You may have been listening to The Shins, The Killers, and The White Stripes. And were excited to see Spiderman 3, 300, and I Am Legend. And you may have just heard about the iPhone that Steve Jobs announced not realizing how much it would impact us today. During this time, I also began tracking my net worth in a spreadsheet for the very first time October 2007 to be exact. I didn’t have very much to add up so it was fairly easy: a paltry 401k, a few stocks, a student loan and a sizable amount of credit card debt.
Today, we have a home, two new cars, two fat and growing 401ks, a brokerage account, a savings account and a bunch of other stuff (instruments, new furniture, a lawn mower, a Vitamix, plants). In 2007, I couldn’t have predicted I’d have all this stuff/all these assets. Ten years into tracking, I’ve learned a bunch, and I want my wife and I to be set up for success over the next 10 years so we can have the option to retire early, living an upper middle class lifestyle for the rest of our lives.
There are four phases in my life that I’ll walk you through along with income, net worth and lessons learned. I’ll give you snapshots of my financial situation along the way. Lastly, I’ll conclude with what’s in store for the future. (BTW, this pairs well with a month by month tracking of my net worth)
Prehistory i.e., before i started tracking my net worth (2001 – 2007)
During college, I maintained a small credit card balance if any. I used my parents credit card so they always knew what was going on and made me pay them on time. I had two jobs/internships that paid ~$10ish an hour. I used that money to make my first stock investments worth about $1,000 in P&G, Merck and Titanium Metals (a rock star that would soon fall like a rock). After graduating from college, my first job was 100% commission. When I made less than $20 in commission that week, I’d got a paper statement that said “voucher $xx.xx”. I also cashed in $1,000+ of Titanium metals to buy some suits and a laptop for work. I finally got a cell phone in 2006 and my own credit card. Fortunately, my parents let me live at home while i got on my feet. I started contributing to mutual funds but struggled to keep balances in them with the little income I had. As you can imagine, I still wanted to go out and do all the fun stuff and thus began my slow march to my peak $7,000 credit card balance. After a year of semi-regular vouchers, I moved to my current employer exponentially increasing my income to ~$38K annually. I remember my very first paycheck – it was a little over $1000 after taxes and deductions. I had to buy something but i didn’t know what. So, I went to Target and bought a Nintendo DS with one game: Brain Age. I really felt on top of the world at this point. I finally had a livable wage exactly one year and two months out of college. A couple of months after making real money, my parents wanted to charge me $50 a week for rent! FIFTY DOLLARS FOR RENT? TO ME? YOUR ONLY SON?! I was so offended I called their bluff and moved out only to start paying $500/mo. I showed them.
I shouldn’t have spent so much on partying. I ended up having a lot of fun but also a lot of hangovers. I could’ve cut out those last couple of drinks each night and instead put $50 in a Roth or non-retirement investment. Find an employer who values and compensates you for the value you provide. I worked my ass off at my first employer and didn’t have much to show for it. Also, in 2007, pride costs about $450; don’t be irrational/emotional when it comes to money. You only end up burning yourself. I would be taught this lesson a few more times in life 🙂
Beginning net worth: ?$0?
Ending net worth: -$24,206
Starting income (base): $3,750
Ending Income (base): ~$38,000
The Early Years (Oct 2007 – Apr 2010)
This period was when I really started to live it up. I went on multiple trips inside and outside of the US, I bought a new car, I went out and partied like a champ. Thanks to having the foresight to invest in myself via an extra license and a certification, I ended up getting promoted twice. This pushed my income up $10,000.
I started my MBA which would pay dividends in the next phase of my life. As you probably recall in 2008, the market was tanking. Fortunately, I didn’t have enough money invested to really feel any effect. So, I kept stashing money into my 401k like a good saver. I used my bonus to pay down my credit card balance only to have it shoot up again. I remember I started buying Banana Republic clothes to dress nicer and ween myself of the thrift store affinity I established in high school and college. I also treated myself to more expensive haircuts (which generally looked the same as cheap cuts). I also bought a car under my name and totaled it. ugh. I bought a Mac to make music and get out of the PC virus world.
Again, take it easy on the partying. Geez. Education was the key to advancement/promotion then and is key to advancement in the future. It may be hard to see the benefits today, but it will pay off tomorrow. Stash as much money away as you can. Just like education, it pays off in the long run. Doing so builds good habits and a nice nest egg.
Beginning net worth: -$24,206
Ending net worth: -$17,912
Starting income (base): ~$38,000
Ending Income (base): ~$49,000
The Pull It Together (PIT) Years (May 2010 – May 2015)
After my car accident, I finally started to pull it together. I would buy another car three months later and just before I met Mrs. MORE. That year I would get a significant promotion in title but not in pay and finish my MBA. In the PIT years, I was finally using my brain at work. This made me party less and less. As a result, I got promoted another three times – this time with pay more than doubling my starting amount. In October of 2010, I finally hit $0 net worth after four years after graduating from college.
In 2013 I thought, “hey, maybe it’s time to buy a house” and so I did. It was a little out of my initial price range ($125,000 vs $190,000 purchase price) but has proved to be a decent utilization of money. Although I’ve accumulated ~$100,000 in equity, this is offset by interest, insurance, upgrades, and maintenance costs. I did a little bit of math and essentially have come out flat. The first year and a half in my home, my cousin was living with us and chipped in for the mortgage and bills.
At the end of this period, the soon-to-be-misses was reminding me of Queen B’s song (paraphrased) “if you like it, put a ring on it.” A wise uncle also reminded me to max out my 401k at this time. It was a pain in the butt to do, but i eventually did it and was glad I did. Not only did it lower my tax burden, but it also accelerated my path to six-digit net worth (hopefully seven digit soon). By the end, I was worth a cool quarter-million.
Education pays off. From an income standpoint, having roommates is awesome. Don’t buy your primary residence as an investment. The early sacrifices I mad to sock away money in my 401k have absolutely paid off. I wish I would’ve done it sooner. Lastly, even though your boss’s boss may love you, don’t piss off your boss. It’s counterproductive.
Beginning net worth: -$17,912
Ending net worth: $249,398
Starting income (base): ~$49,000
Ending Income (base): ~$81,000
The Adulting Years (June 2015 – Present)
After 6+ months of researching diamond engagement rings, I finally made the purchase. I probably wasted a hundred hours researching the same diamond on Blue Nile but it was worth it. I ended up cashing in some Apple options and dropping north of $10,000 on that shiny fella. We went to Spain where I proposed to the misses in front of Sagrada Familia which is a church that has been under construction for over a hundred years. A few days later my cousin met up with us and we ran with the bulls in Pamplona. An amazing two weeks. I digress.
At work, I interviewed for three different jobs in the same organization. I kept coming up super close to getting the job but someone with more experience kept beating me! Fortunately, at each rejection, the hiring manager would refer me to a sister team and after a couple of unsuccessful interview rounds I finally landed my current job. The timing was also spectacular because my current team at the time had promoted me and then I got the new job. That meant I got two raises within two weeks.
A couple of months before we tied the knot, the misses and I got new cars. Unfortunately, she got in a car accident with the car she won on Facebook (that’s a different story) and so she was in the market for a car. I did some research on TrueCar to find out what others had paid for the same car. When I went in to negotiate, they were able to come down even further from the online price. And an error with the finance manager ended up saving us an additional $4,000. I also ended up trading in my car for $500 over blue book value and a lower price than what others had purchased as show on True Car. Sadly, this added $630 to our monthly bills. But my raises a few months earlier afforded us that luxury.
The month before the wedding we also merged our finances. Our pay-your-future-self-first-then-your-bills-then-have-fun approach has proven successful for us. As a result, we were able to accelerate paying off the misses’ credit card, our new mattress and new furniture.
At the urging of relatives, the misses and I decided to stay in the states (vs traveling to a faraway destination) to get married. And we did it by spending approximately $10,000 of our own money and had about $5,000 in help from our family. We partied HARD that night with over 200 guests. It was amazing. Our frugalness kept us out of debt too! Who needs monogramed napkins anyway?! In less than a month afterwards, we took our honeymoon trip to San Diego and Maui. When I imagine early retirement, I imagine our honeymoon. We had great hotel views, great eats, watched Deadpool, visited awesome museums, went to a baseball game. We spent $5,000 on our honeymoon ($2,500 on food alone, did I mention my wife’s a foodie?). In 2016, we would push through $200,000 and $300,000 net worth.
2017 is turning out to be a pretty good year, despite the misses’ job disappearing. She started maxing out her 401k. I started putting in an additional 8% in my after-tax 401k money. I’ll continue this in the future years and I hope to get the misses doing it too. I started investing in options again and bitcoin. We almost have our emergency fund at $10,000. I got another promotion adding over $10K to my base. Oh yeah, and the stock market was roaring helping us push past $400,000.
Research pays off. We were able to save at least $6,000 on our cars. Six months of research almost qualified me to be a gemologist, as I made sure I bought as much diamond as I could afford. You also don’t have to spend a lot on a wedding to have a great time. A little help from family/friends, a nice venue, a good DJ and an open bar can go a long way. Despite extra income being allocated towards accelerating debt payments, paying off debt feels great in the end. Max out your 401k and then some. You’ll thank your former self over and over and over…
Beginning net worth: $249,398
Ending net worth: $459,373 (as of 12/10/17)
Starting income (base): ~$81,000
Ending Income (base): ~$110,000+
We’ve built a solid financial base over the past decade: a low amount of total debt at <$200K, retirement assets of almost $400K, and a growing non-retirement base of ~$20K. Our net worth is just approaching $500K which I project hitting in two months when my bonus hits. This has allowed us to maintain our life style even as we’re temporarily reduced to one income; though we’re fortunate to not have a big emergency – whether medical, home related, etc. – happen during this time. As we proceed in) to a growth phase of our lives (during a bull market on the verge of a big correction here are some things we’ll do for 2018.
- Build emergency fund to $15K – $20K: having one income highlights the importance of this goal.
- Increase life insurance to $1M+: though i don’t talk about the importance of insurance much, it’s critical to providing for your family even if you don’t have one or you want to continue to provide beyond your passing.
- Grow non-retirement investments to $25K: The first phase of early retirement will rely on non-retirement money, so I need to grow this ASAP!
- Pay down or eliminate 12K of student loan debt: At 4.5% interest, this a moderately high rate and a nuisance of a bill. It should/will be killed soon!
- Resume and increase 401k contributions to Max-out rates: In addition to resuming 401k contributions when my wife gets another job, we’ll start putting in after tax money as well. My goal is to get us to contribute $70K+ in retirement contributions and matches.
I’ve modeled 2018 already and will share that soon. However, this post is well beyond 2000 words and I must conclude. 🙂
Note: A post by Money Mine inspired me the post above.