Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
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)?
We are 49. We have been married for 18 years.
Do you have kids/family (if so, how old are they)?
We have 16 year old twins.
What area of the country do you live in (and urban or rural)?
Urban area. A low cost of living mid-western city. We live in a middle to upper middle class area in the city. We are still living in the same house that we bought when we moved here when I got my job.
What is your current net worth?
Not including kids two 529 plans, we are worth roughly $2.2 million.
We have saved $420K in two 529 plans to send the kids to college without touching anything else or having them take loans (assuming nothing crazy happens with the market!).
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?
All our assets are in one way or another in the stock market invested in low cost index funds. Pretty simple – Vanguard S&P500, Total International Index, REIT Index, GNMA and Intermediate Bond Indexes.
- $600K in my 401K
- $150K in my wife’s traditional IRA
- $50K in two Roth IRAs
- $800K in a taxable Vanguard Account
- $200K in company stock
- $120K in cash in CDs and money market checking account
- $10K in an HSA
- Our house valued at $220K on Zillow is paid off
I drive a luxury environmentally friendly car that is two years old, that I really shouldn’t have bought, but what the heck. It is worth about $40K today on KBB; I bought it new, but I paid cash for it. It looks good parked next to millennials’ BMWs and Audi’s in my company parking lot.
We have zero debt.
What is your job (type of work and level)?
I work as a director level scientist for a Fortune 500 company
What is your annual income?
My base salary is about $180K and I have about a 25% bonus that is variable based on my performance and company performance. I also have about a $30K in stock awards every year that is also highly variable. Some years are great where the awards can double. Some years are not and drops to $10K. However, I didn’t make this much always. I stated at $70K and a 10% bonus and no stock awards. I didn’t hit a six figure base salary until about six or seven years into my career. Over the 16 years, I have more than tripled my salary. Not too bad for the E of ESI. 🙂
How did you grow your income so high?
I’m an immigrant, came to the US with $500 in my hand, a suitcase and a full scholarship to a top 25 college. I went to graduate school in the sciences, worked my butt off during the time and graduated with a PhD with exceptional credentials that led to a job in a fortune 500 company. I have been working there for 16+ years in technical roles.
I met my wife in college and we got married in graduate school. I stayed with the same company, same department and have resisted offers to move to other companies or roles. I am not sure the grass is always green on the other side. I am not the smartest guy in the room, but am always the hardest working guy. I always worked harder than my bosses and peers and made myself indispensable. I am the first to come in and last to leave and focused on improving my technical skills and learning new things that are useful in my day job (At night, I read and learn about personal finance and investing). All these lead to building a reputation as someone who delivers on the promises on time. Those lead to frequent promotions in the scientific ranks that gradually increased my salary.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
The main source is still my salary. My wife works part time teaching and brings in about $10k. Our taxable accounts brings in about $15k in dividends (mostly from the company stock and REIT Index), but we reinvest all of it.
What is your annual spending and what are the main expenses you have?
This is an area where I have not paid too close attention. I track our accounts using Mint and Personal Capital, and use cash back credit cards exclusively for every possible expense. But, we have never made a formal budget. Every few months I look to see if my cash balance is bigger than it was a year ago. If it has grown, I invest the money. If dropped, I try to hold off on discretionary expenses. Last year according to Mint, we spent $90K, including $13K on home improvement projects.
What we do is we buy things that we need. Not things that we want (except my luxury car). We cook from scratch and only go out to eat for special occasions like birthdays and anniversaries. We go to nice restaurants, but never order appetizers or drinks. Maybe share desserts. Since I’m an immigrant, we love ethnic food and you can have wonderful dinners out at ethnic restaurants for a fraction of the money paid at a fancy restaurant. We shop for clothes at Kohl’s, with their great discounts and we stack them. Our early summer vacations were to visit relatives/friends where we got to stay for free. We never had cable. We are the last to get the new flat screen TV or the iPad. Actually the iPad is Apple refurbished! We do have Netflix and Amazon Prime though.
We have taken some wonderful vacations in the Caribbean, Europe, and Asia when we got great deals. We are looking for deals all the time as we love to travel.
How did you accumulate your net worth? Also, please share any mistakes you’ve made along the way that others can learn from.
My goal has always been to live off half of our base salary and invest the rest and any other extra income like bonuses and stock grants. I have to say that I have never achieved the half goal, but I’ve gotten close. Our annual savings rate has always been over 40%. We also bought a house with a 20% down payment (with the money coming from a grandparent and a signing bonus at work and the money we saved in graduate school) and a 15 year mortgage that we refinanced later to a 12 year mortgage. Then we paid it off within 9 years and we still live in the same house.
The biggest contribution to our net worth is my income and our diligent savings every month. We continue to invest every month regardless of what the market does. We start by maxing our 401Ks and IRAs and then investing in taxable accounts. We started by putting in $100 a month 20 years ago in a taxable account and it is up to $5000 a month now. If I get a pay raise, most of the after tax increase goes to the investment account. With my increasing salary, our lifestyle has not crept up. I have been doing a back door Roth since they became available. Monthly diligent investing over 16 years allows you to build a nice nest egg, especially with market tailwinds. Compounding is a beautiful thing, when you are an investor.
Early in my investing days, I put money into some balanced funds and target retirement funds. They have too much turnover, too much capital gains, and they keep too much cash. I really should have stuck to index funds. I also didn’t pay much attention to keeping my dividend earning funds in tax sheltered accounts and others in taxable. I should have paid a little bit more attention to tax strategies, but, I was too focused on building the nest egg.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
Start early. Start today if you haven’t already. If you have $50, invest. Invest regularly. Dollar cost average. Make the investment automatic. Use credit cards for convenience. Make sure you and your spouse have the same financial values. A home is a comfortable place to live. Not an investment. A car is something that gets you from point A to B safely, not something to show off (ok, I broke that rule!).
What are you currently doing to maintain/grow your net worth?
I still invest monthly and maintain the same aggressiveness. I have 85% stock and only 15% bonds and have no plans to change.
Do you have a target net worth you are trying to attain?
Maybe I’d like to get to $4 million. We just don’t know. I want to get to a point where I can draw maybe $100k off my portfolio indefinitely adjusting for inflation and without touching the principal. I’d like to leave as much as possible to my kids.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
We’d like to travel and take it easy. My main thing is to be financially independent. My industry is fickle. So, if I get laid off or if work becomes miserable, I’d like to have the ability to walk away and not worry about finding another job. I don’t want to live like Mr. Money Mustache or at the other extreme go on luxury cruises. Just maintain our current modest yet comfortable lifestyle.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
I want to be in a place where my money works for me so I don’t have to.
Don’t Miss a Post
ESI Money is about helping you grow your net worth. The path to get there involves three simple steps starting with the letters E-S-I. You can read more about the site, the author, and keys to becoming wealthy here.
You can sign up to receive ESI Money articles via email or by RSS. For email newsletter subscriptions or RSS updates updates, visit this link.
Comments
Mrs. Adventure Rich saysAwesome interview! This is a great example of sound principles (saving each month, investing early, no flashy cars and buying an affordable house) put to practice. I found myself nodding along as I was reading this article. Thank you for sharing!
Reply
- PhD on Fire says
Thanks. It was fun to look back and see the growth. There were some rough years to stay the course 08, 09, but glad we did.
Reply
What a perfect ESI story. Do all 3 things, earn, save, & invest, and you can accomplish great financial things. Well done Millionaire Interview 12, thanks for sharing your story!
Reply
Great post! Spend less than you earn and aggressively invest the rest! Great job on this interview! Really agreed with everything here. Thanks for sharing!
Reply
- RetireSoon says
Almost boring how simple it is 🙂
A couple take aways for me:
– pay yourself first and no budget is needed when you have a FI focus and spend accordingly (but not nesseccarily “cheaply”)
– $220k house value … I’d love to see the impact of staying in an “inexpensive” house had on networth. I’m guessing little appreciation on homes where they live (and $200k expense are low vs a $500k house) but sp500 has been on a tear.
– $420k in 529 … that’s a lot and maybe a multigenerational investment which is great.
– it wasn’t specifically stated but I think they started earning later in life based on immigration to US later? They could be have another $1M networth if they started working / saving like many of us born in US?Great interview and an impressive stick to a plan story to hit an impressive networth with college paid for!
ESI, I always look forward to the message in my inbox saying a new $M interview is awaiting.
Reply
- PhD on FIRE says
Thanks.
You are correct re housing prices. We paid 195k for the house in a very middle class neighborhood with good schools 17 years ago. I think it was best to buy a cheaper affordable house here than to leverage and buy a more expensive house and count on a boom.
About the 529 as we just finished the first college visits with the kids – if they go to private schools, we will spend it all. 60k+ for a private school. The good State U is about 20k+ as well. My goal is not to let kids have any loans. So, if they chose careers in law, medicine or business, I’m hoping to pay as well. We won’t be eligible for scholarships.
Because I missed a couple of years after high school taking SATs from outside the US and figuring things out and a long 5 year PhD, I didn’t start working for real until I was 32. But, grad school gave me stipends of about 12k per year and my wife worked and earned about 25k/ yr so we never had any loans. We saved then and used the savings for the down payment on the house.
Reply
- RetireSoon says
– it wasn’t specifically stated but I think they started earning later in life based on immigration to US later? They could be have another $1M networth if they started working / saving like many of us born in US
… this was intended to be a compliment that you started later than many of us and have a great networth w a later start. I hope that came through.
Reply
- PhD on FIRE says
No worries. I took it as a compliment.
Thanks for the kind words.Reply
- Paper Tiger says
The 420K in the 529 is for two children, or ~210K each. I’m about to send my only child off to college this fall. If they want an option to go out of state to a decent college, you are easily looking at 50K per year so this amount is right in line with expectations for each child. Staying in-state easily cuts those costs in half.
Reply
I was so blown away too!!! 200K for each child is amazing. That’s pretty much the house mortgage per child. Excellent parenting!!! My husband’s education was paid for by his parents and the total for his 4 years in state was 50K as well. I wouldn’t think you would need 200K unless it’s a high cost private school but the more the merrier!
Love these in-depth interviews!! Thank you ESI!
Reply
- Jeff B. says
Being in a cheaper house is cheaper property taxes and cheaper maintenance. My wife had a boss that tried to live in the smaller house and just kept renovating to keep the wife happy. The kids got old enough he finally caved and bought the $1M house.
Reply
Millionaire 12, there is so much good stuff in your interview, but I want to comment on one very small item:
Dining out.
We also find that the “local ethnic” restaurants offer so much more value for the $$ than the more traditional “fine dining joints.” We go out once per week on a date night (Kid 4.0 gets to come along) and our favorites are usually Vietnamese, Thai, Japanese, Mexican and Peruvian.
Typically a meal for three ends up under $40.00, with no alcohol but sharing a couple of deserts. (Yeah, the kid eats a lot!)
Thanks for doing the interview!
Reply
- PhD on FIRE says
Awesome! That is definitely be part of my FIRE toolkit! Glad you discovered the secret as well!!
Reply
- Paper Tiger says
MI #12, congrats and really nice job on what you have accomplished. You are the shining example of common sense discipline that is needed to execute on smart goals and working a well thought out plan to achieve FI.
Reply
- Jeff B. says
We don’t really have a budget either. We save aggresively and if there are months where we overspend and I can’t save as much, we try and ratchet back the next month, but we are well into FI and are just trying to get through the next 3 years until I get vested in my pension. Wife vests next year and we are going to try and stick it out til 2020.
Reply
Awesome interview – I love your comments on work ethic and look to apply the same principles in my life. “I might not be the smartest in the room, but I’m the hardest working in the room.”
Nice work on accumulating great wealth.
Reply
- Vaneita says
Great interview! Thanks for the encouragement…you made my Monday.
Reply
- Dave says
You have an inspiring story. I love hearing about people who come to the U.S. with very little and become highly successful. Your story truly is the American Dream. Keep up the great work. I am confident that you will reach your goal of retiring with $4M if you keep saving and investing.
Reply
- PhD on FIRE says
Thank you very much for the nice comments. I think this is what is great about America, where a poor immigrant kid without knowing anyone, any connections, any money (although I did have a scholarship) and make it. I would think in the course of my career here, I contributed to the good of the country and society and human health through my work.
Reply
- Natasha says
Very impressive and inspiring! There are many takeaways, will follow your lead and reach my goal of being a millionaire too.
Reply
- Jason says
Awesome interview and an inspiring story. As a fellow Ph.D. I love this. I don’t think I will be where you are when I am 49, but I should be a millionaire.
Reply
- Laurie@ThreeYear says
This is another inspiring interview. We have six years until our oldest is 16. Would love to have that much saved for him for college by then!!
Reply
- Kumbi says
This is easily the best interview I have read so far on this platform. How hardworking, mixed with common sense and discipline can enable anyone to become financially independent. I found myself nodding my head to every sentence in this interview. I lift up my hat to millionaire interview 12
Reply
- sfbernal says
Simply superb and thanks for sharing. Very inspiring. With 2 kids who are 7-10 years from college your 529 numbers are extremely impressive and I need to think about tucking in more there. I live in a highly urban area with extremely high home prices so I have always leaned towards investing (in lieu of more in 529’s etc.) in another house that we can rent and at a minimum break even on the mortgage of the 2nd home and then cross my fingers that there is enough capital appreciation in 7-10 years to cover any 529 shortfall. I know that is riskier than just tucking a few extra $$ into a 529 each month. We have $280K in two 529’s and ~$400K in stock investments of which I have started taking higher risks on 30% of that amount.
Reply
- WorkingOptional says
This interview resonated with me – maybe because I share a similar philosophy or because I’m trying to get where he is. Of course, have nowhere close to that much in my kids 529s yet. Time to beef that up I guess!
Reply
I always like to learn about the millionaire next door, thanks for sharing!
Reply
Hehe MI 12 sounds like me! Not too hardcore MMM but nothing crazy extravagant either.
Reply
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
