Hello dear reader and welcome to the sixth blog post of the Millionaire Interview series, this time being for Educator FI.

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 and learn from all of it from a personal experience point of view.

I hope you can learn something new or help you in taking better money decisions.

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)
  2. Millionaire Interview #2 – FI Heroes (US)
  3. Millionaire Interview #3 – Perpetual Money Machine (US)
  4. Millionaire Interview #4 – Steve Adcock (US)
  5. Millionaire Interview #5 – Contrarian Saver (US)

Meet Educator FI

The sixth interviewee is Educator FI, a career public educator and long term passive investor who is striving for financial independence before turning 50. He blogs at educatorfi.com with the mission of helping other educators reach financial independence too.

Ed and I have something in common that I think is worth mentioning — we both grew up poor as kids.

What we experience as kids have a big impact on our lives as adults. Ed mentions about his constant feeling of financial insecurity even though he is already a millionaire. I have exactly the same feeling (although I am not near being millionaire quite yet).

A countless number of people have told me that I don’t need to be a millionaire to be financially independent. Perhaps I don’t, but believe me, the hardest part for me isn’t becoming FI but to feel financially secure to take care of myself and those that I love. Ed seems to have a similar worry, which is making him save perhaps more than he would actually need.

I and Ed have more things in common. We are both introverts, vivid readers, have just a bunch but trustworthy friends, love travelling and discovering, enjoy spending time at home, worry about money but plan and track for becoming FI.

There are a few sentences that caught my attention that I would like to especially remark:

“Six years ago we saved about 10% of our income. This year, we’ll save 70% and enjoy our life more than ever.“

“I think most who achieve millionaire status do it with consistent and constant work.“

“The millionaire dream is sold as a flashy lightning strike kind of pursuit. Startups, celebrity, and high-risk investments. Those things may result in fabulous wealth for a few people, but aren’t a way to get there for most. I’d rather take the slower path that’s likely to succeed.“

Thanks, Ed for taking the time to answers the questions with honesty and in such great detail. I truly enjoyed reading it and I know readers will too.

So, without further ado, it’s learning time with Educator FI.

Introduction About Yourself

How old are you?

I’m 45 years old, and pursuing financial independence before 50.

What’s your nationality?

I’m an American (United States.)

Where do you live?

I live in the western US on the edge of a major metropolitan area. I grew up rural, but have lived here with my wife for our 20 years of marriage. We’ve moved around the area.

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

Yes! I’ve been married for 20 years to a wonderful woman who is a true partner in every way. We met each other in college and got married in our mid-20s. We made our financial mistakes together, and have worked our way out of them together as well.

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

No, we don’t have children. As career educators, we always say we give all our time to other peoples’ kids.

What do you do for a living?

Whoops, I keep answering these questions in my response to the one just before it! We’re both career public educators. My wife still teaches, but I’m now a school administrator.

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.

I don’t know my exact net worth at the moment, because I only check it quarterly. At the end of last quarter, our net worth was about $1.25million. That was during the initial coronavirus drop in the US markets. I initially avoided looking while it was falling, and have kept up the practice since. With the run the market has been on, I’m sure we’ll be at our highest point ever at our next check.

Our only debt is the mortgage on a second home we own in partnership with another family. That’s about $120,000. We recently made the move to go mortgage-free on our primary residence and are loving it.

About $400,000 total of our net worth is in real estate. The rest is in markets in either our retirement accounts or brokerage account. We don’t count our future pensions in our net worth at all, but they’re a potential substantial future asset.

How much of your net worth is inherited?

I love that you ask this question! I hope people are transparent about inheriting and how it helps. We inherited about $10,000 in our 20s that we applied to our student loan debt of $100,000. It helped though it wasn’t life-changing.

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?

When we first started out, we were both working new jobs and making a combined total of about $40,000 a year. We became teachers and started out as new educators with a total income of $71,000 combined. We’ve almost tripled that and now make right around $200,000 combined most years between our salaries and extra work.

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).

We recently moved back into our rental house, so this question is really simple now. All of our income is from our jobs as educators. We bring in our salary, and then sometimes do additional assignments like summer school or coaching to earn extra money.

I don’t track dividend investment separately since we just reinvest it automatically in all our accounts for now. My blog is a money loser, so no income there. 

I’m proud to say we’ve become millionaires by working hard as public educators.

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

This is the working hard part. During the school year, I work 60-80 hours a week, and my wife is close to that. She gets summers off, except for sometimes teaching summer school half time. I drop back down to a manageable 40 hours a week in the summer but continue to work.

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?)

One nice thing about education is it’s fairly stable after the early years. In my first two years of teaching, we had furlough days which hurts with our small salaries. After we’d both been teaching for 3 years and the furlough days stopped it got better. We’ve improved our salary, and careers, through hard work and professional education since then. It’s not a fast rise, but it’s steady growth, and we’ve been incredibly fortunate to avoid other hardships. 

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

Early on, we did all kinds of extra things. We’d take on extra education jobs, teaching summer school, and I taught college classes on the side too. Thanks to that, we’ve earned $20,000 extra most years. 

Now that we’ve built a strong financial plan, we aren’t actively seeking new income. Instead, we’re trying to bring better balance to our lives. We’ve let our careers consume us in a lot of ways.

Savings, expenses and purchasing behaviour

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

This is where our real financial story is! We’ve done a good job growing our income over time, and always earning extra, but we were horrible about our spending.

We started out together spending a lot and accumulated debt. When we got married, we had a net worth of -$130,000 including student loans. After working to get out of debt in our 20s, lifestyle inflation crushed us. We stayed out of debt but spent everything. 10 years ago our net worth was zero.

Since then, we’ve had some luck (real estate appreciation) and focused intentional effort in the last 5 years. Six years ago we saved about 10% of our income. This year, we’ll save 70% and enjoy our life more than ever.

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?)

 We’ve tried lots of things! In the debt pay down phase 20 years ago we actually used a cash budgeting system. Once we eliminated our consumer debt, that stopped. Since then, we’ve tried tracking spending and budgeting. It hasn’t worked well for us.

Now, we use the annual anti-budget method. We set investment goals and then automate everything. That ensures we hit our main savings goals right off the bat. Then we don’t need to stress about spending in the meantime. At the end of every month, if we have extra we just sweep it into our investment account. Most months we do have extra for investments, but we don’t argue or stress about money any more and spend very little time on it.

We do a monthly financial conversation which is usually a 30-minute walk. We do a financial review and net worth check quarterly. That takes about an hour including discussion. Once a year, we spend an afternoon reviewing all our financial details and then go out for dinner and wine to talk about our new goals. 

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

I do! We bought our first home 20 years ago for $180,000. Our income at that time was just over $70,000/year in total. We recently moved back into that first home and have no mortgage payment for the first time in our married lives.

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

Travel has always been a major expenditure. We used to spend ridiculous amounts on it. Now, we spend less and have used our shared vacation home and road trips to keep costs down. Getting away and taking a break from intense work is one of the ways we balance ourselves out. Travel will still be a significant part of our retirement budget. I never regret spending on experience, but we’ve tried to dial back on the luxury.

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

We don’t spend much on personal clothing. I’ve spent $1000 on work suits before, so that’s the most expensive by far. A good suit lasts a long time, though.

My most expensive car wasn’t actually a purchase – it was even worse. I leased a luxury car for 3 years once. Now, we own our cars outright and drive them until they die.

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

I don’t actually know. We don’t count them as assets, so I don’t pay attention to the value. I guess I’d check if we had to make a repair vs. sell decision, but it hasn’t come up yet.

Investing strategy and behaviour

What’s your net worth asset allocation?

Real estate is currently 30% of our net worth. That has been as high as 55%. We dropped our rental, and will likely sell and shrink our primary residence after we’ve lived in it long enough to gain some tax advantaged status. (It’s a US capital gains tax rule)

The rest is paper assets. In our investments, we are working towards 70% stocks, 20% bonds, 10% REIT allocation. Currently, it’s 73%, 23% and 4%. The REIT allocation is a shift since we decided to stop operating our rental. Right now, we invest enough annually that we do our rebalancing our allocation shifts with new contributions.

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

We are long-term index fund investors. We have less than 2% in individual stocks. Everything else is in passive funds. We review our investment allocation annually, set our targets and rules and hold onto those allocation percentages. 

As an example, we had some cash from the sale of our primary residence last year. We were holding onto it while we sorted out our long-term living situation, but had agreed that if the S&P dropped 15% we’d put half in and 30% would trigger the rest. Both hit, so we followed through. It worked out well so far. 

Most of the time though, our only investing action is our monthly contributions. We’re long term, passive investors.

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

I glance at the market daily, but only enough to think “ah, so that’s what happened.” We only check our actual balances on a quarterly basis. We review our allocations and make contribution changes once a year. At this point, we spend almost no time on it.

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

Not active at all. I find the financial media and headlines like “Market experiences the steepest drop in two weeks” ridiculous, so I don’t pay attention to anything short term.

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

At this point, I’m still managing my investments and doing my taxes myself. As we approach financial independence and consider any life changes I plan to have a fee-only financial advisor look over my assets and plans. I’m comfortable during the accumulation phase, but it’s good to have an outside opinion if I’m not going to be bringing in income. For now, though, we spend $0.

Tell us about your best investment.

My best investment has been in my 403b, a retirement account for educators and other non-profit employees. I started putting some money in it during the great recession and have increased that dramatically in recent years. We get great tax benefits on the front end. It’s in a total market fund, so I’ve benefited from the long market run. I only wish I’d put in more early. We’ve only been maxing it out for three years.

And the worst one?

One major factor in our financial success is we haven’t made catastrophic mistakes. Lifestyle inflation was our big one, and that included buying an expensive house that was way too big for us. 

Even that worked out okay by luck. It appreciated enough that when we came to our senses and sold it, we were able to cash out every cent we’d put into it. It was a forced savings plan, which helped us accumulate something during our dumb financial period. 

We’d have made a lot more if we’d stayed in our original reasonable place and been investing that money during the bull market though!

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

The only investing advice I give is to start as soon as you can, invest as much as you reasonably can, and let time do the work. I try to live without regrets, but when I think about how much I’d have if we’d been investing since our twenties… I can’t help but wince.

Your Habits

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

This is an understatement. I’ve always set and driven towards goals. It’s helped me be pretty successful in most things I’ve done. Unfortunately, I never applied it to money until recently.

Now, we set annual financial goals. It’s one way we’ve gone from a net worth of zero to almost financially independent in under 10 years. 

We do have a financial independence target. It’s changed quite a bit since we started our journey, as we’ve made intentional spending choices and increased our financial understanding. We’ll consider ourselves fully financially independent when we hit $1.5 million in net worth exclusive of a primary residence.

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

I don’t. I’m not a morning person at all. Generally, it’s some combination of breakfast, coffee, and reading. Then I shower and dive into the workday. My mind is most active at night.

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

Cycling is one of my hobbies. I try to ride 100 x My Age in miles each year. I’m not hitting it this year, and sometimes work rhythms keep me from getting there. I think it’ll be a great goal in retirement though, and help keep me active as I age.

Miscellaneous

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

This is such a great question. I grew up poor, raised by a single mom. For years, money was stress. Even thinking about money made me feel anxious. I just wanted to earn enough to not think about it, and that led directly to our lifestyle inflation. 

Now, I view it as a tool. I can’t fully leave behind the worry, which is one reason we have plans, goals, and tracking systems. But we’ll soon have enough that we don’t need to think about it as anything but freedom. That’s pretty great.

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

No. My mom worked hard to make sure we had food and clothing but didn’t have much to give once I finished high school. I appreciate all she did for us and never wanted to add to her stress by needing anything else. 

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

I do now. It’s from a lot of reading. The first book I stumbled on that started my learning was The Automatic Millionaire. It opened my eyes to some possibilities and led me to read other things.

My favorite book to share with people now is JL Collins’ Simple Path to Wealth. 

I’m an avid reader of personal finance blogs and use them to test my assumptions and learn incrementally. 

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

I’ve always been an avid reader and continue to read daily. As I said, I do read a lot of financial blogs. I always have a fiction read going too. I tend to read science fiction as I like to explore the possibilities of humanity. Iain M. Banks’s Culture series is a favourite.

Other hobbies include cycling (that’s my primary exercise) and watching sports. American football is the one I follow most closely.

We’ve recently started meal planning as one of our goals and that’s helped improve our eating habits. I still have a long way to go there, though.

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

I’m driven by fear. I hate feeling fear because it makes me feel weak and powerless. As a result, it controls me in a different way. If I’m afraid of something, I make myself intentionally face it and move towards it. This has served me well by keeping me from avoiding challenges. 

Money is still a source of fear – from my childhood, I’m afraid of not having enough to take care of those I love. This is why I constantly check my assumptions and will likely accumulate more than I “need.” We’ll see if I can overcome that one!

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

As an introvert, I have a small, but tight, group of friends. They’re the ones I talk to and we travel with. My wife is truly my best friend and who I spend almost all of my time with. My favourite thing to do is to travel and explore new places with her.

Our normal environment is our house, which we’ve learned in recent years to design exactly the way we need. Each space has a purpose and fits us. It feels comfortable and is a really peaceful, but productive, place to spend most of our time. 

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

I used to be really cynical and sarcastic. As I’ve grown older I’ve realized it’s far better to be optimistic, so I’ve worked to shift my view.

I’ve always had a lot of self-confidence and assumed I could accomplish most things I tried. That was balanced out by my need to be perfect. So, if I thought I might fail, I’d tend to avoid even trying something. Fortunately, there weren’t many things that fell into that category.

I think a lot about systems and how things interrelate. There are patterns to most things, and trying to understand those help me deal with uncertainty. It’s really useful in my work in education which combines the messiness of people with some really antiquated systems. I’m always looking for ways to make our schools better for kids.

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

Atomic Habits by James Clear

Simple Path to Wealth by JL Collins

Random Walk Down Wall Street by Burton Malkiel

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?

I think most who achieve millionaire status do it with consistent and constant work. 

The millionaire dream is sold as a flashy lightning strike kind of pursuit. Startups, celebrity, and high-risk investments. Those things may result in fabulous wealth for a few people, but aren’t a way to get there for most. I’d rather take the slower path that’s likely to succeed.

Anything else you would like to add?

Thanks so much for letting me participate in this interview – the questions were so thorough. I always like exploring the mental aspects, and really appreciate the questions about fear, mindset, and concept of money!