Author Topic: Race from $2M to $4M...and Beyond!  (Read 519208 times)

soccerluvof4

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Re: Race from $2M to $3M.....and beyond!
« Reply #1900 on: November 23, 2019, 03:50:43 AM »
Are you much more relaxed at $3M than you were at $2M?

Do you consider yourself (and your family if applicable) financially independent at $3M?




I would say more from a psychological point of view knowing that if you had a 50% drop 1.5 million is easier for me to live on than if it dropped and I ended up with 1 million BUT each year that becomes less the case because i know in either case I would be fine. Time for me has at least been my friend in feeling comfortable  in being able to do things to earn extra cash if need be or maneuver some not if but when shit hits the fan.

Bateaux

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Re: Race from $2M to $3M.....and beyond!
« Reply #1901 on: November 23, 2019, 06:21:36 AM »
I was being a whiney little bitch a week ago.  As treatment, I took off with my bicycle.  I went bikepacking for 200 Mississippi miles.  Soul and body lighter now.  Love you bitches.

pecunia

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Re: Race from $2M to $3M.....and beyond!
« Reply #1902 on: November 23, 2019, 08:28:19 AM »
Would the well to do ladies and gentlemen to whom I may be addressing agree with the following basic statement?

Getting enough money to be FI takes a lot of stress away.  It's like it helps you see what has been hidden behind a curtain.  It becomes apparent that rich or poor without your health you essentially have very little.  At least that is how I am beginning to see it as I near the crest of the hill of Financial Independence.

flyingaway

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Re: Race from $2M to $3M.....and beyond!
« Reply #1903 on: November 23, 2019, 09:01:31 AM »
Would the well to do ladies and gentlemen to whom I may be addressing agree with the following basic statement?

Getting enough money to be FI takes a lot of stress away.  It's like it helps you see what has been hidden behind a curtain.  It becomes apparent that rich or poor without your health you essentially have very little.  At least that is how I am beginning to see it as I near the crest of the hill of Financial Independence.

If you don't have your health, you can only see other people enjoy their wealth. I agree that if you want to enjoy something and money is not a problem (with $2M or $3M), do it now.

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1904 on: November 23, 2019, 10:12:22 AM »
Would the well to do ladies and gentlemen to whom I may be addressing agree with the following basic statement?

Getting enough money to be FI takes a lot of stress away.  It's like it helps you see what has been hidden behind a curtain.  It becomes apparent that rich or poor without your health you essentially have very little.  At least that is how I am beginning to see it as I near the crest of the hill of Financial Independence.

If you don't have your health, you can only see other people enjoy their wealth. I agree that if you want to enjoy something and money is not a problem (with $2M or $3M), do it now.

Agreed, On Tuesday this week I lost a good friend to Cancer, same age as me. Their networth I assume is several times what we have!...:(

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1905 on: November 23, 2019, 12:26:56 PM »
Are you much more relaxed at $3M than you were at $2M?

Do you consider yourself (and your family if applicable) financially independent at $3M?




I would say more from a psychological point of view knowing that if you had a 50% drop 1.5 million is easier for me to live on than if it dropped and I ended up with 1 million BUT each year that becomes less the case because i know in either case I would be fine. Time for me has at least been my friend in feeling comfortable  in being able to do things to earn extra cash if need be or maneuver some not if but when shit hits the fan.

This hit the nail on the head for me. The potential 50% drop is much more survivable from these levels of networth. As for going back to work... Naah!...:)

nancyfrank232

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Race from $2M to $3M.....and beyond!
« Reply #1906 on: November 23, 2019, 12:59:03 PM »
Would the well to do ladies and gentlemen to whom I may be addressing agree with the following basic statement?

Getting enough money to be FI takes a lot of stress away.  It's like it helps you see what has been hidden behind a curtain.  It becomes apparent that rich or poor without your health you essentially have very little. At least that is how I am beginning to see it as I near the crest of the hill of Financial Independence.

Not exactly so I guess I technically  disagree. Some of us already knew the importance of Time and Health long before FI. It didnít require being FI to be aware of this

Also some of us werenít stressed. And for those who werenít stressed RE became whatever we wanted it to be

Those who are stressed called it Work and they were generally glad to make RE = no Work

Those who werenít stressed called it Interesting Adventure and they didnít see a difference between RE and not RE because both states were identical
« Last Edit: November 23, 2019, 01:16:19 PM by nancyfrank232 »

nancyfrank232

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Race from $2M to $3M.....and beyond!
« Reply #1907 on: November 23, 2019, 01:10:34 PM »
Are you much more relaxed at $3M than you were at $2M?

No. I never felt relaxed because of my NW

I noticed being more relaxed during the Great Recession as soon as I purchased enough rental property to completely cover all our expenses 

Do you consider yourself (and your family if applicable) financially independent at $3M?

I never used NW to determine FI. I used passive income > earned income > expenses

My NW was always increasing in the background
« Last Edit: November 23, 2019, 01:12:10 PM by nancyfrank232 »

Dicey

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Re: Race from $2M to $3M.....and beyond!
« Reply #1908 on: November 23, 2019, 01:20:12 PM »
Would the well to do ladies and gentlemen to whom I may be addressing agree with the following basic statement?

Getting enough money to be FI takes a lot of stress away.  It's like it helps you see what has been hidden behind a curtain.  It becomes apparent that rich or poor without your health you essentially have very little.  At least that is how I am beginning to see it as I near the crest of the hill of Financial Independence.

If you don't have your health, you can only see other people enjoy their wealth. I agree that if you want to enjoy something and money is not a problem (with $2M or $3M), do it now.

Agreed, On Tuesday this week I lost a good friend to Cancer, same age as me. Their networth I assume is several times what we have!...:(
Oh, so sorry to hear of the loss of your friend, @Exflyboy! The older you get (ahem) the worse it is to lose a good friend. They're hard to come by.

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1909 on: November 23, 2019, 02:31:08 PM »
@Dicey Thanks.. Yeah and the older you get the faster they die.. Such is the way with cancer.

I find myself asking "whats the difference between them and me/DW?".. Answer.. Nothing!

SwordGuy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1910 on: November 23, 2019, 03:15:16 PM »
Are you much more relaxed at $3M than you were at $2M?

No. I never felt relaxed because of my NW

I noticed being more relaxed during the Great Recession as soon as I purchased enough rental property to completely cover all our expenses 

Do you consider yourself (and your family if applicable) financially independent at $3M?

I never used NW to determine FI. I used passive income > earned income > expenses

My NW was always increasing in the background

Way to go!

We have done the same.   Starting in January, our SWR can drop to 0% during a normal year because other passive income sources cover our normal expenses.   

Net worth was nice to track but it's a flawed measurement for FIRE.

That's why I created these polls, to bring more attention to tracking passive income vs planned (or current) expenses instead of net worth:

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/race-to-100-fi!/

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/race-to-100-fi-(only-if-below-median-household-income!!!)/


Bateaux

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Re: Race from $2M to $3M.....and beyond!
« Reply #1911 on: November 23, 2019, 06:48:43 PM »
I was being a whiney little bitch a week ago.  As treatment, I took off with my bicycle.  I went bikepacking for 200 Mississippi miles.  Soul and body lighter now.  Love you bitches.

Ready to pull the plug yet?

My sister retired a couple of weeks ago.  She noticed that now that she is no longer working, there really is nothing in her life worth complaining about.  She is very, very happy that she is no longer working.  She has complete control over her schedule, including the ability to book travel when and where she wants (often coinciding with great prices).

FIREd life is good....

Naugh.   The thread is Race from $2M to $3M.....and beyond!   More money to be made.  More bicycles to buy.

2sk22

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Re: Race from $2M to $3M.....and beyond!
« Reply #1912 on: November 24, 2019, 03:44:43 AM »
I just discovered an old spreadsheet containing net worth from 2003 to 2010 that I had completely forgotten about! These are the sum of pre and post tax investements, (does not include home value or pensions).

December 2005$604,000
Nov 2006$760,000
May 2009$873,000
December 2010$1,150,000
November 2019 (for comparison)$4,600,000

The last ten years have been incredible and feels unreal.

soccerluvof4

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Re: Race from $2M to $3M.....and beyond!
« Reply #1913 on: November 24, 2019, 03:52:26 AM »
I just discovered an old spreadsheet containing net worth from 2003 to 2010 that I had completely forgotten about! These are the sum of pre and post tax investements, (does not include home value or pensions).

December 2005$604,000
Nov 2006$760,000
May 2009$873,000
December 2010$1,150,000
November 2019 (for comparison)$4,600,000

The last ten years have been incredible and feels unreal.


Well done!

Dicey

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Re: Race from $2M to $3M.....and beyond!
« Reply #1914 on: November 24, 2019, 08:04:31 AM »
I just discovered an old spreadsheet containing net worth from 2003 to 2010 that I had completely forgotten about! These are the sum of pre and post tax investements, (does not include home value or pensions).

December 2005$604,000
Nov 2006$760,000
May 2009$873,000
December 2010$1,150,000
November 2019 (for comparison)$4,600,000

The last ten years have been incredible and feels unreal.


Well done!
Indeed!

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1915 on: November 24, 2019, 10:22:13 AM »
Wow @2sk22 Thats well beyond.. Awesome!

Now I'm wondering who all the super wealthy are around here and how much they have..

Do we have any $5M+ invested folks??

oldladystache

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Re: Race from $2M to $3M.....and beyond!
« Reply #1916 on: November 24, 2019, 10:25:24 AM »
I'm afraid I can't join your race. I'm trying hard to avoid getting to $3M. I don't need it and when I die whatever I have will be inherited by someone who will probably waste it.

A few years ago I was there to watch when my dad, then 100 years old, gave someone enough to make them cry. I hadn't thought about that until recently when I gave someone a generous gift and they cried.

So now I'm thinking about where else can I make someone cry.

Once you have more than enough it just keeps growing. A good problem to have.

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1917 on: November 24, 2019, 10:43:21 AM »
I'm afraid I can't join your race. I'm trying hard to avoid getting to $3M. I don't need it and when I die whatever I have will be inherited by someone who will probably waste it.

A few years ago I was there to watch when my dad, then 100 years old, gave someone enough to make them cry. I hadn't thought about that until recently when I gave someone a generous gift and they cried.

So now I'm thinking about where else can I make someone cry.

Once you have more than enough it just keeps growing. A good problem to have.

I guess there is an argument to allow ones NW to grow above and beyond what we need, I mean say 10 years from now you feel its time to go into some form of assisted care. Much better to be able to afford top notch care rather than go into the places where we often hear horror stories.

Maybe hire a personal assistant for $100k/year perhaps.

I do think its important to leave your wealth to something meaningful in your will.. I've got far too many vultures in DW's family that will be swooping in as I lay on my death bed, no way do I want any of my NW going to them.

2sk22

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Re: Race from $2M to $3M.....and beyond!
« Reply #1918 on: November 24, 2019, 12:22:35 PM »
Wow @2sk22 Thats well beyond.. Awesome!

Now I'm wondering who all the super wealthy are around here and how much they have..

Do we have any $5M+ invested folks??

I hope not to reach $5M as I'm definitely quitting in the coming year :-) As I keep saying, I just don't feel "super wealthy" at all.

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1919 on: November 24, 2019, 12:32:42 PM »
Wow @2sk22 Thats well beyond.. Awesome!

Now I'm wondering who all the super wealthy are around here and how much they have..

Do we have any $5M+ invested folks??

I hope not to reach $5M as I'm definitely quitting in the coming year :-) As I keep saying, I just don't feel "super wealthy" at all.

You are kidding right? I quit work almost 6 years ago with about $1.25M invested. Today I have $2.25M.

You cannot avoid making money unless you stuff it all in cash under the mattress..:)

pecunia

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Re: Race from $2M to $3M.....and beyond!
« Reply #1920 on: November 24, 2019, 12:56:31 PM »

- SNIP -

You cannot avoid making money unless you stuff it all in cash under the mattress..:)

It is hard too sleep on that lumpy mattress.

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1921 on: November 24, 2019, 01:25:38 PM »

- SNIP -

You cannot avoid making money unless you stuff it all in cash under the mattress..:)

It is hard too sleep on that lumpy mattress.

Right?.. You'd hit your head on the ceiling..:)

nancyfrank232

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Race from $2M to $3M.....and beyond!
« Reply #1922 on: November 24, 2019, 02:20:31 PM »
Wow @2sk22 Thats well beyond.. Awesome!

Now I'm wondering who all the super wealthy are around here and how much they have..

Do we have any $5M+ invested folks??

Yes. There are a number of us here

And if anyone cares, the Bogleheads forum has a number of $5m+ investors as well

https://public.tableau.com/profile/dvoery#!/vizhome/BogleheadSurvey/Dashboard1
« Last Edit: November 24, 2019, 02:23:20 PM by nancyfrank232 »

flyingaway

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Re: Race from $2M to $3M.....and beyond!
« Reply #1923 on: November 24, 2019, 02:45:57 PM »
I have shifted my AA to about 65/35 and am no longer interested in racing to anything beyond $3M. Maybe the portfolio will increase anyway. But I just found new ways to spend excessive money, added some line items on my budget table.

markbike528CBX

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Re: Race from $2M to $3M.....and beyond!
« Reply #1924 on: November 24, 2019, 03:09:21 PM »

- SNIP -

You cannot avoid making money unless you stuff it all in cash under the mattress..:)

It is hard too sleep on that lumpy mattress.
Right?.. You'd hit your head on the ceiling..:)
According to https://1000000-euro.de/how-much-does-a-million-dollars-weigh/index.php#weigh-dollar        the volume of 1M is about 1 cubic meter ~ 1 cubic yard.  If your mattress is 1 m2 then the pile is 1m high.  Your ceiling is safe.

Bateaux

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Re: Race from $2M to $3M.....and beyond!
« Reply #1925 on: November 24, 2019, 03:12:19 PM »

- SNIP -

You cannot avoid making money unless you stuff it all in cash under the mattress..:)

It is hard too sleep on that lumpy mattress.

Right?.. You'd hit your head on the ceiling..:)

A stack of one million, $1 bills is 358 feet tall and over a ton.  We could judge our goals in feet.  1000 feet or bust!

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1926 on: November 24, 2019, 03:23:29 PM »

- SNIP -

You cannot avoid making money unless you stuff it all in cash under the mattress..:)

It is hard too sleep on that lumpy mattress.
Right?.. You'd hit your head on the ceiling..:)
According to https://1000000-euro.de/how-much-does-a-million-dollars-weigh/index.php#weigh-dollar        the volume of 1M is about 1 cubic meter ~ 1 cubic yard.  If your mattress is 1 m2 then the pile is 1m high.  Your ceiling is safe.

But our intrepid "super investor" has $5M... Maybe they have very tall ceilings.. Quite possible.. But then a king bed is 7ft*7ft which is about 4.6sqm.. So prolly still safe..:)

Bateaux

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Re: Race from $2M to $3M.....and beyond!
« Reply #1927 on: November 24, 2019, 03:30:46 PM »

- SNIP -

You cannot avoid making money unless you stuff it all in cash under the mattress..:)

It is hard too sleep on that lumpy mattress.
Right?.. You'd hit your head on the ceiling..:)
According to https://1000000-euro.de/how-much-does-a-million-dollars-weigh/index.php#weigh-dollar        the volume of 1M is about 1 cubic meter ~ 1 cubic yard.  If your mattress is 1 m2 then the pile is 1m high.  Your ceiling is safe.

But our intrepid "super investor" has $5M... Maybe they have very tall ceilings.. Quite possible.. But then a king bed is 7ft*7ft which is about 4.6sqm.. So prolly still safe..:)

May need to cash in for Woodrow Wilson $100,000 bills.
« Last Edit: November 24, 2019, 03:32:47 PM by Bateaux »

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1928 on: November 24, 2019, 03:33:45 PM »
All kidding aside.. Investments of $5M+ is pretty damn cool.. I mean thats a yearly spend of $200k.. I mean Holy F..:)

Bateaux

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Re: Race from $2M to $3M.....and beyond!
« Reply #1929 on: November 24, 2019, 05:03:58 PM »
All kidding aside.. Investments of $5M+ is pretty damn cool.. I mean thats a yearly spend of $200k.. I mean Holy F..:)

Unless we die early or an asteroid hits, we on this thread have a good shot at seeing 5M.
But yeah, cool stash number.

Bateaux

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Re: Race from $2M to $3M.....and beyond!
« Reply #1930 on: November 24, 2019, 05:14:18 PM »
Just checked the stats on this thread.  Under 2000 posts and almost 230,000 views.   Holy crap thats a lot of lurkers.  Probably coming here hoping to find the secrets to wealth building.   I can just imagine their disappointment once they read our bullshit. 

nancyfrank232

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Race from $2M to $3M.....and beyond!
« Reply #1931 on: November 24, 2019, 06:27:01 PM »
Just checked the stats on this thread.  Under 2000 posts and almost 230,000 views.   Holy crap thats a lot of lurkers.  Probably coming here hoping to find the secrets to wealth building.   I can just imagine their disappointment once they read our bullshit.

More likely narcissist posters just visiting and re-visiting their posts in this thread

I agree that itís definitely filled w BS

nancyfrank232

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Re: Race from $2M to $3M.....and beyond!
« Reply #1932 on: November 24, 2019, 06:28:34 PM »
But yeah, cool stash number.

Meet the new boss

Same as the old boss

EscapeVelocity2020

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Re: Race from $2M to $3M.....and beyond!
« Reply #1933 on: November 24, 2019, 09:19:45 PM »
Just checked the stats on this thread.  Under 2000 posts and almost 230,000 views.   Holy crap thats a lot of lurkers.  Probably coming here hoping to find the secrets to wealth building.   I can just imagine their disappointment once they read our bullshit.

We are the ultimate click-bait:  Headline "multimillionaires talk freely" *click*  Hey EFB, how is the welding going?  Is Bateaux still out biking?  SL4 bought another house to flip?  Oh yeah, and the market went up again :)

soccerluvof4

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Re: Race from $2M to $3M.....and beyond!
« Reply #1934 on: November 25, 2019, 04:02:06 AM »
I have shifted my AA to about 65/35 and am no longer interested in racing to anything beyond $3M. Maybe the portfolio will increase anyway. But I just found new ways to spend excessive money, added some line items on my budget table.

I did 60/40 for basically seem reason when I fire'd going on 5 years ago

Exflyboy

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Re: Race from $2M to $3M.....and beyond!
« Reply #1935 on: November 25, 2019, 09:53:32 AM »
Just checked the stats on this thread.  Under 2000 posts and almost 230,000 views.   Holy crap thats a lot of lurkers.  Probably coming here hoping to find the secrets to wealth building.   I can just imagine their disappointment once they read our bullshit.

We are the ultimate click-bait:  Headline "multimillionaires talk freely" *click*  Hey EFB, how is the welding going?  Is Bateaux still out biking?  SL4 bought another house to flip?  Oh yeah, and the market went up again :)

Wow.. I've never been clickbait before.. Thats like Internet Royalty right?..:)

And the markets are up!

BeanCounter

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Re: Race from $2M to $3M.....and beyond!
« Reply #1936 on: November 26, 2019, 08:53:50 AM »
Clickbait or not, I enjoy this thread. It's not like I can go around sharing about my situation and asking others how they are handling their millions or retiring at 42.

Speaking of which. I've got a new decision to make. I hesitate to bring it up because I know it's a hot topic on the forum. We are trying to decide if we should pay off our mortgage. I used to be firmly in the "don't pay off your mortgage club" but with the new tax laws and $2.5M in investments I'm not so sure. I think the only thing that we would be missing out on if we paid it back is the impact of inflation. Points of consideration-
-We owe $183k on a $310k house with 26 years on the mortgage at 4%APR.
-Of our $2.5M in investments $160k is in cash.
- DH's Honda Accord has 215k miles (10 years old) on it and probably needs to be replaced. Or we could keep it but potentially have another $1k-$2k fix next year. Some of that cash was to purchase another two year old low mileage Accord for him. The rest of the cash is our cushion for market down turn or to draw down to cover expenses without a tax impact.
-Honda is currently offering 0% on new Accord.
-We should have enough in cash this spring, RIGHT BEFORE I RE, to pay off the mortgage if we don't spend it on a car. But it will use up all cash reserves. Everything else is invested.
So buy a car at 0% (and yes I know I can get the loan, I got a 0% 18 years ago and kept the car for 12 years)? And pay off the mortgage and then not have the $7k of mortgage interest that I can't deduct?
Or keep the mortgage and invest the cash?
What do you smart people think?

« Last Edit: November 26, 2019, 08:56:16 AM by BeanCounter »

Bird In Hand

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Re: Race from $2M to $3M.....and beyond!
« Reply #1937 on: November 26, 2019, 09:20:10 AM »
Including estimated home value, our TNW crested $2M for the first time after yesterday's market action.  LNW is hovering around $1.6M, so I don't feel like a full member here -- just dipping my toe in the water.

EscapeVelocity2020

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Re: Race from $2M to $3M.....and beyond!
« Reply #1938 on: November 26, 2019, 09:21:20 AM »
@BeanCounter In your situation, I would probably lean toward the payoff.  Each situation is different which is why this is such a 'controversial' topic (more just a no 'one size fits all' answer to the question).  You mention that your mortgage is at 4% (and isn't reducing your taxes) which is pretty high compared to the sub-2% return on bonds, so there's no real arbitrage and you are paying a lot to have your cash not tied up in the house.  One thing I dislike about paying off a mortgage is that the money in 'tied up' in the house, but you are at FI and considering ER, so you don't need to shoot the moon with 100% equities.  Also, cash-flow will improve if you don't have to pay the mortgage every month which smooths out a big expense in ER.  And in a pinch, you can take out a HELOC or downsize the house in the future to free up that equity. 

I would treat the car as a separate issue.  Your 4% mortgage is the pressing issue, paying for a car that you might or might not buy can be a decision based on if you want to raise the cash from an underperforming investment, pay out of cash flow, or work a little longer...

My two cents for you, now back to cheering on the market rally :)

RWD

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Re: Race from $2M to $3M.....and beyond!
« Reply #1939 on: November 26, 2019, 09:36:01 AM »
Or keep the mortgage and invest the cash?
What do you smart people think?

If you already had the cash invested would you be considering selling off investments to pay down the mortgage?

You've already won so whichever choice you make will turn out fine. Personally I would lean towards investing. But in any case you definitely should not use up all your cash reserves.

flyingaway

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Re: Race from $2M to $3M.....and beyond!
« Reply #1940 on: November 26, 2019, 10:16:07 AM »
We bought our big house in 2006 and made every efforts to pay off the mortgage and did it at the end of 2010.

Looking back, it might or might not be the best decision in terms of money and investing (2008 market crash). However, at that time, I did not have any interests in investing and did not know the difference between stocks and bonds. (I was absorbed completely into my work).
I have no regret and would do that again, if I had the chances.

(A few months ago, about 10 friends having a party at someone's house, one person was surprised that he knew everyone there but me. It turned out that person was a mortgage broker and everyone else in the room had mortgage with him. I was so happy, as I was the only one in the room who were financially independent and without a mortgage).

Much Fishing to Do

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Re: Race from $2M to $3M.....and beyond!
« Reply #1941 on: November 26, 2019, 10:36:55 AM »
Or keep the mortgage and invest the cash?
What do you smart people think?

If you already had the cash invested would you be considering selling off investments to pay down the mortgage?

You've already won so whichever choice you make will turn out fine. Personally I would lean towards investing. But in any case you definitely should not use up all your cash reserves.

Agreed that either choice is fine...whats huge is you could easily pay off the entire mortgage if you wanted to, its such a small liability compared to your overall investments. 

I'm nearing FIRE like you and like to have a small cash portion for multiple reasons which I'd consider the $160k to be.  My investments and home value are similar to yours ($300k vs $3M and mine is paid off, which I just view as taking off risk somewhat now FIREing).  More than 7 years from FIRE I liked being 100% equity, so cash/mortgage payoff didnt make much sense.  But on its doorstep I like a small cash portion and a small bond portion plus a paid off house (which I just see as similar to a pretty good use of much of the cash portion).  Again, I don;t think its a big deal either way.  I would want at least a year of cash in RE for multiple reasons

2sk22

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Re: Race from $2M to $3M.....and beyond!
« Reply #1942 on: November 26, 2019, 10:49:16 AM »
Clickbait or not, I enjoy this thread. It's not like I can go around sharing about my situation and asking others how they are handling their millions or retiring at 42.

Speaking of which. I've got a new decision to make. I hesitate to bring it up because I know it's a hot topic on the forum. We are trying to decide if we should pay off our mortgage. I used to be firmly in the "don't pay off your mortgage club" but with the new tax laws and $2.5M in investments I'm not so sure. I think the only thing that we would be missing out on if we paid it back is the impact of inflation. Points of consideration-
-We owe $183k on a $310k house with 26 years on the mortgage at 4%APR.
-Of our $2.5M in investments $160k is in cash.
- DH's Honda Accord has 215k miles (10 years old) on it and probably needs to be replaced. Or we could keep it but potentially have another $1k-$2k fix next year. Some of that cash was to purchase another two year old low mileage Accord for him. The rest of the cash is our cushion for market down turn or to draw down to cover expenses without a tax impact.
-Honda is currently offering 0% on new Accord.
-We should have enough in cash this spring, RIGHT BEFORE I RE, to pay off the mortgage if we don't spend it on a car. But it will use up all cash reserves. Everything else is invested.
So buy a car at 0% (and yes I know I can get the loan, I got a 0% 18 years ago and kept the car for 12 years)? And pay off the mortgage and then not have the $7k of mortgage interest that I can't deduct?
Or keep the mortgage and invest the cash?
What do you smart people think?

I should note that, in fact, I paid off my mortgage earlier this year because we only had about $20k and a year left on our mortgage at that point. In your case, approaching RE, I think keeping a healthy cash buffer is better idea than paying off your mortgage.

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Re: Race from $2M to $3M.....and beyond!
« Reply #1943 on: November 26, 2019, 11:34:58 AM »
I also don't think the mortgage question matters too much. Paying it off is the least risky thing you can do. Come the apocalypse the one thing you need is the roof over your head paid for (unless the US gets invaded by a foreign power).

Funnily enough I have more of an issue with buying a new car.. Even at 0% it still doesn't make sense because of the depreciation.. But then its fairly small beans at your level of networth.
« Last Edit: November 26, 2019, 03:15:40 PM by Exflyboy »

DavidAnnArbor

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Re: Race from $2M to $3M.....and beyond!
« Reply #1944 on: November 26, 2019, 02:20:23 PM »
I would definitely not pay off the mortgage and keep your cash available for whatever things may come up.

A new car is fine if you're the type of person who is planning to hold onto it forever to the end.

There is depreciation for vehicles, but not so much for Japanese cars, which a year or two old, cost almost as much as when they were new.

RWD

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Re: Race from $2M to $3M.....and beyond!
« Reply #1945 on: November 26, 2019, 02:30:41 PM »
There is depreciation for vehicles, but not so much for Japanese cars, which a year or two old, cost almost as much as when they were new.

15-30% depreciation in the first year is not what I would call "almost as much"...
https://usedfirst.com/cars/toyota/corolla/
https://usedfirst.com/cars/subaru/impreza/
https://usedfirst.com/cars/honda/fit/
https://usedfirst.com/cars/mazda/3/
https://usedfirst.com/cars/nissan/sentra/
https://usedfirst.com/cars/mitsubishi/mirage/

jeroly

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Re: Race from $2M to $3M.....and beyond!
« Reply #1946 on: November 26, 2019, 02:38:19 PM »
I would definitely not pay off the mortgage and keep your cash available for whatever things may come up.

A new car is fine if you're the type of person who is planning to hold onto it forever to the end.

There is depreciation for vehicles, but not so much for Japanese cars, which a year or two old, cost almost as much as when they were new.

With $2.5MM you can do whatever you want with that mortgage.  Another option is to pay off half!
Re: the car... Paying for two extra / most expensive years of depreciation just to get a 0% loan doesnít seem like a good trade off for financial reasons.  If you want a new car you can certainly afford it, but donít pretend itís a ďdeal.Ē

DavidAnnArbor

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Re: Race from $2M to $3M.....and beyond!
« Reply #1947 on: November 26, 2019, 02:43:13 PM »
Well I see a 2017 Toyota Corolla for $13,200 near me so maybe it is possible to get a good deal on a used Japanese car.
You'll definitely want to have an auto mechanic look it over.

MDM

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Re: Race from $2M to $3M.....and beyond!
« Reply #1948 on: November 26, 2019, 02:51:02 PM »
-We owe $183k on a $310k house with 26 years on the mortgage at 4%APR.
-Of our $2.5M in investments $160k is in cash.
-We should have enough in cash this spring, RIGHT BEFORE I RE, to pay off the mortgage if we don't spend it on a car. But it will use up all cash reserves. Everything else is invested.
Have you looked at traditional->Roth conversions, and how much cash you would need to pay the taxes on those?

Dicey

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Re: Race from $2M to $3M.....and beyond!
« Reply #1949 on: November 26, 2019, 03:10:45 PM »
Clickbait or not, I enjoy this thread. It's not like I can go around sharing about my situation and asking others how they are handling their millions or retiring at 42.

Speaking of which. I've got a new decision to make. I hesitate to bring it up because I know it's a hot topic on the forum. We are trying to decide if we should pay off our mortgage. I used to be firmly in the "don't pay off your mortgage club" but with the new tax laws and $2.5M in investments I'm not so sure. I think the only thing that we would be missing out on if we paid it back is the impact of inflation. Points of consideration-
-We owe $183k on a $310k house with 26 years on the mortgage at 4%APR.
-Of our $2.5M in investments $160k is in cash.
- DH's Honda Accord has 215k miles (10 years old) on it and probably needs to be replaced. Or we could keep it but potentially have another $1k-$2k fix next year. Some of that cash was to purchase another two year old low mileage Accord for him. The rest of the cash is our cushion for market down turn or to draw down to cover expenses without a tax impact.
-Honda is currently offering 0% on new Accord.
-We should have enough in cash this spring, RIGHT BEFORE I RE, to pay off the mortgage if we don't spend it on a car. But it will use up all cash reserves. Everything else is invested.
So buy a car at 0% (and yes I know I can get the loan, I got a 0% 18 years ago and kept the car for 12 years)? And pay off the mortgage and then not have the $7k of mortgage interest that I can't deduct?
Or keep the mortgage and invest the cash?
What do you smart people think?
How are you going to feel when you "only" have $23k in cash? Also, typically, it's easiest to get a mortgage when you have a j-o-b. I'd hang on to it for a couple more years. Wait until FIRE gets comfortable, then consider a payoff again, but not before. Once you've paid it off, it's damn difficult to get that cheap money back.

As to the car, meh, I'm okay with buying a new one once in a while, then babying it forever. DH's 2002 truck has just under 100k miles on it and still looks great. He bought it brand new, just the way he wanted it, for about $21k. The current version of his vehicle would cost more than double that. He actually needs a truck, and he plans to keep it for at least another decade.

...Another option is to pay off half!
That's possibly the worst option! Feel free to come and chat over on the DPOYM thread if you're not sure why. We don't bite.