I started PFBlog seven years ago to document the journey toward a publicly-announced net worth goal of $1,000,000. With a starting tally of $47k in 2003, my wife and I were well prepared for a prolonged 13-year fight -- our realistic projection back then envisioned us boasting 7-figure net worth by 2016, or when we will enter our 40s.
A mix of luck and hard work brought our net worth to half a million bucks by August 2006, and we reset our goal to accumulate the million by 2012, and hence we changed the tagline of this blog to "Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million."
Since then, it was quite a drama: a quick ascent in 2006 and most part of 2007 put us within a stone's throw of the million dollar mark, but the following nosedive in 2008 almost wiped out a quarter of our asset base.
But finally, a few days before my 34th birthday, our personal accounting software finally had to accommodate an additional digit in our net worth report. In the end, we closed the month of March 2010 at $1,004,389!
We two newly anointed millionaires went out in a good Saturday evening planning to celebrate this special occasion at the best restaurant in town. But after running an errand first, we found ourselves stuck in a remote area of the city and couldn't get a taxi. After a failed 30-minute attempt, we caved in to our empty stomachs and walked around trying to find a decent enough food outlet with no success. We finally set our feet in a mom-and-pop noodle house with only three tables, and $5 being the highest price tag on the menu. Our final bill for the celebration meal: $9 including drinks :-)
Back to Our Roots
The $9 dinner at the noodle house was actually beyond our expectations. And it reminded us of our roots when we started the journey.
In the very first post of this blog, I wrote: "I believe this [$1,000,000] goal is achievable with hard work, discipline and smart personal finance management."
Yes, with the past decade barely having rewarded any investors, most of our asset growth from $47k to $1M came from the hard work that paid off in our tripled annual income, and the discipline that drove us to save more than 45% of our post-tax income every year since 2003.
With a seven-figure cash pile, we are financially faring better than probably 95% of the people of same age, but I'm equally glad that we are preserving our roots of living below our means. We are no longer clipping coupons, but living in a megacity, we choose to rent instead of buying, we choose to walk and use public transportation instead of owning and maintaining a car, we shop at outlet malls and online merchants instead of department stores, and we invest hours to do comparison shopping when it comes to big-ticket items.
A Journey That Teaches
The last seven years is a rewarding experience not only financially, but also intellectually. Back to 2003, we just arrived in America, and knew nothing more than the difference of a checking account and a savings account. Along the way, we taught ourselves of savings, investing, tax, real estate, retirement planning, college planning, and other money topics. And our financial life became more complex every year, starting from managing multiple bank and credit card accounts, brokerage accounts, 401(k) and IRA, to handling real estate deals, small business retirement plans and foreign tax planning, not to mention a growing investment portfolio.
In more than one ways, maintaining this personal finance blog is a learning experience too. By writing periodically in a spectrum of topics, I pushed myself to learn new things, be thorough and accurate, and be accountable for my actions and decisions. I would never have imagined that the blog has logged millions of page views, and was mentioned in a number of media outlets like WSJ and MarketWatch, and even featured full-page at Kiplinger's Personal Finance. Plus, the blog itself, thru advertising income, contributed significantly to our financial goal.
It won't be fair not to mention that our seven years' journey cut across the worst financial crisis in decades and its initial recovery. At one point of time, our net worth took a multi-month dive from 900s to the 600s, and it was quite a psychological experience. In a mixed feeling of shock and shame, I also regrettably left the blog idle for a long time between 2008 and 2009.
In retrospect, though, we feel we were quite lucky to experience emotional distress from the financial crisis first-hand when we were still in wealth accumulation mode. We certainly learned many things, especially how to deal with temporary asset reduction emotionally, and how to take a long term view of financial planning. It could have been much worse if the first financial crisis in our life time happens after our retirement.
Household finance management is a marathon, not a sprint. And we learned soon enough into the journey that the winner of the marathon is not decided by the figure on the bank statement at the finish line.
We know we want to build a sizable war chest and have early retirement, but we also know we want to enjoy life along the journey as well.
We know we are truly blessed by me having a well-paid job in a booming industry, so we don't have to choose between saving every dime and building a nest egg. We choose to rent a large apartment, afford private schools, and spend in family hobby -- travel. In the last seven years, we've traveled to over 20 countries and dozens of destinations. These great memories and huge photo albums will be cherished in the family forever.
The Journey Doesn't Stop Here
So, have we achieved "financial independence" as we aspired when we set our 7-figured goal years back? A million dollar in the bank is surely bringing peace of mind. But obviously, one million dollar for a couple in their mid-30s is not enough to count on for an immediate retirement. So, what's next?
I am happy to announce our new goal: $3 million by 2020.
We are setting this new goal for a couple of reasons. First, barring a dollar crash, $3 million is a real fortune that a couple can comfortably retire from. Even with a modest 4% annual return, it will yield 6-figure annual income, much more than what we are spending today.
Second, 2020 is the year our son will enter college, and we will be in our mid-40s. If we truly want to have an "early retirement", then 2020 will be the right timing.
It is both a challenging but attainable goal. It took us seven years to build up our first $1 million, so if we really want to amass another $2 million in ten years, we need to speed up. On the other hand, our first million mostly come from savings, but moving forward, we can count on our portfolio to grow in size and keep giving.
So, are you interested in keep watching how the journey will unfold?