Millionaire Interview Series #2 – FI Heroes

Hello dear reader and welcome to the second blog post of the Millionaire Interview Series.

As this blog’s domain name suggests, my personal long term financial goal is to reach a net worth of one million euros, or in other words, become a millionaire.

In addition to self-educating in topics as finance, and summarizing my learnings on my millionaire mind series, I am keen on acquiring knowledge from other people experiences, especially from those who are self-made millionaires.

So, what is this Millionaire Interview Series about?

Every interviewee will answer a set of questions, which aim to collect information from several millionaires around the world. These questions will be all be pretty much the same for everyone.

My goal is to analyse and find common patterns, behaviour, careers, lifestyles, mindset, hobbies, or any other aspect that may come across.

If you’d be interested in being interviewed please get in touch with me by email tony (at) onemillionjourney (dot) com or a message me on Twitter.

Previously interviewed:

1. Millionaire Interview #1 – Finimus (The UK)

Meet FI Heroes

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The second interviewee is an interesting multi-millionaire married couple who’ve reached financial independence and retired early not so long ago. They are FI Girl and FI Guy and they both blog at https://fiheroes.com/.

I have to say that I envy this couple, I would not mind being on their position and neither does my girlfriend, hehe, especially after coming across their Bucket (Adventure) List. (hugging a Koala in Australia, what a cool thing to do!).

Their story and trajectory is inspiring and shows that becoming financially independent is not an unrealistic goal, even if we start from the bottom. It’s also interesting to note that they live out of their passive (dividend) income only, which is a method that I am inclined to, due to its long term sustainability. This guys are not only millionaires and retired, but they are still accumulating more millions, sweet!

Another fact I’d like to highlight is that they don’t own a home, they rent. The sense of freedom must be even greater, think about it, being able to relocate wherever you may like as long as it is a financially affordable and sustainable, or just backpack for months travelling the world while avoiding maintenance housing costs…

Without further ado, it’s learning time with The FI team.

Introduction About Yourself

How old are you?

We are both 38 years old. We reached Financial Independence and Retired Early (FIRE) at 37 years old.

What’s your nationality?

We were both born and raised in the United States.

Where do you live?

We recently relocated from Massachusetts to Florida in the USA.

Are you married? (If so, how old is your spouse and when you married?)

Yes! We met while studying abroad in Australia almost 19 years ago and we were married in 2008. (It took FI Guy a little time to pop the big question)

Do you have any children? (If so, how many and how old are they?)

No children.

What do you do for a living?

We both retired at the ripe ol’ age of 37 and are currently living solely off of the passive income
generated from our investments. Before leaving our cube jobs, we were both managers in IT.

Determining how wealthy you are

In this section, I would like to find out where you stand along the wealth continuum, or in other words, if you are a prodigious accumulator (PAW), an under accumulator of wealth (UAW) or just an average accumulator (AAW). More about this on wikipedia.

What’s your net worth? Please include debt details if applicable.

We have a net worth of $2.7 MM. (Pre-coronavirus we were over $3 MM) We do not currently have any debt other than what we charge to our credit/rewards card each month for food, lodging, entertainment and other basic expenses. On average this comes in under $3,500 a month which we pay
off in full each month.

How much of your net worth is inherited?

0% of our net worth is inherited. I came from a single-parent household with no financial support from my father growing up. My mother did not go to college and had no help from her family. She worked hard to make sure we had a roof over our heads and food on the table. I learned early on what the value of a dollar was.

Could you please tell us what’s your pre-tax household income from all sources, except inheritances and how it has evolved from your first earnings until now?

We are currently living solely off of our investment income which is around $55K annually. Prior to this last year, when we were both working, we had reached an income level of over $300K combined but we certainly didn’t start there. When we first graduated college the IT bubble had just
burst and we were lucky to land paid internships and eventually find our way into a non-IT field but we were only making around $37K each at that time and were deep in student loan debt. Over the course of 15 years, we both received multiple promotions and career rotations to arrive at our higher salaries.

Sources of income

Please, would you mind telling us what are your main sources of income and how much they contribute to your pre-tax income household? (Day job, side hustles, businesses, dividends, interests… from you and your spouse).

Almost all of our income comes from dividend income which is generated from our investments. We are currently invested in 4 ETFs:

• S&P 500: IVV
• International: IEFA
• High Dividend US: HDV
• High Dividend International: IDV

We also have a small amount of interest income that comes from a CoD ladder. We couldn’t let all of our emergency fund money just sits there when it could be earning us some money.

Approximately, how many hours per week of your time is required to maintain this income level?

These days, we spend very little time each week managing our funds as it is almost completely automatic. We do spend a few minutes each week to check all of our accounts and charges on our credit cards but beyond that, everything is set up in a way to make money while we sleep and play.

Have you had any period with a significant lower stream of income due to a career or occupation change, incapacity, illness or any other bumps on the road you encountered? (If so, what did you do to overcome the situation?)

Despite starting at the bottom and working our way up, we have both been very fortunate to not have hit any major bumps in the road along our career path. Working primarily in IT, we have both been through several organizational changes and layoffs and witnessed many coworkers and friends get let go well before they were ready to leave. We were fortunate enough to get the golden parachute, only at the end when we were both ready and planning to leave.

At one point in my career, I did work through a debilitating accident. Because I was able to work remotely during most of it, I had gotten so used to putting my work ahead of my own health, which is something I wouldn’t recommend anyone do. It would have been more prudent to go out on disability and take the lower pay to help ensure a smoother recovery.

Do you spend time or money looking for new opportunities to boost your income?

These days we are not looking for new opportunities to boost our income as we are still getting accustomed to and enjoying our new lifestyle as early retired nomads. For now, living off of the $55K in dividends seems to be more than sufficient but if that changes, we will certainly look for other
opportunities. We don’t anticipate that will be necessary as our projections all indicate that we’d be able to very comfortably live well under the $55K we have budgeted for ourselves. If our dividend allowance, due to lower earnings, comes in below $55K at some point we would more likely cut expenses or extract the difference from our cash reserve / CoDs.

Savings, expenses and purchasing behaviour

How much of your pre-tax household income do you save and how it has changed over time?

When we first graduated, we both continued to live like poor college kids. Putting away as much as we could, paying down whatever debt we had and never spending more than what we had available to us on anything. As time went on and we received promotions, raises and bonuses at work, we continued to live like we were still poor college kids. And so over time, we were saving more and more of our income. While we were working we were able to save about 80% of our household income each year. These days we aren’t saving since we are retired and living off of passive income alone. We have budgeted $55K for our expenses but anticipate we’ll spend closer to $45K which will leave us with $10K to either reinvest or
roll over into next years adventures and living expenses.

Do you have a budget, pay yourself first or track your expenses? (If so, how much time do you spend on it on a monthly basis?)

Yes! We do have a budget and we spend very little time on it each month because it’s almost completely automated. We use Mint to track our budgets, investments, expenses and goals. The tool is super easy to use and once you set it up, it does the heavy lifting for you. We break out our budget
categories by Home, Health, Food, Transportation, Adventures and Other. It’s rare that in any given month we overrun a particular budget. If we do, we carry the surplus expense forward into the next month until we catch up in that particular category.

Do you remember how much you paid for your first home and what was your household’s total annual realized income at that time?

We purchased our first home in 2012 for $515K. We had been saving since we got out of college and ended up putting 100% down on the home. By the time we actually purchased our first home we were making close to $150K combined.

Is there any category where you don’t mind spending more money into? (travelling, education for yourself or your kids…)

Our favourite spending category has to be Adventures! This is planned non-essential spending on things like travel and buying Universal or Disney World annual passes. The time we went to see Hamilton on Broadway in NYC was funded from this category as well (It was only $10 per ticket though because we won the lottery).

So far, most months we have been underrunning our budget in several categories so we have some buffer if we were to overrun our Adventures budget.

What’s the most expensive piece of clothing and the motor vehicle you’ve ever bought?

I used to be a figure skater so it wasn’t uncommon for a skating dress to cost over $300 and skates with professional blades to come to $1000. My wedding dress cost under $300 so yes, I used to spend more money on my figure skating costumes and gear than my own wedding dress…
When it comes to cars, we go for value so you would expect to see us driving base model sedans without any bells or whistles. We have always purchased new cars but we drove them into the ground and made sure to get as much as we could for them by selling them on our own. The most we paid for a car was $16K. We paid for it in full.

What’s the current value of all your motor vehicles?

We currently have 1 vehicle; A base model Honda Civic valued at $6900.

Investing strategy and behaviour

What’s your net worth asset allocation?

As of February month-end, our net worth asset allocation was
as follows:

97% of our assets are in international and domestic equities in the form of low cost ETFs.

What’s your investing philosophy? Do you stick into any strategy? (If so, do you change it often?)

Our philosophy is to keep it simple. We are not super savvy investors nor are we, financial investment professionals. We don’t have a team of people who can spend time researching the market trends nor
do we have the bandwidth to do it ourselves. And for those reasons, we do not believe in stock picking or day trading. We only invest in low-cost ETFs which mirror index funds like the S&P 500 that contain stocks composed of hundreds of companies. These ETFs produce dividends that are projected to cover our living expenses. The plan is to never have to sell shares to fund our lifestyle. At the time we “FIREd” / “Retired”, our safe withdrawal rate was under 2.5% instead of the typical 4%.

How much time do you spend planning and tracking your investments on a monthly basis?

Each month we spend no more than 15 minutes to review the net worth in total for our equities in preparation for our blog post. The investment mix at this point is set for us. We aren’t adding to our positions or doing any reallocations at this point in time. Quarterly we also review the dividends we receive, move them to our checking account and compare them to our prior forecast. This takes less than fifteen minutes per quarter.

Do you follow the markets and media closely and trade accordingly? Are you an active or inactive trader?

We do keep an eye on the markets and media but it doesn’t impact our trading strategy or activity these days. We’re inactive traders in the sense that we are invested for the long haul. We will admit to having the four ETF tickers easily accessible on a phone app, but it’s there as more of a curiosity than a trigger. When major events happen, we see the big numbers go up or down. This has never triggered us to make a buy or sell move. It is just to stay informed.

Do you hire any professional financial and tax advisors, lawyers or accountants? (If so, what’s the annual cost of it?)

No. We do everything ourselves so our cost is simply our own time.

Tell us about your best investment.

When we sold our house we invested the proceeds into the ETFs previously mentioned. It was the largest amount of money we ever invested in one fell swoop and it’s what was able to get us to our target of $55K in dividend income.

And the worst one?

Despite buying at the bottom, in cash, and selling close to the top, buying our house was the worst financial investment we ever made. We did the math and found, had we rented a luxury apartment and invested the rest of the money in low-cost ETFs we would have been hundreds of thousands of dollars richer and would have been able to retire a few years earlier. Here’s a link to an article where we get into all of the mathy stuff: https://fiheroes.com/our-biggest-mistake-revisited/

What would be your investment advice to anyone who wants to build wealth today?

1. Track your spending so you can spend your money with purpose.
2. Save as much as you can.
3. Invest as much as you can in low-cost ETFs.
4. Don’t be a day trader. Set it and forget it.
5. Max out your 401K and be sure to take advantage of any matching your company offers.
6. Do your own taxes so that you can truly understand how it works. Most people can get by with
   TurboTax or a similar program.
7. Be sure to keep an emergency fund.

Your Habits

Are you a goal-oriented person? Do you have a net worth target number?

Yes! We are both very goal-oriented. It really has helped us get to where we are today. When we were working towards “FIRE” we set our net worth target number to $2.2MM. This number is more conservative than most FIRE bloggers but it is what we felt comfortable with. We ended up working a little longer to build a buffer because we were fearing a recession early into our retirement plans. This is ultimately how we ended up with nearly $3MM in net worth by the end of 2019.

Do you follow any specific morning routine? How do you spend the first hour of the day?

Now that we are officially “FIREd”, we tend to wake up naturally without an alarm clock when we can and spend the first hour of our day sipping coffee and getting caught up on messages, world news and searching for travel-related deals. We check the Disney or Universal apps to determine if the ride wait times are acceptable for us to make a visit. Every day is a new opportunity to wake up excited for whatever the day brings.

Is there any specific goal or habit you would like to mention?

Since we spent the last 15 years sitting in an office cubicle and more or less ignoring our health, these days we make our health and well being a priority. We do our best to get out for a walk every day, head to the gym at least 3 times a week and make healthier choices when it comes to our meals and what we eat when we go out. FI Guy didn’t weigh himself for six months and recently found out that his healthier lifestyle has allowed him to lose 25lbs and 4 inches off of his waist! I haven’t weighed myself but I know I have lost weight and overall I feel not only healthier but happier.

Miscellaneous

How do you view money? What does it represent to you?

Money is a means to an end for us. It allows us the freedom to live the nomadic lifestyle we want and to focus more on what is important to us; that being our health, family and travel.

Did your parents provide you with economic outpatient care? (If so, how much was gifted to you?)

No. We are self-made millionaires.

Do you consider yourself financially literate? (If so, please could you tell us how you got the knowledge?)

We had business degrees out of college which gave us a head start. We both started our careers in Finance / Accounting & Investing. In these job roles, we learned how large companies put their money to work from budgets and planning perspective. The lessons we learned here helped us treat our own family finances as a business. Early on, we tended to purchase personal finance books whenever we went on travel but in the last five years, we have relied less on books and more on FIRE blogs. The one
to really inspire us for our journey was the same as many others: “ Mr Money Mustache ”.

Tell us about your hobbies and how you like to spend (free) time and energy.

Our favourite hobby these days is travelling but in addition to that, we spend our free time and energy going for daily walks, going to the gym, listening to podcasts like Millionaire’s Unveiled, writing posts for our blog, staying in contact with our friends and family and keeping an eye out for travel deals.

Your concerns, fears and worries. Can you tell us a bit about them? Is there anything you are especially afraid of?

Our fears are mostly health-related. We had put our own health on such a back burner while we focused on our careers. Now we are playing catch up after fifteen years of neglect. We also worry for the health of our family and friends while we are away from them. We have a few members of the
family who are not in good health or are on their own at the moment. I am very close with my mom, so being away from her for long periods of time is probably the most difficult for me.

Who do you hang out with? Where do you hang out? What’s your environment like?

Up and moving to another state as we did has been somewhat of a social reset button. We have had some friends/family come to visit us, but mostly we have been keeping each other entertained. With two
different annual passes to Orlando theme parks, we haven’t been bored yet.

What is your mindset like? What do you think about on a daily basis?

That we are living an incredible life and are beyond grateful for this amazing opportunity to live and experience life this way. We want to make sure that we are making the most of the gift of early retirement and paying it forward by sharing what we have learned and experienced (for better and for worse) with others.

Tell us three books you think any wealth accumulator must-read.

We haven’t read a book that checked all of the boxes that led us to our current plan. Rather we have mostly taken lessons from lots of different sources to arrive at our executed strategy. There is a lot of knowledge to be found for free in the FIRE community. In addition to offering free content on their sites, several FIRE bloggers have also written books, offer workshops and classes for a fee. Here are a few of the FIRE blogs we highly recommend checking out:

• Mr Money Mustache: https://www.mrmoneymustache.com/
• Millennial Revolution: https://www.millennial-revolution.com/
• Our Next Life: https://ournextlife.com/

Becoming a millionaire is a common people’s dream. Can you see any pattern that some millionaire dreamers follow, and you think it isn’t the most appropriate? What would like to advise them?

Becoming a millionaire is rarely accidental. It takes work, planning and time. There isn’t a one size fits all strategy as we all come from different backgrounds, start in different places, have different responsibilities and goals… and that’s ok.

You have to come up with a strategy that works for you but recognize, in most cases, it is a marathon and not a sprint. Even the most aggressive plans to retire in your thirties are measured in years.

Your first million will generally take more effort to obtain than your second or third. Come up with a plan and be comfortable with making adjustments as you go along. Don’t be afraid to lose money.

Recessions happen and your investments will go down. Play the long game. Think of recessions as stocks or properties going on sale.

Anything else you would like to add?

When we first told some of our friends and family what we were trying to accomplish, we were surprised to be met with a lot of negativity and lack of support. They could understand wealth accumulation and be financially independent, but they couldn’t understand retiring early and living a
nomadic lifestyle.

We felt so strongly about our goals and the path that we defined for ourselves that we didn’t let this hold us back. Rather than continue doing what society expected of us we focused on making our own way and building the future we wanted for ourselves.While it was not the popular vote, it’s our story and we wouldn’t change a thing. Don’t be afraid to do something different.

Thank you so much for this opportunity to share a bit about our journey to Financial Freedom and
beyond. If you would like to know more about our journey and stay in touch, you can find us online at:
https://www.FIHeroes.com