The first several years of becoming an adult I struggled like hell with money. For the most part it just seemed like I couldn’t get ahead. Every year I ran into large unexpected expenses which kept me from being able to build any wealth. At the same time I was frequently looking at co-workers who were 10 -15 years older than me and expecting that my wealth should be what theirs was. Since then I have learned that the only fair comparison is to myself.
I originally penned this post in August, but have been fighting with myself as to whether or not I could be comfortable revealing this much personal info. For the past two years I have been very guarded about my financial position for privacy concerns. The thing is, the handful of people who actually do know me and read this blog, know that I am conservative with my money and have been focused on building wealth for some time. I shouldn’t have to hide from my wealth or be ashamed by it. Justin at Root of Good gave me a push with his similar post detailing his financial journey to becoming a millionaire. I think these numbers may be surprising to some people who assume I have much more, and surprising to others who would think I have much less. The big surprise to me is the velocity at which our net worth is currently increasing.
My Wealth Building Journey By Year:
2001 – 2003: End of Year Approximate Net Worth: $2,000
When I was 16 I learned about IRAs and compounding interest in a micro-economics class in high school. With block scheduling we had the class Govt/Econ for half of the year. Micro economics covered half of the economics segment, so for only 1/8 of the school year, or about 1 month of all of high school we covered micro economics; for me it was enough to get motivated.
I plotted out some excel spreadsheets showing if I maxed an IRA from age 16 to Age 65, with 12% returns I would be insanely rich! Of course now I know sustained 12% returns are highly unlikely. My parents helped me open an IRA with the $600 I had saved up from doing odd jobs. I purchased 100 shares of Red Hat, which was a Linux software company that was taking a bite out of Microsoft. The stock did insanely well for over a year and despite my father’s warnings that it had become incredibly overvalued, I held on and it dropped back down to reality. I later sold it and bought Hansen Natural stock, which doubled in price in 2004. I thought that I was a great stock picker until I bought Space Dev, which lost close to half its value while I owned it. I sold all my individual stocks and invested in Vanguard Total Stock Market Index fund once I had $3,000 accumulated; This was probably around 2005.
I didn’t have a real job until 2004, so I didn’t add any sizeable amount of money to the account, nor did I ever have more than around $100 in cash. For the most part I spent any money I earned.
2004: End of Year Approximate Net Worth $6,000
In March of 2004 I got my first real job working at KFC. I was 17 and in my senior year of high school. If I remember correctly my pay was $5.45 per hour to start out with. I started out working around 15 hours per week. My main concentration at the time was school. Once I graduated from high school I immediately started taking a full class schedule at my local community college. I had class 4 nights per week and worked the other 3 nights. My managers started pushing me to work more hours and during the summer I was working close to 40 hours per week for a while. Business slowed down seasonally and in the fall my hours were back to 15 – 25 hours. I didn’t mind because school was my primary focus and I had no real expenses.
I saved the vast majority of my earnings, well over half my take home pay. By the end of the year I had around $6,000, $3,000 in cash and $3,000 in my IRA.
2005: End of Year Approximate Net Worth: $8,000
In March of 2005 Mrs. C. and I moved into an apartment together. Her son was just under 2 years old at the time. I continued working at KFC and for a couple months I had a second job selling used furniture, making what at the time was a big step up in pay…$7.50 per hour. I was still going to school full time and averaged around 35 hours per week at KFC. Mrs. C. was working at Meijer full time and started going to school as well. During the county fair I drove the chicken van to deliver chicken to our fair location. This was the cushy job that was mostly a reward for their top worker. 16 hour shifts for 6 days. I worked 90 hours and took home around $550, which was a big deal at the time. While working one of my shifts I got a call from my mom and while talking to her someone she worked with walked into her office and overheard part of our conversation, in which I was telling her I was working 90 hours that week. Later on my mom told me this and that he suggested I go to the job fair for ice condenser work in the spring of next year, because they are always hiring people to work long hours for the outage.
Our rent was $550 per month. between rent, utilities, gas, insurance, and groceries, it was fairly difficult to save money and we certainly felt squeezed. I HATED living in an apartment. We had neighbors below us, and shared walls with neighbors on two sides. I picked up a monthly real estate listing magazine at Meijer one day towards the end of the year and upon realizing how inexpensive housing in the area I was already living in was, I became motivated to buy a house.
At the time I was concerned mostly with the monthly payment and the benefit of not sharing any walls and having an actual yard. At 6% interest and a 30 year mortgage I could get a house costing $80,000 and have a lower mortgage payment. The biggest hurdle was saving up a down payment. You could then, and still can today buy a decent home in Benton Harbor for under $50,000. A 20% down payment for a $50,000 house would be $10,000, so we made that our savings goal. I started tracking our finances around this time and by the end of the year we had around $5,000 in cash and I still had $3,000 in my IRA.
2006: End of Year Approximate Net Worth: $15,000
In 2006 Mrs. C. switched jobs and started working at Autozone, with a decent bump in pay. In March our lease was up and Mrs. C. and I moved into her mom’s basement. This gave me some serious motivation to get our finances together to get our own place. We were staying there to avoid signing another year lease while we looked for a house. I continued to work at KFC and went to the job fair to work in the ice condenser. I was hired for the job and in March worked my first outage. I was working 60 hours a week for $14 per hour. I was also working a couple days per week at KFC to keep my spot and I was still going to school. I earned around $5,000 at this outage which brought our savings to the point where we could start shopping for a house.
In the summer we looked at a few places and found a 5 bedroom 2 1/2 Bath house with a partial basement for around $50,000. Getting a mortgage ended up being a more difficult process than I had thought. Having no credit was our major problem. We were able to get a loan through a local home loan broker who manually underwrote the loan through his company, instead of processing it through a big bank for a finders fee, like they normally do, with the caveat that in 1 year we would have to refinance after establishing some credit.
We put in an offer for around $42,000 on the house, which was bank owned and had been on the market for over a year. We got a call from the realtor that another offer was put in on the house at the same time, and we then upped our offer to list price (I know, this was most likely a strategy to get more money from us). Between the down payment and closing costs we spent virtually all of our cash to get into the house. I withdrew all the contributions I had made to my Roth IRA, which left around $1,000 in it (I know bad move). We closed at the end of August right as I was starting my second outage.
I was brought in early for the online portion of the job giving me an extra 3 weeks and I also was put on the support team, so instead of working 60 hours per week I was working 72 hours. I ended up making almost $10,000 during this outage, which replenished our cash and allowed us to fix up some things on the house.
2007: End of Year Approximate Net Worth: $15,000
I filed my first unemployment claim in 2006 when I was laid off from the outage. I didn’t go back to KFC because when the outage started my store manager informed me they would not be willing to bring me back if I left. In March I traveled to North Carolina for an outage. I didn’t know what I was doing and spent virtually all of my Per Diem. In retrospect I should have found someone to share a room with to save a bit more money. When I got back home I was able to get my job back at KFC and worked there until the fall outage at my home plant. At the end of the ice condenser job there was still work going on on other projects and I was able to roll over to a scaffold builder helper position for a month. I was working 12 hour shifts 13 days in a row then 1 day off. Compared to earlier years, this was a really good year as far as income was concerned.
We had to refinance our house this year and I pretty much let the bank do what it wanted to do because we were forced to refinance. I didn’t shop around for a loan, and services like Lending Tree that help compare loan options weren’t widespread. I didn’t negotiate closing costs at all and I took a few grand of cash out. Our new mortgage was a 15 year mortgage, but it was at $47,0000; our original loan was around $39,000. About $5,000 went to closing costs and $3,000 into my pocket. #Stupidtax. We put in new carpet with the money we took out.
2008: End of Year Approximate Net Worth: $18,000
2008 was a REALLY rough year for us financially. I had an outage in the spring at home, but I didn’t travel at all. I wasn’t able to go back to KFC either. I found a part time work from home job working on a project called “The Sunshine Review”. I basically did data entry, reviewing government websites for transparency against a 10 point checklist. I earned $12 per hour, and negotiated a raise to $15 per hour a couple months in. Typically I worked 15 – 30 hours per week.
In August our son was born, which was also a drain on cash. Mrs. C. had been working reduced hours for a few months and I didn’t have an outage that fall season and wanted to find a way to make some extra money. We had probably around $9,000 in cash and I had a GREAT idea to buy a house at the tax auction and…..profit? either through renting it out or flipping it. We found a house we thought would be a good one to own, it was right down the street from my Mother in law and the house had a good structure. We agreed on spending up to $5,000 on it. I went to the auction and while bidding the auctioneer switched from $100 bids to $500 bids after hitting the $5,000 level. I was caught off guard and instead of bidding $5,200 just over our max price I bid $6,000. I won the house and I also had to pay the latest tax bill. I figured it would be only a couple hundred bucks, but it was almost $1,000. By the time we were into the house and completed the demo, I was pretty much out of cash.
Overall we still lived very cheaply, so despite having a drastically reduced income from the previous year and buying a house at the tax auction, we were still able to get through the year.
2009: End of Year Approximate Net Worth: $25,000
In the spring of 2009 I went back to working the refueling outage at my home plant, and this time I was promoted to a supervisor position. The second unit at the plant had a major problem with the new turbine and as a result we had to stay and do the minimum required surveillances the NRC mandates on that unit as well. This amounted to an extra 6 weeks of work. This spring season refilled our cash reserves and that money was burning a hole in our pockets.
We bought a Wii, a flat screen TV, a new couch, and then a $15,000 van on payments. We bought the van and sold our previous car only a month before the Cash For Clunkers program launched, which gave a $4,500 rebate for scrapping an old car and buying a new one. Had we waited a month we probably would have went for that deal.
In The Fall I finally convinced Mrs. C. that I needed to start travelling again for work. I was able to do a couple steam generator jobs, which brought in as much money as the jobs I made working at our local plant. We did some repairs to the house we bought at the tax auction, but it was no where near livable yet.
2010: End of Year Approximate Net Worth: $36,000
During 2010 I had two outages at home and was able to travel a bit. My total earnings for the year was just over $30,000 and Mrs. C. was earnings around $12,000. To us this was a lot of money and our bank accounts were filling up. The van we bought the previous spring on a 5 year note was paid off by the end of 2010.
In 2010 we also sold the house we had bought at the tax auction a couple years earlier, for the same price as we paid for it, minus costs and fees. We walked away with around $2,000. This was a big loss, but at least it put some cash in our pockets.
By the end of the year we were talking about moving up in house. Our income had doubled since we bought our home, interest rates were really low and we had a sizable cash reserve. At this point in time we still had not started actively saving for retirement. Mrs. C. contributed to her 401K at work enough to get the matching funds, but that was it.
2011: End of Year Approximate Net Worth: $67,000
I continued travelling for work and finished my bachelor’s degree in May.
In the fall of 2011 we found the perfect house to buy. We wanted a tri-level house and we wanted at least 3 acres, with a max price of $150,000. It also needed to be within a 15 mile radius of Benton Harbor, MI. It turns out there was only 1 house that fit that criteria. Tri-level homes were usually built for subdivision housing, 99% of them are on small subdivision lots. The only reason this one came with 3 acres was because the previous owner had bought the lots to each side of his house. The house was originally listed at $160,000 and due to the horrible housing market at the time they had cut it down to $150,000. We offered $145,000 for the house and the sellers accepted that day. Between the 20% down payment and the closing costs we wrote a check for just under $30,000. Once again our bank accounts were drained to only a couple grand and this time we had two house payments….once again, paying some stupid tax.
I thought for sure our first house would sell quickly, but it didn’t. For the remainder of 2011 we had 2 house payments and into 2012.
2012: End of Year Approximate Net Worth: $83,000
I continued travelling for work and working the outages at my home plant. We worked on rebuilding our cash position and paid for several upgrades/repairs to our new house. The water heater and the washer and dryer needed to be replaced and we needed a riding lawn mower.
Around April we received an offer on our house and it looked like it was going to work, but the deal drug on for almost 3 months before the buyer finally backed out. We found out later that he backed out because his bank gave him the final list of his closing costs and he couldn’t pay around $500 of unexpected fees he came into. Had we known this I would have gladly paid those fees for him.
Our Realtor then presented us with a land contract offer and strongly suggested we entertain it. It looked great on paper. The buyer was going to pay us $5,000 over list price, with a $20,000 down payment and payoff the balance at 6% interest over 5 years. Once again, this deal drug on. He took every extension possible, then finally came clean that he had no money and was waiting on an inheritance. We actually ended up renting to the guy around November because we were so sick of having two house payments.
2013: End of Year Approximate Net Worth: $107,000
2013 is the pivotal year for us. We had the house rented out, so that massive cash drain was capped. My earnings were increasing, and I was done with school. Since our first house was no longer on the market we were able to refinance it. Our original loan for that property was a 15 year at 7.37%. We were able to refinance to a 10 year at 3.5%. This cut around $100 off the payment, with a larger dollar amount going to principal and only extended the mortgage by a year. This made the rental cash flow positive and accelerated the growth of equity. It would have saved us a ton of money had I thought to refinance it back in 2011 before listing it for sale.
We made a major investment in our primary residence in 2013 as well. The boiler from 1979 still worked, but it was extremely inefficient and scared the crap out of Mrs. C. We replaced it with a new energy efficient boiler.
Mrs. C. earned twice what she normally earned because her store went through some management changes and was left extremely short staffed during most of the summer. She was working 55 – 75 hour weeks through most of the summer.
I learned about health savings accounts in 2013 and got us on a high deductible health care plan. We opened an HSA at Health Savings Administrators and started funneling cash into it automatically. At the same time I looked at our dismal retirement savings and started automatic contributions into those as well. Combined we started putting $1,000 a month into long term savings, which also helped us out quite a bit on our taxes, between the tax deduction and the retirement savers tax credit. I also started focusing on increasing our delta, by increasing our income and reducing our expenses at the same time. By viewing our retirement savings as our first out expense we kept wage increases from leading to lifestyle inflation. We still lived like we were earning around $30-$35K.
A few months later I started Action Economics. I had a passion for finances and one of my co-workers suggested I go into personal financial planning. Since most real jobs in the industry are really sales positions and I had no desire to give up my nuclear career, I started a finance blog to share my knowledge and to encourage me to build on my knowledge as well.
I was able to squeeze into a job after the fall ice project, working at South Texas Project. This gave me some work in November and December, which kept us from going backwards during the winter months.
2014: End of Year Approximate Net Worth: $128,000
In 2014 I had the best spring travelling season yet. I was busy from January to May. This was followed by my worst Fall season. The plant had a major project going on the replace the ice machine, but it didn’t get done on time. There was hope they would get it dialed in, but it just didn’t happen and the job finished up early. This cut my earnings from this job by around 35% and I was unable to find a second job. I continued to make the automatic contributions to our retirement accounts and HSA and started paying extra on our primary residence. At the end of 2014 our hoarder renter moved out, and we had some costly repairs on the house to make.
A few weeks after wrapping up the Fall outage season I got a call from one of our project leads who is in house at the plant. He is also the manager of the Facilities department out there and he wanted me to come work as a night shift supervisor for snow removal. Usually I don’t have any income during the winter, so this was a great opportunity. Instead of going backwards in the winter I was able to move forward. Trust me, there is nothing like shoveling snow right next to Lake Michigan at night in the middle of a blizzard.
2015 Net Worth Currently…$178,000!
Thanks to the snow removal job I was able to purchase the railroad bed behind my house. The previous owner put a letter in the mailboxes of all the people whose property adjoins the railroad bed. I immediately called him and worked out a deal when I got the letter. We agreed on a purchase price of $3,500. By itself I think I got a great deal, at well under $1,000 an acre. When combined with the house though the value of it is substantially more. I personally value this chunk of property at $10,000 (and that is reflected in the total net worth). After figuring out that the property actually includes about 200′ of frontage on the big creek, I should probably value it at closer to $15,000.
The other side of the coin on home equity is the mortgage. I am currently paying an extra $200 per month on the mortgage and I just paid an extra $5,000 on our mortgage, dropping the total to under $100,000! One of the tools I use to stay motivated on putting extra cash on the house is my House Payment Spreadsheet. The sheet keeps a tally of all the extra principal payments I make and tells me how many months I have taken off my mortgage and how much total interest I have saved.
I was promoted again at the ice project, putting me in charge of directing the work for the project, putting me only 1 step below the project manager. This allowed me to come in two weeks earlier than I had projected and I was able to roll directly from the snow removal project to the ice condenser project without missing any time in between. I was also able to get a short steam generator job following the ice job. The Fall season went very well too…I worked three steam generator jobs and was able to return to my snow removal position at my home plant at the beginning of December.
In March our nephew’s dad had some problems and our nephews needed to move in with us. Adjusting from 2 boys to 4 was a difficult process, but now we have acclimated to our new normal. Yes, we receive a small Social Security check for them from their late mother’s work history, and they will give us a bit of a tax deduction as well. Mrs. C. has worked fewer hours than normal during the year and the offset has been about equal to the Social Security check we receive for the boys. All in all this year our total gross income is right around $72,000, by far our best year yet. The best part of growing your income is the disproportionate growth in savings rate, since virtually all of the new money can be saved.
The velocity at which our net worth is increasing is nothing short of amazing. It took us almost 10 years to achieve $100,000 in total net worth, and it will only take 3 years to hit $200,000. We are continued to keep a relatively tight budget of around $3,000 a month for a family of 6. What’s great is that included in this budget is our house payment, which by itself builds us a few grand in wealth per year.
I pieced all of the information in this article together from previous bank records, tax records, and a myriad of spreadsheets I have built over the years, needless to say, this was an exhausting effort, and one of the reasons I signed up for a free Personal Capital account a few months ago. Personal Capital keeps track of all my bank accounts as if they were one account, and all of my investment accounts as if they were one account. I can also view each account individually and track the progress of my house payoffs. I can’t wait to start seeing a steep downhill chart on my mortgage! Going forward Personal Capital should make tracking my finances much easier to do, and thus much easier to post here.
Wooooooooooaaahhhhhh That was a long freaking post! This whale weighs in just North of 4,000 words; 10 years ago I never would have thought I could increase my net worth by $20,000 in a year, much less the $45,000+ I’m going to hit this year. Have you experienced similar momentum in your wealth building journey?