I DID IT!
My net worth shot past $200k like busy New Yorkers hustling to work.
You might remember my post about hitting $100k. If not, take a quick second, pop over there, and refresh your memory.
So…. how did I do it? I don’t make 6 figures, I didn’t get an inheritance, and I’m a SINK household.
My first $100k, as I established in the post, was pretty much 100% savings. Ok fine, it was 86% savings.
This second $100k looks completely different than the first $100k. Yes, I still saved but there were other forces in play helping me along. It’s the financial equivalent of the car in California being picked up and carried along by a wash of muddy water.
My allocations at $200k are as follows:
- 401(k): $126k
- Real Estate: $85k
- Roth: $28k
- Cash: $15k
- HSA: $9.7k
- Pension: $9,6k
- Taxable: $6k
- Car: $4k
It’s definitely interesting to look back at the chart in my $100k post to see how my allocations have changed. At $100k, I basically had a few investment accounts and some cash. Now, I have those same retirement accounts, but I also have a pension and real estate investments. In fact, adding real estate to my portfolio super charged my growth! There was no real estate in my portfolio 18 months ago and now it’s 30% of my holdings! I’m very excited to see where real estate takes me in the next 18 months!
Save, Save, Save
Saving lots of money contributed to most of my net worth growth. I wouldn’t be where I’m at today if I hadn’t furiously shoveled money into as many accounts as was legal. Investment gains and real estate are awesome, but you can’t get those prizes until you unlock the savings levels. I saved over $30k in that 18 months!
Invest Like a Snazzy Alligator Detective
The second biggest category was investment gains. Yes, the market is on a tear and going bananas. Yes, I know 20% gains in one year are not the norm and I can’t count on them every year. It’s like one of those informercials on TV. “Look at my gains! You can do it too!*
*(Results not typical)
But there’s something really, really cool at looking at your accounts and seeing the market put in a whole extra years’ worth of contributions into my 401(k) in 2017. That’s right, the gains on my 401(k) were $18,500! That is “free” money! I say free, because I know it’s growth and can go away if the market enters a downturn, which is incidentally something I do think will happen here soon. I’m not going to go out and buy cryptocurrencies or precious metals like some people I know, but I want to acknowledge I know that money isn’t mine unless I lock in those gains.
Increase Your Income
My income went from $65k to a shade over $100k in 4 years. A good chunk of that came from raises, promotions and bonuses at my W2 job. However, over the last year or so I’ve started to diversify my income streams and make more outside of work. I started a few side hustles and bought a rental property. It is a LOT easier to put money away when you don’t need it every penny for living expenses.
When I started out at $65k, I felt the pinch of maxing out just my 401(k). I had a hard time imagining how I would be able to max out my 401(k), Roth IRA and HSA in one year. Now, here I am 3 years later doing just that. Which leads me to my next point.
Avoiding Lifestyle inflation
Inflating your lifestyle is stupid easy. It’s easier to throw money at things to make problems or stresses go away. New car? You deserve it after all that hard work. Lunch out every day at work? It’s networking with your coworkers. Dinners out all the time? Of course, who wants to cook after a long day at work?? New clothes all the time? Gotta look good. Vacations to Caribbean resorts? You betcha!
What’s difficult is keeping that inflation at bay. It requires more effort for just about everything. Cooking at home, taking your lunches to work, maybe riding your bike to work, keeping your old car, resisting the urge to go shopping for new stuff…. It’s hard. I let my lifestyle inflate a bit when I moved for my second job. I didn’t really need that nice apartment so close to work. Thankfully, I learned my lesson and kept that particular dragon at bay when I moved 18 months after that. If I had upgraded everything in life, I wouldn’t have been able to save so much!
You can’t save money you’ve already spent.
Everyone says the first $100k is the hardest… looking at the timeline, I would have to agree!
Here is a breakdown of my timeline to $200k:
- 4 months to save $15k
- 10 months to go from $25k to $50k
- 9 months to get to $75k
- 8 months to get to $100k
- 6 months to get to $125k
- 4 months to get to $150k
- 4 months to get to $175k
- 4 months to get to $200k
Just a few comments here.
One, wow, the power of leverage. For $5k, I put some money down on a house and immediately started getting an extra $1,200 a month! I’m not sure what other kind of investment I could make that would give me that kind of return. Legal investments, anyways!
Two, things kind of plateaued there from $150–200k due to the rental property and the fixings I was doing on it. I undeniably spent more money than necessary, but hey, I learned lots of lessons. No ragrets. Not even one letter. I hope to turn those lessons into better experiences with real estate going forward!
Final Thoughts
I didn’t do anything revolutionary to get this $200k. I didn’t buy in on the bottom floor of a cryptocurrency. I didn’t get a crazy big inheritance. I don’t earn 6 figures. All I did was live well below my means, save a bunch, invest it, and try to increase my income as much as possible. You can do it too!
What are some of your goals? Do you associate certain ages with milestones? Let me know in the comments!
Boom, you go girl! Great achievement. At 27 I was two years out of University. Definitely didn’t have $200k to my name at that time.
Thanks Cheesy Finance! I’m very lucky to have discovered this at a young age!
They also say that the first million is the hardest. I think there’s a factor-of-ten rule here. The first $10k is as hard as the first $100k and the first $10m is as hard as the first $1m. I imagine there’s a fellow in Redmond, WA who can tell you that getting to $10b is as hard as getting to $1b.
Hey Steve, I would definitely agree with that statement. Inertia of compound interest is an amazing force to have on your side! Thanks for the comment.
That is quite the milestone, congrats! It’s crazy to see how the pace picked up after the first 100k. I hope things line up for me in the next 2 years and I can reach that number at 27 as well (haha)!
Thanks Teacher on FIRE! I think the market going bananas has a lot to do with it as well lol. Good luck on hitting your milestones!
Great work. Each big number is a huge accomplishment and also a building block to even bigger and better things.
Thanks Money Beagle!
Congrats! Great inspiration right there to stick with the basics: “All I did was live well below my means, save a bunch, invest it, and try to increase my income as much as possible.” Love it!
That’s the hope! No crazy strategies over here. Just following the basics 🙂
That is truly amazing Gwen — congrats on knocking that one out of the park!
Unfortunately, it’s making an old guy like me feel like a failure when I was your age! 😉 At 27, I think I was just finally out of debt and on the positive side.
You’re really killing it! Keep it up!
– Jim
Yeah but think of where you’re at now! You’re doing pretty great even if you weren’t where I’m at. Keep up the great work!
This is EXTREMELY impressive! Heck, at 27, I was racking up bar bills as if it was the end of the world!
I am willing to bet you are ahead of 99% of your peers, for two reasons:
1. Your quote, “You can’t save money you’ve already spent)
2. You understand leverage. “…the power of leverage. For $5k, I put some money down on a house and immediately started getting an extra $1,200 a month!”
Bravo on your achievements!
Thanks Church! I have this community to thank for my success!
Awesome! Keep at it! It only gets easier, unless you keep buying expensive properties 😉
yeah yeah yeah thanks for your very special brand of encouragement…
Get it Gwen! Psyched to see your progress. Just wondering, would you count equity in a single unit primary residence towards your net worth?
It’d be my money, so I would count it.
Amazing financial achievements, congrats!
Keep it up and all the best!
Cheers,
Financial Shaper
Thanks Financial Shaper!
Nice job, Gwen! Can’t wait to see what you do in 2018 with some of the big changes you are making.
Thanks GE! It’s going to be a fun time full of work!
Well this is super inspirational. That’s sick you have this much patience at 27. You’re on the way to your goals. Here’s to the next.
I’m glad I could inspire you! Thanks for the comment 🙂
So awesome, Gwen! I’m super excited for you to see how it keeps picking up the pace. Pretty soon that NW is going to be an unstoppable snowball rolling down the hill and ready to crush everything in its path!
Thanks Andy! Can’t wait for that day to get here!
Well done Gwen! I listed to your ChooseFI episode and was impressed with your persistence and maturity. This is the payoff. As you said, nothing special. Just following the pillars of FI. Way to go.
Thanks Drew! That episode was a lot of fun to record. I love their podcast!
They say the first $100k is the hardest. Also that it takes the longest. How’d the second $100k feel?
Keep killing it!
It’s totally true. Second $100k felt a lot better than the first! Thanks Drew!
Congrats Gwen, a well deserved accomplishment. Looking forward to seeing you smash through 300k!
Thanks Erik 🙂 I have a feeling that one will take me a little longer with me quitting my W2.… but then again you never know, an idea could take off and earn ton$ of ca$h monie$
Rock on. We’re clipping along at similar paces. Look forward to the day when we both hit the double-comma-club and can buy an awesome dinner out to celebrate. Keep on, keeping on. 🙂
McKinney & Roe?
I’m in on that. Looks so good, and out of my frugal norm, that maybe we can make an excuse to visit at the half way $500K club point.
I have a $100 gift card 😉
Now wait a minute.…. that’s our gift card for dinner! hahaha
Congrats on the milestone! That is awesome!
Thanks Cody!
Woo hoo, congrats, Gwen! You are absolutely killing it 🙂
Also I love the new look for the blog!
Thanks Erin! I think it’s growing on me 🙂
Amazing! I’m 27 too I know this is a feat. Congratulations!
1990 Babies unite! Frankly, I think it was the best possible year to be born, but I might be biased. Keep working and you’ll get to $200k too!
Congrats on the milestone! What an awesome achievement. Though you downplay it, your hard work and dedication has paid off! This has to feel like a nice cushion to grow on especially as you move onto the new chapter in your life.
I’m approaching my first $100K (hopefully in the next few months), and here’s to hoping my eventual $200K will be a lot easier (and faster) than this first $100K has been!
Congrats Gwen! That is a real accomplishment. I would also wager to say that you are well beyond that number if you count your social security taxes as contributing to an annuity that starts paying out at 67. There are calculators that will give you present value information out there somewhere. Every $100k will go faster from here. $1 million, here you come!
A big, fat CONGRATULATIONS to you!! That’s amazing!
Also, unrelated, but that “investigator” joke got me a job once.
Woot!! Now it’s just a little leap to a million. 😉
PS — The blog is looking good!!
Congrats Gwen! Curious how a $5k down payment on your rental property translates into $85k of equity. Are property values in that area shooting up?
Amazing! When I was your age I was spending more on beer than you’re putting away in your Investments every month. There’s something to be said about having your act together at such a young age, kudos!
Hi Gwen,
First of all congrats! I’m 28 come from a similar background and just starting on my road to FI and you inspire me.
I would like to get into real estate investing but what is your advice for people who live in über expensive cities such as Boston and New York? I was getting outbid by over $20k – $70k over asking price this summer..so maybe RE investing in these cities is not worth it since homes are super expensive. I would love to get your thoughts on this. I also dont want to relocate so maybe renting makes sense for millenials in my situation until maybe another RE crash.
Congratulations on your net worth and that impressive salary trajectory! And truer words were ever spoken:
“It is a LOT easier to put money away when you don’t need it every penny for
living expenses.”
Will you keep your rental and manage it from a distance now that you’re moving away or will you liquidate and buy something else? What lessons did you learn from your first multi-unit rental property?
I’ll be keeping the rental and managing from afar, at least until it stops making sense. I learned the numbers are the most important part. If you have good cash flow, you can survive anything (like wasting money on a bad contractor).
congrats fiery m, way to go — love your podcasts.
Congrats Gwen! 200K is such a huge accomplishment! Your hard work and dedication is truly paying off. Best of Luck in 2018!
‑MH
Wow!! Good for you! I’m 28 and have zero debt. I don’t have a ton of money in the bank. However my house is worth over $400,000 and my mortgage is under $180,000 now. I think I am doing okay
Wonder Woman!
Wonder Woman!
Now the world is ready for you
and the wonders you can do
Make a hawk a dove
stop a war with love
Make a liar tell the truth
And build a $200K portfolio all by yourself before you hit 30!
Hi Gwen, finally it is great to meet a like-minded individual who is on the path to financial security. My assets are a little over $330,000 mostly because my home is located in an up an coming neighboorhood. Currently, I have $50,000 in liquid investments and trying to increase them to at least $150,000 but rather have at least $300,000 to be safe.
that is an impressively quick savings! I don’t quite understand how you have 85K in equity in real estate with 5k down so quick. Have you been making big principle payments? I have often wondered if that would be a good thing to get into, I’m just not the landlord type. But I do have a friend or two that have made it work.
I don’t have $85k in equity. Perhaps I worded that poorly. The house is worth $85k and I have about $10k in equity.