Who Wants to be a Millionaire?

millionaireWhen I was a little kid, I always wanted to be a millionaire.  I think it probably had to do with the board game Monopoly.  I loved playing that game as a child.  I still remember playing with my grandfather, Pop Pop.  He would always shake up the dice and say “Pop Pop needs a new pair of shoes.”  That would always make me smile.

 

As a child, I was very competitive.  I could not stand to lose at anything, let alone my favorite game Monopoly.  I’m sure this made me a difficult child to play games with.  Fortunately, I have toned down my competitiveness as I have gotten older.  

 

Unfortunately, some of the concepts that I learned as a child from Monopoly stuck with me, such as, whoever has enough money available will have their choice of the best things available to buy.  This concept warped my head a little bit.  As a child I thought if I had a million dollars, I could theoretically buy anything that I wanted.  Thus, from an early age, achieving millionaire status has always been a goal of mine.  

 

I have always been ultra conscious of my spending habits and looked forward to receiving my bank statements as a child to see my meager dollars grow.  Now that I’m older, I wish I had learned about the stock market at a younger age.  I think I would have been really impressed with the concept of buying a company and getting paid dividends.

 

When I was in college, the stock market peaked my interest.  I began to learn more about the concept outside of class and started researching stocks.  I had no idea what I was doing though.  

 

Options Trading

I started to learn about technical analysis trading.  At the time, my parents took a class taught by a guy that claimed that he could return 25% per month on his money, if not higher, through options trading.  While I was unable to take the class, I figured I could teach myself by reading the material and going to my parents with any questions.  I was able to quickly absorb the material, and it seemed so easy to me. 

 

millionaireBeing the risky person that I was at the time, I began to trade on my own.  I felt like I was on a roller coaster of emotions.  When a bet was going right, I was on cloud nine.  I use the word “bet” purposefully because like I said before, I had no business trading experience and was new to all of this.  Then of course, when a trade was going poorly, I was in the dumps.  

 

I have to say, options trading was one of the dumber things I have done in life.  I acted like an expert when I only had a basic understanding of the material.  I definitely do not recommend doing this without guidance and practice from those that really understand the option market.  But for those with the stomach of the ups and downs of the options market, it can be very lucrative.

 

Fortunately for me, I came out ahead because I knew when to stop when it came to options.  While I made money when it came to options, I knew that the emotions experienced during options trading were not going to be good for my health in the long run.  My temperament was not suited for the extreme highs and lows that options trading is.

 

When I graduated from college at 22, I was incredibly fortunate not to have any debt, but I also needed to find a job immediately.  This was before Obamacare, so my parents were also insistent that I get a job so that I had healthcare insurance.

 

When I first entered the workforce, I knew that I needed to contribute to my 401k and my Roth IRA.  I had learned through my research how important compounding interest was and did everything in my power to contribute as much as I could to both accounts while also diligently paying off my mortgage.

 

Over the years, I look back and am thankful that I was able to start early.  This has allowed me the ability to be in the position that I am today.  Having paid off our mortgage, my wife and I have dramatically cut our expenses and are able to live off of 30% of our take-home pay.  The remaining 70% is allocated towards our investments or cash.  

 

Becoming a Millionaire

Based on our current trajectory, I believe that we will be millionaires in four years or slightly before I reach 40.  When I say that I will be a millionaire, I don’t mean my net worth will make me a millionaire.  I mean that the my investment portfolio will have one million dollars in it.  Since I plan to take whatever equity I have in my house and buy a new home in the future, I don’t include this amount since it’s not a liquid asset.

 

Now that I am getting closer and closer to my childhood goal of becoming a millionaire, I don’t feel any different.  I can’t imagine that my lifestyle is going to change that much, but it has begun to make me think.  Part of me wonders if I have missed out since I have worked a job the past couple of years that has not been very fulfilling.  But I theorize that the money I make will potentially more than make up for it when I leave the workforce.

 

In four years, theoretically with the our expenses at less than $25,000 a year, we should be able to be able to live off of the dividends and interest that our investments generate each year.  While that’s a big if, I believe based on a 60/40 split between bonds and stocks that this will be achievable.

 

While the goal has always been to become a millionaire, honestly until I started to write this article, I had never thought about dropping out of the workforce at 40 years old.  I hadn’t given it much thought, until now.

 

In a previous article, I had discussed buying a home with my parents.  In recent discussion with them, we agreed that by 2020, it was time for the home to be sold to return their equity.  Before now, I thought about saving up to by a new home in the DC area or even buying out their equity and continue working my job and staying in the current home.  

 

This discovery of having a million dollars in four years, along with needing to sell my place, could result in something potentially dramatic that I had never previously thought about.  What if we moved from the DC area?

 

A photo by Rachel Davis. unsplash.com/photos/tn2rBnvIl9IThe original idea came up when I read about a couple that decided to forgo on buying a home.  Instead, they saved up their money to become financially comfortable and now travel around the world.  They stay in cheap places around the world and are able to have experiences some only dream about.  

 

While all that sounds incredible, I don’t know how reasonable it is to live all around the world with school-aged children.  I’m sure we would be able to homeschool them, but I would love the ability to coach my children’s little league teams. For those that have done lived overseas with kiddos, I welcome the feedback.  

 

With only a million dollars and retired, I don’t honestly think that I would want to stay living in the DC area.  While I love being close to family and friends, the cost of living in the DC area would just be too much.  

 

I would love to be able to take the equity that I have in my home and by another home outright in an area with a cheaper cost of living.  This would potentially further reduce my expenses and might stretch my dollars even more.  

 

millionaire_1My wife and I have talked about what the future would look like.  She would love to live on some land and raise some animals and get fresh eggs everyday.  I, on the other hand, would love to live on a beach and enjoy the ocean breeze.  At some point I’m sure we’ll come up with a nice compromise like a farmhouse on a lake.  But, I have no idea if those will still be our dreams in a few years, or if we would be able to find something we love in our price range.  Either way, maybe I can crowdsource my readers for a nice compromise.

 

One of my biggest fears from jumping out of the rat race of working full-time is not knowing what I would do with my time.  Oh sure, the first couple of weeks would be exciting and fun.  But then what?  I need to come up with a solid game plan that would provide fulfillment and a creative outlet on a daily basis.

 

My current idea would be to write full-time on personal finance while also provide financial consulting services to those looking to optimize and improve their situation.  But once again, four years is a long way to go.  In four years from now, I could be totally burned out from writing, or I might have a new passion that I would like to explore.  Maybe in four years I will have found a fulfilling job in Corporate America that makes me want to jump up out of bed every morning.  I doubt it, but I could be wrong.

 

Was millionaire ever your goal?  If you were to drop out of the rat race, what would you do to occupy your time?  Would you still look for ways to work, or would you sit by a beach and relax?

Mustard Seed Money

Welcome to the website. A mustard seed is a very small seed but astonishingly grows very large over time. My hope is that through your financial journey that your small investment in time, money and faith will grow beyond anything that you could ever imagine.

20 Comments

  1. As a fellow DC-area person, I feel your pain on cost of living. My wife and I wandered into an open house in our area recently only to discover that the relatively unassuming house was on the market for $1.1 million. I sometimes think about how much we could do in a lower cost of living area, but as I am still firmly in the accumulation phase, we haven’t gotten too specific about it.
    Matt @ Optimize Your Life recently posted…Your Emergency FundMy Profile

  2. It’s great that you are asking the question and thinking through a potential early retirement now. It’s not something we had really even given a second thought to until the last couple of years. Millionaire status is on the horizon for us as well, but we will be in our mid to late 40s before it happens. We plan to travel more (in the form of camping) and buy fixer uppers to work on. We always have a ton of projects, so I’m not worried about keeping busy! 🙂

  3. Congratulations on your path to becoming a millionaire.

    As for options, it’s better to be on the ‘right’ side and be the person selling an options contract. Best case you keep the premium, dividend plus the shares, worst case you keep the premium (maybe keep the dividend) and sell the shares at perhaps a lower profit. That’s my opinion anyway.

  4. Sounds like you really have your house in order, getting to a million in the next few years. That timing should work out well if you chose to relocate, although, like you said, plans may always change.

    I didn’t see anything about kids, curious if they are in your plans at all?
    The Green Swan recently posted…The Frugal MillionaireMy Profile

    • I have one son and we are currently funding his 529 plan since it’s tax deductible.

      I think he should be in a pretty good spot in four years in terms of the amount in his 529 but you raise a good point if it’s not.

  5. Sounds like you have a plan with a firm goal on mind. There was a time when we were younger that a million was all you’d ever need almost regardless of your spending control. It’s hard to remove that anchored perception of what that number means now that it might be just enough.
    Full Time Finance recently posted…Retirement CalculatorsMy Profile

  6. I think you still have plenty of time to figure it all out, and now is the best time to cultivate some interests you have that you might now have gotten around to. It’s a good problem to have. BTW I’m with both you and your wife. I need/want to be by a body of water, but I also entertained the thought of growing my own food and having a couple small farm animals like goats and chickens.

  7. I really liked this article, especially because I recognised myself in most of the things you write about. My option trading was forex when I was younger; you can imagine how much I have now from that money… 🙂
    I wish you all the bests to reach your target as soon as possible, meanwhile keep on reporting your progress and thoughts!

    • I always like to hear that I’m not the only one that made a couple of mistakes 🙂 Glad to hear we have similar stories and I will definitely keep the updates coming!!!

  8. I certainly want to be a millionaire! Love Monopoly. Funny how those games of our youth can coach you a little into a path to relative riches. I hope you land on a good plan for the future. It’s a struggle – as tempting as early retirement is, grass is always greener.

  9. Great question here MSM! You’re future sounds cool and looking forward to following your progress 🙂

    I do love Monopoly and have over the past few years enjoyed playing cash flow (by Kiyosaki) as well.. I’m definitely keen on being a multi-millionaire although for more than the sake of having a whole pile of cash.. I’ve got some big visions on travel, volunteering and being able to live life on my terms with friends and family..

    Looking forward to following you towards your journey too! 🙂

    • Thanks Jef for sharing. I’ll have to checkout Cash Flow.

      I’m like you, there are so many things in life that I want to do in life. Sitting in meetings during a powerpoint is not one of them.

      I look forward to reading more of your financial journey and all the things that you want to accomplish in life.

      Thanks for sharing!!!

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