I had a nice feeling this morning when I logged onto my finance aggregation tool and took a look at my net worth box. For the first time, it has six digits… before the decimal!
How I Got Here
If you look at my most recent net worth update, you can see that I was a long way off from this point just a couple of years ago.
Around December, 2010, I was nearing a net worth of zero. While I did not have credit card debt, I was mid-way through graduate school, my student loans were growing and my bank accounts were shrinking. I had more debt than cash for the first time in my life and I knew I had to keep working hard to get out.
Fast forward to January 2011. In the eleven months since my last MBA tuition payment, I paid off my car, paid off one of the two remaining student loans, dramatically increased my savings rate, and had good trajectory.
I was in a good place with my career and my cash flow, so I decided it was time to look into buying a home. I took control of my “secret down payment fund” that I had kept separate from my other financial accounts. I only used about $5,000 from that account during grad school. When I took the cash and deposited it into my savings, my net worth took a big jump, but it was sort of artificial because I knew the money was there the entire time.
The Double Jump
I was good about pressing forward in my savings and generally good about my spending over the next nine months. I saw my total net worth fall some from equity investments, but I was still on track to buy a home. My expenses rose when my lease expired and I went month to month, so I knew it was time to make a change.
I found the condo I knew would be home around that time, and I started the process of buying my first home. I negotiated a fair deal on the condo and, according to Zillow, had an instant $40,000 home equity gain.
After I bought the condo, I had lower monthly cash expenses. My costs were about $300 lower per month. It was just a matter of weeks from there for my net worth to make the extra jump to $100,000.
I don’t have any plans to change my spending habits. I will put that extra $300 per month into savings first, student loans second, and my mortgage payments third. That will keep me on track to add another zero to my net worth.
Who know, maybe the million dollar club is not that far off?
Image by financialfellow1.