As you can see, things are moving along in the right direction. Our net worth has most definitely gone down, but it's not visible here, as I only used end of the year numbers to streamline. Between May of 2011 and October of 2011, our net worth dropped by $260K, when the housing market bottomed out.
I wish I had all of the magic solutions on how to get the same results with your net worth, but I don't have that. I can, however, tell you what worked for us. Your mileage will obviously vary.
- We invested in our retirement accounts, early. I've been investing since I was 22, and maxed out every year for about 17 years. M got a slightly later start, but has also been maxing out. What does this mean? Lots of compounding interest. We've also had employer matches, which always helps. We're not quite to the one million mark, but hopefully over the next couple of years.
- We bought a house at the high end of our price range, way back in 2005. I wouldn't recommend that strategy, but our salaries have gone up, making our primary residence (now rented, in Seattle) affordable over time.
- We improved our property. Again, our now rental property in Seattle, but we put in quite a bit of cash to remodel before we rented it out.
- We refinanced into great mortgage rates. Our primary residence is at 3.25%, and our vacation house is at 2.5%.
- We have no debt, other than our rental house & vacation house.
- We knew that we would spend our income as it grew, unless we stretched ourselves. As a result, we bought a vacation house. This is another strategy that probably wouldn't work for most, but for us, it would have been a great strategy, had we not moved. ;-) It definitely forced us to divert more of our income every month to real estate, vs spending. Now that we need that cash flow to buy in California, it's caused more of a challenge for us. Hindsight.
- We kept our spending in check, even as our incomes grew. This has been hard for us, but we prioritized traveling & trying to keep our vacation house, which made it easier to cut back on more frivolous purchases. We are far from perfect, but do track our expenses every month.
- Speaking of, we track our expenses, This has made a huge, enormous difference in #7. I can't begin to imagine how I budgeted way back when I would create the budget at the beginning of the month, and then reached the end of the month trying to figure out where all of the money had gone.
- We don't consider ourselves wealthy. Because, we don't give ourselves a lot of disposable income. See #6.
- Every month, every dollar has a place - college funds, mortgage savings (for a California house), travel funds, taxes, an emergency fund, groceries, etc. If we leave it to chance, it will get spent. ;-)
- It's not really a tip, because much of this is outside of your control, but we've grown our income every year. In some years, by significant amounts. This has come with major down sides as well (work life balance), so it's not for everyone. Even us. We've furthered our education, moved for jobs, increased travel, increased work load, taken on new challenges, and rebuilt our skill sets, as jobs have required it.
And, those are the tips that have worked for us. Some were intentional, some were risky, and some were less thoughtful than others. What about you? What has helped you grow your net worth? Where are you at on the growth curve? Just starting out, or a bit further along?