I Have Hit a Personal Finance Milestone!

This month I have hit a personal finance blog milestone. As you know the focus of this blog is to track my journey to financial freedom. I have defined this goal as a net worth of $2 million plus the value of my primary residence. Since I currently don’t own my primary residence I have to roughly estimate my future primary residence will be worth around $250,000. I am happy to announce I have achieved a net worth that is roughly 10% of my $2,250,000 goal; my net worth has recently surpassed $225,000!

This is a big moment for me as it has taken over 4 years of steady focus in regular saving and cost cutting to reach this point. I always thought the first 10% of my goal would be the hardest because I had no base to build off of and most of my net worth accumulation would have to come from savings and cost cutting.

I wonder where the next 4 years will take me. I hope I will be able to reach a net worth of $750,000 before then. I wonder if I will be able to maintain my annual savings rates or will I be to find other ways to improve my net worth.

Now that I have a good foundation I hope the growth of my net worth will accelerate. Each year more and more of my annual growth will be come from investment returns and less from savings and cost cutting.

This is a concern for me. I don’t know if I consider myself a good investor espically given the recent discovery I reported that my total return for 2005 was a measily $2,094. I need to spend more time and effort improving my investment returns.

In the past, I have been able to make steady progress by saving more to offset poor investment returns. As investment returns comprise more and more of my annual net worth growth, no amount of additional savings will be able to offset years with poor investment returns.

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Comments (18)

DATE: 1:15 PM
Too cool!

DATE: 4:03 PM
GOOD JOB!!!.... Just hope compound interest works in your favor

DATE: 10:03 PM
Congrats on reaching this milestone!

DATE: 10:39 PM
Woot!! Congrats!! Now save more haha

DATE: 11:53 PM
$2M,Wow! Congratulations. I think the psychological and emotional impact of achieving your first 10% is amazing.My wife and I are approximately 13.75% of where we need to be. And it feels wonderful seeing the numbers grow - I can't wait until we reach 20%!!One point of caution, compounded growth does take a long time -- even with perfect investment decisions.You'll still need to save and be frugal for quite a while before the investment income is big enough to make a huge difference.How long do you estimate it will take for you to double your net worth to $450k?I have the impression you save quite a bit each year. Is $40k/year a reasonable estimate on your go forward plans? I know you'll need to save up for a house and probably to furnish it.Just by saving alone you'll be able to double your networth within six years. If you add investment and asset appreciation, maybe five or even four years if things go spectacularly well. Also compounding of additional savings will keep things growing.I have a feeling that the point in time you reach that $450k mark is when you'll start seeing your investments and asset appreciation make a very meaningful contribution towards your networth growth. Of course this assumes your income stays constant. Such a fertile mind as yours will certainly be hard at work increasing it.You might want to post a spreadsheet showing your planned annual savings along with some conservative investment returns - you could even show several rates - say three 3% 7% and 10% and then show how each of them, in addition to annual savings will help you reach your goal. It would be a very interesting benchmark to check your progress against. Then again, since I'm new to your blog and blogging already, you might have already done this.BTW, I've put a link on my blog to yours. My blog is at http://makingourway.blogspot.com.Thanks so much for the stimulating discussion and entertainment. Discussing finance in the abstract can be interesting, but you learn so much more when you explore the mechanics and details of the actual calculations and thought processes.Regards,n

DATE: 12:43 AM
yay! you should celebrate this special occasion by spending some money!

DATE: 12:56 AM
Do not be too happy a person's net value can fall and rise at any time. For instance if you are too heavily invested in the property market or share market when it falls, your net value falls as well. If you hold too much CASH and the US dollar depreciates, like it has been doing you would reach your 2 million dollar net worth easily and it you would not make you financially well off. Other than that 2 million dollars in Europe would be considered middle class as most people in Europe are worth US$ 2 million American dollars. The best bet is to start a business to achieve financial security if your income does not allow you to meet that target. You could try the rental of property to achieve your 2 million target. But it would take a long time (however it is extremely safe). The easiset way to achieve the 2 million target is to marry someone rich of course.Anonymous Millionaire

DATE: 12:58 AM
Nice job! Congrats!

DATE: 8:21 AM
Anonymous Millionaire,I had a professor in college who told me the same thing - unfortuntely my long time girlfriend isn't rich so I guess I have to acquire my wealth the old fashioned way ;-).

DATE: 10:46 AM
Congratulations!!I still remember my 100K day, and my 250K day... and my 500K day, and so on.Those are wonderfull days to open a special bottle of wine.I will open one in your honor this friday :) (or is that just an excuse?)Money And Investing

DATE: 11:12 AM
2 million congratulations! 10% is a great start. I have been working on the investment return part of the equation for several years now. It is particularly important since we have 3 different types of investment going; retirement (long term), college education for our kids (medium term) and other (short term). I have greatly improved our investment returns by doing 3 things: reading Business Week almost every week, reading the “Where to invest your money in 200x) in Smart Money and Fortune at the end of each year, exploring the strong buy (S&P) and 5 star (Morning Star) stock and mutual fund ratings. Some great things that have resulted from this are 2004 bought CME at $84, now $4232005 bought BR at $48, now $902005 bought OSK at $38, now $562004 bought VGENX at $28.52 now at $59.Also, using the fund ratings I have been able to make sure I have low cost high performing mutual funds in our 401k / IRAs. I choose the best funds in each category among the 4 different accounts we have. The allocation is not well diversified in each account but is good over all the accounts. From what I read I have changed the waiting of the sectors from year to year. Each year since 2003 I have had at least a 20% return in all retirement accounts.I had one very notable bad but UTSI in 2004 in one of my IRAs. I just sold it at a 70% loss. Overall the good has really outweighed the bad. I hope you find some of this useful.

DATE: 12:12 PM
Congratulations! I enjoy reading your blog. Keep it up and hope we can all go through the financial freedom journey.

DATE: 9:28 AM

DATE: 2:06 PM
congratulations! it feels great, doesn't it, to reach milestones? Now onto $300k!!

DATE: 9:08 PM
You really need a little more balance in life. Signed- A concerned citizen

DATE: 4:43 PM
I really agree with the previous anonymous person. You can read on the web some inspiring material on living a simpler life, notably:Overcoming ConsumerismYou seem to be worrying about money all the time, and to be too concerned if one of your investments drops. I'd recommend that you ease up a bit, read some good material (hundreds of blogs around, just google for it, I can recommend Success in Life) if you want to achieve a little more balance in your life.Other than that, I wish you the best in achieving your goals!

DATE: 6:49 PM
Anonymous People,I appreciate you stressing the need for balance in my life. Keep in mind this is a blog about my financial goals and not the other aspects of my life.

DATE: 7:59 PM
First congrats on hitting 10%. That is really cool.Second, I am shocked by the anon comments. You are obviously someone driven to plan for the future and live within your means in the present. Thats not exactly the definition of consumerism.My suggestion is to stop wearing pants. Swing free and enjoy the world. Think of how your perspective will change and it will bring a new balance to your life. Just don't mention that the money you used to spend on pants brought you up to 10.001% of your goal.Again, congrats!

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About 2millionblog.com

A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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