7million7year's April Fools Day Joke!
OK, I promised myself that after my March Fools Day joke-with-a-message (you know, the horse racing system one) that I would NOT do an April Fools day post …
… apparently, promises are made to be broken 
So, yesterday’s April Fools Day Post was another joke-with-a-message: no matter how much you have, you can always spend more.
Yesterday’s post is actually (slightly) rooted in fact; I have made some errors recently, and the market has turned, so let me come clean:
- We bought our current home for about $1.6 Mill.; naturally, we paid cash.
But, after we cashed out on the second part of our 7m7y journey (the part that I have NOT yet written about on this blog, because it’s a business success story, not a personal finance success story like my 7 million 7 year journey), things took a turn for the ‘worse’:
- We upgraded to a $4.5 mill. home (plus $1 Mill. renovations to come: house/swimming pool/tennis court), and again paid cash … unfortunately, the market correction has probably wiped $500k – $1 mill. of value … but, this is ‘value’ that will only be realized when we sell (hopefully, we’ll be there for at least 10 to 15 years).
- We bought $300k of cars (for cash) but also managed to sell the Maserati
- I did indeed lose $600k in the stock market; this is the ‘cost’ of my experiment in letting somebody else manage a small part of my portfolio for me, and trying to time the market (bad AJC … bad boy!)
- And, I was due to receive a $3 Mill. ‘bonus’ from my ex-employer, that was to be delivered in cash, but ended up being delivered in now-reasonably-worthless stock (that 30 pence to 7 pence slide is real).
The two mistakes that we made were:
- We tried to time the market … however, $1 Mill. represents a small’ish % of our total portfolio
- We spent money on a house that we assumed that we would have, but didn’t get (i.e. the UK cash-to-stock thing).
So, right now, we have broken the 20% Rule … but, I counted cash, and after all of this (including completing the renovations) we still have a LOT of cash in the bank, plus the houses, plus equity in a number of apartments / commercial property, not to mention a ‘passive’ business or two floating around … I won’t have to ‘downgrade’ my $7 million 7 year mantle anytime soon [AJC: because, say, $3 million in 11 years just wouldn't have the same ring to it, would it?] 
Still, how are we going to ‘correct’? After all, we have broken so many Rules, it hurts me to think …
Well, exactly the same way that you would:
Some of it will come from simply waiting for the market to correct (that $600k stock loss will partially reverse, as will the 30-pence-to-7-pence UK stock slide) … some of it will come from making long-term buy/hold investments in this soft-to-recovering market over the next year or three … some of it will come from applying a large portion of the equity in the home (and selling the old one, when the market recovers) to investments (thus bringing us back within the 20% Rule).
But, the lessons are clear: always obey the Rules … do NOT speculate … and, heed Rick Francis’ Making Money 301 advice:
You really should [not] have to worry about affording needs anymore- you just have to control your wants. Also, you can afford to be more conservative in your investments. Making Money 301 should be a lot less risky as you only need to maintain your principle against your spending and inflation.
Where were you when I needed you, Rick?
PS: In case you didn’t get to see the masthead that went with yesterday’s post, here it is … I’m particularly ‘proud’ of the by-line (something to do with noses, white powder, fast cars/girls) … unfortunately, all-too-true for too many people (but, definitely NOT me! Well, the fast car – singular – maybe). I don’t even know who the photo is of? Do you?
7 Responses to “ 7million7year's April Fools Day Joke! ”
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I made $7 million in 7 years™ … but, I started out $30,000 in debt.
Now, find out how you can get rich(er) quick(er) ... no scams, no schemes ... just good old fashioned financial advice! 
How to manage your life with just $19 Billion …- 7million7years on It’s NEVER going to be enough!
Adrian on How to ruin your return by paying off principal …
Luis on How to ruin your return by paying off principal …
A Man with a plan. I have great confidence you’ll come back from these mistakes.And you have some learned lessons you will carry with you into the future. Great Post.Thanks for sharing.(Salamat) thats thanks in Tagalog.
Wow ACJ, you opened up and shared a softer side of you.
Actually, that is atrocious of you to break the rules! lol! Glad on my part, to see someone else has weathered the mistakes in hopes that I may learn from it. What do you do with a 4.5-mil dollar house? iHmmmmmm…
>Where were you when I needed you, Rick?
Sorry I didn’t advise you earlier
, but I actually do have some money saving advice now:
Reevaluate the pool and tennis court-
Consider this- how often are you _REALLY_ going to use them… if it isn’t all the time then does it makes sense to own it instead of renting it?
Why not just join a nice health club? For the cost of the renovations you could pay the membership for years. You leave the maintenance costs and hassles to someone else, and a club should offer a more social environment- and better services.
-Rick Francis
@ Money Funk – the only ‘softer side’ of me is the gooey stuff between my ears … it didn’t work so well, this time
@ Rick – We did that BEFORE we upgraded
Actually, Rick, we did think about it until we counted pennies and realized that we COULD afford the house IF we did one of the following:
1. Take out a HELOC (or mortgage) on, say, 50% of the house, OR
2. Apply, say, 50% of the equity in the house (remember, we paid cash) to another investment; for example, there is a commercial building that I am looking at … it’s possible that a bank will let me 100% finance, using my house as equity. If not, we simply finance both 50%.
The key here is:
a) Will we then meet the Equity Rule? YES
b) Will w then meet the income Rule? YES
If so, we CAN afford to keep the house …
[...] have a smaller portfolio of investment property than previously [AJC: unfortunately, I also have a larger portfolio of for-my-own-use residential property than planned or ideal], having sold the ‘jewel in my investing crown’ due to market conditions [...]
[...] Ooops! She broke the 25% Rule …. Published May 29, 2009 Your House 0 Comments Tags: 7million, 7million7years, house, Investing, millionaire, money, Rich, Saving, Starting Out, wealth I wrote a post some time ago about how I broke (nay, smashed!) the 20% Rule when I bought my latest house – considering that we paid $4 mill., are about to renovate for at least $1 mill., and still own another $2 mill. house that we haven’t been able to sell due to the crash, I’d say that we need some major corrective action … which, I outlined in this post. [...]
Hello there, Happy April Fool’s Day!
This old gal was trying on one of those blouses with a plunging neckline and after looking herself over in the mirror, asked a saleslady if she thought it was too low-cut.
“Do you have hair on your chest?” the saleslady asked.
“No!” she squealed.
“Well then,” the saleslady said, “it’s too low-cut.”
Happy April Fool’s Day!