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!
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!