When I think about numbers like $2M (or look at my family personal capital net worth tracker and see it show $1.9M in net worth) I get a strange feeling. Just 17 years ago, I was a fresh-out-of-college gal with pretty much nothing to my name, struggling to pay $400 a month for a tiny room in a Bay Area apartment (it was more like a closet) and afford gas for my car to get to my internship, where I earned $50 an article the newspaper published.
I didn’t know what I was doing with my life (spoiler alert: I still don’t!) but I knew I couldn’t fail. I couldn’t ask my parents for help. My father had quite an interesting financial philosophy of being overly giving through college but then you’re cut off. I’m grateful for the no college loans, but in hindsight find the strategy unwise overall versus instilling a sense of understanding the value of money.
I had to learn that on my own.
But I’m also glad I did. It worked out for me, while my younger sister is still struggling. I made a choice to be self sustaining. I realized than meant no kids until a decent nest egg was built (I loosely set a goal of $500k in savings before kid #1.) I didn’t want to marry for money and I didn’t feel comfortable dating career-minded men. Due to my mental health challenges it was important to find a partner who would be emotionally there for me and our family. I wanted a guy who I could see being a dad to my children. Granted, when I fell in love with my now husband at 22, I thought he may eventually be motivated to earn more income. It turns out people don’t change. But I’m ok with that. It works for us.
Sometimes I realize that lots of my peers at work (especially women) are married to partners who make equal to what they do, or more. Men overall tend to make more, so those married to SAHMs or “business owners” who barely break even are generally in a more stable boat overall, with earnings of at least 300k per year if not much more. But I also exist in a bubble, where you have a bunch of people who make 500k a year per household and then the rest of everyone who is making like 100-200k (as a family) and actually struggling to get by. We exist in this weird in between.
Saving and investing is the only reason we can stay here and make this work. I’m working with my husband to have him catch up on his retirement accounts (since he is self employed he can put a good chunk into his 401k each year.) I am trying my best to max out my own tax advantaged accounts, which now include 57k with a backdoor Roth through work. As we approach $2M, I feel little sense of stability or satisfaction. It’s a HUGE number, but it didn’t financial security. It’s better than the 10k I had 17 years ago or 100k 5 or so years after that. But it doesn’t make me feel good—yet.
My whole money mentality is broken, though, due to growing up with parents who earned enough for a good life but failed to budget or save effectively (case in point a $200k HELOC on a $500k home that was basically paid off when they were in mid 50s and empty nesters to ADD on to their home—my mom at 67 is just beginning to pay that down.) There were other bad choices and sad errors that led to losing about 100k overall. I’ll write about them one day.
But I grew up not worrying about money. We didn’t have a luxurious lifestyle by any means, but we were solidly middle class. And while I definitely do not expect or want any further money from my family, it is terrifying to me to lose that sense of security, however false or ill-conceived it was. I want to get to a point where I can send my kids to summer camp… or take the family on a nice vacation… without worrying I ought to put that money in the stock market instead. I want to get to the point where I don’t feel like every $1 I spend today is $20 30 years from now invested. Where I can step back and say, ok, we have enough and we just don’t need more even if we can save more.
Right now that number seems to be $5M. The sooner I get to that, the better. Again, it’s another arbitrary number I’ve picked out of thin-ish air, but it just seems right. My goal is to be able to focus on working to pay annual expenses but no longer having to save at that point. If I can no longer work for some reason, the $5M, spent and invested wisely, can last quite a while. I don’t have any desire to keep going and make $10M or whatever—what is the point? Who needs that much money? At $5M I could help my mom out, pay my expense, help my sister, pass on enough to my kids, and even comfortably pay down my 30 year fixed mortgage.
I just really want to get to the point where I can work because I enjoy it. To say fruck you to the golden handcuffs and do my own thing. Start a business. Start a non-profit. Build a company that helps people. Write books or screenplays or direct documentary films or who knows what else. Spend time with my kids because clearly they grow up way too fast. Spend time with my family because they won’t be around forever.
I am not quite sure how we get to $5M. In 10 years at 10% YoY if I don’t touch the 2M that’s 5 right there. I don’t know if 5 will feel enough then, but it will be close. Imagine, $5M when my kids are 12, 10, (and 8??)—what that would mean for the rest on my life. And their lives. I’ll be 46, which is old in that is likely half of my life if not more than that, sadly, but still if I am at 46 with $5M my family is in a really, really good spot. My mom, hopefully healthy and well, will be 76. I can finally feel like I am in a financially safe enough place to pay her back for college and my wedding, through helping her out if she needs it or treating her to massages and other gifts on the regular. I can help my sister buy a house, or buy one and rent it to her at below market (in her lower cost area.) I can finally be free of worry (almost—I’m sure I’ll fear total market collapse and never truly feel secure.) I can donate chunks of money and also buy some frivolous things just because. Like nice furniture. And lots of experiences to create the most valuable asset of all—memories.
This next year will be life-altering for me, and yet even with its income potential it still feels like baby steps towards my goal. I’m so impatient. But next year, as long as the market doesn’t totally crash and I keep my job, I should make $650,000 at a minimum. My husband will bring in about $100k on top of that. So after tax we will be bringing home about $350k, or nearly 30k a month. We should easily be able to save $20k a month for the year, which adds $250k to our net worth. It’s kind of crazy how big the income seems and how many people would kill to be able to save $250k per year and yet that’s just one year. If we could make $650k consistently for 10 years and save $2.5M on that alone, that would be one thing. But this is a special year. After that we go back to about $300k in income, and likely $2k-$3k a month or so in savings. Back to reality.
So the trick is figuring out how to obtain a series of high-paid (due to stock) jobs for the next 10 years. If I can make 300k per year on my own and my husband can reliably do 100k we will be in a pretty good place. Of course that’s not easy — before this job my highest income was 190 and before that 170. It may be impossible to find another job that pays well. And staying in my current role doesn’t help—due to minimal stock refreshes, by 2022 my annual income will be around 200k WITH bonus. So I’ll need to move on (target date April 1, 2022) in order to have a shot at hitting my goal. April 1, 2022 is actually very soon! But right now I’m trying not to think about that. I have to keep my current job for 18 more months. That’s 3 months of work, 5 months maternity leave, and another 10 months of kicking ass and taking names (or, you know, just meeting deadlines and following through on plans) to remain gainfully employed and win the lottery where I am already holding a winning ticket.
So I can’t focus on $5M now. I have to focus on $2M and really $2.5M. How fast can we get to $2.5? Well, my husband promised me if we have 2.5 we can try for a 3rd kid. Given I’ll be 37 this month(!!!) I don’t have a lot of time left to make that happen. And I’m more than incentivized. It will happen. Somehow.