I often hear the question, “how much debt were you in and what is your net worth now?” It took some serious Debt CSI to uncover our debt, assets, and net worth since 2006, but the results were quite revealing. In 2009/2010 we had a high of $61,700 in consumer debt and a net worth of -$74,000. In a few short years, we dug out of this pile of debt and currently have a net worth of over $500,000. Here’s our numbers story.
2006 – 2010: Livin’ the Dream?
Our story starts in 2006 when Eric and I combined finances. We were engaged, new college graduates, working in new professional jobs, and we were ready to buy our first house. Excited to own a piece of property in Seattle, we purchased a small, fixer upper home for $345,000.
Over the next few years we remodeled the house, financed two new cars, let credit card balances float, and paid minimum on student loans. We had our first son in 2010 and now had childcare expenses and medical bills added to the mix.
With a combined annual income of about $120,000, it’s no surprise we were living paycheck to paycheck to pay our mortgage, debt, and consumer choices.
Alongside all this spending, the housing market crashed. Our peak of consumer debt was $61,700, with a bottom of the barrel net worth of -$74,000.
We were seriously underwater.
2010-2015: Debt Payoff Time
Around 2010 we realized how much of our income was going to debt repayment and started aggressively paying off debt. To payoff $61,700 in auto, credit card, and student loan debt, we:
- Paid off high interest loans first (strategically rolling high interest credit card balances to lower interest cards).
- Started budgeting and using Microsoft Money (old school) to track and budget (we now use Personal Capital).
- Got on the same page about money, having some serious talks about our spending and the reality of our debt.
- Became a one-car family (we did not purchase a second car after our new Honda Element was stolen).
- Refinanced our house to lower payments and to secure a lower interest rate.
- Got creative with childcare.
During this time, the housing market started to improve and we continued to save in employer retirement accounts.
By 2015 we were debt free (except for our mortgage) and our equity and investments were starting to grow. We were in a prime spot to discover the concept of financial independence.
2015 – Present: Growing our ‘Stache
In the fall of 2015, we were debating what we should do with our house. Eric was commuting about 20 miles to work (one way) and we were discussing moving closer to work.
In researching the cost of commuting and other ways to save money, we stumbled on Mr. Money Mustache’s blog. If you know Eric, you know he goes in deep into a topic that interests him, so it was only a matter of days before we were crunching our own financial independence numbers and had a plan for early retirement in ten years – by 2025.
At first, I did a lot of nodding and smiling. Sure, I thought. We don’t make enough income (our annual income at this time was around $150,000 annually). We have kids. We’re frugal but not super frugal. But seeing our numbers was huge and helped us get on the same page about a goal to retire early. If we made certain lifestyle changes (moving, bike commuting, budgeting, not buying so much crap), we could realistically reach financial independence in ten years.
Fast forward three years to today, and our goals are even more aggressive.
With new rental real estate and side hustle pursuits, our goal is to retire from our day jobs by 2021, three years from now. This is a big goal – it will take additional income streams and consistency with our budgeting and (non)spending – and a bit of luck with the housing and stock market – but we’re excited to see what the future unfolds.
Are you on the path to financial independence? What are your big, audacious goals? Comment below!