I’m All In! Time to Track My Net Worth.

Michael QuanBeliefs, Family, Misc, Real Estate, Saving Money45 Comments

Some links below may be from sponsors. Please see our disclosure for more info.

First things first.  It’s important to KNOW HOW to calculate your net worth.  But, it’s important to NEVER VALUE yourself by it.  You are so much more than just a silly number.

Having said that, I was quite hesitant to share our net worth and cash flow values with the public.  I didn’t like being vulnerable because there was a deep-rooted fear of how others will judge me.  But…

it’s not about me.  It’s about YOU, my readers and what you can learn from seeing REAL raw data.

Full Transparency

There’s something raw and visceral about seeing someone’s financial situation and how they approach life.  I first came across this concept reading Budgets Are Sexy where J. Money hangs it all out there.  As it turns out, he’s got another fantastic site called Rockstar Finance which actually consolidates my fellow net worth tracking bloggers.

It’s inspired me to do the same and I hope in my sharing (the good and the bad) it will provide inspiration, real-life insights, and help you to stay focused on your financial journey.  After all, my site’s all about getting you financially alert!   Finally, it will help keep myself accountable with my future goals… there’s no hiding or excuse-making anymore. 😉

Net Worth Snapshot

Finding your net worth is determining your total assets and subtracting your total liabilities.  For more detail on how to do this, you can check out my article – How to Budget Like a Badass (pt 2)

Every month, I’ll do a quick review of the prior activities for the month.  I use Personal Capital to help me consolidate my data because it can seamlessly tie in multiple bank accounts, investment accounts, credit card accounts, real estate values, and even liabilities.  It’s pretty cool in fact.

At 42 years old, I know I am blessed to have a net worth of ~$2.1M.  It allows me to have a very comfortable life, and at the same time, I’m driven to grow more.  My long-term goal is to grow my net worth to $10 million by the time I’m 50.

Luckily my buddy, Dom, over at GenYFinanceGuy is ready to tackle the challenge with me.  We’re gonna kick each other’s butts until it’s done… he’s not far behind and his momentum is insane!!

How I Got to Where I am Today

If you’ve been reading my blog a bit, you’ll no doubt know that I’m a personal development junkie and mind over matter kind of guy.  I take a perspective of abundance in this world and see it all around me.  I have a very large extended family (~30 aunts and uncles, & ~50 cousins).

Some have done very well for themselves.  In fact, without knowing specifics, I’d guess there are at least 2 dozen self-made millionaires in the mix with mostly real estate & businesses as their primary wealth vehicles.

The reason I share this is to illustrate how influential the people are who surround you.  Even though my specific family wasn’t that well off growing up, I was close enough to “success” to know what was possible.

“Surround yourself with only people who are going to lift you higher.”   – Oprah

Because of this influence, I was always entrepreneurial and always knew I’d be a millionaire one day.  Growing up in a broken household and worried about finances in my adolescence just fueled that desire even further.

Expect more from yourself, and hang out with those who expect more from you.

Paying Myself First

In 2001, I landed my first job out of college.  I felt super rich!  I was making $42,000 a year as an IT administrator and I was still living the life and expenses of a college student.

Since I was continually reading PF books and trying to figure out the best way to manage my finances, I decided to set aside a large chunk of this income into my company’s 401k, an automated savings account ING Direct (now CapitalOne 360), and eventually a Sharebuilder account (automated dollar-cost averaging equity investments).

This simple process allowed me to set up the proper habits of savings which is a huge reason why I’ve been able to accumulate the assets I have today.  Over my working years, I estimate I saved anywhere from 35%-60% of my income in a given year.  Want a badass budget of your own?

Advantages Along the Way

Full disclosure here.  Although I didn’t grow up as a trust fund baby, I did have some advantages along the way.

My father was kind enough to provide full college tuition for me in addition to subsidies.  So, although I worked a little bit during college, it wasn’t a requirement and I walked out of school with $0 debt.  (Props to those of you who took on debt to get through school and then paid it off before building your wealth.  I admire your perseverance!)

Sadly in 2005, my Mom passed away from an aggressive lung cancer (she never smoked a day in her life).  I inherited about $135,000 from my Mom’s estate, including a 3.33% fractional equity share in a real estate apartment investment.  This essentially doubled my net worth in 2004 to $358,000.  Of course, any inheritance is bittersweet with the passing of a close loved one.  I vowed not to waste the advantage I was given in honor of my Mom’s selflessness as a single mother.

*Note that even though I had a decent head start than most, advantages will do you no good if you don’t practice sound financial principles.  Had I not been given these advantages, I would have still become a millionaire (maybe not as quickly), so don’t let your situation become an excuse for not trying.  You’d be surprised what you are capable of.  For an example of someone without the advantages I’ve had, but still a 30-something millionaire, check out Justin’s story at RootofGood.com.

Risk Taking

Risk taking has been a critical skill towards building my net worth.  Probably the number one best return on my investment has been starting, running, and selling a business.  I had zero clue how to run a business when we started, but I figured it out.  The same held true with real estate investing.

All too often, we get stuck in an “analysis paralysis” mode and fail to act.  So, taking a leap of faith is critical (in both business and life).  It’s the only real way to grow.  Remember, sometimes the riskiest decision is doing nothing at all.  Don’t live a life of regret!

Take risks early, often, and with care (i.e. gambling is NOT a wealth-building strategy!).

Maximizing Equity

As I mentioned above, saving a large portion of my paycheck was a huge reason for my current net worth.  But, I also made some strategic decisions with my time and money to focus on assets that could help grow my net worth even quicker.  These two assets were my business and purchasing real estate investments.

As a 30% equity owner in my IT business, I was constantly trying to figure out better ways to increase the value of our business.  Most professional services firms will never sell their company with a large multiple on their revenues, simply because it’s not a super scalable business model.  A lot of it comes down to trading time for money.  But, in early 2008 I found a way to partially address this issue and I spearheaded a conversion to our business model into a subscription-based one.

It was a pretty tough transition in the beginning as we were early adopters of the model, but now it’s commonplace among IT service providers.  Once we figured it out, we were able to secure 1-3 year-long service contracts with our clients which were pure gold.  This eventually allowed us to sell our business in 2011 for a low seven figures which was double what other companies were getting without contracts in place.

I also didn’t want to rely on savings or the business alone, so I invested savings into real estate along the way.  In addition to my primary home (which I wouldn’t call in investment), I purchased a few other investment homes.  Some of these fell flat on their face (like my very first one!)  But some other ones have been and continue to perform very well.

Just to give you an example, I purchased a 4 bedroom/3 bathroom house in Las Vegas back in 2011 for $151,000.  I put up $15,000 for the down payment, another $8000 for repairs, and financed the rest at 4.5% for 30 years.  It currently rents out for $1385/month and spits off ~$200 cash every month.   Better yet, as my principal is being paid down by my tenant, it’s appreciated about $100,000 in just 3 years, and I can even depreciate it on my taxes each year.  I LOVE REAL ESTATE!!

The Challenges

Again, I want to be 100% transparent with you.  There are and have been some challenges.  And despite being a millionaire, I’m still human and very capable of screwing up!  So, despite being able to save a good chunk of change, cash out equity, and grow some real estate investments, I haven’t figured it all out yet.  Far from it!

I am humbled every day reading some other personal finance bloggers and how disciplined they are in their practices and understanding of certain concepts that make my head spin (props to Sam over at FinancialSamurai.com who always makes me think!).

Ever since leaving corporate America and coming home to be a stay-at-home Dad, it’s been a challenge to maintain the lifestyle we’ve become accustomed to.  Sure we’ve got a decent chunk of change stashed away, but drawing down on principle is NOT a good practice long-term.

At least with my wife back to work full-time (she worked part-time for a year after the birth of Little L), cash flow has returned to break even on a monthly basis (and we even squeeze out a small profit occasionally).  So, if you’re considering taking an early retirement, make sure you’ve got all of your ducks in a row.  (Joe, over at Retireby40.org has an excellent grasp of this.)

We’ve also been lucky with the recent bull market of the past few years as this has helped our net worth to increase even as our overall cash flow has been down.  This however, is not a long-term sustainable strategy and 2016 will be a year of adjustments.

The adjustments are simple.  How do we reduce expenses, and simultaneously increase income?  I hope to share these challenges as part of my journey going forward.  Needless to say, if I’m going to make the $10 Million goal a reality, it’s going to require a pretty huge shift in net income (positive cash flow).

My Monthly Net Worth Report

Starting next month I will be sharing a monthly net worth snapshot, accompanied by an analysis of monthly cash flow.  I hope this will be useful for some of you to see and it will also help to keep me accountable to my own goals moving forward.

I hope you’ll join me for the journey!

As a quick preview to this series, I’ve included a chart documenting my net worth over the past 12 years.

My Net Worth Over Time

 

Readers, do you find this type of transparency helpful?  Are you tracking your net worth?

Follow me

45 Comments on “I’m All In! Time to Track My Net Worth.”

  1. Hi Michael. Thanks for sharing your thought process in making the decision to share your networth and also for being honest about your advantages along the way. As some have noted, these advantages in life are a mixture of a blessing but is also a huge responsbility. Many would squander such opportunities and only a few would actually grow the gift they have been given into something much bigger like you have. I am considering sharing my networth and numbers but haven’t quite decided yet. I am reading around to see what everyone’s take is.

    1. CC, that’s good to do your research first. It definitely took quite awhile before I pulled the trigger myself. Good luck as you explore the possibility and remember it’s fine either way. 🙂

  2. Thanks Michael for sharing. I recently started the journey to FI, I know I am still at least 13 years away from where I want and need to be to feel FI. I am glad you share your data as it would really help me gauge where I stand to be where you are.

    thanks,
    Hiep

  3. Pingback: Why you should track your net worth every month.

  4. Pingback: How To Build A Seven Figure Business | Financial Samurai

  5. Hi Michael, very nice sharing details about your personal finance! I’ve added you to Net Worth of Popular Personal Finance Bloggers. We all can learn about personal finance from each other. Keep it up!

  6. Nice transparency here! It’s definitely helpful, motivating and something that I’d be happy along with Dom to kick your butt on as well ;)..

    I notice you had a bit of the drop during the GFC before I’d even started university however you’ve come out of it fine.. We’ll probably see some choppy and volatile markets over the next few months, although I’m definitely no expert, however we’ll generally be right and the ceiling probably won’t fall in

    Interested to know if you’re keen to & probably even are already giving back? I’d love to collaborate on this as some stage and am already putting measures in place / building connections with like minded people 🙂

    Keep up the great work and I’ll keep reading!

  7. Pingback: The AC Interview Series with Michael from Financially Alert | Adam Chudy.com

  8. Thanks for sharing and congratulation! That’s a big accomplishment.
    Good luck on your race to 10 million. We’re shooting for just 3 so it should be quite a bit easier. 🙂
    It’s nice to see how you got there at such a young age.
    Thanks for the mention as well.

  9. Congrats on doing so well in life! I saw your NW stats at Rockstar Finance and noticed that you bumped me out of 5th place. Nice! I actually like seeing people above me on that list because I enjoy seeing others succeed.

    Make the pie bigger and don’t worry about how big your own slice is – if the other guy’s slice is bigger there’s usually a reason.

    1. Thanks Justin. I’m sure you’ll leapfrog me one day, and perhaps I will again. 😉 Better yet, let’s both displace the other 4 on top of us!

      Congrats again with all the viral success of your article.

  10. Well done Michael and congratulation to achieve FI at that young age, I am jealous 🙂

    I will be following you to see how and what you do to progress toward your goal of 10mio when you are 50. On my side will be difficult to achieve that level as I have only 9 years left to 50.

    Cheers, RA50

    1. Thanks for the comment RA50. It’s said that most people overestimate how much they can accomplish in 1 year, but underestimate how much they can accomplish in 10 years. Since you’ve got 9 years left, your goal is certainly doable. I’ll be cheering you on to FI by 50! 🙂

  11. Amazing Michael! I totally feel you on the “Judge Me” part of sharing your financial situation in public.

    I’m sorry to hear about your loss. Inheriting money from your mom must have been a very strange experience. My dad recently had the same thing happen to him, and he still has a hard time knowing that he just inherited a good amount of money that he didn’t work for and it being from his mom.

    I totally love the risk taking part. I’m all for calculated risks. And like you mentioned, we’re all only human. Things happen and we make mistakes. I’m happy to see you’ve done so well for yourself over the years.

    I’m sure you’ll reach your goal of $10,000,000 at age 50. I like to dream big as well and if I hadn’t, I wouldn’t be in life where I am today. There will always be people criticizing and judging, but you seem like the kind of guy who could care less about that and will still appreciate constructive criticism. I think that’s all that matters :-).

    1. Thank you for the comment and the support Peter! Yes, inheritance is a bit strange, but also a phenomenal blessing. Being a good steward of the assets and paying it forward is the ultimate way to honor your passed loved one.

      Starting this blog and putting it all out there is definitely a 180 degree shift from where I’ve come from. Nothing ventured, nothing gained, right? The funny thing is the more I concentrate on serving others, the less I care about what people think of me. Ironically I’ve had nothing but wonderful support thus far which really speaks volumes about the high quality of the PF blogging community and readers who are looking to improve themselves.

      Keep up your incredible drive and good things will keep happening to you!

  12. Great Post Micheal. I’ve been tracking my NW since 2006 and I can say without a doubt it is the biggest reason for the growth in our families wealth. You can’t improve unless you are tracking it. Good job in being so transparent.

    1. Thanks Andrew! That’s great you’ve been tracking for nearly a decade. I’m sure you’ve found by just tracking NW it “automagically” helps you to maintain better financial habits better which no doubt has contributed to your family’s increase.

  13. Hey Michael!

    Nice job on the net worth! I have a feeling there are more wealthy people out there than we all know. The media likes to drone on and on about people who are clueless and suffering. But I don’t think that’s true for a lot of people.

    Let’s see who gets to $10M first, you or Dom?! 🙂 I guess I’m in a race with you guys as well based on my $10M goal in stocks and bonds.

    I’ve written about my journey as well in the linked post. The first million could be the easiest imo! What do you think?

    Cheers

    1. Hey Sam, you’re definitely right. With 10M+ households with a NW of $1M or more, there’s definitely a good sampling of millionaires all around us (especially in the larger metro areas). Half of them are probably your readers at Financial Samurai!

      I’m glad Dom and I are in good company on the race to $10M! You’ve got a nice head start, I’m used to being the “middle” child, and Dom has the momentum of youth at his back. 😉

      The first million could definitely be the easiest, but I’m hoping it won’t be! Time will tell.

      1. Love it Michael!

        Not many in the space have big number goals like this, so it’s nice to have someone to build along side with.

        It’s very interesting looking at your Net Worth History. Comparing it to my own plan, brings a bit of comfort knowing that $1M in 5 years is feasible target.

        Onward and Upward my friends!

  14. First time reader who stumbled upon your blog. Congrats on the $1.5M. I assume that is your total family NW for 4? Curious about your monthly expenses since you are determined to build a nest egg of $10M

    1. Thanks for stopping by John. Yes, you are correct that this is the NW for my family of 4. I’ve been married to my wife for a little over a decade, so there was certainly a period of time when we were DINKS (dual income no kids) and saving like crazy. I will go over my expenses in detail in a future post, but it hovers around $10k/month at the moment no counting CAPEX. Bear in mind though, $6k of this is allocated to mortgages (primary residence and income properties). In order to hit the $10M goal, it’s going to require much more than expense management and likely an investment into a business and/or multiple properties.

  15. Michael, kudos for sharing your financials. I appreciate you doing it and giving us all some inspiration. After reading your blog earlier today, I found myself thinking a lot more about our family net worth and what we could do to dramatically improve it. While growing my business is certainly one avenue to a greater net worth, I think that I need to seriously explore some diversification in the next 12 months.

    1. Thanks for the kind words Jeff. I’m glad that this is helping you to reflect on your family financials and how you can dramatically improve your net worth. It’s amazing what a few small changes can do over time. If you need a sounding board, or have an specific ideas that you want to pass by, don’t hesitate to ask. Someday you will tell me you’ve factor four’d your family’s net worth! 😉

  16. Hey Michael, thanks for sharing these numbers. It’s always encouraging to me when I get to see how much someone’s net worth has increased over time — it reminds me that a lot can change in a few years. 🙂

    1. I’m glad you find it encouraging Sarah. You’re right that a lot can change in a relatively short amount of time. It’s all the little things which seem insignificant during the moment that ultimately add up to big results in the end. Luckily for you, you’ve already found this out at such a young age and taking action. Can’t wait to here where you’re at in 10 years.

  17. Pingback: The Net Worth of Personal Finance Bloggers

  18. This provides a valuable backstory to not just your net worth, but how you got where you did. It’s going to be fun watching you grow your net worth to your $10m goal! Best of luck!

  19. I love it when people are transparent with their numbers. I love seeing what others who are successful are doing and compare it to my financial picture. I currently do not share my numbers and not sure if I will or not in the future but I do greatly appreciated those who do!

    1. Thias, if someone had told me a year ago that I’d be sharing my full financials online, I would have told them they are smoking crack!! 😉 Glad to hear you like seeing the transparency.

  20. Very cool, and welcome to the club of those who divulge their net worth. It’s not as big of a deal as it may seem – and it helps to keep you focused on watching that number continue to climb year after year…or in our case, month after month. Congrats on doing so well, and don’t let anyone tell you that your financial success is because of all your advantages. Yes, advantages do help, but it was ultimately YOUR CHOICES in life that led to your current position. You could have easily squandered those advantages – many people do, every day.

    Again, well done, and welcome! 🙂

    1. Steve, thank you so much for your comment! You’re definitely one of the bloggers that’s inspired me to start this journey, so I’ll soak up all the wisdom you’ve got. 🙂

      I appreciate you highlighting my choices over my advantages. That’s exactly what I was trying to get across. We all have different circumstances, but it’s our choices that ultimately determine the quality of our lives.

      Thanks for sharing your own story openly everyday!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.