This month marks the 25th month of exposing our personal finances. It’s hard to believe how far we have come in the past two years. Despite being laid off and cobbling together an income for the majority of the time, we increased our net worth by over $75,000.
Wait a minute. Let’s absorb that number.
We increased our net worth by over $75,000.
The entire time — and I mean the entire time — it felt like we weren’t getting ahead, just barely getting by. Our frugal dedication wasn’t painful, it just felt like it was necessary. But when I look at a $75,000 increase, it seems like we had some wiggle room. And we certainly had the ability to make different choices. We could still be over $100,000 in the red. Or worse. But we’re not.
Let’s remember, however, that $30,000 was a down payment gift. We did nothing to earn that, so it had nothing to do with our frugality.
We Saved and Invested
The other $45,000 had a lot to do with our investments over the past two years. Our investments then and now are at the $50,000 mark, but when we bought our house, we cashed out nearly $40,000 from our Roth IRA’s. We had used our Roth IRA’s as retirement vehicles plus a “just in case” down payment fund over the years. They were exclusively invested in low cost index funds, from last 2008 to now — a big boom time for the stock market. Last Spring, we cashed out $30,000 of contributions and $10,000 of growth — all tax free under IRS regulations.
Although we depleted much of our Roth IRA’s, we still had our various 401(k) and 403(b) retirement accounts. Mr. Stapler and I never pass up the opportunity to take advantage of an employer match, and Mr. Stapler has contributed to his retirement at 3% of his salary plus a 3% employer match for years. I started doing this more recently, with my new job. At this point, both of our employers do a 3% match, so we contribute 6% of our gross income each year.
We Doubled Our Income
Cutting your expenses can only get you so far. At some point, you can’t reduce your expenses any further. That’s why it’s important to look at the Income side of your balance sheet.
Two years ago, I was unemployed and Mr. Stapler worked for a nonprofit. Our income wasn’t too shabby, but when it came to paying our $1,300 monthly student loan bill, on top of a $1,750 rent bill, things were tight. Since then, Mr. Stapler increased his salary by 60% and I took a salaried position.
The best news of the past month, however, is that Mr. Stapler got promoted! Along with the promotion comes with more responsibility of course, but it also comes with a raise! He also got stock options, which is new territory for us. At this point, our income has doubled since my first net worth update post.
November Net Worth Update:
Cash: – $19,309. You probably notice an enormous drop in our cash reserves over the past two years. In addition to dipping into our emergency savings after my layoff, we transferred $10,000 to our Roth IRA’s and paid a hefty tax bill due to our hefty self-employment. At this point, we have just $1,000 in our Emergency Fund, but we are slowly building up our savings for anticipated upcoming expenses.
Credit Cards: + $3,503. I want to make sure readers know that, aside from earlier this year, we don’t carry any of this balance on our credit cards from month to month. Even when we did carry a hefty balance for two months, we offset the finance charges with the rewards points we racked up and redeemed for statement credits.
Loans: – $490,122. When I began this blogging journey, our “only” debt was $193,000 in student loans. Now that we moved and own a home, our loans have increased significantly, although the student loan portion is now down to $171,000 — a $22,000 difference! I would like to say that we have aggressively paid down these student loans over the past two years, but the truth is that the reduction is solely due to our regular payments plus one or two extra payments.
Investments: $521. As I mentioned already, our investments appear to have stayed the same, but this is because we took a big withdrawal for our down payment.
Property: + $589,000. That’s the house! I should decrease the value of our cars, though, because two years does a lot of depreciation damage.
Net Worth: + $75,543. I love looking at the big picture and seeing the difference just two years can make in our portfolio. We have a lot less in liquid assets, but our slow and steady approach to investing allowed us to purchase a significant asset.
I would love to be at net zero next year, but I’ll hedge my bets and guess that we’ll be there by November 2017.
- Survive: SUCCESS! Done.
- Draft a Business Plan: FAIL. I made zero progress on the business plan.
- Improve our heating efficiency: SUCCESS! Our new boiler is installed and works so nicely. I swear our home is more comfortably heated than it was before.
- Finish Christmas Shopping: I would prefer to spend December enjoying holiday events instead of dealing with the stress of shopping for the “perfect” gift. Also, I’ve found that December is a lot less stressful when I put gifts in the mail early — instead of waiting until the last minute. I also would like to finish my handmade gifts this month.
- Improve our heating efficiency: We are adding one more piece to this puzzle, and that is to seal the air leaks in our house. We are hoping that will also prevent a certain type of rodent from coming into the house. Ick.
- Contribute to a savings account for capital expenditures.
- Open a credit card so we can “travel hack” our way to a family reunion next Spring. We still have credit scores of over 790, despite being somewhat frequent credit card rewards fiends, so we would like to hack our way into some free airfare next summer.
Do you ever look back on past years and wonder how you got from where you were then to where you are now?
Amazing progress! The best things happen a little bit at a time. 🙂
Nice improvement – but holy cow you guys are really leveraged! I don’t think I could sleep at night having $190K in student loans and then going out and buying a $580K house.
BUT…. if you keep increasing your NW $30K a month, it won’t take too long until you’re in the black. Nice work!
I hear you! It was a tough decision, but so far we’re happy with it. Careful planning and a lot of good fortune with our jobs is making it look like it will work out for the best.
You guys are doing phenomenal. Congrats to the Mr. on his new promotion. I am all for owning a home, and like yours, ours is rather expensive. I couldn’t imagine paying someones rent for them and thankfully haven’t had to any time in my life.
I noticed, like myself, you guys don’t seem to have an emergency fund. Do you have a plan to build one? Or can you easily pull out of some of your investments if another issue came up where you needed some extra cash to get by?
Anyways, wanted to pop in and say hello and great job on moving forward. I look forward to seeing you guys get out of the red in 2016!
Thanks! We have a teeny emergency fund — about $1,000 — and are striving to continue building it each month.