Target Achieved: £1,000,000 net worth

I’ve just run the sums and I’M A MILLIONAIRE. It’s taken some getting here but I’ve done it! Woo hoo!

We came very close to hitting the 7 figures at the end of September but came up a bit short. Doing the numbers again for a personal anniversary, we’ve managed to just clear the hurdle. I didn’t think that I’d do it this early or this year but strong tailwinds on our investments have brought us to this landmark level. It’s been a long slog but I’m very very pleased. (The Lady on the other hand actually thought that we were already there and didn’t seem that impressed when I told her the good news earlier this week along with a celebratory beer).

For a bit of background; I entered the workforce in December 2005 and instantly realised that I needed to make a plan to escape it as soon as possible. I worked with miserable older men (engineering) who had little reason to be as unhappy as they seemed and they were unhappy for every little reason. Miserable Scots you might think but I didn’t see what the alternative was and I thought that I had made my bed (4 year degree plus few other options) so I’d better lie in it. Ironically, the one guy in the office who was not a gloomy sod went and died when I was on a training course; I came back to his empty desk and was told that he had a heart attack at 46. Carpe diem!

Still, I had started a good job with good prospects and a new life in a new country, the world was my oyster.

I didn’t know what it was called at the time (FIRE) but I had learnt enough about economics, finances and money that if you had investments that paid a dividend that covered your living expenses then you could be free from the hassle of finding the money to pay for living.

Live to work or work to live?

I worked out that I would need to do three things if I wanted to retire early.

  1. Spend less money
  2. Earn more money
  3. Invest money wisely

I must admit that I’ve not stuck religiously to all of these things over the years. But I stuck to the principles and accumulated money as time went by.

I managed to breakeven 9 months after starting work. Zero net worth (annihilating 4 years of student loans) felt good. A few years later I crossed £100,000. I’ve had the luxury of uninterrupted earning and modest spending requirements. I’ve not lived like a monk, and I think that sometimes I spend too much – but compared to many I live the life of a pauper.

Project 40

My original expectations were that I would hit £1,000,000 by the time I was 40. This was based on a lot of modelling from far off. One Million was always seen as a less a destination but more as a milestone on the way to financial freedom. So hitting it at the age 38 is for me a success.

The recent post from Indeedably paints a grim picture of the ennui of striving for something for it only to lose its lustre once you’ve attained it. But for me, this is a great moment because 2020 has been a rough year for me and my family. Covid decimated our savings and net worth. Both the Lady and I have changed jobs and we have the joy/despair of raising two kids without family help. But just as my career prospects are drier than a Saudi wedding, I’ve got the comfort to say that I don’t need to work.

Think about that for a moment.

 I don’t need to work for money!

The fear of running out of money that has propelled by for the last 18 years can safely be ignored. I have enough now to not be worried, stressed or anxious. If I don’t work again, that’s fine. It does raise some interesting questions which can be answered later along the lines of “what should I do?”, “what will make me happy?”, “do I want to spend my life here?”

There’s time for all that. Now, I’m just going to enjoy this milestone. It coincides with me being between projects at work – so I’m just taking some time off before I think about what I want to do next.

Where’s the Money? (I hear you ask):

  • Cash – 2%
  • ISAs – 15%
  • Non-ISASs – 12%
  • VCTs – 10%
  • P2P – 5%
  • Housing Equity – 5%
  • SIPPS – 28%
  • DB Pension – 24%

I’m still a bit pension heavy (52% of net worth) and the twin effects of salary sacrifice and deferred tax payment flatters our position. However, I think that we have a good balance between jam today and jam tomorrow.

What don’t I include in net worth:

Any possessions or household items (except my barrel of whisky and our cars), the Lady’s secret money in her home country, state pension, company money, future tax liability/rebates or goodwill.

Converting Wealth to Income

The paradox is that being in the top decile of family wealth is that with a SWR of 3%, you can only live the life of an average British family and you’ll be able to claim none of the benefits that those less fortunate than you can. I don’t want to punch down; you can only do what’s best for you in your situation and that’s what I intend to do.

Money doesn’t automatically make you a better person and by a number of measures, our social position is very low – we don’t have any important friends or high status positions in society.

Plateau

At this point in life, I don’t see us either earning a lot more money. I don’t have the motivation or want to make the sacrifices that focusing on something like that requires. Likewise, the Lady doesn’t want to become a big boss and would prefer to have a job that is interesting. We both would not like to work full time, as I believe that full time is too much, especially if you have kids. I don’t see us spending a lot more either. The big costs are nursery and they’ll drop down as the kids grow. Getting rid of work related costs for me will save a lot of money and working from home is working well. The mortgage is a constant cashflow drain but we’re ok for cashflow. In many ways, if you met us you wouldn’t think that we’re rich – real millionaire next door material. But you would probably notice from our laid back smiles that we have something special going on. It might have taken years to do it but I hope that it’s worth it.

Thanks, GFF

32 comments

  1. I put it to you, ladies and gentlemen of the jury, that since our esteemed blogger is married he is only a half-millionaire. What say you?

    Liked by 2 people

  2. Amazing! Congratulations! And what an inspiration for people like me near the very start of their journey. I don’t think I’ll ever achieve the big 7 figures, but I hope to one day reach the same stage of FI.
    What blogs such have yours have taught me and many others (either directly or indirectly) are paving the way for so many people to start really thinking about their money and priorities and that can only be a good thing.
    Enjoy some time to take a step back and chill and I look forward to reading what you plan to do next!

    Liked by 1 person

  3. Congratulations GFF (and Mrs GFF)!

    Celebrate the win, it is fantastic to read about when a plan comes together.

    It will be fascinating to see what comes next for you both!

    My prediction: GFF takes to strutting around town wearing socks and sandals, home schools the kids, and reveals that his super secret side hustle is llama farming. All just because he can!

    Seriously though, well done to you both.

    Like

  4. Woohoo!! So pleased for you both – I’ll drink a beer in your honour tonight!

    There’s nothing like making a goal together to put a smile on your face. The freedom of just having options is amazing. It lets you have an entirely different attitude to work.

    Obviously I can thoroughly recommend part-time from my own experience, though convincing HR et al is often tougher than it really should be.

    Whatever you choose I’m just really pleased to see good people coming out on top. Keep smiling, it’s a great way to make people wonder what you’ve been up to 😉

    Liked by 1 person

  5. Boom ! Just wait until that beer company pays out and we’ll both be laughing at multi-millionaires. I mean, that’s only “next year”, or the year after, or the year after……

    Liked by 1 person

  6. Well done on this achievement and at this difficult time. Your next milestone might be £1m excluding home equity. Paying off your mortgage could be another target.

    Liked by 1 person

  7. Congrats gff. Did you find the second half went quicker than the first? I’m at just over 600k net worth and looking forward to the fabled snowball on both my Isas and my pensions. I’ve actjly taken the decision to stop paying the mortgage completely for a few years by going interest only and concentrate on my investments. Mortgage fixed till 2027 and 2.59% so secure doing this and it’s a a manageable amount at less than 3x salary

    Like

    • It’s a game of two halfs.
      Certainly as time goes by the monthly gyrations of asset values are much greater than monthly income but my path to riches was patched by hard earning, restrained spending but greatly shortened by some good financial shortcuts like buying and selling things at the right time.

      Like

      • I currently work contract for an engineering firm but have no hours at the moment.
        If new work comes I will probably take it but up to maybe 20 hours a week.
        The new project I should start on is green / sustainable which is a good long term move but I have had a good few weeks off recently to just enjoy life and I’m not keen to go back to 9-5 plus commute just yet.

        Like

  8. Ah man! Amazing… what a feeling. I’m about the same age (just the other spider of 40) and if I include cars, I’m about £25k behind you.

    Very different profile though:
    Pension 25%
    Isa (Index fund) 30%
    House 30% (no mortgage)
    Cash 10%
    Other 5%

    Are you still happy living the meagre lifestyle? I’m finding that the closer I get, the more I feel the urge to spend more today. Ijust can’t imagine ditching the six figure salary and the status for some time, and my fear is that I’ll look back in fifteen years time when I have much more and kick myself for living in a 3 bed terrace house with the kids and not enjoying the money when it actually meant something.

    That said, I’ve not felt the ambient fear that comes with financial insecurity for some years now and it’s easy to take that for granted.

    Liked by 1 person

    • Well I don’t think our lifestyle is meagre or all that modest and I do feel a bit like a champagne frugalista when we spend £5k a month all in compared to some who get by on £1k a month.

      Status is something that I’ve tried to avoid like the plague

      Like

  9. Many congratulations! I have enjoyed reading your blog and it is great to see you have reached this milestone!

    I have a rather mundane question if that is OK: how have you valued the DB pension? Do you multiply the expected income by 25 / 30, or some other method? I ask as my partner has just got a new job at a firm that has a DB pension and am wondering how that translates into net worth. Thanks!

    Liked by 1 person

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