Sometimes I forget just how far aheads I am (in terms of savings) than most of the American population, let alone most people my age (28.) I obsessively check my networth and investment growth, and have this month watched my “investing for fun Sharebuilder account” hit $100k. Sure it’s down a few thousand now under that mark, but I’m confident it will inch over the line again. My total Networth is now $200k, a goal that seemed completely impossible just 5 years ago on my then $50k a year salary.
A few months after I started investing in this “fun” account the stock market crashed and it was hard to keep watching my investment account go down. At the time, even though I had about $15k in the account, it was painful to watch it slip to $10k or less. I knew that was the right time to invest as much as possible, so I started to try to pour as much as possible from each paycheck into my investment accounts.
Interestingly enough, my more “safe” investments — such as my Vanguard index funds — have not performed well at all over the last 7 years. Meanwhile my fun account — which is unfortunately taxable but the only place to put my investment dollars when either I have no 401k option or I’ve maxed out my 401k and Roth — had performed quite well. It’s had its ups and downs, but I realized overall since starting the account it has made about $25k — on less than $75k investment. Knock on wood as things can always change, but the performance has definitely been much stronger than my safe accounts that have barely moved at all.
I recently met up with two of my friends from different aspects of my life — one who I grew up with back east, who moved across the country to go to culinary school and has been moving her way up in the world as the manager of a hotel. The other, also my age, I met in a summer program in high school. She too picked up and moved across the country and is now working as a video editor. All of us are middle class — the hotel manager, I’ll call her Sally, owns a 2br condo in the suburbs, which her parents helped her purchase despite the fact that they were struggling with money. I don’t know her exact income but I’d guess it’s around $60k. My friend the video editor has been at the same job for 6 years now, and hasn’t received much of a raise in those 6 years. Her income I estimate to be about $50k. She likes her field but is unhappy with the company and some colleagues, but is comfortable without change. She hasn’t saved for retirement yet and is living in a 1br apartment for about $1200 a month (which isn’t bad for the city she’s in, but having roommates could help her save more.) Meanwhile, my boyfriend just quit his PT $20/hr job and has $0 in retirement savings. He turned 30 last March and is finally getting his act together and looking for a FT position with benefits and such.
I’m sitting here today staring at the net worth in my PersonalFinance.com account, with the number $200,947.58 staring back at me. This isn’t a fake number or guesstimate of my networth today. This isn’t filled with some questionably accurate estimate of a car or home value. This is $200,947.58 of straight-up cash and stock investments. This isn’t meant to brag — for one, I could have been much wiser with my money to date and saved even more, and two, I know I’ve been fortunate in my upbringing to be able to get where I am today, with no student loans and $5k from my parents plus $10k from a lawsuit when I was a kid to buy my first car and get started in the world.
Still, my friends noted above had similar situations. My friend the hotel manager may have student loans, but her parents bought her a 2br condo. My friend the video editor had her college education paid for and is likely going to inherit a large sum down the road. My boyfriend’s college education was paid for by his mother, and he lives at home paying $0 in rent in a part of the country where jobs that pay well are relatively plentiful. So, in short, I feel ok comparing myself to these three people I know in understanding my level of success versus the rest of the world who may be less fortunate.
In June, the average American family saw their net worth drop 40% in that three-year time period from $126,400 to $77,300. Going on 29 and single, I’m already well above that. It’s sad to think that most families do not have more than $77k in networth! I’m still shocked that I’ve been able to save and earn this much on my investments in less than a decade of work. I’m a bit terrified of how little i’ll be able to save once i have a family and kids — I’m pretty sure the whole financial advice that marriage is good for your finances is actually going to be the opposite for me.
Looking ahead, I’m focused on continuing to save $50k per year. My goal has always been to hit $250k by the time I turn 30. As long as the stock market cooperates next year that may be achievable. Given I’m at $200,947 right now with 3.5 months left in the year (and a big iphone release coming out which will only help Apple stock ride up in the short term), I could theoretically hit this goal much sooner than thought. The car purchase will definitely get in the way — it’s kind of funny, but one thing my DUI proved is that large expenses don’t have to get in the way of your goals. I’m still pissed at myself for all the chaos that one stupid day caused to my life, but the reality is the DUI was my largest-ever “expense” and I’ve lived to tell about it. I estimate the DUI will cost me $10,000 all things said and done, whereas previously my most expensive purchase was my car for $7500. Sure, without the DUI I’d actually be able to purchase a car right now and be well over my networth goals, but in a way it’s shown me that you can spend money in life and still save quite a bit.
My goal has always been to have $500k in the bank before having children. The plan right now is to get married at 31 (in 2 years) and start my family in 3 (wedding in 2014, start family in in 2015.) That gives me 3 years to save $300,000, so that goal is highly unlikely. This year my stock performed well but in reality I’ve saved about $25k and the other $25k was earnings on my investments. That may not happen in future years and it very may well go in the other direction. Eeks. But even if I can save $50k per year, that’s still just $350k by the time I want to start a family… no where near the $500k goal. I could wait another 3 years to start a family and put marriage off as well, if I can continue as planned saving $50k per year I should reach $500k by 34. But I’m worried 34 is too late to start having children given my PCOS and how hard it will be for me to have kids in the first place. Sigh. I get very freaked out about how fast life is going and all the choices that need to be made. But I really don’t want to have children until i hit that $500k networth mark. Of course my company stock options can significantly impact this. If my company is able to have a successful exit, my networth could skyrocket past that goal. That’s always in the back of my mind, but I don’t like to consider that in my planning as it also very well may not happen. It’s crazy to think that there’s a better-than-winning-the-lottery chance that it may, but until the day that happens I’ll stick to my plan of saving $50k per year, and try to up that quite a bit so I can get to $500k earlier than 34!