Financial Freedom - 5 million

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DJFlare99
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Financial Freedom - 5 million

Postby DJFlare99 » Wed May 11, 2016 9:08 pm

Hi all. Finance for me is a hobby and a passion. I have been a saver since I was 8 years old, and was given a gift of $200 from my grandparents. My parents helped me open my first savings account. When I got my 1st interest payment, I thought the bank had made a mistake! It blew my 8 year old mind that money can create money. Since then, I was hooked.

Goal: $5MM
Expected time frame: 8 years


Now I really don't know how I accrued $2.2MM. I know I hit $1MM about 5 years ago, and that's when I started to track. Prior to that, I never calculated or tracked my net worth. I actually never budgeted either. I just kept my expenses as low as I can go, and saved/invested everything else. Looking back, I could've made different moves. For instance, some of my investment choices were downright bad. However, this speaks to the power of keeping expenses low, investing, and time, with the latter probably the most important.

My goal is to hit $5MM in net assets by the time I'm 43yo. At $5MM, I'll consider myself financially free. $5MM at a 3% draw rate is $150k per year, which about 4x more than my current expenses. I think that's enough buffer, inclusive of inflation and expected rise of expenses. Also I don't imagine I'll completely stop working either.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:15 am, edited 3 times in total.

Masterlandlord
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Re: Financial Freedom - 5 million

Postby Masterlandlord » Wed May 11, 2016 9:27 pm

Congratulations! I am a capitalist myself and don't have anything against millionaires though despite my username I doubt I will reach millions.

There was a post in these forums which I replied to correcting it what financial freedom means.

Anyway I am sure you don't need millions or 5 million to get financial freedom at least if you have active passive income when you FIRE.

Well yeah these forums are nice there are rich people upper class like you, then there are middle middle or upper middle class whatever you want to rate me depending on view. We also have more poor those in lower class currently with lots of negative networth and debt, but all are welcome to this forum.

Exellent progress I look forward to read also your journal posts.

DJFlare99
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Re: Financial Freedom - 5 million

Postby DJFlare99 » Thu May 12, 2016 11:52 pm

Thanks Masterlandlord. Although I hesitate to call myself "rich upperclass". That conjures up images of sitting around a country club in stuffy clothes and sipping tea.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:16 am, edited 1 time in total.

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LMoot
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Re: Financial Freedom - 5 million

Postby LMoot » Fri May 13, 2016 6:22 am

I think we're all pretty much on the same page around here. I think budgeting does wonderful things for a lot of people. When I was making more and saving more I didn't concern myself too much with it, but now that things are tighter and I still want to maintain a strict saving schedule I do have to carefully track how much I spend now. Although I am more in wealth building mode I still try to maintain balance because I will be in wealth building mode for most of my life. Hopefully that's a long time. Because life has no more guarantee than returns, I'm careful not to over sacrifice for the pursuit of wealth. Therefore I am firmly in the treat yourself camp.

DJFlare99
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Re: Financial Freedom - 5 million

Postby DJFlare99 » Wed May 18, 2016 9:31 pm

I've always preached but never followed the blind asset allocation, low cost index fund approach. Meaning I've always advised other people to do this, but not really following it myself.

I like to get maximum 'value' for my money in whatever I 'buy' (don't we all). Hence, it was always hard for me to contribute to something I think is overvalued. Over the past 2 years, I've more or less stop contributing to Domestic Stock funds since I felt it was overvalued, and instead contributed to international, emerging, and REITs over the past 2 years (mostly to REITs). Well it was a hit and miss. REITs did very well, while international/emerging were meh. Overall, I probably did the same as if I contributed to domestic stock, although I didn't go back and calculate.

What made me concerned is due to the rapid rise of REITs, my portfolio was getting close to 40% in REITs. This is in addition to the fact that I own my home, and I also have a industrial building I own and lease out, I was way overallocated in real estate in general.

So this past week, I finally rebalanced just my retirement account, and tried to turn a blind eye to what's happening in the current markets. My plan is to blindly stick to this and reallocate every 1-2 years. I didn't fully 100% commit though as I continue to leave out bonds due to the low interest rate environment.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:16 am, edited 1 time in total.

DJFlare99
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Re: Financial Freedom - 5 million

Postby DJFlare99 » Wed May 25, 2016 5:48 pm

Well after reading some of the other journals, I realize a lot of people are very precise in their debt or assets. I always just did a rough approximation of my net worth since:

1) Stock markets fluctuate frequently
2) Technically, $100K in a Roth IRA is worth more than $100K in a Traditional IRA, but in net worth calculations, they are treated the same.
3) Things like real estate is always an approximate and never account for selling fees and closing costs

I also never really tracked monthly and hence it's difficult to know of my progress.


- I use credit cards as much as possible, but always pay it off. Hence I didn't list any credit card debt since it'll be reflected in the following month's cash. Plus it's usually very minimal so I didn't want to take the effort to list the credit cards.
- "Stocks" are all non-real estate investments held in taxable accounts.
- I have a whole life insurance policy. I listed the cash value divided by 2 in "annuities." I originally wasn't going to put it at all since I intend to pass on to kids when I die (hence whole life), however I suppose the cash value is there as a backup if needed, so I decided to list half of cash value.
- I reduced my home value. Previously I was using Zillow's estimate which will fluctuate and not altogether accurate. So instead, I will use one value for the home unless there's a strong reason to change the value (such as an appraisal).

My resultant net worth is 2.162MM

For 2016, my goal is to keep my net worth around 2.2MM. I will be buying a new minivan next month and so assets will take a hit. Also, I'm expecting the Fed to raise interest rates and the stock market to drop by the end of the year.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:17 am, edited 1 time in total.

DJFlare99
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Re: Financial Freedom - 5 million

Postby DJFlare99 » Mon Jul 11, 2016 12:56 pm

Well for July, my net worth essentially went unchanged. $2.161 MM. In the grand scheme, I guess this is actually a good thing. I had to pay roughly $40K for 2015 taxes in April, and at the same time about $32K for quarterly taxes in both April and June. So the big tax burden is done. Next quarterly payment of $25K is in Sep. But it's somewhat frustrating not seeing the number tick upwards.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:17 am, edited 1 time in total.

avocado
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Re: Financial Freedom - 5 million

Postby avocado » Tue Jul 12, 2016 12:18 am

DJFlare99 wrote:So while a minivan seems bigger than I need, I bought it to "future proof".

:o How many kids do you plan on having?

Lol, anyway, with your income and spending habits, I think you're almost guaranteed to exceed your goal within the timeframe you specified assuming you don't send all those kids to an expensive private school or something.

However, don't forget to stop and smell the roses. Too many physicians neglect their family for their patients and/or careers. Either is a terrible trade off - it may seem tenable now, but long-term you'll surely regret it. Make your wife happy. Play with your kids - a lot (there's no such thing as too much). Oh, and ffs, get a damn dresser! :P

kombat
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Re: Financial Freedom - 5 million

Postby kombat » Tue Jul 12, 2016 4:15 am

Re: Cars. Buying new is not the best move financially. The best move is to buy slightly used, like a car just coming off of a 2-year lease. When you buy brand new, you pay a premium for being the first owner. In addition, there are a plethora of extra fees and taxes that you don't pay when you buy used. Things like dealer prep fee, delivery charge, admin fee, loan origination fee, air conditioning surcharge, environmental tax, gas-guzzler surtax, sales tax, and so on and so forth. Those all add up to thousands of extra dollars. Most people just roll all of those into the loan, which means they compound the mistake by paying interest on all of those fees.

By buying a 2-year old vehicle, you avoid all of those fees/taxes. It also allows 2 years for new models to establish a safety/reliability reputation, so you know whether or not what you're buying will be a good value, or turn out to be a lemon.

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LMoot
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Re: Financial Freedom - 5 million

Postby LMoot » Tue Jul 12, 2016 12:28 pm

Wow, you are doing awesome. I'd like to think if I was making that kind of cash that I would do all of the responsible things...but I definitely would be buying a new car with no skin off my back. It would probably be a Honda too, just because I happen to like Hondas. Are you planning on retiring, or reducing down to part time before your kids leave the nest?

I do agree with kombat about the upfront fees associated with new cars. But cars can turn lemony at any time, new or used. Since owning my 13 year old Accord, I've had to address 3 recalls (all within the last 4 years). And with all the warranties packed onto new cars, it doesn't seem like it would be too difficult to trade in or fix. Shoo, I sill had a warranty on the seat belts that needed to be fixed in year 10 of the car...100% free at the Honda dealership.

I plan on buying my first new car in about 5 years. I just don't want the hassle of hunting down a used car that meets all of the specifications I want...and that doesn't smell like smoke like this one still does from time to time. Also, I work from home most days for one job and live walking distance from another job, so I would put much less miles on a car than anyone driving it for the first few years. Not to say used cars are a bad deal. Mine has treated me well, but since I plan to be with the next car for 15 years plus, I might as well buy new and have the best possible start.

DJFlare99
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Re: Financial Freedom - 5 million

Postby DJFlare99 » Tue Jul 12, 2016 4:25 pm

@avocado

I'm done with kids except for any accidental ones :lol:

Good advice on stopping and smelling the roses. I completely agree. That won't be a problem with me though. I've always been financially minded, but I got really motivated when I realized that I didn't like my job. So I 'titrate' how much I work between my financial goals and my sanity :lol:

@kombat

You are probably right. I just hate getting ripped off, and I'm not a car enthusiast, so it will happen more to me if I go after a used car. By getting new, I can establish market value by shopping dealers using "out the door" pricing. That way, any fees/taxes are already included.

Plus with a new car, you get to breathe 'new car smell'. Which I found out is probably bad for you.

@LMoot

Yes Hondas are awesome.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:18 am, edited 2 times in total.

DJFlare99
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Re: Financial Freedom - 5 million

Postby DJFlare99 » Sat Oct 01, 2016 5:58 pm

Networth Scorecard:
Oct 2016: $2,232K
YTD 2016: +$234K

I'm stoked that I was able to break the $2.2MM barrier this month as September was another $25K in tax payments and a $24K whole life insurance premium payment. Granted, most of the rise was from the stock market. The final quarter of 2016 should bode well as there are no major expenses coming up. If I can end the year $2.3MM+, then I'm on target.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:19 am, edited 1 time in total.

Masterlandlord
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Re: Financial Freedom - 5 million

Postby Masterlandlord » Sun Oct 02, 2016 12:50 pm

Oh you are in upper class crowd in my eyes. Though this Europe vs USA pension system so very difficult to estimate total wealth of European depends on how long that European lives.

Don't be to modest with 2,3+ million and 5 million within 8 years you are upper class. That said on debate on that there exist layers within each class. There exist like lower upper class, middle upper class, upper upper class, but where to draw line between those is subjective.

The 1% are to my research 7 million dollars networth or more... Elite of
the Elite class are perhaps billionaires.

This South Korean tune does mention in English "billionaire baby".
2NE1 - 내가 제일 잘 나가(I AM THE BEST) M/V
https://www.youtube.com/watch?v=j7_lSP8Vc3o

That said you are among the most rich :) members in this forum and I don't consider this forum extreme frugal.

DJFlare99
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Re: Financial Freedom - 5 million

Postby DJFlare99 » Tue Nov 01, 2016 1:07 pm

Networth Scorecard:
Nov 2016: $2,244K
YTD 2016: +$246K
Since last post: +12K


Nothing much to report for October. Stock market dipped a bit. Next week, election week, ought to be exciting for many reasons, including the stock market. I'm completely impartial to which way the market goes. If it goes down, I'm looking to buy more. If it goes up, then there are some equities I'm looking to sell.
Last edited by DJFlare99 on Thu Feb 09, 2017 3:19 am, edited 2 times in total.

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LMoot
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Re: Financial Freedom - 5 million

Postby LMoot » Thu Nov 03, 2016 6:35 pm

DJFlare99 wrote:
Work: Yes! I made partner.


That is AWESOME! CoNgRaTs. Hopefully that means things will get even breezier, financially.


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