relentless financial improvement

Financial Black Belt Interview – Relentless Financial Improvement

Being a black belt in finance means to have a net worth of a million dollars.

Just like a martial arts dojo, Your Money Geek is 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 guest is Chester from Relentless Financial Improvement. Chester is 38 and lives in California with his wife and kids. He became a financial black belt at age 36.

Now for the interview:

What degree black belt are you? (e.g. one million = first degree, two million = second degree). 

We are a first degree black belt and working towards our second degree. 

Give us the break down on your current net worth. What is it invested in and do you have any debt? 

Net worth is around 1.3 million.   We mostly invest in index funds with our 401Ks, IRAs and a taxable account.  We have an emergency fund that should cover about 9 months worth of expenses (aiming for 1 year).  We also have one rental property.  

Of our index fund investments, we have about 63% in US stock market, 27% in the international stock market and 10% in the US bond market.

Our debt includes our home mortgage (10 years left at 3.125% interest) and our rental property mortgage (25 years left at 4.0%).  Our real estate equity takes up around 59% of our net worth.  

Your story

How was your childhood? Was your family wealthy, middle class or low-income? 

My family fluctuated from times of wealth to times of poverty.  Prior to my 12th birthday, my family was very wealthy from my father’s engineering salary as well as real estate investments.  My mom was a homemaker. We lived in a million-dollar home on a 1-acre lot with a huge backyard and swimming pool. We had a live-in nanny as well.  We had piano lessons, cello lessons, and private tutoring.  

While real estate investing helped my father become wealthy, it also destroyed his finances.  He made a big speculative gamble on a significant amount of land – which ended up falling through.  My father was also laid off from his career. He went bankrupt and my family lost our home. One thing led to another and my parents separated.  My father left our family, leaving my mother alone to take care of my sister and me.  

Our life went through some drastic changes.  We went from living in a huge home to living in a small apartment that would occasionally have cockroach problems.  We went from eating out often to eating every meal at home. We only went shopping for clothes at discount or thrift stores.  No matter how much financial trouble we were in, my mom always managed to make sure we had a roof over our heads and a fridge stocked with food.  She prioritized the importance of a good education and found ways to pay for tutoring when we needed help.

My mother found work here and there and eventually opened up a small business.  She taught me to be resourceful and to save money. My mother’s small business thrived and she was able to pull us out of poverty and into the middle class.  As a result of what she had to go through, she is extremely frugal. 

Did you go to college? 

I graduated from a public university in 2003.  Way back then, college costs were much less than they are today. With scholarships, grants, work-study income, and help for housing expenses from my mom, I had very minimal college debt. 

I was able to completely pay off all of my undergraduate education loans within 6 months of graduating. My wife also received scholarships and grants for college so she did not graduate with any debt.

What is your fighting style? (Career path from first dollar ever made to present). 

My fighting style is to focus on both offense (making more income) as well as defense (saving as much as possible).  Growing up I was always focused on different ways to bring in extra income. This included random side hustles such as participating in research studies, reselling items on eBay, chauffeuring people, tutoring students, and working at my mom’s business. 

Nowadays, the majority of our income comes from our salaries. As our stock market portfolio has grown, there are some days where our investments pull in more income than our paychecks. We purchased a rental property a few years ago, which now provides another income stream.  

Would you recommend people to pursue the same career path? Would you choose a different job if you could go back? 

While I love my career and the path that I have chosen, it is not for everyone.  One should not pursue the same career path based on income prospects alone. Passion is necessary to keep you engaged and motivated to work.  

If I could go back (with the same educational costs), I would still make the same career choice.  If starting from high school today, I’m not sure I would want to pursue the same career path, considering that college and optometry school costs have skyrocketed over the last decade.

I love my career in optometry. I love taking care of people’s eyes and helping them see well. I enjoy optometry so much that I spend 4 to 8 hours a month teaching future optometrists about eye care at the local university optometry school. I will probably always be involved with the field of optometry. 

Have you had any side hustles? 

I always worked 2-3 jobs during college.  Some were very easy, such as being a computer lounge or information booth attendant.  I was basically paid to study! I tutored math and science. I did data entry for a small insurance firm.  That job paid $15 an hour, which was a huge amount back in the early 2000s. I even worked for a medical office as their fish tank cleaner – a job that paid $100 an hour!

I participated in paid research studies – I remember needing to wear a heart monitor for a week and donate saliva samples to monitor stress levels.  In the early 2000s as the internet was being refined, there were very easy ways to perform retail arbitrage – basically buying products for cheap and then selling them on eBay for profit.  I spent a lot of time on the Anandtech, Fatwallet and Slickdeals forums, searching for the most profitable deals. I drove high school students to school dances and other events as a paid chauffeur.  Some weekends I would help my mom at her business.

I don’t hustle as hard as I used to, but I still enjoy bringing in extra income.  I continue to participate in online medical surveys. Some of these medical surveys pay very well, at an equivalent of $50 an hour.  I occasionally do consultation work on the side, which can pay $100 to $200 an hour (or more). My favorite side hustle is teaching at the local optometry university, about 4-8 hours a month. 

If you have a spouse, how have they contributed to your net worth? 

My wife has contributed significantly to our net worth because we both have similar financial goals.  We combine our finances together 100%. Reaching financial freedom is much easier working together in 2-player mode.  We treat all of our investments as a joint portfolio. For example, my 401K offers better US stock market funds to choose from. 

My wife’s 401K offers better international stock funds to choose from. We allocate my 401K contributions towards the US stock market and my wife’s 401K towards the international stock market.  Because we are both on the same journey towards financial independence, there’s a lot less stress and resentment when it comes to money.

At what age did you start seriously saving money? 

I first started seriously saving money at age 29.  This was after a few years of living paycheck to paycheck and never getting ahead. 

What has been your investment strategy? 

We mostly follow the Bogleheads 3 fund portfolio of index fund investments (63% US Stock market, 27% International Stock market, 10% US bond market).  We also have one income-producing rental property.    

Who was your financial sensei? (Most influential person/source of information in your financial life). 

I’ve had many financial senseis over the years.  Ramit Sethi, the author of I Will Teach You to be Rich, was the first sensei that introduced me to the basic concepts about earning, saving, investing and automating my finances. 

John Bogle, the founder of Vanguard, was the sensei that taught me the fundamentals of index fund investing.

Mr. Money Mustache has been the most influential sensei for me, face-punching me into getting relentless with my finances.  He’s taught me the importance of living on a high savings rate. This hit me hard because I used to think that the best way to build wealth was to increase my income. The more income I made, the more I would spend. While increasing income is important, saving a significant portion of that income is just as (if not more) important.

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? 

We are definitely pursuing financial independence.  I’m not so sure about aiming for early retirement. My life priorities have shifted and my family comes first.  I want to continue to spend more quality time with my kids, teaching and nurturing them. I love my career. I enjoy taking care of people’s eyes and helping them see well. 

Reaching financial independence provides options.  I can choose to work part-time. I can volunteer my skills to help underserved local and international communities.  Once we reach financial freedom, we can do whatever we want, whenever we want.

College and professional school have become insanely expensive over the last few decades with no signs of easing up.  When I attended college, I could keep up with my costs just working part time. I could easily repay my loans within 6 months of graduating. 

When I graduated optometry school, I had about $100,000 in student loans. Students graduating optometry school today (11 years later) are dealing with student loans upwards of $250,000.  Should our kids choose to pursue college and/or professional school afterward, we want to provide some assistance and do not want to saddle them with crippling debt. Working after reaching financial independence will also provide more options for our children.

Mind over matter

Do you think psychology plays a more important role than math with finances? 

This really depends on the individual.  Facts and numbers motivate some people; while other people are motivated by emotions.  I’m a big fan of automating investing and savings. This takes the willpower out of the equation. 

What was your toughest mental opponent on the path to your black belt? 

My toughest mental opponent was procrastination.  When I first started making money, I never made saving or investing a priority.  I kept telling myself that I would start investing in the future once my income grew.  I was too focused on living for the moment and worrying about the future later. Barring someone living in extreme poverty, everyone can save and invest at any income.  The hardest part is getting started.  

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? 

Many people only think about today and how short life can be.  The fact is that for most people, life is long. I try to keep an eye on the future and plan for it accordingly.  I try to live a simple life and express gratitude daily. As it turns out, having a minimalistic lifestyle is very beneficial for building wealth quickly. 

Some people are surprised at how frugal I am.  I bring lunch to the office every day and I rarely eat out.  My wife cuts my hair at home instead of me paying for a haircut.  I have a limited amount of clothing that I wear (2 pairs of jeans, 2 pairs of shoes, 3 pairs of slacks, 10 button up shirts) and I have a very simple wardrobe.  For instance: I will only wear black slacks at work, I will only wear jeans for other occasions (do not own any shorts), and I will only wear black socks. I groom my dog at home (haircuts, baths, teeth brushing, and nail clipping).

What does wealth mean to you? Should everyone pursue it? 

Wealth to me means having freedom.  Having wealth gives you options to pursue your passions, instead of your next paycheck.  Yes, everyone should pursue wealth.

Should people follow their passions or just do something practical? 

Ideally, someone should be passionate about the career that they are in.  For our working years, we spend about half our time being at work or doing work-related things such as commuting to/from work.  It can be hard to be motivated to work if you can’t find some enjoyment from it.  

Unfortunately, not all passions pay the bills or contribute to wealth building.  Being practical is the next best option. If someone does not find happiness in their job, there are other ways to cope.  One can develop friendship with coworkers or find some meaningful purpose in their work. Financial freedom will give you more time to pursue your passions, and it may take a practical career to get there. 

Bonus round

What is your weapon of choice? (favorite money tool/app) 

My favorite finance app is Mint.  I’ve been tracking my finances on Mint since it first came out.  It has helped me catch a few fraudulent charges over the years. While Mint occasionally does not connect with certain accounts, it allows you to manually track them.  Their customer service is very responsive and helpful.

What has been your favorite way to earn money? 

My favorite way to earn money has been from investment returns.  My money can work much harder than I can. My investment returns get reinvested, which further produces even more returns.  On some days, investment returns far exceed what my paycheck can bring in after 2 weeks of working.  

On a side note, I love earning credit card points and miles.  Just by making normal purchases with a credit card and collecting points, we have been able to go on many free vacations.  It’s nice not to need a separate savings account for travel expenses. We have earned and redeemed over 1 million points and miles.  We’ve traveled the world by flying in first class and business class, a luxury we would never pay cash for.

What’s your favorite way to use money? 

Our favorite way to use money is to spend it on experiences such as travel, dining and Airbnb/hotel stays.

What’s your one piece of money advice to us financial underbelts? 

Invest early and often.  When it comes to compound interest, time is on your side.  Don’t wait until the future to start saving. Investing less early on beats investing more later on.  

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