Net Worth Goals

by Ryan Guina

stock-chart.jpgI don’t often discuss my net worth on this website. There are several reasons for this – I do not feel it is necessary to share those details, I’m not 100% comfortable doing so, and I believe money is not a competition. However, I am comfortable discussing my net worth in terms of percentages. (If you must know, my net worth lies between $1 – $12,000,000, but much closer to the first number!). ๐Ÿ˜‰

A year of changes

My wife and I were married last fall, so this year was a big change for us. We combined our household and our finances. To be honest, we really didn’t know what to expect in terms of financial growth. In addition to our marriage, my wife left her position in the military, and as a result, we took a $20,000 decrease in our income (after taxes). This was a huge financial change, but to us, our quality of life is more important than money.

We knew this change was coming, and we gave ourselves a voluntary paycut to help prepare for the change. By living on less money for almost a year, we forced ourselves to save a lot of money. This was a great benefit to our net worth!

Fortunately, this was relatively easy for us to do, because my wife and I are both frugal by nature, and we spend less than we earn.

Positive Net Worth Growth

Even though my wife and I took a cut in our income, we saved as much as we could. We know that one day we will have children and drop down to one income. Now is the best time to stuff our retirement accounts as full as we can!

Our change in net worth for 2007 was 42.9%. (yes, I double checked the numbers). Of course, this doesn’t mean anything without any numbers attached to it, but I assure you, the growth was significant. In fact, when I went back and looked at the numbers, I was quite impressed. The growth is not attributable to any one stock or fund outperforming the market by a huge margin, as most of our holdings are index funds designed to match the market. I attribute our net worth growth to the fact that we have no consumer debt and we saved as aggressively as we could because we knew we were going to take a large cut in pay. We did not live like hermits though. We enjoyed ourselves, and even went on a honeymoon cruise to the Mediterranean.

How we calculate net worth

I calculate our net worth as Assets – Liabilities. By assets, I include all bank accounts, retirement accounts, mutual funds, CDs, other equities, and our house. I do not include our cars or any other belongings. Our house was purchased 2 years ago, and even though our house has appreciated in value, I used the purchase price as the value for our net worth. Our only liability is our mortgage. Here is a guide explaining how to calculate net worth.

Net worth goals for 2008

It is difficult to make this goal because there are many external factors involved in net worth. The housing market could go up or down in our area (it is stable right now), or the stock markets could drastically rise or fall. I am not sure if we will be able to replicate last year’s growth, either in dollar or percentage amount. But, I would certainly be happy with either! ๐Ÿ˜€

Even though I cannot control the housing or financial markets that our net worth is so closely tied to, I can have some impact on how much money we contribute to our retirement and other investment funds. So I will make a goal based on contributions, and let the markets go where they may. In the long run, they should go up.

My goals in 2008 are to max out both of our Roth IRA’s (this is $10,000 for 2008), and come as close to possible to maxing out our 401(k) plans – $15,500 per person in 2008. I am not sure if we will accomplish the latter goal, but we will attempt it. If we accomplish both goals, we will have contributed $41,000 to our retirement funds ($31,000 total contribution to our net worth) – a truly staggering number in my opinion. (The $10,000 for the IRAs has already been saved, it will just be transferred within our holdings to a retirement account. It will not change our net worth, just where certain funds are allocated.)

How we plan on accomplishing this. We saved enough cash last year that we can fund our IRAs straight away. In the coming weeks, I will analyze our asset allocation and determine where we need to add money to balance things. (I prefer to add vs. sell because it is easier on the taxes, although that doesn’t matter in tax shielded accounts). For our 401(k) plans, we will set our contribution levels as high as we can and still maintain enough income to meet out financial obligations every month. Our emergency fund is sufficient for us to do this, and we can always lower our contributions if necessary.

I also plan on looking at other employment and income options. I feel I am stagnating in my current position, and I want more opportunity for professional growth. I have a few things in mind, but I will write more about this later. I also earn some income from this blog and other alternative income sources. Any side income we earn will help contribute to our bottom line.

Will we reach our goal? I hope so! Our plan is to have children within a year or two and we will likely drop down to one income at that time. Our plan is to put away as much money toward retirement as we can while we have the opportunity. The more money we can sock away now, the longer the magic of compound interest will work in our favor!

For other great posts on net worth, check out the following blogs:

photo credit: mm904ut.

Published or updated January 18, 2013.
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{ 9 comments… read them below or add one }

1 Mrs. Micah

Yay for marriage and positive life changes! ๐Ÿ™‚ That’s a very healthy growth and I’m sure you’ll do well on your goals.


2 Lynnae @

You’re doing great! You also have some great goals, and I’m sure you will have a very successful 2008!


3 Pinyo

Great accomplishment in 2007. Congratulation and I wish you the best in 2008.


4 Becky

Very impressive. My husband and I will also drop down to one income once we have children. We’re 2-3 years away from that, so I will stay updated and see how you do with it! ๐Ÿ™‚


5 fathersez

Excellent grades for achievement.


I will implement some of the steps you took, the voluntary pay cut looks just right.


6 Ryan

Thank you, everyone. My wife and I feel blessed to be able to be in the position we are in.


7 Kirk

Great job on your hard work. You should be very proud of yourself. You are showing financial discipline rarely seen in today’s world, and you should be commended for that.


8 My Dollar Plan

Great job! Even if you keep two incomes, kids are a big expense. Save as much as you can before having them:)


9 Early Retirement Extreme

Kudos for only using the cost of acquisition of the house in calculating the house. Marking-to-market doesn’t make much sense in this environment when nothing is selling.


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