Here at the dojo, being a black belt in finance means to have a net worth of a million dollars. Just like a martial arts dojo, I want Millionaire Dojo to be a place where we can learn about personal finance and eventually become financial black belts ourselves. In this series, we get to hear the stories of actual millionaires and see what it took for them to get to that level.
Today’s featured black belt is a fellow blogger who goes by Steveark. Steveark is 63, married, and lives in a rural town in Arkansas. You can learn more about Steveark at his blog – Slightly Early Retirement.
If you’re a black belt in personal finance and want to be featured, send me an email. Having a blog of your own isn’t a requirement!
Now for the interview:
What degree black belt are you? (e.g. one million = first degree, two million = second degree).
We are somewhere above third degree, but I would rather not be more specific than that.
Give us the break down on your current net worth. What is it invested in and do you have any debt?
We have zero debt, really never had any after we cleaned up a few thousand in student loans my wife had. We did have a mortgage but we paid it off early too. Like both sets of parents, we have typically bought cars and everything else with cash.
Our investments are split up as follows: 21%cash, 9% International bonds, 17% US bonds, 16% International stocks, 32% US stocks, 5% Alternatives. These are divided among Personal Capital and Vanguard with a smaller amount at Betterment. We also have one year of expenses in funds that serve as our working capital and emergency fund.
How was your childhood? Was your family wealthy, middle class or low-income?
My parents were middle class, my dad was a salesman and my mom was a school teacher. But they were very frugal and managed to be millionaires (next door) by the time they retired. Plus they both had pensions so they continued to build net worth until they passed away. But we lived like middle-class people. My mom’s only vice was jewelry and my dad’s was bass fishing. They were great parents that taught my brother and I to work for our money and to invest.
My wife’s parents were farmers on a 400-acre spread. They made a living but did not make much money. They sent all their kids to college and they’ve all done well. It was primitive by modern standards. My wife didn’t have an indoor bathroom until middle school, they had an outhouse and a well. She drove tractors at nine years of age and learned hard work and how to mend and fix things.
Did you go to college?
Yes, my parents paid for it but it was very inexpensive back then, the first-semester tuition was only $225 and by the time I graduated it was still well under $1,000. But it was rising quickly, those were the days of double-digit inflation. My brother and I both had some scholarships, we were both high scorers on SAT/ACT and made mostly A’s in high school.
I chose chemical engineering and my brother chose chemistry. I knew engineering made a lot more money than pure science STEM degrees and that in fact turned out to be true. I had decided in high school that chemical engineering would be my choice and I never changed my mind. I loved my career and the extreme mental challenge of solving complex chemical engineering problems.
What is your fighting style? (Career path from first dollar ever made to present).
Offense only! I had interned at the company I joined upon graduating and I chose the job because I could rise very high without moving around the country as most large corporations required. My wife grew up on a small rural farm and I could not see locating her in Chicago or Houston! Also if I did have to transfer with this company their other operations were outside of Denver and we both loved to ski.
However, the main reason was there were mostly older people in all of the key jobs and they had not hired anyone lately so there was limited competition and lots of potential to advance. The day I walked in I had a goal to run the place before I turned 40. I failed, it took me until I was 41. But it was a billion dollar company so that was still pretty good!
My career advice is to volunteer for every project, make your work impeccable and mistake free and be very nice and kind to everyone, even to your sleaziest competition. The other thing is it helps to be super talented, however, that is generally a gift and not something you can learn. I had a good starting salary, tied for the best in my class and was well paid my entire career. The last three years when we were bought out by a Fortune 200 company my pay went up a lot due to being a corporate officer and getting free stock that shot through the roof in value.
I made over one million dollars over that three year period and we saved over half of it. At that point what had been a fun career took a turn for the worse. I realized making more money was kind of insane, I had more than enough, and decided I could consult enough to stay mentally and socially active and decided to retire.
The intense pressure from upper management and the fact that my position exposed me to criminal and civil liability from things my employees might do without my knowledge(think gigantic chemical facility) just made retiring a no brainer. Since retiring I have turned down many six and one seven-figure job offer. It took a while for me to realize that enough money is enough, but I get that now and no amount of money could entice me back into a 9 to 5.
Would you recommend people to pursue the same career path? Would you choose a different job if you could go back?
If you are a brainiac and a problem/puzzle solver with mad math and science skills then chemical or electrical engineering are great fields. But realize that your classmates will be on average 97% percentile SAT and ACT scores and you’ll be graded on the curve against them.
There is a lot of grade inflation in universities but not in engineering colleges so it only makes sense if you are weird in the right way. But if you are then it is likely you will make a lot of money doing work you’ll actually enjoy most of the time. Not all engineers love their work, but overall it has one of the highest job satisfaction ratings. I would not change a thing about my career choice.
Have you had any side hustles?
I did some consulting on the side early in my career but as I rose in the company it would have become a conflict of interest so I stopped. However, I developed some networks and skill sets that were not part of my core job duties with post-career side gigging in mind. So the day I retired I set up two consultancies dealing with regulatory consulting that are going into their fourth year now. I also have consulted as an expert witness on a huge lawsuit, as a lobbyist for a green energy company and as a chemical engineering consultant.
I try to limit my workload to about a day a week. It pays well so that I can earn a six-figure annual income from about eight hours of work a week. I consider working one day a week a hobby since I do not need the money but a lot of my friends say I’m not really retired. I’m not sure what I think, but I do enjoy the work and I think it makes me a more whole and fulfilled person. But having six days off each week is pretty nice too!
If you have a spouse, how have they contributed to your net worth?
My wife is the real secret to our success. She is frugal, an awesome shopper and handles 100% of the maintenance on our house, property and finances. I handle investing and taxes but she pays all the bills and spends all the money. She worked for nine years teaching middle school after we married but when we had kids she chose to be a stay at home mom.
As our small house began to get crowded with three kids she designed and helped build on the eight expansions and revamps we made on this house over the 40 years we’ve lived here. It has been our only house but it has doubled in size including adding a second story. My wife was the entire crew for the carpenter we hired on that project after his guys quit suddenly.
She also instilled a love of reading and learning into our kids so that they became great students. This paid off in that they all got free college including room and board and all graduated with their four-year degrees with money in the bank, no debt and lucky parents that paid virtually nothing!
They went on to get graduate degrees in education, engineering and one is a medical doctor now. All are self-sufficient, none of our millennial three came back home to live in our basement. She gets all the credit for their successful adulting.
How old were you when you became a financial black belt?
Probably in our early 50’s, I never really bothered to check on our net worth much back then. We always gave over 10% of our gross income and saved over 30% as our income rose. We never really ramped up our spending much other than for inflation.
At what age did you start seriously saving money?
I started with my first engineering paycheck. I paid the max into Social Security every year of my career so I’m going to be one of the highest paid recipients someday when we start drawing it. That is a few years away but in our case, that will be $71,000 per year ($60,000) in today’s dollars.
Most people do not realize that Social Security can pay that much but if you paid a lot into it then you will actually get a pretty good return until it goes broke! But that wasn’t your real question. We also maxed the 401K every year from the start and put an equal amount into ROTH’s when we could and also into regular brokerage accounts.
We have a good balance of tax-free, taxable and tax-deferred accounts now. Just my 401K was well over one million dollars. As much criticism as people direct at 401K’s the fact is I am a 401K millionaire and I never noticed it cost me anything, it was on cruise control and took care of itself.
What has been your investment strategy?
All stocks for most of my career. As I neared retirement we shifted more into bonds and now we have about a 50-50 split. Over time I’ll adjust that back more toward 60% stock most likely since I’ve come to believe 50-50 is a little too conservative even at our age.
Who was your financial sensei? (Most influential person/source of information in your financial life).
My dad was a good investor so I’d say it was him. I also got to help manage a profit sharing plan and I currently help manage an eight-figure endowment. Both of those have paid financial advisors so over the years I’ve been able to appropriate a lot of that knowledge for my personal use.
Are you pursuing FIRE (financial Independence/retire early)? If so, how much money do you plan to retire on and are you going to quit working for money altogether?
I could have retired with a fraction of what I’ve got if work had not been so much fun. One million would have been plenty to augment Social Security and keep me at a low six-figure spending rate adjusted for inflation. That assumes I’d work until I took social security at my one day a week side gigs, which I probably will. But I’ve got several times that amount so my kids will be looking at seven-figure inheritances some day. Someday a long time from now I hope.
Mind over matter
Do you think psychology plays a more important role than math with finances?
Both, being a high earner made my road very easy to travel. It isn’t hard to save 50% when you make $200,000. But the other matters too, I worked with people making much more than $200,000 who were basically broke all the time due to multiple divorces and out of control spending.
What was your toughest mental opponent on the path to your black belt?
I did not have one. I did use to buy new cars at first and I’m smarter now. I have excess money and still buy used cars. But because after a few years the company started providing me vehicles for personal use that never became a big problem. And even when we bought new cars we paid cash for them.
There are a lot more financial white belts than black belts out there. How do you think differently than the average person when it comes to money?
Same spouse, same house, same job. Those three save an insane amount of money. Imagine never moving, ever. You get better at living with practice in one location. You know where to shop, you make connections where you trade favors, you know where to borrow from and not buy expensive tools you only need once. Plus when you build the kind of love that lasts decades and enjoy each other’s company a lot of free or low-cost entertainment is possible. Just cooking a meal together is a date night. Or going on a run or a hike or hitting tennis balls. Or fishing, our favorite.
The same job in a small rural state offered me advancement and great freedom in deciding what I wanted to work on. I was able to build my current side gigs on company time because they benefited the company and now they benefit me. I became friends with every governor, senator and representative over time, with all the regulatory agencies, and most of the business leaders and the rich and famous people in the state.
Those contacts also make life easier because no matter what kind of problem arises I know somebody that can help. And our house is very nice now, 800 acres of wooded wetlands all around me that I don’t own but can freely use. Almost three thousand square feet of modern design and we have way less than $200,000 in it, and it is paid for! Property taxes and insurance is negligible and there is no such thing as homeowner associations around here. So I’d say those three things that are out of step with modern life worked for us.
What does wealth mean to you? Should everyone pursue it?
Freedom. I laid in bed and read until after 8 AM this morning. Then made breakfast and took a consulting call, wrote a couple of consulting emails while I ate and then answered these questions. I’m still at the breakfast table on my computer in my bathrobe(sorry for that visual!). And I’m calm, smiling and perfectly relaxed.
Four years ago I’d have spent the morning on a video conference with several of our corporation division General Managers and our CEO and our leadership teams getting criticized about whatever wasn’t perfect last week. THIS….IS….SO….MUCH….BETTER! I can’t begin to convey how good life is right now. It isn’t problem-free, but without the problem of mandatory work, it feels almost that way.
Should people follow their passions or just do something practical?
Do not follow passions. That’s a great way to be a starving artist. Follow the intersection of your best talents, your greatest interests and what makes a good living. Then over time gain mastery of that job and that is when you will grow your own passion. At least that is what happened for me.
What is your weapon of choice? (favorite money tool/app)
I love Personal Capital, enough so that I let them manage a seven-figure account. But the free tools are available to anyone, and they are good. And no, I do not get a cent from them or have any affiliate links, I just like the way they manage my money and I like their free tools.
What has been your favorite way to earn money?
Probably lobbying, getting to testify before Congress, Senate and House committees was great fun, also expert witness work was pretty cool too.
What’s your favorite way to use money?
Giving it away is the most fun. Taking road trips to hike to waterfalls is a close second.
What’s your one piece of money advice to us financial underbelts?
Boring, I know, spend less than you make. Invest as much as you can. Be frugal but also live for today. Tomorrow might not be there so have fun. But learn to have fun that isn’t expensive. Oh, that’s not exactly one thing, sorry.