How My Wife and I Made $370,000 in One Day!
I am finally ready to disclose to everyone here how my wife and I worked together to make $370,000 in just one day! It was not easy, and by the end of the day we were exhausted and ready for a vacation 🙂 Read on to find out exactly how my wife and I made $370,000 in just one day!
$370,000 in One Day – The Background
I’m going to let the cat out of the bag – the trick to making $370,000 in one day was downsizing our house. How does this equate to making $370,000 in just one day? Let me tell you…
Since before we were married, my wife and I have always been great savers. We were able to put a 20% down payment on our 2,050 square foot home after we had been married about three years. Because we were such good savers, our cash pile continued to grow. We then decided to make a change and “upgrade” to a larger house. We went from a 2,050 square foot home to a 3,550 square foot home!
This new larger home had everything: a two car garage, kid’s play room, breakfast room, office, 3rd floor gym, guest room, 3 and a half baths… the list goes on and on. It seemed to make sense to us that this was a good use of our extra money. The crazy thing was, we only used most of these extra room like 5% of the time. Talk about a waste of money…
When I chose to start my own business and devote myself to saving, making, and investing money, it became quite clear to me that we would need to change our housing situation if we were ever to become financially independent. I wrote an article about downsizing your home and made plans to put this into effect the next time we moved. Since deciding to relocate for my job, we basically had a “free chance” to make things right and move into something more reasonable.
During our one-day house-hunting trip, we were able to find a much smaller house and save ourselves a small fortune over the upcoming years! Read on for the details to understand to how the savings amounts to making $370,000 (in today’s money) in just one day.
$370,000 in One Day – The Details
We moved from a 3,580 square foot house with a 15-year mortgage into a 1,780 square foot home with a 30-year mortgage. Here’s a breakdown of the old monthly costs vs. the new ones.
| Old House | New House | |
| Principle | $1,363.48 | $191.00 |
| Interest | $660.21 | $565.00 |
| Insurance | $83.17 | $33.33 |
| Taxes | $234.20 | $80.00 |
| All Charges Monthly (not including principle) | $977.58 | $678.33 |
| P&I = | $2,023.69 | $756.00 |
| TOTAL MORTGAGE = | $2,341.06 | $869.33 |
| Difference to Invest = | $ – | $1,471.73 |
As you can see, by moving to a smaller house and shifting from a 15-year to a 30-year mortgage, we have almost $1,500 extra each month to invest!
Now, here’s a detailed breakdown of how much we would be spending,saving, and investing each year based on the two different scenarios (we were already 3 years into the 15-year mortgage on the larger house). Just to make the analysis a bit easier, I assumed that the expenses didn’t inflate over the years.
| Year | Old Expense | New Expense | Old Principle | New Principle | Old Investing | New Investing |
| 1 | $11,730.96 | $8,140.00 | $12,553.32 | $932.00 | $- | $18,896.97 |
| 2 | $11,070.75 | $7,914.00 | $25,766.85 | $2,090.00 | $- | $39,116.73 |
| 3 | $10,410.54 | $7,688.00 | $39,640.59 | $3,474.00 | $- | $60,751.87 |
| 4 | $9,750.33 | $7,462.00 | $54,174.54 | $5,084.00 | $- | $83,901.47 |
| 5 | $9,090.12 | $7,236.00 | $69,368.70 | $6,920.00 | $- | $108,671.54 |
| 6 | $8,429.91 | $7,010.00 | $85,223.07 | $8,982.00 | $- | $135,175.52 |
| 7 | $7,769.70 | $6,784.00 | $101,737.65 | $11,270.00 | $- | $163,534.78 |
| 8 | $7,109.49 | $6,558.00 | $118,912.44 | $13,784.00 | $- | $193,879.19 |
| 9 | $6,449.28 | $6,332.00 | $136,747.44 | $16,524.00 | $- | $226,347.70 |
| 10 | $5,789.07 | $6,106.00 | $155,242.65 | $19,490.00 | $- | $261,089.01 |
| 11 | $5,128.86 | $5,880.00 | $174,398.07 | $22,682.00 | $- | $298,262.21 |
| 12 | $4,468.65 | $5,654.00 | $194,213.70 | $26,100.00 | $- | $338,037.53 |
| 13 | $3,808.44 | $5,428.00 | $214,689.54 | $29,744.00 | $- | $380,597.13 |
| 14 | $3,808.44 | $5,202.00 | $214,689.54 | $33,614.00 | $25,984.18 | $426,135.90 |
| 15 | $3,808.44 | $4,976.00 | $214,689.54 | $37,710.00 | $53,787.25 | $474,862.39 |
| 16 | $3,808.44 | $4,750.00 | $214,689.54 | $42,032.00 | $83,536.54 | $526,999.72 |
| 17 | $3,808.44 | $4,524.00 | $214,689.54 | $46,580.00 | $115,368.28 | $582,786.67 |
| 18 | $3,808.44 | $4,298.00 | $214,689.54 | $51,354.00 | $149,428.24 | $642,478.71 |
| 19 | $3,808.44 | $4,072.00 | $214,689.54 | $56,354.00 | $185,872.39 | $706,349.19 |
| 20 | $3,808.44 | $3,846.00 | $214,689.54 | $61,580.00 | $224,867.64 | $774,690.60 |
| 21 | $3,808.44 | $3,620.00 | $214,689.54 | $67,032.00 | $266,592.55 | $847,815.92 |
| 22 | $3,808.44 | $3,394.00 | $214,689.54 | $72,710.00 | $311,238.21 | $926,060.00 |
| 23 | $3,808.44 | $3,168.00 | $214,689.54 | $78,614.00 | $359,009.07 | $1,009,781.17 |
| 24 | $3,808.44 | $2,942.00 | $214,689.54 | $84,744.00 | $410,123.88 | $1,099,362.83 |
| 25 | $3,808.44 | $2,716.00 | $214,689.54 | $91,100.00 | $464,816.73 | $1,195,215.19 |
| 26 | $3,808.44 | $2,490.00 | $214,689.54 | $97,682.00 | $523,338.08 | $1,297,777.23 |
| 27 | $3,808.44 | $2,264.00 | $214,689.54 | $104,490.00 | $585,955.93 | $1,407,518.60 |
| 28 | $3,808.44 | $2,038.00 | $214,689.54 | $111,524.00 | $652,957.02 | $1,524,941.88 |
| 29 | $3,808.44 | $1,812.00 | $214,689.54 | $118,784.00 | $724,648.19 | $1,650,584.78 |
| 30 | $3,808.44 | $1,586.00 | $214,689.54 | $126,270.00 | $801,357.75 | $1,785,022.68 |
| TOTAL = | $165,749.58 | $145,890.00 | $214,689.54 | $126,270.00 | $801,357.75 | $1,785,022.68 |
As you can see, by the end of 30 years once principle and expenses are factors in, we will have an additional $897,467.84 from investments! This assumes an average 7% return on investment.
If I then discount that back to today’s dollars assuming 3% inflation, this gives $369,367.84 in today’s dollars! As I said, making the decision to downsize our home during our one-day house hunting trip made us $370,000 in one day!!! What would you do if you could make $370,000 in one day?!?
$370,000 in One Day – Charts and Figures
Here’s a nifty little chart showing the same concept graphically. The “net worth” displayed in the graph is the principle that builds up over time plus any investments that compound at 7% interest. At the end of 30 years, there is nearly a one million dollar difference in net worth between owning a large house and a small house!
In our case, we were going from a 3,580 square foot house that costs $360,000 with a 15-year mortgage to a 1,780 square foot house that costs $174,000 and a 30-year mortgage.
$370,000 in One Day – Final Thoughts
It was a little difficult to find room for all of our stuff, but that was the beauty of downsizing. We sold or gave away a bunch of our stuff to family and friends. This push to go smaller forced us to de-clutter and rid ourselves of material junk we don’t really need to hang onto.
Even though we literally cut our home size in half (3,580 to 1,780), the kids still each have their own room, we have a craft/guest room for visitors, and our kitchen is awesome and spacious! We combined the office and living room into one – this is great because we can do computer stuff on the TV and multi-task as a family all in the same room. We eliminated our formal dining room because we only used that 5 days or less out of the year in our old house – talk about a waste. In addition, all of our exercise stuff moved to the garage.
Things get a little interesting only have two bathrooms with four people, but for one million dollars I think we can manage through that 🙂
Good job Derek! I think you and your wife really deserve a nice vacation!
Clarisse @ Make Money Your Way recently posted…Using Magnitude Extreme vs. Time Extreme
Haha – we are only about 2 hours away from several beaches, so we’ll get a vacation nearly every weekend when things begin to warm up 🙂
Don’t forget about the utility costs you’d save over the course of 30 years for heating/cooling in the smaller home! 🙂
Brock @CleverDude recently posted…Dear Garbage Company: I’m Moving On
Brock,
Great point – I thought about this but didn’t not have a great way to estimate the difference. We’re moving from natural gas heating and electric cooling to all electric. Moving into a much hotter climate, time will tell exactly how much we’ll save.
To your point, I have a feeling it will be thousands over the years 🙂
Great job. It’s easy to “buy into” the idea you need to keep upgrading your home into a bigger and bigger one. You took the time to realize that you don’t really use the extra space, so why pay for it. I hope others reading this take the time to reassess what is important to them and make the changes as well.
Jon @ Money Smart Guides recently posted…16 Habits of Wealthy People
Jon,
Yes – it really feels great to actually downsize. I know for sure that we made a great decision to go the other way! No regrets whatsoever.
Good Job on the big opportunity to invest newly acquired money. I will keep my house purchase modest as well when the time comes. I think I will aim for a 20 year mortgage, if I am unable to save up the entire amount for the house.
EL recently posted…Milestones Achieved in 2014
EL,
Good luck with the savings! Working your way there is a lot of work, but worth it in the end!
Great Job. I really like the mats you and your wife did. I am inspired!
Amos recently posted…Career Test – Taking Career Change Tests and Assessments
Thanks – but I’m not sure what you mean by mats, lol.