Who are you and how old are you:
I am a 55-year-old tenured professor at a major Ivy League University on the East Coast. I also write books on the side and have a second career as a speaker/consultant in my field of study.
Tell me about your background:
I grew up in the Midwest, stayed in the Midwest for college and my masters degree, and then got my PhD on the West Coast. I've taught at three major Ivy League schools, and stayed put at the third one. I've very well-known in my field of research and run a relatively well-known lab.
Tell me about your money. How much do you make?
Between $200,000 - $300,000 a year from my university salary. Add on another $50,000 - $300,000 every year from consulting/royalties/speaking fees.
A lot of my annual earning power comes down to hustling. If I hustled more, I would make more but it would probably affect my work performance at school.
How do you define rich?
Having enough money so that for normal things (meals, tickets, vacation trips), you never have to ask what it costs. You can always travel first class without having to ask about how much it is. It's knowing that you had enough money in enough different places and in varying levels of liquidity so that if disaster strikes in any form, you’ll always be okay and prepared.
Did you grow up with money? How did your childhood conditions about money affect how you behave?
No, I definitely did not grow up with money. My dad worked in the muffin line of a commercial baking company and my mom was a legal secretary. We were very much lower middle class. During Christmas, my parents used to buy used games or toys at rummage sales and mom would wrap them up in saran wrap and use a hair dryer to tighten up a the saran wrap so that it would look more new.
My parents were extreme savers. When I was eight years old, my dad was laid off for 4-8 months and we struggled through that time. We went to the local food pantry, had pancakes a lot for breakfast, ate weird parts of chicken for dinner and had lots and lots of white bread.
This really incentivized them to save. They put a lot of money away in banks and invested in bonds. They were very financially conservative.
To this day, I don’t order a cheeseburger in a fast food restaurant without asking how much it costs. I will always ask if there are refills on diet coke. Otherwise, I won’t get it unless it’s priced under a dollar.
Growing up in such a household made me very frugal and conscious with how I spent or saved my money.
Did your parents give you money when you were growing up? What about for school?
My parents gave me a weekly allowance (started at $0.25/week and eventually went up to $1.25/week) for doing household chores. From 11 years old and on, I had summer jobs, which included detassling corn, selling vegetables door to door, and mowing lawns.
I wasn’t encouraged to go to college because parents didn’t have money saved for college. The only reason I went was because when I was 17 (this was in 1977), I won a $500 junior achievement award for winning a business trivial contest. I then chose the cheapest college I could find so that my $500 winnings would cover the annual tuition.
Do you still have school loans?
No - I've never had school loans. I sold Amway to make money on the side which paid for my entire college tuition. When I attended my masters program, I had a 20 hour/week job where I reviewed resumes and worked as a fraternity adviser. This (along with my Amway sales) paid for my masters program. During my PhD program, my tuition was paid for and I got a $1000/month stipend which paid for room and board. I lived in a mobile trailer for a few years to save on rent costs. It's not as bad as it sounds.
Where did you learn about investing?
In college, I would go to the library and read books on investing. That's where I first learned about investing. Two book that come to mind includes Think and Grow Rich by Napoleon Hill and More Wealth Without Risk by Charles Givens.
What does your family situation look like?
I have three children, aged 10, 8, and 6. They are lots of fun. I also had a cat for ten years but she sadly passed away a few years ago. My parents are in their mid-80s and still living in the Midwest.
How much do you spend on your children every month? How does that break down?
I'm not too sure about this and my numbers are probably going to be incorrect but I'd say that $500 is spent on each child per month. There's $200 for lessons (ballet, piano), $150 for food, and $150 on other miscellaneous expenses. But again, I'm really not sure about this.
Have you started to put money away for their college tuition? If so, how much is it?
I started two 529 plans titled “Child 1” and “Child 2” when I was 31 years old and deposited $1000/year for each account. I stopped contributing to both funds when I didn't get tenure at my first teaching job and only began contributing again to both accounts in the recent years. Each account has around $20,000 now. I just started a 529 plan for my youngest child this past summer.
How did your financial lifestyle change when you had children?
Life became boring. I couldn't really spend money going out or going on vacations. When I was single and making decent money, I bought a lot of weird stuff. I really like WWII collectibles and bought a ton on ebay. I've probably spent over $20,000 on this stuff over the course of ten years.
Are you still living paycheck to paycheck? If not, do you feel that way due to your lifestyle?
No, I've never lived paycheck to paycheck because I saved money all the time. I always had a six-month cushion.
What was your best purchase?
The first house I ever bought when I turned 30. It was in the town where I got my first tenure-track teaching job and buying the house made me feel like I had finally "made it" and was a real adult. When I didn't get tenure, I had to leave town relatively fast and so I sold my house. I didn't make any money on it because I had to leave in a hurry but it holds a great deal of sentimental memories for me.
What was your most regrettable purchase?
A home I bought on the East Coast when I moved there for a teaching job. I overpaid for it because at the time, I was very busy with other things (recovering from knee surgery, moving to a new school, didn't want to rent a place, etc) and hurriedly chose the house. Even though I've since moved to a new house, I haven't been able to sell the first house and am still stuck with it.
Do you feel like your success now has anything to do with luck or being in the right place at the right time?
I attribute most of my success to God. I have a very deterministic view - a lot of the things that people would chalk up to luck, I attribute to a divine force.
How much investing do you do, if any?
I bought some Apple stock in the early 2000s, when the iMac G3 came out. I really admire Steve Jobs and wanted to invest in his company. I also invest in mutual funds and real estate buildings.
How much do you have in your retirement account and do you actively contribute to it?
I probably have around $1 million in my retirement account and max out my 403(b).
Do you talk to your peers and family about money?
I talk to my parents, brother and accountant. But other than that, I don't really talk to anyone about money. Academics talk very little about money - they are not into conspicuous consumption. My business friends talk about money all the time though. They're two very different crowds.
Do you worry about money?
I don't worry about my personal funds but I worry about having enough money for my school lab. The lab employs around 20 people and our budget is in the millions. I am always concerned about whether we will have enough to create the impact that I want.
Do you feel like your lifestyle reflects your income bracket?
No, I’m not into conspicuous consumption. Being raised frugally had a huge effect on my lifestyle. I feel that people who make half or even 1/3rd of what I do live a much more extravagant lifestyle.
How are you teaching your kids about money?
By often telling them there’s a lot they can’t have (iTunes apps, buying stuff at stores) or can’t do. They’re not spoiled at all.
Do you splurge on anything? If so, what was the last splurge and how much was it?
When I achieve something great at work (I get a major paper publication in one of the top two academic journals), I would reward myself by buying something new. This happens maybe once a year. The last example was buying myself a nice piece of leather luggage that cost $2000 although I did wait for it to go on sale for $1300 before I bought it.
Do you pay attention to money or personal finance at all?
I'm more conscious of day to day stuff (how much does adding extra cheese on my burger cost) but lose sight of the bigger picture sometimes (how are my retirement accounts looking).
Do you have a plan to make more money?
Yes, I'm in the process of starting a business around a book I recently wrote and am currently looking to hire a CEO to grow the business.
What would it take for you to feel like you are completely rich?
$25 - $30 million. My reasoning for this is strange. I like checking out websites like celebritynetworth.com and finding actors that are around my age and look like me. I see how much they're worth and think that I should be worth that much.
In terms of money, if you could go back in the past, what is something you would have done differently?
I would have always maxed out my accounts like the ROTH IRA, 403(b), tax deferred accounts, etc. I travel a lot for business and even though my costs are reimbursed, I often lose receipts or don't turn in my expenses on time. I would have made sure that I got every dollar reimbursed as quickly as possible. I also would have hired financial consultants that weren’t in the business of selling something or the other. And lastly, I wouldn't have given away IP related to my work. I've lost money that way in the past and it was a tough lesson to learn.
What is your strategy for moving forward now in regards to your big financial goals in life?
Max out as much money as possible for retirement, get all my business receipts reimbursed as quickly as possible, and focus much more on generating money through my business.
What is this?
An anthropological look at how people think about money. Created and edited by Star Li.