Two Comma Club!

Meg77 · Post by **Meg77** » Tue Jun 03, 2014 3:28 pm

When I updated my net worth statement for May 2014, I was surprised and delighted to see that my husband and I have jumped into the two comma club for the first time! There is no one I could really celebrate with (including my own husband who rolled his eyes at me for caring so much when I announced our new millionaire status), so I wanted to share my progress with fellow Bogleheads.

I joined this forum exactly 5 years ago, in May 2009, at which time my individual net worth was $335,554.
I was 25 years old, my salary was $60K (I got a bonus of $14K that year), my retirement assets totaled $35K, I had a $10K emergency fund, I had $132K in real estate equity ($89K from the two rental properties I'd purchased), and $160K in stocks (my leftover college fund plus probably $20K or so in personal brokerage I'd accumulated). At that time it is safe to say that fully 80% (around $272K) of my net worth was the result of gifts as opposed to my own savings. My grandparents saved a lot of money for my college education and invested it in Vanguard index funds, and there was enough left after school for me to put down 20% on a condo and two rental properties - and still have about $140K leftover.

As of May 2014 my combined net worth with my husband is $1,015,272.
My salary is $113K (my bonus this year was $29K), my retirement assets total $231K, I have a $36K emergency fund, I have $404K in real estate equity ($299K from 6 rental properties), and I still have $90K left in that college fund (as it grew I tapped it for down payments on the additional rental properties). Things that have really helped me boost my net worth:

I have doubled my income and raised my retirement contributions with each raise.

I have been gifted $210K in the last five years ($75K in my parents' divorce, $50K for my wedding, and $85K from my grandparents).

I married a fellow Boglehead who had just over 6 figures of net worth himself (mostly retirement and stock assets, less a fairly hefty student loan).

Most recently, in May, I was awarded nearly 6 figures in new employee stock in conjunction with the acquisition of my former employer.

I realize I have had a LOT of help getting to 7 figures, primarily as a result of family gifts (not to even mention the education they paid for). But I'm proud that I've made choices which have enabled those gifts to grow and compound, rather than squandering them. As I settle into married life, I know my husband will only aid this effort. He cares much less about achieving these milestones, but he earns 6 figures and is naturally frugal. Though we both like to spend and will have to fight the materialism that surrounds us in our careers and neighborhood, I'm confident our net worth will only continue to grow. It's been an expensive year already (new house, wedding, honeymoon) and yet our net worth has grown each month as we pour money into our 401ks, ESPP, and HSA - and as our loan balances amortize.

Thanks for all your ongoing support and information Bogleheads!

VictoriaF · Post by **VictoriaF** » Tue Jun 03, 2014 3:30 pm

Congratulations, Meg! Keep up great job,

Victoria

Ice-9 · Post by **Ice-9** » Tue Jun 03, 2014 3:37 pm

Woohoo! Congrats!

CABob · Post by **CABob** » Tue Jun 03, 2014 3:48 pm

I was going to add my congrats to others, but, as I read your post thought I had better add your parents and grandparents to my congratulations. They certainly started you off very well and you were able to continue in the tradition.
This is a welcome break from the more typical story of a child wasting what was given to them by parents and grandparents.

rayson · Post by **rayson** » Tue Jun 03, 2014 3:55 pm

Congratulations!! You are doing awesome at age 30. Thanks for sharing, and stay the course.

Meg77 · Post by **Meg77** » Tue Jun 03, 2014 4:12 pm

CABob wrote:I was going to add my congrats to others, but, as I read your post thought I had better add your parents and grandparents to my congratulations. They certainly started you off very well and you were able to continue in the tradition.
This is a welcome break from the more typical story of a child wasting what was given to them by parents and grandparents.

Thank you - yes they certainly did. It's generally known that wealth is often gone by the third generation - in other words the wealth my grandparents generated will statistically end with me and my cousins and siblings (often there is enough to be passed down to sustain generation two, but then it is spread thin and often all spent by generation three). I'm going to do my best to buck the trend!

Dulocracy · Post by **Dulocracy** » Tue Jun 03, 2014 4:26 pm

Congratulations! Now set the next goal and take aim!

DTSC · Post by **DTSC** » Tue Jun 03, 2014 4:31 pm

Congrats! Nothing better than having Boglehead grandparents!

6miths · Post by **6miths** » Tue Jun 03, 2014 5:13 pm

DTSC wrote:Congrats! Nothing better than having Boglehead grandparents!

+1 congratulations!

sesq · Post by **sesq** » Tue Jun 03, 2014 5:16 pm

Congrats. .

That said, your parents divorce and that triggered a $75K gift to their child?

I do like how appreciative (and upfront) you are of the help you've received.

FelixTheCat · Post by **FelixTheCat** » Tue Jun 03, 2014 5:23 pm

I love Boglehead success stories. Congratulations!

fareastwarriors · Post by **fareastwarriors** » Tue Jun 03, 2014 5:45 pm

imgritz wrote:I love Boglehead success stories. Congratulations!

+1

MoonOrb · Post by **MoonOrb** » Tue Jun 03, 2014 6:29 pm

Great news!

(What a tremendous example your grandparents set, too--wow!).

Keep up that great work.

amitb00 · Post by **amitb00** » Tue Jun 03, 2014 6:34 pm

Awesome news and heartiest congrats!

VictoriaF · Post by **VictoriaF** » Tue Jun 03, 2014 6:35 pm

I think the grandparents' contributions are overstated here. It is Meg herself who has doubled her salary in five years. It is Meg herself who has discovered the Bogleheads and manages her money prudently. It is Meg herself who has chosen a suitable spouse and set up her family finances.

Victoria

NAVigator · Post by **NAVigator** » Tue Jun 03, 2014 6:37 pm

Welcome to the club! Enjoy each triumph as you continue to watch your portfolio grow.

Perhaps you should have those commas bronzed so you can enjoy this achievement forever!

Jerry

Cut-Throat · Post by **Cut-Throat** » Tue Jun 03, 2014 6:38 pm

Dulocracy wrote:Congratulations! Now set the next goal and take aim!

Don't set the next goal as another comma however. It's a real Bitch!

Medviersi · Post by **Medviersi** » Tue Jun 03, 2014 6:41 pm

Very impressive, you are in a great position.

By my calculations you should be in the three comma club in 2019

RunningRad · Post by **RunningRad** » Tue Jun 03, 2014 6:56 pm

Fantastic!

Cut-Throat · Post by **Cut-Throat** » Tue Jun 03, 2014 7:13 pm

Medviersi wrote:Very impressive, you are in a great position.

By my calculations you should be in the three comma club in 2019

We'd love to see the math on that one !

NAVigator · Post by **NAVigator** » Tue Jun 03, 2014 7:19 pm

Cut-Throat wrote:
Medviersi wrote:Very impressive, you are in a great position.

By my calculations you should be in the three comma club in 2019
We'd love to see the math on that one !

The miracle of confounded interest!

VictoriaF · Post by **VictoriaF** » Tue Jun 03, 2014 7:19 pm

Cut-Throat wrote:
Medviersi wrote:Very impressive, you are in a great position.

By my calculations you should be in the three comma club in 2019
We'd love to see the math on that one !

It's not math. It's two commas liking each other and producing little commas.

Victoria

Post by **Mel Lindauer** » Tue Jun 03, 2014 7:25 pm

Congrats! Thanks for sharing your success story with everyone here. Keep up the good work. There will undoubtedly be some temporary setbacks along the way, but you obviously have what it takes to continue on the road to financial freedom.

Medviersi · Post by **Medviersi** » Tue Jun 03, 2014 8:11 pm

Cut-Throat wrote:
Medviersi wrote:Very impressive, you are in a great position.

By my calculations you should be in the three comma club in 2019
We'd love to see the math on that one !

Well, if my one comma per 5 years mathematics is not good enough for you . . . .

Meg went from 335,554 to 1,015,272 in 5 years, so the average annual return is

(1015272/335554)^1/5 - 1 = 24.8%

Assuming similar returns/savings rate in the future (No pressure Meg

) 31.12 years should take you to one billion.

Look forward to the post confirming around July 2045.

dlprop · Post by **dlprop** » Tue Jun 03, 2014 8:22 pm

fareastwarriors wrote:
imgritz wrote:I love Boglehead success stories. Congratulations!
+1

+1

bru · Post by **bru** » Tue Jun 03, 2014 8:24 pm

Nice accomplishment but it leads to a couple of observations.

Why such a small emergency fund? With your income you are not even close to what you should have.

The real estate equity accounts for 40% of your net worth.

No doubt with your high household income you can easily build up the emergency fund and continue to increase your net worth so the real estate becomes a smaller percentage.

WarpSpeed · Post by **WarpSpeed** » Tue Jun 03, 2014 8:43 pm

bru wrote: Why such a small emergency fund? With your income you are not even close to what you should have.

It's expenses that determine the adequate size of an emergency fund, not income. Maybe $36,000 is 6 months or more of expenses in the OP's household...

investor1 · Post by **investor1** » Tue Jun 03, 2014 9:18 pm

I think you are an outlier which means lucky you!

I'm not afraid of hard work and grinding it out, but I welcome luck at all times

Congratulations on your progress! It is always good to hear a success story.

Raymond · Post by **Raymond** » Tue Jun 03, 2014 9:52 pm

Now for the "eight-digit, two-comma club"

ajcp · Post by **ajcp** » Tue Jun 03, 2014 9:52 pm

Cut-Throat wrote:
Medviersi wrote:Very impressive, you are in a great position.

By my calculations you should be in the three comma club in 2019
We'd love to see the math on that one !

baw703916 · Post by **baw703916** » Tue Jun 03, 2014 10:13 pm

I had a negative net worth at your age (had just finished my education and had some student loans)--so congratulations.

IPer · Post by **IPer** » Tue Jun 03, 2014 10:30 pm

Thank you for sharing! I would gather I am not alone in saying the gifts you received have truly been justified by your outstanding efforts, never forget it!
As for celebration, yes! You should definitely celebrate this and smaller ones along the way.

tj · Post by tj » Tue Jun 03, 2014 11:07 pm

Congrats Meg, you've always been an inspirational poster. it's also refreshing to read about a compatible couple, it's surprisingly not common on the financial forums that I frequent.

acegolfer · Post by **acegolfer** » Wed Jun 04, 2014 6:05 am

Gratz!

I'd like to hear more stories like this. If there's anyone out there who wants to share his(hers) story, this is the place to share.

bonaire27 · Post by **bonaire27** » Wed Jun 04, 2014 6:09 am

Well done! I look forward to posting something similar in a couple of years.

Grt2bOutdoors · Post by **Grt2bOutdoors** » Wed Jun 04, 2014 7:54 am

Congrats!

Good thing you've done it before the children arrive.

Those headwinds can slow dow progresss - (high cost of schooling, etc).

thedayisbrave · Post by **thedayisbrave** » Wed Jun 04, 2014 8:34 am

Congratulations! I'm in a similar boat as you, albeit I'm a couple years younger. I'm 24, but my goal is to hit the $1 million mark by 30. I, too, have a rental property and plan on going in on more with my mom (we own a real estate investing LLC 50/50). Through family circumstances, I've been lucky enough (and unlucky enough, as it turns out) that I'm financially light years ahead of my peers, and working to make the most of those advantages. It's nice to read about someone who's done it.

Do you manage the rental properties yourself? I'd like to eventually accumulate 5-10 properties and I'm curious how you operate them.

HardKnocker · Post by **HardKnocker** » Wed Jun 04, 2014 8:40 am

Congrats! You are a real estate tycoon.

We can all make wise and not so wise decisions as we go through life. Well done.

BigFoot48 · Post by **BigFoot48** » Wed Jun 04, 2014 9:49 am

The Boglehead forum and philosophy will be a huge benefit to the 10's of thousands of young people that discover it and apply it to their financial lives. While I discovered it around age 50, I think those, like the OP, who discover it in their 20's will find its benefits over the decades will be "priceless", but hopefully full of double-commas!

Welcome to the club!

TSR · Post by **TSR** » Wed Jun 04, 2014 10:26 am

Congrats! I'll also just say that I really appreciate the advice you've given to others who have come into windfalls.

bru · Post by **bru** » Wed Jun 04, 2014 10:42 am

WarpSpeed wrote: It's expenses that determine the adequate size of an emergency fund, not income. Maybe $36,000 is 6 months or more of expenses in the OP's household...

OK. OPs emergency fund equates to monthly expenses of $4500. By her own admission she likes to spend and with six rental properties I imagine there are some substantial loan payments. Yes there is income from rents that could be used to cover expenses but given her situation I don't see a problem adding a bit to the emergency fund. As easy as it all went up, it could all come crashing down.

I won't give any more comments about this post as it is clear I am in the minority.

Average Investor · Post by **Average Investor** » Wed Jun 04, 2014 10:58 am

Congratulations, that is quite an achievement!

letsgobobby · Post by **letsgobobby** » Wed Jun 04, 2014 11:01 am

bru wrote:
WarpSpeed wrote: It's expenses that determine the adequate size of an emergency fund, not income. Maybe $36,000 is 6 months or more of expenses in the OP's household...
OK. OPs emergency fund equates to monthly expenses of $4500. By her own admission she likes to spend and with six rental properties I imagine there are some substantial loan payments. Yes there is income from rents that could be used to cover expenses but given her situation I don't see a problem adding a bit to the emergency fund. As easy as it all went up, it could all come crashing down.

I won't give any more comments about this post as it is clear I am in the minority.

c'mon, don't quit now. Every celebratory thread at Bogleheads needs a wet blanket or two.

There's the "I have a $11 million saved for retirement with $4m more coming, can I retire?" thread with the predictable, "well a 1% withdrawal rate has always been safe but who says the future will look like the past?" response!

Cut-Throat · Post by **Cut-Throat** » Wed Jun 04, 2014 11:04 am

letsgobobby wrote:c'mon, don't quit now. Every celebratory thread at Bogleheads needs a wet blanket or two.

There's the "I have a $11 million saved for retirement with $4m more coming, can I retire?" thread with the predictable, "well a 1% withdrawal rate has always been safe but who says the future will look like the past?" response!

LOL ! Yes, I always see these as well..

Meg77 · Post by **Meg77** » Wed Jun 04, 2014 11:27 am

letsgobobby wrote:
bru wrote:
WarpSpeed wrote: It's expenses that determine the adequate size of an emergency fund, not income. Maybe $36,000 is 6 months or more of expenses in the OP's household...
OK. OPs emergency fund equates to monthly expenses of $4500. By her own admission she likes to spend and with six rental properties I imagine there are some substantial loan payments. Yes there is income from rents that could be used to cover expenses but given her situation I don't see a problem adding a bit to the emergency fund. As easy as it all went up, it could all come crashing down.

I won't give any more comments about this post as it is clear I am in the minority.
c'mon, don't quit now. Every celebratory thread at Bogleheads needs a wet blanket or two.

There's the "I have a $11 million saved for retirement with $4m more coming, can I retire?" thread with the predictable, "well a 1% withdrawal rate has always been safe but who says the future will look like the past?" response!

Haha, I don't fear a "wet blanket" or two. My finances are far from perfect. Part of the reason I enjoy this forum are the straightforward reality checks and continual encouragement to do even better (if I wanted just to be patted on the back I could just read standard personal finance advice citing all the 'average American' statistics).

For the record, although I keep my rental property assets, including additional reserves, "separate," our emergency fund is certainly NOT adequate currently. We have drained it putting 15% down on a new house, getting married and spending two weeks in Hawaii, and furnishing said new house all in the last 6 months. We also may have just paid 5 figures to install an outdoor kitchen...I know, I know, we should have rebuilt our reserves first. We justify it by instead focusing on how much we are pouring into investments each month. If you really want to know the real figures, you'll see plenty of opportunities to throw stones.

Cash - $36K (our committed expenses are just under $7K a month - but we are also saving $5K a month which could be suspended at any time - and we both have very secure jobs)
Taxable Brokerage - $42K (25% is ESPP)
Retirement - $382K (includes small HSA)
Homestead - $513K ($409K mortgage)
Cars - $25K ($10K loan left)
Student loan - $68K (at 2.75% floating - this is next priority after paying of cc debt and getting cash over $50K)
Credit cards - $29K (I KNOW! I've never carried a balance until now, but we financed the house stuff on cards that give us 0% interest and great rewards; they'll be paid off by year end.)

Rental Reserves - $11K
Leftover college fund cash - $20K (additional rental reserves)
Note receivable - $70K (secured loan to a real estate investor from the college fund, paying 8.5%)
Rental Property - $1,861K ($989K mortgages)
Dad's house - $75K Illiquid Investments - $250K (leftover college fund plus my portion of an LLC that's currently all cash plus my portion of a house that I own with sisters that my dad lives in - I don't fully control this money)
Inherited LLC - $85K cash (need to invest this, as I manage the entity and it's now $341K cash...)

Grt2bOutdoors · Post by **Grt2bOutdoors** » Wed Jun 04, 2014 11:37 am

Time for a will and/or trust. Lots of assets and moola at stake.
Those rental reserves are low compared to equity and remaining mortgage.

No comment on outside kitchen other than - I hope you like to cook ALOT...and you lucky dog!!

No interest credit card debt - I did the same, paid it off at my leisure instead of immediately. Part of being a home CFO is managing cashflow.

E-fund? If push came to shove, you could always cash out some of your investments. Build it up as you can.

Twins Fan · Post by **Twins Fan** » Wed Jun 04, 2014 12:40 pm

I thought the wedding was paid for, yet it keeps being mentioned as a large expense last year?? And, $85k from grandparents should have covered the honeymoon or outdoor kitchen?? $29k CC bill and a five figure outdoor kitchen?!

I'd say the spending needs to get under control. But, congrats on being pretty well off at your age!!

Meg77 · Post by **Meg77** » Wed Jun 04, 2014 2:14 pm

Twins Fan wrote:I thought the wedding was paid for, yet it keeps being mentioned as a large expense last year?? And, $85k from grandparents should have covered the honeymoon or outdoor kitchen?? $29k CC bill and a five figure outdoor kitchen?!

I'd say the spending needs to get under control. But, congrats on being pretty well off at your age!!

I definitely agree that we need to control our spending. However the $85K from grandparents is money I can't touch/don't control. Several years ago my grandfather gifted a $270K LLC to my sisters and I. We've grown that fund to $340K (I own 25% so that's where I get $85K). And we were given $50K for the wedding late last year but used all of it and then some as a down payment on the house. So when the wedding and honeymoon actually rolled around we tapped our own savings/cards for that.

We have spent around $10K furnishing the house, $20K on the wedding and honeymoon, and $25K on the deck so far this year. We've been putting most expenses on the cards while we let cash pile back up mainly because that makes hubby more comfortable than draining cash. We are also investing appx $5K a month, so essentially we've been treading water so far this year (although market increases and mortgage amortizations have continued to increase our net worth). But now that those expenses are largely done we will definitely be more in savings mode.

Meg77 · Post by **Meg77** » Wed Jun 04, 2014 2:22 pm

sesq wrote:Congrats. .

That said, your parents divorce and that triggered a $75K gift to their child?

I do like how appreciative (and upfront) you are of the help you've received.

Yes my parents agreed to gift their home to the four of us as a creative solution to "what do we do with the house?" She didn't want to live there, but my dad didn't have the liquidity to buy her out. So my dad got a life estate in the house (he can live there until he dies), but technically we four own it. It's insured for over $1MM, but currently it would probably fetch only half that on the open market. It's a grand old house in a fairly rural area so it's hard to tell. I value my 25% stake at $75K to be conservative. Who know what, if anything, I'll ever get from its sale.

Meg77 · Post by **Meg77** » Wed Jun 04, 2014 2:33 pm

Grt2bOutdoors wrote:Time for a will and/or trust. Lots of assets and moola at stake.
Those rental reserves are low compared to equity and remaining mortgage.

E-fund? If push came to shove, you could always cash out some of your investments. Build it up as you can.

Yes you're right we do need to sit down and write a will...we got life insurance checked off the list, and all our accounts with beneficiaries are up to date. But we haven't been in a rush since TX probate is fairly quick and cheap, and TX community property law would give either of us the others' assets anyway if we died intestate. But if we both die together it could be kind of a mess for potential heirs...none of whom even have a clue how much we have or where it's held.

And the to-do list grows.

Yes I've actually rarely had a fully funded EF (especially if you count rental expenses) for several reasons. Suspending savings alone would net us an additional $4-5K per month. But before doing that we could liquidate brokerage assets if we 'had' to. The thing is we pay for "emergencies" out of our regular cash flowAlso I could even tap my Roth IRA even in a pinch (obviously a last resort). One big factor also is that two of my rental mortgages are held by my mother. So in years where rental expenses exceeded income, I have suspended payments to her for a time until I had enough cash to pay her. Having that flexibility on payments is a big plus and reduces my need for what would otherwise be adequate rental reserves.