Posted by Tim Stobbs on September 14, 2009
I was reading MDJ’s post the other day on baby steps and I came to realize how these little steps do add up. The really interesting part of all these little steps is how you may not even notice them over a short period of time, it’s only in the long run do they appear.
Case in point, if you track your net worth you can actually see the progress over time. For example, if you dig up my very first net worth post on this site in Nov. 2006 you would have seen I had an investment net worth of $21,000 and a mortgage of $150,000. Not very impressive, but as of Aug 2009 those numbers are at $81,800 and $130,400. So in total in the last 33 months I’ve saved, had investment growth and paid off debt to the tune of $80,400 or an average of $2436/month not including any increases in my house value. Wow, that’s fairly damn good considering that also includes the biggest drop in the stock market in my entire investing career. At that rate I should cross the $100,000 mark sometime in 2010.
Now had you told me that in advance I would save/invest/pay down debt to the tune of $100,000 in about 3.5 years back in 2006 I think I would have looked at you like your crazy. I was trying my best, but to be honest in the start I did not feel like I was getting much of anywhere. It was only keeping track of the small things and improving my savings rate a little here and there where I felt like I was doing much of anything.
Now my investments are to the point I feel like I’m seeing progress each month. That whole compound interest effect has finally got big enough for me to notice, so progress now seems a bit more obvious now. In fact, I’m really starting to understand a comment I’ve seen on various blogs and books “The first $100,000 is the hardest.” Yes it is. With little to no compound interest effect that climb up can feel like it goes on forever. It’s only has you close in on that number does it feel like you are getting somewhere.
So regardless of how hard that first bit of your long term goal looks, keep going. It’s a long haul up to it, but trust me as you get closer it will feel easier. You will start to feel more confident about your long term goals if you keep taking those baby steps. Savings is like any other journey you only get there one step at a time.