I had some time, and so decided to look at my net worth.
With the real estate market, decided it would be UGLY.
In the end, not so bad. No improvement over last year, but didn't expect any...
(I suppose I am at the whim of the market, the rest of the year - but wanted to see where we were at).
Cash was mediocre. I did save far more than I expected to this year (with the demise of our beloved preschool). BUT, also had a lot of unexpected, and luxury expenses, this year.
I don't expect to make much progress in 2010. I just want to save more than I Spend! (Medical bills and house maintenance will be big in 2010).
The investments are the only silver lining here. My retirement is up about 20-25%. I put away $13k during 2009. Grandma gave the kids $1/each, per usual. Next year I will be happy to put away $8k. Taking a step back while the market is rebounding. IF it dips low I will be tempted to invest more, on the other hand.
I still have $7k cash (emergency) in our ROTHs. The returns get invested into the retirement portion of our ROTHs. (What returns, right? I did have some though).
On the autos, I adjusted my car down a lot, to $5k. I just haven't been depreciating it fast enough. Dh's car is valued about $2k right now, for net worth, and I Depreciate it $500/year. I'll probably just do $1k/year for mine, going forward.
House - I have been using assessed value since the bubble was so volatile. The way property is assessed in Cali is up 2% per year, max. BUT, adjusts downward for real losses. While inflated gains aren't helpful to my balance sheet, the true value as it goes down, is good to know. This is why I like just going with the assessed value. I think the assessment we got is low, BUT won't be surprised if our house drops a lot in the coming year(s). So I will just go with it. I will wipe my brow with a "phew" this year that the assessment is what we paid for the house, and that the market is performing even better. Can't say what 2010 will bring. (I'd guess, more losses!)
We did refi January 1 and roll the costs into our loan (Have never done that before, but felt it was worth it for the rock bottom interest, and to keep our liquidity). Though we added a fair amount to our loan, our repayment clip has resumed where we left off - just about $4k per year to principal. I can live with that.
Interestingly, we have been homeowners 10 years, our home is worth about what we paid, and our loan is about where we started (maybe $1500 higher). Thing is we now own twice the house, and land. Doesn't tell the whole story at face value - since moving bought us twice the home, and more, for the same price as where we started. There is really nothing complain to about considering the real estate mess. Putting 25% down on our current home, has paid off. (As did buying before all this mess. It's paid off because rents are insane here).
For reference, I've got prior years cumulated:
Though the last 2 years haven't been pretty, we don't have much to complain about. Careful saving in our youth has given us a tremendous leg up.
2010 will probably be our last one-income year. I look forward to being able to bring in, and save, more income. Maybe make some forward progress... (Not that I expect that dh will work full-time, or even part-time. But he can raise enough to fund his ROTH, etc., with the kids in school all day).
ETA: Auto loan $1 was a typo - oops!
Viewing the 'How We Got Here' Category
I had some time, and so decided to look at my net worth.
Really funny, but I ran into some old files on my computer.
I have said many times I am not much of a "budgeter." Not a strict one anyway. But, whenever life changes I tend to run up a budget to see where we are at and what our course of action should be. Thus, I am not terribly surprised that I found an old budget from 1999 (when I graduated college) and one from 2003 (when my first child was born).
In fact, I MUST have a budget from when dh and I first combined our finances - I will have to hunt it down (I am curious now). That's certainly the only time I remember making one, pre-2006.
Anyway, I only started using Quicken in 2006, and so I find anything prior to that is more of a guess - or reliance on scattered paper records, etc. SO, it was really interesting finding some old budgets. I decided to put them side by side (& will be interesting to add on in future years). I think it's interesting some of our expenses (like healthcare) have exploded, while others have stayed the same for a decade (landline?).
These all happen to be one-income years (1999, 2003, 2009). Dh was working in 1999, but we weren't living together or combining finances, etc. We got married and all that in 2000.
Obviously, my income has done quite well. Interestingly, my taxes have not gone up much over the years. Lots of tax breaks with the kids and the whole one-income thing. The mortgage helps too. I have never withheld more tax than I needed to!
Medical: Obviously, my medical insurance premiums look horrific. They are, but I am covering 4 people now, as opposed to one in 1999.
Dental/Disability: I now pay those privately, and save for those through "short-term savings." Dental cost way more, with 4 of us. Disability - I probably pay double that, these days.
Rent: This one is interesting. I rented a room in a nice home in a decent neighborhood, for about 5 years, through college. This is one expense I did not see increasing just because I graduated college. If I was single, would have stayed there a few more years, easily. Anyway, I have no doubt said, many times, that owning is cheaper than renting where I come from. Looking at this sheet, you wonder, "how?" Um, I had a room for one person. 2 wouldn't have been allowed. More importantly, it was a sublease from a renter who had been there MANY years. Our rent was rarely raised. The entire 3-bedroom house cost about $1600/month to rent and was a complete steal. (I had the most modest room and paid slightly less than 1/3. There was nothing modest about this room BTW - LOL - it was huge). Basically, I don't think it would have been possible for us to rent an apartment for as much - certainly not one with room for kids. So, my rent was cheap - but it wasn't very feasible to find cheap rent once we married - and we were always thinking ahead to when we had kids. BAsically, at marriage we were done renting with other people to keep costs down.
Mortgage: We have refied that down over the years. 8%+ down to 4.875%.
HOA: I was surprised to see our HOA fees used to be higher. I had completely forgotten. Dh reminded me that we used to pay more because few houses had been built when we moved in - they lowered it as people moved in, etc.
(The HOA on our old condo has gone from $250 to $400, monthly, in just a few years. So I daresay we have been lucky here).
Auto gas - I find my 2003 budget figure interesting. I used to drive home for lunch every single day. Gas was considerably cheaper in both 1999 and 2003. Am I driving more now? Not in the least!! Though my current budget figure is more forward thinking/inflation including. I rarely spend $300 on gas any given month. But, no doubt the expense has gone up.
Food - we have added a few mouths to feed.
Clothes - was always my big splurge
Gym - I used to get a good deal on 24 hour Fitness, through my work. These days we pay about the same for dh and I to go to the discount/no-frills gym. I didn't feel we could afford a gym when we had BM, but I guess I would have considered it if I knew there were such cheap options.
Landline - Back to old $25 now that dh let me drop call waiting. (I always had my own landline - for internet).
Cell - I had a cell (& internet) in 1999, but my parents paid for it. My dad had aol from way back, and I had an account many years. I just dialed up, of course. I don't remember when or why they got me a cell phone. I am sure I got my own plan sometime not too long after graduating college.
We've been able to lower our costs since, by adding our parents to our family plan, and sharing the costs.
Utilities - they have gone way up. No biggie renting with the roommates - they were never home. I was home even less - so our utilities were low. Plus we split them. Water was very cheap in San Jose - I was shocked at our water bills when we moved up here. !!
Cable - the first luxury we added when we married. I am surprised cost has stagnated. Seems like we have been paying more lately. But I think dh had HBO when BM was born. That probably explains it.
Gardener - a luxury we added in 2005 - LOVE it.
Preschool - a luxury we added in 2006, and which will entirely disappear in just one year. That will be divine.
Expenses Reimbursed - At my first job out of college, I made this budget before I got heavily into it. Truth is I spent a LOT more on driving and on eating out (part of the job) but was reimbursed handsomely for most of it. So I had a "reimbursed" category. I did spend a lot more on gas and food that first year or 2, but since it was reimbursed, guess it doesn't really matter. I was able to stretch my paycheck a lot further with all the extra money.
Car - I bought a $6k car around the time I graduated college, and paid it off in a few months. (My 20-year-old car had the decency to die 2-3 months out of college - phew). So it was one expense I kept very low. The auto reimbursements were quite high compared to my actual auto costs. Helped to bulk up my savings.
Savings - I was really surprised I seemed to take care in calculating semi-annual expenses in my 1999 budget. Shouldn't be surprised - I lived on a shoestring so long - no doubt I needed that planning. That pretty much sums up most of my college living expenses, etc., when I made far less money.
Obviously, my savings in 1999 was far simpler. (I was also surprised I had a 401k category - I wasn't able to contribute until mid-2000. Planning ahead I guess).
I have since simplified, since we have so many items to save for (property taxes, insurance, vacation, dental checkups, car repairs, and many other irregular expenses). I just put $1k per month away, for all that now. This is an area where a lot of our expenses have gone up, post-kids. We have lots more insurance, etc., than we did in 1999 or 2003.
The whole point of sharing is to illustrate how much easier it was to live below my means immediately post-college, than it has been since having children, etc. To the YOUNG people.
I was NOT deprived in 1999 - I had tons more savings and disposable income than I do today.
I traveled a fair amount back then. It was just so cheap alone (You know, stay with friends, split hotel room) that it hardly warranted a mention in the budget. The thing I Struggle with these days is how so many things seem to cost times 4 (with 4 of us).
People all the time assume living so tightly in my youth sucked. The thing is, it paid off so quickly. The truth is I just wasn't much into material things. My life was very rich with people and experiences. The $6k car I bought was an immaculate, cute, convertible. Those were some fun times. "Deprived" is not the word I think of when I think back to my early 20s.
(It was easier back then because everyone else was young and broke too - not a lot of financial pressure! PArticularly with the exorbinant rents - none of my friends had much disposable income).
Going forward? We've been trying to limit our regular monthly expenditures to the realm of $4000/month (indefinitely). We no doubt increased our expenses over the years, with mortgage and kids, but we don't really have any new "luxury" expenses on the horizon. Happy with where we are at. We are also pleased with our insurance coverages, etc., for the long haul. So basically, outside rising costs /inflation for our current expenses, we don't expect to add much to the expense column. (This holds true even if dh lands a high paying job - we'd just save it and pay off the mortgage. We'd be willing to help more with college. Boring stuff like that).
It helps that our biggest expense, the mortgage, is not going up. On the contrary, it has gone down with time, literally (refis) and inflation-wise.
It will be interesting to check back in 6 years and to see where we are at.
DINK, meaning dual-income, no kids
The underlying theme of my entire blog is how well we did before kids and how our life goal is to get back to that savings level. Days like this I am glad we had kids rather young. It's not like we have a large income to live up to since dh quit working so early on in his career (merely 3 years in?). If we had waited a few years we may have a smaller mortgage and bigger savings, but more income lost in the interim, etc. I think going young was the way to go.
We allowed enough time to save up that I stress when my efund is lower than 3 months' expenses and when I don't have enough cash to replace our cars, etc. IT's all relative. But once you have decent financial security, it is difficult to move backwards. I think also my biggest fear is we have been so lucky in our youth that I fear once we reach some DINK level we may just be kicked off by some outside forces; not by choice. (Job loss, natural disaster, anything).
I am reflecting on it much as we just reduced our expenses by almost $400/month by simply refinancing the house and switching preschools. Meaning, no change to our lifestyles, but wala, just about enough to fund an entire Roth!!
Anyway, the most dh ever brought home was $2500/month, so at our peak that was what we saved, in addition to 10% of my income to my 401k (about $5k). The $2500/month went to cash, where it eventually went to down payment on home, massive cash savings, cash for moderate car purchases, and a few thousand here and there into our IRAs over the years. Short-term savings (property taxes and the like), mid-term, long-term, all funded by dh's income.
So I am super excited as we near that savings level again. Though I have mentioned before, it is certainly not an apples to apples comparison.
For now we are at:
$1000/month short-term savings
$ 650/month cash savings
$ 350/month ROTHs
Getting awfully close.
My increased retirement contributions, through my employer, and overtime, bring our savings level up by about another $500/month.
For a grand total of the magic number, $2500/month!
Of course, we have more expenses, and $2500 doesn't stretch as far as it used to. At least $3k/month is what we should aim for, to factor inflation. I guess that's the point where I don't care particularly if we have a second income while the kids are younger than teens. $3k/month to savings? - we're probably good.
We'll probably hit $2700/month once LM is done with preschool next summer.
Means merely another few thousand dollars a year in income will make a BIG difference.
WE actually just crossed over to the point where I feel like we are saving more than we "need" to in the long run. That certainly feels NICE. But we have things to catch up for. Building back up our cash savings, starting to think about college more, we will have a couple of cars to replace within the decade, AND we haven't put any money to speak of into our house since we purchased it 7 years ago - we have some work to do, etc. Beyond all that, we will err on the side of saving a bit too much cash in the interim because dh would like to go back to school to get a teaching credential or possibly upgrade his film/TV minor to a major. Whatever he does, he will probably go to school a bit to make himself more marketable. Of course we would like to pay cash (community college/state college is our aim - which is still quite affordable around here).
If the year is good we may be able to put $10k into cash this year - but you see we have a lot of competing goals. I wouldn't mind increasing the efund either.
Maybe it's eye opening to have so many of my clients coming in this year and "struggling" on one income in the $120k range. Sometimes I think we will always worry about money. We didn't so much when we were younger but I think it was due to being naive more than anything else. Ignorance can certainly be bliss.
But I do admit, aside from this whole catching up thing and trying to set aside $10k cash this year, I do feel significantly more relaxed with our current situation. No ill will towards those wil mortgage bail outs. They certainly can't feel my peace of mind and my freedom today.
It's funny though. The reason we decided we were ready for kids was when we bought our dream home in our low cost of living haven and we no longer thought we had to save $100k down for a starter home. That was precisely why we were saving so rapidly. We figured, "What do we need all this savings for anyway? Let's have kids."
Our expenses have stayed rather stagnate and my income has grown considerably over the years, which is why we are where we are at. But we do still have kids to support (orthodontics, piano lessons, college and the like) and I didn't know our medical insurance premiums pre-kids would grow by 8000% in just 3 or 4 years. I never expected we would last this long on one income and that dh would probably have to return to college to get a job.
Of course, if we expected all this, well, it wouldn't be life. Life isn't s'posed to be so easy, right?
But yeah, as we square away this whole preschool thing, it just hit me. Wait a minute, we didn't do anything but we are saving almost $400/month this year? Huh?
& I tell you, the extra overtime I can work with LM going to school by our house, instead of by my work when I used to drive him? I think preschool will just about pay for itself this year. Woohoo. Though I did play hooky yesterday to pick him up on his first day and figure since he will either arrive or leave in the noon hour (depending if he can get an a.m. class) I will have plenty of opportunity to go home at lunch (as I often do) and pick him up or drop him off once in a while. Arriving at work at 9 & having to leave at 4:45 always was such a time suck. Adding 15-minutes to a lunch once a week isn't as near of a big deal.
Well, I updated my net worth in my last post:
However, though I have discussed more of our history here and I have a "How We got Here" category, I haven't been good about having any resource for new or occasional readers.
I feel like my blog has been considerably more organized lately, but that is one are where I have lacked. Likewise, I have often thought it would be more interesting to share how we got here, than where we are now. Which I am sure there are a lot of questions about that in general.
So, don't know why it never occurred to me before, but yesterday I was suddenly excited to piece together about 10 years of net worth history. There is a lot of estimating involved, though I actually had bank accounts and stuff, and I keep meticulous track of our retirement, so most of the assets are pretty exact. I guessed more on home and auto values, and mortgage balances, etc. I know I was in the ballpark which is all that really matters.
It's interesting too because I look back at things I often find that memory and reality do not jive. So it was a good exercise to look some things up.
& this is what I came up with:
I have said often that I graduated college with a net worth of $0. I'd be lucky to have a few hundred dollars in checking and the car I drove was probably worth $100.
BUT, one thing my memory failed me was how generous my grandparents had been. My grandfather passed right before I began college, and my grandmother gave my sister and I $20k each at the time. I got such a chip on my shoulder that I "did it all myself" in college that I forgot about most of that money. If you asked me I would have said it was $10k and I didn't touch it. BUT I came across some financial records lately that showed it was $20k. I honestly did not remember at all. I spent most of $10k of it my first 2 years of college when I was making less money. By 3rd year I was making about $10k/year and didn't touch the rest of it until we bought our home. It's kind of mind boggling to me. Money was so tight back then, why on the heck didn't I touch it? I was crazy. LOL. I would have never guessed I was so frugal back then. But yeah, it's just interesting. It basically helped me move out on my own before I really had the income or means. Which saved my sanity. Thank Goodness!
Also, dh worked since he was 15 and pretty much saved every dime. He made as much as me in college but he had no bills. So I estimated we left 1998 with about $30k in cash. My $10k and he had saved up about $20k by then. Maybe more.
This is where people annoy me about my dh's situation. So what he hasn't worked in 6 years? There is NO WAY we would have had it so good in our 20s if dh hadn't of saved every dime he ever made pretty much. I mean when he worked, he always saved 90%+. ALWAYS. It's why he can afford some time off.
1999 we graduated college and tripled our wage. ($10k to $30k, each). We saved our $20k raise each for 6 months and had the cash to put down on our condo.
My 20-year-old Toyota died about the same time I started my job. I bought a "like new" Mustang for about $5k. I borrowed the money from my parents at 0% and paid it back before year end probably. That is one where I had to guess. So, our car value went up a tad. I would have kept driving my old clunker if it had more life, but the engine blew. My job required about 30k miles a year anyway, so it was hard on that car. Dh had to replace his first car in college so he was driving a car worth about $1k then.
The car thing is also where we saved considerable money. Those old cars never had much in car repairs. Not more than a few hundred dollars a year.
Also, going to public college in California was VERY cheap in the 1990s. My entire education cost about $10k, books and all. His parents paid for his. I worked and paid as I went. We had no college debt.
In 2000 we saved most of dh's wage. We both ended up making closer to $40k that year. Dh invested much in tech stocks. We started to put away money for retirement, etc.
2001 was interesting. We decided to move to cheaper lands. But our timing was bad. The plan was to sell the condo for $100k profit, BUT we put it on the market right around 9/11. We literally expected it to sell in a day with multiple offers, as real estate had been insane for MANY years. BUT in the end we couldn't sell it for even what we bought it for.
We went through with the purchase of our new home in December 2001. We almost didn't, but we decided to go through with it. I can't say owning 2 homes is something I would ever do again. But we lucked out.
We left the year with a pile of debt. We were honest on our loans and I think they were both no doc loans. They didn't blink at lending us $500k when we made maybe $100k. (One job was 100+ miles from our new house. Dh had to sign some form that he could work from home or something, to get the loan). Just a sign of the times.
In the end we did buy a house, twice the size of our condo, complete with yard and garage, and luxury throughout, for the same price we bought and sold our condo for. So it was a good move. Pretty much could never afford an actual house back home.
By year end we were both making $50k. I quit my job mid December for the move and had a job lined up here for Jan. 1. I expected a 10%+ pay cut with the move, but with benefits I actually made a little more here, to boot.
We had saved a lot of cash in 2002, but sunk it into the house. We borrowed a chunk from our condo too, for the down payment on the house.
In April 2002 we sold the condo. Phew! I know many people assume we made the move just for equity. Well, we didn't end up with any! House sold for about $300k and after fees and costs we got about $275k. We had paid $260k. We made a small profit, but we also maintained/owned 2 homes for 4 months. I consider it rather breakeven.
But we were able to buy TWICE the house with that money. It was less about equity; more about the lower cost of living.
Dh looked for a job up here but never found one. He wanted to move from marketing into advertising but most of the firms around here had government contracts and were hurting in 2000.
Since we were still saving his entire wage but we no longer had to save massive amounts of cash for a house (as we had to back home) we felt pretty good and decided we were ready for kids. So we started trying to conceive. I became pregnant in October 2002 and dh was laid off from his job back home in November. We had really counted on saving his wage for another 9 months, so it was kind of a blow to us. We are extremely fiscally conservative!!!
Oh yes, dh's old car was on its last legs in 2002 so we bought a newer car when we sold the condo. We bought a 2001 Ford with 15k miles for $7888. Best car deal we ever got. The car is awesome.
The stock market was not nice during this time frame.
In 2003, BM was born. I took about 12 weeks off work, partially subsidized by disability insurance (short-term, mandatory in Cali actually).
I waited until the bitter end, but BM was born in July and it was around September and my return to work that dh finally convinced me that my Mustang convertible was NOT going to work with the baby. So I sold it for $3k and bought an old Saturn with tons of miles for $800. We wanted to get a minivan eventually, but just didn't feel ready. We wanted more kids and wanted to be prepared if I was ever to be put on bedrest as the sole breadwinner, etc.
Not much went on in 2004. I became pregnant with our second child.
During these years we shifted a lot of cash to our IRAs (2003, 2004, 2005). So our cash was going down a bit but our retirement went up.
2005 was the end of our "carefree" years.
LM was born and with the new "Family Leave Act" in Cali, I was able to take 12 weeks off after he was born. I took off about 4 months with him. I received about $800/week for 16 weeks (disability/family leave), so we didn't have to touch savings too much.
I remember this being one of the most special times in our lives. Having a second child was a considerably easier adjustment, AND I didn't have to rush back to work 8 weeks post partum. Of course, fact is I had gone back to work 8 weeks PP with my first and I never saw it as a big deal. It was an easy transition since my job was so close and so low stress. BM slept most of the time I was at work, and it just worked for us.
LM was another story. I returned to work in October and he refused to take a bottle. I started to fall apart. I asked my boss if I could work part-time for a bit and was mortified when I burst into tears in his office.
I realized about that time I had PPD. The many months at home I had no idea because I couldn't have had it more easy or been more relaxed. The cool thing about having a SAHD is that I never had to care for a new baby alone.
I had an inkling something was amiss because I started to have panic attacks in traffic. It was odd, but it never occured to me that was a sign of PPD. So I returned to work, and the slight stress of going to a job I love pretty much sent me over the edge. There were signs much earlier on but I just had no idea.
I also gained new respect for women with PPD. Most of the women I know were often misdiagnosed and most of them had crappy husbands and no help. I think, of course watching a new baby with no help is depressing. Doh! But it was so much more than that. I couldn't have had a more supportive boss or a more supportive husband, and I pretty much couldn't function.
I do share because I had a lot of pre-conceived notions about PPD, and it wasn't at all what I would have thought it was. For one, it was a time in my life that I could have hardly been happier. I was okay as long as I was at home, had no responsibilities but a good baby, and didn't have to go anywhere or do anything. Which is pretty unrealistic for most people to achieve.
Part-time worked out okay. I was pretty stubborn and breastfeeding and so had no interest in talking to my doctor. The last thing I wanted to be was drugged up in my state. No, I don't recommend taking my course of action.
Since I was only working part time, and that pay was WAY less than disability, dh started to look for jobs. Even just seasonal things for Christmas, etc. It was a very hard time because it was then we realized the jobs we scooped up in college were not available to SAHDs who had not worked in a while. It was maddening that he couldn't even get a minimum wage job. & he faced a lot of blatant discrimination. So it was just a very frustrating time.
In 2006 we just sucked it up. We knew we had to tighten our belts and move on. I returned to work full-time Jan. 1 and it worked out. I would say I was only half there at work for about 2 years though. I was lucky that my full speed at work was like 2 employees so my half speed was still good enough that my boss was patient with me. IT's our only saving grace for that time. I am very thankful to this day to how understanding my boss has been these last few years.
In 2006 we also went ahead and bought that minivan. Nothing was wrong with my old clunker. I think it is a decision we regret a bit. Probably a little premature, but packing those 2 carseats in the subcompact was driving us nuts. (Though the infant seat was only used 6 months and yeah, looking back, we could have stuck it out).
We had some tech stocks that had done terrible and we just sold those and paid cash for the van. Financed a little because it was a low interest rate and we didn't want to spend all our cash.
2006 was also when I joined SavingAdvice. I realized if dh couldn't find a job, we were screwed. It was just always our backup plan and it was very disheartening when it was kind of ripped out from under us.
Him staying home was always a very temporary consideration. The biggest change since being here is we start to realize that maybe we could live on one income and do well, indefinitely. IT's kind of a mind shift for us. I think ideally we assume dh has many working years left ahead of him (when the children are older). BUT it's much more comforting to not have to rely on that second income. Ever again.
Anyway, 2007 was a really good year for us because we got some cash gifts and I vested in my retirement plan at work. So we had some nice windfalls in 2007. In 2008 we just saved more, and we hope to save even more in 2009.
I was just updating Quicken and noticed our retirement balance is a solid $75k. For now anyway.
This is actually my gross salary for the year. So one years' saved!
Of course, the interesting thing about measuring your goals in terms of salary, is that I for one, had already met this goal last year (maybe the year before). Likewise, in past years I way exceeded this goal (because my income was much smaller...)
So though $75k is a new milestone for me, I can't say the one year salary saved is a new or exciting milestone... It is turning into an impossible moving target that makes me feel a little at a standstill.
If dh returned to work tomorrow it would be a long road to save up one year of salary.
Which probably illustrates much why I so love the idea of measuring progress against "annual expenses."
I guess this idea particularly makes sense for us.
In school we both made $10k annually. Out of school we made $60k combined, and that quickly climbed to $100k.
But then we slowed down for kids and lived a couple of years on $45k (the years I took maternity leave anyway). But my full salary was a mere $50k when I had my first child. In the meantime, my income has ballooned to $75k rather quickly. Though a good chunk of the last decade we really made less than $60k. So it is hard to measure progress in terms of an ever growing income.
Of course, no complaints on the ever-growing income.
But our expenses, on the other hand, have remained rather steady. Probably a bit of a jump when we bought our first home (okay, a significant jump since we lived on pennies before that). & probably a bit of a jump when we had kids. But overall our expenses have remained rather steady and predictable. So we find that a much better measure of our forward progress.
We generally live on $50k-$60k annually (after taxes) so we are trying to grow our net worth half of that, annually. ($25k-$30k/year). If our income grows astronomically (possible, could double if dh returned to work) and our expenses remain the same (possible) than we really need to work on goals that support our lifestyle, not our income. So this is where a lot of our thinking on expenses comes in. Income means little to us. (Which is the ideal!)
But $75k is a milestone, indeed. Of course, I was wondering, recently, when our cash and retirement would hit $100k. I think we will probably hit it in 2009. Not so sure on 2008. But we'll see. (We have a fair amount of cash, in addition to our retirement investments).
We've also paid a good $90k off our house. So our more liquid assets seem to be neck and neck with how much we have invested in our house.
I expect that to change greatly in the future. Our goal in the nearer future is to put away $10k/year to retirement, in addition to 10% contributed at my job. So ideally our retirement will be growing $18k/year or so, plus investment returns, while we are only paying the minimum on our mortgage, about $4k principal every year.
I think our 20s was our decade of home ownership. & we have accomplished a chunk there. I would like our 30s to be the decade of retirement funding. Which is also why I don't sweat the mortgage prepayment. We worked very hard while young to keep our mortgage costs down (putting a chunk down and paying it off aggressively). That work will save us tens of thousands, if not more, in the long run. So it feels like it is off to the next battle - Retirement!
Likewise, I look forward to do the day our cash/investments far exceed our mortgage.
Well, we're getting there.
Anyway, I don't think we will put $10k to our IRAs anytime REAL soon. My goal is about $1500 this year, and $5k next year. But I think we may make it in 2011, when LM is entirely out of preschool. Working up to it. So though our goal is $10k/year, to IRAs, we got a ways to go.
Of course, in our 20s, retirement was only a mere afterthought, after the token 10% contributions we have always done. So I look forward to what we can do with retirement as the forethought. I expect to zoom ahead rather quickly... In fact, my roundabout goal has been $150k in retirement by age 35... (So doubled in 4 years?). Kind of aggressive, but doable.
I saw I had a pile of our old savings account statements and I thought I would really like to look through and see exactly where all our money went. Since I have joined here I say - oh it went to cars and IRAs and mostly our house of course. But it did dry up rather quick - where did it all go?
I thought - I want to find out. I woke up early this morning and decided to tackle it.
It was REALLY interesting. I started out a little dissapointed in ourselves as though we saved 80% of dh's paycheck, I saw $2k after $2k credit card bills (far more than we spend today and these days we put all our utilities and everything on card. I try to budget $1200/month on card).
I actually felt like maybe we weren't so great with our money before. Or maybe we aren't doing so bad now?
Then we sold our old home and deposited some cash. We didn't really make much off the home, but we paid a lot of cash to our second home, and therefore got some of our down payment back to cover that when we finally sold our own home.
We then pretty much did not touch the money for many man years. I didn't touch it through 2 maternity leaves (as the sole breadwinner). The transition to one income (even periods of no income) was absolutely seamless. I was impressed. I thought I remembered pulling much more money out for big one-time bills. But we never did!
Then we had our second son, and we went crazy. We spent like $25k in the course of a few months. Bizarre. I can't explain it.
I'll show some excel spreadsheets later. I feel better piecing exactly where our money went through the years.
I think you can also explain it that like 6 or 7 years of extreme frugality gets to you and you just snap or something. Throw in a big raise and you feel like you can spend far more than you should. Interesting. It is good to be back on the right track.
I was putting papers away the other day and found our most recent Social Security Statements. So of course what does Ms. Accountant do - throw it in excel and see how much money we have made over the years. Quite Interesting.
Year Dh Moi TOTAL IRA/401K
1991 2,693 0 2,693
1992 3,757 0 3,757
1993 3,962 1,820 5,782
1994 3,263 1,972 5,235
1995 7,061 3,756 10,817 2,000
1996 7,614 5,250 12,864
1997 10,063 8,262 18,325
1998 10,944 10,104 21,048
1999 20,986 20,617 41,603
2000 41,371 47,870 89,241 6,622
2001 42,461 56,765 99,226 5,768
2002 29,049 52,671 81,720 5,000
2003* 0 44,665 44,665 0
2004 0 64,474 64,474 4,000
2005* 0 45,955 45,955 0
2006 0 70,000 70,000 2,000
TOTALS 183,224 434,181 617,405 25,390
It is amazing to me to think dh and I have made $617,405 between the 2 of us in our young lives. On top of that I estimate we received around $33k in unemployment and disability. I put a * next to the years I took maternity leave, but did receive $6000 in disability, or so, in 2003 & more like $11,000 last year. This year I just estimated my total. I would guess dh received $10-$15k unemployment in 2002 & 2003.
Dh he is a year older than me and when he started working it was allowed to work at 15, not for me when I turned 15. He worked at the local amusement park from age 15 - 22. I can't believe he was making as much as me those days. For me at the time every penny was going to college. For him, he was living at home all cushy - it went for the down payment on our house though - no complaints here. He saved up $40k easy by the time we graduated. All those game systems and fancy toys - even with all that - hehe. I know he worked at a bank, AT&T, Macys in between there somewhere - while working at the amusement park. Graduate college 1999, laid off 2002. Made $40k or so a couple of years in between. I believe his salary was up to $50k, but then his company did mandatory days off and vacations and such - at the end he was only working 4 days/week. Beat being laid off as it seems everyone and their brother was laid off back in 2000 and 2001. Though eventually they did lay him off.
As for me, I worked the amusement park - summers - from age 16-18. 3 years. At age 16 or 17 I Also started teaching piano. I am not sure if I reported all my income on that the first year - either that or my parents helped me more than I remembered - hehe. I lived rent free in 1995 (house sitting) and rented my first place in 1996. Those were some tight years. Oh yeah - just remembered I also had another job in 1998 which helped boost my income a bit - bookkeeping for a security firm. I believe there was a time I was doing that, teaching, and I took another summer job - didn't take many summer classes - phew. I Am kind of bummed all that and I Could have just kept working with dh in the sumemrs and look at that dough - LOL. Graduated 1999 - first job paid $32k or so, but quickly got promoted - that whole desperation for qualified people thing. Has served me well you see.
The end of 2001 we moved and I took a slight pay cut. Eh, you move to where housing is actually affordable, a few k less a year, eh. Plus with the 10% profit sharing contribution I Came out ahead. My prior job had 401k - but a crappy match. I think they matched me $300 when all was said and done - ??
The 2 years I had kids are a little obvious - took some time off...
1991-2001 were all about saving money for a house, and me just surviving and paying for college so I guess we don't have much to show for that - well except all our equity. Started putting more into retirement a couple of years and then got sidetracked by the whole kid thing.
Right now my social security would be $1,158/month at 62 and dh's would be $325. Ah, but not counting on it. We both qualify for medicare too.
I thought we had a year or 2 of six figures, but you know, we never made it - hehe. Darn close.
Dh's first job out of school was a whopping $28k/year. SO we started at $60k combined and I think that was our income when we bought our $260k condo. We couldn't afford a cent more, we really lucked into it. But we quickly got raises and so it worked out pretty well. It is amazing to me we went from 60 to 90 to 99 so fast. & that 7 years later I am making more than the 2 of us combined at our first jobs out of college. IS this a commercial for college education or what?
Looking back you would think we could have saved more. All I know is we put $50k down on a condo in 1999, and then we proceeded to save most of the down payment on this home - another $30k or so, over 2 years. We had 2 homes for a while and sunk a lot of cash into 2 mortgages. I think our mortgages totaled $500k for a few months. That took a chunk of our income for almost 6 months. You know sometimes I wish we lived somewhere where we could buy a house for $80k. Ah. Or even just a stinking condo - hehe. Oh I am sure there are trade-offs. But the idea of all the money we have sunk into housing and how much we still owe - blah...
In 2002 we made $81,000, but I would guess our take-home was the same or even less than today, with taxes. Kids have proven to be a nice tax deduction. I wonder how much in tax we paid in 2000 & 2001... Probably a lot, whereas we have swung a couple of years with 0 income taxes since then.
Well now you know the whole financial story of my life.