How We Became 3/4 Millionaires
My wife and I recently hit another financial milestone by passing the $750,000 net worth mark. While we still have a ways to go to get to our goal of $2 million, I am getting more confident that the hardest part is behind us. While our current net worth may sound impressive to some, I don't credit this to anything unusual. It has taken us 10 years combined with some fairly simple but powerful ideas to allow us to grow our net worth at a regular and sustainable pace.
Here are what I believe are the biggest contributors to our net worth growth:
- We set a simple financial goal (hint: It's the title of this blog)
- I measure our progress with monthly net worth reports
- I started my career in a higher-starting salary field - Engineering
- I lived like a college student for as long as possible after college.
- My car is a means of transportation -- I still drive the used car I bought in college that has 200k miles on it, but runs well. This has allowed us to save significantly more instead of purchasing a replacement car, paying for more insurance, and paying property taxes.
- I focused on career growth, accepted growth opportunities at work, and looked for opportunities like my international assignment.
- I took advantage of 0% Balance Transfer arbitrage and other opportunities to earn extra bits of money.
- I have maxed out my retirement contributions every year that I have been working.
- I married someone who spends within her means
- We only use insurance to cover catastophic events, and self insure as much as possible to keep our insurance costs low.
- I've converted two previous homes to rental properties, each with positive cash flow.
- We have minimized our subscriptions and other expenses so we could save a greater portion of our income.
I think going from 3/4 millionaires to our $2 million net worth goal is actually going to require much more focus on investing and returns on investment. If we can just edge up our overall rate of return on our net worth by just 1% that is an extra $7,500 or more per year. To me that type of payback means perhaps more of my time should be spent trying to maximize our overall return than clipping coupons, etc. We will see.
Related in Financial Goals:
Financial Freedom Plan - 2015 Update (Apr 30, 2015) I finally sat down to get an updated view of our progress towards our financial freedom plan that I laid out a few years go in terms of asset allocation. Some notes: Our asset allocation to fixed income (interest) will...
Financial Freedom Plan (Aug 25, 2013) Almost two years ago I laid out a plan for the net asset allocation I thought we needed for our financial freedom plan. It was a rough guide for asset allocation that I believe could generate enough income to cover...
2012 Passive Income: Dividends (Jan 27, 2013) Here is a summary of our 2012 dividend income. All this income comes from our taxable stock portfolio that is included in our monthly investment review. All retirement investment holdings are excluded from this dividend income summary. This passive income...