One Million Dollars

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Lets talk about money.

Money does buy happiness. You don’t need to be rich to be happy, but you definitely can use money to have fun. For example: Traveling is one of my favorite things to do. Traveling makes me happy. Traveling is expensive. Having money and be able to travel, makes me happy. Another example: I don’t like mowing my lawn. I much rather spend those two hours watching my favorite team Atlético Nacional in the Colombian soccer league finals. I pay Jose $40 and he takes care of my lawn. Those $40 make me happy, specially if Atlético Nacional wins the game and obtains its 10th championship title. José is a really cool guy and makes good ‘Pasta Pronto’.

‘So how much money do I need to be happy?’ you might ask. I don’t know. Each person needs a different amount. There is no magic formula to calculate that. Do you have really expensive hobbies like flying jets or really cheap ones like origami? Do you like traveling first class and stay in nice five-star hotels or are you ok with traveling coach and staying at cheap hostels. Do you have to support a family? Your parents? An illegitimate child? See my point? there are many variables that you need to consider here, so answering the question is not an easy task.

Here is my advice: Set some financial goals for yourself. Define short-term-easier-to-achieve goals like ‘I want to go to the soccer world cup in South Africa 2010’ and decide how are you going to save money to achieve that goal. Define long-term-retirement-type goals and create a plan to get there (401k, IRA, long term investments, etc…).

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Why am I suddenly talking about money? it all started when my friend Vanessa asked me how to transfer money between two bank accounts. I did a little googling on the subject and found a very simple but interesting blog called: My Money Blog. This guys goal is to save 1 million dollars and retire sooner than most people. He posts much of his financial information, like how much money he have saved so far, how his investments are allocated and he also posts tips and advice about the subject. Somehow this guy inspired me: I would like to openly publish all my financial information and goals. I think by doing that, you put some extra pressure in yourself because everyone is watching how you are doing. You also get the opportunity of receiving feedback from your blog readers and you might also end up getting some additional benefits sponsored by financial institutions that want their names mentioned in your blog. It would not surprise me if a broker firm asks this guy to allow them to manage some of his money risk free or something, to get some recognition.

Anyway, there are a couple of reasons that make me not want to publish my financial information here but what I can do is to publish my financial goal: I want to have 1 million dollars before I turn 50 years old. That gives me only 20 years to reach my goal! To see how feasible this goal is, I just opened an Excel worksheet and used the PMT financial function and it told me that I need to start saving $610 a month (assuming a pretty optimistic yearly interest rate).

Maybe my goal is too aggressive, but that is the whole point with goals. Besides, most of my blog readers will be dead in 20 years so no one will be there reminding me how stupid I was for setting this crazy goal. (This last statement does not apply if your last name is Jaramillo).

9 responses to “One Million Dollars”

  1. I used a rate greater than what the best savings account can offer (5%) but less than what normally people make in mutual funds (11%). So in reality is not so optimistic, but rather average.

  2. Well, so the stupid insurance company took too long, so I won’t be buying the new car this year (meaning I no longer need to transfer money) but hey, at least I inspired SOMETHING 🙂

    So are most of your blog readers senior citizens? Because I plan to be alive in 20 years and expect you to be rich (and you KNOW I won’t forget either!). 😛

  3. saying that in twenty years most of your blog readers will be dead, what do you think their average age is?? (I hope to be still alive in 2028 and I think there’s a fair chance to it!)
    And then… you should always try to be aware of what you are buying.
    You can buy luxury, but not relaxation. You can buy a car, but not liberty.
    You can save $ 1 000 000 and retire earlier than most people, but you can’t buy the years that you spent with a job you didn’t like…
    y el abrazo que te estoy mandando, no lo puedes comprar tampoco (ni comprar ni pagar!), las mejores cosas en la vida son gratis!! 🙂

  4. “most of my blog readers will be dead in 20 years” is just a silly dark humor comment that really makes no sense. it implies that either my blog is only read by 70 year old people or by nobody at all (except my family)…

    I agree: best things in life are free or cannot be bought like love, time or Cristin hugs!

  5. Remember Daniel – $1 Million in 20 years is much less than 1mil today. So you have to shoot for higher 🙂 Sorry – had to give you a reality check there…Came to your webpage by accident actually btw. From Marcos’s blog 🙂 Nice webpage.

  6. You are correct Anand. I’m not considering several variables like inflation, dollar devaluation, cost of opportunity, etc…. neither the fact that if I get married and have kids my lifestyle will change and my saving approach would have to change too. My key point here was to prove that being financially responsible is not hard and how goals can take you there faster.