My Rule Of 7 – One Day Off

Good news sneaks up and tests me against one of my rules. For the last six years I’ve been working according to My Rule Of 7. When my net worth was over $700,000, I knew I didn’t have to work very hard. When my net worth was under $100,000, I knew it was time to work every day of the week. My Rule Of 7 is incredibly simplistic; so, maybe I should call it more of a guideline. I’ve finally realized that if I was going to respect the Rule, then I should, er, get to, start taking one day off each week. My net worth may have finally risen above $100,000. The weird part is watching myself push and pull the idea of not working every day. Oh, what ruts we build for ourselves.

As an entrepreneur it would be great to celebrate reaching this milestone from all of that work. As an investor it would be great to cheer a sudden rise in my portfolio. (The opposite of that happened thanks to AMSC, MVIS, and NPTN.) It wasn’t hard work or insightful investing that is going to give me a day off; it is simply staying in my house while the real estate market recovered. (Which I was able to do because of all that hard work, so it wasn’t for nothing.)

Figuring out net worth is easy if it is all in cash or in liquid assets like stocks. Check the statement. Subtract the debt. There’s the number. Reality is more complicated because what people own and owe changes every day. It is an imperfect exercise, but it is worth doing. Most folks have more assets than they realize.

I hesitated adding in my house’s value because I don’t plan to sell, it would take a long time to sell if I decided to do so, and the value is always a guessing game until someone actually buys it. But, like I just said, it is an imperfect exercise, but it is worth doing. Again, an overly simplistic check convinced me to go ahead. Assume I could clear $700,000 by selling my house. If I ignored that and kept working, I’d be inside a life that hurt my health, and left me with very little time for family, friends, and fun. If I sold and cleared $700,000, taking 5% to spend a year recuperating would be one of the healthiest and fun things I could do. In the meantime, I’d put $665,000 to work on getting back up to $700,000.

Ah, but what is the market value of my house?

I’m fortunate enough to have a variety of perspectives from which to estimate my house’s value. I wrote a (ill-timed) book about personal finance. (Dream. Invest. Live.) I’ve bought and sold several houses. I write about real estate for Curbed and 360Modern. Put it all together and I feel confident that the value of the house has at least returned to its pre-Recession price. Seattle’s ridiculously hot market is starting to warm the island. Some neighboring counties are rising at about 10%, with a few flukes that are much higher. If not now, then reasonably soon, my house could be worth about 10% to 20% more than it was when I bought it. (~$290,000 x 1.15 = ~ $335,000) Take that purchase price, assume 1.5% per year growth and get something similar, $338,000.

Two other estimates are available for free. Both Redfin and Zillow provide market estimates. Redfin’s estimate ~ $275,000; which is probably based on recent sales without projections. There have been so few houses like mine on the market that the estimate is probably hampered by a lack of data. Zillow also has to deal with the lack of data, but I suspect Zillow is applying an algorithm that includes the regional market growth. Zillow’s Zestimate is a very sweet ~$463,000. One thing I like about Zillow’s estimate is that it comes with a range. In my house’s case, from a low of $361,000 to a high of $560,000. Ah, for that high number, but I have my doubts about it. Just for fun I found the average of Redfin’s estimate and Zillow’s low estimate. Voila, ~$318,000.

There are people who do this sort of thing for a living, real estate professionals. One has heard me talking about this sort of thing long enough to at least help bracket my estimate. Yes, Redfin is probably too low. Yes, Zillow is probably too high. Yes, somewhere in the between $300,000 and $350,000 is a good enough estimate for what I’m trying to do. (Getting real about putting it on the market would require an in-depth analysis, and I’m not going to ask someone to do that for free and fun.)

So, without revealing my mortgage balance (hey, some privacy, eh) it is reasonable to assume that my net worth has finally risen about $100,000. Throw in my portfolio and a few other assets as a buffer on conservatism and – whew.

And yet I hesitate; and yet I know I shouldn’t. Life is meant to be lived. Wealth, or at least the money to fund a lifestyle, can come from unexpected directions. That doesn’t mean it should be discounted. Recognizing values in our lives grants them the respect they, and we, deserve. Too many people dismiss the money they have in an IRA, or the value of their collectibles, or even the value of their home. If they already have sufficient funds, then that’s fine. But too many work as if the products of their labors and their life have no value. If I think they should value what they have, then I should value what I have.

Next week I’ll start taking one day off each week. Fellow entrepreneurs can know how radical that act can be. For a day I won’t be making any money. It won’t be a paid vacation. But, it is something that I’ve worked towards and that has arrived, even if it happened in  a way I didn’t expect.

Now, the trick will be remembering what to do with a regular day off. It may sound silly, but I’ve forgotten what I did when I wasn’t working every day. Sounds like a task to add to my To-Do list. Hmm, something about that sounds like a rut I should get out of.

About Tom Trimbath

real estate broker / consultant / entrepreneur / writer / photographer / speaker / aerospace engineer / semi-semi-retired More info at: and at my amazon author page:
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