My main goal was 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 last year and my 1500 Days are over, but in the interest of openness, I’ll continue to share my numbers.
Two net-worth altering events happened in May. The first involved our home and the second involved a car purchase.
House
Way back in 2013, we moved from a big luxury home in an awful neighborhood to a neglected home in a great neighborhood. We willingly went from this beautiful kitchen:
To this ant-infested, ugly-ass kitchen:
We then fixed up the neglected home:
While we were busy rehabbing, something good was happening in our town; prices were going up, up, up. According to Zillow, the average home price in June 2013 when we purchased was $214,000. It now sits at $345,000:
And our little pocket of the ‘hood has been doing exceptionally well. In October 2015, a home just a couple doors down sold for over $517,000. While this house was much bigger than ours, I was still surprised at the price. But it has gotten crazier. Another home that isn’t nearly as nice just sold for $580,000.
Prior to this latest sale, I had been valuing our home at $460,000. This number came directly from a bank appraisal at the end of last year. Based on Mr. $580,000, I decided to recalculate the worth of our home.
My Small One
$580,000 home:
- Size: 2087 finished square feet ($278 square/foot), but some of it is in the basement
- Beds/baths: 4/3, same as our place
- Finishes: Nice, but no better than ours
- Yard: Large
Our home:
- Size: 1850 square feet, all of it above grade
- Beds/baths: 4/3
- Finishes: Nice
- Yard: Tiny. Remember ladies, it’s not the size of your man’s yard, it’s how he uses it. (Yeeeaaah right, that’s what men with small yards say. Sigh…)
Ummmm, that was uncomfortable. Let’s move on. And hey, stop laughing at my yard! Seriously, I’m crying here. Don’t make me use the weed whipper on you!
Anyway, if I apply the $278/square foot number to out home, I arrive at a value of $514,300. I like to be conservative, so I’m knocking it down to $500,000. Our mortgage sits at $110,000, so we have $390,000 in equity.
Our home initially set us back $175,000 and we put about $100,000 into it. While I knew our town was on the upswing, I had no idea the swing would be this big and fast. It’s popular now to dismiss home ownership in favor of renting, but I’m glad we bought.
Car
The other new development is a used car purchase. I bought a silly toy that set me back $45,000 (perhaps I’m compensating for my small yard?). The money came out of our cash pile:
For the purposes of the Performance Update, I’ll continue to value the car at it’s purchase price until I see strong evidence of price movement in either direction.
Performance Update: May
2017 (as of 6/1/2017)
- Days elapsed: 151
- 2017 gains: $148,409 (including 401(k) contributions of $31,220**** and car purchase of -$45,000)
Since the start (1/1/2013)
- Days elapsed: 1611
- Portfolio gains since 1/1/2013: $819,574
- Needed to quit work ($1,120,000 in investments): Mission accomplished!
- Net worth: $1,860,617 which includes:
- Investment portfolio and cash: $1,405,617
- Home equity: $390,000
- Silly toy car: $45,000
- Other cars, bikes, dinosaurs: $20,000
Stock Picking Experiment
I don’t pick stocks much anymore, but some companies still intrigue me. My litmus test is this:
How big is the moat? In other words, do I have a reasonable degree of confidence that I can hold the stock for the next 10 years?
And by that, I really mean:
Do I have confidence that the company’s stock will outperform the S&P 500 over the next decade?
And by that, I really mean:
Do I have confidence that the company’s products and services will grow at a faster rate than the average of companies in the S&P 500?
This is very difficult to do. Very few companies meet my criteria, but I picked a small bucket of them that do in April of 2016. I don’t condone this; it’s only a silly little experiment. And my real goal is to prove myself wrong so I just stick to indexing.
My portfolio has been up and down, but as of now, I’m beating the pants off of the S&P 500:
My portfolio is tech heavy and this sector has been a run. My little (stop laughing!) portfolio holds 3 of the 4 FANG stocks (Facebook, Amazon and Google) which have done very well. However, Alibaba and Tesla Motors are the two best performing holdings in this portfolio.
One Thing that Isn’t Small
I didn’t grow up with money or confidence. My family occasionally struggled when my dad was out of work. At the same time, I had a lot of self-doubt and always worried what others thought of me.
I never thought I’d amount to much in life. I didn’t apply myself in high school and was a slightly above-average student. Meh.
In college, I started studying and realized that I wasn’t stupid. I got all As and graduated magna cum laude in biology and chemistry. But back to my childhood…
If you would have told me when I was growing up that I’d be worth a million dollars some day, I would have laughed at you. Now, my net worth is $140,000 away from $2,000,000 and I have a difficult time wrapping my mind around it.
Don’t take this to mean that I’m not grateful because I am. I’m very grateful. I just don’t feel like someone who is worth $1,860,000 (what is that supposed to feel like anyway?). I still feel like the same guy I was when I finished school and had a net worth of -$60,000 (mostly college loan debt). I suppose I always will and maybe there isn’t anything wrong with that.
*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. 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.
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Wow almost $2m in net worth. I’m curious do you fee like there is a huge difference between making the first million and the second million?
I have set up some goals along the way and honestly when I reached them they were anti-climatic for me. Like I reached the number but the number was meaningless because it didn’t stop me from working.
Maybe I need to change my goals so I can feel it 🙂
Mustard Seed Money recently posted…How I Improved My Family’s Quality of Life
The 2nd million is a lot easier because your investments are compounding. The first million is all blood and sweat. 🙂
Joe @ Retire by 40 recently posted…How We’re Generating Passive Income in 2017
Yeah, the second million is way easier! The money is working for you instead of the other way around!
And I’m not sure how the second million will feel! I’m not about to speculate either; don’t want to count my dollars before they compound!
There is more than compounding going on that makes the 2nd million easier. It’s you. Net worth is more than numerical; it’s behavioral. Most people run a non-profit operation consuming every dollar they earn, or go into debt… If you accumulate $1M through industry & frugality, your behavior will make the 2nd million a virtual certainty.
I have to say I’m finding the second million almost impossible. The first took only five years- great salary, fantastic market gains, work seemed tolerable. Now work has the inevitable cuts, I’m totally burned out, and cranking through for even another day seems impossible.
Glad others have found otherwise!
Also, I have to add that having a million plus saved hasn’t saved me from work or financial stress.
Sounds like you guys made a very smart (literal) move to your new house! It’s all about location in real estate. But it sounds like you also bought low. It’s very cool to see how much your portfolio has grown! I agree with you–no matter how much our net worth grows, when we pass the next benchmark I still feel exactly the same. And I guess I always will. Makes me remember that I need to stop and enjoy the journey (which is definitely easier in the beautiful summer that we’re having now than in our 7 months of cold, long winter!).
Yeah, totally agree about location in real estate. We’re in Boulder County which is just nuts.
7 months of winter! Reminds me of my time in Wisconsin!
“(perhaps I’m compensating for my small yard?)”….. no comment 😉
You are pretty good at the stock picking thing, perhaps some play money after all??
It pretty fantastic that the value on the neighborhood is increasing. It’ s almost unfortunate that you don’t plan to sell and move.
Team CF recently posted…May 2017 Cheesy Index
We will sell and move, but not until the girls are done! We’ll probably downsize to something much smaller at that time.
Really amazing how you surpassed your goals like that. With a net worth like that, it’s perfectly understandable to buy a little toy for fun 😉
We don’t have an end number ourselves, we just want to grow as much as possible as fast as possible. We evaluate every year were we are and look forward to future plans. We first (3 years ago) thought it would take us like 20 years or so to get there… Now we just aim to do it a whole lot sooner.
Congrats on closing in on 2 million! I still don’t feel like a “millionaire” either even though we are. It feels a bit anti-climatic yet comforting. It’s nice knowing there is a big safety net in place should something happen and it’s nice knowing I’ve got the freedom to pursue what I want with a nice range of latitude in what that could look like.
It’s a good thing we can’t write out our lives back in highschool or I would’ve sold myself way short. No way I could have imagined that I would be in the position I’m in less than 25 yrs out of highschool. No way…
Mr. SSC recently posted…Choose FI Podcast Interview: How we got here and even more SSC household background!
You are so lucky! Still trudging. A million is not what it once was.
It still feels pretty strange to me when I do our monthly numbers update and see seven figures – and I’m getting the impression it’s something that will never feel super natural to me. On the other hand, Mr PoP seems to have adapted to it pretty well! He always wanted to be a millionaire by the time he was 30 (we ended up a couple years late on that front), so maybe that mentally prepared him for it in a way that I never really did.
Mrs PoP recently posted…PoP Balance Sheet – May 2017
LMAO…. at the whole yard thing. Hilarious. I’ve heard the trend in home buying is that people are wanting less space, but better space. Even a tiny yard can be turned into an oasis. 🙂
It is an oasis! I make the most of my small one!
I don’t care what car you drive, or how big your yard is. What impresses me is how down to earth and friendly you and Mrs. are. That you are totally cool having lunch at a Panera and shooting the breeze about 401Ks and investments. The incredible blueprint you’ve laid out for others and mainly your girls.
Great stuff!
Brian recently posted…Finding Harmony When Dumping Debt
Oh man, you’re far too kind. Usually I’m a big jerk! I must have been drunk or something!
Wow, that’s crazy! I love that you have been successful in areas where most personal finance blogs tell you to steer clear: stock picking and timing the housing market. Also, going from the before picture to the after picture looks like way more than $100,000 worth of work. Nicely done!
Matt @ Optimize Your Life recently posted…On Quitting and Time Management
It would have been $200,000 if I didn’t do most of it myself. Not easy, but I don’t regret it. Maybe a little bit. OK, those 4 years sucked! Not really. Maybe a little.
Never mind!
Well yeehaw on the home valuation! That’s amazing! Do you plan to hold onto the home or do you think you’ll sell it and move on to a new challenge? 😉
Mrs. Picky Pincher recently posted…79 Ways To Have Fun For Nearly Free
That’s so cool to know you have gone above and beyond securing your future. I still can’t believe what you did with your “small” home! It looks stunning!
Thanks Tonya! The home was 4 years of hard work that I’m very glad to have behind me!
Hey small yard, less maintenance? You’re right, this is awkward, I’m going to stop here.
On the other hand, doubling your house value is HUGE! And, as an added bonus, you have a beautiful home to live in now! No more ant motel.
Gwen @ Fiery Millennials recently posted…Planning for the Future
Haha, I love the self deprecating humor.
The net worth amounts seem unreal, don’t they?
Dividend Growth Investor recently posted…Two Dividend Machines Rewarding Shareholders With A Raise
The net worth is unreal. I have to pinch myself every day. Life is good.
I think that the doubling of house price more than compensates for the yard, or lack thereof. We’ve seem similar-ish gains in house value. We bought for $775k in 2012 and comps in our neighborhood are now at $1.2 million. Given that we were financial morons and bought because ‘that is what people do’ – I would say that we have been extremely lucky. Now as long as a giant earthquake doesn’t fissure our land before we sell and set sail….
Mrs. BITA recently posted…Pigs Get Slaughtered
Whoah, that is a lot of money to have in a home! I know y’all are in California though, so I’m pretty sure you’re not living in a 5000 square foot McMansion. It will be nice someday to unload it put that equity to work.
1900-ish square feet. Built in the 50s. No hardwood floors. Kitchen not large enough to fit an island. One of the two bathrooms not large enough to accommodate a tub. So nope, not a McMansion. Depending on which online resource you look at the median home price for San Jose is between $800k and $1 million.
Mrs. BITA recently posted…Pigs Get Slaughtered
Holy hell. I’d be curious to know where you’ll go post-work.
Looks like a great move for your house! I’ve always wanted to purchase a fixer upper to hopefully capture some equity.
Boulder is such a cool place, especially with all the people moving there. I have friends in the area that are being continuously priced out. The real estate in that area is just nuts!
I’m not in Boulder, but close to it. And yeah, it’s a great place. Just big $$$$$!
Wait, so the fact that I rent and don’t have a yard means that I just use a community yard (a.k.a. the park). So is it better to have a small yard or no yard at all and have to share a yard? lol
No comment.
We just up and bought what, to us, is a pretty expensive home. But, like you, I’m pretty happy that we bought it. We love the house and the neighborhood, and we’re in Tempe now, the most bike friendly spot in the valley, and within walking distance of our best friends. To us, it’s a no brainer.
Still, it likely makes it harder for us to reach FI by forty. It’s going to be close.
I suppose I could safely say we’d be financially independent by 43…but that’s like, barely impressive at all. 🙂
!!!!!
I wouldn’t worry about the size of your yard. If you wife is happy with it, that’s all you need.
Frankly, a small yard is a good thing — less time and energy required to maintain it. You need to focus on maintaining your sportscar now! 🙂
Congrats on the incredible net worth growth!
Mr. Tako recently posted…Sticking With It: Cooking At Home
You stole my “yard size” comment 🙂
My wife complains about the size of the yard all the time. It doesn’t help that the neighbor just 2 doors down has a huge one and isn’t afraid to wave it around.
Yep, housing in your neighborhood is going craaazy. Not to crazy as in SFBA but crazy enough. Which is great 🙂
I don’t have a yard and we are happy. But I do, I’d rather have a small, well maintained yard than a big and ugly one.
Friendly Russian recently posted…Don’t let your past define your future.
Wow, such a good journey to read! It’s really motivatig to hear how other people already made their first (or even 2nd Million) through hard work, saving and investing.
I’m just turning 21 in July and will hopefully reach the 100’000 Netowrth by end of 2017!
Regards
Thomas
That before and after shot of your house is insane! It looks beautiful now. That’s not the same house is it?
Did you get a contractor to do the work? Do some yourself? Either way, very nicely done.
Owen @ PlanEasy recently posted…The Simple Retirement Plan
Same house! We hired rough carpenters to frame it out and drywallers. Other than that, I did it all myself. It was 4 years of hard work.
Don’t worry, some men don’t even have a yard at all so in comparison, you’re doing just fine. ?
Have you ever talked about which index funds you’re parked in?
I’d agree the first M is the hardest and the second will only be easier if you made the right choices in where to stash that first Million.
Love the before and after pictures of the house. I have done a bunch of work on our current house, but nothing compared to that. Looks fantastic. Also fantastic with the house value jumping up.
Congrats on the fast approaching $2m milestone. We are approaching the $500K milestone and looking forward to the next.
FIbythecommonguy recently posted…A move is coming
I’ve had the same thoughts earlier in life about self-confidence. I never considered myself to be a genius. Fortunately, it doesn’t take a genius to become wealthy. Congrats on the your huge milestone! Hopefully I won’t be too far behind you!
I heard that if you trim the shrubbery it makes the yard look bigger.
Ha!
Great update Mr. 1500. Love the humor. It is always an inspiration to see those that have gone before in pursuing financial independence. I am on my way there, but have a ways to go. Your feeling that you will always be the kid just out of college living like a poor college grad is spot on. I think that is what allows us weirdos to reach financial independence in the first place. If we “lived up to our means” then we would never get there.
An interesting job. I also redesigned my house and I was very happy with it.
I promise you I read the whole article but I think the final sentence is the most poignant!
“I suppose I always will and maybe there isn’t anything wrong with that.”
I think you’ve hit on something really important here, having a lot of money doesn’t, well hopefully won’t I think, change who we are deep down. If you are depressed and won the lottery you will likely still be depressed despite your good fortune (it might even make you more depressed as you will have a lot of new problems to deal with). Likewise if you a happy person then getting more money will not likely increase happiness all that much (or it will only be a brief uplift).
Cheers!
theFIREstarter recently posted…mustachian spotting uk – level 2
Wow, I was just thinking about all of this today. Just like you said, quitting didn’t change my baseline happiness. I thought it would bump it up a little, but it didn’t. This made me realize that I need to work on other things. It’s all good though.