Author Topic: The first million is the hardest  (Read 101401 times)

Honest Abe

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Re: The first million is the hardest
« Reply #50 on: November 24, 2013, 03:46:26 PM »
Am I alone in finding the whole "double comma" thing just a little crass?
My impression from this forum is one of above average earning professionals, able to save and grow their net worth, year-on-year, often in considerable leaps and bounds. Whilst everyone can benefit from taking steps to improve their finances, there is a large proportion of the population for whom a million USD is not realistic or feasible.

While I agree that a 7-figure NW is a formidable goal for many, $1mil is doable on a modest income if a person 1) starts early enough and 2) does it right.

Dicey

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Re: The first million is the hardest
« Reply #51 on: November 24, 2013, 03:47:26 PM »
Any other 2 comma club members want to chime in?


Am I alone in finding the whole "double comma" thing just a little crass?

Whilst everyone can benefit from taking steps to improve their finances, there is a large proportion of the population for whom a million USD is not realistic or feasible.


isleofthorns: The phrase is from the 2000 movie "Finding Forrester", in which an impoverished but smart inner-city kid finds success through hard work and the help an unexpected mentor. It's actually a brilliant reference, in no way crass. You can watch the movie and decide for yourself. With mentors like MMM and the members of the forum, I believe anyone can succeed, no matter where their starting point.

BTW, it's not "double comma", it's "two comma".

Bigote: Thanks for the reminder. I love this movie. Think I'll watch it again over the Thanksgiving weekend.




isleofthorns

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Re: The first million is the hardest
« Reply #52 on: November 24, 2013, 05:16:53 PM »
I haven't seen that movie.

I first heard it used in reference to the trustafarian kids of NY, starting out life with substantial means and privilege - so, the exact opposite perhaps to the reference point you mention. From my perspective (and perhaps in part it reflects a difference between the UK / USA), giving your financial position a status-moniker as such, is unnecessary and a little crass. Personal taste perhaps.

Whilst I agree anyone can succeed, and I certainly don't belittle the powerful effect a few changes in perspective and effort can have on one's own personal situation, the reality is that for everyone who achieves a sizable stash, there will be a multiple more stuck in debt and finanical precariousness. That is the nature of the game. Money and debt are intrinsically linked.

I've worked alongside and employed people who will barely earn that amount gross in thirty years of work, and in countries where social and financial mobility is barely possible. I think the notion that your first million dollar "two comma" stash is the easiest two-comma stash to make will be wasted on most people (notwithstanding the ability of your Fed to print enough dollars that everyone can soon be in the two comma club!).



Bigote

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Re: The first million is the hardest
« Reply #53 on: November 24, 2013, 08:07:00 PM »
Yes it will be wasted on most people.   So will posts about achieving a 65% savings rate.   So will posts about making your own soap.   So will posts about biking to work.

But this site isn't for most people - it is for Mustachians or mustachian wannabes.  So we get to talk about those things. 

dragoncar

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Re: The first million is the hardest
« Reply #54 on: November 25, 2013, 04:04:01 AM »
Yes it will be wasted on most people.   So will posts about achieving a 65% savings rate.   So will posts about making your own soap.   So will posts about biking to work.

But this site isn't for most people - it is for Mustachians or mustachian wannabes.  So we get to talk about those things.

What I love about this forum is that we have such a wide variety of people with different goals.  Sure, a million dollars is more than anyone "needs".  From the latest poll, it seems that about half of us are shooting for less than $1 million, and half over.  So I don't think this thread is "wasted" on most people any more than a thread on making your own laundry detergent is wasted.  We are pretty diverse here although I agree we tend towards higher earning professionals.

isleofthorns

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Re: The first million is the hardest
« Reply #55 on: November 25, 2013, 01:29:48 PM »

I guess I should endeavour to embrace the concept of badassity, rather than my default "modest-ity".....

How's this?

I worked out today that, in 13 years of running my own business, I have retained and reinvested an average of 80% (savings rate) of my post-tax profits, year on year.......   does that sort of thing qualify?!

As regards the fact that this site is for mustachaians or like, this leads me to pose the question of how would one define the concept? (succinctly if possible!). I'm intrigued as to whether I'm remotely mustachaian.....


Yes it will be wasted on most people.   So will posts about achieving a 65% savings rate.   So will posts about making your own soap.   So will posts about biking to work.

But this site isn't for most people - it is for Mustachians or mustachian wannabes.  So we get to talk about those things.

2527

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Re: The first million is the hardest
« Reply #56 on: November 25, 2013, 05:23:18 PM »
I don't think it is crass within the context of this website.  I sometimes mention it on this website because it is the only place I can, I don't know any of you in 3DLand, and it might inspire somebody to know what other ordinary people have achieved. 

My income has been on the high side of middle class, but not upper middle class.

bigchrisb

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Re: The first million is the hardest
« Reply #57 on: November 25, 2013, 08:09:28 PM »
I hit my $1M at age 31 (started working full time at 23, switched on to financial growth at 25).

Net worth was:
23: -$30k (car loans, student loans)
24: $11k
25: $48k
26: $55k (2008 - GFC & margin calls)
27: $183k
28: $415k (bought into employer)
29: $649k
30: $884k
31: $1,150k

My net worth growth has been:
Capital gain on listed stocks: $240k
Capital gain on private company: $390k
Retirement savings / growth: $155k
Savings/investment/debt repayment: $365k

So roughly 45% from savings and roughly 55% from investment returns.  I've certainly noticed that portfolio returns are now having a large impact compared to my savings (as opposed to the start, where the savings rate was the biggest driver).  However, the savings rate is the only one I have any control over, so the one that I still focus on!

Hopefully I can report back in a couple of years about how the second million fares.

imustachemystash

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Re: The first million is the hardest
« Reply #58 on: November 25, 2013, 08:20:40 PM »
I like this thread because I find it interesting to read about how people went about getting their first million.  It's something I don't hear people talk about in real life, so I'm glad there are people here willing to share.

zinethstache

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Re: The first million is the hardest
« Reply #59 on: January 09, 2014, 11:28:25 AM »
+1

I am approaching that 1m mark...it is a mix of retirement savings and real estate. Loved reading the thread. Definitely not your casual conversation.

dude

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Re: The first million is the hardest
« Reply #60 on: January 09, 2014, 01:19:47 PM »
Yes it will be wasted on most people.   So will posts about achieving a 65% savings rate.   So will posts about making your own soap.   So will posts about biking to work.

But this site isn't for most people - it is for Mustachians or mustachian wannabes.  So we get to talk about those things.

Yep, that's it in a nutshell really.  This is the place where you can anonymously get some feedback, or support, or a pat on the back, for efforts that you can't talk about in polite society or with your family and friends, and where you can learn from and marvel at those who've crossed that FIRE line, or who are closing in on it.  No two people do it the same way, but there are certainly some common denominators, and I for one, love to hear about the success stories.  Very motivating.

Poorman

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Re: The first million is the hardest
« Reply #61 on: January 09, 2014, 03:02:32 PM »
Of course this is funny money.. I have a large exposure to stock ETF's and we know a significant pullback is coming and probably soon.

I was just thinking the tone of this thread would be a lot different if stocks had suffered a negative return in 2013.  Bull markets tend to make geniuses of us all.

marty998

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Re: The first million is the hardest
« Reply #62 on: January 10, 2014, 03:57:04 PM »


28: $415k


hmmm...I am actually right here....28 and $415k-$420k.

If I got to $1,150k in 3 years time it's likely there will also be flabby pink animals cruising past at altitude. But stranger things have happened  ;)

Blindsquirrel

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Re: The first million is the hardest
« Reply #63 on: January 12, 2014, 07:06:12 PM »
   First million is definitely the hardest. I do not find the OP crass, this is share your badassity and the dude is bad ass! Our first $1,000,000 at around 2005 was saved by investing in stocks and SFR real estate with a 4 flipped houses. Lots of work and a few poor decisions for sure. We dropped below 1M but kept saving and investing. We went from 1.6 to 2.2 in the last 2 years while picking up 3500 a month in passive income. (debt reduction and 4 sfrs) Once you cross the event horizon of compound interest it goes nuts. To do the first million we each never made more than 60k from our jobs but had great company 401k contributions. We now pay more in total taxes (100K) than we made 10 years ago. I will exit work at the paid off house and $3,000,000 mark at around 50. We may well pull the plug on jobs sooner than that.  You can do it. Real estate and SPY can get you there. It is not a race but once it happens, it happens fast. I had done the calculations and the math but when it actually happens to you 1. It is amazing. 2. It is a really good feeling. 3. Congrats and major props to the OP for having great big brass ones during the financial cricis.

libertarian4321

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Re: The first million is the hardest
« Reply #64 on: January 27, 2014, 03:15:34 PM »
Our growth rate has slowed a lot because we just don't try as hard anymore.

I was obsessed with making money when I was young (I started working full time in '85)- spent all my free time investing and researching, and did very well on a fairly modest income.

But at some point, we realized we had more than we needed, that we don't need to work unless we want to, and stopped obsessing about it.  I used to know my net worth to the penny every day, now I honestly don't know what it is, I would guess somewhere between 2.5 and 3 million.

I retired early in 2006, went back to work in 2010 (yeah, I know, I'm nuts :) but give most of my salary to charity- though with my wife's salary and investment returns, our net worth is still rising.

Another Reader

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Re: The first million is the hardest
« Reply #65 on: January 27, 2014, 05:11:25 PM »
+1 to Blind Squirrel's comments.

I retired and promptly took a big hit to my net worth because of what happened to the real estate market and then the stock market.  The important lesson I learned is the rent and dividend checks still show up for the most part (along with the pension checks in my case), and as long as that happens, you will survive.  At some point, you will recover. 

Leverage and compounding are your friends and can alter the event horizon in your favor.  As long as you do not put yourself in a position where you lose the underlying income producing assets when the SHTF, you will be just fine.


anisotropy

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Re: The first million is the hardest
« Reply #66 on: April 16, 2014, 12:58:38 PM »
post of resurrection !!!

i've actually noticed as the stash gets bigger and bigger the % of tax actually goes down (thanks to the preferential treatment of investment income). i am unsure how fair that is.....

ethics aside, last year we paid 15% average tax, had we "made" the same amount from employment income our average tax would have been around 40%.

lesson? yes, the first million is the hardest, after that, not only do we "make" more, we also get to keep more.

Exflyboy

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Re: The first million is the hardest
« Reply #67 on: April 16, 2014, 03:56:16 PM »
Yes an old thread but  a good one.

The obvious advantage of hitting $2M is if 2008 happens again then that $2M will become a little over $1M.. Enough to still give a decent salary at 4% SWR.

At the market peak a couple of weeks back I was at $1,325,000.

Although very much a first world problem the thing that worries me just a little is that if 2008 happens now I'll only be worth a little over $600k.

Frank

Baylor3217

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Re: The first million is the hardest
« Reply #68 on: April 16, 2014, 07:45:42 PM »
This is my concern as well. I know it's going to happen eventually just who knows when. Maybe ill be retired and go back to work for 3-4 years until the politicians find a way to goose it back up again.

Yes an old thread but  a good one.

The obvious advantage of hitting $2M is if 2008 happens again then that $2M will become a little over $1M.. Enough to still give a decent salary at 4% SWR.

At the market peak a couple of weeks back I was at $1,325,000.

Although very much a first world problem the thing that worries me just a little is that if 2008 happens now I'll only be worth a little over $600k.

Frank

dan@themadrealworld

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Re: The first million is the hardest
« Reply #69 on: April 17, 2014, 01:43:45 PM »
Happy for all of you with the high net worth. Mine is about $270k right now but it is growing and at a faster and faster rate as I continue to purchase rental properties.  In the last year I have cut down on working at my job big time and gone long periods without working and my net worth keeps going up!

It is a great feeling and provides flexibility to work on other things and spend more time with my family.

Question for people with $1 million+.  Was there a point when net worth started growing on autopilot?  When did you decide to retire and what have you done in retirement?

mjs111

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Re: The first million is the hardest
« Reply #70 on: April 17, 2014, 02:14:13 PM »
Was there a point when net worth started growing on autopilot?

Yes in the sense that a 5% return on $1M or $2M is a lot of money in an absolute sense, making that second million (or whatever your next milestone is) that much easier.  The compounding machine really kicks into high gear when you start dealing with principal amounts in the high six figures/low seven figures.

No in the sense that you need to make sure not to get too cocky and comfortable, truly leaving your finances on autopilot. Whatever due diligence you used to get to that first milestone makes sense to keep in place to get to that next milestone.

Mike


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Re: The first million is the hardest
« Reply #71 on: April 17, 2014, 02:42:54 PM »
Hitting a million seems so far away but I have loved reading through this thread.  I'm going for 100k at the moment but someday.... I'll get there....

Jon_Snow

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Re: The first million is the hardest
« Reply #72 on: April 17, 2014, 04:54:36 PM »
My wife and I hit 1M net worth when we were 35, largely due to a prodigious ability to save money, with a nice assist from the phenomenon known as Vancouver Real Estate.

We passed 2M net worth just a few months ago, around my 42nd birthday. The difference now is that in addition to a ridiculous savings rate (80%), we now have a considerable stream of investment income that we reinvest diligently - Einstein wasn't kidding when he extolled the virtues of compound interest. Amazing to watch.

I sometimes wonder what our finances would look like if I could keep it together and work another 5 years... but this feeling passes quickly. I intend to ER this year, while my wife wants to continue to work for a spell. I think by the time she joins me, our NW should be around 3M...

Bigote

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Re: The first million is the hardest
« Reply #73 on: April 18, 2014, 07:38:25 AM »
Was there a point when net worth started growing on autopilot?  When did you decide to retire and what have you done in retirement?

Yeah, though autopilot can work both ways!  But the portfolio momentum can start to dwarf typical earnings easily enough.   My portfolio swings are very often 5 figures on any given day (up 12k yesterday, for example).   

I have been doing my own version of semi-ER for close to 10 years, but rather than being part time work its been working on and off.   I took a couple of sabbaticals and changed jobs twice, each time with a gap year between jobs.   Finally a year ago I pulled the plug for good.   My life now is like MMMs but without all the construction stuff :)   Seriously though I spend a lot of time with my boy, and a lot of time in the community.   

Gin1984

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Re: The first million is the hardest
« Reply #74 on: April 19, 2014, 10:00:36 AM »
Am I alone in finding the whole "double comma" thing just a little crass?

As regards the topic, I would think it fairly obvious that the first million is likely the hardest for most who've achieved that or more. Similarly, further down the scale, I'm sure there are plenty more folk with negative or no assets and modest incomes would view a few thousand as a veritable mount Everest of targets!

My impression from this forum is one of above average earning professionals, able to save and grow their net worth, year-on-year, often in considerable leaps and bounds. Whilst everyone can benefit from taking steps to improve their finances, there is a large proportion of the population for whom a million USD is not realistic or feasible.





Seeing the 100k thread got me thinking about the million dollar thresholds.

I started working in 1990.   I crossed a million in net worth in 2001. 

It took me until 2006 to cross 2MM.  I dipped below briefly during the crisis, but for the most part stayed between 2-3 until 2010.

I hit 3MM in 2010.

I hit 4MM in 2012.   

I hit 5MM in 2013.

So basically it took me 11 years to get to the 1st million, 5 years to the 2nd, 4 years to the 3rd, 2 years to the 4th, and 1 year to the 5th.

I'm defining net worth conservatively, I'm not including home equity but I did subtract mortgage debt for the years that I had it.


Any other 2 comma club members want to chime in?
I personally don't think one million is something that is hard to obtain.  A million dollars using the 4% rule only gives you $40,000 so I would think that most Americans will need that to retire.  Saving $400 from 25-65 gives you that million. 
http://budgeting.about.com/od/Why_Budget/a/How-To-Be-A-Millionaire.htm

paddedhat

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Re: The first million is the hardest
« Reply #75 on: April 20, 2014, 06:09:17 AM »
After years of investing/gambling in the market, I finally gave in to having my cousin manage my money. Although his fees are high, I feel I am guarded from a large downside risk of a market. I am still on the fence watching the market soar with my mediocre returns this year.


I have to admit, this is tough to read. I'm glad that you clarified the difference between your actual gambling in the market, and the way the word is used by most. For example, I watch family members struggle, and work hard well into their 60s, with no real strategy, as they tell me that they have their money in the bank since they won't "gamble in the market". I hope you take the time to stop by a friend of this forum, and read what he has to say about the market and investing. Go to  http://jlcollinsnh.com and read his "stock series".

To illustrate the difference between his thinking and staying with a "pro" and all the high fees and poor performance they often bring to the table, I can offer a stunning personal experience. I was pushed into using a "great guy" from one of the mega-banks. He came highly recommended by a friend, who is a estate lawyer and does a lot of client business with him.  After far too much churning of my account, high fees and little to show for it, I pulled 80% of my funds and went with Vanguard. Two years later I was up 51% with Vanguard and 9% with my advisor. My advisor got 1/3rd of the pathetic gain as a fee for his dismal performance. Vanguard's fees were a tiny fraction of his. During that time period I threw away $2K a month on a very well regulated and vetted "investment professional", who, like most of them, was unable to get CLOSE to matching the index on a bull market as he did stupid shit like leaving cash on the sidelines and buy gold mining stock, etc.....
   Not a personal attack on your cousin in the least, but you can move to Vanguard, select whatever risk you are comfortable with, and forget about it. You will save thousands yearly in fees, be invested in a rock solid company that was built for the "little guy" and end up far wealthier in the end. Good luck.

sleepyguy

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Re: The first million is the hardest
« Reply #76 on: April 20, 2014, 07:22:15 PM »
TEACH ME MASTER! ;) j/k

A million doesn't seem to far from us currently, but 2-3-4... seems pretty out of reach.  We'll be semi-retiring once we reach about 1-1.2 in equities.

that's pretty awesome man tks for sharing... enjoy life!

dan@themadrealworld

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Re: The first million is the hardest
« Reply #77 on: April 20, 2014, 07:24:49 PM »
Quote
After years of investing/gambling in the market, I finally gave in to having my cousin manage my money. Although his fees are high, I feel I am guarded from a large downside risk of a market. I am still on the fence watching the market soar with my mediocre returns this year.


Quote
I have to admit, this is tough to read.

I agree.  If you are going to invest, invest with low cost index funds.  You don't need someone to manage your money.

It is a mistake to keep too much cash out of fear but you don't have to invest in stocks either.  I invest most of my money in real estate at this point in time.
« Last Edit: April 20, 2014, 07:26:27 PM by dan@themadrealworld »

Thomas54

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Re: The first million is the hardest
« Reply #78 on: April 20, 2014, 09:18:31 PM »
It is certainly off limits as dinner party conversation goes but it is entirely ok in the 'share your badassity' forum on MMM.   This is a site where we can talk about accomplishments in saving, cutting spending, exercise, efficient living, or anything else that makes up the Mustachian lifestyle.

I understand completely about not talking finances at a gathering.  Since I retired from my federal job a couple of years ago and since I live in a modest 1900 sq. ft. home (which is paid for), most folks figure that we are your average Joe's.  What I don't advertise very often is that we were 125K in debt nine years ago.  I had just turned 50 and I had an epiphany one evening while looking over our financial spreadsheet.  I realized that we were going more and more negative every month and that I was never going to be able to retire. 

I proceeded to walk into our living room and I told my wife that the buck stops with me and that I need her help if we are to ever retire.  She bought in and we shredded every credit card that night.  We put ourselves on a $100 a week allowance for gas and lunch, and went from eating out 3 nights a week to 1 night per week.

We paid off the highest credit card first and then went down the line.  We went into 'debt free' status 2 years after my epiphany.  Had I known that debt free felt so great, I think that we would have done it several years sooner.

I'm not certain how to figure in my pension into my net worth or whether I should.  I know that between the house, cash, savings, some small investments, and toys, our net worth is in the 500K range.  If I figure the pension in, it is probably in the 3mil ballpark.  Now all I have to do is live to 90 like most of the men in my family.

Thomas


NewStachian

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Re: The first million is the hardest
« Reply #79 on: April 21, 2014, 03:54:12 PM »
I will caveat with I am not at $1M yet, but I have a little advice that I think might be relevant.

I got married last year. I had been doing pretty well savings, but was definitely a wasteful spender. I had been tracking my net worth and it appreciated at 19% over the last 10 years, so my savings rate was an icky 12-ish% if you include my other returns in the market.

Getting married at 30 made me realize that if my wife and I want to have kids, it will happen in the next 2-3 years. Being dual income and continuing to live a frugal lifestyle allowed us to stash over $100k last year and really feed the principal beast. If any of you are young, keep in mind this double income trick. Even if you can only do it for a few years, it will pay off huge down the road. We should be able to hit $1M in the next 2-3 years given normal market returns and go down to single income to have a stay at home parent (not FIRE. expensive house. don't ask ;)
« Last Edit: April 21, 2014, 03:56:24 PM by NewStachian »

dan@themadrealworld

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Re: The first million is the hardest
« Reply #80 on: April 21, 2014, 05:59:49 PM »
I have done everything so far on my income alone.  Would have been great to have another strong income.  I may have been at that $1 million mark by now.

Blindsquirrel

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Re: The first million is the hardest
« Reply #81 on: April 21, 2014, 06:51:40 PM »
   Dan, has a really good point. Most fixed costs remain the same when you go from a one person household to a two person household. Having a second powerful earner really gives you a firehose of cash every month to invest. Once you have a good size stash, the firehose of income along with income from your investments really cranks up. On the flip side, if you marry a spendy spouse with a ton of debt and low income, it can stunt your stash. 

dan@themadrealworld

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Re: The first million is the hardest
« Reply #82 on: April 21, 2014, 07:17:31 PM »
Definitely.  Best to find a partnet with similar financial habits.

RMD

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Re: The first million is the hardest
« Reply #83 on: April 22, 2014, 06:25:39 AM »
For those who have made it through...was there a spot where you felt stuck?

I feel like I've been hanging at 250,000 for forever.

Gin1984

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Re: The first million is the hardest
« Reply #84 on: April 22, 2014, 06:58:06 AM »
   Dan, has a really good point. Most fixed costs remain the same when you go from a one person household to a two person household. Having a second powerful earner really gives you a firehose of cash every month to invest. Once you have a good size stash, the firehose of income along with income from your investments really cranks up. On the flip side, if you marry a spendy spouse with a ton of debt and low income, it can stunt your stash.
Or a kid, lol.

soccerluvof4

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Re: The first million is the hardest
« Reply #85 on: April 22, 2014, 08:25:45 AM »
i Was in and out of the 1M club to 1.5 from 32 to about 42 and took a huge real estate hit. Changed alot of things around, went into protectionism as I called it and crossed well over the 2M last fall.  Mostly by selling shit I wasnt using. I starting hitting the Index funds hard just about 4 months ago. Hopefully with my shit together and the help of people on these boards I can keep it on the rise for the next 3. 5 years. I am in ER but wife is still overseeing 25 hrs a week our business so we can max out 401ks etc...Simply by her choice.

HAULIN3

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Re: The first million is the hardest
« Reply #86 on: April 22, 2014, 03:13:45 PM »
I'm very excited about that easy 2nd million.  I'm only at 440K right now, but you know, it's going to be hard to get to that 1st million...

Hopefully the second 500k is easier than the first 500k :)

Dude, word.

Double WORD!!!

dragoncar

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Re: The first million is the hardest
« Reply #87 on: April 22, 2014, 03:55:25 PM »
I'm very excited about that easy 2nd million.  I'm only at 440K right now, but you know, it's going to be hard to get to that 1st million...

Hopefully the second 500k is easier than the first 500k :)

Dude, word.

Double WORD!!!

So for not so good for my second $500k... I'm a terrible investor.

EscapeVelocity2020

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Re: The first million is the hardest
« Reply #88 on: April 22, 2014, 09:27:03 PM »
I'm commenting to the first page and a half of the thread, so I may be off topic a bit in my reply, but my inner thoughts on the earlier comments is that the feelings are very temporal.  Sure, it's easy to go from 1 to 2 to x mil if you started with the 1+ at the S&P 666 on March 2009.  I was well below a mil and it's been a matter of not paying attention until now to get above a mil.  And if the market continues to run, you'll have more people piling onto this thread that investing and real estate is easy.  But there was that pesky tech stock collapse in 2000/01, and then the financial collapse in 2008/09.  I'm betting another rain-cloud will roll in before I'm in the ground...  But there's always the hope that America enjoys a pleasant, if not somewhat boring plateau after this bull run...

In the meantime, I'm enjoying the caviler attitude discussing huge sums money in a MMM forum, so I'm posting to see where this goes next!  Maybe WestchesterFrugal will pop up?
« Last Edit: April 23, 2014, 09:02:20 AM by EscapeVelocity2020 »

mjs111

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Re: The first million is the hardest
« Reply #89 on: April 30, 2014, 10:26:01 AM »
Congrats, Cottonswab!

A few other fun psychological things to watch out for in addition to the ones you mentioned:

1.  In the next market downturn that takes your portfolio just a bit below $1 million you might feel poor and perhaps slightly depressed, even though from a practical standpoint your financial position hasn't really changed.

2.  The next time you go above $1 million you won't have the same feeling of accomplishment the first time you did. It'll feel more like relief that you "recovered" to $1 million vs. attaining it.

3. You might start feeling like $1 million isn't all that much money, now that you have it: a monetary-based "familiarity breeds contempt."


Really awesome job! Just watch out for all the mental hobgoblins out there. :)


Mike
« Last Edit: April 30, 2014, 10:29:57 AM by mjs111 »

Cottonswab

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Re: The first million is the hardest
« Reply #90 on: April 30, 2014, 03:09:05 PM »

A few other fun psychological things to watch out for in addition to the ones you mentioned:

1.  In the next market downturn that takes your portfolio just a bit below $1 million you might feel poor and perhaps slightly depressed, even though from a practical standpoint your financial position hasn't really changed.

2.  The next time you go above $1 million you won't have the same feeling of accomplishment the first time you did. It'll feel more like relief that you "recovered" to $1 million vs. attaining it.

3. You might start feeling like $1 million isn't all that much money, now that you have it: a monetary-based "familiarity breeds contempt."


Really awesome job! Just watch out for all the mental hobgoblins out there. :)

Good points. 

I am already starting to experience goal creep.  My FI target used to be $1.25M.  However, I am mentally starting to nudge that number higher with "what ifs".  Hello, Indeterminate Safety Cushion!

I am already hedging against the next major stock market downturn, so I hope it won't be too depressing!  The constant/increasing dividend income should keep my spirits high!

« Last Edit: April 30, 2014, 03:10:50 PM by Cottonswab »

Workinghard

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Re: The first million is the hardest
« Reply #91 on: April 30, 2014, 04:50:21 PM »

A few other fun psychological things to watch out for in addition to the ones you mentioned:

1.  In the next market downturn that takes your portfolio just a bit below $1 million you might feel poor and perhaps slightly depressed, even though from a practical standpoint your financial position hasn't really changed.

2.  The next time you go above $1 million you won't have the same feeling of accomplishment the first time you did. It'll feel more like relief that you "recovered" to $1 million vs. attaining it.

3. You might start feeling like $1 million isn't all that much money, now that you have it: a monetary-based "familiarity breeds contempt."


Really awesome job! Just watch out for all the mental hobgoblins out there. :)

Good points. 

I am already starting to experience goal creep.  My FI target used to be $1.25M.  However, I am mentally starting to nudge that number higher with "what ifs".  Hello, Indeterminate Safety Cushion!

I am already hedging against the next major stock market downturn, so I hope it won't be too depressing!  The constant/increasing dividend income should keep my spirits high!

I appreciate the points too. We're not at 1m yet, but I've already notice the "creep" factor.

mjs111

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Re: The first million is the hardest
« Reply #92 on: April 30, 2014, 05:46:52 PM »

I am already hedging against the next major stock market downturn, so I hope it won't be too depressing!  The constant/increasing dividend income should keep my spirits high!

Just think of a big market downturn as a sale on some of the best companies out there. The stock market is the only place where a big sale makes people run for the exits.*


*I didn't make up this clever phrase, wish I did.  I think it's a Warren Buffett-ism.

Mike

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Re: The first million is the hardest
« Reply #93 on: April 30, 2014, 05:57:49 PM »
*I didn't make up this clever phrase, wish I did.  I think it's a Warren Buffett-ism.
OTOH, Warren Buffett is still in the accumulation phase (we're wondering how long he has left to go...), and your perspective will probably be different once you're in the withdrawal phase.

mjs111

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Re: The first million is the hardest
« Reply #94 on: April 30, 2014, 06:06:28 PM »
*I didn't make up this clever phrase, wish I did.  I think it's a Warren Buffett-ism.
OTOH, Warren Buffett is still in the accumulation phase (we're wondering how long he has left to go...), and your perspective will probably be different once you're in the withdrawal phase.

Very true.  As long as you're a net buyer of stocks, take advantage of the sales as they come.

Mike

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Re: The first million is the hardest
« Reply #95 on: April 30, 2014, 09:14:27 PM »
I broke through the $1M barrier today.  Here's to an easier second million!

I suspect that financial complacency and hedonic adaptation will set in, making the second million more difficult.  We shall see!

No, if you made it to the first $1m then it will be easy to build on from there.

Sure, you feel you can spend a bit more but you can afford to spend more and if you established the habits to get you to the first $1m (assuming you did not get it winning the lottery), you will be right to build on it.

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Re: The first million is the hardest
« Reply #96 on: May 01, 2014, 08:57:11 AM »
Our 3rd million will likely take just as long as the second, perhaps longer since we will be down to one income (wife's). So much will depend on market performance - it used to be that we saved so much due to LBYM that markets didn't matter too much. This is about to change with my impending ER. Bit nervous - though logically it doesn't make sense to be so... I'm just wired this way. :)

mjs111

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Re: The first million is the hardest
« Reply #97 on: May 01, 2014, 10:26:51 AM »
Our 3rd million will likely take just as long as the second, perhaps longer since we will be down to one income (wife's). So much will depend on market performance - it used to be that we saved so much due to LBYM that markets didn't matter too much. This is about to change with my impending ER. Bit nervous - though logically it doesn't make sense to be so... I'm just wired this way. :)

That's true.  Once the portfolio gets big enough the dollar amount it can move in a day can be significant relative to the amount of new money you're putting in. A 1% move up or down on a $2 million portfolio is $20,000, which might equate to half a year's worth or more of active savings. 


Mike
« Last Edit: May 06, 2014, 11:28:04 PM by mjs111 »

slothman

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Re: The first million is the hardest
« Reply #98 on: May 06, 2014, 06:19:04 AM »
If all goes to plan, I hope to break the $1M networth mark in 4 years, excluding the home.

I currently hold:
~$1.7M in investment property, with $500K in equity
~$90K in shares, mainly in listed investment companies (essentially low cost passive-ish mutual funds that pay fully franked dividends)

I've been racking my brain to try to figure out how to FIRE from a heavy property portfolio, particularly one with debt. My thinking is to sell one or two properties to clear some debt, cash in some of that equity, and purchase more shares for better cashflow.

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Re: The first million is the hardest
« Reply #99 on: May 06, 2014, 01:57:41 PM »
Our 3rd million will likely take just as long as the second, perhaps longer since we will be down to one income (wife's). So much will depend on market performance - it used to be that we saved so much due to LBYM that markets didn't matter too much. This is about to change with my impending ER. Bit nervous - though logically it doesn't make sense to be so... I'm just wired this way. :)

That's true.  Once the portfolio gets big enough the dollar amount it can move in a day can be significant relative to the amount of new money you're putting in. A 1% move up or down on a $2 million portfolio is $20,000, which might equate to half a year's worth of more of active savings. 



yea, thats a really good point. I never really looked at it that way but better start!


Mike

 

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