Author Topic: Finally Worth Nothing Again  (Read 6724 times)

Whiskers

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Finally Worth Nothing Again
« on: January 20, 2014, 09:16:47 PM »
Next week I will be celebrating my 30th birthday. However, the party will begin a few days early. Upon receipt of my next paycheck, this Friday, I will be back to zero. It will be the first time my assets* (not counting mortgage) outweigh my debts since taking out that original student loan about a dozen years ago. In some ways it is sad to think that it has taken me this long to get back to having the net worth of toddler... but looking back on these last few years, I'm really proud at how far I've come.

I started college in the fall of 2002, grad school in 2007 and graduated in the Spring of 2010 with over $90,000 in student loan debt and $0 in retirement. I was 26 years old and in a pretty deep hole. My first post-grad job, which began in the fall of 2010, provided me with an annual salary that was roughly half of my total debt load. [Yes - I made some mistakes along the way]. Luckily my amazing girlfriend (now my amazing wife) had a nice paying job and, more importantly, was understanding of my situation. We lived in a cheap, below-code 400-square-foot studio apartment for over a year and a half until I could start to get on my feet. In retrospect, it was probably the best thing for us both; it was during these times that the frugality muscles really began to develop.

Now, about 40 months after starting that first job, I have about $41,000 in retirement, almost $7,000 in cash and just over $48,000 left in student loans (at 6.25%). Having spent the last 13 or so months firing everything I can at my loans--roughly $20,000--I decided this year to scale off the payments a bit. Not to live a more lavish lifestyle, but to get closer to maxing out my 401K and to continue maxing out my Roth.


*When I refer to "my assets", I'm just taking about the assets (bank account / retirement) and debts (student loans) that are in my name alone. I have to admit that, as a couple, my wife and I are doing well. This is mostly thanks to my wife. The only reason that I care to celebrate the "my assets" figure is because, for the longest time, I didn't feel like I was making a positive impact on our financial future. Happy to say that I don't feel like the anchor holding us back from achieving FI anymore.

Cheddar Stacker

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Re: Finally Worth Nothing Again
« Reply #1 on: January 20, 2014, 09:30:21 PM »
Congrats! It's quite an accomplishment and I'm sure their are plenty more people like you out there who are still digging out of the hole. Here's to getting yourself to $200K + by 35.

We didn't really start building a stache until around your age due to many, many circumstances and at 35 we're really starting to feel like we have a decent amount built up for the future. I also didn't track it as closely as you are, so I'm sure you'll build it up quick.

the fixer

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Re: Finally Worth Nothing Again
« Reply #2 on: January 20, 2014, 09:32:43 PM »
Yes!

It's through adversity that we learn what we and those closest to us are really made of. That toddler's got nothing on you.

horsepoor

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Re: Finally Worth Nothing Again
« Reply #3 on: January 20, 2014, 10:22:42 PM »
Well done, that is some seriously impressive progress in a relatively short timeframe!

rocksinmyhead

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Re: Finally Worth Nothing Again
« Reply #4 on: January 21, 2014, 08:04:05 AM »
Congratulations, that's awesome!!!

aclarridge

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Re: Finally Worth Nothing Again
« Reply #5 on: January 21, 2014, 01:06:23 PM »
It gets easier and easier from here on out my friend. Congrats.

Exflyboy

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Re: Finally Worth Nothing Again
« Reply #6 on: January 21, 2014, 01:36:24 PM »
Awesome.. you are now surfing "ahead of the wave".. or close to it. You now have to decide whether to pay off the mortgage or add to retirement savings (or a bit of both)

I went the pay of the mortgage route first but there are valid arguments both ways.

Either way.. well done!

Frank

mbk

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Re: Finally Worth Nothing Again
« Reply #7 on: January 21, 2014, 02:37:29 PM »
Awesome job. Kudos on your achievement.
My suggestion is to keep that aggressiveness in attacking your student debt till it is vanquished.


Whiskers

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Re: Finally Worth Nothing Again
« Reply #8 on: January 21, 2014, 04:38:06 PM »
Thanks for the support everyone -- it is greatly appreciated!

Awesome.. you are now surfing "ahead of the wave".. or close to it. You now have to decide whether to pay off the mortgage or add to retirement savings (or a bit of both)

I went the pay of the mortgage route first but there are valid arguments both ways.

Either way.. well done!

Frank

Frank - There is definitely an ongoing battle in my mind between paying off debt and retirement. We have about $145k left on the mortgage, but it is only at 3.25%. The student loans on the other hand are beating me up at the tune of 6.25%; so as  far as debt payment, the SLs are the priority. Once I got below $50k in SL debt I felt such great relief -- it now seems so much more manageable. Therefore, I'm going to be more aggressive in 2014 with my 401k, probably close to maxing out, but will continue to dump all excess at the SLs.

Thegoblinchief

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Re: Finally Worth Nothing Again
« Reply #9 on: January 21, 2014, 05:53:23 PM »
Congrats! I will hit "zero" in 2 years, possibly next year. Can't wait!

AccidentalMiser

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Re: Finally Worth Nothing Again
« Reply #10 on: January 21, 2014, 05:58:06 PM »
Congrats!  It gets easier once you can quit swimming and start walking.

frugalecon

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Re: Finally Worth Nothing Again
« Reply #11 on: January 22, 2014, 06:44:21 AM »
Congrats! That is a great milestone. It sounds like you have great financial discipline, which is the key to building wealth. (Absent an amazing stroke of luck/genius!)

But I hope you realize that you are worth way more than nothing. Your biggest asset is your capability to earn a salary. Those student loans were, hopefully, an investment in that asset, which increased the return you could earn.

Whiskers

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Re: Finally Worth Nothing Again
« Reply #12 on: January 22, 2014, 06:04:37 PM »
Congrats! I will hit "zero" in 2 years, possibly next year. Can't wait!

Once you set your mind to it, it will come faster than you think.

But I hope you realize that you are worth way more than nothing. Your biggest asset is your capability to earn a salary. Those student loans were, hopefully, an investment in that asset, which increased the return you could earn.

Being buried in debt can sure be depressing... But you're right, without those student loans, my ability to earn would probably have been significantly stunted. I'm still playing catch up now, but in the long run they will pay off.

lukebuz

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Re: Finally Worth Nothing Again
« Reply #13 on: January 23, 2014, 08:49:59 AM »
Don't forget...that $41,000 in retirement hasn't been taxed.  It's really only $30,000 or so.  Your debt is after taxes...so, I'm afraid you are not there yet.  I'd keep at it a little more....

Cheddar Stacker

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Re: Finally Worth Nothing Again
« Reply #14 on: January 23, 2014, 09:27:15 AM »
Don't forget...that $41,000 in retirement hasn't been taxed.  It's really only $30,000 or so.  Your debt is after taxes...so, I'm afraid you are not there yet.  I'd keep at it a little more....

Booooo. Not cool at all to rain on the parade.

But, since you mentioned it there are many ways around paying that tax as folks on here have discussed in various threads. If your income is low in retirement you can avoid quite a bit, if not all the tax related to drawing these funds down or converting them to Roth funds. Here's a thread where I posted something about this once, but there are many others that address it.
https://forum.mrmoneymustache.com/ask-a-mustachian/4-withdraw/msg187544/#msg187544

lukebuz

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Re: Finally Worth Nothing Again
« Reply #15 on: January 23, 2014, 10:57:13 AM »
He also mentions they are well off, due to the wife.  He can handle a very gentle face-slap...with a feather.

adam

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Re: Finally Worth Nothing Again
« Reply #16 on: January 23, 2014, 11:01:47 AM »
I crossed 0 back in June (when I was tracking two houses as well)  it felt good.  After this post I went back and took out the home values and put them somewhere separate because they just fluxuate every single day and I'm not getting a good idea of my net worth growing when one day its $20k and the next day its $60k and then next day its $40k.

When I did that yesterday my net worth went up $15k or so, lol.  Still, in 6 months we've gone from 0 $40k+, which happened WAY faster than I was expecting.

Whiskers

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Re: Finally Worth Nothing Again
« Reply #17 on: January 23, 2014, 08:41:38 PM »
He also mentions they are well off, due to the wife.  He can handle a very gentle face-slap...with a feather.

Reality needs to be faced--even on parade day. The floats will continue to roll though. Luckily half the retirement is in the Roth.

oldtoyota

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Re: Finally Worth Nothing Again
« Reply #18 on: January 24, 2014, 10:49:54 AM »
Nice work! And welcome to the forum!