There are plenty of milestones to pass on the long journey towards the goal of Financial Independence. I see milestone posts on FIRE forums all the time. Having a zero net worth is a big one for many, since it seems nearly everyone starts below zero thanks to the skyrocketing price of a college education.
After that, $100,000 is a pretty big milestone. It’s a signal that the hard work is paying off, even if the jobs aren’t what you dreamed of. And it’s around this point that you should begin to feel a bit of the compounding effect. There are other steps along the way, and round numbers of a quarter million or half million definitely won’t go unnoticed. Some people like to celebrate when their portfolio could cover portions of their spending, such as their groceries or their housing or their bike fund (possibly in ascending order) for life. If it helps your motivation, there’s plenty of ways to break your Big Goal™ into smaller chunks.
Personally, I’ve never really cared much about these intermediate milestones. Despite the rise of the free financial services like Mint or Personal Capital trying to entice you into tracking your portfolio balance in real-time, I’ve never considered opening an account. I still track my numbers the old fashioned way, manually on a spreadsheet. And in an effort to not obsess over my balances, that spreadsheet only gets updated once a quarter so I never actually know exactly when I hit the round numbers.
At the end of 2016, we had around $730,000. Our goal of quitting our jobs and traveling the world was getting closer. Somewhat unsurprisingly, it’s hard to figure out what it will cost to travel the world full time. There aren’t a lot of people doing it. Many of those are taking a gap year and are doing their best to squeeze in as many adventures as possible (which is expensive) before heading back to work. Many others don’t document costs at all. I spent many hours scouring travel blogs and forums trying to piece together spending amounts and costs of living in desirable destinations worldwide. Consequently, one of the reasons that this blog exists is that I want to document our cost of living for anyone else that may want to follow in our footsteps.
Eventually, I settled on a prospective budget of $36,000/yr. To generate that, we’d need a minimum invested amount of $900,000. But of course, most everyone was in agreement that the stock market was nearing the end of its long bull run. I decided to use (what I hoped would be) a conservative 0% return. If returns were larger than that, it would be our buffer to help with the impending bear market (and there’s always an impending bear market). If they were lower, then the plan would have to change, but we still needed a plan. Plugging that 0% return into my spreadsheet and adding our savings amounts, we would be very close to that $900,000 goal after two years. Working two more years became the concrete goal. And it was nice to have that to replace the abstract dream.
With our goal set below $1,000,000 and a bull market that was long in the tooth, I never actually expected to be a millionaire. At least, not while I was still working. Luckily for us, no one can actually predict market movements, and the 2017 stock market happened. The US stock markets jumped by over 21%! The international stock markets rose more than 27%! It was a banner year that no one saw coming. We were only a few thousand dollars short of that elusive second comma at the end of 2017. As such, I made an exception to my rule to update my tracking spreadsheets only once a quarter, as this is a round number that I knew wanted to see. After watching the daily market results for the first week of January 2018, I knew I was there. $1,000,000!! I had it planned out in my mind. Katie and I would jump around and hug. I’d call my parents, swear them to secrecy, and reveal the big news. I’d yell out to my online forum friends for congratulations. I’d have a permanent smile plastered onto my face.
Somewhat surprisingly, none of that happened. I updated my spreadsheet with the new balances of our accounts. We saw the elusive second comma appear. And our reaction was akin to “Yeah, that’s nice. What should we have for breakfast?” Instead of being a Big Fucking Deal, it barely felt different than before. Our weekend was normal. We cooked at home, hit the farmers market, watched some TV, and mostly stayed indoors to avoid the cold and rain. I wrote this at work on a Monday morning. Nothing really changed. Even the luster of writing that second comma in $1,000,000 has already worn off. But how can that be? Isn’t this a major achievement?
I certainly wanted to be excited. I wanted to celebrate. It’s just that once the moment was there, the desire was not. After thinking about it for awhile, it seems the answer is that there is only one milestone that really mattered. Anything less than that is a just another step towards the ultimate goal. Since we were really close to the real goal already, having a portfolio worth a round number, even a number as round as $1,000,000, didn’t really change anything. We were sticking to our plan and still had another year to work. So it didn’t allow us to quit our jobs. It didn’t allow us to sell everything, get on a plane, and start our new life. It didn’t actually do anything. I think that’s the root of the disconnect. It was hard for me to celebrate something that didn’t actually mean anything. Don’t get me wrong, I was happy to have a million dollars. It’s better than not having a million dollars. But with the finish line in sight, I was saving the celebration for when it mattered.
Now the second time I became a millionaire, I was much more excited about it. It was now nearing the end of 2018, and we decided to set the date to be April 19, 2019. While my date was unofficial, Katie actually made hers official by giving her boss 6 months notice! And then, about 10 months after becoming a member of the two comma club for the first time, we experienced our first bear market in nearly a decade. From October 2018 to the Christmas Eve Massacre (excuse the hyperbole, but it seems there’s a law that you have to be as dramatic as possible when discussing stock market drops, at least when on TV or in print), the S&P 500 dropped 20%. Despite our contributions throughout the year and holding a sizeable portion of our portfolio in bonds, our net worth dipped to one comma on 12/24/2018. Womp Womp!
The market had been falling in large chunks basically since the day that Katie gave her advance notice to quit. Whoops! For a while it seemed like the market lost another 2-3% every single day. Of course it wasn’t that bad, but it was a steep 20% drop in under three months. While we certainly weren’t panicking, we did have casual discussions about what would happen if this trend continued for the next 4 months, mainly concluding that it’s possible our April date may need to be delayed.
Then a (day after) Christmas Miracle happened! Being in the spirit, an angel got its wings from the opening bell ring. The stock market had a frenzied buying session ending at a nearly 5% gain. And just like that, we gained back our second comma and were once again millionaires. This one really did feel good. I guess the old saying really is true, that you don’t know what you’ve got until it’s gone.