This is definitely a millionaire that has put some serious thought into his plan. There are some excellent nuggets that will no doubt help anyone who studies his strategy. Thanks for sharing your story! – Utah Millionaire
$150K plus distributions/yr
What type of employment do you have and what does your comp plan look like? Any side income?
I'm a small business owner with a few different businesses. My full time job pays around 150K + benefits and distributions. (medical, dental, 401K w/match, employer HSA contributions, cell phone, gas card, and annual vacation) My wife and I have an investment company. My wife is the CEO of our house which is no joke, the hardest job ever. (6 kids)
When did you cross the million dollar mark and how did that happen?
2010 is my best guess. We have been excellent savers and investors who have lived very conservatively. Much of our net worth is tied up in our businesses and investment accounts that have grown over time. Short answer- not through stock options or the sale of a company, just steady investing
What was the single best thing you have done with your investments?
I would say it's a combination of owning businesses and steady investments into the market using dollar-cost averaging. (401K, IRA's, HSA, non-qualified accounts, 529's, whole life) The business provides solid returns, and the compounding interest has done its thing over time. I have sold a few companies and did well. I also have studied tax strategies and done my best to avoid or defer. My wife and I are not comfortable with any personal debt.
Where do you have your money invested and what are your debts? (account balances) Whats next?
- I put my net worth at 3.75mm + the value of my businesses. (not disclosed) My main business is well established and cash flows every year.
- Personal LLC- 1MM (equity positions in small businesses, hard money portfolio, cash, Real estate) 1MM is my cost basis- assets are hopefully worth significantly more.
- Retirement accounts- $750K
- Charles Schwab-350K (non-qualified)
- Personal residence- (no mortgage)
- Whole life policy #1- 14 years old (healthy cash value)
- Whole life policy #2- 7 years old (healthy cash value)
Vehicle 1- (paid off)
Vehicle 2- (paid off)
*we have a HELOC on our primary residence and use that for our emergency fund
- I’ve studied the Traditional IRA backdoor to Roth strategy and might do that someday. I have too much in the markets right now and prefer real estate or businesses.
What is the biggest pitfall or mistake you have made with your money?
Unfortunately, I have too many here. I once had seven figures of company money invested in a very conservative Wallstreet portfolio. I was emotional and uneducated at the time and pulled all the money out at a loss before a presidential election. The market rallied for several years, and I missed a bunch of gains. This was a hard lesson that taught me not to try and time the market. I purchased a home in and lost 100K when I sold it. I got sucked into the Utah tech bubble thing investing in several startups that have not made us any money. Cash-value life insurance- I have a love-hate relationship with these policies. With one of my policies, I reduced my budget and lost a ton of cash value and then was talked into moving from an IUL to whole life which set me back even further. These policies are not for everyone and you must be very careful about who you buy these from. At the end of the day, they make sense for me since I have no debt and max out all my other investments.
What are the primary tax strategies you follow?
- Another great question. If you own a business, spend the money to engage with a tax expert. I can’t keep up with the IRS changes and strategies and therefore pay someone to help me. I have an LLC strategy that holds most of our investments. We can expense some things and protect the downside should an investment go south. (vehicles, gas, internet, phones when used for business) Other things we do for taxes:
- Max out the 401K’s (my wife has a solo401K under our llc)
- Max out the HSA-$7000- (Why to use after-tax dollars for medical expenses. I think this is a better investment than 401K because it’s never taxed)
- Two Roth IRAs grow tax-free. (On the years our income allows it)
- Cash-value life insurance grows tax-deferred or tax-exempt.
- 529 grows tax-free
- Wife solo 401K- investments within the account grow tax-deferred
- We tithe via stock donations avoiding the 24% capital gains tax. I’m also looking at the donor-advised fund account within my trading platform. (move out of positions faster)
Do you follow a budget and how's that going?
We live pretty simple and don't have a formal budget. Our spending has gotten higher with teenagers in our home, so we may need to reconsider this..
What steps have you taken to protect your money? (estate planning, trusts etc)
The wife and I have living trusts and moved all our accounts under those trusts for some protection. The LLC has some basic layers of protection. We deeded our house under my wife's trust for another layer of protection.
Do you use a financial planner or software to track your assets?
I have a close friend (wealth manager) who does an annual check up on me since I'm mostly self-taught. I pay a firm to manage my non-qualified and IRA accounts for 50 basis points. (sweet deal) I use personalcapital.com for tracking personal assets and quick books for my LLC. My main business has a full financial team in place.
What's your best money advice for someone who is just starting out?
My real estate professor in college challenged our class by saying, "don't blow chunks." We frequently get chunks of cash via commissions, bonuses, tax returns, sale of a business, etc. We have always invested those chunks in assets acting as if we didn't get the money. Most people are not disciplined and waste those chunks. If you just sold a business, I would try my hardest to be more conservative with the money. Don't think you will have the same exact success with your next business. I've heard of people throwing the money across a bunch of investments they don't understand and losing a significant portion of it. I would keep it very simple and low risk. Paper assets and safe real estate. (debt and equity funds) Maybe a small amount into a business, I understand. If you make a big chunk of money, getting a financial planner to help you is probably best.
If you could do it all over, what would you do different?
Real Estate. I wish I learned about its power much sooner. It seems to me that over the long run, it does about the same as stocks with less volatility. I also wish I would have invested even more into paper assets starting in my early 20's. Lastly, I would never invest in risky tech start up's that I didn't understand. (c-corp convertible notes, safe notes.- the older I get, the more I understand how risky these are)
What does a typical day look like for you?
Awake at 6:30, work out or bike, eat & get ready, work from home till traffic is over. (I get more done outside the office) 10-5 at the office. Taxi kids everywhere, try to have fun or relax at night. Work a little before bed. Start all over. I try to spend 1-2 hours each day doing personal development.
Any advice on life you can share? (school, career, family, personal development)
Money won't make you happy or fulfilled. Family, friends, and faith are the most important things for me. Work harder on your marriage and spiritual fitness and money & stability usually follow. I think everyone should work harder on themselves through personal development than at a job. School, books, podcasts, mentors, etc. Avoid tv and other wastes of time. I've learned that service usually helps me far more than the person or project at hand. Live simple and be careful with risk. Peace is priceless. Be Kind, don't burn bridges.
Any books you would recommend on money?
Millionaire next door, Automatic Millionaire, The legacy Journey, Financial freedom, I will teach you to be rich, The millionaire real estate investor, Why Didn't they teach me this in school? Set for Life, I will teach you to be rich, The wealthy Gardner, The white coat investor, Rich dad poor dad.
Do you have a retirement goal? What are your plans? Concerns?
I will sell my company someday and be a full-time investor but probably never retire. I do have a goal to shift into more service work at 50. (humanitarian work, church service)
Favorite restaurants in Utah?
Valters, Ruths, Little America, Seven Brothers, Red Iguana, Mo Bettas, Cafe Rio, I'm all over the place.
Favorite golf courses in Utah?
Thanksgiving point, Park city golf course
Favorite ski resort?
Brighton because of the price
Favorite Hotel in Utah?
Little America, Hotel Park City
Where is your favorite Utah vacation destination? Outside of Utah destination?
Bear Lake / Park city. in the summer. Hawaii in the winter.
Favorite things to do in Utah?
Mountain Biking, snowboarding, hikes, Jazz, Utes, boating, Temples, dinner in the canyons, national parks.