Net Worth Milestone Today - $1.5M

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Meg77
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Net Worth Milestone Today - $1.5M

Post by Meg77 » Fri Sep 23, 2016 4:32 pm

I was just updating my net worth spreadsheet and realized that our net worth crossed over the $1,500,000 mark. $1,500,492 to be exact.

The breakdown if anyone is interested is as follows:

Cash net of credit cards outstanding - $45,291
Taxable investments net of one car loan and deferred taxes - $241,315
Retirement accounts - $598,714
Home equity - $176,955
Rental equity (7 properties) - $438,361
2 cars - $48,000

Total assets $2.72M, total liabilities $1.22M

I know stock prices could plummet next week, but then again I value our real estate at cost, so in reality we probably crossed the $1.5M mark at some point in the last 18 months as local property values have increased.

I hadn't really been anticipating this milestone, and it feels a little surreal to not feel very different. I spent some time mulling over how to celebrate or mark the occasion, but other than buying some nicer-than-usual steaks for grilling tonight I'm not sure there's anything much to be done. I find it sort of sad and also liberating to think ahead to the future net worth milestones we (hopefully) have to come and realize that they will get less meaningful, less exciting, and less impactful over time.

I am really proud of what we have accomplished so far though, and of the savings rate we have maintained since we married 2.5 years ago. When we married our combined net worth was $1,062,000. I do not take it for granted or consider it inevitable to be able to build wealth. My husband and I are smart and have worked hard, but we also were lucky enough to born into loving middle-class American families during a relatively stable period of history.

Perhaps we'll mark the event with a special charitable endeavor or gift of some kind. That seems more appropriate somehow than spending extra money on ourselves (we spend plenty already). Any ideas are welcome.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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celia
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Re: Net Worth Milestone Today - $1.5M

Post by celia » Fri Sep 23, 2016 4:42 pm

Meg77 wrote:I hadn't really been anticipating this milestone, and it feels a little surreal to not feel very different. I spent some time mulling over how to celebrate or mark the occasion, but other than buying some nicer-than-usual steaks for grilling tonight I'm not sure there's anything much to be done. I find it sort of sad and also liberating to think ahead to the future net worth milestones we (hopefully) have to come and realize that they will get less meaningful, less exciting, and less impactful over time.
I think it is sort of like birthdays. When you are a kid, each is important and celebrated. As an older adult, do you need to celebrate each and every one other than acknowledging it? How about enjoying it by going for a walk to someplace you haven't walked before? Look at nature, weather, wildlife, and notice that we are now in fall.

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Re: Net Worth Milestone Today - $1.5M

Post by Mademoisellebogleheads » Fri Sep 23, 2016 5:20 pm

Congratulations!!

On such an occasion, I'd love to have a 'gratitude' circle time. Maybe go into the woods with my husband, and light a candle, and look at the sky and the stars and give thanks.

And also, I'd review what I can do to be healthier. Sleep better? Cut down on alcohol? Lose weight? Pick up a new work out routine?

Without health, no amount of money is worth sacrificing good health.

Without gratitude, no amount of money is truly celebratory.

Just my humble opinion, but it's fun to think about this question.

Anyway, congratulations, sending you good wishes!
Last edited by Mademoisellebogleheads on Fri Sep 23, 2016 5:36 pm, edited 2 times in total.

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Re: Net Worth Milestone Today - $1.5M

Post by boglephreak » Fri Sep 23, 2016 5:21 pm

i am curious why (1) you include cars' worth in net worth; and (2) why you subtract car loans from taxable, not your cars' net worth.

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Re: Net Worth Milestone Today - $1.5M

Post by goingup » Fri Sep 23, 2016 5:39 pm

Meg77 wrote: Perhaps we'll mark the event with a special charitable endeavor or gift of some kind.
Congratulations on your success! I don't have any suggestions about charitable endeavors, but I always appreciate your posts here as a banker in the know. You have offered much valuable insight on loans, mortgages, credit scores, etc. It's noted and appreciated. :beer

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Re: Net Worth Milestone Today - $1.5M

Post by am » Fri Sep 23, 2016 5:51 pm

How old are you and what is your income/bracket? In any case, you are in the top percentiles of net worth in this country. Congratulations!

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Re: Net Worth Milestone Today - $1.5M

Post by EXH » Fri Sep 23, 2016 6:07 pm

Congrats! Although i would certainly not count cars in your net worth. They are not an investment and will lose their value quickly.

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Re: Net Worth Milestone Today - $1.5M

Post by 123 » Fri Sep 23, 2016 6:15 pm

We'll see what happens tomorrow (or Monday). Wealth, like fame, can be fleeting.
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Re: Net Worth Milestone Today - $1.5M

Post by Dottie57 » Fri Sep 23, 2016 6:16 pm

How about a nice donation to a homeless shelter?

am
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Re: Net Worth Milestone Today - $1.5M

Post by am » Fri Sep 23, 2016 6:55 pm

I think cars should be counted in networth as they can be sold for cash if needed. I don't because I am too lazy to get the value :D

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Re: Net Worth Milestone Today - $1.5M

Post by taxeconomist » Fri Sep 23, 2016 8:08 pm

am wrote:I think cars should be counted in networth as they can be sold for cash if needed. I don't because I am too lazy to get the value :D
What is your couch worth as you can include that too? How about the window treatments on your 7 properties? Net worth is probably closer to $1.6m if include those too.

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Re: Net Worth Milestone Today - $1.5M

Post by ved » Fri Sep 23, 2016 8:16 pm

taxeconomist wrote: What is your couch worth as you can include that too? How about the window treatments on your 7 properties? Net worth is probably closer to $1.6m if include those too.
This post comes across as mean-spirited. If that's not the intent, I apologize.

It's the OP's net-worth, and she can include/ exclude whatever she sees fit. Congratulate her on her accomplishment, if you are so inclined. Otherwise, just move on.

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Re: Net Worth Milestone Today - $1.5M

Post by VictoriaF » Fri Sep 23, 2016 8:20 pm

Congratulations Meg!

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Re: Net Worth Milestone Today - $1.5M

Post by Steve723 » Fri Sep 23, 2016 9:11 pm

Congrats! It's thoughtful of you to consider sharing some of your wealth with others. I would determine perhaps an amount (or a range if you don't want to get too precise) and earmark it for giving. Then wait and put your radar up. Over the next few weeks, you will hear of some need that resonates with you and your husband and you will happily provide support to a person or organization in need.

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Re: Net Worth Milestone Today - $1.5M

Post by investing1012 » Fri Sep 23, 2016 9:14 pm

Meg77 wrote:I was just updating my net worth spreadsheet and realized that our net worth crossed over the $1,500,000 mark. $1,500,492 to be exact.

The breakdown if anyone is interested is as follows:

Cash net of credit cards outstanding - $45,291
Taxable investments net of one car loan and deferred taxes - $241,315
Retirement accounts - $598,714
Home equity - $176,955
Rental equity (7 properties) - $438,361
2 cars - $48,000

Total assets $2.72M, total liabilities $1.22M

I know stock prices could plummet next week, but then again I value our real estate at cost, so in reality we probably crossed the $1.5M mark at some point in the last 18 months as local property values have increased.

I hadn't really been anticipating this milestone, and it feels a little surreal to not feel very different. I spent some time mulling over how to celebrate or mark the occasion, but other than buying some nicer-than-usual steaks for grilling tonight I'm not sure there's anything much to be done. I find it sort of sad and also liberating to think ahead to the future net worth milestones we (hopefully) have to come and realize that they will get less meaningful, less exciting, and less impactful over time.

I am really proud of what we have accomplished so far though, and of the savings rate we have maintained since we married 2.5 years ago. When we married our combined net worth was $1,062,000. I do not take it for granted or consider it inevitable to be able to build wealth. My husband and I are smart and have worked hard, but we also were lucky enough to born into loving middle-class American families during a relatively stable period of history.

Perhaps we'll mark the event with a special charitable endeavor or gift of some kind. That seems more appropriate somehow than spending extra money on ourselves (we spend plenty already). Any ideas are welcome.
Why do you have credit card debt of !45000

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Re: Net Worth Milestone Today - $1.5M

Post by JGoneRiding » Fri Sep 23, 2016 9:19 pm

Why do you have credit card debt of !45000
She doesn't she is subtracting what she actively owes on her credit cards (probably this month's transactions) from the cash she keeps in various accounts.

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Re: Net Worth Milestone Today - $1.5M

Post by Grt2bOutdoors » Fri Sep 23, 2016 9:28 pm

Congrats...... :moneybag :sharebeer
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Re: Net Worth Milestone Today - $1.5M

Post by Ervin » Fri Sep 23, 2016 9:34 pm

Meg77 wrote:I was just updating my net worth spreadsheet and realized that our net worth crossed over the $1,500,000 mark. $1,500,492 to be exact.

The breakdown if anyone is interested is as follows:

Cash net of credit cards outstanding - $45,291
Taxable investments net of one car loan and deferred taxes - $241,315
Retirement accounts - $598,714
Home equity - $176,955
Rental equity (7 properties) - $438,361
2 cars - $48,000

Total assets $2.72M, total liabilities $1.22M

I know stock prices could plummet next week, but then again I value our real estate at cost, so in reality we probably crossed the $1.5M mark at some point in the last 18 months as local property values have increased.

I hadn't really been anticipating this milestone, and it feels a little surreal to not feel very different. I spent some time mulling over how to celebrate or mark the occasion, but other than buying some nicer-than-usual steaks for grilling tonight I'm not sure there's anything much to be done. I find it sort of sad and also liberating to think ahead to the future net worth milestones we (hopefully) have to come and realize that they will get less meaningful, less exciting, and less impactful over time.

I am really proud of what we have accomplished so far though, and of the savings rate we have maintained since we married 2.5 years ago. When we married our combined net worth was $1,062,000. I do not take it for granted or consider it inevitable to be able to build wealth. My husband and I are smart and have worked hard, but we also were lucky enough to born into loving middle-class American families during a relatively stable period of history.

Perhaps we'll mark the event with a special charitable endeavor or gift of some kind. That seems more appropriate somehow than spending extra money on ourselves (we spend plenty already). Any ideas are welcome.
Your main problem is that you are incredibly overextended. If anything happens to the economy, you could get into a catastrophic cash flow problem. $1.22M in loans? You must be paying tens of thousands a year just to service them. You are like the paper "millionaires" from before the previous two stock market crashes.

Stop drinking the Rich Dad Poor Dad Kool-Aid, and start paying off your loans. You can start celebrating when your loans are paid off.

I am not trying to be a party pooper here. Just imagine what would happen if the stock market crashed, because of our national debt, and your houses and stocks would be worth much-much less tomorrow, while your debt stayed the same.
Last edited by Ervin on Fri Sep 23, 2016 9:51 pm, edited 1 time in total.
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Re: Net Worth Milestone Today - $1.5M

Post by Focus333 » Fri Sep 23, 2016 9:40 pm

Meg,
Congrats! May I ask you how old you are?

To everyone else: Should we account house equity to be part of net worth?

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Re: Net Worth Milestone Today - $1.5M

Post by Ervin » Fri Sep 23, 2016 9:52 pm

Focus333 wrote:Meg,
Congrats! May I ask you how old you are?

To everyone else: Should we account house equity to be part of net worth?
There is zero real net worth, as long as the amount of cash on hand is significantly lower than the amount of loans pending. They are most likely playing roulette with their future. Unrealized gains are exactly that: unrealized. Same goes for the book value/cost of assets. Cash is king.

Why would any BH invest in another rental, while the previous one hasn't been paid off yet?
Last edited by Ervin on Fri Sep 23, 2016 10:03 pm, edited 1 time in total.
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Re: Net Worth Milestone Today - $1.5M

Post by VictoriaF » Fri Sep 23, 2016 10:02 pm

Ervin wrote:
Focus333 wrote:Meg,
Congrats! May I ask you how old you are?

To everyone else: Should we account house equity to be part of net worth?
There is zero real net worth, as long as the amount of cash on hand is significantly lower than the amount of loans pending. They are playing roulette with their future, unless the loans are under some shielded entity.

Meg has:
Total assets $2.72M, total liabilities $1.22M, net worth $1.50M

Her:
Home equity is ~$180k, rental equity ~$440k, cars ~$50k. Total ~$0.7M

Even if she had lost all her equity, she would still have ~$0.8M in liquid assets.

This is FAR more than zero real net worth. Additionally, Meg and her husband have solid human capital that will provide them with substantial continuing income.

Victoria
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Re: Net Worth Milestone Today - $1.5M

Post by Ervin » Fri Sep 23, 2016 10:07 pm

VictoriaF wrote:
Ervin wrote:
Focus333 wrote:Meg,
Congrats! May I ask you how old you are?

To everyone else: Should we account house equity to be part of net worth?
There is zero real net worth, as long as the amount of cash on hand is significantly lower than the amount of loans pending. They are playing roulette with their future, unless the loans are under some shielded entity.

Meg has:
Total assets $2.72M, total liabilities $1.22M, net worth $1.50M

Her:
Home equity is ~$180k, rental equity ~$440k, cars ~$50k. Total ~$0.7M

Even if she had lost all her equity, she would still have ~$0.8M in liquid assets.

This is FAR more than zero real net worth. Additionally, Meg and her husband have solid human capital that will provide them with substantial continuing income.

Victoria
You are way too optimistic. In a bad market, the tenants will leave, or will stay for much reduced rents, their home and rental equities might become a fraction of what they are today, and Meg and her husband might lose their salaried jobs (if they have any). All they have liquid is whatever they have in cash or equivalents.

This is nothing new. This is history. A lot of real estate speculators went bankrupt like this when the housing market crashed.
Last edited by Ervin on Fri Sep 23, 2016 10:13 pm, edited 1 time in total.
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Re: Net Worth Milestone Today - $1.5M

Post by tainted-meat » Fri Sep 23, 2016 10:11 pm

Man, there are some tough posts in this one. Meg's one of the better posters around here and I believe has had a great real estate portfolio strategy.

Congrats on the accomplishment and remember to have fun along the way. :D

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Re: Net Worth Milestone Today - $1.5M

Post by VictoriaF » Fri Sep 23, 2016 10:12 pm

Ervin wrote:
VictoriaF wrote:
Ervin wrote:
Focus333 wrote:Meg,
Congrats! May I ask you how old you are?

To everyone else: Should we account house equity to be part of net worth?
There is zero real net worth, as long as the amount of cash on hand is significantly lower than the amount of loans pending. They are playing roulette with their future, unless the loans are under some shielded entity.

Meg has:
Total assets $2.72M, total liabilities $1.22M, net worth $1.50M

Her:
Home equity is ~$180k, rental equity ~$440k, cars ~$50k. Total ~$0.7M

Even if she had lost all her equity, she would still have ~$0.8M in liquid assets.

This is FAR more than zero real net worth. Additionally, Meg and her husband have solid human capital that will provide them with substantial continuing income.

Victoria
You are way too optimistic. In a bad market, the tenants will leave, or will stay for much reduced rents, Meg and her husband might lose their salaried jobs (if they have any). All they have liquid is whatever they have in cash.

This is nothing new. This is history. A lot of real estate speculators went bankrupt like this when the housing market crashed.
Meg and her husband are highly-educated well-paid professionals. I think the real estate is inherited. Meg will correct me if I am wrong.

As for the fragility of the real estate, 2007-2010 were bad years, but rental properties were still occupied even as owned homes were deserted.

Victoria
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Re: Net Worth Milestone Today - $1.5M

Post by Ervin » Fri Sep 23, 2016 10:13 pm

tainted-meat wrote:Man, there are some tough posts in this one. Meg's one of the better posters around here and I believe has had a great real estate portfolio strategy.

Congrats on the accomplishment and remember to have fun along the way. :D
Good luck to her, and to our economy.
RIP, Mr. Bogle.

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Re: Net Worth Milestone Today - $1.5M

Post by Novine » Fri Sep 23, 2016 10:30 pm

"Why would any BH invest in another rental, while the previous one hasn't been paid off yet?"

Because she must feel confident enough in the rental market where she has invested that she'll be able to continue to cover the loan payments, taxes, maintenance, etc. on her rentals even if rental rates go down. I personally wouldn't go around calling people "real estate speculators" when I know next to nothing about their personal financial situation.

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Re: Net Worth Milestone Today - $1.5M

Post by Ervin » Fri Sep 23, 2016 10:39 pm

Novine wrote:"Why would any BH invest in another rental, while the previous one hasn't been paid off yet?"

Because she must feel confident enough in the rental market where she has invested that she'll be able to continue to cover the loan payments, taxes, maintenance, etc. on her rentals even if rental rates go down. I personally wouldn't go around calling people "real estate speculators" when I know next to nothing about their personal financial situation.
I didn't call them anything. I was talking about what happened the last time when the stock market crashed. Only when the tide goes out do we find out who's been swimming naked, to approximately quote a classic.

No good deed goes unpunished, I guess...
RIP, Mr. Bogle.

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Re: Net Worth Milestone Today - $1.5M

Post by Novine » Fri Sep 23, 2016 10:44 pm

So I should have read your comments to say "I wasn't talking about them, I just happened to use that phrase in the context of a commentary about their personal finances. But it wasn't about them."?

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Re: Net Worth Milestone Today - $1.5M

Post by Ervin » Fri Sep 23, 2016 11:01 pm

Novine wrote:So I should have read your comments to say "I wasn't talking about them, I just happened to use that phrase in the context of a commentary about their personal finances. But it wasn't about them."?
You should read my comments assuming that I have her best interests at heart. The first books all great investors tend to recommend are the ones about the history of the financial markets, because it tends to repeat itself. As I was reading her post, I had a strong feeling of déjà vu.

If she were a public company, and would owe long-term 40% of her book value (or about 30% of her market value) while holding just 2% in cash, in this economy, would you probably invest in her stock, just because you trust the CEO? (This is an oversimplification, of course.)

Anyway... All the best to Meg77. I meant well.
RIP, Mr. Bogle.

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Re: Net Worth Milestone Today - $1.5M

Post by Ervin » Fri Sep 23, 2016 11:45 pm

There seems to be nothing wrong about a bunch of things... until the tide goes out.

Despite human capital, life is short, and there is a reason why Buffett and all the great investors put capital preservation first. It can take decades to recover after a big hit, especially if one is not diversified (and/or cannot wait for the market to bounce back).

I am sorry. My inner BH just can't agree with this amount of risk. Like most prudent investors, I am most likely wrong today, until one day I am very right. The market is much more likely to go up, on average, than down.
Last edited by Ervin on Fri Sep 23, 2016 11:58 pm, edited 2 times in total.
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Re: Net Worth Milestone Today - $1.5M

Post by Donnie Baseball Fan » Fri Sep 23, 2016 11:50 pm

Ervin wrote:
VictoriaF wrote:
Ervin wrote:
Focus333 wrote:Meg,
Congrats! May I ask you how old you are?

To everyone else: Should we account house equity to be part of net worth?
There is zero real net worth, as long as the amount of cash on hand is significantly lower than the amount of loans pending. They are playing roulette with their future, unless the loans are under some shielded entity.

Meg has:
Total assets $2.72M, total liabilities $1.22M, net worth $1.50M

Her:
Home equity is ~$180k, rental equity ~$440k, cars ~$50k. Total ~$0.7M

Even if she had lost all her equity, she would still have ~$0.8M in liquid assets.

This is FAR more than zero real net worth. Additionally, Meg and her husband have solid human capital that will provide them with substantial continuing income.

Victoria
You are way too optimistic. In a bad market, the tenants will leave, or will stay for much reduced rents, their home and rental equities might become a fraction of what they are today, and Meg and her husband might lose their salaried jobs (if they have any). All they have liquid is whatever they have in cash or equivalents.

This is nothing new. This is history. A lot of real estate speculators went bankrupt like this when the housing market crashed.
First of all, congrats, Meg!
I don't know, I think Ervin is providing a sometimes absent, sobering point of view.
About a third of her net worth is in rentals, and she seems to be in Dallas, which is a white hot RE market right now. It is starting to remind me of the Miamis, Las Vegas, and Californias of a few years ago --without the natural beauty or entertainment offerings. The human capital is certainly there, but its earning potential is heavily correlated with the RE market where they probably have invested. If North Texas were to fall out of favor, they could be in deep water, the RE equity would vanish, and find themselves in a situation in which they have to move, which would make keeping those rentals difficult or impractical.
I think the age is what truly determines whether this milestone is truly a reason to celebrate. If they are approaching retirement, $1.5M, which calculated by including cars, home equity, and emergency savings, might just be enough. OTOH, if she is 40, then that amount is a very healthy number.
In any case, congrats are in order: If you visit the Global Rich List website, you will find out you are in the top 0.41% richest people, IN THE WORLD!
Well done!
Last edited by Donnie Baseball Fan on Sat Sep 24, 2016 12:06 am, edited 2 times in total.

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Re: Net Worth Milestone Today - $1.5M

Post by Mademoisellebogleheads » Fri Sep 23, 2016 11:56 pm

I'm no expert in anything but I wonder why others are voicing concerns about counting RE as equity. I'd imagine where the real estate is invested is important, right?

Ok,if you have real estate invested in a highly speculative locations, then of course, you are open to risk.

But let's say you got a piece of prime real estate in NYC, or Washington DC, in the prime part of town, then the chance of losing value on that real estate is really small, petite, no?

Of course, there is always the possibility of an apocalypse, where the entire US economy collapses, and you lose 50% of the value of a Park Avenue condo in NYC. Or, even the real estate of the White House itself in Washington DC drops by 60%. But What are the chances of that happening? And if it did happen, well, hats off to them. Meg and her husband are survivors of an apocalypse!

I thought the meaning of the original post is more of a philosophical wondering, of reflecting, what does one do, or feel, to come upon a milestone, of financial success. It has happened to me a few times. You'd think that at a time like that you'd be jubilant. But in reality, at least for me, the feelings when facing that achievement can be quite complex, probing, bittersweet, anti-climatic, and unexpected. Sometimes we just need to talk to others about it.

Also, the human capital cannot be underestimated. The fact that a couple has achieved $1.5 million, it is most likely their net worth will compound even more from this point forward.

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Re: Net Worth Milestone Today - $1.5M

Post by chicagoan23 » Sat Sep 24, 2016 11:22 am

They added $460k to their net worth in two and a half years, without marking up the value of their real estate properties and likely without significant market gains (at least for an indexed portfolio) over that time. They are clearly high earners and great savers and that's where the net worth comes from.

As for NYC real estate, my old neighbor in Chicago "bragged" that he lost 30% on a NYC coop he had to sell in the 1980s when interest rates were high. He was the only person he ever knew who lost big on Manhattan real estate. Of course, that was before the Disneyfication of NYC.....but yes, you can lose money on NYC or Bay Area real estate (or anywhere, for that matter) without a systemic financial collapse.

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Re: Net Worth Milestone Today - $1.5M

Post by unclescrooge » Sat Sep 24, 2016 11:30 am

taxeconomist wrote:
am wrote:I think cars should be counted in networth as they can be sold for cash if needed. I don't because I am too lazy to get the value :D
What is your couch worth as you can include that too? How about the window treatments on your 7 properties? Net worth is probably closer to $1.6m if include those too.
Furniture has almost zero resale value. OP is right to exclude them.

Hopefully, you're being facetious (which I've learned is a nice term for smart-ass) :mrgreen:

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unclescrooge
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Re: Net Worth Milestone Today - $1.5M

Post by unclescrooge » Sat Sep 24, 2016 11:34 am

Ervin wrote: You are way too optimistic. In a bad market, the tenants will leave, or will stay for much reduced rents, their home and rental equities might become a fraction of what they are today, and Meg and her husband might lose their salaried jobs (if they have any). All they have liquid is whatever they have in cash or equivalents.

This is nothing new. This is history. A lot of real estate speculators went bankrupt like this when the housing market crashed.
With this logic only cash should be included in net worth, since anything can go to zero.

For that matter, even cash can go to zero, so only gold should be counted! :mrgreen:

Or producing farmland?

lomarica01
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Re: Net Worth Milestone Today - $1.5M

Post by lomarica01 » Sat Sep 24, 2016 12:15 pm

I hadn't really been anticipating this milestone, and it feels a little surreal to not feel very different. I spent some time mulling over how to celebrate or mark the occasion, but other than buying some nicer-than-usual steaks for grilling tonight I'm not sure there's anything much to be done. I find it sort of sad and also liberating to think ahead to the future net worth milestones we (hopefully) have to come and realize that they will get less meaningful, less exciting, and less impactful over time.

I am surprised at the responses to this post. I expected the discussion to focus on the excerpt above not the details of calculating the NW although I do agree the NW amount does seem a bit stretched.

So my comment to Meg is I agree with you, over time your net worth total does seem to be less meaningful but I do not think it is sad. It means having a large and increasing NW does not by itself bring happiness. Also as your NW increases you will most likely not even "celebrate" them. For example you might not even notice when you reach $1.75m or $2.0m.

best wishes
final comment, you might want to consider some of the other comments, for example the credit cards, pay them off NOW.

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walletless
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Re: Net Worth Milestone Today - $1.5M

Post by walletless » Sat Sep 24, 2016 12:31 pm

Congrats on the milestone, and bigger congrats for not getting ahead if yourself and feeling any different.

Like you, I value my home at cost when calculating my net worth as well. At 35, my NW us roughly $1.1 Million.

Curious what is your age & location? Are you planning to retire any time soon?

ERISA Stone
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Re: Net Worth Milestone Today - $1.5M

Post by ERISA Stone » Sat Sep 24, 2016 12:46 pm

Vehicles are included in net worth calculations because they are assets. They depreciate but they are still assets. I also include a very conservative number for household items in my net worth calculation because I know I could get good value if needed. Congrats Meg that's a mighty fine number. I wouldn't be too terribly worried about less excitement about future milestones. There is plenty to get excited anout!

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TxAg
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Re: Net Worth Milestone Today - $1.5M

Post by TxAg » Sat Sep 24, 2016 12:49 pm

I'm excited for yall. Congratulations, and good luck doubling it!

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Re: Net Worth Milestone Today - $1.5M

Post by soboggled » Sat Sep 24, 2016 1:24 pm

Congratulations. Now let me tell you about my kids' minor academic achievements. They are on the Honor Roll at PS1 Podunk Elementary School, the rough equivalent of being at $1.5M "net worth".

rick2427
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Re: Net Worth Milestone Today - $1.5M

Post by rick2427 » Sat Sep 24, 2016 1:25 pm

Meg:

Congratulations on achieving a significant financial milestone.
Wish you all the success!!

Best Wishes to you and your husband,
Rick

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Meg77
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Re: Net Worth Milestone Today - $1.5M

Post by Meg77 » Sat Sep 24, 2016 6:40 pm

Wow, I neglected to check in for 24 hours and came back to much more commentary than I expected! :happy I love a good debate, and I certainly open myself up here to opinions of all types, so no hard feelings. Here are some specific responses to some of the criticisms that popped up:
boglephreak wrote:i am curious why (1) you include cars' worth in net worth; and (2) why you subtract car loans from taxable, not your cars' net worth.
I include cars because we previously had no car loans and the auto values wer over $50K. Also because that's just been my habit for years since my car loan was a much bigger portion of my net worth. I depreciate them as appropriate over time every few months, but I admit that this is hardly necessary! And I agree that I should have deducted the car loan ($32K) from the value of the cars as you point out; the way my net worth statement is laid out has all notes receivable at the top, and that's just how I rattled it off when I posted this.
am wrote:How old are you and what is your income/bracket? In any case, you are in the top percentiles of net worth in this country. Congratulations!
I am in my early 30's and my husband is in his late 30's. We both make in the low $100k's in the banking field with a total gross income of around $300K depending on bonuses.
Focus333 wrote:Should we account house equity to be part of net worth?
I'm 32. I count it because we don't plan to live in this town home forever (we'll convert it to a rental one day most likely), and we put extra resources toward paying down the mortgage each month. But I understand why some people don't, especially if they don't ever plan to move.
Ervin wrote:Your main problem is that you are incredibly overextended. If anything happens to the economy, you could get into a catastrophic cash flow problem. $1.22M in loans? You must be paying tens of thousands a year just to service them. You are like the paper "millionaires" from before the previous two stock market crashes.

Stop drinking the Rich Dad Poor Dad Kool-Aid, and start paying off your loans. You can start celebrating when your loans are paid off.

I am not trying to be a party pooper here. Just imagine what would happen if the stock market crashed, because of our national debt, and your houses and stocks would be worth much-much less tomorrow, while your debt stayed the same.
...
There is zero real net worth, as long as the amount of cash on hand is significantly lower than the amount of loans pending. They are most likely playing roulette with their future. Unrealized gains are exactly that: unrealized. Same goes for the book value/cost of assets. Cash is king.
I understand many folks are extremely debt averse, and we have actually delevered significantly in the last year (check out my previous posts) and continue to do so; I'm about to sell my worst cash flowing rental and pay off another rental mortgage with the proceeds. However I don't understand the zero real net worth figure since we could sell everything we own today and have over 7 figures in the bank - even after realtor commissions and capital gains taxes. I value all RE at cost BTW; our actual net worth is probably closer to $1.8MM if I included the estimated current value of all RE. Yes, I'm paying about $29K in mortgage interest this year on my rentals. But my returns exceed that amount, and I anticipate they will continue to do so.

For the record as far as the "when the tide goes out we see who's naked" comments, I started investing in stocks in 2000 and in rental property in 2006. I kept buying both throughout the downturn and cash flowed all the major vacancies and maintenance issues I've encountered (which were more the result of my bad landlording skills than the local economy!). I've used leverage, but I have always kept personal fixed costs relatively low. My husband and I could service ALL personal and rental debt from our incomes even if all 10 rental units were vacant indefinitely.

Yes the stock market could crash, and real estate values could crash, and a Great Depression II scenario could make finding paying tenants very difficult, and the banking industry could collapse and we both lose our jobs and can't find other ones. All true. Unlikely to all happen at once (and if it does we will all have bigger problems!). Plus I have to invest in something, right?
VictoriaF wrote:Meg and her husband are highly-educated well-paid professionals. I think the real estate is inherited. Meg will correct me if I am wrong.
Actually I purchased the rentals one by one in my 20's, but I DID use what was left in my college fund (which was established by my grandparents) for the 20% down payments and closing costs. I had about a $250K head start financially, not including the college education I received which was also paid for.
"An investment in knowledge pays the best interest." - Benjamin Franklin

LarryAllen
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Re: Net Worth Milestone Today - $1.5M

Post by LarryAllen » Sat Sep 24, 2016 6:51 pm

Congrats! Keep up the good work!

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Meg77
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Re: Net Worth Milestone Today - $1.5M

Post by Meg77 » Sat Sep 24, 2016 6:57 pm

Mademoisellebogleheads wrote:
Without health, no amount of money is worth sacrificing good health.

Without gratitude, no amount of money is truly celebratory.
Too true! We have increased our health/fitness spending this year and don't regret it. I should really look into decreasing my wine spending though...for both my pocketbook and health!
Dottie57 wrote:How about a nice donation to a homeless shelter?
Very good idea. I read that a local foundation funded the construction of 50 tiny houses that are being handed over to homeless individuals in Dallas, and that strikes me as a promising project I'd like to learn more about.
Steve723 wrote:Congrats! It's thoughtful of you to consider sharing some of your wealth with others. I would determine perhaps an amount (or a range if you don't want to get too precise) and earmark it for giving. Then wait and put your radar up. Over the next few weeks, you will hear of some need that resonates with you and your husband and you will happily provide support to a person or organization in need.
This is helpful, thank you. I do like the idea of letting loose the grip I have on the wallet and being able to respond more impulsively to giving opportunities. It may be a less efficient way to give technically speaking, but I think it goes a long way to cultivating a spirit of gratitude and a love of giving which is arguably as important.
letsgobobby wrote:We increased our charitable giving in increments around the same time we hit various milestones. It wasn't a precise quid pro quo but it felt apropos nonetheless. Milestones are nice.
Very interesting. We may be due to raise the baseline amount we give each year. It would make another noteworthy milestone.
Mademoisellebogleheads wrote:I thought the meaning of the original post is more of a philosophical wondering, of reflecting, what does one do, or feel, to come upon a milestone, of financial success. It has happened to me a few times. You'd think that at a time like that you'd be jubilant. But in reality, at least for me, the feelings when facing that achievement can be quite complex, probing, bittersweet, anti-climatic, and unexpected. Sometimes we just need to talk to others about it.
Yes, this! I do appreciate the specific opinions on our net worth and strategy of course, but the main point of my post was the philosophical nature of milestones. I am very goal oriented and tend to feel more lost/anxious when I reach a goal than triumphant. It's good to be able to open up here about financial struggles and milestones, but I also think I put too much focus and energy toward financial achievements.
lomarica01 wrote:I hadn't really been anticipating this milestone, and it feels a little surreal to not feel very different. I spent some time mulling over how to celebrate or mark the occasion, but other than buying some nicer-than-usual steaks for grilling tonight I'm not sure there's anything much to be done. I find it sort of sad and also liberating to think ahead to the future net worth milestones we (hopefully) have to come and realize that they will get less meaningful, less exciting, and less impactful over time.

I am surprised at the responses to this post. I expected the discussion to focus on the excerpt above not the details of calculating the NW although I do agree the NW amount does seem a bit stretched.

So my comment to Meg is I agree with you, over time your net worth total does seem to be less meaningful but I do not think it is sad. It means having a large and increasing NW does not by itself bring happiness. Also as your NW increases you will most likely not even "celebrate" them. For example you might not even notice when you reach $1.75m or $2.0m.

best wishes
final comment, you might want to consider some of the other comments, for example the credit cards, pay them off NOW.
Yes I agree. The reality is that net worth and financial success are just numbers on a page; increases don't change my life and don't, in reality, matter. That's what I meant by it being sort of sad.

For the record we pay our cards in full automatically every month, but there is always a balance of a few thousand dollars or so, so I track it against cash.
walletless wrote:Congrats on the milestone, and bigger congrats for not getting ahead if yourself and feeling any different.

Like you, I value my home at cost when calculating my net worth as well. At 35, my NW us roughly $1.1 Million.

Curious what is your age & location? Are you planning to retire any time soon?
We are in our 30's in Dallas. We've thrown around the idea of early retirement (or quitting our careers and doing something else at least), but I'd want the house paid off and our net worth to exceed $2.5M to consider doing that as young as we are. We don't hate our jobs but don't love them either and don't envision slogging away in banking for decades. But we got a lot of education and worked hard to build our careers, so I want to get a solid 10-15 years out of our high-earning careers at least before abandoning them (I've been in banking a decade now, but DH went back after 6 years in the workforce for an MBA and has only been in banking 7 years).

Thanks all for your enlightening comments, as always!
"An investment in knowledge pays the best interest." - Benjamin Franklin

sc9182
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Re: Net Worth Milestone Today - $1.5M

Post by sc9182 » Sat Sep 24, 2016 7:00 pm

Congratulations! Glad you've put your head-start monies towards good use..
Meg77 wrote:" I am in my early 30's" .. "I started investing in stocks in 2000 .."
You sure been an early investor - started when you were sweet-16 ? :-)

KlangFool
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Re: Net Worth Milestone Today - $1.5M

Post by KlangFool » Sat Sep 24, 2016 7:11 pm

OP,

Congrats!!

KlangFool

DTSC
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Re: Net Worth Milestone Today - $1.5M

Post by DTSC » Sat Sep 24, 2016 7:21 pm

Congrats!

Your sense of gratitude is refreshing.

You might agree with the following article:
http://www.frugalwoods.com/2015/02/16/t ... ependence/

Also, with your young age, passive income stream (rental properties) and high net worth (no matter how you calculate it) you might well be ready for financial independence and early retirement.

Read Mr Money Moustache's blog if you haven't done so. You might not agree with his level of frugality, but it's a thought-provoking and refreshing point of view nonetheless

Good luck!

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