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General Discussion => Share Your Badassity => Topic started by: Rein1987 on March 19, 2015, 02:33:09 PM

Title: A million net worth achieved!
Post by: Rein1987 on March 19, 2015, 02:33:09 PM
Yesterday we achieved 1 million net worth, when escrow closed our previous home sale. It takes 11 working years of my DH and 3 working years of me to achieve this. I wish the second million will take less time.

Asset:
Cash: 410k (Because of the home sale was yesterday, we do not have time to put into market yet)
Taxable investment: 150k
Retirement account: 200k
Primary Residence equity: 260k (Bought 1 month ago. This is our down payment so I assume equity is the same.)

Net worth:
1.02 million
Title: Re: A million net worth achieved!
Post by: Abe on March 19, 2015, 02:47:18 PM
Do you have a mortgage on the primary residency? That should be subtracted. But still, great job!
Title: Re: A million net worth achieved!
Post by: Cathy on March 19, 2015, 02:57:53 PM
Do you have a mortgage on the primary residency? That should be subtracted. But still, great job!

As OP mentions, the house figure is just the "equity" (i.e. the value of the house minus the mortgage balance). According to the OP, this figure is also the same as the downpayment, so assuming a 20% downpayment, the house would be worth $1.3 million and the mortgage balance is $1.04 million.
Title: Re: A million net worth achieved!
Post by: arebelspy on March 19, 2015, 03:07:25 PM
Congrats!

Do you have a mortgage on the primary residency? That should be subtracted.

They're counting just the equity, not the total value, so it already is.  :)
Title: Re: A million net worth achieved!
Post by: Abe on March 19, 2015, 10:22:23 PM
Ah I see, sorry about the mistake. Good job x2 then!
Title: Re: A million net worth achieved!
Post by: larmando on March 20, 2015, 12:06:07 AM
Do you have a mortgage on the primary residency? That should be subtracted. But still, great job!

As OP mentions, the house figure is just the "equity" (i.e. the value of the house minus the mortgage balance). According to the OP, this figure is also the same as the downpayment, so assuming a 20% downpayment, the house would be worth $1.3 million and the mortgage balance is $1.04 million.
If that's the case it sounds not ideal to have a house that is worth more than one is. And also a mortgage balance higher than the net worth. :/ (especially with such a high net worth it should be easy to do better). Also they were already worth a million since the old house equity would count (but congrats on selling it). (Of course to each their own choices, this is just a suggestion for other future millionaires) :)
Title: Re: A million net worth achieved!
Post by: Cathy on March 20, 2015, 12:27:01 AM
A $1.3 million house isn't unusual for where the OP lives in the bay area. It's more risk than I would take on personally but if you intend to live in the area long term, it's not necessarily an inherently foolish financial move.
Title: Re: A million net worth achieved!
Post by: dude on March 20, 2015, 06:32:58 AM
B.A.!  Congrats!
Title: Re: A million net worth achieved!
Post by: Rein1987 on March 20, 2015, 10:00:52 AM
Do you have a mortgage on the primary residency? That should be subtracted. But still, great job!

As OP mentions, the house figure is just the "equity" (i.e. the value of the house minus the mortgage balance). According to the OP, this figure is also the same as the downpayment, so assuming a 20% downpayment, the house would be worth $1.3 million and the mortgage balance is $1.04 million.
If that's the case it sounds not ideal to have a house that is worth more than one is. And also a mortgage balance higher than the net worth. :/ (especially with such a high net worth it should be easy to do better). Also they were already worth a million since the old house equity would count (but congrats on selling it). (Of course to each their own choices, this is just a suggestion for other future millionaires) :)

If you look at the housing price trend for the past 20 years in the Bay area, I believe having some equity here is not a bad investment idea in the long run. The salary level can support the housing price in this area, not to mention tons of foreign investors. Also, we do want to take advantage of the low interest rate.

BTW, the old home selling price was an all cash offer, 100k more than our expectation, so I always thought my networth is only 900k...
Title: Re: A million net worth achieved!
Post by: larmando on March 20, 2015, 12:33:32 PM
Great to have the surprise then! Yeah I hadn't checked it was in the bay area. So is your plan to retire there? Will you pay off the mortgage first or just pay it with investments?
Title: Re: A million net worth achieved!
Post by: Rein1987 on March 20, 2015, 12:54:46 PM
Great to have the surprise then! Yeah I hadn't checked it was in the bay area. So is your plan to retire there? Will you pay off the mortgage first or just pay it with investments?

I do not have a clear retirement yet because my husband has no intention to retire early...He is a workaholic..So maybe at some point only he works and I'll be a stay at home mom. However, if once he is on board with the early retirement idea, we may sell the house and move to a cheaper place to retire.

Our loan is 130k 4% HELOC and 910k 2.375% 7/1 ARM. We will pay off the HELOC using the cash, and then invest the rest of money. If we stay here for more than 10 years and the interest rate skyrocket, we may pay a huge lumpsum at that time. For now, we will invest the money.
Title: Re: A million net worth achieved!
Post by: misschedda on March 25, 2015, 12:44:40 PM
Our loan is 130k 4% HELOC and 910k 2.375% 7/1 ARM. We will pay off the HELOC using the cash, and then invest the rest of money. If we stay here for more than 10 years and the interest rate skyrocket, we may pay a huge lumpsum at that time. For now, we will invest the money.

Sounds like a good plan. Congrats!
Title: Re: A million net worth achieved!
Post by: Bigote on March 27, 2015, 02:27:59 AM
Congrats!
Title: Re: A million net worth achieved!
Post by: Sid Hoffman on March 27, 2015, 12:16:38 PM
and 910k 2.375% 7/1 ARM. We will pay off the HELOC using the cash, and then invest the rest of money. If we stay here for more than 10 years and the interest rate skyrocket, we may pay a huge lumpsum at that time. For now, we will invest the money.

That seems like the smart thing to do.  Even if the current stock market is a little overvalued, over 7-10 years with reinvested dividends, I'm pretty sure you'll come out way ahead by investing the money versus putting it towards a mortgage with such a low rate.  That's barely half a percent over inflation last year, so it's almost free money for that first 7 years.
Title: Re: A million net worth achieved!
Post by: fiveoh on March 27, 2015, 12:36:30 PM
Congrats!  Thats awesome.  I hope to be there one day.  Mind if I ask what range your combined gross income is? 
Title: Re: A million net worth achieved!
Post by: Rein1987 on March 27, 2015, 12:55:01 PM
Congrats!  Thats awesome.  I hope to be there one day.  Mind if I ask what range your combined gross income is?

When my husband got out of college, his gross was around 40k. His exceeded 100k around 2011. Last year, his exceeded 200k. For me, my first year was about 80k and later 2 years were around 150k. These were our gross income including salary, RSU and bonus, not including any capital gain.