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When 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, especially with my grandpa, 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.
Lessons from Monopoly
Some of the concepts that I learned as a child from Monopoly stuck with me over the years. I learned quickly that cash was king and that proper asset selection was critical. I also became slightly obsessed with becoming a millionaire. If I had a million dollars, I could theoretically buy anything that I wanted.
The Stock Market
I have always been ultra conscious of my spending habits, even as a kid. The monthly bank statements were always exciting to receive to see my meager dollars grow. Monopoly was a great tool to help me get started about thinking about money from a young age. Now that I’m older, I wish I had learned about the stock market at a young age as well. 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. Through much reading and research stocks, I began to learn more about the stock market. I really had no idea what I was doing though.
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.
Being 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.
Too Much Risk
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. That’s because I knew when to stop. While I made money, I knew that the emotions experienced during options trading would not be good for my health in the long run. My temperament was not suited for the extreme highs and lows that options trading is.
Starting Off On The Right Foot
When I graduated from college at 22, I was incredibly fortunate not to have any debt. I still needed to find a job immediately, though. This was before Obamacare, so I needed one in order to have healthcare insurance.
When I first entered the workforce, I knew I would contribute to a 401k and a Roth IRA. I had learned through my research how important compounding interest was. I 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. That puts me 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 to 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 an unfulfilling job over the couple of years. But I’m hoping the money I make will 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. I had also considered buying out their equity and continue working at my job.
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?
Traveling The World
The 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.
Staying Close to Home
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.
Beach House or Farmhouse?
My 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 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?