Category Archives: Networth

Cash Needed for Buying a Million Dollar Home

We just purchased a $1.6M home. That isn’t a huge home here in the Bay Area, but it’s also not the cheapest home we could buy–especially of the 3 bedroom / 2 bath variety. But it was large in terms of square footage and with an oversized lot in a neighborhood we wanted to buy in (or, well, a block away) I ran all the variables in my head and decided while this isn’t the one now it definitely can be with some work. It’s also in an up-and-coming area and I think the value will hold in 5-10 years time, if we do decide to sell.

Rules for Buying a Million Dollar Home

I have a few home buying rules that are a little nutty but they work for my oddly conservative financial brain.

  • 20% down + 3% closing costs
  • 6 Months of home and rent expenses (we will have 1-2 months overlap on rent and house to make the move smooth)
  • 6 months of basic living expenses outside of housing
  • Any taxes due within the next 6 months
  • $50k-$100k “first year fixes” fund (try not to spend all of this, but have available if needed esp when buying an older house)
  • 6 months additional in emergency fund (all monthly costs)

My one additional rule that I am going to stick to (but will be harder) is:

  • No more than 20% of networth in equity at any one time.

Home Equity =

+ Downpayment
+ Principal Paid
+ Any Realistic Gain on Home Value (if sold today)
– Any Realistic Loss on Home Value (if sold today)
– 10% current value of home (cost to sell)
– .30% of any gain over $500k+home maintenance fees

This means that right now, my home equity is worth:

+ $322k
+ $0
+ $0
– $0
– $161k
– $0k
=======
$161k

This means that my remaining AFTER TAX cash & investments should be $805k to have 20% of my networth in my home.

Buying a Million Dollar Home Doesn’t Have to be That Scary

This is what makes buying a $1.6M home less scary, but it also means that before buying a $1.6M home you not only should save a large downpayment, but also an additional $1.1M. Not everyone can do this, or wants to do this before buying a house. It’s possible I should have purchased a house 10 years ago for $800k, where now my mortgage would be $3500 a month, vs $7000 a month (give or take) and I’d have 20 years left to pay it off. But then I wouldn’t have the $1.1M, and I would have definitely gone into home ownership with way too much of my networth in home equity.

I prefer to build up that larger cushion and know that a chunk of my money still has access to the markets, which will likely outperform my house after you factor in lost opportunity cost with the downpayment, etc.

How much of your networth is in home equity?

Journey to FIRE: 2021 Networth Goals By Account Type

Quick “after tax value goals” post for Jan 1, 2022

  • Home Equity: $456k
  • Cash: $311.8k
  • Stock: $811k
  • IRA: $201.5k
  • Roth: $147.1k
  • Husband’s Retirement: $108k
  • 529 (2 kids): $138.3k

NEW TOTAL AFTER TAX NETWORTH GOAL:
$2,065,832 (age 38)

I’ll be tracking this closely as this is a significant growth in networth, as well as assuming we own a $1.6-$1.8M home… if we ever buy one.

My Journey to $2,000,000 — A Quick FIRE Check-In

2020 is weird. Remember when our stocks dropped about 30%, then bounced right back? I made some not-so-wise money when the market was down, but also made a few good ones. And maybe the bad ones weren’t so bad after all.

My asset allocation is all out of whack. Still. It’s worse, because I admit I’m a wee lil addicted to individual stock buying and those individual stocks are primarily US tech stocks. I do not recommend this to anyone, this is me being dumb and seeing investing as a hobby outside of my actual diversified index fund investments. It was fun when I had about $50k in my old Sharebuilder account and I could see if I could beat the market, for kicks. Now I have about $300k in that account (moved to another broker but nonetheless), it’s getting a little, well, scary.

Right now, my networth (after tax*) looks like this:

  • Cash: $318,937 (downpayment fund + emergency fund)
  • US Large Cap: $546,150 (65.5%, target 43%)
  • US Small Cap: $31,810 (3.8%, target 5%)
  • International Developed: $183,258 (21.9%, target 27%)
  • Emerging Markets: $28,546 (3.4%, target 5%)
  • US Bonds: $0(0%, target 12%)
  • Int Bonds: $45,142 (5.4%, target 8%)

TOTAL: $1,154,954

(*why after tax? I count my networth based on after tax value, not including any penalties or fines for early withdrawals, so I have a full picture of my actual savings and asset allocation)

As you can see above, I’m wayyyy overweight in US Large Cap.

This doesn’t tell the whole picture, because:

  • it doesn’t include my husband’s savings or investments (~$200k which help the diversification but not much, total ratios look like 65/3.9/21.8/3.7/.4/5.3 %)
  • it has $0 in bonds because I sold US bonds for downpayment, and need to rebuild my bond fund
  • the above does not include my potential RSU earnings in the next 16 months, which after tax = ~ $536,896 if I can keep this job for another 16 months, which I hope I can! (total networth including 16 month RSU vested and taxed = $1,691,850)

At this point, for my goal of $2M after tax networth by 40 (solo, not including husband’s savings/investments), I think I’m making good progress. The next 16 months will be key. If the stock market crashes, given how heavily I am invested in stocks, the $2M goal could be far off. If it goes up, then I could be closer than I think.

$2M isn’t a substantial goal for me. I won’t feel good about my personal finance progress until I get to $5M. I want to do that by the time I’m 50, so I have enough money to raise a family in a very HCOL area and help my mother and sister out, so they don’t have to worry. My mother will be 76 then, and I expect that to be the age she is running out of money. When I hit $5M, I plan to pay her back for my college education and wedding (if she really needs the money before then, I will definitely help her out and I already pay for her trips to visit my family, etc.)

$5M seems like a long way off, but if I can find another company growing at anywhere near a similar rate to my current company and get an equivalent or larger RSU grant, maybe 2-3 more times, it’s somewhat possible.  I didn’t think $100k was possible just 15 years ago, so who is to say adding $3.5M in 10 years isn’t possible? With my current funds growing at 5% a year, that will add about $1M in 10 years, so I just have to makeup for $2.5M, which is saving $250k a year. That’s going to be rough, maybe impossible. It depends what kind of salary and total comp growth I see in the next 10 years. It’s probably impossible… but I always pick impossible targets, why not this one?

 

Still Shopping For a Home—Will We Ever Buy One?

Nine weeks pregnant with number two. Wide awake at 4am due to some pretty bad nightmares and a moderate amount of dehydration. I would go to the kitchen to get a water bottle but I can’t because I live in a one bedroom apartment my son sleeps in the living room, next to the kitchen.

I feel so ridiculous to consider my problems problems when the real problems in this world and in this country are so, so much worse. Anyone reading my story, especially without context, would think—man, what a crazy rich woman who is afraid of spending money. Maybe I am. Maybe I shouldn’t be. But my mental health issues make it really hard to know what my life will be like in a year let alone a day. So what do I do?

Looking at houses here that are under $2M and you wonder why anyone buys a house. If they cosmetically are acceptable then there is something wrong with their bones, if their bones are in good shape they are three bedrooms in a space only slightly larger than my current one bedroom apartment. With my husband’s mission to have his dad live with us (which I support IF we could find a place that worked), it makes it all the more difficult.

Part of me says — rates are so low right now, now is the time to buy your forever home. It will hurt financially for the first 5-10 years and then not be too bad. But that is if I can maintain employment for 30 years. I cannot imagine doing what I am currently doing for 30 more years. I desperately need a career change. Without a clear vision of what that is or the income on the other side, I really don’t know how to plan at all. And my husband mutters how I make unreasonable requests of him like try to earn $150k in 5 years (he is at about $80k now but works part time, and he is 38.) I try to tell him I don’t care about his income but if we are going to buy a house that changes things. I need to know we can afford the mortgage or at least most of it on one income—mine OR his.

I know many families have one SAH parent and buy a house. But around here the only families like that I know are one engineer households. If you are a good engineer at a good company you are pretty much set for life unless you massively fuck up. I’m not in a position like that. My job is a weird one that in some companies would be considered a junior role and in companies where it is paid anywhere near what I’m making it would require a lot more management experience.

So I am in this weird spot. I am earning more than I ever thought I would and my networth is climbing (it is realistic to think, if I can keep my job, I’ll have $2M in 2-3 years saved up pre tax, unless the stock market crashes) but I still don’t feel at all stable or accomplished. Yes living in the Bay Area is living in lala land — anyone reading this post from anywhere else would say leave! But my husband grew up here, our friends are here, I am better mentally without my typical seasonal depression in most of the country, and we really want to stay.

I just wish my husband would step up a bit. I know he is tired since due to COVID we lost our part time childcare and now he is watching our son all day while also working part time at night or whenever he finds time to do his work. So maybe I am asking for too much. I would like him to take an online class or something—just to move in the direction of building a career. Like my job, his doesn’t really make sense outside of his company. Some skills would translate but since he has worked for one small company his entire 13 year career, it’s harder to show variety or new learnings. I still think he could get a better paid full time job if he tried, but he never has been interested in having a career.

And some days I think—maybe I can just work my way up to VP and consistently earn, say, $300k a year. For others in my position, that might be doable. But I’m no VP. I do not like managing people or hiring or firing people. In my creative field, I find it very difficult to give feedback without redoing the work myself—and even then I don’t like what I’ve done so how am I supposed to guide someone else to do better?

All of this is to say, here I am, 36, pregnant with #2, with a good chunk of change in savings, and I feel more vulnerable and scared than ever. Up until now I’ve lived with no debts. Some of that is due to fortunately having parents who footed my bill for college (and I really want to pay my mother back for that one day!) But I’ve also bought my cars used with cash and live in small apartments that are less than I can afford based on any housing to income cost calculators.

It’s hard to go from NO debt to $1,500,000 in debt.

But isn’t that how wealth is acquired? My friends who 11 years ago paid $800,000 for a small house, probably with $180,000 down, now own a small house valued at $1,700,000. Maybe $2,000,000 in 10 years will sound as cheap as $800,000 sounds now? Though it’s hard to imagine these homes being worth $3M let alone the $2M they are going for today.

On top of all this, I dislike the real estate business as a whole. Sure, if you know what you are doing and buy the right investment properties you can do very well for yourself. But when you are buying a home for yourself, you are in it on your own while all the people who are supposed to help you don’t really have your back —

your lender — well they want you to be as low risk as possible and any small risk they say you have gives them a reason to charge you more for it. This makes sense for actual risks — but my latest finding from one lender is that we qualified for 3.125% 30 year fixed except when they realized my husband is self employed it jumped to 3.85% (clearly they don’t care that my husband has worked for the same one non profit for the past 13 years and has always made the same annual income with them plus raises while in that same time I’ve had six jobs. Whose income is more stable???)

Then, since you can’t do contingencies in the Bay Area if you want to buy a house, you apparently have to risk 3% of the price of the house (your “earnest money deposit”) and pray to god your loan closes in the allowable amount of time. If not, bye bye $30k! Well, none of these lenders are giving me much confidence our loan will close with no hiccups. With my husband’s self employment status and some new rules around that, not only will our rates be higher, they also will need to see some crazy things like a deposit within 10 days of close. Maybe that makes sense for someone with ongoing business income, but my husband gets paid four times a year for each quarter of work. That is not a big deal—to hold a check and deposit it, but only one lender told me this. What other weird rules will pop up during our closing process that we don’t know about?

your realtor — she drives a nice car, always. And she is an extrovert and smiles and sells you on why to buy a house. She may look at the disclosures and warn you of major risks, but she isn’t really an expert on that stuff, that’s what inspectors are for. But you don’t need an inspector to see that this house built 60+ years ago has issues. There are tiny cracks here and there. The floor is uneven. A tree looks like it’s roots might be going under the house. Everything creeks when you walk upstairs. The layout is nonsensical which is a cosmetic issue but still will you regret having to walk a weird way to get around for the hundredth time? What other issues are lurking in the foundation and in the walls?

The sellers, at least here, pay for their own inspections. I’ve read plenty of reports. Termites. Water damage. Fungus. Liquefaction zones. Flood zones. Seismic hazard zones. Environmental hazard zones. The list goes on. In any area where we are considering a $1.8M home (that will probably go $2.1M anyway) the ground water apparently is 0-10ft deep. That’s not in the inspection report, I found that online! But two “tanks” with one leaking(?) is in the report. What does that mean? My realtor said she would be comfortable with that risk. But we don’t know what’s leaking.

I’d feel so much better buying a 3/2 for under $1.4M. If it turns out to need work we would have the money to do that work. Husband refuses, wants a large home on a large lot with an in law where his 76 year old dad (who can pay $2000 a month until he goes into assisted living) can live. I want that too—but without me knowing I can maintain a mid-senior role in public tech companies every month for the next 30 years, well, that seems like a horrid idea.

your inspector — ok, they are going to try to find issues to help you out (that is their job after all) but given no inspection contingency is allowed in most cases, you won’t actually have your own inspector.

Ok, so maybe we should rent-forever. It is difficult to find rentals I want to live in (at a reasonable cost) and I can’t fight the nagging feeling that if we don’t buy now we will be priced out forever. I certainly know most people would recommend we rent for a few years then move to an area with a lower cost of living. But we really plan to stay here forever. At some point, into the far off future, buying becomes a better financial Option than renting. Emotionally, it is a better option day one.

The reality is that houses that really check all the boxes are around $2M-$2.5M. Y’all think I’m crazy but look at Bay Area listings on the Peninsula and in the nicer areas of San Jose. Can we get a house for less than that? Of course. It’s even possible to get a dump for $1M! But if we get what we want — 1800 sq ft, 4br/2ba with an in law or ADU on 7000 sq ft in actual good shape, in a half decent school district, that’s easily $2.2M. So then I question should we just wait until we can afford $2.2M? Will we ever be able to afford that? And by then I won’t that house be $3M and the mortgage rates will have gone up?

i know I know first world rich people problems. But most rich people have either trust funds or faith in their career and ability and skills and value, and often two parents who are earning a good income. What do I have? A few crazy good years of income thanks to RSU growth then back to earning $150k a year, if that?

I feel like I can’t buy a house until I figure out my career but at 36 that now seems like it’s never going to happen. I want my son and tbd child 2 to grow up in a house. It isn’t necessary, it is a want. But when I’m making $600k a year (what I will likely earn this year if I keep my job which is absolutely insane) I feel so confused about how I should think about my “class,” my risk tolerance, and my home purchase price. A few more years at this income and I can afford that $1.8M house. Heck, I can afford that $2.2M house. But in 2 years my income drops to $300k, then $210k, as my stock isn’t being refreshed enough since I am not a very valuable employee. I should get some small stick refresh this year so I’ll probably hover around $210k if I stay in this company in this role forever (last year I got a 1.7% raise so I’m not expecting any big salary growth here.) $210k isn’t bad either, but with my husband’s $80k that is not enough to afford $2.2M or $1.8M.

AND that $210k is IF i keep this job forever. It is good for now—I am going to stay at least to get all of my initial grant as long as I don’t get fired or let go, and maybe one more year, but then I need a change. Maybe I need to make $80k for a few years (or less) while I figure things out. Maybe I need to go back to school. Maybe I want to take some time off to spend with my kids while they are young and consult part time, I don’t know what I want but I know I don’t want to overbuy and close doors to whatever out there could make me happy, if such a career exists.

So this is where I am. We’ve agreed it we don’t buy a house by October we will rent a bigger place for a while. We are considering putting a $1.8M offer in on this 5br listed at $1.875, which I am fairly confident we wouldn’t get. I’d prefer to lose out on a bunch of bids then overpay. The house is far from my current job but I won’t have to go back to the office this year and in 3 years I can change jobs. But it’s also far from SF which most jobs I’m qualified for are. If I change careers, maybe that doesn’t matter. But it’s scary to think I might get stuck with some crazy San Jose to SF commute one day to not lose our house.

we are looking at another two coming up—not as nice, both $1.8-$2M, both with built in laws. The inspection report on one was pretty scary though most old buildings have issues so who knows.

I wonder at what networth I will be able to relax a bit and enjoy life. I have the $5M number in my head. It’s arbitrary, as all my numbers are, but I think that’s it. That’s enough for a $2.5M basic house and enough to stay in the stock market and grow as long as we keep working and at least pay our living expenses each year. That’s enough to pay my mother back for college and my wedding and help my sister out a bit if she is still earning minimum wage or close to it. And to start giving to charity in substantial ways. I mean, $10M sounds better, but more realistically I want to aim for $5M. I guess that’s my FAT FIRE number. I don’t know how I’ll get there (unless I manage to keep getting jobs at rocketship companies where my RSUs go up in value.) I mean, realistically I’m looking at $2M by 38 or so. If I don’t touch that and get 5% on it YoY, in 20 years we will have $5M. Of course, in 20 years $5M won’t be worth $5M today. The real question is how do I get to $5M by 45? That’s saving about $400k a year for 8 years in a mix of interest, stock growth, and new earnings. It seems impossible. But my first $100k also seemed impossible. So maybe it is possible. Maybe it’s only possible if I buy a house. Maybe it’s only possible if I don’t.

 

 

 

How I Grew My Networth from $15k to $1M in 15 Years

In 2005, I had about $5k to my name. By 2010, I had increased that amount to $88k while living in high cost of living (HCOL) area and earning an average salary of $56k for those first years out of college. Five years later, my networth hit a respectable $342.4k. I kept working at startups with decent-but-not-great pay (stock options are worthless) and lived relatively frugally over the years.

By 2017, I achieved my first goal of $500k — a bit milestone, as I wanted to have $500k in the bank before having my first child–and I made it! Thanks to finally switching to work in a public company (and that company performing stronger than the market), I’ve been able to dramatically increase my networth in a short amount of time… doubling it in under 2 years. I haven’t really spent time to appreciate that I actually doubled my networth in two years.

Do I think anyone can do this? No. I got lucky. Some of this lucky has to do with my working at a lot of different startups and building up a reputation for being good at one thing that ultimately got me the job I have now. Will I continue to make such a high salary? No — probably not. My income is largely dependent on my RSUs and after I vest the remaining two years of stock, I’ll be back to a lower (but still good) salary. I’ll need to leave my company and find a new job for a chance at making close to the same income. Hopefully by then my experience at this company will get me the ticket in the door at another company that pays well and will offer me a good compensation package.

I know a lot of people look at my income now and think–well, I’ll never make that much. And that’s probably true if you work in a different industry that doesn’t offer RSUs as part of your compensation package and you aren’t a highly skilled employee. But you can see you can still save quite a bit on a lower salary in your 20s if you are single and don’t have kids. Now, I admit I did not have college loans to pay pack (thanks to mom & dad) so you can fairly say that my total networth should be about $200k less than is now, or even less than that since I would have lost out on compound interest repaying a loan. So comparably to others who have loans, my networth today is about $800k and by the end of this year will be $1M or more.

I still have a long way to go to achieve my goals. I want to get to $2M before having my third child (whether or not I have a third child is dependent on achieving this milestone by the time I’m 38 or 39) and I want to buy a $1.7M house. Below, you can see my income, networth, and YoY growth for the last 15 years. I plan to continue tracking this for the rest of my career — subscribe to my blog to get updates and learn more about my path towards wealth. If it inspires you to save a little more each month — awesome! Remember, I live in a 800 square foot apartment with my 22 month old and husband and drive a used car built in 2011.

Year Income Networth $ Growth % Growth
2005 $15k n/a n/a n/a
2006 $35k n/a n/a n/a
2007 $50k $24.9k n/a n/a
2008 $60k $15.8k -$9.1k -37%
2009 $60k $32.7k  $16.9k 206%
2010 $120k $88.6k $55.9k 270%
2011 $90k $145k $56.4k 64%
2012 $100k $200k $55k 38%
2013 $110k $253k $53k 26%
2014 $125k $299.5k $46.5k 18%
2015 $160k $342.4k $42.9k 14%
2016 $190k $416k $73.6k 22%
2017 $130k $551.3k $135.3k 32%
 2018  $300k  $625k  $73.7k  13.3%
 2019  $400k  $1.05M  $425k  99.83%
 2020  $500k $1.3M Goal  $250k goal  23% goal

Saving for a Two Million Dollar Networth by March 2022

Life has been busy these days. I’ve been busy saving 2 million dollars. Well, not yet. But I’m shockingly well on the way to a family networth of $2M before I turn 40. This number seems ridiciously large AND small at the same time. It’s obviously large. If $1M seemed large, $2M seems much larger. It is an amount many people would consider “rich” — although not in the Bay Area.

I also don’t really consider my networth close to $2M, since I actually track everything on a post-tax basis. I map my investments to an allocation plan that my former CFP provided. I also have a chunk in cash (not seen below) because that’s for the downpayment of the house I will be buying soon (hopefully, house TBD.)

Screen Shot 2020-05-10 at 7.48.24 AM

The orange are areas where I’m underinvested. I’m quite over in large cap but that’s because of my probably too high concentration in company stock. My company has performed quite well (so well that I do kick myself for selling my RSUs at a fraction of the price it is today.) I’m glad I held on to a good chunk of my ESPPs (for now) as it is unwise to do this financially speaking (you get a discount up front you’re supposed to sell immediately and not take a risk on that money) but I decided to hold a little under 1000 shares and it definitely is helping get me closer to achieving my goal. I still have a significant chunk of RSUs and ESPP coming in the next two years… so that’s where I’m estimating my family will achieve $2M PRE TAX by the time I’m 38. Maybe we’ll get there post tax by the time I’m 40.

Do I feel rich? NO. But I do feel INCREDIBLY LUCKY to have a job that pays well, let alone a job at all right now. It feels weird and I’m looking for ways to give back. I donated $100 to a local food bank but that’s not enough, so I’m considering how to give more while also still staying on track to our goals. My donation plan was always to save as much during life, invest well, and then in your will put a % of your savings towards charity. That way if times get tough later in life you have the money if you need it, but you still have a plan to give back to the world. But right now the world clearly needs it, and I’m overwhelmed by trying to figure out where to give and how much. It is definitely on my mind — but so is buying a house and having a 12 month emergency fund and hopefully being able to work part time in a few years because…

I’m apparently pregnant.

Shh, don’t tell anyone. It is top secret. It’s super early and only my husband knows. We started trying this month and thought it would take a while because last time I needed infertility treatment to get pregnant. Low and behold, boom, happened right away. I’m excited and scared and will write more about this later but clearly it shifts our financial picture. Before I was considering moving further from my office to have more space in case I had another kid, now I definitely am thinking about this option. We’re still talking about $1.5M homes, but they are much bigger and right now we want space and with another kid we will def want that space. We could still rent for a few years but I want to settle down in a neighborhood where my son can make friends  and we can meet other parents and just feel at home. I’ve been living semi frugally my whole life (we’re still in a 1 bedroom apartment even though we can clearly afford more) and I guess I’m ready to take the plunge.

I did run some numbers based on a more conservative house buying formula and found that we need the following amount in savings/cash before we buy a home for the following prices:

House Cost Cash Savings
$1.5M $436,542
$1.7M $494,000

I also determined that to have 30% of our networth be in home equity (and emergency fund) that we’d need approximately $1.95M in networth to buy a $1.6M home. (My gap analysis below) but clearly we’re not going to get there before we buy a home now, so I’m going to do my best to try to reduce the home cost while also buying something we can grow into. More on that later.

30.0% 43.0% 5.0% 27.0% 5.0% 12.0% 8.0%
23.1% 33.1% 3.8% 20.8% 3.8% 9.2% 6.2%
43.00% 5.00% 27.00% 5.00% 12.00% 8.00%
goal $450,000 $645,000 $75,000 $405,000 $75,000 $180,000 $120,000
gap $450,000 $284,705 $47,142 $252,465 $47,525 $160,066 $89,103

 

Right now my estimates have us at about $1.96M pre tax in March 2022. That’s so soon! If I can do this, it will be pretty incredible. I just have to keep my job. Through a pandemic. And a pregnancy. How hard can it be?

But the reality is I’m scared. Yes I have a lot in stocks I could sell to cover the mortgage for a while… and right now I have a job. But will I have a job in a year? Who knows. My company may need to have layoffs at some point. I really don’t understand how they would decide that and who would be laid off, but I definitely am not “safe.” So I have to assume that at any time I could lose my job, and at that point it would be hard to find a new one. I will just hold my breath through my vesting periods and pray (even though I don’t pray) that I can get through the next 19 months until I get most of my stock. That’s 8 months of pregnancy, 3 months of maternity leave, and 8 months of being exhausted and holding on for dear life.

Please, wish me luck. I’ll need it!

Networth Check-In Before End of Year

I just ran my numbers for the year and realized that I crossed the $1M threshold on my own (not counting my husband’s smaller nest egg) and I feel like I should celebrate somehow. (Blows a party horn alone.)

I have a fairly unique way of calculating networth so I consider this a false victory… my before tax total account value is $1,127,789 BUT after I factor in probable taxes (conservatively) my total networth is $845,052. Wah, wah.

Still, $845,052  AFTER TAX in networth isn’t so bad at 36. With my husband’s savings, we’re close to $1M total.

I’ll feel much better when I get to $2M after tax networth, but that will take a while. However, right now I’m on track to hit $1,869,286 before tax (solo) in two years and $1,215,801 or more AFTER TAX in two years as long as my company stock holds close to its current value (TBD.)

I will do a more formal breakdown at some point but just pausing to smell the fiscal roses and celebrate with my fellow readers who have been following my blog for many years (and new readers as well.) When I was 22 and had less than $10k in my bank I thought $1M was an impossible feat to accumulate let alone $100k. That was a long time ago, but on my worst days when I feel hopeless and like I’m a total failure, I just need to remember where I came from and how I’ve somehow held it together to build some sort of stability in my life, at least to cover a few mental breakdowns. Go me. (Blows party horn again.)

The after-tax breakdown is as follows:

  • Cash – $144k
  • Debt – $3k
  • Investment (Taxable) – $457,951
  • Retirement (Roth) – $69,355
  • Retirement (IRA) – $144,580 (assuming 50% tax rate)
  • College Savings – $32,455
  • FUTURE RSU AFTER TAX Next 2 Yrs – $370,749

Trying to feel accomplished because I feel like a big ‘ol failure these days.

Sept Check-In: HOME STRETCH!!! $920k of $1M Goal

It looks like I will be coming very close to my $1M goal this year.

Current breakdown*:

Cash: $2,915
Debts: $0
Down Payment: $100,000
529: $27,354
Taxable Invest: $435,521
IRA (Roth): $60,930
IRA (Trad/401k): $254,101
Company Stock (after tax est): $40,500
(*does not include husband’s savings of $55k)

Expected Oct-Dec Income: $67,296
Expected Oct-Dec Expenses: $24,000
TOTAL EXPECTED SAVINGS: $43,296
TOTAL EXPECTED NETWORTH EOY: $964,617
TOTAL EOY GOAL: $1,000,000
DIFFERENCE: $35,383

So that $1M goal looks unlikely… but it could happen! I should get close.

Will this be my $1M year? One million is just the start.

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It’s crazy how one turn of good luck (or perhaps a series of turns) can make such a huge difference in your net worth. As you can see from the chart above, my net worth has been gaining steadily since 2007 — but suddenly in the last year it has jumped from $625k in Dec 2018 to $884k in July 2019. That’s kind of insane.

How did my networth increase $259k in 6 months?

Well, it’s mostly paper gains at this point — and given we’re likely headed to a recession, I see the blip up evening out over time. Still, $259k in 6 months — seems impossible, except I have the data to prove it actually happened.

Between the stock market doing well overall and my company stock doing even better, I’m achieving some major milestones faster than I ever though I would. My goal of reaching $1M by 40 now seems like it might be achieved THIS YEAR. It’s possible, depending on when a recession hits. I estimate by the end of the year, I should have another $100k in my various workplace stock plans, which, if the market doesn’t drop, gets me to $984k. That’s close enough that I could hit $1M by the end of 2019 or even before my 36th birthday.

If you add in my husband’s accounts, our overall networth looks even better. Currently, our total net worth (we do not own real estate so this is cash/stocks/bonds only) is 130k (his) + 884k (mine) = $1.01M!!!

So, while I don’t count my husband’s $ in my net worth, if I did, this actually IS the month we crossed the $1M threshold. I feel like I should celebrate or something. I wish my husband was as excited as I am.

It’s funny because when I was 21, I thought $1M was completely unachievable. I also haven’t increased my lifestyle that much. After all, I’m still living in a one bedroom apartment with my husband and 1 year old.

Once my own networth hits $1M, I think I might be willing to move into a larger space. I’d like to get to $1.5M (doable in the next 3 years) before I purchase property. This way if I own a home worth $1.8M, I know I have the $ to pay it off (mostly) if I had to… that’s what financial security is to me. I don’t mind debt, as long as I have the money to cover it available and the debt has very low interest rates. Or, maybe we’ll buy sooner. I think once I get pregnant with #2 it will speed up the process. For now, we like our apartment a lot, and it’s hard to think about moving. Maybe an extra room would give us more quality of life, but it probably would just become a storage room (however, I would like if my husband moved his office/gaming computer out of our bedroom!)

Anyway, I’m celebrating our $1M here because my husband doesn’t care and it’s a pretty big deal. I certainly don’t feel rich at all, but I feel like we’ve achieved the first major milestone to wealth. Wealth to me is not buying things you don’t need or designer crap, but it is being able to spend freely on your friends and family without worrying about running out of money now or in retirement. I think about $10M is the amount needed for true wealth based on what I could ever want to spend in life (assuming its invested and about $2M of it is in a home and another $1M or so is paying for my mother’s home and life, since I do want to pay her back for all my parents gave me in my life and hoping I can do this before she gets too old!)

Well, we’re a long way off from $10M, but I finally feel like we’re on our way.

Q1 P&L Report

Better late than never.

This post is a P&L report on my Q1 profit and “loss.” It does not include my husband’s income or spending. (We split household expenses 50/50.)

Key Notes:

  • Maxed our 401k (so overall take home higher since $19k of it was pre-tax)
  • Includes one quarter of RSU vesting (on incredible, fairly life-altering vesting schedule for 3 years if I keep my job and my company keeps performing as well as it has.)
  • I also did not pay enough tax yet but my husband’s income is much lower so it might balance it all out. Making 2x last year at least so we will at least be safe harbor tax wise. Keeping a substantial amount in cash to pay taxes next April.
  • We have about $20k in my son’s 529 plan so have delayed monthly investing more in that, and considering skipping 529 going forward as its tax benefits in CA are not that great, and just keeping my investments in taxable accounts.

Q1 Profit Analysis

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Loss Analysis (Spending)

Notes

  • Household expenses generally split 50/50 – below notes my 50% of household spending + personal spending (i.e. 1/2 rent, food is not included here. Yes, we spend too much on food.)
  • I pay for any travel to visit my family out of my income
  • I pay $1200/month for “childcare” to my husband that he will put into a Solo 401k for his retirement (this includes that amount – since his father watches our son, I “pay” my husband 50% of what daycare would cost, plus $200 a month for doing my laundry… which hasn’t really happened yet. 🙂 )

Spending by Category

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Spending vs Saving

Screen Shot 2019-05-25 at 9.42.22 AM
Monthly P&L

  • Jan: +$29,215 (*includes annual bonus)
  • Feb: +$4,571
  • Mar: +$30,457 (*includes quarterly stock vesting)
  • Q1: +$64,243 

Screen Shot 2019-05-25 at 9.57.38 AM

As noted above, this does not include enough taxes being taken out, so my annual report will be more accurate. I am going to meet with my CPA because we now have the very nice to have problem of having no idea how much in taxes we will owe for the year, since it is all dependent on my quarterly stock vesting amounts. I can estimate but it’s really impossible to know what our stock will be doing in a week at this point, let alone December.

By tracking quarterly, I hope to achieve my goal of $1M in networth by 2020.

Networth Report ($833,655 Q1)

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Target networth rest of year:

Q2: $850,000
Q3: $875,000
Q4: $900,000
2020: $1M Year!!!