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2015 Annual Net Worth Update

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2015 Annual Net Worth Update

I hope everyone had a great Christmas. We drove down to the Bay Area to spend time with family and friends, and we had a really nice Christmas. It was a bit crazy with 3 kids in the house because someone was always crying. The kids had a lot of fun playing together, though. RB40Jr was sad to go home because he enjoyed playing with his cousins so much. It was really great to see old friends from college, too. Now it’s time to wrap up 2015 and get ready for the New Year!

I have been keeping track of our net worth since 2006, but I haven’t shared it much here on Retire by 40. While our net worth isn’t that big, it still feels a bit like showing off. For those of you who are just starting out, I hope you take this as an inspiration and use it as a motivation to work hard while you’re young. We started out with nothing and were able to build our net worth over the years. We never won the lottery or had a big windfall. We did it the old fashion way by saving and investing a little at a time. Even if you have some student loan debt, don’t get discouraged. Keep building your wealth every year and you’ll reach financial independence someday.

Anyway, 2015 actually was a very good year. Our net worth increased about 14% in 2015. That’s much better than I thought. Here is the spreadsheet.

2015 Annual Net Worth Update

Let’s break it down in detail.

Net Worth Update

Dividend Portfolio (+$10,668)

The stock market was pretty volatile in 2015. I reinvested our dividend income and purchased Philip Morris, Omega Healthcare, and Caterpillar. I didn’t add much extra cash in 2015, though. We’ll have to remedy that in 2016 and increase our dividend income.

Joe’s Retirement Portfolio (+$24,996)

My retirement portfolio is invested in various Vanguard index funds. I have REIT, bond funds, international funds, and US stock market funds. In 2015, I added $24,500 to my i401k. That’s basically where the $24,996 increase came from.

Mrs. RB40’s Retirement Portfolio (+$12,863)

Mrs. RB40 added about $18,000 to her 401k this year. Her accounts didn’t do as well and only increased about $13,000. A significant portion of this portfolio is invested in emerging markets (VWO) and those funds struggled in 2015.

Individual Bonds (+$156)

We started with $10,000 in 2013. I haven’t added more money here because we didn’t have much liquidity. Currently, the rate is pretty low at 1.64%.

Duplex (+$138,152)

I used 90% of Zillow’s Zestimate as the value on all our US properties. The duplex’s value increased from $522,000 to $656,856. That’s a huge increase. Portland’s real estate market has been great for property owners in 2015. Of course, it’s all paper value until we actually sell it. Currently, we have $195,531 left on the mortgage for this duplex investment.

The number in the spreadsheet is value minus mortgage ($656,856-$195,531 = $461,325)

Rental Condo (+$20,893)

I co-own this 1 bedroom condo with my brother. This unit is cash flow neutral so I don’t mention it much. The property finally increased in value this year. We picked it up in 2010, near the bottom of the real estate crash. This value of this condo increased from $162,000 to $201,384 in 2015. We owe $97,597 on this property.

Thailand Properties (+$15,000)

I’m a part owner of 2 condos in Chiang Mai, Thailand. My dad lives there and rents them out. I sent him $15,000 earlier this year to help purchase another property. That’s where the increase comes from. I’ll get the money back at some point. Or we can go live there for a few years when we fully retire.

Cash (-$36,040)

Our liquidity is very low at the moment. One of our tenants left the duplex and we did some expensive remodeling. That’s one of the reasons why we are low on cash. This will be our priority in 2016. We need to build our cash position back up to around $15,000.

*I just received a $7,000 check from the high tech anti-trust settlement! That will go a long way toward building our cash position back up.

P2P Lending (-$2,216)

I withdrew $3,000 in April 2015. The money was sitting around in the account because the automatic screening only picked up a few new investments. I’ll probably leave this alone in 2016.

Pension (+$1,048)

I haven’t checked on my pension since I left my job in 2012 and it grew a little bit. As far as I can gather, I’ll get $16,048 if I take the whole thing now. If I wait until 2039, I will get $356/month until I die.

RB40Jr’s 529 (+$4,364)

The stock market didn’t move very much in 2015. The increase is basically due to the new money we put in.

Primary Residence (+$53,419)

This is our 2 bedroom condo in Portland. The value increased from $288,000 to $336,012 this year. Actually, I think Zillow prices this condo a bit too low. I’m pretty sure we can get more for this property. We have a great view of Mt. Hood and Willamette River. These units don’t come up for sale very often. We owe $232,593 on this property.

Car (-$2,841)

The value of our 2010 Mazda5 plummeted a few days ago when a Californian driver backed into it. I honked and he kept backing up. What the heck! Anyway, the condition went from exceptional to average and reduced the value quite a bit. The other driver is clearly at fault so I should get a check from their insurance company at some point. I’m not sure if I’ll fix this dent or not. It’s pretty minor so I might just keep the money.

Art work (+$1,650)

We have a few pieces of art work. I’m sure we won’t get this much if we need to sell them. Mrs. RB40 would be really upset if we ever needed to sell as she is quite attached to them. This is just a place holder for now.

Net Worth (+$242,112 or 13.56%)

Our net worth did extremely well in a volatile year. The stock accounts were basically flat and increased about as much as we added. The big contribution to the increase came from our real estate holdings. The Portland real estate market has been on a tear for a couple of years now and our net worth reflects that. We might sell the 1 bedroom condo next year if the price is right and redeploy the money elsewhere. I’m not sure how long this real estate boom will last in Portland. I don’t see how our employment market can support this level of increase. The price always plummets whenever we have an economic hiccup.

Anyway, 2015 was a great year. Our net worth increased quite a bit more than expected. I was hoping for 8% and I didn’t think we were going to get that. The stock market has been in the doldrums and I was focusing on that when I updated our monthly cash flow. I only update our real estate value once a year so I didn’t realize how much it would affect our net worth.

2020

It took us 15 years to accumulate a million dollars, but just 5 years for the second million. The last 5 years were great due to the stock market, though. My goal is to hit 3 million dollars by 2020. Theoretically, it should be doable, but it really depends on how our investments perform over the next 5 years. 2020 might be a big correction year, who knows. That will be fine too, we still have 20+ years in our investment timeline so we’re not too worried. I’m pretty sure we’ll hit 3 million eventually. Mrs. RB40 plans to retire in 2020 so it would be nice if we get there before she quits her job.

How did you do in 2015? Is your local real estate market as hot as Portland? Actually, I think all the big cities on the West coast did better than Portland.

track your net worthSign up with Personal Capital to help keep track of your income and net worth. Personal Capital is geared for investors and have many great tools. See my review of Personal Capital and how they helped me reduce my investment fees.

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{ 75 comments… add one }

  • Ernie Zelinski December 28, 2015, 12:30 am

    W O W ! I am impressed. Congratulations.

    You say, “While our net worth isn’t that big, it still feels a bit like showing off. ”
    First, your net worth is pretty impressive and much higher than most couples who are the age of your wife and you. Second, insofar as feeling “a bit like showing off,” Walt Whitman quipped, “If you done it, it ain’t bragging.”

    You asked, “How did you do in 2015? Is your local real estate market as hot as Portland?:

    My net worth should have gone up by over $100,000 in 2015 given that I will had the best year ever for pretax income. Regarding real estate, I live in Edmonton, Alberta where the real estate market is starting to go down due to the economic downturn associated with low oil prices. In fact, my half-duplex in 2014 was still worth less than what I paid for it in 2007 at the height of real estate prices here. I often tell people, “If you want to make a lot of money in real estate and the stock market, just pay close attention to what I am doing — and do the complete opposite!

    • retirebyforty December 28, 2015, 10:18 am

      Thank you for your encouragement! Congratulation with your net worth gain as well. I hope to enjoy life as much as you do when I get older.
      Our primary residence is still worth a bit less than what we paid for in 2007. I think we’ll be over that hump next year. It all depends on the local economy. The low oil price will be tough to overcome. It might be a few years.

  • Michael @ Financially Alert December 28, 2015, 1:00 am

    Hey Joe, thanks for sharing! I agree with Ernie… it ain’t showing off if it’s true. Numbers don’t lie and you’ve done very well for yourself and your family. I used to have similar reservations, but I realized that readers love full transparency.

    BTW, that’s so cool you have some properties in Thailand!

    • retirebyforty December 28, 2015, 10:24 am

      I still feel like it’s showing off. 😕 I guess I was raised to be modest.

      • Mr. Tako @ Mr. Tako Escapes December 30, 2015, 1:03 pm

        It’s not bragging when you earn it the hard way Joe. Hard work is not especially apparent to the masses, but individuals in a similar situation to yourself know the hard work that went into it. I know the pennies here and there that added up to it.

        Congrats, and well done sir!

        My portfolio is dissimilar to yours in that I hold real estate as REITs. Interestingly enough, I saw large gains there as well (20-25% depending on the REIT)

        • retirebyforty December 31, 2015, 9:57 am

          Thank you! Great news about your REIT. VNQ (REIT index) ended up flat this year. We’ll probably shift our real estate investment to REIT eventually.

      • HeadedWest January 1, 2016, 5:05 pm

        I appreciate the sharing.. especially paired with the comment that it took you 15 years to get to a million. My wife and I aren’t there yet – but, I’ve been working for 12 years and she’s been at it for about 9. By the time I hit the 15 year mark we should definitely be worth 1M, unless the S&P crashes. So this is encouraging. Keep up the good work!

        • retirebyforty January 3, 2016, 7:48 am

          Good luck in 2016! Actually, it’d be great for you if there is a market crash. You’ll be able to pick up shares at a discount and accelerate your progress in the long term.

  • Stefanie OConnell December 28, 2015, 2:12 am

    I always appreciate net worth shares, inspires me. Mine has held steady around 50k this year because I’ve reinvested just about everything beyond my cost of living and some retirement contributions back into my business. It’s sometimes a challenge figuring out the best balance between investing in myself and myself 🙂

    • retirebyforty December 28, 2015, 10:25 am

      I think you’re doing really well. You’re young so you have a lot of time left. Investing in your business and yourself is the best way to spend money. Good luck on your journey.

  • Amy December 28, 2015, 4:43 am

    I want to know more about your Art Collection…did you write about it on this blog?

    • retirebyforty December 28, 2015, 10:27 am

      No… I don’t like mentioning it because it’s at home. I also wish we didn’t purchase them. We could have invested that money instead. I guess I was young and wanted to impress Mrs. RB40. I’d never buy them now.

  • Leigh December 28, 2015, 5:18 am

    Nice, you guys are doing great and have a lot of variety in your net worth. I have a hard time valuing my condo sometimes because I don’t trust the Zillow prices, so I’ve only been updating its value once a year or so. Real estate sure offers some diversification from the stock market sometimes. I think that we should be millionaires next year together (my boyfriend and I), but we don’t really track net worth together, so it’ll be a few more years until I get there, about nine years post college is my estimate at the moment.

    • retirebyforty December 28, 2015, 10:27 am

      I don’t really trust Zillow either. It’s just a baseline. You can look at the comparable price to get a more accurate value.
      Good luck next year!

  • Jo December 28, 2015, 6:12 am

    Congratulations!
    To make 13% in a year when the SP500 makes 0% its great.
    It shows the importance of having real estate alongside stocks & bonds for a balanced well diversified portfolio.
    It seems that you are on the right track for 2020 retirement.
    P.S. I think that with $2M you can retire today in Thailand…
    Have a good 2016!

    • retirebyforty December 28, 2015, 10:29 am

      Yes, I didn’t think it would improve that much. Real estate makes a big difference because it’s leveraged gain.
      I think we could retire in Thailand too. The only issue is RB40Jr. I want him to go to school in the U.S.

  • Paul December 28, 2015, 6:12 am

    This is very inspiring. Well done.

    I’m curious though, to which asset class would you attribute most of your success? E.g., is it your dividend portfolio or the index trackers or the real estate? I ask because I’m doing a review of my own hotchpotch of assets and can’t really decide how to position myself for the future. I’m reading that returns from the stock market and bonds, for example, are expected to be much lower going forward. And property may also be in debt-fuelled bubble territory.

    Apologies if you’ve already covered this. I haven’t read all your posts yet.

    Thanks.

    • retirebyforty December 28, 2015, 10:31 am

      I would pick the index funds in our retirement portfolios. They don’t perform as well as our other investments, but we don’t have to worry about them. All we need to do is concentrate and saving and contributing the max every year. It’s easy and that helped build it up over the years.
      I’m not sure about future investments. I’ll probably stick with our current mixture. I’d probably add some municipal bonds as the rate rises.

  • Sam @ Financial Samurai December 28, 2015, 6:27 am

    Dang! Your Portland duplex is up 40% in one year? That is sweet! Why do you think everybody talks about San Francisco real estate Portland real estate is going so much faster? Zillow has San Francisco up about 17% to 20%, but I use up to percent in my model to be more conservative given there is a 5% selling cost. What do you think Portland real estate will do next year? Should I be investing as well? If I can just get 20 a year from Portland real estate I’ll be very happy!

    Sam

    • Investment Hunting December 28, 2015, 10:13 am

      Lot’s of Bay Are money has been relocating to Portland the past 24-months. This is helping to market there grow at insane rates.

      • retirebyforty December 28, 2015, 10:46 am

        Really? I didn’t know about that. I guess it’s a good way to diversify their portfolio. Now if we could only build up our economy to support the insane pricing…

    • retirebyforty December 28, 2015, 10:34 am

      The 40% rise is the leveraged value. The property value went up about 25%. Not sure if I can trust Zillow on this property. The surrounding properties are nicer and they are driving up the comparable.
      You are doing really well in the Bay Area. I don’t think you can compare Portland to SF. SF has the economy to support the price increase. I don’t think Portland does. It’s just a popular city right now. Once we get a recession, the property value will plummet (I think…) Portland always lag the Bay Area about a year.

      • Sam @ Financial Samurai December 28, 2015, 12:29 pm

        A 25% increase in value is still pretty huge Joe! In San Francisco they are talking about maybe a 15% to 18% increase, but as you said we have all the employees here such as Google, Facebook, Apple, Pinterest, Uber, sales force, all the financial tech companies, Biotech, and the large financial institutions. It is really kind of crazy here and getting really crowded.

        In addition to Nike, what are the large an up-and-coming employers in the Portland area? If there is a big migration of companies I very well might use some of my California money to buy Portland real estate!

        Thanks

        • retirebyforty December 28, 2015, 9:31 pm

          I don’t think there are a lot of big companies out here. Intel, Nike, Adidas, Columbia sportswear, and a few healthcare companies. The other big employers are the fed and state. I’m not sure if there are many up and coming employers. I need to ask around. We have a lot of small companies here.

  • Eff You Money December 28, 2015, 6:51 am

    Condos in Thailand sound very cool to have!

    How did you get involved in that? I assume your father was there first?

    • retirebyforty December 28, 2015, 10:35 am

      Yes, we have families in Thailand and my dad lives there now. He purchased a condo when he first moved there and continue to purchase more when there is a buying opportunity.

  • Pennypincher December 28, 2015, 7:30 am

    Joe, Impressive and helpful to all of your fans out there. I see a retirement in your future w/the Thailand properties-nice!
    As for the driver backing into you-not surprised w/all the distracted driving these days. They probably had the radio blasting and didn’t hear you honking. Classic. Take your time, shop around for repair costs. Body shops can pull your parts needed from a scrap yard now, same color. They search the country for it, UPS the parts to the shop, big savings. Body shops also use “after market” parts made in other countries. Replacing parts is far cheaper than labor costs (painting, etc.) for body work.
    It’s worth looking into, especially if you take that Mazda to 200K miles. Now that’s the RB40 way!

    • retirebyforty December 28, 2015, 10:37 am

      Thank you for the encouragement. I’ll call around today and bring it in for an estimate. Actually, I want the repair cost to be high so I can collect a bigger check… I’m incline to keep the money and not repair the dent. We only have street parking at the duplex. When we move there, I’m sure we’ll get more bump and bruises.

  • Nicoleandmaggie December 28, 2015, 7:42 am

    Wow! Our networth isn’t that high yet. Maybe in five years it will be.

    • retirebyforty December 28, 2015, 10:38 am

      Good luck! You’re saving a lot so you should get there soon. It all depends on the investment, of course.

  • freebird December 28, 2015, 7:45 am

    2015 will be a down year for me, mainly due to overweighting energy and mining shares– and not being a homeowner. Plus my employer’s stock price didn’t do well. Maybe we’re different but in the zip code where I live, I was looking to buy a house all year but couldn’t find the right location, and I don’t think our prices moved by much this year. According to Zillow my brother’s house in a more exclusive neighborhood rose by 25% over the past two years. So maybe like with stocks, individual home prices can move quite differently than the average?

    • retirebyforty December 28, 2015, 10:39 am

      The energy shares did a number on our dividend portfolio as well. I’m sure they will come back at some point. It might take a few years, but gas won’t be cheap forever. The housing inventory is very low in Portland, as I understand. Our duplex was a bit below the market so I think it just caught up to the comparable.

  • Mike H. December 28, 2015, 7:48 am

    Excellent breakdown. This kind of detail really allows people to see the possibilities. It’s interesting that a quarter of your net worth is in real estate investments – when are you planning on liquidating those assets? Basically, I’m wondering whether that $600,000ish would be better invested in your dividend portfolio.

    Omega Healthcare scared me off this year. Looking at their financials, the dividend yield is sexy, but analysts seem to think that it’s in a bit of jeopardy. If OHI cuts its dividend, the value of the stock would almost surely drop by half.

    • retirebyforty December 28, 2015, 10:41 am

      Ideally, I’d like to keep the real estate investment for a few more years to capture the gain. The stock market is at the end of the bull run so I don’t think it’s a good time to put a big lump sum in. We’ll probably sell them before RB40Jr goes to college. That will free us to travel more and move around.

  • James December 28, 2015, 8:09 am

    Amazing job by you both!

    On the RE valuations, I would be very skeptical about “Zestimates”.

    Looking at my own RE holdings, the Zestimates are materially above true market value.

    If you have time, Redfin.com, as does Zillow and many other residential listing sites, does a nice job of tracking historical sales geographically.

    This way, you can actually do a pretty precise appraisal of your property with comps in the area. Only you know your property and it’s relative characteristics in the immediate marketplace.

    When running my net worth #s I like to model conservative and not aggressive #s based on Zestimates.

    This way you get a nice surprise if/when you do sell.

    Anyway, keep up the good work!

    • retirebyforty December 28, 2015, 10:42 am

      Yes, I’ve very skeptical about the Zestimates. It’s a bit high. That’s why I used 90%. Should I use 80%?
      I will check Redfin. We’ll also have to pay plenty of fees and taxes when we sell.
      Thanks for the encouragement.

      • James December 28, 2015, 1:19 pm

        I don’t think it’s accurate to take a flat % of the Zestimate or even the Redfin Estimate.

        I would recommend looking at the Redfin estimate as they detail the comps in the immediate area that they are basing their estimate on. Of course, some of these may be bad comps but you can make that call and see which recent sales apply to your property.

        • Gopi December 28, 2015, 3:21 pm

          Actually Redfin’s estimate seems to be at least 10% higher than Zillow’s.
          I think Zillow’s estimates are conservative and we should use these numbers.

        • retirebyforty December 28, 2015, 9:39 pm

          I don’t think it’s accurate either. I just checked Redfin and the duplex is a bit lower on there. The house across the street was sold recently for 650k. It was listed for 800k, but didn’t sell. That house needed a ton of work, though.

          • James December 29, 2015, 12:01 pm

            Yes. Again, this will vary from market to market. And my original point was to NOT benchmark to these algorithm-based numbers that don’t “think” about comparables as owners/investors view them.

            Educate yourself on your asset because real estate is unique and by definition different from lot to lot.

  • Mike H. December 28, 2015, 8:20 am

    I ran the numbers on your pension. Basically, your decision is whether to withdraw it now and invest it (I’m assuming in a dividend basket yielding, let’s say, 3%), or take the monthly payments when you’re age 65 (65, right? Age 41/42 now?).

    For most people, I’d recommend the guaranteed monthly income without hesitation. If you take the withdrawal now, it will be difficult – I’d say almost impossible – to achieve a dividend yield from that investment which exceeds $4,272/year (356*12) by 2039. In an aggressive investment with a high dividend yield, you might cross that line in your 80s. In a more conservative investment with my assumed 3% yield, it would take until your 90s.

    There’s also the matter of survivor options that the pension offers. Is that $356 after a 50% or 100% survivor reduction, or is that the ‘straight life’ amount, unreduced but also not continuing after your death? Key considerations:
    1) do you expect your wife to outlive you, and if so, by approximately how long,
    2) are your primary financial strategies set up to continue for your surviving spouse (I’m guessing yes), and
    3) is one of your goals to leave a sizable inheritance to RB40Jr?

    This might sound like I am 100% on the “take the pension” side, but that’s not necessarily the case for an investor such as yourself (i.e., somebody who clearly is preparing for a solid financial future and is a proven saver). If you took the withdrawal now and invested it, sure your dividend yield wouldn’t approach the monthly payment you’d receive from the pension, but the principal would continue to grow. I suspect that you’re not terribly interested in touching the principal for your dividend portfolio, so that could be another $125k-$150k in your estate to RB40Jr.

    On the one hand, you have greater passive income throughout your life. On the other hand, there’s less passive income but greater assets later in life, plus inheritance. Tough choice!

    • retirebyforty December 28, 2015, 10:45 am

      I think it’s straight life with no survivor benefit. I plan to take the pension because it’s another diversification. Thanks for running the number, though. I need to check if we need to pay tax on this $16k. If we do, then it’s a much easier decision to keep it in the pension.

      • Mike H. December 28, 2015, 11:07 am

        A direct rollover into an IRA should avoid the taxes. But be careful – there are some time limitations on how quickly the money needs to be inside another qualified account.

        I’m also pretty sure that Oregon taxes pension income. Don’t forget to take that into account.

        If you take the pension – which I usually consider the best choice – don’t forget to prioritize your long-term health. You maximize a pension by living as long as humanly possible.

  • Amy K December 28, 2015, 12:48 pm

    Regarding your cash situation: if you haven’t already you should be getting a check from the High-Tech Employee Antitrust Settlement very soon. My husband got his over the weekend. He calculated that the average is $5,000, but it depends on your pay over the years in question.

    Definitely a nice Christmas surprise for us!

    • retirebyforty December 28, 2015, 9:32 pm

      I just got it today! $7,000 isn’t bad at all. 🙂

  • Justin December 28, 2015, 1:37 pm

    Wow, Joe, congrats! Cracking the $2 million mark is a big accomplishment.

    I was wondering how you cranked out $200k+ in net worth gains then I saw the real estate investments. Great year in your market I suppose!

    Best of luck in 2016 continuing on the same path, and I expect by 2020 you’ll have another million tacked on to the Net Worth spreadsheet. 🙂

    • retirebyforty December 28, 2015, 9:40 pm

      It was a good year to be a property owner in Portland. We had some painful moments ($15k property tax..), but it worked out.
      Thanks! I don’t think we’ll be able to repeat this next year. It feels like everything will slow down quite a bit. I’d be happy with 8%.

  • Tawcan December 28, 2015, 4:43 pm

    Wow impressive net worth growth. Over $2M is a huge accomplishment. It’s great to hear that it took your 15 years to get the first million and only 5 for the next million. Gives me hope. 🙂

    • retirebyforty December 28, 2015, 9:41 pm

      Good luck! The 2nd million was a lot easier. The bull market helped a lot.

  • Midwestern Landlord December 28, 2015, 6:07 pm

    Nice job on your progress. Have you considered that you already have enough funds to retire now with no other outside job income from yourself or wife? With $1,200,000 to work with based upon the 4% rule, that’s $48,000 / year.Then another $400/ mo from the rental. Total is around $4,400 / Mo. Nothing wrong with making more money but it looks like you both could hang it up if that was your goal.

    I became financially independent at the end of 2013 after about 15 years in the workforce through rental real estate. While there is very modest property appreciation in my area, the cash flow is quite good. There is some work associated with managing rentals, but far less than a full time job. Thankfully this vehicle was available to me because in my scenario I would have never been able to achieve early FI by just investing in traditional methods (401K, stocks, etc).

    • retirebyforty December 28, 2015, 9:45 pm

      I like blogging part time. It gives me something to do. I’m not quite ready to stop working completely at this point. Mrs. RB40 likes her job, but sometime she wants to call it quit too. We are a bit conservative so we want to build up our passive income and net worth a bit more.
      Our goal is to avoid drawing down until we’re 60. I think we can be very well setup if Mrs. RB40 works for 5 more years.
      I’m sure the cash flow is much better in other parts of the country. The Portland market is too expensive to make any money on rent unless you’ve own the place for a while.

  • Moderately Frugal December 28, 2015, 7:42 pm

    Congratulations on breaking the $2M mark. That is quite an accomplishment. You must feel very good about your decision to leave the corporate life.

    We are running a bit parallel even though our path is quite different. We just broke the $2M threshold this year but due to recent stock market activity we are just shy of it now.

    But where you and your wife are doing a phenomenal job of continuing to plow money into your retirement accounts my departure from the life of being a corporate drone annihilated our cash flow. I have taken on some part-time work, but there is not much disposable income left to contribute to retirement. I keep trying to tell myself that it is okay to have exited the contribution stage and allow compounding to do the heavy lifting for us, but it is hard to stop the internal mantra of “save, save, save.”.

    Have a great new year. Thanks for sharing…your story is quite inspiring.

    • retirebyforty December 28, 2015, 9:47 pm

      Thanks! I certainly feel validated. It’s pretty amazing we’ve been able to increase our net worth since I quit working.
      We’re preparing ourselves mentally to stop saving for retirement when Mrs. RB40 leaves her job in 2020. I think we’ll be much more comfortable with the idea then.
      Have a great 2016!

  • John December 28, 2015, 9:38 pm

    Great job Joe. Thanks for sharing your net worth and encouraging others. Can you do a detailed post on buying the rental properties including selection criteria used.

    • retirebyforty December 29, 2015, 10:26 am

      Actually, I’m not a very good real estate investor. I think we’ve just been relatively lucky because the whole market went up.
      The main thing for us is to buy during the down years and keep accumulating. The reason I choose our duplex is because it was the only affordable property in the area we wanted to live in…

  • A Frugal Family's Journey December 28, 2015, 9:40 pm

    Way to go! You are rocking it with your Net Worth!! You certainly have that chart continuously headed in the right direction. And way to create a Net Worth that is well diverse into several different asset classes.

    Best wishes and continued success in the coming 2016 year! AFFJ

    • retirebyforty December 29, 2015, 10:27 am

      Thanks! Hopefully, we can keep it up for 5 more years. It really depends on how the economy does over that period. After that, we don’t mind if the chart just goes side way. Best wishes to you as well.

  • Alan December 29, 2015, 8:01 am

    A more reasonable long-term appreciation estimate for real estate would be the inflation rate, or at most 1% more than that. Certainly add in the cost of any improvements made, and selling real estate involves a cost of at least 3 to 6%. Its certainly possible to make more or less depending on if you buy and sell a good or bad year, but long-term, the inflation rate is the best estimate.

    • retirebyforty December 29, 2015, 10:30 am

      Tell that to the Bay Area people. 🙂
      I hope Portland will join Seattle and the Bay Area in the “unusual” category, but I doubt it. Portland doesn’t have the economy to support the explosive growth. Inflation rate sounds about right. The gain is leveraged, though. So a 5% gain in price is actually more like 10-15% gain in net worth gain.

  • BeSmartRich December 29, 2015, 11:00 am

    Wow, you are doing amazingly well. Great job reaching $2M this year. 13% increase is truly a great achievement at the level.

    Cheers!

    BeSmartRich

  • Race 2 Retirement December 29, 2015, 2:46 pm

    Congrats on hitting $2M mark. That’s more than what all of people will dream their whole life. You must have saved a lot in such a short time span of 15 Yrs: even if you were getting $100K and saved 100%, you can achieve a figure of $1.5M, not counting taxes 🙂 Keeping racing towards $3M. R2R

  • Preston December 29, 2015, 3:51 pm

    Congrats on your growth and the motivation I need for 2016! We’re still reaching for the $1M level. Awesome to see you property values increase. We don’t have that much gain in IL! Keep up the good work.

  • Dong Liu December 30, 2015, 6:02 am

    Hey Joe, great job! congratulations! have you considered to put some math around health care cost after you and your wife fully retired (2020?) it will be a big cost factor and I believe the Obamacare will help. the overall 13% increase includes the active income from your wife, I recommend you should deduct that (or have a second column ) since after 2020, it will be gone and the net asset value appreciation will be much less. health care cost after fully retirement will be a good topic to cover in your blog.

    again, a great job in blogging!

    Dong

    • retirebyforty December 30, 2015, 10:47 am

      Thanks! I will look at health care cost more carefully when it’s close to 2020. The cost is increasing rapidly so it’s difficult to estimate at this time.

  • Agig December 30, 2015, 10:19 am

    I am very precise about making sure I max out my 401k and take advantage of maximum company match also (6%). I typically front load the first 3 or 4 months with high contribution, but then make sure my final months are getting the 6% contribution. I like having bigger take home checks later in the year. So I was surprised and disappointed today that my company said we would get paid on the 31st (Thursday New Year’s eve) instead of Friday Jan 1. The reason according to them is the bank holiday, and employees can’t get $ until Monday if paid Friday the 1st. So I was maxed out on contributions based on 26 pay periods, and suddenly this surprise 27th pay period. (they let us know on Dec 22, too late to do anything planning wise) No contributions come out and voila, I lose a few hundred in match. Anyone else have this situation occur. I know only a few hundred bucks , but it’s the old “principle of the thing”. ?. Had they announced this sooner I could have adjusted. Oh well. At least I know next year will only have 25 pay periods.

    • retirebyforty December 30, 2015, 10:54 am

      Oh man, that sucks! I like your front loading idea. It’s great if you can afford to contribute a bigger percentage in the first few months. It forces you to live more modestly.
      Good luck in 2016.

  • ap999 December 30, 2015, 2:23 pm

    First time poster, but been lurking your your articles for some time now. Congrats on the positive progress, and very well thought out and organized to the penny on your net worth! So far I have not broken down my net worth to the level you have. I do use personal capital and mint.com to get an idea of my spending, saving and investing. But these programs do lack some areas, like it doesn’t do a good job of whats going on in my lendingclub account and other crowdfunding ventures. Also other investment accounts and real estate holdings. However this was one my slowest years in the past 5 years or so. As my net worth grows the slower it becomes to reach progress especially when you have a flat stock market for the year. Year over year I was up about 11% in growth due to purely just new money from the day job getting invested, stock portfolios appear to be down or up slightly, I am mostly heavy in index funds tied to the US total market. I wish I had been a little more aggressive on funding my p2p investments over the last 2 years, it started off as some sort of experiments to see how things went. They’ve done quite well, and return wise they beat my index funds this year by a large margin, but in the grand scheme of things since p2p is a tiny portion of my net worth the gains were actually pretty tiny when calculating total net worth increase. My goal next year is start building up my p2p investments. The only other mild stone i did get over this year is my net worth is now over 500k by the age of 30. Retiring by 40 for me seems quite a possibility. I am sure we will all have a great 2016!

    • retirebyforty December 31, 2015, 9:59 am

      Good luck with your journey! I like P2P on paper, but the money isn’t very liquid. I guess you can sell on the secondary market, but I haven’t tried that yet. I also wonder how P2P lending will do when the economy heads south. There will be a lot more defaults when a recession hits.

      • ap999 December 31, 2015, 2:47 pm

        I agree, default levels would certainly decrease in any situation we have were jobs were lost at a high pace. I have used the secondary market to sell notes before, usually notes that enter grace period or late. I have been able to unload bad notes that were unlikely to get current for a smaller loss. I have tested selling current loans, they do sell, but it can take time. Discounting them a little bit helps getting them resold on the secondary market of course, all in all in can take a week or so. Once the loan is sold, then the money first transfer to your lendingclub account which can take 2-3 days and then of course you can transfer it back to your checking account. I only invest money that i dont need for a long time.

  • Tracy @ Financial Nirvana Mama December 30, 2015, 7:50 pm

    Wow!! I am very excited for you and your family. It is so motivating to see your goals achieved and your networth grow by that much year to year. Thanks for writing this post because it made me get off my butt to review my goals and progress.

    • Adam and Jane December 31, 2015, 7:19 am

      Hi Tracy,

      Did you get a chance to look into municipal bonds in Canada?

      Adam

    • retirebyforty December 31, 2015, 10:00 am

      Thanks! New Year is the perfect time to review your goals. Good luck with your journey.

  • Frugal Pediatrician December 31, 2015, 6:12 am

    Joe. Haven’t commented for a while. I am impressed. We are a few years younger and about matched in net worth, but you guys did it with a smaller income with longer working life. We just started making real money about 6 years ago after finally finishing residency/training, and started saving/buying properties. It just goes to show how important saving is. I was inspired by your idea to do the 1031 exchange in your blog, and eventually turn your duplex into your primary home. We live in a big place now which is a good investment but probably bigger than we need for retirement. I finished a 1031 exchange on one of my rentals I bought at the bottom of the market, and locked in the gains into a nicer 2 BA/2BD condo in downtown San Diego. I’m renting it out for now so I don’t have to pay capital gains taxes on it, and eventually will use it as our retirement home. Its nice near the ballpark. It brings our retirement housing cost down quite a bit, so we could retire comfortable on 40,000 a year. Thanks for the inspiration!

    • retirebyforty December 31, 2015, 10:02 am

      Glad to hear from you! Wow, you did very very well in just 6 years. That’s amazing!
      Great job buying at the bottom of the market. I wished we could have picked up more properties, but funding was tough during the down years. San Diego is too busy for me. 🙂

  • Jim @ Route To Retire January 6, 2016, 6:03 am

    Congratulations on hitting the $2M mark – that’s fantastic!! Although our net worth isn’t where yours is (yet, hopefully!!), this is really inspirational. From everything I’ve read on your blog over time, I tend to liken myself to you and your path so this post is a real motivator!

    Good luck on hitting the $3M mark!!

    — Jim

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