My main goal is to build an investment and cash portfolio of $1,120,000* in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal earlier this year, but believe that it’s a worthwhile exercise to continue with my financial updates until the end of 1500 Days, so I continue.
It’s time to take a look at the month of November when our net worth went from $1,469,096 to $1,600,058 (!).
Warning: Poem time!
The fourteenth of November,
The home appraisal we sought;
Exceeded all expectations and I know of no reason,
Why all of our hard work,
Should ever be forgot!
The Guy Fawkes poem doesn’t actually go like that. However, the fourteenth of November was an historic day for us. With one email, our net worth increased by over $100,000. This story started over three years ago.
We downsized our house in June of 2013. The path to FI had made me realize how silly it was to own a home that had over 4,500 square feet. We had rooms that had no other purpose than to collect dust. However, downsizing wasn’t easy.
We decided on a neighborhood in Boulder County, Colorado. Unfortunately everyone else in the world had the same idea; the market was hot. Every house seemed to get 3-5 bids on it within 24 hours of hitting the multiple listing service. It was frustrating. Very frustrating. And then we found:
When I first laid eyes on Uglyhouse, my immediate thought was ‘No.’ Actually, it was more like:
The home was a foreclosure that hadn’t been maintained well in its previous life as a rental. It wasn’t pretty:
But wait, perhaps the inside was fantastic?!
I wrote the home off, but that night, I had a conversation with the wife:
- Me: I really hated that blue house on first impression, but maybe we could fix it up?
- Wife: I didn’t think it was so bad. You’re the one that hated it.
- Me: The Fannie Mae HomePath rules state that we must live there for a year, but we could fix it up in that time and then rent it.
- Wife: Let’s make an offer.
We wrote up a contract and it was accepted. Then, two things happened to vault the home to its current value:
1) A change of plans
We soon discovered that we liked the people in the neighborhood and also the low-traffic, dead-end street. We decided to stay. Since this would be a home we’d inhabit until our girls finish school, we also decided to expand the scope of the remodel. Instead of just refreshing the inside of the home, we popped the top and added a second story.
All of this work started way back in June 2013 and just ended in October. The remodel set us back about $100,000 and cost many, many, many weekends.
2) Boulder County goes nuts
An already hot real estate market got even hotter. Prices have gone nuts in Boulder County and the bidding wars are ridiculous. We’ve since made offers on a couple other homes (flips or rentals) and each has had at least 10 other bidders, many with cash.
What the appraiser said
I’ve always had two main numbers on the right side of the blog. The first is my investment portfolio. This is our stock market holdings, cash and two real estate investments (hard money and syndication loans):
The second number is our net worth which includes home equity, bicycles, cars, dinosaurs and the Guy Fawkes mask:
The home equity in that second number is what matters here. Up until the fourteenth of November, I had valued our home at $350,000. I thought I was being conservative, but I had no idea just how much I was actually sandbagging the value. We decided to open a line of credit on the house and part of the process was a full appraisal (not an electronic one). Here is what the appraiser had to say:
Life is good.
My portfolio increased from $1,219,095 to $1,230,058 for a gain of $10,963. Despite those numbers, it was another losing month for my investments. I had money accumulating in my business account (which isn’t reflected in my numbers), so I transferred $15,000 into my personal account (which is reflected in my numbers). Without that, my portfolio would have gone down in value this month.
2016 (as of 11/30/2016)
- Days elapsed: 335
- Days remaining: 31
- 2016 gains: $172,097, (including 401(k) and some after tax contributions of about $45,000)
- 2016 401(k) contributions: $51,000****
Since the start (1/1/2013)
- Days elapsed: 1428
- Days remaining: 72
- Gains since 1/1/2013: $644,015
- Needed to quit work ($1,120,000 in investments): Mission accomplished!
- Net worth*****: $1,600,058
Stock Picking Experiment
So, there is still a tiny little part of me that clings to my old stock picking ways. I don’t like this, so I designed an experiment to break this habit. Like most stock pickers, I’ll probably underperform the S&P 500; thereby squashing my desires to play with Mr. Market. I set up a little portfolio with $10,000 back in June. For a while, I was crushing it. And then, the election happened and my tech-happy portfolio nosedived:
I’m now getting crushed. Mission accomplished!
My mailman has a neuromuscular disease. Perhaps he picked the wrong career because our neighborhood is a walking route and he struggles a bit. While he has an awesome attitude, I can’t help but feel just a little sorry for him when I spy him hobbling down the street. Thinking about his condition also makes me incredible grateful.
My 43 year old frame is in great condition. Besides a minor case of asthma which I’ve had all my life and two slightly torn knees, I’m in great shape. I have no aches and pains. I don’t get headaches. I hardly ever get sick. Life is good. My mailman or anyone else with MS would love to have a normal body. Since I do, I need to appreciate and respect it. Besides, all the money in the world means absolutely nothing without good health. I have vowed to keep myself in great condition from here on out. Aside from an occasional beer and pizza, I’ll do my best to stay fit until I buy the dirt farm.
I used to be in pretty great shape too. In my prime, I weighed 155 pounds and could bench press 230. I could also crank out 70 push ups and 50 dips in a row. I have since let myself go, but I didn’t realize just how much until I saw some pictures of myself in Ecuador:
I must remedy this situation ASAP. To do this, I’ve been putting myself through rigorous exercise routines; been running about 15 miles per week and doing P90X routines. I’ve also been eating loads of nasty broccoli.
And I must share the pictures. I hate posting them, but there is no way around it. I do it for:
- Transparency: It’s one thing to tell you I’m in better shape, but pictures are much more powerful. It is no different from me sharing my finances.
- Humiliation: Posting these is humiliating, so it’s extra inspiration to work harder. I wish I didn’t need external sources (you) to keep me motivated, but I’m not perfect.
- Inspiration: Maybe I’ll inspire a couple of you to join me in my fitness journey. Let’s keep each other motivated.
I’ve already dropped 7 pounds since Ecuador, but there isn’t much to be inspired by this month. Readers with weak constitutions, kindly avert your eyes.
The visit to Ecuador,
Where I maxed out my gut.
I have no desire,
To keep the fat I acquired,
It’s time to get cut.
*My goal isn’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. So, if I were to quit my job now, I could spend about $48,000 in my first year of retirement. I’d stick very close to that number too because market valuations are ambitious. Let’s say that Mr. Market caught a cold tomorrow and my portfolio dropped down to $800,000. No big deal. This would mean I’d be safer stretching my spending a little north of 4%.
**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. My compromise is to have enough money put away to cover the mortgage at the time of retirement. So, to retire today, I would need about $1,120,000.
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****My 401(k) contributions include my own, Mrs. 15oo’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.
*****The numbers on the right side of the page only reflect my investments and cash. Net worth includes, but is not limited to
- Home equity ($350,000 after the appraisal!)
- I’m on empty. Nothing clever to see here this month.
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