Millionaire Interview 2 – TicTocLife

Millionaire Interview 2. I have started a series called Millionaire Interviews. There is no better way to learn how to build wealth than from those who have already done so. Along those lines, I ask millionaire bloggers or even millionaires who are not bloggers a series of 11 questions that they answer. The questions are highlighted in bold and the answers are below each question. Hopefully, the answers are enlightening and will help you on your journey to build wealth and attain the $1,000,000 mark and beyond. 

The millionaires in the Millionaire Interview series became millionaires at a younger age than the Secret Dividend Millionaires. This comes down to mostly having higher incomes. Second, they are not very frugal to the point of austerity as some of the Secret Dividend Millionaires but certainly save more than they earn and save more than the average person. Lastly, most have multiple sources of income.

Before we start with Millionaire Interview 2, if you are a millionaire blogger or even a millionaire who doesn’t blog and want to be a part of this series, just send me an e-mail or message me on Twitter.

Millionaire Interview 2 – TicTocLife

Millionaire interview 2 is with bloggers Chris and Jenni who blog on TicTocLife. The blog was started in May 2020. They talk about their road to financial independence, current status as semi-retired, and retiring early by 35. Their portfolio value crossed the $1 million mark in early-2018 mostly by saving roughly 50% of their income and using diversified index funds.

• Tell us a little bit about yourself.

Hi! We are Jenni and Chris from TicTocLife.com. We’re 36 years old. Jenni was born in Virginia and has lived here her whole life. Chris was born in California and has lived across the US. We live in central Virginia now.

We met each other way back in middle school and dated on-and-off many times in our younger years. Our relationship became more concrete once we moved in together in 2012, though we’re not married—which may surprise some of our own readers! We don’t have kids.

Jenni has a Doctor of Pharmacy and has worked as a pharmacist since 2010. She moved up the ladder at her pharmacy and took on many responsibilities. In May, Jenni passed the pharmacy manager baton off and now works part-time as an emergency “as-needed” pharmacist at an independent pharmacy.

Chris has a bachelor’s degree in Communication (as in interpersonal communication) but hasn’t directly leveraged it for employment. He has worked in digital strategy on the web (marketing, design, development, and operations) since 2007. He started his first business in computer systems integration in 2006 which has pivoted to different types of consumer sales over the years. By 2012 he left the corporate and higher ed world of digital strategy to focus on his own agency. He continues to operate both businesses as a form of near-passive income, putting in a few dozen hours of work per month.

• What is your net worth? At what age did you become a millionaire? How many years did it take to become a millionaire? Do you have any debt?

As of November 2020, our net worth crested $1.7M. We track it as part of our monthly budget updates. What we track as our net worth breakdown like this:

Description	Value (USD)
401(k)	$‎          602,097.00
Brokerage	$‎          763,304.00
Roth IRA	$‎          121,439.00
HSA	$‎          28,866.00
Real Estate	$‎          318,270.00
Mortgage	$‎          (153,670.00)
Miscellaneous Assets	$‎          10,250.00
Checking & Savings	$‎          29,557.00

• Miscellaneous assets include specific investments we’ve made in physical assets (think collectibles)
• Amounts do not reflect the value of the businesses Chris owns or their assets, which should appear as income to us over future years
• Jenni’s Prius is not included

Most of our net worth these days is tied up in broad index funds.

Currently, our only debt is a low interest mortgage—which we’re considering refinancing before the end of the year! However, not very long ago our net worth was more than $100K negative. We shared our story of going from a heavy student loan debt to reaching financial independence at $1.2M in 2018 through our story: 

How to Become a Millionaire in 10 Years (Debt to $1.2M at 33)

In general, we both view debt as a vital, but sometimes dangerous tool. It’s a lot like a sharp blade: if you don’t understand or have any practice with a nicely weighted chef’s knife, you might be a little scared of one. But, once you become familiar with the dangers and—most importantly—how and what it’s supposed to be used for, debt is much less scary. 

While it took us a long time to climb out of student loan debt (with interest rates over 7%), it was vital to Jenni earning a doctoral degree. Her earnings would likely have been greatly reduced without it. Similarly, while we could have paid cash for our house in 2013, it didn’t make sense to do so with mortgage interest rates below 4%. We paid a 20% down payment to eliminate PMI and kept as much money as possible invested in the stock market.

• How did you become a millionaire?

The primary source of income on our path to millionaire status was Jenni’s W2 employment and Chris’s business income.

Our combined income ranged from a low of $12.5K in 2009 (just after Chris’s time in the Peace Corps and while Jenni was in Pharmacy School) to a high of about $280K. Our average income per person per year during our journey to financial independence at $1.2M was $77K. We crossed the million-dollar net worth threshold sometime in early 2018 when our combined income was about $264K.

2020 will likely be the first year that investment income (appreciation, dividends) exceeds our earned income. We expect that trend to continue in the future as we transition from semiretirement to early retirement.

If we extrapolate our November 2020 income/expense report to represent a full year, our earned income these days is just under $80K/year. We are in a state of semiretirement, on the way to early retirement—combined, we worked 84 hours throughout November for those earnings. Our net worth sat at $1.7M as December 2020 began.

Our investment history

Jenni’s investments, coming some years after Chris’s due to graduate school and student loan debt, have been entirely in target-date funds and index funds.

Chris was younger and more foolish. He thought, as a total amateur, he could beat average market returns by picking stocks instead of index funds. He’d managed to save nearly an entire year’s worth of income (about $40K at the time) and promptly lose half of it throughout the 2008-2009 Great Recession—more on that mistake in the next question!

The majority of our wealth has come from earned income, though an increasingly large portion is from index fund investments. We’ve been incredibly fortunate to have had supportive parents in our college years. We didn’t get here alone. However, we’ve not received any direct financial support post-college (inheritance, down payment, etc.).

• What is your investing philosophy, and do you use a particular strategy?

These days, our investment philosophy is very much “set it and forget it.” We check in with our investments monthly, but daily—even weekly—neither of us pays much attention. Any extra income during our semiretirement phase flows through to our index funds which are generally a mix of:

1. 40% domestic stock (VTSAX, etc.)
2. 40% international stock (VTIAX, etc.)
3. 10% domestic bonds (VBTLX, etc.)
4. 10% international bonds (VTABX, etc.)

Jenni’s target-date fund follows a somewhat similar distribution.

We have about 5% of our assets in cash equivalents (savings, checking, money market) as well. It’s inefficient but provides liquidity and a feeling of safety.

Jenni’s philosophy has been similar pretty much since she started investing. She’s been willing to keep plowing money into her investments through the market’s ups and downs (which have mostly been ups for her investment career).

Chris’s philosophy has evolved significantly. As mentioned in the previous question, he attempted to invest in individual stocks just ahead of the 08-09 Great Recession with nearly all of his net worth.

Here’s a sampling of individual stocks he was investing in at the time, which cratered:

• Mcdermott International Ltd. (oil/energy infrastructure)
• Foster Wheeler (global engineering/infrastructure)
• First Solar, Inc. (solar energy)
• Pengrowth Energy (Canadian oil and natural gas)
• Halliburton Company (oil field service)
• Alcoa Corporation (aluminum)

Those are some that stick out in memory since they were such significant losers (and often sold at the bottom of the crisis).

Of course, there were a few winners or at least smaller losers:

• 3M
• Procter & Gamble
• Berkshire Hathaway
• VISA (bought at IPO, sold too early)
• Tesla (bought at IPO, sold too early—with hindsight!)

And probably a few dozen others that are difficult to recall from memory.

The experience of losing half his net worth through individual stock investments taught him to diversify through index funds and accept he’s the sort of retail amateur investor that’s too often on the other side of someone else’s gain. Simply matching the market became good enough for his investment goals.

Starting from zero to earn $1M

If we were starting over on the road to earning $1M, our investment strategy wouldn’t change very much from today, simply because what we’ve settled on works well for us. More than just the numbers and efficiency of the capital, it works well for us mentally. Without some grand talent or tremendous luck, wealth is built a little at a time through the course of many years of consistent earnings and investment.

We’d take our earned income, save 50% of it, and invest in broad, diversified index funds. If we earned the median US household income ($68,703 in 2019), we’d reach financial independence in 16.6 years at a little over $850K. Keep going just a little longer and we’d have $1M before the 19th year ended.

Here’s a great retirement calculator to run your own numbers.

Chris’s thoughts on turning it up to eleven to hit $1M:

I’d only diverge from this path if you had a specific urgency to reach $1M in less time. In that case, you’d have to take on more risk (assuming you can’t just earn more money to do it faster). In such a situation, I’d see if the barbell strategy would create enough alpha within my portfolio to juice returns to where I’d need them. This strategy takes more effort as the investor since you’ll be chasing now high return investments and keeping an eye on things. High risk investments (crypto, small cap growth stocks, etc.) are offset by lower risk, low beta large caps, bonds. etc.

If my income was high enough (to qualify as an “accredited investor”) and the timeline to $1M needed to be exceptionally short, I’d probably look into angel investing. There’s potential to earn outsize investment earnings on a relatively short timeline while also having a more direct hand in the operations of a startup.

Lastly, if I was desperate to hit $1M as quickly as possible (but not quite at the point of hitting a casino), I’d consider buying an existing digital business. I’d aim for a business that followed my expertise but had a gap in their plan that I could fill with my expertise to juice the business’s income. I’d likely be shopping on Empire Flippers or similar marketplaces for such a business. If I could raise revenue significantly, the business value increase would multiply and give me a chance to hit $1M more quickly—but through a lot of luck, expertise, and hard work.

• What was your best investment? What was your worst investment?

Chris:

My best investment was in leaving the corporate world to protect my consulting agency. In a subsequent handful of years, total revenue generated cracked $1M fairly quickly with exceptionally high margins. All while not actually working that much.

My worst investment was in individual stocks focused on commodities (energy, precious metals) before and during the 08-09 Great Recession.

Jenni:

My best investment was the first contribution I made to my 401(k). Opting into my company’s 401(k) plan forced me to understand target-date funds and to research which ones were the best. I learned that investing my money pre-tax before ever seeing the funds in my bank account helped me avoid lifestyle creep. I developed a habit to invest money versus spend it. This led me to eventually open a Roth IRA and a brokerage account where I invest in Vanguard target-date funds. 

My worst investment was a matter of time: not investing sooner. The stock market can be confusing and scary to get started, so I didn’t invest when I was younger. I was never taught about it in school or by my parents. I did not take any initiative on my own to learn about it. I wish the day I turned 18, I opened an IRA and started investing.

• How much time per day or week do you spend reading financial news and going over your investments?

Neither of us spends more than a couple of hours per month on financial news or reviewing our investments at this point. It’s mostly just rebalancing a few times per year, checking in our monthly budget, and occasionally getting a laugh out of Wall Street’s latest bubble or doom and gloom.

The only money-related professional either of us has ever hired was a corporate accounting agency for Chris’s business around 2014 when it elected S Corporation status. It was a complicated tax maneuver that benefitted from an expert’s eye and handholding.

These days, we file our own taxes—even the S Corp’s 1120-S.

• What habits helped you become a millionaire?

The most important habit on our way to becoming millionaires was to simply live below our means. And not by a little. We pretty consistently saved and invested 50% or more of our earnings. Granted, that’s a lot easier with a high income. We’d both argue that it’s important to build the life you want before you turn into a crazy frugal person. You need to be saving for something.

In recent years, we’ve averaged about $40-45K in living expenses for the two of us. That’s with a mortgage and Chris’s health insurance expense. Our 2019 FIRE budget reveals all the details.

It might be a little surprising, but in general, we don’t set a specific monthly budget for individual categories. We have a general idea of how much we want to keep our total spending to over a year. And we know what our average spending is within a particular category. Instead, we tend to practice Conscious Spending—the idea of building up intentional spending by deciding what’s important in life, spending what we need to achieve it, and saving the rest.

Our most expensive splurge is on travel. We drastically reduce it by maximizing credit card rewards, finding deals, and being flexible—but it’s the thing we most want to spend our money on. If not for the pandemic, we’d be writing our responses while on an adventurous tour around the world.

• What are your three favorite books related to investing, personal finance, retirement, and financial freedom?

I Will Teach You to Be Rich – by Ramit Sethi

The source of novel concepts like Conscious Spending mentioned above, Sethi uses a clickbaity title to get people following “get rich quick” schemes to redirect their money life in truly productive ways through real change. It takes genuine effort and—truth be told—it’s anything but a get rich quick scheme. Sethi was one of our original motivations to ask ourselves how much money is enough to build the life we truly want. The author also served as one of our earliest inspirations to plan our financial lives and make small, consistent efforts to affect change.

The Snowball: Warren Buffett and the Business of Life – by Alice Schroeder

Warren Buffet has always been an intriguing investment icon. Snowball is the most interesting telling of his life, beyond the investment details. The “coming of age” section of his tale is inspiring. BRK is one of the few holdings that have survived our culling of individual stocks in exchange for index funds (the Geico discount doesn’t hurt!).

A Guide to the Good Life: The Ancient Art of Stoic Joy – by William B. Irvine

It might sound like a book on personal philosophy is a stretch for financial interests, but much of your investing success will depend on your actual decisions. In other words, in theory, your investments will return X, but if you try to time the market your investments will return X minus the cost of your decisions. This gap between expected returns of your underlying portfolio and reality, driven by your investing decisions, is called the behavior gap. You can reduce much of that gap by staying the course, being consistent, and not being controlled by emotion. That also applies to simply keeping up with your savings rate and staying on track for a very long-term goal like retirement. Developing an internal philosophy helps you weather the storms of life. This book is an introduction to what we’ve found to be the most helpful sort of internal philosophy: Stoicism.

• Why do you blog about your investing and journey to millionaire status and financial freedom?

Think of your best friends that are a couple. Imagine you all got together one evening over drinks. Your friends sit sheepishly, fiddling with their glasses, and say “there’s something we need to tell you.”

It’s May of 2020 and your friends are breaking the news that they’re retiring early in their 30s. Flabbergasted and confused, you ask wonder:

“Retiring? Now? But they just started their prime earning years! And they bought that house and went on vacations around the world! Why?! And better yet, how!?”

We started our retire early blog as a way to be the best friend couple in the example above and to answer those questions about “how” and “why” when it comes to FIRE. We’re just sitting down for drinks and weaving the tale of what our method was. The challenges we faced. And the wisdom we’ve gained from stepping away from successful careers and business in our 30s to pursue a very different path in life.

As a nod to the fleeting nature of time, TicTocLife also serves as a way for us to give to charitable causes, effectively. As we don’t run ads, sell anything, or ever intend to—part of our mission is to leverage what we’ve learned with FIRE to build long-term giving with participation from our readership (who direct monthly grants). We feel privileged to be in a position to have more than we need and want to help others—either through giving knowledge or money—achieve what we have. We want to be an example of lowering the ladder behind us rather than pulling it up, like so many do.

• Besides investing what else do you like to do?

With the ongoing pandemic, Chris has become even more of a video gamer—it’s a great way for him to keep in touch with his friends. They play team games like Apex Legends or Age of Empires as a way to socialize and be challenged.

Jenni likes to keep herself busy by being creative. She has an entire craft closet that she stores different types of project boxes. She will pull out one box from time to time and get reacquainted with its contents. Most recently Jenni has started to make handmade cards to connect with family and friends. Jenni also likes to try her hand and DIY projects, the next one being reupholstering the teak dining room chairs. She stays fit with virtual fitness classes, a rock-climbing session, or just a run in the neighborhood. We spend time outside daily. We both love traveling and exploring. Sometimes the activity can be as simple as running to the river and exploring a trail that’s new to us. Other times we book a flight and a boat ride to a remote 2-mile island in the Caribbean. Outdoor adventures make us feel alive. Disconnecting and being in nature gives us time to be with each other, to be in the moment, and to simply have a conversation with one another.

Final Thoughts on Millionaire Interview 2

I hope that you enjoyed reading about Chris and Jenni at TicTocLife in Millionaire Interview 2. Check out their blog at the links above. Their story shows that with determination, an excellent savings rate, and some smart investment decisions with index funds and diversification that reaching $1 million early in life is possible.

In an earlier article I identified the three principles of dividend millionaires: spend less than you earn, invest your savings, and reinvest the dividend. Your odds of becoming a millionaire are about 3.6% in the U.S. But I would argue that through systematic earnings, saving, and investing you can improve your odds. Certainly, Chris and Jenni have showed us it is possible in Millionaire Interview 2.

As a final note, I have another series called Secret Dividend Millionaires. This one is about ordinary people who became millionaires by investing in dividend paying stocks for the most part. Most of these people were only discovered after they died and left their money to charities and other non-profit organizations. Often, they became millionaires through very frugal if not austere living, investing their savings in stocks that paid dividends, and reinvesting the dividends.

You can read Millionaire Interview 1 – Young Dividend as well.