Nearing a milestone, you reflect on the progress and the mistakes along the way. Approaching a $500,000 Net Worth, the regrets are weighing more heavily than I expected. What if we had saved just a little bit more? Wasteful purchases over the years come to mind, plus thoughts of returning useful but not absolutely necessary recent purchases. Why didn’t we start seriously saving and investing earlier? How awesome would it be to have $750,000 instead, being that much closer to a millionaire? Our total at 55 years old would be a million dollars higher if we had. Or we could slow down the delayed gratification sooner.
BUT you cannot live life in regret, or ignore the progress. We are incredibly blessed with a growing family, comfortable house, went on a wonderful two-and-a-half week family road trip covering 5,000 miles visiting 5 national parks, have extended family in pleasant locations to visit throughout year, interesting jobs that pay well, AND a net worth that is ballooning. With a conservative annual adjustment in the value of our home to match the upgrades and appreciation, we’re right at $496k! Up $143k over the 2021 year!!
Certainly a strong bull market helped (S&P 500 up 29% YTD; VTSAX up 26%), but maxing out two employer retirement accounts + our HSA, and even some cash on the side, meant we saved ~$50k on top of saving the expanded child tax credits in 2021. And since we had some room at the 12% income tax bracket given all the deductions, we also converted more IRA investments into our ROTH IRA, so more that 50% of our retirement portfolio will be tax free now.
Thinking back to regret and feeling behind, most of our progress has been in the past few years. We didn’t cross $100k until August 2017. That is when we started being serious about saving (but weren’t maxing our account yet) and purchased a home we could add some serious sweat equity into. We didn’t cross $200k until the fourth quarter of 2019. Meaning… half of our net worth was built in less that 2 years! Basic calculations say we should be millionaire’s before 40 if we continue with our strategy; and well before 40 if the bull market/inflation continues. Don’t mind the jumps or dips below; Personal Capital double-counted once, we had some transfers causing dips when between accounts, and we only manually update home value once a year.
So, how should we make even more progress in 2022?!!
First, we need to continue the momentum with saving and investing. And also continue increasing our emergency fund beyond $20,000 just in case. Our insurance premiums are higher in 2022 + orthodontics for one child + paying off a birth of another child, all will make our net income less. BUT we are committed to still maxing out everything we can this year. We usually buy quality, so we have most of what we need now and it is lasting. Although a replacement family vehicle for our road trips is probably coming this year too. We will have some large expenses, but we currently have the income to cover them all and save, if we reduce the miscellaneous purchases.
Just as importantly, we need to add pain and barriers to spending money. Amazon and online shopping deals make the little-to-no thought purchase just too easy. As we pass $500k and have $750k in our sights, extra junk in our life means slower growth and more clutter. We’re not minimalists, and with growing kids you can only pare down so much, but we want our life to be about experiences and travel, not cleaning up and storing stuff. Having the right mindset and spending less time looking at things are the first steps. We might need to take more drastic personal steps, but we will see.
We need to step-up our overall health and fitness this year too. Between working 60+ hours every week for years, a new baby, and home remodeling projects, the quality of our family dinners and only a little cardio has taken it’s toll on our waistline and energy level. I have been making personal mental growth though; growing up lower income we finished everything on our plate and anything special (something other that roasts with potatoes and carrots, or lunch meat sandwiches) was eaten quickly and as much as I could have. Having pursued a higher income, occasional work trips, etc, “luxurious” meals are more common and I’m developing the ability to each less, enjoy each bite more, and even limit the sweets (chocolate is dangerous).
Finally, for both the excitement of it plus some mental well-being, we need to plan regular family trips this year. We have access to a family cottage about two hours away that we can spend every second or third weekend at during the summer. Another family place up North to camp at. Other family we can go stay with if on occasion. We enjoy spending time with our extended family, who loves seeing the kids, plus traveling period. I’m hoping to take a few work trips this year too, depending on COVID and travel restrictions.