Jason from Dividend Mantra recently asked “Is The First $100k The Hardest?” I can officially answer that question with a resounding “YES!” as I just crossed that barrier last week. Woo hoo!
Man was I ecstatic! It’s hard to believe that I just started on this journey to financial independence last year, and really didn’t get serious until the end of 2014. In the past 365 days I have been able to increase my net worth approximately 67% to over $100,000! And that was without any windfalls, just hard work and dedication.
Last year I was already somewhat “decent” with money, but I could have been a lot better. I was contributing over 10% to my 401k. I had sold my car as soon as I moved to NYC. I was paying down my high interest rate student loans first. I was never someone to just shop for the hell of it. I had a decent job. So I’m not going to deny, that the cards were already stacked in my favor. It just took one conscious decision to knock it out of the park and really pursue financial independence to really get the ball rolling.
To get to where I am, the first thing I did was take a look at my retirement savings. I didn’t have an IRA and I wasn’t maxing out my 401k. So I logged onto my retirement account website and reset my 401k contribution rate to a percentage that I knew would get me to the IRS contribution limit.
The second thing I did was look at my expenses. I canceled the stupid $60 a month clothing subscription service I was a part of. I reduced the amount I was going out to bars and clubs in NYC, and “but everyone else is doing it” was NOT going to be an excuse anymore. I began to cut down on meals out, and began shopping more at the grocery store.
Fall of 2014 rolled around which is open enrollment season at work. I selected the HSA medical plan option and set my contributions to max out for 2015. I then opened up a Roth IRA with Vanguard and basically threw all this “new” money from cutting expenses straight into my Roth IRA. Anything left over goes into an after-tax brokerage account with Vanguard.
That’s the quick and dirty of how I got here, now onto the good stuff. What are my numbers?
Cash – Checking account, plus money market account, minus outstanding credit card balances.
Post-tax investments – Mix of individual stocks and cheap Vanguard index funds in brokerage accounts.
Tax advantaged accounts – Pre-tax and Roth 401k, Roth IRA, and HSA. The Roth 401k is from previous years, I know better than to contribute to something other than pre-tax now!
Cash-balance pension – I have a cash balance pension plan with my current employer that I’m fully vested in. I believe if the balance remains small I can roll into an IRA when I leave, but if it gets higher I unfortunately would have to leave it alone until standard retirement age.
Student loans – These puppies are at 3% and I’m not really in a hurry to pay them off.
Man it’s been a wild ride, and it hasn’t even been that long! I’m just excited for what’s next. When I calculated my financial independence day I thought I would get to $110k by the end of the year, but as long as the market cooperates I should be able to beat that.
I definitely want to thank this whole personal finance community that doesn’t shy away from taking time to share their stories and best practices to help others like myself achieve their goals!
Is your net worth progressing as you planned? Have you crossed any milestones lately?