While my net worth isn’t the end all be all metric, its one I’ve been tracking, every month, for nearly my entire adult life.
Here is what the plot of my net worth looks like.
While it just seems obvious that it would always go up and to the right (I mean thats what the stock market does right?), it took a tremendous amount of work, planning and sacrifice to get those types of results.
Scroll below to get the specifics on the break down of my net worth as well as the keys that have helped me grow my net worth by 400k in 9 years.
What is net worth
Net worth is a pretty straight forward number to calculate. What you do is take all your assets (things like cash, investments, your house, etc) and subtract all your liabilities (your debts) and what you have left over is your net worth.
Think of it as what you’d walk away with if you sold all your possessions and cashed in all your investments.
Some people have negative net worths and some people have really high net worths. You always see the net worths of people like Jeff Bezos or Bill Gates in the news.
Most people don’t connect the dots and understand that Jeff Bezos doesn’t have tens of billions of dollars in a savings or investment account. Because, again, its what you’d walk away with if you sold everything, not what you make in a year.
It doesn’t matter where you’re at right now. What matters is the direction that your net worth is heading.
Why do I track my net worth
I’ve been tracking my net worth every month since January of 2015. Honestly, I wish I had started sooner.
While net worth is not the only key personal finance metric, it is an important one. I’ve made the argument that net worth really isn’t important until later on in life. The metric that’s most important? Your savings rate.
I track my net worth every month to ensure that I’m making smart financial decisions. While that may be difficult to see on a month to month basis, it really shows itself over the course of years and decades.
If my net worth stayed stagnant for the last several years it’d probably be wise for me to rethink the decisions I’m making.
My net worth progress
I’m excited to say I’ve made a ton of progress on my net worth. I entered the real world as an “adult” in 2011 and had the most simple of financial balance sheets. Here is where my wife and I stood as right when we got married (before I had started my first job).
Nearly 9 years later here is what that same table looks like:
Its crazy to see so much progress. I’m happy to see the progress but I know I have a long way to go to increasing my net worth.
4 Keys to increasing my net worth by 400k
Looking back on the journey over the last 9 years and 400k in net worth I’d say there are four keys.
I feel like you’ve been living under a rock if you don’t know whats happened to the stock market over the last decade. I was fortunate to graduate college right on the upswing after the stock market crash of 2008 & 2009.
I haven’t done anything crazy when it comes to investing. I haven’t maxed out retirement accounts. I just got my company match (and maybe a little more).
The key was that I started right away, I never stopped and I have no plans to stop.
As you can see from the plot above, my wife and I started out with a crazy amount of debt. With a significant debt load I attacked it like crazy. We lived off of my income and banked every penny of hers.
While I haven’t dug up the specific numbers (I really need to) we paid off somewhere in the neighborhood of 55k in debt in our first 3 years of marriage.
As you can see we still have a little debt but it pails into comparison to what we started with.
If I didn’t take that aggressive stance on debt I’d imagine it only would have grown since then.
Work my As* off
To be frank: I’ve put in the work. I’ve done it at my job itself. I’ve worked to take on my responsibility and grow my role within my company.
I’ve also put in a ton of work on my finances. On the learning side I’ve read a ton of books, listened to podcasts and picked the brains of some incredible people.
On the execution side of personal finances I’ve been tracking my net worth, budgeting like crazy and planning for the future.
A lot of people work hard. I’m certainly not saying I’ve worked the hardest. I’ve just done what I can to take advantage of the opportunities in front of me.
Got Ridiculously Lucky
I’m not sure a lot of people would admit this. To say that luck or good fortune hasn’t played a role in increasing my net worth would just be absurd. I can think of a few big ways that I’ve been extremely fortunate.
The first is that I got into a company at its earliest of stages. Since that time our team has grown 4x and revenues have grown more than 10x. That fortunate time has allowed me a tremendous amount of growth.
The second is the area I live in. Its growing fast and the houses (at least the two houses I’ve purchased) are pretty cheap. Since 2011 I’ve owned two different homes. Those houses have appreciated, on average, 6.5% per year!
Isn’t that nuts?
I was able to take advantage of that by cashing out my first house and using those proceeds as a down payment on my next home.
The third is that I started investing in my retirement right when it started to go up. Since 2011 the stock market has been, more or less, on a crazy ride up.
Well there you have it. Growing your net worth consists of a ton of patience, hard work, sacrifice and some luck.
What is your net worth? Let me know!