Personal Capital Joe Roberts Wine

Giving Up A Six Figure Job For A Passion

in Financial Planning by

Welcome to the second installment of our “How To Become A Millionaire” series where we profile people from around the country across various industries who’ve achieved the one million net worth milestone. The goal is to figure out what they’ve done in order to gain insights into how we can improve our own finances.

Joe gave up a healthy six-figure job to follow his love of wine. He now earns 80% less than before, but he’s thrilled to be pursuing his dreams. It seems like so many high income earners feel stuck working at jobs they no longer enjoy due to fear of the unknown. What if I never make as much money? What if my quality of life plummets? What if I have a health emergency and can’t pay? What if society no longer respects me? Such questions are common among those itching to break free.

If your golden handcuffs are starting to tighten, we think you’ll appreciate Joe’s thoughts of how he took the leap of faith to pursue his dreams.

MILLIONAIRE SNAPSHOT

Name: Joe Roberts

Age: 42

Title: Principal (1WineDude.com) [formerly, IT Service Manager)

Years At Job: formerly about 15

Total Work Experience: About 20 years

Gross Income From Old Job: about $190K/year

Gross Income From New Job: about $35K/year (writing gigs, speaking engagements, site affiliate income)

Alternative Income: Dividend income / capital gain income as needed

Estimated Annual Expenses: about $60K annually

Estimated Net Worth: $1.6 million

Diversification of Net Worth: 65% Index funds, 13% property, 19% pension, 3% cash/other

Occupation: Media (formerly IT Manager)

Industry: Wine (formerly CPG)

Location: Philadelphia area

Education: MS in Information Science

Sex: M

Single Or Married: Married

Number of Children: 1 (daughter)

Average Savings Rate: I’ve never calculated it, but rough estimate is that it was around 35% annually

Lucky Breaks: I’ve had several, including marrying the right girl and having a great kid. Professionally, I was lucky in that I anticipated several trends in my field of IT before the impacts were felt (reliance on developers, and outsourcing, for example) and was able to position my career to take advantage of those.

Big Mistakes: One to three things. There are sooooo many… I didn’t start saving for retirement immediately in my career, which was a dumb mistake because I could have retired even earlier and/or with more invested. I also purchased a vairable annuity from “friends” which turned out to be a really dumb decision. But the biggest mistake was a money relationship issue: me not originally providing a safe enough environment for my wife to openly discuss finances, which caused us to make some costly decisions when I retired early.

Investment Strategy: My strategy is more or less the Bogleheads / three fund index portfolio. It’s extremely simple, and based on the now incontrovertible evidence that you cannot beat the market via skill (or at least, you cannot determine what finds will ahead of time!).

QUESTIONS & ANSWERS

Personal Capital: Did you ever think you’d be a millionaire, or be a millionaire by age 42?

Joe: Yes, and No. We didn’t have much money when I was growing up. Finances were always tight, and I lived in a house where things were breaking down (it was, much later, condemned). And so I decided that I would, no matter what, save my butt off if I had to, in order to ensure that I didn’t have to subject my future family to that kind of life. I just didn’t want money to be a severely limiting factor in my life.

I did often tell people, when I was a pre-teen, that one day I’d be a millionaire, as if it were just a matter of fact conclusion, and they’d sort of laugh it off, but I was serious. I saw it as an achievable goal through hard work and saving, though I’d no idea back then how the specifics would work out. And then I literally forgot about it for decades, and just went into a benign neglect mode of saving as much as I could without becoming miserly and while still enjoying life to some extent.

I joked at work that I wasn’t greedy, if I was someday worth one million then I figured I could make that last almost forever and I’d quit working. Then one day in my late 30s I looked at my entire net worth and saw I’d hit that number, and then I figured I didn’t need to sweat office stress so much, I had options and could be okay if I had to part ways with the corporate world.

Personal Capital: Why were you able to become a millionaire, but everyone in your family couldn’t?

Joe: Well, I had more options than most of my family because they sacrificed to send me to college so that those opportunities would open up for me. I also had a different mindset of saving, and a much higher paying job than the previous generations of my family. Add it all up and I was just able to do it more quickly. My family also instilled a sense of hard work and never providing low quality work, no matter what, which I am sure helped me move up in my IT career.

Personal Capital: Let’s address the critics up front. One commenter wrote in the first millionaire interview post, “If you’ve been making over $100K per year for almost 20 years, then you’d have to be an incompetent moron NOT to be a millionaire.” How do you respond to such a statement? How important is a high salary to becoming a millionaire? Do you think you would have become a millionaire if you only made $50,000?

Joe: I basically agree with that comment, actually, except that we have to remember that people have different circumstances. Caring for ailing relatives, poor health, or other demands, can happen to anyone and drain money that could potentially be saved instead. Having said that, I’ve also no doubt that people waste a huge amount of money on things they don’t really need – and I’ve been guilty of that somewhat from time to time. We are only human.

Saving money and becoming a millionaire is quite straightforward, but it’s not easy because societal pressures are strong and most of them involve parting you from your hard earned cash. A high salary can help, but your savings rate is, I think, more important. If you make $50K/year, that’s an enormous sum compared to the rest of the world right now. Enormous. The trick is – all things being equal – controlling expenses, especially recurring ones.

Personal Capital: Do you think it’s better to include your primary residence as part of your net worth or not?

Joe: This seems to take on the air of a religious debate online, but I do include my home in my net worth calculation and think that it’s important for others to do this, as well, if only to get a sense of the total picture of your finances. You need to do it intelligently, in that you have to treat it as a relatively illiquid asset, and subtract any portion still owed on it, and not let a hot housing market convince you that you’re wealthy (because in that case, if your home is a substantial percentage of your net worth, you’re only “rich” if you sell it and move into a less expensive home). In other words, it should be part of your net worth, I think, but not a factor in how financially independent you are.

Personal Capital: Please tell us more about how your net worth is divided?

Joe: Only about 13% of it is in our home, and a similar percentage is in a relatively well-protected pension I will eventually receive from my corporate days (another lucky break!), and a small portion is in cash for immediate needs and emergencies. The vast majority of it (over $1M) is invested in index funds. Of that, about 2/3 is in retirement in a classic three-fund portfolio that is 75% stocks. The other 1/3 is in a taxable account, but is 50% in stocks that are slightly weighted to Small Cap, and 50% in bonds weighted to tax-exempt bond funds. I should add that the retirement portion was all over the place when I was saving, and wasn’t simplified into the 3-fund portfolio until I had semi-retired, but was always in index funds (which underscores, I think, just saving no matter what, and keeping investment expenses as low as possible).

Personal Capital: What does your wife currently do?

Joe: She has a dream job as far as my daughter is concerned: she manages a local toy store, and works part time for a local independent bookstore.

Personal Capital: Do you think Americans have a savings problem? If so, why?

Joe: I think the evidence points to an incontrovertible YES at this point. The Why is, I think, a combination of social pressures and rising cost of living with a wounded economy. However, since investing and saving is not rocket science, I think the general lack of financial education in this country plays a part, along with what I would consider downright predatory practices by some firms in the financial industry.

Personal Capital: What do you think is the biggest detriment to a person’s finances?

Joe: A lack of education about how investing works (and doesn’t). It’s why otherwise highly intelligent people will pay ridiculous sums of money to people who provide almost no value and are siphoning off earnings that rightfully belong to the investors, who are fronting all of the risk investing their own money. As Americans, we have this strange arm’s-length, dysfunctional view that finances are somehow important but that doesn’t need our attention now, we can leave it up to others who are smarter and will “beat” the market for us and it’ll all turn out OK. If we treated it like we treat home DIY projects, we’d have even more millionaires than we do now, and a few less billionaires in the finance industry, I think. Another big factor is where you live; the cost of living and how far your dollar can go has a huge impact, but I find that people often overlook that.

Personal Capital: What’s your advice on how to become a millionaire?

Joe: You really have two numbers, at a high level, that you need to worry about. X is what is coming in, Y is what is going out. X needs to be bigger than Y for as long as you can manage it, and as much of the remainder as possible needs to be invested in simple solutions like low cost funds, that you won’t touch for many, many years. That’s really it. If anyone reading this thinks that is too simple, go to the Social Security website and add up all of the wages you’ve earned over all of the years that you have worked. For many people, that figure will already be close to – or in excess of – $1 million. The trick is how much of that you socked away so that you could exercise freedom later (the freedom to do whatever you want, or to have more choices for how you want to work, etc.).

Personal Capital: What do you think of the mantra, “Follow your passions and the money will follow?”

Joe: It’s largely bunk, because the passion has to produce something valuable to someone else or you won’t make any money at all. If you can find passion doing a job that pays a great wage, and save like mad, then you will have the freedom to pursue your bigger passions later. In fact, some people’s big passions could very well change the world, so in some ways you could say it’s a moral obligation to try to pursue them, and the best way I know to do that is to make some money first.

Personal Capital: How does it feel going from making $190,000 a year to $35,000 a year?

The reduction in income is an adjustment, for sure, but we don’t have big expenses generally, so combined with the investment income it’s a big change, but one we were mostly prepared for beforehand. Our combined income is $70,000 a year, so we’re doing fine by most people’s standards, I suppose given our expenses are $60,000 a year.

Personal Capital: How did you know when to leave your relatively high paying tech job? What were some financial exercises that took place before you left? e.g. 12 months of savings.

Joe: Well, my company closed my office and that started a long, gradual draw-down of my time there. Once they announced it was happening, and I knew I had reached $1 million net worth, I felt it was as good a time as any to switch gears and leave, rather than moving to another state, probably getting promoted, and spending even less time with my family; I just didn’t want it. Having said that, I stayed on almost two years after my original separation date, and worked on some great programs, and made a bit more money for the emergency fund (about two years’ worth) than I’d originally anticipated (another lucky break). But the catalyst was the company reorganizing, and my wife and I realizing that I didn’t need to work any longer.

Personal Capital: Do you think it’s harder or easier to become a millionaire today?

Joe: It’s still simple but has never been easy, because of the savings discipline involved, which can be a drag sometimes. While I think it’s become harder to make higher wages recently due to the economic downturn, that will pass eventually, and the tenets about saving and investing will probably still hold true unless the planet gets hit by an asteroid or something similarly catastrophic.

Personal Capital: What do you think are the key reasons for widening wealth inequality? Do you see any concrete solutions?

Joe: That’s an incredibly complex question; no doubt there are dozens of interconnected reasons, many of them hinging on how we can get people access to more opportunities, or at least prevent opportunities from being unfairly denied to people. In terms of building wealth, however, I see education – not just financial, but education in general – as enormously important and one of the pillars upon which any solution has to be built over a long haul.

Personal Capital: How much do you think luck plays into your success? How much do you think effort plays a role? What would you quantify the percentage split?

Joe: It’s got to be huge. At least 50%. I mean, as a species we are hard-wired to significantly underplay the role that chance has in our lives, so just based on the science I think it’s got to be a big percentage. And I like thinking that I have a lot for which I should feel humble and thankful, so I will stick with the 50%!

Personal Capital: Do you have an ideal net worth figure you’re shooting for? If so, why?

Joe: Not really, I’d rather focus on minimizing my expenses and building up my media career in wine. I’d be ecstatic if our portfolio doubled by the time we withdraw from the tax-deferred accounts in 20 years or so. Hopefully we stay lucky and things work out even better than we’d planned, but life has a way of returning everything to the mean, including luck. So I am not banking on windfalls like that. Breaking $1 million was enough to change our thinking about the future, and so I’m not thinking much beyond that, and growing and protecting that, and enjoying the freedom that has provided to our lives.

Personal Capital: Why do people complain about why the world isn’t fair, yet don’t do everything possible to get ahead e.g. get into the office hours early before everyone else and leave hours after?

Joe: I look at it this way: did the Roman empire fall because people were stupid? No, it probably fell because they became lazy and complacent due to too much success. As a country, we need to continually check ourselves and our elected officials, that we’re not getting complacent or waiting for handouts, and are willing to put in the hard work for ourselves and for others.

Personal Capital: Do you think one of the basic reasons why there aren’t more millionaires is because people simply don’t care as much about accumulating as much money?

Joe: I really wish that were the case – because you can certainly have a productive, happy, and amazing life without that much money. But I don’t know too many people who wouldn’t at least want the freedom that kind of money provides, so for many people it’s more a factor of not believing that kind of savings is attainable, when in reality it is attainable for many, many of them. There are millions of millionaires in the U.S., so why couldn’t/shouldn’t one of them be someone reading this right now?

Personal Capital: Tell us about your wine business. What made you decide to go that route?

Joe: I feel in love with the stuff and went off the deep end, getting wine certifications and hanging out with sommeliers, etc. I started 1WineDude.com as an avid wine consumer, and it became popular, and I’ve been able to build a brand around that online to the point where I’ve gotten some great writing gigs in outlets like Publix Grape Magazine, Parade, and Answers.com. It’s a classic example of building up wealth so that you have the freedom to follow your passions later. It’s crazy, but in 2007 no one in wine knew who I was, and now I’m sometimes cited as one of the most influential wine people in the U.S. business. That’s partially a testament to how strange the wine world is, but more a testament to how the Internet has helped to level the playing field for people who want to pursue their passions.

Personal Capital: Are you a Personal Capital user? If so, what do you think of the software?

Joe: I’m still in the “playing around” stage with PC but I love the interface. And having it focus on investments sets it apart from its competition; whereas Mint seems focused on spending/saving, PC seems focused on net worth, which is potentially very powerful for many users who have gotten a handle on savings and are focused now on growing their money.

Personal Capital: Anything else you’d like to share?

Thanks for the opportunity to talk about this. I get asked – literally at every single wine event I attend – how I am able to make a living doing what I do, and I’ve never really answered that question until now. The most amazing part about my situation is that I get to stay home with my six-year-old daughter, and take an active part in her life every day; it’s the freedom and precious moments that brings that are the best part about being able to “semi-retire.” I just hope that others who might read this find it helpful to see that there is a life after Corporate America, and that it can be filled with things that are much more enriching than continually buying the latest electronic gadget, and that if you have a plan and are diligent about following it then you don’t need to wait until you are sixty to pursue that life.

** If you’d like to share your millionaire story, please leave a comment and we’ll get back to you. We are especially looking for stories from women and people of various cultural backgrounds to keep this series as diverse as possible.

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Financial Samurai

Sam is the former Managing Editor of the Daily Capital blog. He worked in finance from 1999-2012 before deciding to focus full-time on his online endeavors - FinancialSamurai.com and the Yakezie Network. Sam is an avid tennis fan who loves to travel. He received his BA from William & Mary and his MBA from UC Berkeley.

18 comments

  1. Untemplater

    Fantastic interview and another fascinating look into the life of a millionaire. I can totally get how your wife has a dream job for your daughter! 🙂

    That’s great you were able to completely switch careers and have the support of your wife. A lot of people have dreams they want to pursue but don’t have support from their spouse emotionally or financially. So it’s great you have both.

    It must be so rewarding to watch all the different stages from growing grapes to selling wine to customers. Keep up the great work!

    Love these posts Sam, thanks!

    Reply
    • 1WineDude

      Thanks, Untemplater. You hit on one of the big lucky breaks in my life, which was marrying my wife!

      Reply
  2. George

    This series is not only encouraging but also insightful on evaluating the right financial decisions one has to make early in their career. It teaches us that you don’t have to start filthy rich and can build up slowly.

    I too agree after noticing that financial diligence is just not taught in the school culture over here and I wonder why. I see college kids being signed up for credit cards at colleges without any parental oversight. I immigrated to this country 7 years ago and have been blessed by the wonderful oppertunities and freedom that this country provides.

    I’m 32 and my wife is 30. We’re starters but we’re generally frugal and haven’t fallen for the spending-spree culture. We’ve so far accumulated around 1.9K in net worth, gross income of around 1.3K and I’ve changed my investing strategy over the last three years to a dividend growth model with a goal of generating income to meet expenses in 10 years through dividends and address inflation through divend growth.

    We target saving around 40% of income. We do have occasional spend bumps cutting our savings to 25% to 30% but I think that’s still good considering anything more than 20% is a must. The only assets we own are our cars (paid in cash) and we may purchase a home after two or three years. As per Personal Capital, I’m around weighted 70% in equities and 30% cash (which is our emergency fund) so I think that sort of matches with the formula of being 100 minus your age in equities. My long term investment goal is to be overweight healthcare, energy and consumer staples as these are always in demand and growing while I have exposure to other industries.

    After reading articles like this, I’m looking forward to seeing how our slow and boring approach will turn out 10 years down the line.

    Reply
    • 1WineDude

      George – I can attest to slow and boring winning the race (at least in terms of how I’d define winning :).

      Reply
  3. Financial Samurai

    Hi Joe,

    Thanks for sharing your story! One thing I forgot to mention is how you account for the difference between your $60,000 annual after tax budget, and your $35,000 pre-tax gross income. Is the short-fall made up by your alternative incomes? Or do you draw down from savings/principal? If so, which source do you decide to draw down from.

    Thanks,

    Sam

    Reply
    • 1WineDude

      Thanks, Sam. My wife’s salary makes up the remainder, so the focus is on keeping our expenses reasonable while still enjoying things and providing for our family, etc. When/if needed we draw from savings for larger expenses (vacation, etc.). I’ve yet to figure out the best method (if there is one) for how to draw down from the pre-retirement portion of my portfolio. It’s the psychological adjustment of transitioning from accumulating to spending, and I’ve yet to come to grips with that, I guess.

      Reply
      • Financial Samurai

        Ah, yes! I totally forgot about your wife’s income. That’s great you’ve got a steady income partner.

        I completely agree with you on the psychological adjustment of transitioning from accumulating to spending. As a super saver myself, I would rather eat ramen noodles and water than pilfer my principal. It was a little tight for the first year, but I was able to grow my revenue streams to the point I didn’t have to touch principal again. Although I make much less now, I’m still saving 50%+. We all tend to adapt to our surroundings, no matter what.

        Reply
        • 1WineDude

          Sam – yeah, fingers crossed, I’ll be able to do the same without too much mental and emotional hand-wringing! 🙂

          Reply
  4. Jim

    Doing something in the wine industry is my next career once I’ve accomplished what I set out to do with my current career. Very inspiring to see other people who are courageous enough to make the switch.

    Reply
    • 1WineDude

      Jim, just remember the old adage:

      Q: How do you make a small fortune in the wine business?

      A: Start with a large fortune!

      Reply
      • Jim

        Absolutely, I started small with a house in Healdsburg and making a lot of industry connections so I can at least get the industry discount. I doubt I will ever get into the manufacturing side since that’s the largest black hole for dollars.

        Reply
        • 1WineDude

          Then you’re in better shape than many winemakers/proprietors that I know, Jim! 🙂

          Reply
  5. Sean Cooper

    Thank you for sharing your story, Joe, it was very inspirational. I’m a big fan of goal-setting and tracking my net worth. What advice can you provide for someone who’s expenses exceeds their income? How can become motivated and their savings back on track?

    Reply
    • 1WineDude

      Thanks, Sean. My advice would be to prioritize the expenses and debt, get brutal on the recurring expenses, and pay off any of the debt at whatever schedule is possible. What I found with paying off debt (admittedly, this was only student debt and was early in my career), watching the debt becoming smaller and smaller was serious motivation. I will NEVER forget hearing the voice on the other end of the phone when I called to schedule the payoff payment on my student loan: “Congratulations, Mr. Roberts.” It will sound odd, but that conversation made me feel like an adult for the first time, I think!

      Reply
  6. Todd - VT Wine Media

    Joe,
    I figured you were a shrewd financial planner and appreciate that you have shared so many of your strategies and tactics for the benefit of others. Reading a case study like this, directly from the highly informed consumer certainly carries a different kind of weight than when delivered by a financial professional. It’s effective, much in the same way that your style of wine writing successfully informs consumers with its peer oriented delivery.

    I’m not sure what kind of loss you were to the IT world, but I believe that the wine world is definitely a bit better off because of your transition.
    Cheers.

    Reply
    • 1WineDude

      Todd – thanks, man, I really appreciate those kind words, especially coming from someone I respect as much as you. Here’s hoping we get to share a glass (or several) soon!

      Reply
  7. Rowland

    Great article Joe, and thanks for the reminder blog post – I hadn’t seen it originally. My situation is similar to yours except you figured things out 20 years sooner than I did! The turning point for me was putting savings on autopilot (automatic monthly deductions to investment accounts – I didn’t consider that as “my money” to decide whether to spend) and setting a budget and tracking it.

    Try to teach my kids this but hard to do without sounding like you’re preaching. And it’s soooo easy to raise your spending to keep pace with your income so your amount of savings never grows.

    Thanks for sharing and congrats on making your passion your pursuit!

    Rowland

    Reply
    • 1WineDude

      Thanks!

      In hindsight, since I am divorcing my soon-to-be-ex-wife on fault grounds (use your imagination – it’s just as bad as you think), I shouldn’t have said those positive things about her in the interview. The truth as I have now uncovered it is that I did all of the savings myself, despite the destructive actions of my then-wife. Thankfully, I saved a lot of money, and I have copious amounts of documentation on my pre-marital financial state, and so should still be financially whole even after the divorce.

      Anyway, a cautionary tale for everyone there: be very, very, VERY sure that you are actually “marrying the right girl” when you do tie the knot. And you never know what craziness will hit you in life, so save your butt off as early and as much as you can!

      Reply

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