Networth IQ Series: How Did You Save?

Since 2007 in addition to keeping a personal finance-ish blog, I’ve also obsessively updated my networth on the NetworthIQ site (my profile here). While the site itself hasn’t been updated in years, what it does have is a very interesting community of people who track their networth on a monthly basis. While there are some outliers of people who seem to like to pretend to have millions of dollars when they clearly do not, most of the profiles are legit, and some are very impressive. This led me to wondering – who are the people behind NetworthIQ, and how did they save their money? The great news is that everyone has been so wonderful about sharing their stories when I reached out.

To kick off the series, I interview Jonathan, a 31 year old in Arizona with no formal education who has amassed $943k in networth as of October 2013. This year, he is set to gross over $350k per year. What does Jon do for a living, you ask? He’s a programmer, which explains the sky-high salary. But he’s also a self-made man. And he’s expecting his first child with his wife this January, so we’ll have to check back in with him once he’s buying diapers. That said, having nearly a million in networth at 31 is nothing to shake a stick at. So, other than being an engineer, how did Jon do it, and what advice does he have for the rest of us?

Q. Can you tell us a bit about your salary history and career?

A. This year I should gross over $350k and the last two years made just over 300k each year.  No formal education though attended ASU briefly on a scholarship after high school in 2000.  Quick salary history: Started professionally programming in 2001 (at $10/hr) and was up to $15/hr by 2003, $45k/yr by 2005, $60k/yr in 2006, $75k by 2008, $85k in 2009 and $100k by the time I left the day job last year in 2013.  The only way I could manage to get sizable pay increases was by finding new jobs and changing jobs in relatively short time frames of 6 months to 1 year.  I’ve worked in various fields but mostly insurance and banking at businesses such as Toyota Financial Services, First National Bank, Mutual of Omaha.
 

Q. When did you decide to strike out on your own and leave Corporate America and how did that go for you?

A. In October 2009 an old boss that was pleased with my work called and offered me a new fancy job paying $150k/yr in New York but involved lots of travel, had met my wife and wanted to start a family so turned him down, smartest move ever.  Instead a month later asked me to work as a contractor on the side while maintaining my day job, asked me what I should be paid and knew as a previous contractor companies paid twice the amount of money that I received, so I took a shot in the dark and asked for $80/hr which was just about double my take home.  He likes me and was in New York so wrote up the contract at $100/hr, which was insane to me.  I worked very hard on the side and jumped at every opportunity to do side work and make an extra $1k in week by working on a Saturday.  That year my side income was $15k.

Q. So you were doing incredibly well as an independent programmer. How did you increase your earnings to your current $300k+ per year?

A. The following year there was even more work and the original boss and another boss called me up from new companies to do side work, the same $100/hr was applied to future ventures and my salary supplemented with an extra $49k (500 hours of work in addition to a full time job).  By 2011 there were more people calling me to ask me to do what I had done for them before and made an extra $180k, which was mind boggling considering my salary was almost half that.  I knew it was time to consider leaving but felt like my job was good, they treated me well, gave me freedom, and it was a long-term career.  Once I got married the 80hr work weeks were not going to cut it for long (40 hours at the day job and 40 hours on the side) and my wife was very encouraging for me to quit the day job and do my own thing all the time, from home.  June 2012 I quit the day job and in 2012 my gross invoices were $400k which netted to $330k after expenses (before taxes).  This year along I’ve invoiced $480k and netted $311k of that so far (pretax)!

Q. What exactly do you do for your job now, are you programming all of your projects by yourself?

A. My business is a software consultancy, I’m the principal and have a handful of contractors that help me on larger projects.  I pay them and clients pay me for their services plus a markup.  My hourly rate varies from $125-$150/hr now and I do more than just programming, also do consulting, training, architecture and integration.  Was lucky enough to be a paid speaker at a couple technology conferences which only increased exposure and added to my “value”. Still I do no marketing and even turn away work on occasion.

Q. What is your current networth, and what was it 5 years ago? (*the fast growth in networth is what sparked my interest in his profile to begin with)

A. True net worth of assets – liabilities for October 2013 is just shy of one million, currently at: $943k.  October 2009 (4 years ago) net worth was $143k.  October 2008 (5 years ago) net worth was $80k, October 2007 was $20k and was when I first started investing.  You can see, from 2007 to 2009 I was not working side jobs and making crazy amounts of money, just a normal job making good money (60-85k) while keeping my expenses low and living frugally and investing.  In those 2 years was able to increase my worth $120k.  Had no car payment, paid off my credit cards, rented an affordable home, and bought lots of cheap mutual funds.

Q. Clearly you are making a very solid income now, but how did you save so much per year even when you were working your day job?

A.  At first it was discipline, by living off of $45k/yr and still managing to save for retirement it was much easier to make more money and not increase my lifestyle accordingly. In 2005 and 2006 all my friends were buying houses to get rich and flip them, I decided to wait, this was huge.  I’ve always been very debt adverse and thought you should pay cash for things you wanted, this helped.  Also the ability to delay gratification from today to the future was helpful for me as well.  My determining ratios and spending limits with a small salary based on percentages of income it was easy to keep my spending in check as my salary increased.  Saving 15% while making $45k/yr made it easy to do the same while making $100k per year.  Living off only $30k/yr comfortably made it easy to live off $50k/yr while making $100 so I had more money to invest and store for the future.

Q. What is the most you’ve spent on any one item?

A. Largest amount of money ever spent at once:  $68k for the 20% down payment on our current house in Feb this year.  Next, wife’s new baby momma car: $20k (3 year old Hyundai Santa Fe).  Nothing else in the 10k+ range.

Q. What recommendation do you have to people getting started in their careers who want to save money?

A. Learn about money!  Learn about investments, finances, debt, compound interest, bonds, mutual funds, etc.  Read a book about the markets, or Warren Buffet, or personal finance, don’t try to get rich quick, be patient, but start now.  Decide how much you can live while still enjoying your life, then be aggressive about saving the rest and investing as well.  Analyze where your money goes every day, week, and month.  If your money is being spent on things that don’t give you joy, happiness, value, or meaning, change it!  If you don’t review your finances you’ll have no ability to control.  Don’t buy individual stocks, buy mutual funds, and only buy no-load low-fee funds as well.  Expenses will really decrease your potential after 40 years of saving and investing.  Also, don’t be in a rush to buy a house, wait and rent.  Also, travel outside of the US, get some perspective on how wealthy we are here, should help put your spending into perspective.

Q. You’ve done incredibly well with your networth to date, but your fiscal history can’t be flawless. What was your biggest money mistake to date?

A. Fear and doubt which have lead to selling stocks when they dropped or were dropping instead of buying more or at least holding on.  Also seeking the highest possible returns with risky investments, more often than not I would loose.  Buy low and sell high is everyone’s goal, but true investors buy and hold until many years later.  If you want the money sometime soon, don’t buy a stock, use the bank or a CD. Examples of stocks that I’ve sold out of fear while holding:  BAC bought at just under $30 per share in 2008 then sold at $5 fearing it would collapse… it did not and is only back to half what I paid ($15) now but still 3x higher than I sold it for.  SIRI was another, started buying at $4/share, then $2 but at $1/share sold them all assuming the worst.  This stock dropped all the way to $0.05!  Had I been a genius I’d of poured everything in to it, the stock is trading now at $3.60 (72x higher).

Q. What are your financial goals for the next 10 years?

A. Debt free, including house, not have to work to pay bills or fund our lifestyle, live off our investment income.  Not that I ever plan to retire, just don’t want it to be the #1 thing in my life.  Wife, kids, family, friends, etc are more important.  Once financial freedom is achieved priorities can be reshifted.

Q. Who are your favorite PF commentators?

Ramit Sethi is the primary one I currently still read from the past, recently discovered you and enjoy your blog as well.  On my list still are Christian Personal Finance, AllFinancialMatters, DebtKid, and Millionair Mommy Next Door.  Finance wise I’m a big John Bogle and Warren Buffet fan.

Q. What is the best personal finance advise you’ve ever received?

A. Ramit Sethi’s advice from I Will Teach You To Be Rich which says to find ways to make more money instead of always ways to limit your spending.  Income is potentially unlimited.

Q. Do you have any other advice for the HECC audience?

A. Don’t settle for anything less than awesome.  If you are displeased with something start now to find a way to change it or accept it.  Living a life of discontent will not end way.  Travel to new and foreign places, not just awesome beach resorts.  Experience other cultures, learn their values and their ability to be happy with less than us.   Relationships are all that matter, not your job, car, house, school, etc. Try your best to give some money away, whether to church, poor, sick, friends, strangers, huge tips, anything.  Try it, you will be surprised.  The pain fades and joy replaces it.  This was very hard for me at first.  In 2009 I gave away a total of $1000 to five charities at the end of the year.  Every year, my giving increases as well.  Keep your eyes open and find ways to creatively help people, there is nothing like it.

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9 comments

    1. UnixDesigner78 says:

      Yeah, this was awesome. Do more of these if you like them! I think this interview is a great way to see how to save and earn, and it also shows how we’re really lucky to be in markets like NYC/SF cause there are so many opportunities. (I say this as I sit in my friend’s PA apt. at the tail end of the holiday weekend…cannot WAIT to go home!!)

      Also a big fan of Ramit Sethi although I never paid for any of his classes/seminars. Congrats on your success as a money/finance blogger…it takes a real talent!

  1. Executioner says:

    I’m a big fan of NetworthIQ but definitely agree that it is showing its age. Would be great to see a new/revised version in the future.

  2. GPS says:

    I think this is a great idea!
    These posts are unique because most “What is your networth story?” comes from other bloggers who are trying to promote their blog. Their stories are not really unique and I’m tired of reading the same thing over and over again.

    What is unique about this post is you’re finding people who inspire YOU! and ask the questions you want to know… AKA.. How did you REALLY reach your networth goal? How did you really achieve it?

    Further, I’ve been working on a start-up idea myself but it focuses on updating NetworthIQ… It is terribly outdated, but it does have a good community. I’m sure if you created something that functions a little smoother (different categories for assigning financial assets). I’m also looking for an app that works across multiple currencies as I have assets in different countries.

  3. I love this post!!!

    This sounds rather familiar actually, although my career path has been a lot more relaxed (read: lazier) than Jon’s, because I work a bit (not even 12 months), then take a year off.

    He’s been working every year (a lot!) plus obviously getting a markup from the team he’s hiring out for projects to work with him, which makes a big difference, even if he only takes $10 – $20/hour per person, billing at 35 hours a week.

    (Each person on his team at those margins would be worth about $20,000 – $40,000 a year in his pocket if they worked the whole year).

  4. brokeGIRLrich says:

    I really liked his comment “don’t try to get rich quick, be patient, but start now.” That’s such great, sound advice (although clearly if the dude is doing that well, he’s digested plenty of good, sound advice). Cool series!

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