Net Worth Update: May 2016

Happy May!  I hope April treated you well and tax day didn’t crush you like it crushed me!  Even though taxes came due, our net worth still went up $6,379.32!! I’ll take a $6K jump every month…

April Financial Breakdown

House: $383,728 – $321,484 $62,244.  I’m just using zillow.com as the baseline here.  They give their estimate for how much they think you’re home is worth.  I’m not saying it’s accurate but it’s a decent way to keep track without bringing an appraiser in every month to help you track your net worth. This month it said the value of my home went up $4,197.00.

My 401k: $18,689.37.  Right now 5% of my salary is going into my 401k via my employer. Nothing crazy here.  According to my account at personal capital, my portfolio only increased 1.79% over the course of April.

Pension Fund: $8,215.40.  I’m one of the few remaining workers in America that contribute to an employee pension fund and if I decide to stay with my employer and retire 24 years from now I will receive a pension.  I DO NOT PLAN ON DOING THIS!  I’m all about early retirement!!!

My Old 401k: $8,497.11.  This 401k is from an old employer.  I need to roll this over into a Roth IRA.  Hopefully I get to this very soon…


Wifey 401k: $4,682.47. Same situation as my 401k.  5% match from her employer.

Wifey Old 401k: $3,300. Also in the same situation as my old 401k.  We also need to roll this over to a Roth IRA very soon.

Car: $13,174.00.  Well, I don’t know what to say on this one.  According to kbb.com, the value of my car actually increased by $174 over the past month.  I won’t expect an increase on a vehicle ever again but it’s a nice surprise.

Jeep: $10,763.00.

Emergency Fund: $8,016.98.  The emergency fund took a hit this past month due to taxes.  I owed over $3k and was able to cash flow over $2k of it, but I had to dip into the emergency fund for just over $1,000 of it.

TOTAL NET WORTH: $137,582.33 (+$6,379.32)

So 2nd post of my net worth in the books.  I’m not expecting to see gains of over $6,000 for a while, especially since over $4,000 of it was due to gains on the value of my home.

Keep in mind, the first few years of beginning to build your net worth are slow but once you get some momentum it’ll shoot up faster than you can imagine!

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Motivate Yourself To Build Wealth!

Getting control of your finances, increasing your net worth, and building wealth is not an easy thing to do. It’s actually extremely difficult. It will never happen without a plan, telling your money where to go, and the dedication to follow through with your plan.

Because of this, it’s important to figure out why you want to build wealth. Think about it right now! Why do you want to build wealth? Do you have specific goals you want to accomplish? Do you want to retire early? Do you want to change your family tree? Do you want the freedom to do whatever you please? Maybe you just want some “f#ck you” money? Whatever your reason is, it is important to have that reason fresh in your mind because you’re going to need to refer back to it frequently for motivation.

debt-slave

Personally, I don’t want to be a slave to anyone. I use the word slave because I firmly believe that if anyone has control over me and can manipulate me due to my finances, that’s exactly what I am…a slave to that person, job, loan company, etc.  Currently, the only outstanding loan I have is the mortgage on my house and it’s driving me crazy.  My mortgage, although extremely affordable as a percentage of my take home pay, is stressful because if keeps me from being able to leave my job if I wanted to quit today (to see how much house you can afford, look here).  My emergency fund keeps me safe for 6 months if I lose my job but my mortgage is keeping me from being able to choose any job I want, regardless of what that job pays.

So, for me, not wanting to be a slave is my “why”, and the motivation from my why will keep me disciplined and help me achieve anything I want! Do I want to have f#ck you money? Yes. Do I want to retire early? At this time I do. Do I want to change my family tree? It will be done. Any goals I want to accomplish can become a reality, all because I have the motivation to never be a slave to anyone.


Now it’s your turn to think about why you want to build wealth.  If my reason works for you, great! Roll with it and use it to live your dream of being free and financially independent.  If my reason doesn’t resonate with you, sit down and figure out:

  1. What are your goals that you want to accomplish in life? Write this down on a piece of paper and write down whatever comes to mind.  What would you do with the rest of your life if money wasn’t an issue?
  2. How would you live if you only had 6 months to live? What kind of life would you live?  How does it compare to how you’re living now?  How would it change if you didn’t have to worry about money?
  3. What are your most important goals? While you’re reviewing the goals you’ve written down, pick out which ones are most important to you.  Will you be able to accomplish your goals without getting control of your finances?  How will your goals be affected by building wealth?  How will they be affected if you don’t change how you spend/save money?

After completing this exercise you should have an idea of what’s important to you right now and how building wealth will only aid you while trying to accomplish your dreams.  Your goals will probably change over time so you’ll want to revisit this exercise periodically so that you can adjust.

So…What’s your why?

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Do You “Act As If?”

Have you heard the saying “Act As If” before? If you’ve seen the movie “Boiler Room” I know you have.  In “Boiler Room,” Ben Affleck is training a group of wannabe stock brokers to be fantastic but illegal stock salesmen on Long Island.  I won’t ruin the story for you but I want to talk about a specific part of the movie where he’s addressing the group of trainees…

At this point in the movie all trainees have just been hired and are preparing to start selling stock after passing their series 7 exam (the SEC requires any individual who wants to sell securities pass this exam). While conducting a morning sales meeting Ben brings up the fact that many of the trainees, who are all wearing suits, aren’t wearing suits that meet their companies standards.  He told them they dress like $hit and need to go out and buy at least one decent suit because the company they work for has a “minimum level of aesthetic professionalism they need to maintain.”  He also promises the group that it’s ok to buy an expensive suit even though they’re broke because they’ll be millionaires in a short period of time.

This then led to the “Act As If” speech, which I’ve always loved. Check it out… ***Disclaimer: Ben drops the F bomb in this clip.***

This is how the typical American thinks about money.  Most of us spend our money before we’ve made it and it gets us into trouble.  Luckily, no job will require anyone to act like millionaires if they aren’t millionaires.  I understand that the point of this talk is to build confidence and present an image of success.  But, you can’t just go out and buy an expensive suit because you think it’ll make you successful faster by influencing how others think of you.  Maybe you’ll boost your confidence for a brief period of time but you’ll become financially successful by being good at your job and telling your money where you want it to go.

I’ve never gone to a doctor because he drives a $100,000 car or a lawyer because he wears a $1,500 suit.  I pick a doctor by talking to patients of his and finding out his reputation. Is he smart? Does he have a good bed side manner? Will he be able to keep me from dying if I’m not supposed to die at that particular time? My point is that if you’re good at your job, no one will care what kind of suit you’re wearing or what model car you’re driving.

Like I said, I’ve always liked the “Act As If” mantra.  It can be applied to almost any situation, not just money.  It pumps me up, it’s motivating and it makes me want to go out, kill something, and drag it back home (metaphorically).  However, now that I’ve gotten a little older and gotten control of my finances and career, I don’t agree with this message as it relates to personal finance.  “Act As If” sounds an awful lot like keeping up with the Jones’ and no one can build wealth by trying to keep up with all of the other fools who either don’t care or are ignorant about personal finance.


When I was younger, I would blow all of my money right after pay day because, like the characters in this movie believed, I thought that I would earn money so fast that I wouldn’t miss the money I already blew.  I think most young professionals feel that way in their early 20’s.  It’s hard to think about retirement when you’re just starting a working career.  But, there isn’t one person on this earth that won’t run across a difficult time in there lives. It is said that everyone will have at least 1 financial emergency every 10 years. We just can’t keep spending money and expect to make it back, or make more, right away. We have to be prepared!

Fortunately, some of us finally wake up and realize that we work too damn hard for our money and we don’t want to look up after 30 years and have nothing in the bank to show for our hard work.

Success with money and more importantly, the speed with how fast you are successful with money comes from your level of dedication and what you are willing to sacrifice. “Act As If” DOES apply to you and your money but you have to reverse how you think about this phrase. “Act As If” you’re poor. “Act As If” you only make 50, 60, 70% of what you really make. “Act As If” you’ll be working for the rest of your lives if you buy that new car or bigger house…because you actually might if you make a poor decision.

Get rich by “Acting As If…”. How will you “Act As If?”

Escape The Rat Race With Early Retirement

Why is it that whenever I talk to anyone about retiring early, they look at me a little cross eyed and either shrug it off by not really responding because they don’t believe it can be done, or they ask me, “Wouldn’t you get bored?  What would you do if you retire?”

I can understand when people look at me like I’m crazy for thinking I can shorten my working years down to 15 years.  It’s extremely difficult to pull off and it’s hard enough to even get people to behave with their money, budget, and stay out of debt, let alone start an early retirement movement.  But I don’t understand why people would ask, “wouldn’t you get bored?”  Would you really stay in the rat race because “you might get bored?”  Do you know how bored I am working in the same office everyday?  I also have the same commute, same desk, and same type of work…EVERYDAY!!!  Early retirement seems like heaven when you look at it this way.  I don’t know about you, but I have a lot of things I want to accomplish in this life, and I feel like work just get’s in the way of that.  Sit down and think about what you would do if you didn’t have to work for money.  Dreaming is the first step in making it a reality!

day dreaming
Day Dreaming Just Let’s You Know Where You Really Want To Be. Early Retirement Will Help You Get There Faster!

The general perception of a normal retirement is that you’re now 65 or older and you’re just trying to organize the remaining years of your life so that you can be comfortable and have a little fun with the time you have left on earth (harsh but true).  But what if you could “retire” in your 30’s, 40’s or 50’s?  You could potentially have 50, 60, or maybe even 70 years to live life however you want!

As you can see, early retirement means that you have enough money to choose how you want to live your life and spend  your days!  If you just wanted to be lazy, sleep in and sit on the couch all day?  I guess you could do that, but I don’t recommend it.  If you wanted to pursue your passions and do something that is productive but excites you?  Do it, you have that freedom.

My hope is that I can reach millions of people and make them understand that early retirement isn’t impossible and that it isn’t about living a boring life.  Early retirement sets you free from being chained to your job! Early retirement IS financial freedom.  I really can’t imagine a better scenario for anyone than being able to choose how they want to live their lives!

Action-Changes-Things-AcronymIf you’re now like me, and convinced that the 65 and older “retirement” sucks, you have to TAKE ACTION NOW!  You have to pay off your debt, save money, invest, and not spend every cent of your working wages that you bring home.  The less you spend and the more you save/invest, the earlier you will be able to retire.

No one says that you need to listen to all of the conventional retirement advice and wait another 20, 30, 40 years until you retire.  Nerdwallet.com says that the average savings rate for families in America is just under 5%.  At 5%, you probably won’t even be able to retire at 65!  And, for the younger generations (millennials), what if you don’t even get social security?  You’ll be working until it’s not physically possible anymore.

If you’re ok with that type of life, I understand.  It’s easy and doesn’t require any kind of thoughtful planning or sacrifice.  But I can’t live that way.  I have a hard enough time going to work every morning and I can’t imagine doing it for more than a few years.  I’d rather save the most money I can and live the rest of my life writing a blog, trying to become a professional golfer, hunting, or working a job that I’m passionate about even if it doesn’t pay a lot of money.  I just want to be in charge of my future!

And that’s simply what I want you to takeaway from this post.  You can take control of your life!  Take control RIGHT NOW and don’t let anyone get in your way!

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Your Debt is Killing Your Future Self!

Your Debt is an EMERGENCY! It is killing your future self. You can’t build wealth with a pile of credit card debt and car loans hanging from your neck and you need to treat it like the emergency it is.  You have to get angry that you’re in debt so that you can attack it as if it were holding you captive and making you a slave, because when you’re in debt, you are a slave.  You’re a slave to the financial institutions, car companies, credit card companies and anyone else you borrowed money from.  Don’t be a slave anymore!  Get ANGRY!!!

Getting out of debt is not easy, but it is worth the effort.  For most people, wealth is built from your income, and you can’t use your income to build wealth if you’re like I was and paying $1,000 per month towards car payments, and $500 per month in credit card payments.  Don’t forget that I also had a $2,000 per month mortgage.  How can you save money with all of those payments?  You either have to significantly increase your income, payoff the debt, or preferably, do both!  Here we are going to talk about getting out of debt.

debt free sign

Step 2: Get Out of Debt

The first thing you need to do is write a list of everyone you owe money.  Do not include your house in this step.  We will focus on that in Step 5.  Figure out how much money you are in debt to each person/company in that list and sort them out from smallest to largest.  Here’s an example:

Debt Snowball

ItemTotal PayoffMinimum PaymentNew Payment
Credit Card 1$1,000$10
Credit Card 2$5,000$50
Vehicle 1$15,000$300
Vehicle 2$21,000$410
Student Loan 1$24,000$230
Student Loan 2$36,000$360
Net Worth Explosion

You can see that all debts are listed by smallest total payoff to largest total payoff amount.  You don’t need to be concerned about the interest rates of the loans unless 2 debts have a similar balance.  If you have 2 debts like this, list the one with the highest interest rate first.  However, you’ll be paying the debts off fast enough that the interests rates will not affect the math too much.

Since you’ve created your budget in Step 1 you know how much money you have left over after you’ve accounted for all expenses.    **Don’t forget that YOU WILL continue paying the minimum payments on all of your debts.**  The “New Payment” column is a combination of the minimum payment of that particular loan and the money you have left over, according to your budget.  You will take all of your “extra” money and throw it at the smallest debt until it’s paid off.  After each debt is paid off you’ll take all of the “extra” money that was in your budget, add the minimum payment from the debt you just paid off, and apply it to the next debt.  This is called a DEBT SNOWBALL.  As you pay off each debt you’ll start building a lot of momentum and you’ll be out of debt in no time!

Getting out of debt can take a little or a lot of time depending on the circumstances.  It took me 3 years to get out of debt but others have done it in less than a year.  It all depends on the amount of debt you have and the size of the snowball you can throw at your debt.

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