Posted by Tim Stobbs on November 3, 2010
Well it seems hard to believe that in a few short days this blog will be four years old. Where did the time go? Anyway I thought it might be a bit useful to do a little review on how I got here and the journey to freedom 45 (so far).
Net Worth Growth [%increase from last year]
Nov 2006 – $76,500
Nov 2007 – $201,300 [+ 163%]
Nov 2008 – $219,000 [+8.8%]
Nov 2009 – $281,400 [+28.5%]
Nov 2010 – $370,000 [+31.5%]
Total Growth over Four Years = $293,500
Yet those aren’t the greatest numbers to show progress since they also include my house value increasing which I really didn’t do much to get. So let’s look at the investment net worth and mortgage pay down progress.
Investment Net Worth Growth [%increase from last year]
Nov 2006 – $31,500
Nov 2007 – $47,200 [+ 49.8%]
Nov 2008 – $50,900 [+7.8%]
Nov 2009 – $87,400 [+71.7%]
Nov 2010 – $116,900 [+33.8%]
Total Growth over Four Years = $85,400
Mortgage Balance [% decrease from last year]
Nov 2006 – $150,000
Nov 2007 – $144,900 [- 3.4%]
Nov 2008 – $138,500 [-4.4%]
Nov 2009 – $128,000 [-7.6%]
Nov 2010 – $86,900 [-32.1%]
Total Reduction over Four Years = $63,100
So there are few interesting lessons from these numbers. First off your investments do not grow on a linear basis and you will have your bad years like 2008. The point is to keep up your contributions and get past that first $100,000 in investments after which you will actually feel like you are making some progress. So don’t panic over a bad year and keep your eye on the long term, you might get lucky and hit a rebound like I did in 2009 that makes up for it.
Another interesting point I noticed out these numbers is that if you decide to pay down your mortgage without the occasional lump sum payment you will be at it for a VERY long time. As you can see I only made limited progress for the first few years and then picked up steam by 2009 since I started doing some extra payments. Now the progress is significantly easier since more of my regular payment is going to the principle rather than interest.
I also find some comfort that out that total net worth growth over 50% of that number came from our actions as a family. So that would mean we have averaged savings of $36,600 per year over the last four years. Going forward I expect that our savings will increase, since my wife has taken on a few extra kids in the daycare and my school board income, but predicting exactly how much we will save is difficult. Why? I have some sources of variable income for example income from ads on this blog and decreases from other decisions like only working 80% at my day job. Life happens so I don’t panic over adjustments to the plan. If I were to guess an amount for 2011 I would guess in the range of $45,000.
So do you track your financial progress? Is so, how have your % improvements been over the last few years?