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How long did it take you to reach net worth milestones?
Old 12-04-2009, 01:08 PM   #1
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How long did it take you to reach net worth milestones?

After reading another thread, I was surprised how quickly people were able to jump from $100k to $250k. How long did it take you to hit certain NW milestones? Obviously the market plays a major role in this and there are a bunch of other factors but it'll be interesting to see if there's any sort of a trend.

I've also heard people say how the first $100k is the toughest. Was this the case for you and if so, why? Compound interest, paying off debt, becoming established in your career, buying a house?
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Old 12-04-2009, 01:31 PM   #2
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In my case, I see net worth increasing at a faster rate in general. Relatively fixed expenses in nominal terms (debt payments such as mortgage and student loans) and in real terms (most other expenses don't go up except at the rate of inflation if you don't have lifestyle creep). In contrast, salaries tend to go up over time as you get more experience, know how, savvy, etc. So for us, income increases faster than inflation, and weighted average expenses increase slower than inflation = increasing amounts of disposable income each year = more ability to save an increasing amount each year.

Add to that the compounding growth on an increasing portfolio size. 10% average annual earnings on $100,000 is only $10,000. 10% earnings on $500,000 is $50,000. Add nothing to a $500,000 portfolio and it grows by $50,000 in the first year, $55,000 the second year (at 10% growth).

And consider the amortized nature of debt repayment on student loans or mortgages. The first payment is almost all interest. Towards the end of the loan, you are paying almost all principal and very little interest. Paying down principal at an increasing rate goes right to the bottom line net worth figure.
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Old 12-04-2009, 01:43 PM   #3
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Originally Posted by bank5 View Post
After reading another thread, I was surprised how quickly people were able to jump from $100k to $250k. How long did it take you to hit certain NW milestones? Obviously the market plays a major role in this and there are a bunch of other factors but it'll be interesting to see if there's any sort of a trend.

I've also heard people say how the first $100k is the toughest. Was this the case for you and if so, why? Compound interest, paying off debt, becoming established in your career, buying a house?
Interesting question and when I look back to when my records began, here is my timeline and this is retirement savings, I never counted the equity in my home).

1/1/94 $21k (401(k) value was $6k )
7/1/96 $109k
1/1/98 $150k
7/1/99 $205k
4/1/01 $265k
1/1/02 $332k
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Old 12-04-2009, 01:52 PM   #4
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Started tracking 1/1/05.

Year over year change in net worth:
1/1/06: +77%
1/1/07: +129%
1/1/08: +59%
1/1/09: -17%
1/1/10: +69% (estimate based on 9/30/09 numbers)
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Old 12-04-2009, 02:07 PM   #5
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this is my year on year % increase of RE savings (this not IRR or ROI as it includes contributions)

1996 69.9%
1997 52.2%
1998 54.9%
1999 39.2%
2000 21.5%
2001 10.7%
2002 14.0%
2003 58.3%
2004 34.1%
2005 14.9%
2006 17.6%
2007 14.0%
2008 -9.0%
2009 19.4% (ytd as of 12/1)
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Old 12-04-2009, 02:26 PM   #6
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I usually participate in this type of thread, but I am too lazy to do that this afternoon.

Besides, who am I competing with? Just myself, and the same is true for all of us. If you get some idea of how fast others saved from their salaries, that might discourage you or it might subconsciously limit your ambitions.

What helps me to save the most the fastest is to challenge myself. Where I might have been working on a goal of $1,000/month, I might get a mischievous little thought of "I wonder if I could save $1,100 this month? $1,300?". That and then watching the nestegg grow even faster than you have originally projected is the FUN part of saving!

Also every penny you save is "sticking it to" the people or forces in the world that would keep you chained to your desk until the day you die, and there is a certain satisfaction in that.
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Old 12-04-2009, 02:33 PM   #7
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Also every penny you save is "sticking it to" the people or forces in the world that would keep you chained to your desk until the day you die, and there is a certain satisfaction in that.
Yes. Yes, there is.
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Old 12-04-2009, 02:40 PM   #8
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Good topic. I've included the house piece because you asked about NW, not just RE savings.

I've only kept good records since my late 30's, so there's some guesswork here:

Age 23, graduated from college, got a career-track job. My NW was $2000, the value of my well-used car. (The folks and part-time work paid for school, so no debt).

Age 24, got married. Our NW was $8000, the value of two worn-out cars, some wedding gifts and a couple of paychecks worth of savings.

Age 26, ready to buy a house - NW = $15,000 after some LBYM savings for a house down payment while making car payments, buying furniture, etc.

Age 26, bought the first house - NW = minus 85,000. It was scary to sign a 30-year note, but thanks to the mid-80's S&L / real estate troubles in Texas, it was a good bet and within our means. This was also about the time I began putting $100 a paycheck into a 401k. We also made several April tax-time IRA max contributions while we were still DINKs.

From there, I'm guessing we went positive around age 30. The real estate values went up quickly and we continued socking away $5000+ per year in IRA/401k's. Also, DW had a pension plan at her Megacorp job, which became a rollover IRA when she left at 30 for stay-at-home mom duty.

Mr. Lynch over at Magellan was kind to us, and real estate in our neighborhood went up some more, so I'm guessing we were on track to hit $100k around age 33.

So the key factors of hitting $100k were equal measures of house appreciation, steady (but modest) IRA & 401k contributions beginning ten years earlier, and compounding.

What actually put us over top a little earlier, though, was a windfall. Ours happened to be a legal settlement, but for others might be an inheritance. Had one of those, too, around age 40, which bumped us over the $250k milestone.

The most important factors since? More compounding, continued steady (but modest) RE fund contributions and holding onto those two windfalls in a buy-and-hold stock mutual fund portfolio.
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Old 12-04-2009, 02:52 PM   #9
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I never looked at certain amounts of assets as milestones until about 5 years ago. At that point I started buckling down. Then, three and a half years ago, I found this forum, tinkered with FireCalc and really got with the program.

During my working daze, I saved most of my salary. We lived off DH's salary and saved as much as we could from his paycheck. Taking advantage of tax deferred accounts, paying 'ourselves' first, diversifying our portfolio and paying off the mortgage early allowed us to reach our goal.
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Old 12-04-2009, 02:57 PM   #10
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The most important factors since? More compounding, continued steady (but modest) RE fund contributions and holding onto those two windfalls in a buy-and-hold stock mutual fund portfolio.
Most important factors for us were

1) Making the decision we needed to start saving for RE soon enough (age 38).
2) Aggressive saving, but not to the point of deprivation
3) Success at work for both of us and using the higher incomes from promotions to save more rather than buy more.
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Old 12-04-2009, 03:04 PM   #11
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I really didn't set numerical milestones. But when I did my tallying of net worth each quarter, I did notice how much that number would fluctuation depending on the market conditions. Hopefully, more steps forward than steps back.
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Old 12-04-2009, 03:04 PM   #12
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I have been tracking our retirement portfolio since March 2001 (see trend below). The starting date coincides more or less with the beginning of our careers.

We first reached $100K in March 2001 (we saved money throughout graduate school). But, between the 2001-2002 market crash, paying for the wedding, buying 2 new cars and a house all within a 12-month period, we didn't reach the $250K mark until August 2005 (53 months). It took another 4 years to reach the $500K mark (August 2009). Of course, we could have reached that milestone earlier if the market had not crashed -again- right before we got there. Hoping to reach $1M in 2011.
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Old 12-04-2009, 03:32 PM   #13
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I don't track NW milestones, but rather my NW overall. Individually, I reached the 100k milestone around 2001. If everything goes according to plan, I expect to reach the $1MM mark by 2011. Throw in DW's assets, and we're substantially north of that figure already.

Here's an additional thought/question. I had an opportunity a few months back to take a job that would pay 30%-40% higher than I currently earn now. I turned it down because of the commute and other non-tangible factors (legal specialty, type of work, etc...) Part of me wonders how much closer to FIRE my DW and I would be if I had taken the job and spent a couple of years at it. Then again, another part of me thinks I made the right choice, and that a few more years of doing something I don't really want to do, just for the money, isn't worth it.
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Old 12-04-2009, 03:41 PM   #14
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Nice graph FIREdreamer. The shape, with the characteristic "meltdown dip", looks a lot like my retirement accounts graph.

DW and I hit 250k in early 2005 and just now hit 500k in the defined contribution retirement accounts. During that time, DW took some some time off, and now that she is back to working full-time, has found that time off was better. I do recall the first 100k took a while to accumulate and since then, 100k movements are much more common. From the market peak in Nov. 2007, we saw our retirement accounts drop by over 100k in less than 18 months (even as we were maxing out 401k, 403b, and IRAs), and since the market bottom in March of this year, go up by over 200k in 8 months. It's been a wild ride for the last two years.
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Old 12-04-2009, 03:43 PM   #15
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Here's an additional thought/question. I had an opportunity a few months back to take a job that would pay 30%-40% higher than I currently earn now. I turned it down because of the commute and other non-tangible factors (legal specialty, type of work, etc...) Part of me wonders how much closer to FIRE my DW and I would be if I had taken the job and spent a couple of years at it. Then again, another part of me thinks I made the right choice, and that a few more years of doing something I don't really want to do, just for the money, isn't worth it.
I'm sort of stuck in that same quandary right now. I finally got the law license and could potentially take a job paying 50-100% more than what I'm making now in engineering. But it would mean lots more stress, long hours, hard work, and some more work related expenses (clothes, maybe new-ish car, commute, dry cleaning, needing to hire some household tasks out etc).

But when I factor in taxes and crunch the numbers in terms of "years to retirement", I'm facing roughly 10 more years in the current position vs. 7 more years in a high paying firm position. Hard to give up a relatively cush position just to knock 3 years off the FIRE clock, when the next 7 would likely involve much less free time and much more stress.
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Old 12-04-2009, 04:03 PM   #16
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I'm sort of stuck in that same quandary right now. I finally got the law license and could potentially take a job paying 50-100% more than what I'm making now in engineering. But it would mean lots more stress, long hours, hard work, and some more work related expenses (clothes, maybe new-ish car, commute, dry cleaning, needing to hire some household tasks out etc).

But when I factor in taxes and crunch the numbers in terms of "years to retirement", I'm facing roughly 10 more years in the current position vs. 7 more years in a high paying firm position. Hard to give up a relatively cush position just to knock 3 years off the FIRE clock, when the next 7 would likely involve much less free time and much more stress.
Exactly the analysis I conducted when I turned down the higher paying job. From 2000-2005, I slaved away at a big law firm for the big bucks (or what I thought were big bucks; the firm paid on the low end of the BIGLAW scale). Four years later, I now make the same money serving as in-house counsel for a Fortune 500, with a great deal less stress. No suits, no need for a luxury car, reasonable hours (no weekends), etc.... With a new daughter (6 weeks old), staying put is probably my best bet. On the other hand, the siren song of ambition and seeking higher pay is sounding ever so sweet.
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Old 12-04-2009, 04:11 PM   #17
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I have had similar decision points, Jay & FUEGO, and expect to have at least one more in the foreseeable future. In my case, the career riddle has been whether to continue in a secure and interesting (but modestly-paying) government engineering job or making the jump to a more lucrative job in the private sector where I started my career.

My financial life has some big milestones in just a few years: the house will be paid off, I become vested in an attractive pension at my current job, DD #2 will finish college. About that time, I'll finally find myself in the long-desired position of being able to make maximum contributions toward my RE fund "number". I'll be on the home stretch.

The question then is likely to be: "Should I continue for another X years with the gummint, or slice that time by one-third by jumping to the consultant world and spending time on airplanes, sucking up to customers, etc." Not sure of the answer, but when the phone rings I will be listening.
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Old 12-04-2009, 04:22 PM   #18
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With a new daughter (6 weeks old), staying put is probably my best bet. On the other hand, the siren song of ambition and seeking higher pay is sounding ever so sweet.
Young kids here, too. I'm looking at 7 years not seeing the kids a whole lot, or 10 years of seeing them fairly often. Or some workable middle ground hopefully. I'm giving in-house/govt positions serious consideration too instead of just high paying firm jobs. There will be no mulligan when it comes to spending time with family and friends. Once the kids are grown, I can never go back to having them be little children.
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Old 12-04-2009, 04:31 PM   #19
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I'm sort of stuck in that same quandary right now. I finally got the law license and could potentially take a job paying 50-100% more than what I'm making now in engineering. But it would mean lots more stress, long hours, hard work, and some more work related expenses (clothes, maybe new-ish car, commute, dry cleaning, needing to hire some household tasks out etc).

But when I factor in taxes and crunch the numbers in terms of "years to retirement", I'm facing roughly 10 more years in the current position vs. 7 more years in a high paying firm position. Hard to give up a relatively cush position just to knock 3 years off the FIRE clock, when the next 7 would likely involve much less free time and much more stress.
We had to make a similar decision in 2005. Stay in place and continue to make a nice income but with limited financial upside, or move and take advantage of a golden opportunity. We decided to move. We were 30 years old, no kids and it was now or never. The jobs are definitely more stressful, but boy we never imagined in our wildest dreams that we would ever be making the kind of money we are making now. This was the best financial decision of our lives. We are quickly building a very strong financial base which, by the time we reach 40, will open all kinds of possibilities that, under the previous plan, would not have opened until our early 50's.
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Old 12-04-2009, 04:37 PM   #20
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Counting only my retirement assets [401(k)/IRA] and liquid non-retirement assets (i.e. mutual funds, checking/savings accounts, NOT home equity or cars), and excluding anything I still owed in O/S loans (i.e. student loan, mortgage), here are my milestones:

1Q 1988: 10k (age 24)
(fell below 10k in 1989 after I bought my apartment)
4Q 1990: 25k
(bought a newer car and refinanced my mortgage)
4Q 1992: 50k (age 29)
1Q 1995: 100k
3Q 1997: 200k
(paid off mortgage 4/98, age 35)
4Q 1998: 250k
3Q 1999: 300k
2Q 2001: 400k
(fell below 400k later in 2001 when market dropped; I also switched to working part-time)
4Q 2001: 400k (again)
3Q 2003: 500k (thanks to my company's ESOP zooming up in value since its inception in 1997; stock market recovered, too; age 40)
3Q 2004: 600k
2Q 2005: 700k
1Q 2006: 800k
4Q 2006: 900k
3Q 2007: 975k (further reduced my weekly P/T work hours from 20 to 12; age 44)

Never made it to 1M (yet). Dropped under 900k and even 800k (briefly in 2009) after market tanked and I paid the taxes on the cashed-out ESOP following my retirement in late 2008. I have since rebounded back over 900k with the market's upturn.
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