Previously on Retire By 40, I wrote about my Exit Strategy and Financial Goals and now I’ll conduct a little progress review.
1 Million dollars combined net worth (not counting principle residence)
- Grade: A-. We are doing pretty well this year due to the stock market recovery and additional contribution through out the year.
additional 100k invested in yield-producing portfolio to help with expenses
- Grade: Incomplete. Not started yet. I’ll need to open this account in 2011 and move some investments over.
additional 50k seed money for when opportunity comes knocking.
- Grade: Incomplete. Just started in 2010 and only have about 7k in this account currently.
Even cash flow so we do not have to draw on net worth unless there is a big emergency.
- Grade: C-. Work in progress. We’ll need to increase rental income, yield income, and side income. Holding a garage sale will help, but that’s not a long term solution. How to yard sale in the winter? Nah, let’s wait until summer.
More detail on investment properties:
|Debts||estimated value||mortgage||equity||monthly contribution to net worth|
|50% rental condo||171k||103k||34k||-30|
|rental condo in Thailand||60k||0||60k||rental income goes to mom & dad cost of living|
I didn’t list primary residence or auto above because I don’t think they should be included in the net worth. Our primary residence is not worth that much anyway because of the real estate market crash, but at least we are not under water.
The Backup plan
When I leave my corporate job, our biggest income stream will dry up, but if all goes according to plan we should be all right. However, if Michelle is laid off or something else happens, we would need a fallback plan. I really don’t think this would happen because her job is very secure, she is great at her job, and everybody loves her. In any case, the backup plan is to cut expense drastically. Our biggest expense is our primary residence and we can cut this out by selling the place and moving back to rental home #1. That mortgage will be paid off in 2017. The move would cut our monthly expenses by a large amount and will give us a good head start on reducing expenses.
2nd backup plan. We can move to Thailand and our expense would be just a fraction of our current expense. I also qualify for public health care in Thailand and can go to private health care for serious issues. Michelle does not like either of the backup options so she will just have to not get fired. 😉
See any problems? Most of our net worth are illiquid. I’m not really sure if I should be concerned about this. I’m also trying to move more money toward real estate in the next few years so the overall investment will become less and less liquid. Another experiment I’m running in the next two days is that I’m not going to promote this post and see what the results look like.
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.