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My Secret Financial Goal
By Meg | January 4, 2008
I have lots of financial goals. Fund a comfortable retirement, build a 6 month reserve fund, push my credit score over 800, blah blah blah. Those are all abstract goals, though. I can’t really make my goals concrete without coming up with completely arbitrary targets.
- I don’t even know what a comfortable retirement will look like for me, or what one might cost.
- I have a confession: I actually don’t feel like I need to have 6 months of expenses stashed in cash (which is probably why I tend to take a vacation or go on a shopping spree every time that account creeps above $5,000).
- My credit score is pretty good already (all three are at or above 740) and can really only improve with time.
Still, every month I take dutiful steps towards those variable goals. I shove a chunk of my income into my EF, into my Roth 401k. I max my Roth IRA every January. (In case you were wondering about the absence of one other popular PF goal, I bought my own home last year) I know one can never really save too much, and the idea that I can have multi-millions by retirement simply by following these steps for 40 years is compelling…
But the truth is that I’m blessed to be relatively secure financially. Barring a total recession/depression (which my simple savings habits can’t supersede anyway), I should remain financially secure as long as I allow what I already have accumulated to compound. True, I don’t yet have kids, and other circumstances are sure to emerge over my lifetime that will require lots of financial resources. But as long as I continue to save (and especially if I continue to be blessed by the generosity of my parents and grandparents), then I should largely avoid all but the most unforseen financial struggles.
In light of these facts, I would probably be best served to think and plan less about my finances and throw my effort and attention towards other matters. But I’m veritably preoccupied with personal finance (obviously). There’s always another goal to achieve, and I’m lucky enough to have the kind of head start that should make me capable of just about anything I decide to do.
So what keeps me motivated to save, invest, and boost my income? Why do I spend my days reading and writing about finance when all I really need to do is passively add to my index funds for the next 40 years? My secret financial goal: I want to be a millionaire by the time I’m 30.
I want to have a net worth–including all real estate but not including cars and other personal assets–of one million dollars. I don’t want to publish my exact age or DOB, but let’s just say I have around half a decade to accomplish this.
Becoming a millionaire at a relatively young age is truly a measure of success in my eyes, as well as a serious challenge. I can’t just save a certain percentage of my income in index funds and hit the mark effortlessly, as one can with distant retirement goals. To become a millionaire in just a few short years will require serious investing and hard work. I will have to take risks and even get a bit lucky.
I’ve already begun my journey. I close on my first rental property in a couple of weeks, and I’ve created a plan that just might get me there. Wish me luck!
More from Meg at The World of Wealth
Topics: Miscellaneous |
January 4th, 2008 at 11:43 am
Psst…it’s no longer secret
Best of luck to you. Shoot for the stars!
January 4th, 2008 at 11:51 am
You are absolutely right. Unless you have a high six figure income, saving your way to a million by your thirties is highly unlikely. The compound interest math doesn’t work.
What worked for us was starting with a home and mutual funds and then learning how to invest in individual stocks, and going for it. It’s been a wild ride. We made it to a million by our late thirties.
January 4th, 2008 at 12:02 pm
Meg,
That’s cool about the rental property.
Good luck!
January 4th, 2008 at 12:09 pm
[...] Original post by AllFinancialMatters [...]
January 4th, 2008 at 1:01 pm
It’s good that you actually “come out” about your secret goal! This way, you will feel more accountable, right? I hope it helps, because I will be so happy for you if you make it! Good job so far and good luck.
January 4th, 2008 at 1:19 pm
Did you know you can invest in real estate inside your IRA or Solo 401(k) just as you can traditional assets? (Tax deferred appreciation)
Millennium Trust Company (http://www.mtrustcompany.com/services/ira/real.asp) located in Oak Brook, IL, custodies real estate in self directed IRAs and solo 401(k)s. They can educate you on the process. Try contacting Sandra Reese at sreese@mtrustcompany.com for more info.
January 4th, 2008 at 1:26 pm
Meg,
Just read your comments on the Welfare Poster posting from the other day. I was curious to learn how you became so deeply knowledgeable about the living conditions of Americans at the poverty line, so I decided to read more of what you wrote. Here’s a sampling:
“I am lucky to have parents and grandparents who over-saved for my education. There is money left in my college fund to help accelerate my wealth journey. However I do not directly control these funds nor rely on them as part of my financial plan.”
“But as long as I continue to save (and especially if I continue to be blessed by the generosity of my parents and grandparents), then I should largely avoid all but the most unforseen financial struggles. . . I’m lucky enough to have the kind of head start that should make me capable of just about anything I decide to do.”
I guess you could say that I’m still curious.
Don’t get me wrong–I don’t begrudge you your family’s wealth, nor suggest that you don’t work hard to earn success of your own, which you clearly do. But it’s more than a little sickening for me to read as someone from your background lectures others on how good the poor in America have it, and how lazy their households are.
You are wise and thankful enough to recognize that your good fortune is not entirely your own doing. Do you also recognize that the same is often true for the misfortune of others?
January 4th, 2008 at 2:35 pm
Meg - the best way to succeed at a goal is to share it with others. You’ve done that, now good luck!
January 4th, 2008 at 4:00 pm
Did you know you can invest in real estate inside your IRA or Solo 401(k) just as you can traditional assets? (Tax deferred appreciation)
I read an IRA book which, as I recall, said there is a catch: to put real estate in an IRA, the property must be bought outright from the IRA.
In other words, if you want to buy a $500K property, your IRa must have $500K with which to buy the property, and you can’t finance the property with a smaller down payment and a mortgage.
(I love reading PF books; I find a perverse satisfaction in proving how PF-educated I am and how useless a lot of this information is to the poor.)
January 4th, 2008 at 4:20 pm
Pete - I became knowledgeable on the living conditions of the “American poor” because I have a great interest in the subject and have read a lot about the issue (though I’m certainly no expert). I never claimed to have firsthand knowledge of the welfare system.
And not that it matters, but I will point out that both of my parents and all four of my grandparents grew up in poverty. Not at “the poverty line” as it’s defined today, but literally getting clothes from the church and struggling to get fed from time to time. When I was little, in fact, we lived in “the ghetto” in an urban city in AL. Even today I know many “poor” people personally; I even have a few extended family members who earn “less than a living wage.”
My family’s current relative wealth has nothing to do with the statistics that show that “the poor” in America today have lifestyles and standards of living that vastly exceed what anyone would define as poor anywhere else in the world. And that if the typical “poor” person actually worked 40 hours a week (as opposed to around 20) that they would no longer be legally “poor.”
January 4th, 2008 at 6:55 pm
Government “poverty” statistics are not very useful in measuring actual poverty.
By government standards, I am not poor; a childless adult working full time for minimum wage is above the poverty line.
On the other hand, a retiree owning a home with no mortgage, and living on a small Social Security check can be defined as poor, although the retiree might have a $500K net worth and has more money to spend after housing than I do.
January 4th, 2008 at 7:12 pm
I think they don’t consider you a millionaire unless you have 1 million excluding your primary residence. Read it somewhere. Was curious if I qualify. One has to live somewhere, so I have problems including primary residence. I am way over 30, though. I think unless you are really lucky or have very high salary, it’s tough to make a million by the age of 30, even including primary residence.
In terms of being poor, how about that: I came to the US 30 years ago from the Soviet Union with exactly $128. My parents were in their 40s and couldn’t speak English - try learning English and finding a job in the US when you are over 40. We survived. Didn’t go hungry either as many of the poor in other countries do.
Meg is right about comparing poor in America with poor in other countries. My PhD-in-engineering cousin in St Petersburg, Russia, for example, earns $500 a month working two jobs - for one government lab during the week and for another lab in the evenings and on weekends. Sure, she owns a small one bedroom apartment that she shares with her mother, but everything else is expensive. Food there is a little cheaper than in the US, but not that much cheaper. Maybe about half for some items, about the same for others. But she doesn’t consider herself poor either. She is way better off than a typical retiree there, who is getting less than $100 a month in pension - barely enough to cover living expenses for 10 days. Those who could afford saving some money while they worked lost most of their savings in a couple of “currency reforms” in the 90s. And this is more than some poor people in other countries have.
January 4th, 2008 at 8:08 pm
[...] Meg of AllFinancialMatters.com has lofty goals and a plan to be a millionaire by the time she’s 30. But you can tell that she doesn’t deprive herself, either: I have a confession: I actually don’t feel like I need to have 6 months of expenses stashed in cash (which is probably why I tend to take a vacation or go on a shopping spree every time that account creeps above $5,000). [...]
January 4th, 2008 at 8:57 pm
Good luck with that! Rental property sounds like a step in the right direction–as long as you know how to use them.
January 4th, 2008 at 9:53 pm
As a heterosexual male, all this stuff about the “poor” not really being poor drives me nuts.
Like it or not, humans are social, hierarchical animals.
IN GENERAL - there are always exceptions - financial resources are used for signaling in dating and mate selection.
It is no accident that low-income men have low marriage rates; women IN GENERAL have financial standards below which men are considered “umnarriageable”.
An American woman would scoff at a suitor who sought to impress her with the claim that by world standards he is actually quite rich.
A “poor” woman is much more likely than a “poor” man to find a mate, and it is no solace to a “poor” man to hear that he is really rich.
January 7th, 2008 at 8:24 am
Dear Minimum Wage -
You might be interested in a book by Diane Kennedy titled The Insider’s Guide to Tax-Free Real Estate: Retire Rich Using Your IRA. It is not true that one must buy property outright and it must be at least half a mil. There are nonrecourse loans. One can buy with someone else. It could be a vacant land or a condo rather than a mansion. If you are interested in finding out more contact sreese@mtrustcompany.com.
April 14th, 2008 at 9:40 am
i graduated from college at 22 with $15,000 in debt. ten years later at 32 my net worth was $1.1 million. it is totally doable. good luck!