before retirement.
I can’t say I’m really passionate about the work I do anymore or the field that I’m in. Having said that, the company is outstanding, the people are great and I know I’m good at what I do. So all in all, it’s a great situation, and a means to an end, which is an early retirement before 55 and the ability to thoroughly enjoy that retirement with family.
How much do you earn annually, and how does this amount break down (salary, bonuses, etc.)?
My compensation is broken down into three main components, base salary, bonus and stock options.
Base salary is $320k and bonus opportunity is up to 100%, or an additional $320k, depending on company performance. Things have gone ok on the bonus front the last few years, so most of the bonus has been paid out each year, and this year is likely to be the same.
The stock options are the real long-term opportunity. I’ve had options with past companies, and have usually been pretty diligent about waiting to exercise until close to expiration or departure from the company, to maximize the potential leverage and upside opportunity. The same plan is in place here. The options are in the money now, but I still feel good about the company’s prospects long-term, so I’m trying to hold them as long as possible to maximize the upside.
My options when they were granted had a rough annual fair value in the $400-$500k range, but with company performance and a long-term hold mentality, I believe the true opportunity at exercise might be 4-5x that number. No plans to exercise any options for at least another 3-4 years.
All-in, my target annual compensation is about $1m to $1.1m, and the options provide for a meaningful upside opportunity from that.
Do you receive any additional compensation/benefits from your employer (401k match, stock options, etc)?
No other perks or benefits of substance from my company.
We have the usual things like a 401k match, but those benefits are all relatively small in the grand scheme of things.
How long have you been working?
Truth be told, I started working when I was about 7, helping my dad as cashier at the little grocery store he owned at the time. I also would sort his checks for him in his tax prep business. I had an affinity for numbers from a very young age, so anything involving numbers, I helped with.
My first real job was at 12 years old, delivering the local paper.
I’ve always had a strong work ethic, which was instilled by both parents. My father was a workaholic by choice, and after their divorce, my mother was a workaholic by necessity.
I took after my father in a lot of ways. He did tax returns and had a passion for cars, owning an auto body shop on the side. A lot of the weekends I spent with him involved long days at the shop just so I could be around him. One highlight for me was searching through the cushions of the cars he’d buy to fix up for coins. I could always count on a couple bucks from each car! I never took on his love for cars, but I did get his penchant for numbers, and I became an accountant as well.
My mother came out of the divorce with nothing, and had a 5 year old to feed with nominal alimony/child support. So she worked as a nurse, and worked a really tough schedule to make ends meet.
For several years, we drank powdered milk, I was on the free lunch program at school, and a lot of our meals were the super cheap/filling stuff like meatloaf & spaghetti.
While she was working, she got her associates degree taking classes at night. She spent many years as an ER nurse, often working the night shift & volunteering for holidays for double pay.
A vivid memory of mine was in 7th grade, where I wanted Air Jordans, like everyone back then, but we couldn’t afford them. So she ended up getting me one of the fake brand pairs of shoes. I remember other kids making fun of me for that quite a bit of school (saying they were “Air Zayres”, a low end department store back in the day), and there’s no doubt as I look back, stuff like that motivated me to succeed. I never wanted my kids to have to experience what I did growing up poor, and that’s been part of my motivation for getting ahead in life.
Things started to turn financially by the time I got to high school, and she started to get a little bit ahead in life. A side note, she never made more than $60k in a year, yet retired about 10 years ago in her mid to late sixties, as a millionaire.
I manage her money today, and she owns her house outright & lives comfortably on her social security, pension and dividend income. I almost have to force her to spend money on the stuff she wants! What she accomplished with her work ethic after being broke & divorced with a 5 year old is way more impressive than anything you’ll hear about me in this story.
There is no doubt that seeing both of them work the way they did instilled a fire in me. I started delivering papers and mowing lawns at age 12. I always did well at school because that was the expectation. She made it clear that I had to go to college to succeed, so school was a focus.
Throughout high school I worked about 20 hours a week, and then in college, continued working part time during the school year & full time all summer. I needed to do that to keep student loans from getting too out of hand, but still came out of college with about $30k in debt.
How long have you earned at least six figures?
Here’s my earnings history beginning from the year I graduated college.
I started in the full time workforce in May 1995 with one of the big accounting firms. My annual salary was $36,000 that year, and I first earned six figures in 2002.
The effects of stock options started to really impact earnings in 2011.
Meaningful promotions happened in 2002, 2008 and 2011.
Late in 2011 I was promoted to an executive role, and have been in basically that role every year since (for three different companies).
From 2012 on, my base and bonus have been pretty consistently in the $500-$600k range, so the excess comes from stock.
What have been the key steps you have taken that have allowed you to earn this level of income?
I’d say three big drivers:
I spent a lot of time on this already. I saw work ethic from both parents, and I’ve had it most of my life too.
I worked part time throughout high school and college. In high school I remember going above and beyond for extra cash. On my paper route, I was always polite to people and would chat with them. It paid off – many customers would give me nice Christmas tips. One lady would give me $50 at Christmas each year!
One job I worked at a mattress store, and I would volunteer to deliver mattresses to customers for cash when my shift ended, rather than have them take them home on their cars. $30 a pop in 1989 was meaningful, and many customers tipped me as well. Once I started full time employment in my 20s, I worked a ton to really try to get ahead.
I spent about 10 years with one of the big accounting firms, and averaged about 500-600 hours of overtime with them. The year I left, I worked 2900 hours, which was way too much.
At that point I was sure to make partner, but the hours were getting to me, and there was plenty of opportunity to do well working for other companies, with less hours. Today I have a better balance. 45 hour weeks are typical, but when a big project comes up and I have to put in 70 hours, I do. Hard work paid off with my parents, and it’s paid off for me.
Being Driven When I Fail
Michael Jordan had a great quote: “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty-six times I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed”. I’m nowhere near on his level at anything, but I love that quote.
My first test in college was a chemistry test. I sort of coasted through high school, never studied much, and just relied on being smart to do well. That first test, I got a 39 out of 100, and the professor wrote “see me” on it.
I didn’t go see her, but boy, that grade ticked me off. I realized the high school effort wasn’t going to cut it, and I worked my tail off to study for that class. Ended up acing the other two tests and getting an A- for the semester, and that was the only bad grade I got on any test in college.
I didn’t get offered a college summer internship with the accounting firms, but that motivated me and I worked hard during the full time job interview process, and had two offers to choose from. The one time I got a bad performance review, even though I disagreed with it, I applied myself so much harder going forward and excelled. Failure should be a motivator to push forward that much harder.
Having Strong Mentors
I’ve been unbelievably lucky to work with some incredible leaders, who I think are just some of the best in the business world. Each time, I realized how great these people were, and I made sure to learn from them and get advice.
The first partner I worked for in my accounting firm told me I should have a goal to double my income every 5 years. If you look at the earnings chart, I’ve been close. He also taught me the importance of communication, work ethic, and integrity, which are essential for success in finance.
I’ve had three other leaders I’ve worked for on par with him, and plenty of examples of how they bettered me. Find excellence in your workplace, and actively learn from those people.
Which of the following career advancing strategies did you employ (if any) and which were most effective: a. Doing well within your current company and being promoted. b. Jumping around from company to company always seeking a higher salary & responsibility. c. Entirely changing your career path from a lower earning field to a higher earning field (going back to school, etc)?
Clearly my path was A. The three most important career advancing strategies for me:
- Working long term for excellent, high quality companies: I’ve worked for four companies in my 26 year career. One role was only a few years because of some issues in my personal life, but by the time I retire, the other three will each have been 10 years or more. I was right about the companies I’ve chosen to work for as well, and right about the opportunities I passed on. I can’t stress enough how important it’s been to work long term for high quality companies.
- Willingness to really go the extra mile: Early on at my big accounting firm, there were about 40 people in my start group. I was fortunate to work on a really big client, and I worked really hard to excel there. Tons of hours, and I focused on delivering great client service, so the client had great things to say about me. It’s hard to differentiate yourself from 40 others, but a few of us did. In my case, so much so that after two years, it led to me getting a 6 month assignment in New York in a specialized capital markets group at my firm. Five years into my career, I applied for our national accounting research group, and took on a two year assignment there. The specialized knowledge I got during those assignments differentiated me, and was a difference maker in landing senior level roles later on in my career.
- Willingness to relocate: When I was younger, I was always agnostic to location. It was about the opportunity, not the location. I relocated twice for special short term assignments, relocated with the accounting firm twice, then relocated again for one of my subsequent roles. So I’ve moved five times total for career-related opportunities, and this maximized my earning capability.
What are you doing now to keep your income growing?
My goal now is to continue to add value to my current company, and keep looking for ways to make the company better.
I’ve always been a stock market guy, and in the last couple years, have started to diversify into real estate, as I think that’s a way to increase my passive income needed for retirement.
Now it’s all about developing reliable forms of passive income to eventually cover the costs of our lifestyle, so that work is a choice, not a necessity.
What are your future career plans?
I’m with an excellent company, and I’m planning to retire there. Depending on how the company performs, that’s probably still 5-7 years out.
My youngest will be in college in 6 years, and I have a good work-life balance at a great company, so there’s no reason to consider changing any of that the next 6 years.
Have you been able to turn your income into a decent net worth (what is your net worth)?
Unfortunately, net worth isn’t where you’d expect it to be looking at the earnings history above.
Currently it’s a little under $2m – more on that in the next section.
Why or why not?
Divorce can take a bite out of net worth when you give up half. Add in alimony, and I’m not where I’d like to be at this point.
I’ve also been passionate about making sure my kids have the best chance for success in life, so their private school costs and 529 plan contributions take a healthy chunk out of my net worth too.
The next 6 years will hopefully change all that – the divorce has been final awhile, the alimony costs are fixed, and my private school costs are starting to go down.
We’re currently around $2m excluding unvested stock options, and things in the future really depend on those options. Our stock has done well since the grant date, so I’m optimistic to add to that number dramatically.
I’ve always set tangible goals to achieve in terms of net worth, like hitting my first million by age 40 (I was 39). The goal I’ve set for myself now is to retire by 55 with a $10m net worth, and an 8% annual return on our stock the next 5-7 years ought to get there.
What advice do you have for people wanting to grow their incomes?
I’ve known since I was 10 years old that I had a gift with numbers. I knew at a young age my best chance for success was working with numbers, and that realization led me to business school and a future in finance.
So I think a key piece of advice is understanding what you’re good at when you’re young, and thinking about how to maximize that to your advantage in your career. I tell that to my kids all the time, to recognize your own strengths and figure out how to make those differentiators in your career.
The rest comes back to the career advancing strategies I used. Work ethic has always been way above average, as has my drive for success.
I’ve been blessed with excellent mentors, but those types of people are out there, wherever you work. Seek them out and learn from them.
Identify the ways to differentiate yourself in your field, and go after them hard.
And one other thing I haven’t touched on – have a positive, can-do attitude. If you believe you can do it, you probably can. I have negative thoughts like everyone else, but I make sure when it comes to work, I need to channel those out and focus on the positive, focus on what I can control and focus on making things better. A positive attitude goes a long way.