Millionaire Status

[felizcortez]

Well I looked at my net worth this morning and it passed the $1 Million mark due to a bump up in the value of my company stock (not all of it has vested yet so there are a few caveats).  This is the first time our net worth has been over a million which is a pretty big milestone for my wife and I.  (I'm only 32 years old).  My wife and I have been living Mustachian for quite some time and it is nice to know that the hard work is paying off.  We had been hovering just under the 1M mark due to market fluctuations, but just weren't able to get over that hump.  It'll probably go down below $1M tomorrow, but it's nice to be a "millionaire on paper."

[seattlecyclone]

Well I looked at my net worth this morning and it passed the $1 Million mark due to a bump up in the value of my company stock (not all of it has vested yet so there are a few caveats).  This is the first time our net worth has been over a million which is a pretty big milestone for my wife and I.  (I'm only 32 years old).  My wife and I have been living Mustachian for quite some time and it is nice to know that the hard work is paying off.  We had been hovering just under the 1M mark due to market fluctuations, but just weren't able to get over that hump.  It'll probably go down below $1M tomorrow, but it's nice to be a "millionaire on paper."

I don't want to rain on your parade, since this is an awesome milestone, but I question whether it's proper to count unvested stock toward your net worth. Are you also counting the salary you plan to earn between now and your last stock vesting date?

[surfhb]

Yay!   So when do you quit? :)

[Gone Fishing]

Congratulations! Even though a million isn't what it used to be, there is still something special about that 7 figure mark!  Have you got a ER date in mind? 

[PseudoStache]

Great job!

What percent of your net worth is your company stock?

[felizcortez]

[/quote]

I don't want to rain on your parade, since this is an awesome milestone, but I question whether it's proper to count unvested stock toward your net worth. Are you also counting the salary you plan to earn between now and your last stock vesting date?
[/quote]

I thought this might get brought up as I agree with you.  If I retired tomorrow then this would go away as it hasn't vested yet.  However, I keep getting more stock options each year I'm working so it have substantial value either as negotiation leverage if I change jobs and also impacst the decision on when to retire.  My wife and I are looking at invested (fully vested dollars) for retirement, but it was nice to see the total go over $1M

[felizcortez]

Great job!

What percent of your net worth is your company stock?

About 200k - 110k of it is unvested at this point.  I just had a bunch of stock vest that I need to dump as I try to keep this amount lower.  We also have ESPP as well so I buy stock at a discount and turn it over quickly.

I also just received another $100k of RSU's that have a 4 year maturity date that will show up on the 5th which I didn't include in this number yet. 

[felizcortez]

Congratulations! Even though a million isn't what it used to be, there is still something special about that 7 figure mark!  Have you got a ER date in mind?

The wife and I have been talking about this for a while.  I'm in some pretty peak earning years right now and have some career momentum that I think can pad the stache some more.  I'd like to get about $1.5M in invested assets, but could probably stop sooner. 

[greenleaf]

Congrats.  Whether it has any practical implication or not, it's still a fun number to see on paper.

[Baron235]

Congrats!! How did you guys get there?  Extreme Frugal living? High Salaries?  Some other combo? 1 million by early 30's is very impressive. 

[felizcortez]

Congrats!! How did you guys get there?  Extreme Frugal living? High Salaries?  Some other combo? 1 million by early 30's is very impressive.

It has been a combination of strategies.  I started saving into a 401k at 19 years old while I was co-oping during school so I graduated with the beginnings of a retirement account.  I have an engineering degree and also went back to get an MBA while working full time.  I lived in SoCal for a number of years so rents were higher, but so were salaries.  I hit $100k salary at about 27 and then over the last two years i've gotten to around $240k.  I basically said yes to whatever was thrown at me for work and moved a few times which also included relocation bonuses. 

My wife had a decent paying job which she didn't like while we were in Socal, but she quit when I got moved for work and has been staying home since then.  This has worked out very well contributing to frugal living and also to her overall happiness.   We live pretty frugally currently, but don't go crazy with it- we aren't high maintenance people, but try to focus on quality over quantity.  We generally have pretty simple tastes - we like camping, hiking, outdoor activities etc. 

[2527]

I don't think it is completely unreasonable to count the value of non-vested stock.  You seem to understand what it is and it isn't.  It is a little like counting the value of a relatively illiquid real estate holding.  What kind of engineering do you do?

[starguru]

I too have unvested RSUs; I don't count them.  Something about counting chickens before they hatch. 

[Jon_Snow]

I remember the thrill when I hit that number in my 30's. Thrill was fleeting when I realized I still had to get up at 4:30am the next day and go to my crap job.

[Prairie Gal]

Congrats! That is an amazing accomplishment at your age.

[felizcortez]

I don't think it is completely unreasonable to count the value of non-vested stock.  You seem to understand what it is and it isn't.  It is a little like counting the value of a relatively illiquid real estate holding.  What kind of engineering do you do?

Electrical - but I am in sales now.  Followed the money so to speak.  Especially when I realized I was an engineer with people skills.

You know that joke, how can you tell if you are talking to an extroverted engineer?
He looks at your shoes instead of his. 

I too have unvested RSUs; I don't count them.  Something about counting chickens before they hatch. 

Yeah, that is why we are focusing on income producing assets when we are calculating our retirement number which unvested stock wouldn't count as.  This is simply a situation where my paper balance went above a threshold that I had in my head.  It felt good to feel like I've been accomplishing my goals.  Never been able to say I'm a millionaire before :).  Depending on what the market does over the next few days, I may cross this threshold multiple times.

However, the unvested stock can play into decision factors because if I know I have a large chunk due to vest within 6 months of being able to retire it may make sense to stick it out.  I see the unvested stock as a bonus - if I quit it goes away, if i change jobs i can negotiate with it, if I stay until it vests it becomes cash in hand.

[Denarius]

You're kicking ass. Congrats.

[Thegoblinchief]

We will be FI long before the million mark so I'll probably never hit that number, but congrats to you :)

You're earning major bank, but keep in mind you also don't want to fall prey to OMY syndrome.

Is your wife SAH even without kids? What kind of hobbies does she enjoy to stay busy?

[starguru]

Yeah, that is why we are focusing on income producing assets when we are calculating our retirement number which unvested stock wouldn't count as.  This is simply a situation where my paper balance went above a threshold that I had in my head.  It felt good to feel like I've been accomplishing my goals.  Never been able to say I'm a millionaire before :).  Depending on what the market does over the next few days, I may cross this threshold multiple times.

However, the unvested stock can play into decision factors because if I know I have a large chunk due to vest within 6 months of being able to retire it may make sense to stick it out.  I see the unvested stock as a bonus - if I quit it goes away, if i change jobs i can negotiate with it, if I stay until it vests it becomes cash in hand.

You still can't say your a millionaire (well, and have it be true, you can say anything you want).  Unvested RSUs are not assets.  They are a promise of assets.  You might as well include the next x years of salary, bonuses, and property appreciation, as well as the average 9% market gains.  Man you are probably already a multimillionaire.  You should retire today because of this made up net worth.

Seriously, I'm not trying to rain on your parade.  You are doing very well, and having RSUs is great.  I definitely include my own in my projections of where I should be in the next 1, 3, 5, and 10 years.  I just don't think you should count expected future gains before you own them. 

[surfhb]

What's your asset allocation?   A large percentage of your net worth is tied to a single company.....this is very risky.   

With that income I'd like to hear you say you have a couple hundred grand in a low risk investment :)

I'd also think about owning your primary residence ASAP with that kind of cash flow....security investing should take a slight precedence over growth investing for the long run.   That's my opinion anyway

At your age and income I'd secure my nut then go from there.

[RFAAOATB]

When you are comfortable living the millionaire lifestyle, what will you buy?  A Rolex?  A luxury car?  Perhaps, but I think I can safely announce my ascension into the millionaire's club in a few short years with a replica of the million dollar belt. 

http://www.ajsbelts.com/beltpagemillion.htm

Now that's classy.  The real one cost $125,000 so I might have to wait on decamillionaire for that.

[powersuitrecall]

What's your asset allocation?   A large percentage of your net worth is tied to a single company.....this is very risky.

As a guy who lived through the tech bubble at a now flatlined infamous Canadian Telecom giant, I can't agree more with this. 

I purchased company-matched tax sheltered stock (through a special mutual fund) as well as after tax dollars.  Of course, when it all came crashing down I lost it all, and eventually my job, without a severance package.  Hey, it can happen!  Diversify!

Great job, btw OP.  You're doing great.

[Huffy2k]

Congrats OP, kudos to you!  I'm interested to hear that you're an extroverted engineer as both my recently graduated engineer sons are as well.  We've talked many times about the advantage they may have in the field as they can both easily interact with other people.  Your story confirms my thoughts.  Keep up the good work!

[felizcortez]

What's your asset allocation?   A large percentage of your net worth is tied to a single company.....this is very risky.

As a guy who lived through the tech bubble at a now flatlined infamous Canadian Telecom giant, I can't agree more with this. 

I purchased company-matched tax sheltered stock (through a special mutual fund) as well as after tax dollars.  Of course, when it all came crashing down I lost it all, and eventually my job, without a severance package.  Hey, it can happen!  Diversify!

Great job, btw OP.  You're doing great.

Agree that this is risky and I've been dumping company stock as it vests and as I purchase shares via ESPP to try to reduce the risk.  I take this new cash and put it into other index funds after selling the company shares.

When you are comfortable living the millionaire lifestyle, what will you buy?  A Rolex?  A luxury car?  Perhaps, but I think I can safely announce my ascension into the millionaire's club in a few short years with a replica of the million dollar belt. 

http://www.ajsbelts.com/beltpagemillion.htm

Now that's classy.  The real one cost $125,000 so I might have to wait on decamillionaire for that.

I wonder if there is a monocle that I could get that might be like that belt.  I would think that would be a little more classy. 

What's your asset allocation?   A large percentage of your net worth is tied to a single company.....this is very risky.   

With that income I'd like to hear you say you have a couple hundred grand in a low risk investment :)

I'd also think about owning your primary residence ASAP with that kind of cash flow....security investing should take a slight precedence over growth investing for the long run.   That's my opinion anyway

At your age and income I'd secure my nut then go from there.

. 


Rough asset allocation
300k is a 401k - index funds
200k is company stock.
300k is cash - looking at buying a house and reinvesting a large chunk of this in the market.  This is high due to selling quite a bit of stock recently.
200k is split between Roth IRA's and other index funds. 

[felizcortez]

Congrats OP, kudos to you!  I'm interested to hear that you're an extroverted engineer as both my recently graduated engineer sons are as well.  We've talked many times about the advantage they may have in the field as they can both easily interact with other people.  Your story confirms my thoughts.  Keep up the good work!

It is extremely difficult to find someone that can operate in a technical capacity that has the people skills necessary to interact with customers.  The technical piece gets them credibility with other engineers while their people skills allow them to exert influence.  What I've found is that most people when they graduate with an engineering degree think that if they don't get into design they have failed.  Most don't even know there are other opportunities available to them that can be more lucrative past just a pure technical role. 

[clarkfan1979]

Congrats! I'm 35 and my wife and I are probably about 10 years away from that number. However, I love my job and have no interest in retiring so we are not in a hurry. If you like the work, keep on doing it. If you don't like it, you can retire very soon. Good luck. 

[surfhb]

Rough asset allocation
300k is a 401k - index funds
200k is company stock.
300k is cash - looking at buying a house and reinvesting a large chunk of this in the market.  This is high due to selling quite a bit of stock recently.
200k is split between Roth IRA's and other index funds.

Ah hell!   Youre awesome Bro.....keep it up

[felizcortez]

Congrats! I'm 35 and my wife and I are probably about 10 years away from that number. However, I love my job and have no interest in retiring so we are not in a hurry. If you like the work, keep on doing it. If you don't like it, you can retire very soon. Good luck.

So far I'm enjoying what I'm doing, but it can be a grind when you look at total hours I put in each week.  Overall though there is a lot of flexibility in my role so that helps.  However, I do have some things on my bucket list that would be difficult to do while working.

[retired?]

So, at 32, if you take out the unvested part, then you are at 890k.  Incredible.  Very nice.  I just finished grad school at that point.

Regardless of the naysayers, unless you are planning to quit before that vests, you still have future income.  i.e. even if you quit and move to another firm, you will still have income.

Staying and having that 110 vest is up to you, so, psychologically, I would count it.

[felizcortez]

I remember the thrill when I hit that number in my 30's. Thrill was fleeting when I realized I still had to get up at 4:30am the next day and go to my crap job.

Agree with this statement.  I told my wife about it and we had a brief joke about living the high life, but then got right back down to socking more cash away.

[Gone Fishing]

Probably won't happen until I am several years into ER, but I can guarantee you when I get close, I will be scrounging change from the sofa and possibly raiding the kid's piggy banks to get over the hump!  If it is like most other benchmarks I will probably slip back and forth a few times.  I might just celebrate every time! And yes, I will count my home equity, but it shouldn't account for much more than a few percent of the the total.

[felizcortez]

Just wanted to post a follow up.  We hit 1M net worth today without the unvested RSU's and NQO's.  So it's official now... a 7 figure net worth without an asterisk.  Had a few stock's increase, plus a big profit sharing check that put the net worth over the edge.  With the NQO's and RSU's it's even higher.

[2Birds1Stone]

Just wanted to post a follow up.  We hit 1M net worth today without the unvested RSU's and NQO's.  So it's official now... a 7 figure net worth without an asterisk.  Had a few stock's increase, plus a big profit sharing check that put the net worth over the edge.  With the NQO's and RSU's it's even higher.

Amazing!! Congrats. I had a feeling you would update this sans asterisk.

[powersuitrecall]

Just wanted to post a follow up.  We hit 1M net worth today without the unvested RSU's and NQO's.  So it's official now... a 7 figure net worth without an asterisk.  Had a few stock's increase, plus a big profit sharing check that put the net worth over the edge.  With the NQO's and RSU's it's even higher.

Niiiice.  That's a good feeling. 

We are in a similar position with a NW just hitting 1M, including our home equity and an education fund for our kids.  All are technically applicable to NW calculations, but nothing we want to ever cash out for the purposes of retirement.  It's going to feel great hitting that number again, and again :)

[felizcortez]

Niiiice.  That's a good feeling. 

We are in a similar position with a NW just hitting 1M, including our home equity and an education fund for our kids.  All are technically applicable to NW calculations, but nothing we want to ever cash out for the purposes of retirement.  It's going to feel great hitting that number again, and again :)

Nice.  Congrats.  I had the same feeling about the NQO's and RSU's as you do about the house.  Was looking forward to hitting the number "for real"

This is 1M liquid assets (stocks, bonds, cash, equivalents).  No home, cars, etc.

Amazing!! Congrats. I had a feeling you would update this sans asterisk.

Couldn't let it slide.  Had to defend the honor of my stache

[Davids]

When you are comfortable living the millionaire lifestyle, what will you buy?  A Rolex?  A luxury car?  Perhaps, but I think I can safely announce my ascension into the millionaire's club in a few short years with a replica of the million dollar belt. 

http://www.ajsbelts.com/beltpagemillion.htm

Now that's classy.  The real one cost $125,000 so I might have to wait on decamillionaire for that.

I watched wrestling when i was a kid. I remember whenever The Million Dollar Man beat an opponent he shoved a $100 bill down their throat.

[ysette9]

Congratulations. It is a good feeling and at the same time, just a number of a screen.

There are a lot of parallels between your situation and ours. We are a dual-income family though, both of us engineers with social skills. :) I am now an engineering manager while my husband is still doing design work. I often stop and marvel at the path that got us here and the fact that companies are somehow willing to pay us these ridiculous sums of money. Hey, as long a the paychecks keep coming in, I will keep sending the $ over to Vanguard!

Out of curiousity, did you feel any different or approach things differently once you reached the $1M mark? You might have said it in the conversation thread above and I missed it, but what is your FIRE number? When you do FIRE, will your assets all be "on paper"? We have enough similarities in our situations, as I mentioned before, that your details are quite interesting to me.

[coin comments]

does this count savings for both you and your wife?  i.e. is $1MM networth just your savings or a combo for both of you?

[FOBStash]

Congrats!!!

[ysette9]

does this count savings for both you and your wife?  i.e. is $1MM networth just your savings or a combo for both of you?

I've wondered that myself. In our case we are $1M together, so does that mean that we aren't millionaires as individuals? I think probably "yes". It doesn't matter in the end since it is just a label, but it certainly is easier to reach that number as half of a partnership than alone!

[Prepube]

Congratulations!  Now look again!  if you are invested appropriately for your age, you just dropped below a million again.  Maybe tomorrow!.

[Cookie78]

does this count savings for both you and your wife?  i.e. is $1MM networth just your savings or a combo for both of you?

I've wondered that myself. In our case we are $1M together, so does that mean that we aren't millionaires as individuals? I think probably "yes". It doesn't matter in the end since it is just a label, but it certainly is easier to reach that number as half of a partnership than alone!

I was wondering that lately myself, since I only have a single income to work with, and I'm pretty sure I'm quitting before 1 million. I told my boyfriend when we each get to 1/2 million separately I'm counting us as having a million net worth (just for feel good purposes) :p

Congrats OP and all the other millionaires.

[Bateaux]

I've made a few wrong turns along the way.  No debt, happily married, 1.3M in investments, 400k paid off real estate and good paying jobs.  The problem?  We planned to retire too late in life.  We're in our 40's and planned to retire in our mid 50's.  All our investments are geared towards retirement.  800k in 401k's, 250k in cash balance pension, 150k in Roth IRAs, under 100k in cash and taxable accounts.  Even with nearly 1.75M in assets we are in no position to retire.  Even this year we intend to invest nearly 50k in 401k with company match, 12k in Roth IRAs and an additional 17K in company pension.  I have invested an additional 6k in a taxable account this year in Vanguard Strategic Equity.  I'd like to get 20K or so in that taxable account before year end.  Selling off the real estate could bridge our way to drawing our retirement funds without tax penalty.  We'd need to find a cheaper place to live for a few years.  Thinking on a sail boat.

[Chrissy]

I've made a few wrong turns along the way.  No debt, happily married, 1.3M in investments, 400k paid off real estate and good paying jobs.  The problem?  We planned to retire too late in life.  We're in our 40's and planned to retire in our mid 50's.  All our investments are geared towards retirement.  800k in 401k's, 250k in cash balance pension, 150k in Roth IRAs, under 100k in cash and taxable accounts.  Even with nearly 1.75M in assets we are in no position to retire.  Even this year we intend to invest nearly 50k in 401k with company match, 12k in Roth IRAs and an additional 17K in company pension.  I have invested an additional 6k in a taxable account this year in Vanguard Strategic Equity.  I'd like to get 20K or so in that taxable account before year end.  Selling off the real estate could bridge our way to drawing our retirement funds without tax penalty.  We'd need to find a cheaper place to live for a few years.  Thinking on a sail boat.

Uhhhh... are you sure you have a problem?  My understanding is that Early Retirees in a 5-year bridge fund while they convert money to their ROTHs (401k-->tIRA-->ROTH) which can then be pulled out penalty & tax free.  Do some research.  http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/

[ysette9]

What a fabulous "problem" to have! How much do you spend each year? If you trim expenses and quit working now, can you make your cash and taxable non-retirement money hold you for five years until your Roth pipeline is ready? Heck, I'd even pay some penalties to make it happen if I were in your shoes if it meant I could quit working tomorrow.

[felizcortez]

Congratulations!  Now look again!  if you are invested appropriately for your age, you just dropped below a million again.  Maybe tomorrow!.

Checked it again, it went down, but still above 1M :) even after the drop today.  At this point I'll happily ignore the market and just keep pushing cash into investments.

does this count savings for both you and your wife?  i.e. is $1MM networth just your savings or a combo for both of you?

Yeah it's for both my wife and I, but we only have one income between the two of us.

Congratulations. It is a good feeling and at the same time, just a number of a screen.

There are a lot of parallels between your situation and ours. We are a dual-income family though, both of us engineers with social skills. :) I am now an engineering manager while my husband is still doing design work. I often stop and marvel at the path that got us here and the fact that companies are somehow willing to pay us these ridiculous sums of money. Hey, as long a the paychecks keep coming in, I will keep sending the $ over to Vanguard!

Out of curiousity, did you feel any different or approach things differently once you reached the $1M mark? You might have said it in the conversation thread above and I missed it, but what is your FIRE number? When you do FIRE, will your assets all be "on paper"? We have enough similarities in our situations, as I mentioned before, that your details are quite interesting to me.

It hasn't really changed our strategy or our outlook, except it helps to make the goals feel more attainable as you start hitting some of these milestones.  It's a good confirmation that we are on the right path and what we are doing is working.  Also spurred some good conversations this evening as we talked through some of our goals.

We are thinking the retirement number is about $1.5M which should put off about 60k per year at 4%.

[sol]

Heck, I'd even pay some penalties to make it happen if I were in your shoes if it meant I could quit working tomorrow.

That's probably good advice.  You can ALWAYS access your 401k funds at any time, you just have to pay the 10% "penalty" tax.  If your tax bracket in retirement is more than 10% lower than it was while working, you still come out ahead.

Bateauxdriver is the ideal candidate for this sort of plan.  More than enough assets, distributed into wrong accounts.  Who cares!  Think of it as supplementary taxes instead of a penalty.  If you really have more than enough, then just pay it and get on with your retired life. 

[Dexterous]

Heck, I'd even pay some penalties to make it happen if I were in your shoes if it meant I could quit working tomorrow.

That's probably good advice.  You can ALWAYS access your 401k funds at any time, you just have to pay the 10% "penalty" tax.  If your tax bracket in retirement is more than 10% lower than it was while working, you still come out ahead.

Bateauxdriver is the ideal candidate for this sort of plan.  More than enough assets, distributed into wrong accounts.  Who cares!  Think of it as supplementary taxes instead of a penalty.  If you really have more than enough, then just pay it and get on with your retired life.

Agreed, plus it seems that he has at least $100,000 in Roth contributions or taxable accounts already that can be withdrawn now penalty free.  That should last some time while the 401k > tIRA >rIRA rollovers are ongoing.  Taking a penalty on the remaining few years worth of expenses shouldn't be a big deal after that... and if it was then there's the $400,000 in real estate that could be sold without a penalty.  :)  *Edit*  I'm also considering a liveaboard sailboat during my retirement, and have found some good options for about $300,000 for 40-46' boats.  So basically, you could use the Roth contributions + taxable money + difference from the real estate sale & boat purchase to fund your retirement now... depending on your taste in boats of course!

Back to the OP -- congrats!!  I hope this market downturn doesn't make you have to reach the milestone again, hehe.

[dude]

Probably won't happen until I am several years into ER, but I can guarantee you when I get close, I will be scrounging change from the sofa and possibly raiding the kid's piggy banks to get over the hump!  If it is like most other benchmarks I will probably slip back and forth a few times.  I might just celebrate every time! And yes, I will count my home equity, but it shouldn't account for much more than a few percent of the the total.

haha!  I was less than $1,000 away from having half a mil in my 401k about a week and a half ago and was SOOOOO looking forward to seeing that number on my account, and then the market . . .  Ah well, it'll happen sometime before the end of the year, I'm sure, and it's already happened if I included cash and cash equivalent (GNMA fund) in a Vanguard account, but I wanted to that number staring back at me from 401k statement!  Won't see a mil for about 10 more years, but that's fine, I don't need that much anyway!

[Bateaux]

After the past week unless you were out of the stock market you've likely lost some money.  I'm down nearly $100,000 from the high.  That's the bad news.  The good news I haven't FIRED yet and we're still in million status.  Time to buy some stocks on sale!