7 Millionaires … In Training!

I know how I got my first number. I knew someone who had $3M in the bank and no longer worked and thought they were set for life. I then talked to a friend who was a financial planner because I didn’t think $3M was really all that much but the planner said that it was enough to have a decent withdrawal for living on (I believe we were thinking of around $100k for the area of the country we were in) and not touch the principle.

As for the next numbers, I went through a wish-list based on the 4-hour Work Week book (4hww.com) that gave us a clear way to think about our dreams in terms of what it would really cost to do what we think it would cost “millions” to do. (For example, what does airline from Po-dunk USA to Paris cost? What kind of accomodations would I really stay in and for how long, what is the cost of a rental car? How much of this can I get from a travel agent?) As a cost analyst, I was well familiar with the need to get rough estimates by making sure I considered all the parts (doing a grass roots estimate by building up from these pieces) so that I wouldn’t get caught unaware later. The numbers now are still rough estimates based on some pretty-fleshed-out plans, analogies to similar items, some basis on historical facts, and a lot of assumptions (tho I did play some “what-ifs” with assumptions about earnings from investments to get a range of what I would need).

The hardest thing to determine is time. I am basing that on a perceived need, realizing that if I am still alive, there is more time, yet needing to reach my number by 6 years for more personal reasons.

To reach that, I need to set some intermediate goals next.

I know i’m ready to get to my number. Just about everything i’ve done since I left home for the Army at 18 years old has been in preparation to get to exactly where I am today. And where I am today is standing directly on that same road, headed to the same goal and same place….on to my number and to my life’s purpose.

I arrived at my original number through a list of activities as well as things that I want to achieve and own in my life time. ($20,000,000) This number hasn’t really changed for the long term at all, but the minimal number I need to consider myself successful in achieving my life’s pupose is 4.85 million. This is the smallest number imaginable while staying true to my life’s purpose.

I started out with $5 million as my number. There wasn’t much rhyme or reason to that, it just seemed like a ton of money and I figured it’d be more than enough for anything I’d ever want to do. I’m only a little embarrassed to say I just sort of picked it out of thin air for the most part.

As I progressed through AJC’s experiment… he had us think more about the big picture – our “life’s purpose”. So my revised number was reflecting how much I thought necessary to live that purpose and I discovered $5 million wouldn’t quite be enough to sustain some of those things.

Finally, after an excruciating process (for me, anyway) I worked out the fine details of living my life’s purpose by the date I selected and exactly what kind of cash would be required to be able to stop working (if I want).

I’m glad we went through this process. If I had just gone with my first guess of $5 million, I’d fall short and not be able to fulfill my life’s purpose as I intend to. I wouldn’t have known that if I didn’t go through a detailed, thought-provoking exercise to come up with my number and date. I also wouldn’t feel particularly passionate about what I’m doing in this experiment if I didn’t have such an attachment to my number and date. It’s not good enough to say “I need a lot of money to do stuff” or “I need money to do stuff and give to charity” – it’s the specifics that allow you to create actual plans that can deliver. Without a plan and end goal – how would you know if you “made it” there?

@ Debbie – I thoroughly enjoyed working with you (offline, via e-mail) on this … it really helped me to refine the process and you’ll see how that begins to manifest for everyone else’s benefit shortly.

[...] we have looked (again) at the size of the mountain i.e. our Number, and – if you are anything like me or the 7MITs – it seems [...]

[...] point, and large Number, she will need to create a publishing empire if she is going to reach it in time. Somehow, I think she just might [...]

[...] point, and large Number, she will need to create a publishing empire if she is going to reach it in time. Somehow, I think she just might [...]

[...] uses the mountain as the analogy on how steep or difficult it is to reach our number. The number to me is a first [...]

[...] review my original number and date here. It is $5 million in 10 years and the required compound growth rate is about 40%.  I should be [...]

[...] requires a super-high annual compound growth rate, and that only comes from the strategies that I mentioned earlier; and, of these, business is clearly a better path than trading stocks and options on margin … [...]

[...] Take another look at the table by Michael Masterson and affirm which ‘tools’ you think will help YOU along the way; remember, this table is [...]

[...] me with a monstrous (though not as big as some!) compound growth rate of 82%. When you look at Masterson’s Table you will see that I am left with only one option to get me to my number…start my own [...]

[...] to the table by Micheal Masterson, http://7m7y.com/2008/11/13/draft-how-high-is-your-mountain/, we’ll need a combination of real estate and stocks together with small businesses as our vehicle [...]

[...] to Masterson’s Table I should be able to generate ~ 30% with my growth engine.  Over the past couple weeks I’ve [...]

[...] that will do the job, although I couldn’t find one that accepts >20% annual return and we know that we need more than that! If you find a good one, please post a link in the comments. Share This [...]

[...] 3. Selected your Growth Engine. [...]