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I did a little happy dance to the Bare Naked Ladies singing "If I Had a Million Dollars" last night since, after downloading stock prices, our Quicken accounts total read:

$1,000,918.17

Sorry for gloating, but I had to tell someone :)

-murray
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Very excellent!

Ours topped $500,000 about three months ago and I think it's around $530K now.

#29 (it would be a lot higher if we stayed in California for two more years)
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So when exactly are you going to FIRE? It seems like you are already there!

Congratulations.
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A great milestone! And they say the first million is the toughest ;-)

nmckay
woo hoo!
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So when exactly are you going to FIRE? It seems like you are already there!

The Quicken total takes into account equity in our house, our actual investment savings is closer to $700k. I'd like our savings to be closer to $2M before I pull the trigger since we still owe $180k on our house and we have a 5yo daughter.

My estimates based on past performance & contributions put it at about 9 years. I guess I can take the line out of my spreadsheet "Date to $1M" :)

It's kind of funny, we've reached this huge milestone and I feel like I can't tell anyone face to face, I'd rather be modest about the whole situation. Oh well, I can always share here.

-murray
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Still, 700k isn't so bad. If you really wanted to FIRE, you could buy a nice place for 100k and sell your current one (I saw a special on Money about nice houses for 100k in different parts of the country).

Take the extra 200k and buy a duplex, to bring in around 5% a year in rental (or 10k). Take the remaining 700k and put it in dividend achievers, REIT's, and some bonds and draw of 4% for 28k a year. Then you have no mortgage payment and 38k a year to live on.. that seems like a ton to me. Save 10% and live off the 34k remaining.

I suppose it is all a matter of perspective. If you love where you live more than retiring then you should stick it out for 2 million. I am going to FIRE at 1 million including the house (unless inflation comes along fast) but probably take up teaching as a career with little kids, to try it out. That is still a long ways off for me though, I suppose once you finally reach it you have already set higher goals.

Yeah, there are not that many people who seem interested in FIREing, and people don't normally talk about finances, for better or worse. It is an impressive achievement, nonetheless. I am thinking of a big treat at major milestones (like 500k, 1 million), like a European vacation (with a house swap though).
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Congratulations on a fantastic milestone.

My net worth is hovering at 50k so I have a lot of road to travel. Give me some encouragement, how long did it take you to get where you are now from where you started. 1 mil in the bank with a 5 yr old sounds fantastic.


qaddy
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I was looking over my finances and just read a book about retiring in Mexico. You can live there for about half of what you can here.

I realized that we could retire right now, and it was a strange feeling (must as you may feel when thinking about moving into that 100k place and just quitting).

You have to ask yourself- what do you really want? What is the purpose of moving further, if you have already reached a point of independence? Is it merely seeking a larger marging of safety? Or coming up with a standard of living for your spouse?

I don't know the answers to those questions, but do think a larger margin of safety is nice, and the future is so unknown it is threatening. Living off of just investments seems risky in some ways.

I guess it comes down to why you want to FIRE. If you want to FIRE to pursue your dream job- couldn't you do it now? If you want to FIRE to escape from wage slavery- you certainly could in Mexico. If you want to FIRE to maintain your current standard of living here in the states in your same house- well you may have to wait.

But wouldn't it be nice to spend summers with your 5 year old instead of an air conditioned office? I am asking myself those questions now- I am not ready to FIRE but could take on a job with the summers off. What am I sacrificing and for what purpose? My kids are not even in school yet though... I get to see them during lunch break- so this soothes my ego a bit.

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I think the biggest part of reaching the million dollar threshold is the peace of mind it brings. At this point you could retire. It might not be the best possible retirement, but you could do it. So from this point forward you're working for a better retirement, but you have the basic one covered. That's a great feeling.

qaddy, just keep doing what you are doing. Learn all you can about investing and saving. Here are my basics off the top of my head.

Don't pass up a chance to make a career change if it'll get you more salary. You get the bigger money when you leave. You need to be a mercenary about this, just don't burn any bridges if you can help it.

Don't stay in your present house too long. Look for the next real estate opportunity. Don't be afraid to do a little work to your place. Worst case, you can live in it and hold on for a better market in the future.

If you are under 30, don't be afraid to take some risks. You have plenty of time to recover.

If you are married, don't get divorced. If you aren't married don't do it until you find the perfect one. Divorce is seriously expensive.

If you have kids, teach them to be smart kids. This saves gobs on education costs. Also wouldn't hurt to get them to play a sport of two especially if you have girls. Title 9 is a great way to get young women into college scholarships. It's not near as competitive as they men (unless she wants to play basketball for UConn).

And about a dozen other things I can't think of right now.

Keep plugging away. It doesn't take near as long as it seems.

nmckay
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My net worth is hovering at 50k so I have a lot of road to travel.

This is a great start!

Give me some encouragement, how long did it take you to get where you are now from where you started.

GO QADDY GO QADDY GO QADDY GO QADDY GO QADDY GO!!!

For me, I am predicting it will take 25 years to reach 1 million dollars from the day I started investing. I am 15 years down the road so hopefully only 10 more to go.

1 mil in the bank with a 5 yr old sounds fantastic.

I'd have to have a kid in 5 years to pull this off- too old for my taste but still physically possible, I hope anyway.

If you can manage to save 15k a year (or 1,125 a mos) with a modest 8% return

21 15.00
22 31.20
23 48.70
24 67.59
25 88.00
26 110.04
27 133.84
28 159.55
29 187.31
30 217.30
31 249.68
32 284.66
33 322.43
34 363.22
35 407.28
36 454.86
37 506.25
38 561.75
39 621.69
40 686.43
41 756.34
42 831.85
43 913.40
44 1001.47

At 44 you have a million bucks. Of course most people start much smaller and then work up to a higher savings rate later (to correspond with their salary slowly going up)


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Thanks for the support.

qaddy
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Give me some encouragement, how long did it take you to get where you are now from where you started

I've been contributing the max to my 401k since I started work out of college in '88, so about 17 years. Just estimating, 10 years ago our net worth was around $100k.

It definitely didn't hurt to marry a physician 9 years ago ;) though I had a decent net worth when we met and she was still 10's of thousands in debt from school. My wife works part time which lowers her salary, but it keeps her happy.

The only advice I can give LBYM and max out your savings. Keep it up and you'll get there sooner than you think.

-murray
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My net worth is hovering at 50k so I have


I can feel you qaddy. I am just about to go over $50K in my 401K plan. I also have my house($140,000) paid off in October. Yet, I feel poor.

$1,000,000 at this point looks so far away.

fredinseoul
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Sorry for gloating, but I had to tell someone :)

-murray


That is so cool!

Geez, I have only about half that in net worth, and I plan to retire in 3-1/2 to 6 years...

Life's too short...

--Chooey
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>> I've been contributing the max to my 401k since I started work out of college in '88... <<

Me too! And I got out of college in '88, too...

>> It definitely didn't hurt to marry a physician 9 years ago <<

Umm, no, that helps. I don't feel like such a slacker now. :-)

#29
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Congrats on your 1M mark! I'm at about 4.5k myself, so I have a long way to go. I've also still got a year for my BA, and then a year or two for an MS, so that's holding me up a little. It's funny, though, to see everyone at their different stages along the way to FI. Good luck to ya!

~w
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Don't stay in your present house too long.

That one's contrary to my experience. We bought a family-sized home in 1986 before we had a family. Our friends who bought "starter homes" had to pay commissions, closing costs, and moving expenses every time they upgraded. Although their smaller home had appreciated, the larger home they were moving into appreciated more over the same period. So, there are several friends of ours who owe a higher mortgage than we do on a similar or smaller house than ours.

By owning one home, we've refinanced when the rates were advantageous to doing that, keeping the low rate when mortgages went higher. People who moved may have gone from a 6.25% mortgage to a 7.5%, but there was no choice because that's what the rates were when they closed on their new house.

We've made improvements, but almost all of them have NOT raised the resale value of the home as much as they cost. We did them for ourselves, mostly, but changing the kitchen cabinets and changing the floor from linoleum to tile wouldn't get back the money put into it. I believe the deck *might*, but that's because I built it myself and am counting only the materials.
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Murray,

Congratulations! Our net worth is fairly similar to yours and it's a nice feeling that we could make it if we really had to right now. The things that keep us going with the job are a) 2 kids still in college, b) the frightening rise in health insurance and medical expenses c) a desire for a little higher standard of living and security in a long retirement. We're thinking that my husband will quit in about 4 years. Meanwhile, we've got the part-time work plan (every other month starting in September) and our RV to help ease the pain until he quits. My husband and two sons just returned from a week in Yosemite (we live in Tennessee) where they hiked and had a fabulous time.

I envy all of you who figured out how to LBYM and save for the long haul when you were young!
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Absolutely fantastic!!!

We hit a milestone last week... passing the 250k mark but the road to FIRE seems long. All the complete wackjobs I work with are motivating though.

Again, congrats
96hokies
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Thanks for the many positive comments on our financial accomplishment!

For those of you with a long ways to go, I thought I would post the growth of our net worth over the last 9 years in 6 month increments.

One thing jumps out at me, we were stuck between $550k & $650k from 12/99 to12/02, but since then, we've had 5 great 6 month stretches.

Good luck to all in reaching your goals!

-murray

Date Net Worth 6 mo change % Change
6/30/96 $255,236 $0 0%
12/31/96 $265,961 $10,725 4.20%
6/30/97 $317,186 $51,225 19.26%
12/31/97 $347,328 $30,142 9.50%
6/30/98 $398,735 $51,407 14.80%
12/31/98 $448,473 $49,738 12.47%
6/30/99 $492,788 $44,315 9.88%
12/31/99 $557,015 $64,227 13.03%
6/30/00 $600,717 $43,702 7.85%
12/31/00 $562,284 ($38,433) -6.40%
6/30/01 $602,433 $40,149 7.14%
12/31/01 $624,784 $22,351 3.71%
6/30/02 $602,679 ($22,105) -3.54%
12/31/02 $582,154 ($20,525) -3.41%
6/30/03 $680,529 $98,375 16.90%
12/31/03 $788,851 $108,322 15.92%
6/30/04 $855,052 $66,201 8.39%
12/31/04 $937,425 $82,372 9.63%
6/19/05 $1,005,699 $68,274 7.28%
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Greetings, MurrayS, congrats on your achievement! When determining your net worth, is your $1M in cash assets or are you counting your residence in this figure?

xraymd
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When determining your net worth, is your $1M in cash assets or are you counting your residence in this figure?

It's counting about $180k in equity on our house. I know some say you shouldn't count your residence, but I like looking at my Quicken accounts total and seeing 7 figures to the left of the decimal point :)

-murray
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And, for those of you that have a loooong way to go before that magic $1 million, here's a ray of hope:


http://tinyurl.com/8b9au



--Chooey
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Murray,

Congrats... It's great to read these stories to keep us motivated.

I am where you were in 6/98, and I have my first kid arriving next month. My goal is to also have $1,000,000 when my kid turns 5 in 7/2010. It is a bit aggressive, but I hope possible.

I also include house equity, as it is a sizable chunk, and we plan to leave the bay area eventually so we will see the equity sooner rather than later. Tax free as well.

I don't think you mentioned your investing style. How much in mutual funds, versus stock picking? How did your investing style change over the years?

--
whyohwhyoh
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Thank you for your post murray.

Congratulations to you! It is a great achievement, IMO.

Your post prompted me to do the same and now I can make the same milemarker claim.

It's my nature to downplay what we have (blame it on my raising!), so now that I can see it altogether, it's helping me decide where to next steer the ship.

We are also concerned about the future of healthcare costs and potentially false promises of pensions and SS, so we will keep working awhile, but there's a lot of satisfaction in knowing we could stop or make a break if we had to.

There's a poster around here with the screen name of FUMoney. I always laugh when I see that. Our nestegg is definitely FUMoney.

We've both been having a rougher time of it lately at work, so this helps keep things in perspective.

Both my husband and I left home after high school, paid our own way through college and graduate shool and repaid our school loans in full. Our careers did not begin to become lucrative until about 5 years ago and we are still considered "middle management"...so even after losing a bunch of $$ in 2000 stock market meltdown, to us this seems momentous.

ENJOY! MG






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I don't think you mentioned your investing style

We're very aggressive, mainly index mutual funds in our 401k's with a little variety of funds thrown in if they seem to beat the market. I use municipal bond funds for emergency funds, but otherwise stay away from bonds. I plan on sticking with stock funds since that's what has worked the best in the past.

I stayed the course during the 2000-2002 meltdown which, as you can see in my previous post, has paid off in the following years.

I buy individual stocks here and there with some ups and downs. I've also done quite well with stock screens (Keystone100 & PEG26), though this is a fairly small portion of our portfolio.

-murray
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Don't stay in your present house too long.

This has been one of my best strategies for building wealth. DW and I have made very calculated purchases over the years and improved the houses we have bought. This is the virtue of applying my craft. The result is that we've doubled the first home price, doubled it again for the second, then the third and now the fourth. We currently have a 5/1 ARM at 4.625 (Obviously non-conforming)on our current home and it is expected to double by the time the term expires. This strategy has allowed us to take $500K and put it to work in the market while having an equal amount of equity in the house. And remember the Fed allows you $500,000 tax free on each sale held at least two years. That's a pretty big givaway. We should all take advantage of it. The end game is to leave New York (and it's crushing taxes) and purchase a home for a fraction of the cost of our current one. The profit simply adds to the retirement account.

This is somewhat risky financing and certainly not for everyone, but if we're going to retire early we have to take some chances. I'm not convinced that one can do normal things and expect extraordinary results. So far the returns on the money outside of the mortgage has completly crushed the 4.625 bogey. If it doesn't at some point, we can always plow it back in. So I'm a big proponent to moving every few years.

nmckay
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Congratulations, Murray.

Given the comments about retiring with less than $1 MM, here's an interesting calculator. http://www3.troweprice.com/ric/RIC/ Quite different from other retirement calculators. Doesn't require you to type in huge amounts of data, uses multiple simulation runs, gives probabilities of successful retirement etc.
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Another very good thread on retirement nest egg is

Subject: Retirement pondering
Author: babyfrog
http://boards.fool.com/Message.asp?mid=19279400&sort=whole

It has links to other thoughtful threads. The take-away is, at retirement :

1) House paid off
2) No loans outstanding
3) No dependents other than spouse
4) Need $2 to $3 million depending on spending level.
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>> It has links to other thoughtful threads. The take-away is, at retirement :

1) House paid off
2) No loans outstanding
3) No dependents other than spouse
4) Need $2 to $3 million depending on spending level.
<<

I think #4 is too much of a blanket statement. It depends largely on several factors: your desired lifestyle, your planned retirement age, how much you have coming in pensions and Social Security, et cetera, et cetera.

Plus, if the government ever takes over the health care business, that throws everything out of kilter, since you're removing one 800 pound gorilla (early retiree medical coverage) and adding another (a possibly greatly increased tax burden). And then, all bets are off until the smoke clears and everyone sees how it affects them.

As a general rule given the current status quo, it's not far off. Though I'd think someone has to have a pretty high lifestyle to need $3 million. (At 4%, that's $120,000 a year, inflation-adjusted for life with no mortgage, no debts and no need to put money away for retirement savings.)

#29
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ziggy29 wrote:

I think #4 is too much of a blanket statement.

Unless you're a phenomenal speed-reader, you didn't read the linked thread where the numbers were developed with explicitly laid out assumptions. What I presented was the takeaway for somebody far away from retirement. Let's talk after you're done reading the thread.
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4) Need $2 to $3 million depending on spending level.

The median household income in the united states is $40,000.

Assume 15% taxes off the top and we have $34,000

Now, if you assume 1/4 of this goes towards the mortgage, then once you pay off your mortgage you have $25,500 in expenses.

Now, if you assume someone is taking on some risk and is willing to draw off 5% and go back to work if their investments don't grow fast enough, we are looking at an asset base of

$510,000

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>> Unless you're a phenomenal speed-reader, you didn't read the linked thread where the numbers were developed with explicitly laid out assumptions. <<

Didn't need to. Here and at the REHP board, we've gone over this hundreds of times with a fine-toothed comb, looking at all kinds of reasonable assumptions.

Since you're new here, I guess you might not know that.

>> What I presented was the takeaway for somebody far away from retirement. <<

But if we're talking about nominal (i.e. inflation-riddled) dollars, we have no idea what inflation will do for the next 30-40 years. (We don't know about the next 10, either, other than that inflation will change the numbers far less over 10 years than over 40.) So the $2-3 million guess is a pretty wild one. If inflation rages, you may need $5-10. If something happens to halt inflation (doubtful with the oil situation), $3 million is way too high. This long time period is too far to go out with *any* confidence using inflated dollars based on assumptions of inflation.

Again, over the years I've been here, we've talked about this to the nth degree.

#29
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If something happens to halt inflation (doubtful with the oil situation), $3 million is way too high.

Having too much for retirement is a mistake I certainly hope to make.

qaddy
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>> Having too much for retirement is a mistake I certainly hope to make. <<

Agreed. But the point, really, is that if know you can retire comfortably with $2 million, are you going to work another 10 years to make it to $3 million just because you'd rather retire with more money? Taken to the extreme, by that logic we'd never retire; we'd always be working a little bit longer, building up that nest egg a little bit more.

Time is money. Waiting to accumulate more money for retirement means dealing with the rat race longer.

#29
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I also have my house($140,000) paid off in October.

We tie there.

UKBB <looking forward to October>
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"Having too much for retirement is a mistake I certainly hope to make."


I do not agree, that means working too long. Go for the baby bear poridge, just right!

Though I expect pensions from my wife and I that will put us in that catagory(too high). If I could forecast what is just marginally enough I wouldn't work another day. But the medical benefits of retiring instead of walking away, will cost a few years(but hopefuilly be worth the peace of mind)
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First, another congrats to you! 1M is quite a milestone, and as others have pointed out here, that resource gives you the option of immediate FIRE at some level, if you so choose. At age 48, we are at about 700k, and when some rental real estate debt which wil be paid off in the next couple of years, we should be there also.

I also agree with theBreeze on home ownership. Be a long term buy-and-hold home owner. If you are happy where you live and your current home suits your needs, don't become a family of gypsies moving/"upgrading" every few months or years. Unless you are in a declining market, or you know that a new dump is going to be located in your back yard, don't forget that your current home is appreciating also. Closing, moving, refurbishing costs will eat into your home equity every time you move, just like broker fees eat into your protfolio ROI.

Again, congrats and enjoy the peace of mind you are earning! What to do now is up to you! As we get closer, we feel less desperate to "quit the day job" and are focusing on what we really want to do for the next 10-15 years. A great feeling!

AJS
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Again, congrats and enjoy the peace of mind you are earning!

That's interesting because I was having some reflections recently. It was one year ago that my company gutted my department and reorganized. I had a vacation scheduled so I didn't know my future employment status for several days after the initial announcement.

My whole frame of mind would be different if the same thing happened today. Granted, we have a ways to go before I'll be comfortable with RE, but I definitely have some extra “peace of mind.”

-murray
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