November Performance Update (Day 2524): LifeStyles Of The Boring And Frugal

My main goal* was to build an investment and cash portfolio of $1,120,000* ($1,000,000 to retire on and $120,000 to pay off the house) in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal in 2016, my 1500 Days are over, and I’ve left my job. In the interest of openness, I’ll continue to share my numbers.

My grandmother was obsessed with a show called Lifestyles of the Rich and Famous. Hello 80s! It “showed” what wealth looked like; humans living in 10,000 square foot mansions, hanging out on yachts and eating exotic food. The host even had an English accent. How fancy posh!

Most wealth doesn’t look like Rolls Royces, mansions, and shitty art. I learned this from The Millionaire Next Door. Most humans with money drive pickup trucks or Camrys, own small businesses and live unassuming lives in middle-class neighborhoods.

Lifestyles Of The Boring And Frugal

And now, Mindy and I are the millionaires next door. (In November we became the MULTImillionaires next door. More on that in a moment.)

• The average house price here in Longmont is $408,000. We spent almost $50,000 less than that on our home a couple of months ago.
• When I drive, it’s in a 2003 Honda Element with almost 200,000 on the odometer. My kids do not approve of this vehicle.
• I mow my own lawn, clean my own home and fix stuff when it breaks.

Not much would change if I had 8 figure wealth. More stuff consumes mental bandwidth. I’d rather not have to use my brain to worry about vacation homes or pricey cars. There is a lot of value in owning not-so-nice things:

• Someone plows a shopping cart into my car? No big deal. The car is 17 years old.
• Spill something all over myself (a frequent problem)? No big deal since the clothes came from Costco or the thrift store.
• Lose my phone? It’s 4 years old and not worth much.

I think of this as lightweight or simple living. Keeping life simple allows you to focus on what matters. And figuring out what matters is the important part. And it’s also the hard part and a discussion for another time.

If I was on a show, it would be called LifeStyles of the Boring and Frugal. It would show me spilling oil all over myself when I worked on the car, walking aimlessly around town, and breaking up sibling fights. It would be the worst show ever, even worse than “pro” wrestling or cable news.

Double Double Comma Club

In November, our investment portfolio crossed the $2,000,000 mark for the first time. The first million took 17 years and lots of hard work. I had to work hard at a stressful job and hustle. I made lots of stupid decisions. I also had no idea how to invest, so that didn’t help. Contrast that with the second million which took only 5 years and most of the time, I was gainfully unemployed. The money itself did most of the heavy lifting. Money working for you is superior to working for money. In other words, compounding.

It also doesn’t hurt to have the ultimate passive income stream, a spouse with a job. When I started this blog, I wasn’t counting on Mindy going back to work, but then a dream opportunity fell into her lap. Life works out funny sometimes.

November Spending: $5,012.11

Excluding our mortgage of $1,238.49, here were our three biggest expenses:

Groceries ($899): Thanksgiving.

Travel ($729.81): We spent a week in San Diego. It was glorious.

Random House Stuff ($618): We purchased stuff for the new house.

November Performance Update

November was another great money month. I believe that the gravy train will temporarily derail soon, but I’m going to ride it as long as it lasts. Our investment portfolio (stocks, rental home, coworking space, trailer park, and other real estate deals) started the month at $1,960,626 and ended at $2,000,156 for a gain of $39,530. Add in our primary residence and our net worth now sits at $2,365,156:

2019 (as of 11/30/2019)

• Days elapsed: 334
• November gains: $39,530
• 2019 investment portfolio gains: $450,716 (including 401(k) and HSA contributions of $52,689****) Note that the $450K number is large because of our move into a much cheaper house. Because I now rent the old, more expensive home, I account for it as an investment. Our net worth increase, a more accurate measure of gains, is up $300,000 for the year. Still nothing to sneeze at.

Since the Start (1/1/2013)

• Days elapsed: 2524
• Gains since 1/1/2013: $1,414,113

Portfolio and Net Worth

• Investment portfolio and cash value: $2,000,156
• Net worth (everything!): $2,325,626

Real Estate Income: $6,080.47

The big news for this month is that a private loan that we closed on at the end of summer ($65,000 at 10%) started paying out, so we now have another revenue stream.

• Syndication deals: $2,325.28
• Rental house: $1,500
• Coworking space: $1,000
• Private loan #1: $541.67
• Private loan #2: $293.51
• Mortgage notes: $420.01

In 2019, we’ve earned $65,211.43 from our real estate investments. 2020 should be a huge year for the real estate half of our portfolio:

• We still have 4 lots to build out at the trailer park, but it’s mostly stabilized and profits should accelerate.
• We turned our last home into a rental experiment (more on that in a future post). We have short-term renters there now and will Airbnb it in the summer.
• A syndication deal that I signed up for in August will start paying out in January.

I expect our real estate to bring in about $120,000 in 2020. This will be in the 10% return neighborhood which I’m perfectly happy with:

Life Is Good

It’s amazing that we’ll have 6-figure income from investments that are mostly passive. It all took years of hard work, but one of the beautiful parts about Financial Independence is that unlike many things in life, you only have to do it once. Unless you do something stupid like buy a Ferrari or yacht, you’re free forever.

Not many things in life are like this. Want to maintain your fitness? You must work out and eat right for life. Want to be a world-class musician? You better commit to practicing multiple hours every single day.

But, once you’ve made the money and turned the work over to those little worker dollars, you’re done.

Life is good.

*My goal wasn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. Since my investment portfolio now sits at $1,550,000, I can spend about $62,000 in my first year of retirement.

**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off (LOOK at the MONEY I’m MAKING!). My compromise was to have enough money put away to cover the mortgage at the time of retirement.

***This is an affiliate link. If you sign up, the blog (me) makes some cold, hard, beautiful, cash. Personal Capital is a totally free and awesome way to keep watch over your investments. It’s worth it for the fee analyzer alone. I would never recommend anything that I don’t personally use and completely believe in, so give it a try. If you’ve already signed up through the link, please know that you are a fine person of above-average intelligence.

****My 401(k) contributions include my own, Mrs. 1500’s, and the contributions from my corporation. Self-employment with a solo 401(k) is a very powerful savings tool. I should have done this years ago.