My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.


By Topics

Overall:
0. About (10)
1. My Progress (139)
2. Car & Home (107)
3. Credit (138)
4. Banking (33)
5. Saving (49)
6. Investing (308)
7. Taxes (89)
8. Spending (74)
9. Misc (97)
A. Archive (49)



MONTHLY ARCHIVE

Feb 2014 (3)
Jan 2014 (6)
Jan 2012 (1)
Apr 2011 (1)
Mar 2011 (1)
Feb 2011 (1)
Jan 2011 (1)
Dec 2010 (1)
Oct 2010 (1)
Sep 2010 (1)
Aug 2010 (1)
Jul 2010 (1)
Jun 2010 (1)
May 2010 (1)
Apr 2010 (1)
Mar 2010 (6)
Feb 2010 (2)
Jan 2010 (7)
Dec 2009 (3)
Feb 2009 (4)
Jan 2009 (8)
Dec 2008 (1)
Jun 2008 (2)
May 2008 (2)
Apr 2008 (5)
Feb 2008 (3)
Jan 2008 (15)
Dec 2007 (32)
Nov 2007 (6)
Oct 2007 (8)
Sep 2007 (9)
Aug 2007 (24)
Jul 2007 (2)
Jun 2007 (1)
May 2007 (3)
Apr 2007 (4)
Mar 2007 (4)
Feb 2007 (13)
Jan 2007 (6)
Dec 2006 (3)
Nov 2006 (7)
Oct 2006 (7)
Sep 2006 (6)
Aug 2006 (4)
Jul 2006 (10)
Jun 2006 (1)
May 2006 (3)
Apr 2006 (2)
Mar 2006 (6)
Feb 2006 (6)
Jan 2006 (3)
Dec 2005 (1)
Nov 2005 (9)
Oct 2005 (8)
Sep 2005 (13)
Aug 2005 (25)
Jul 2005 (16)
Jun 2005 (17)
May 2005 (19)
Apr 2005 (20)
Mar 2005 (24)
Feb 2005 (23)
Jan 2005 (36)
Dec 2004 (40)
Nov 2004 (34)
Oct 2004 (17)
Sep 2004 (21)
Aug 2004 (59)
Jul 2004 (37)
Jun 2004 (31)
May 2004 (29)
Apr 2004 (52)
Mar 2004 (49)
Feb 2004 (49)
Jan 2004 (31)
Dec 2003 (48)
Nov 2003 (52)
Oct 2003 (29)
Sep 2003 (8)
Aug 2003 (5)
Jul 2003 (2)
Jun 2003 (2)
May 2003 (5)
Apr 2003 (2)
Mar 2003 (2)
Feb 2003 (3)
Jan 2003 (29)



 

Is $1M Still Enough?

Contributed by mm | April 4, 2007 9:42 PM PST

Back to 2003 when I started this blog, I wrote a post "Is $1,000,000 enough?" Then, I crafted a statistical model to argue that if I spend thrift and invest wise, one million dollars can be a good goal to support a happy retirement at 40. At that time, I just purchased our first house and started the American Dream of getting rich while our net worth was at $120,000 and went up $3,000 a month.

It has been three and half years since that post, and many things have changed, mostly for the good. For one, with over $670,000 reported in our balance sheet, the million-dollar goal seems to be within reach in the next two years. Also, our sideline business has been minting money since 2005, which should provide a good cushion if I ever leave my full-time day job.

On the flip side, many assumptions in my original analysis are no longer true. We apparently couldn't live thrift enough for an inflation-adjusted $45,000 a year as demanded in my original model -- our annual spending budget for 2007 is just shy of $90,000. With an early retirement, I am also on the hook to pay for the family's own medical insurance out of my own pockets.

Back in July 2005, I silently changed my definition of $1M from an "early retirement" goal to a "financial independence" goal. The problem I'm facing now is: should I still consider $1M as the golden number that can free me from mundane pursuits, or it is just a nice round number?

The parameters are pretty clear:

1) We probably need $110k (adjusted annually for inflation) to maintain the household if I bid farewell to the corporate life.
2) The earning power of our household business is becoming more reliable (and strong) now. To be very conservative, we can probably count on at least $50k after tax per year from these entities for the long run -- that's only half of our revenue run rate right now.
3) I might be looking for some part-time consulting or training jobs in the future, and these jobs should be able to net a quick $15k after tax per year.
4) From my million-dollar portfolio, an ultra-conservative allocation should return 5-6% a year, so it is another $55k.

So without any sophisticated math, it appears that a million dollars is all I need for my financial independence. In fact, since I'm so conservative in counting my income streams and really liberal on the expense side, I will most likely be able to pay all my bills and contribute more savings to our retirement fund to defeat the inflation. So once again, $1,000,000 is enough.

This does not necessarily mean I'm counting my days at my current job, though. Finance professionals usually see the world as a combination of risks, so another couple of years on my high paying job after I pass the million-dollar milestone will certainly create a larger safety net. Furthermore, I'm still getting enough challenges and fulfillments from my current corporate job, and to be able to retire, I need to prepare myself psychologically. After all, I cannot count beans all days if I suddenly have eight more hours a day on my own.

This Post Has Received 78 Comments. Share Your Opinions Too.


Jeremy Noring Commented on April 6, 2007

First time I've read your blog, and it's really great. Congrats on the excellent financial planning and hard work!

Re: retirement

For me, retirement really sounds dull. Like, terribly dull. It's not that I want to overwork myself, but I think it'd get pretty bored at home, trying to find something to do with myself for vast expanses of time. I actually imagine myself always having a job of some sort (even if it's part time, and even if it's trivial and/or inconsequential) to provide myself with social interaction and the reward of getting work done.

I've read a few articles about this (there was a good one in the Economist a year back), and it's becoming increasingly common for people to work in their retirement years. And often not because they need the money, but because it gives them a sense of self-worth and much needed social interaction. Which is, in my opinion, something that might be hard to put a price on.


joewatch Commented on April 6, 2007

Have you taken account homeownership in your calculation? Don't forget you will need to apply a significant amount of your liquid assets as a down payment and also have enough income to cover mortgage, taxes, and maintenance.


b2a Commented on April 6, 2007

MM - Forgive me if this has been answered or if you are trying to keep it private, but what is the household business you run?

Also, I am just begining my career so retirement is really not in sight for me...but 1 Million dollars just seems like an underachieving and easily attainable goal with even a mediocre salary if the person takes advantage of compound interest.

1 Million dollars seems insignificant once home ownership (in Seattle or Shanghai) is taken into consideration and the comfortable life style professionals enjoy. Currect me if I'm wrong, but wouldn't a $5 million dollar, or even $10 million dollar goal be more of a real goal for you? Tuition/housing/living expense for your kid will already cost nearly 200k in 15 years...


dong Commented on April 7, 2007

1 Million is nice round number, and people often pick it as goal when they're young, but in the end it's never about a number - it's about getting what you want, and not just getting what you think you should want.


SS Commented on April 10, 2007

MM,
Financial goal perspectives change dramatically with age. I can recall thinking as long as I make $80K per year I'll be able to provide for all aspects of my financial planning. Now 10 years later making more than double that my "comfort" threshold has increased dramatically. Personal psychology has major impact on this.

Can you provide more insight into your side business and income stream...is that in reference to your blog and income is from advertising?


Stephen Snyder Commented on April 10, 2007

"One Million Dollars" and being a "millionaire" are somewhat outdated. Yes, you can easily live on a million for the rest of your life if you want, but it you'll have to always watch your spending.


Q Commented on April 10, 2007

$1MM is a beautiful goal - it is at least a concrete goal. You cannot set an amorphous, general goal of "I want to save enough for retirement" and continue to stay excited about the pursuit day after day, year after year. That's where the $1MM comes in. You have to stay motivated, and proud of yourself. It is my goal, and I work towards it every day.

I am about to pass $200,000. That's ten times more than the $20,000 I had just a few years back. But I still have to quintuple my money in order to hit $1MM. It kinda screws with you a little.... so anything one can do to keep themselves engaged - saving and investing - is a positive thing.


Hazzard Commented on April 10, 2007

I know exactly how you feel. We are 35 with a net worth of $435K. I have often thought that the magic number is $1M, but have thought about health care, unexpected expenses etc. I've decided that I want to try to get to as large a number as possible by 45 and then make some decisions.

While I don't have a measurable income from side projects, I'm hoping that some real estate will help us move along. My goal has been to increase our net worth more than we make in regular income each year. If we can continue that, we'll be able to enjoy our family time together 24X7 at 45.


stocktrader Commented on April 10, 2007

1MM cash is not chump change and is a substantial amount. Many networth millionaires cant claim to have one million liquid assets.

24x7 family, watching movies all waking hours etc become intolerable within days. One needs to have a hobby to engage oneself.


stocktrader Commented on April 10, 2007

1MM cash is not chump change and is a substantial amount. Many networth millionaires cant claim to have one million liquid assets.

24x7 family, watching movies all waking hours etc become intolerable within days. One needs to have a hobby to engage oneself.


william nixt Commented on April 10, 2007

The 1,000,000.00 net worth will not make it. Family needs, childrens college, grandchildren, parents, financial setbacks, illness etc. 3 or 4 million is a more reasonable goal for early retirement (semi). You need to be more in tune to what quality of life you and your family deserves between 45 an 80 years old. Investments are genneraly the majority of your income after 70.


Nobody Commented on April 12, 2007

When I hit a million I will continue to work, but I'm going to save less and vacation more.


Michael Halls-Moore Commented on April 12, 2007

I think it's great you're trying to shoot for the $1million goal, but why not concentrate on trying to build up some assets that will generate an income for you without needing to do any work?

For instance, your family business. Why not systemise it and then hire somebody to take care of the work while you cream off a profit?

Can it be franchised?

I would prefer a post-tax income figure guaranteed annually that is not inclusive of having to work.

We can all dream eh? ;-)

Great post though!


ken Commented on April 16, 2007

Basically agree with Blasak - understand the comforts are nice but for to have practical financial independence you do need to control your expenses.

Think back to the BMW purchase - how much are you willing to work to drive old bmw's instead of newish corollas???


joewatch Commented on April 16, 2007

Well, if mm wants to live on $110k a year, that's his right. As long as he's not living above his means, I don't see why he shouldn't. Accusing him of being spoiled is ridiculous. If you told Donald Trump he was spoiled, he'd laugh in your face. In any case, I expect mm to reach $3M by the time he's 40 at the rate he's going at.


David Commented on April 17, 2007

I love the blog that you have. I was wondering if you would link my blog to yours and in return I would do the same for your blog. If you want to, my site name is American Legends and the URL is:

www.americanlegends.info

If you want to do this just go to my blog and in one of the comments just write your blog name and the URL and I will add it to my site.

Thanks,
David


Sidney Commented on April 23, 2007

$1,000,000 sounds great but the value will diminish over time once you retire. If you constantly take out all the interest how much will that $1m buy you say 10 or 20 years down the road? You need to have something generating an income as well to keep topping it up.


Lionsault Finance Commented on April 28, 2007

$1 million may not be a big sum of money in America since the standards of living is high. But it is definitely a sum that allows us to retire comfortably in Singapore since our inflation rate is low and kept in check stringently by our government. Anyway, good financial planning. I also like your thrifty habits. In line with my philosophy also. :)


I-key Benney, On Is $1,000,000 enough Commented on May 1, 2007

Hello:

Your blog is over flowing with very important and interesting financial and business information.

You must be a very busy man to create and maintain such a large blog.

About your question "Is $1,000,000 enough", it depends on the individual, the lifestyle and the country.

So there are a couple of factors which are crucial to answer that question.

Ikey Benney
mscsrrr.com


pesli Commented on May 3, 2007

Great retirement plan, it might just work out as you have predicted. Anyway I came across this software which has a financial planning program. It calculates how much you would have to save to meet the amount you would like to have when you retire. Here is the site for those who are interested in it www.parcusgroup.com.au/index.html


RobertR Commented on May 7, 2007

In one of your introductory posts you mention that you wanted $1MM to retire comfortably in China, but now it sounds like you are planning to stay in and retire in America, is that correct? I could see retiring on US $1MM in China, I travel there frequently and the cost of living is quite low but I can't imagine retiring off of that in the States, assuming you stay in or near a metro area and don't move to a cheap state like Kansas. Good savings rate though, just be sure to enjoy your money as well and not focus on being so frugal all the time. I'm in my 40s right now and have been frugal like you which has allowed me to save a nest egg of low seven figures but I sometimes look back and regret not enjoying more if it when I was younger.


Homer Commented on May 8, 2007

Are you guys planning to have any kids? If so you better factor in a lot of money for them, especially education expenses. Retiring on just $1MM at a young age is risky in my opinion.


ProspectZone Mortgage Commented on May 10, 2007

$1M is a pretty number, especially since we all like the word "millionaire" - but inflation has ruined that American dream. The pretty number won't provide for a comfortable middle class living in most areas of the United States.


Jennifer Gordon Commented on October 11, 2007

Thank you for getting out there are doing something and then sharing. A lot of people "think" investing to death, criticize what others do, and end up with nothing. It is a great idea to have some freedoms so you work purely for pleasure. That also makes you a better employee.


Kalomyal Commented on May 5, 2008

Of course, but what do you think about that?,


Forexman Commented on June 5, 2008

Hi. This is really interesting post. Thank You! I have just subscribed to Your rss!

Best regards


Vuxraxky Commented on June 10, 2008

Yes, you can see more about this here:,


Vuxraxky Commented on June 10, 2008

Yes, you can see more about this here:,


Vuxraxky Commented on June 10, 2008

Yes, you can see more about this here:,


Kuklad Commented on June 12, 2008

Open this post and read what I think about that:,


Kuklad Commented on June 12, 2008

Open this post and read what I think about that:,


Kuklad Commented on June 12, 2008

Open this post and read what I think about that:,


Petrovich Commented on June 14, 2008

It's so interesting:,


Wajjiwtb Commented on June 15, 2008

Open this post and read what I think about that:,


Pozsaien Commented on June 24, 2008

Yes, you can see more about this here:,


Pozsaien Commented on June 24, 2008

Yes, you can see more about this here:,


Qtbywwtg Commented on June 25, 2008

But you are say, that this idead is bad?,


Qtbywwtg Commented on June 25, 2008

But you are say, that this idead is bad?,


DashWeicLecigeGar Commented on September 2, 2008

wow :)
its very interesting point of view.
Nice post.
realy good post

thx :-)


RobertTog Commented on January 13, 2017

buy retin a online without a prescription cheap cialis pills online keppra generic one a day cialis buying nolvadex online hydrochlorothiazide prednisone10 mg


MichaelNub Commented on January 28, 2017

wh0cd337516 augmentin 500 mg cialis retin-a gel our site recommended reading elimite cymbalta online pharmacy buy tadalafil allopurinol proscar bph


Bennyanymn Commented on February 4, 2017

wh0cd325116 cheap levaquin albendazole clonidine augmentin revia atomoxetine metformin tablets clindamycin 150mg


AlfredCaf Commented on February 5, 2017

wh0cd35052 elimite lotrisone cream cost diclofenac pill doxycycline hydrochloride 100mg hydrochlorothiazide online buy bupropion online tamoxifen viagra 100 mg


MichaelNub Commented on February 7, 2017

wh0cd820172 homepage wellbutrin levitra 20 mg phenergan vc motrin generic diclofenac sodium 75 mg buy revia online acomplia online buspar online buy avodart


MichaelNub Commented on February 13, 2017

wh0cd820172 professional cialis celebrex ventolin hfa Nolvadex Online buy prednisone cialis without prescription


Bennyanymn Commented on February 27, 2017

wh0cd142556 nizoral trandate naprosyn


EugeneOrert Commented on March 2, 2017

wh0cd82140 oxytrol nimotop buy serophene himplasia without prescription zocor 20


CharlesLiede Commented on March 3, 2017

wh0cd966833 toradol metformin amoxicillin legal generic viagra antabuse


AlfredCaf Commented on March 18, 2017

wh0cd443308 vardenafil check this out cephalexin


EugeneOrert Commented on April 4, 2017

wh0cd796966 viagra tabs propecia no rx


TracyNuami Commented on April 4, 2017

wh0cd61744 Sildenafil No Rx prozac tablets viagra generic


MichaelNub Commented on April 4, 2017

wh0cd691970 Propecia Generic prozac no rx


AlfredCaf Commented on April 30, 2017

wh0cd801778 bentyl buy advair diskus elocon cream 0.1 prednisone buy cafergot methotrexate tablets


TracyNuami Commented on May 9, 2017

wh0cd746289 furosemide anafranil buy colchicine online


DamonNip Commented on May 24, 2017


lovegra отзывы
cialis 20mg original preis
cialis generika online kaufen ohne rezept
cialis generika wo kaufen
cialis generika online kaufen
kamagra brausetabletten 100mg


KennethCed Commented on May 29, 2017

wh0cd452964 cialis 50 tadalafil prices how much does ivermectin cost kamagra tretinoin buy seroquel advair


Stephenfem Commented on May 30, 2017

how long does it take to get an erection after taking viagra
how much does viagra signal packs cost
where can i buy viagra online safely
how to get safe viagra online whitout receipt
how much does viagra cost at cvs
where can i buy viagra direct from a pharmacy in india


CharlesLiede Commented on June 6, 2017

wh0cd268356 cialis 20mg provera lowest cost


Aranlob Commented on June 7, 2017

personal loans somerset ky

http://paydaysolobest.com/ - payday express

payday express

payday advance in anniston al


Onrolob Commented on June 8, 2017

cialis nebenwirkungen prostata

http://buycialisyionline.com/ - cialis

online cialis

levitra cheaper than cialis


Wesleylob Commented on June 8, 2017

viagra in apotheke kaufen

cheap viagra

cheap viagra online

try it online order viagra


Onrolob Commented on June 8, 2017

cialis tadalafil pas che

generic cialis online

cheap cialis

cialis prices philippines


Onrolob Commented on June 8, 2017

click now fast delivery cialis

http://buycialisyionline.com/ - buy cialis

buy cialis online

cialis 10 prospecto


Onrolob Commented on June 9, 2017

buy generic cialis uk only

buy cialis online

buy cialis

cialis generique uk suisse


Ennielob Commented on June 9, 2017

discount cialis canada 5 mg

cialis online

buy generic cialis

who has the cheapest cialis


Moiseslob Commented on June 9, 2017

cialis generico contrassegn

http://buycialistonline.com/ - cialis

buy generic cialis

5 mg cialis for sale


Borislob Commented on June 9, 2017

viagra online legaly

http://viagraproffonline.com/ - viagra professional

viagra generic

viagra ingredients wikipedia


Moiseslob Commented on June 10, 2017

cialis in venlo

http://buycialistonline.com/ - generic cialis

cialis

lowest prices generic cialis


Ennielob Commented on June 10, 2017

brand cialis edmonton

generic cialis online

cialis online

zumo de cialis sale


Eugenelob Commented on June 11, 2017

cialis rotterdam

buy cialis online

cialis online

what to take after cialis


Moiseslob Commented on June 13, 2017

cash advance in Denver CO

http://fastcashisok.com/ - faxless payday loans

payday advance loan

payday loans honolulu hawaii


Vadimlob Commented on June 13, 2017

free samples of viagra in uk

generic viagra online

buy viagra

wow)) viagra soft generic


Goshalob Commented on June 13, 2017

cost of viagra 100mg kmart

viagra cheap

generic viagra

sildenafil vs citrate viagra


Vadimlob Commented on June 13, 2017

viagra zoll

buy viagra online

generic viagra online

vente de viagra nz


Irishlob Commented on June 16, 2017

visit our site viagra generico

buy viagra online

buy generic viagra

venden viagra sin recet


Brozovlob Commented on June 18, 2017

cialis 40 mg safe

order cialis

generic cialis

daily cialis discount


Varenlob Commented on June 19, 2017

viagra pill buy cheap

viagra

buy generic viagra

kop viagra receptfritt


MichaelNub Commented on June 20, 2017

wh0cd19356 cheapest furosemide viagra soft arimidex


Add Your Comments










Remember personal information?




(It will take a few moments for your comment to be published. Please do not close the window until then.)


Read More ... 152 Posts In The Same Category










This page was last rebuilt at June 20, 2017 11:05 AM PST. (544 Words)
 

RSS FEED





PERSONAL FINANCE BLOGS I READ

Consumerism Commentary
Get Rich Slowly
My Money Blog
All Financial Matters
The Simple Dollar






.



Copyright 2003-2014, PFBlog.com. All Rights Reserved. (Privacy Policy)