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June 25, 2013


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I appreciate anyone who shares their story, thanks JM. Good to have an update as well.

Not an attack, just simple curiosity... I personally feel like there has to be something you're not telling us. That's why we assumed an inheritance last time.

Why do I say that? Well salary's up to $140k, let's say you're paying 25% in taxes, so your take home is $105k. Net worth is $588k and you've been in the workforce for approx 6 years, assuming you graduated at 22.

Yes, there's been a bull market of late, but there was one of the worst bear markets ever prior to that. (Only Old Limey seems to have dodged the worst of that one ;)

How did you manage to "save" approx 93% of your after-tax salary since you graduated college? And really you've "saved" much more than 100% of your after-tax salary, since you weren't making $140k since you graduated college.

Of course these numbers don't add up, you have multiple sources of income, etc etc etc. I'm just using your largest as a basis of comparison. But is there possibly something you're forgetting to mention?

Paul, I think you're off a little there. You've included all their assests including home and rentals. That isn't money they've saved, that's just how much those assests are worth.

If they are saving 40-50% of their gross pay for 6 years I could see having that much in investment accounts with some help from the market.

Yes in six years a lot has happened so there is a lot I'm not telling, not hiding, just don't have time. One black box you probably see is the real estate. Collectively the three homes were purchased for about $290,000, and I value them at $377,000. There was something like $25,000 put into all of them so there is a good chunk of sweat equity there.

The biggest chunk is in our retirement accounts anyway and that I can't fabricate or be gifted. They are matched by our company up to 5% and this year we just started getting some performance contributions, but that just started and were capped at 4% of salary.

Also we started contributing heavily to retirement plans in late 2008 and heavily in 2009 onward. This was not due to any market timing, it just happened to be the point in our lives where we started doing it. I don't profess to be a market oracle, but it certainly worked out well.

Cash is just a small amount of savings we each had left over from college plus any money we have socked away since. I mentioned in both posts we had taken out of town assignments for work. Anyone who has taken one of these knows your living expenses are about nothing due to per diem and expense reimbursements, plus they were in the construction field so we each earned overtime since that is how our company works (all hours billable to a project). So yeah we saved a heavy percentage there as well for a time frame of about 1.25 years.

Also you say 25% in taxes, our effective tax rate has been hovering around 15% for the last few years. Minor point but with maxed out 401ks, property tax deductions, depreciation, etc. we lower our exposure.

I guess in a nutshell, you are right, it is not all built from that salary. There is real estate sweat equity, overtime, one modest bonus one time, fortunate market conditions, etc. I would say we just try to take advantage of every opportunity that comes along to throw money in the bank.

Thanks JM (and Ryan), I was just making generalizations. Sounds good to be true, I couldn't figure out what was missing.

Sounds like you've just done an amazing job. A bit older and definitely jealous. Keep up the good work.

Strong work JM- glad you beefed up the umbrella. Best wishes!

You guys are in a fantastic (and obviously enviable) financial position. Congrats on your hardwork. Thanks for sharing your story (and your update)!

Your investments have done very well over the past year, even after full contributions and employer match.

How are you invested (generally) and do you think you'll remain that aggressive (which at your age is obviously an option, it just seems harder to do psychologically as the numbers get bigger and its no longer play money)?

You guys are doing great

That's pretty amazing that u amassed so much at such a young age.. I just know how to spend .... I need to learn your secrets!

Very general overview of investments (outside of real estate) - roughly 65% is in S&P 500 index and large cap index funds. Maybe another 15% in mid-caps, 15% in small and emerging markets. Remaining 5% in bonds. I think we will get less aggressive as we continue to amass more because we really wont NEED to take the risks if we get ahead soon enough in life. None of this is exact but it's a rough idea of what we have and what the plans are.

Great job!

Im curious how can you move the property into the LLC if (I assume) its just an asset cover -- not generating any income. Isnt it true to be truly protected the mortgage and title must be in the name of the LLC ? My bank told me I couldnt do a transfer deed to the LLC unless the LLC was prepared to refinance the note.

Joe, I think you will find that there are a ton of opinions on this depending on who you talk to. House #1 is actually a home equity loan in the name of the LLC. House #2 is a private mortgage. The scenario you mention has a LOT of opinions. Some people say the bank can call the note if you transfer to the LLC, some say this will never happen if you keep paying, and some say it's fine to do this if it's for asset protection and you are still the sole owner since you are still signed personally. What the right legal answer is from those things I laid out? If you find the answer let me know, that is still some knowledge I am working to gain. I think what you mean by truly protected is correct though, since you are signed personally, if you were sued they'd still get the property and you'd still be on the hook for the debt. It is likely just any other assets you have that might get shielded. This is why I also carry umbrella insurance.

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