Stock markets probably putting a dent into portfolios right now.

Maybe there should be a new thread titled "2 months ago I was a millionaire"

Fire up that cig boat Chris Chris!

SoupNazi2001 said:

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I can relate to your comments about not wanting to advance into management. Our managers travel a lot more and have a lot of additional responsibilities and don't get compensated for it. At some point when you make good money, your time starts becoming more valuable and I don't want to travel a lot and be away from the family even for additional money.

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This is where I am at. Have reached a point in my career where I make pretty comfortable money, and could likely be on the millionaire track faster than my current trajectory has me, but I value my time more. I can always make another dollar, but I can never make an extra minute to my life. and for that one, i don't have a spreadsheet showing me how many i have left.

There is a lot of talk about almost being there or on the right tack but there are so many things that can stop you from getting there. Keep doing what you are doing but do it harder! You can always dail back saving once you hit a million but you can't go back in time to save more.

TDLR: I'm about to turn 40 and my net worth is around $2.5 million

I'm about to turn 40 so it's an interesting time to look at life and how I got to where I am.

Family History (Gene Lottery): Grew up outside of Texas. My grandfather got his PhD in Economics from Stanford and was CEO of the largest state bank in a smaller state in the 70's. He largely paid for A&M and took me and my cousins on several memorable trips growing up (Detroit car museums, London/Paris, Hawaii, etc). I got his smarts so I'm thankful for that. My grandmother died at 76 and he remarried 35 years his junior and gave all his money to wife #2. That always bothered me. I want my kids to have a nice inheritance.

He taught me some good things. When he was 7-8 during the Great Depression, a government employee came to town and bought cattle to slaughter on the spot (I guess they wanted to cut supply to drive inflation/prices and wanted the farmers to get some sales). He begged for a cow at a gas station from the guy and got one. He said that's what his family lived on all winter. His best friend growing up died from an ear infection (pre-penicillin). All that to say, modern life is pretty good. He made good money in the stock market off of Wal-Mart, Exxon, etc. and shared what he bought and sold in the 80's.

My dad was a big believer in residential real estate. Never did the stock market. He died in his early 60's and left my mom with 9 paid for houses. For all those looking at real estate, it can certainly work. It did for my dad. Growing up I went to so many showings, repair man meet ups and evictions. I vowed to never do real estate. Now that my mom had them, she wants to sell them all and just collect checks from a bond/dividend fund. I think people mis-estimate their (or their heirs) desire to deal with the rental houses when they are 75+ years old. Some people do it. Some people find the right property manager (we couldn't). They tied my parents down. They could never travel on the 1st of the month (collecting rent).

Met my wife at A&M. Married as we graduated. I finished at A&M in December 2001. Degree in finance. September 11th had just happened so I took what I could get which was a credit analyst job for $35k a year. Between 2001 and 2006, pay rose to $70k per year. We put money into Roth IRA's and 401k. Over those 5 years, built up $35k in retirement. Cars were paid for and we chipped away at about $30k in student loans we had (but rates were <2% so not huge urgency).

Got the opportunity to go to a Top-5 business school and took it. Finished in 2008 with $137k in debt. Pay jumped to $150k a year. Wife making $35k a year in non-profit. Bought a house in 2008 (in hindsight should have waited as priced fell another 20%). Our net worth was negative until about 2011.

We started having kids, wife stayed home, pay rose at the corporate gig to $250k a year. I figured out I was never going to climb the corporate ladder and get out of middle management so needed to find another way. 20 years at $250k a year, I knew I could end up well off but it just seemed so boring and predictable. I decided I wanted double income so I started a side business in 2010 in an unrelated space. Side gig eclipsed corporate income five years later and I dropped the corporate gig. As the side business grew and the kids came, I gave up marathon running and triathlon's to make time for the side gig and kids.

I've started 4 businesses. Two worked well, two were not big losers but didn't really make me anything. Having businesses has allowed for SEP IRA contributions backdoored into Roth.

Roth IRA: $500k
Brokerage: $125k
Private investments into friends' ventures: $75k (one real estate, one start up, one Private Equity)
Equity in House: $200k (value less debt)
Value of business I'm selling in 2019: $900k (according to boutique ibanker in the space who is selling)
Value of business I'm keeping: $600k

Lessons Learned

• In finance we ran all these models about how important it was to start saving for retirement early. We made it a priority in our 20's but ultimately it's a small portion of what we have today. Most of our retirement came from 2008 and onward. 2000 - 2008 was a cyclical bear. 2009-today well I'm glad I was investing.
• We have Cable, Netflix, Pandora Premium, iPhone X's, Lawn Service, House Cleaner and we eat out a lot. We have chosen not to sweat the small stuff too much but focus on the income side.
• We have always tithed 10% to our church
• I subscribe to Dave Ramsey in paying off all our personal debt (except house at 3.125%), paying cash for cars, etc.
• Debt can be good / almost required in some businesses. I borrowed $750,000 to buy equipment within the business. It worked out.
• Our income ranges between $450 and $600 annually. I give my wife $100k every year and tell her to make it last the year. We spent $92k in 2018. Rest went to taxes and investments.
• We live in a house <1X our annual income. It was 3X our annual income when we bought it. We have 11 years left on a 15 year note at 3.125%
• My wife was never a great income producer but she is a great mom, manages the house well and is hyper involved at their school. Our kids go to public school. There's 6-8 teachers per grade and my wife makes sure our kids get a good teacher each year. We supplement with robotics camps and computer camps. Best I can tell, they are not missing out by not being in private school.
• Stewardship is big for us (over penny pinching). If we are not using something we sell it or donate it. If I own it, I take care of it and I don't like taking care of a lot of things. Most of our friends have upgraded to that million dollar house but we look at it with dread. It's just more to take care of. We have friends with lakehouses, farm land and beach houses. It takes a lot of work to take care of that stuff. I love the sharing economy. I'd much rather go with my friends (and be super generous about buying gas and food and bringing up a new boat toy that I leave) or rent for a week than own it.
• We do travel but airline and hotel is covered by points. The businesses run about 1 million a year on cards buying inventory so we have more than enough points for travel.
• Thankfully, kids and wife are healthy and happy.
• I don't really have any regrets. Low points in life have been losing both my father and FIL in early 60's (both premature) and son needing skull surgery at 8 weeks old.
• Income * Age / 10 says I should be at $2 million. I was behind this rule for almost my entire career except for the last few years.

I feel I will have reached FIRE at $3.5 million liquid with house paid off. Kids are 5 and 8 so I figure I have at least 10 years of work left. I'd like to be done at 50 and that seems very doable. The biggest concern (like all) is health insurance from 50 to 65. I debate if I want to risk off and sell all the businesses and coast in corporate for the next 10 years or if I want to risk on and start another business. We'll see.

Can we move this back to the original discussion?

No more thread derail.

Comeby! said:

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Nice post. Appreciate the insight. If you can answer one question: did you get any help from your grandparents/parents financially for your business/investments? I am sure I will be mentally debating this as we've done well and am currently raising two kids, heading to college in a few short years. Not sure if I should 'invest' in them when they are working professionals and front them some equity or make them earn it themselves, much like I did. I didn't come from money but my parents did pay my Aggie Education.

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Grandparents paid for all but $20k of A&M. Parents gave me $20k to help with MBA school living expenses. Parents loaned us our downpayment on our house (which we paid back over the course of 2-3 years).

The businesses were either bootstrapped or we saved up the money to put in. Parents didn't help. At one point, we had enough cash saved to pay off our mortgage. My wife and I decided to a big chunk of it into a business instead.

If my kids want to start a business, I don't think I will give them the money. I'd rather help them if things are going well but they get short on working capital or growth capital or want help/advice. Smalll businesses are almost always short on capital. I'd rather be the back stop to save a good thing than be part of the first money on a bad idea.