Our household net worth by age.
Really?
Yes! Teachers are listed behind engineers, and accountants on the list of net worth millionaires. My wife and I are both teachers and our household has a current net worth approaching three million.
No really, how did this happen? I didn’t even think of looking at our net worth until around 2022. and suddenly realized we were around $2,000,000. Recently our net worth is getting closer to $3,000,000, so I thought I would try to look back at how we did this.
Age 30s. ($5,000 Net Worth) Our First Home.
At age 30, we married and bought our first home. I was living paycheck to paycheck at the time and K. had just finished school. At the time we were gifted $30,000 for our wedding. We spent half on the wedding and then put 3% ($9,000) down on our first house. It was listed at $299,999 and we paid $302,000. K had her student loan from teaching and a small balance left on a car loan. Our combined net worth was around $5000. When we moved into that house we only had enough for the next month’s payment. We were paying PMI too. Salary wise we were grossing around $90k combined.
This was K.’s first full time teaching job. I had already been working for five years, but really had nothing to show for it other than a bunch of toys (computers and musical instruments). I had invested zero dollars and even failed to maintain my seven year old car in order to keep it going past 2001. (I would definitely like to reach back to past self and give a little slap to start a course correction).
We spent almost all of our free money fixing that house. It had holes in the floor, holes in the walls, no heat, broken windows, collapsing fences, and no running water in the kitchen. We had to pull a hose from the utility sink on the porch, through the cat door into the kitchen to do dishes.
During our 30’s we did play a little too; we took two long summer trips to Europe. On the responsible side we paid cash for most thing, and the only debt was house related a mortgage and a HELOC used to build a garage. We paid off K.’s car and student loan very quickly. As soon as the house appreciated we refinanced to get rid of the PMI and drop our payment. In 2008 we inherited a six year old car and a small sum.
Age 40 ($500,000 Net Worth)
In our 40’s we enjoyed our redone home, I finished my M.A., and our income steadily rose. We paid off the the HELOC we had taken to build a garage. Other than fixing up the house and starting a family we did not really have a financial plan.Though we never carried a balance on a credit card, we also never really saved on purpose.
By age 40 we had about $100,000 sitting in a low interest savings account. We cash flowed the adoptions of our two children which was very expensive. We also inherited a small sum when another grandparent passed away. When the kids were born K took several years off and we lived on my income. Our MIL and FIL helped with childcare. They also talked to us about investing, but we did not listen (time for another psychic time slap to my prior self).
In 2013, we just had to have a new car when the second kid arrived. We financed a mini-van at 0% interest with half down. It was our first and last consumer debt. Also, it was actually a great learning experience as Idid learn a ton about new car buying and how to use internet salespeople to arrive at a price before going to the dealer.
Age 45 ($800,000 Net Worth)
At age 45 I woke up and realized I had no idea or plan of attack with the finances, and yet we had the responsibility of raising children. I bought and read the book Personal Finance for Dummies. Based on its advice, I opened a brokerage account ,Roth and 403b accounts. The author advised Vanguard funds, and I followed the formula. I bought a mix of funds as well as three individual stocks from companies that I just plain liked: Virgin Air, Southwest Airlines, and Apple. One out of three is not bad.
Then things got crazy when we saw an amazing property nearby. We made an offer, entered a bidding war, bought the house, and sold ours, all in about 45 days. We put all of the returns and some extra cash into that purchase. It goes against every financial advice I have read since. The house was $1.36 million dollars and we took on a large mortgage. I rationalized the payments by forecasting our future spending.
Age 48 ($1,100,000 Net Worth)
The bet worked out. K finished an M.A. program and we took several good bumps on our salary scale. The housing market went crazy and the house quickly appreciated. We later refied the house when rates dropped. Good news: lower payments, bad news: we restarted our mortgage.
When K. went back to work, we upped our 403b contributions to over 10% of our gross and started Roth accounts as well. I decided to save for the kid’s college in the Roth’s so that we could have options if they did not attend (Daddy needs a pool heater).
I also started using YNAB to track our spending. We set goals and that helped us focus our spending. I discovered Mr. Money Mustache and the world of FI. I am not sure if that would have happened if I had not bought the more expensive home.
Age 50 ($1,700,000 Net Worth)
After the haze of the pandemic, I started using some of the report options in the YNAB Toolkit. I realized that I could also add in the cash value of our CalSTRS accounts. I am pretty good about entering the balances from our Vanguard accounts every other month or so. It’s pretty fun when the market is up. I started upping the Roth contributions as well. Last year is the first year that I maxed out both Roth accounts. So some of the “growth” is just me starting to track existing accounts moving forward.
The housing market has continued to rise along with inflation. We also received a small raise during that time. Our union is currently attempting to negotiate a raise which will help as well.
We have been working slowly on the new house and bought a used RV to travel with during the summer. We purchased significant life insurance and started estate planning as well by setting up a will and trust.
Age 53 ($2,670,000 Net Worth)
The housing market skyrocketed in this last year. Every house on my street has sold significantly over asking. I would estimate that housing prices are 4 -8 times what they were in this neighborhood 25 years ago. I’d say that it looks like the housing market is going to flatten, but a smaller house on my street sold for almost $3 million last year. The house is the largest part of our net worth and at this point doesn’t do much for us in retirement unless we want to sell. The value is not liquid.
The stock market has gone up too which makes a big impact when you have more invested., and we are earning and saving more. Some of the tracking increase is due to me entering the cash value of our supplementary benefit accounts that I wasn’t tracking.
Looking Forward ($3,000,000)
Our income has almost reached peak. I reached the top of our pay scale last year and K will be stuck on her rung for a while. I have taken on an extra assignment which brings in a good extra almost 20% . With our extra assignments we grossed almost $250,000 last teaching year. . I imagine we will cross $3,000,000 net worth in the next three to five years.
I started consuming many financial podcasts, reading books, and talking to others about finance. I can see the mistakes we have made, but can also now see progress. The plan now is to stay the course, continue to fix up the new house, continue to save and invest, and continue to sprinkle in the fun.