年终总结 (One more Millionaire)

Our net worth reached 1,000,000 at year’s end. So I wanted to share this excitement. I have been a regular viewer of this forum and always enjoy any financial postings. So I want to do my share.
Some people may laugh at this because it’s nothing. I know many people here are multi-millionaires. And if you have double-income in IT for a while, you are bound to become one. But I’m posting it anyway because is a significant milestone. Even if you are multi-millionaire, your first million is probably the most exciting.
To be exact, we are not Millionaires. A millionaire is defined as net worth minus primary residence is equal to or more than one million. The numbers I post here include our primary home.
Profile
1. Work history: Hu*****and: 10 years, wife: about 6 years (on and off with modest salary).
2. Family: two young kids
3. Age: both of us are 40.

Net worth:
Assets:
1. House: 200k (original purchase value. It’s a decent house in a city where houses are cheap)
2. Investment (stock & bonds): 600k
3. Cash (some of them will be in real estate soon): 200k
Liability:
1. Zero

I want to share a few things, some of which have nothing to do with finance. I post them here anyway because money is not the most important thing. It’s the journey that counts. You don’t get to share this kind of intimate stuff regularly with everyone you know. If anyone doesn’t like it, just consider that I am talking to myself.
1. Humble beginning:
a. I came from a very remote rural area. My family started to borrow money from neighbors to send my little brother and me to college. I was the first in our village to go to any college. So it was a big deal for them. My parents didn’t manage to finish paying all loans until I came to the US and sent enough money back. My wife also came from a rural family. Her brother and sister supported her through college. Because of this, we sent money to both families every year. When we look at the numbers we sent home every year, it’s becoming quite large. But it’s something we have to do.
b. Looking back, there were many things that could have stopped me being where I am. When I took the high school entrance exam, I only scored 28 points (out of 100) on my English. I never thought I would be coming to US one day back then. Though my total score was enough for high school, something got messed up and I didn’t get admission letter to the high school in the small city when school started. My father, a farmer, spent a week in the city to finally get me admitted to high school. He sold his only watch for expenses to stay in the city. He walked home because flood damaged some roads and no bus was available and flooding almost took his life. For that, I am forever grateful. When I got the admission letter, we had to walk six hours to get to a point where transportation was available to take us to the city for high school.
c. When attending college in a big city, it seemed that going back to where I came from (remote and poor) was the only option. But I managed to secure a job (ironically, the job was related to my relatively good command of English considering I only scored 28 points in high school exam) in the big city and eventually came to the US.
d. After getting first US degree which was pretty much useless, we came to a bigger city to study for my second degree in computer science without assistantship or scholarship.
2. Ten years of struggle and joy. Within these 10 years in which we accumulated our net worth (I don’t want to use word wealth because it seems so heavy and big), we had struggles of our own. First of all, two recessions and burst bubbles hit everyone. More importantly, our two kids turned out to be very hard to raise initially. My wife had to stay home for a period of time. We didn’t have any help but just ourselves. Raising two kids took a very big toll on my wife. But she is a strong woman and our two kids are incredible. At times, we wondered if we made the right decision to come to the US. But in the end, I think we made the right decision. If we stayed in China, we could not even have two kids to start with.
3. Saving is the key. Our work started right at the end of .COM bubble. We have survived two recessions. Suffice to say that we didn't benefit from all the good fortunes from good days. Of all the money accumulated, only 160k came from investment gain. Rest of it was saved from hard-earned salaries. You can accumulate wealth in the following ways other than saving:
a. High-income. You are lucky if you are Goldman Sack’s employee because again they will receive 670k bonus a piece on average this year.
b. Smart Investments. Some people are smart at investment like real estate, or stocks that made them rich.
c. Inheritance: your rich dad and mom have money.
d. Start your own company to make money.
None of these applies to us. We have modest salaries. So we relied on saving to accumulate our first million. Dave Ramsay said in his book that “if you want to live like no one else, you must live like no one else” (or something like that). Basically he was saying that if you want to become rich (or debt free), you must first make lots of sacrifice.
A couple of years after we bought our house with 5% down, we started very aggressively to pay off our home loan to save interests. This turned to be a right decision. If we instead had invested what we put in the house, 2008 crash would have taken most of them. Our cars are Toyotas and Hondas paid with cash.
4. Be your own financial advisor. After starting to work, we started to buy books and visit financial web sites on how to manage our own money. We use software to accurately track our spending and money flow. We use dollar-cost-average approach to invest and stick to asset allocation. We picked a few good mutual funds that are blend funds with mix of bond and stock. When 2008 market crashed, S&P 500 lost 38%. Our funds didn’t lose that much. With 2009’s good market, we recovered most of them when all said and done. For a 38% S&P 500 loss to recover, you need a 61% gain to break even. S&P 500 so far only gained 28% YTD. For people 40 and older, asset allocation is more important.
a. Being in US for while, I realized that you don’t have to know all things. But you need to know enough in a few key areas to ask right questions even if you ‘outsource’ that portion of your life to someone else. Finance and health are two key areas that you have to know enough. Just relying on your financial advisor or doctor is not enough. For example, your doctor doesn’t routinely check on you. You have to initiate your call first. Regarding finance, it’s very important that you know your stuff. Even you have a good financial advisor; you are the one who has to make the decision. Additionally, it is your own financial future that matters.
a. Wall Street: How do hedge fund managers get rich? They use your money to take risks. When it works out, they rip off tremendous fees to get rich. When things don’t work out, who cares. It’s other people’s money. The same principal is actually true for publically traded companies because it’s all investors ‘money. When things go bad, it’s not their own money. So I don’t put too much money to any single company stock. I don’t put more than 100k into any single mutual fund, either. Who knows what kind of form of Bennie Maddoff will come out tomorrow? .COM bankruptcies in first recession and financial crisis in 2nd recession all proved this point. Do you really care that much if it were other people’s money? This is even true when you gift money to someone. If you give someone some money, it’s less of value that if it were earned.
5. There are more important things in life than money. During these ten years, we made some decisions that were hard financially. When our kids were small, we decided that my wife stayed home with kids. Now since one of them enters school, we decided to have my wife work part-time so that she can spend more time with kids. Kids’ education is another area that we think we can’t ‘outsource’ too much. We are in a very good school district. But we still need to spend lots of time with them and get involved in their school and education. Our motto is that you need enough money to live a decent life but don’t let money dominate everything you do.
6. Looking forward. We will start spend more and save less and let what we have accumulate on its own.

所有跟帖： 

• 顶啊顶，太强了！ -sunskitehomes- ♂ (0 bytes) () 12/30/2009 postreply 10:38:29

• Congratulations! Good job! -shell@- ♀ (0 bytes) () 12/30/2009 postreply 10:39:47

• 多谢分享，祝好运。 -kenw- ♂ (0 bytes) () 12/30/2009 postreply 10:55:45

• "use software to track spending" - many people use but not get r -Quarx- ♀ (111 bytes) () 12/30/2009 postreply 11:13:38

• 可以读出你的激动和自豪！恭喜，鼓励，enjoy your life -stl- ♂ (0 bytes) () 12/30/2009 postreply 11:18:23

• 真诚地祝贺！ -老顽石- ♂ (0 bytes) () 12/30/2009 postreply 11:26:14

• CO：真诚地祝贺！ -daxia- ♀ (0 bytes) () 12/30/2009 postreply 12:33:32

• CO：CO：真诚地祝贺！ -jy101- ♂ (0 bytes) () 12/30/2009 postreply 13:40:31

• 可贵的经历 -888-1- ♂ (0 bytes) () 12/30/2009 postreply 11:46:18

• 衷心祝贺, 你该为你自豪! -老周- ♂ (396 bytes) () 12/30/2009 postreply 11:46:54

• LOVE "accumulation, hard work, discipline, and persistence, not -ranch99- ♀ (0 bytes) () 12/30/2009 postreply 13:32:47

• 好样的。你父母一定为你骄傲 -forever_searching- ♂ (0 bytes) () 12/30/2009 postreply 11:49:15

• 一对志同道合的好夫妻。 -南门野菜- ♀ (0 bytes) () 12/30/2009 postreply 11:50:53

• 恭喜 -商纣- ♂ (0 bytes) () 12/30/2009 postreply 12:22:55

• 好棒 -ranch99- ♀ (0 bytes) () 12/30/2009 postreply 13:32:05

• 见仁见智吧，省得太厉害生活的乐趣会少很多。 -nickie- ♀ (76 bytes) () 12/30/2009 postreply 13:36:30

• agree. -hc29- ♀ (0 bytes) () 12/30/2009 postreply 13:50:15

• congrads on your success! -longtermInvestor- ♂ (0 bytes) () 12/30/2009 postreply 13:42:57

• 很棒的总结！非常谢谢你的分享！祝你们越过越好！ -金色风铃- ♀ (0 bytes) () 12/30/2009 postreply 14:43:23

• 很精彩的成功故事，谢谢分享，为我们中国人自豪。祝在新的 -福龟龟- ♀ (18 bytes) () 12/30/2009 postreply 14:55:41

• Great Job!!! -caren- ♀ (0 bytes) () 12/30/2009 postreply 15:47:36

• 回复：年终总结 (One more Millionaire) -hz82000- ♀ (243 bytes) () 12/30/2009 postreply 16:18:35

• Congratulations! Millionaire -NewBird- ♂ (0 bytes) () 12/30/2009 postreply 17:40:57

• 真不错，夫妻同心，又有硕果！也谢谢分享！ -可乐阿姨- ♀ (0 bytes) () 12/30/2009 postreply 18:25:13

• 恭喜, 衷心祝贺2010年更上一层楼 -彩盒子- ♀ (0 bytes) () 12/30/2009 postreply 18:28:19

• Honor your parents and you will do well. -insight777- ♀ (0 bytes) () 12/30/2009 postreply 19:25:53

• You saved at least $84K/yr. What's your pre-tax income? -gd3- ♂ (118 bytes) () 12/30/2009 postreply 21:16:00

• 他家房子付清了的。 -gingertea- ♀ (0 bytes) () 12/30/2009 postreply 23:15:20

• 回复：You saved at least $84K/yr. What's your pre-tax income?这种省法应该 -zoex- ♀ (726 bytes) () 12/31/2009 postreply 11:04:54

• income （收入） -firstmillion2009- ♂ (163 bytes) () 12/31/2009 postreply 13:14:27

• 我是保守估计，包括退税后应该不到25% -zoex- ♀ (0 bytes) () 12/31/2009 postreply 20:53:40

• 谢谢分享。很感人的故事。 -10203040- ♀ (0 bytes) () 12/31/2009 postreply 00:07:23

• 恭喜 -小老百姓- ♀ (0 bytes) () 12/31/2009 postreply 00:07:37