Kyle and I officially have a net worth of over $100,000! I’m so excited to reach this milestone, but how it happened precisely has taken the wind out of my sails a little bit. But it probably shouldn’t have. See below.
Slow and Steady
One afternoon last week, I had some time to kill waiting in a parking lot, so I became absorbed in our Mint account (naturally). This was the net worth balance I saw (doesn’t include property):
I have been keeping an eye on our steady approach of the $100,000 net worth mark for around six months now. I estimated that we would overtake it during the summer sometime. I thought it would be impressive to be able to say that we got our net worth to $100k while in grad school so it was kind of turning to a race between our net worth and Kyle’s defense/my defense.
When I was doing the math on May 24, we were in our between-paychecks period – Kyle had been paid for May but I hadn’t yet. Here was my thought process:
- My paycheck of a bit over $2,000 would bump us to about $100,600, but it usually doesn’t get deposited until around the 4th of the following month.
- Our rent ($870) comes out on the last day of the month. So it looked like we wouldn’t quite get to $100k at the end of May/beginning of June because of the timing of the transfers – only about $99,700 at most.
However, I did expect that our June paychecks (Kyle’s last one as a grad student!) would put us solidly into the $100k range for the whole month of June and following, barring some major fall in the stock market or outsized spending on our part.
I was very pleased to be able to project that we would become hundred thousandaires before Kyle officially exited grad school. I think that’s quite an accomplishment! But I also was keeping in mind that if we do all the planned spending we would like to (big vacation, camera, car repairs) in the fall and I am un/underemployed for a while, we might dip back below $100k for a bit. So things would still be a bit shaky on whether we had truly passed that milestone for some time.
Thrust Over the Finish Line
Later that very same day, Kyle’s parents gave him a sizeable monetary gift that was a combination of inheritance from a relative’s estate and graduation gift. That gift pushed our net worth well over $100k.
We have yet to figure out what exactly to do with the money, but it will likely become the start of a down payment for a house. I checked with Kyle’s parents about what their expectations might be for the money, if any, and it really seems like there are no strings. Per Ric Edelman’s advice, we will probably keep they money in savings until we know the timeline on the house purchase, and if it’s quite a ways off we’ll invest the money.
So… that’s how that happened! I’m just ever so slightly disappointed we didn’t get ourselves over the $100k mark, but not enough to not be ecstatic about the gift.
How We Owe It All to Our Parents, Anyway
Really, though, I shouldn’t be disappointed in how this happened at all. Much of our net worth at our young age (28) is due to our parents, anyway. It’s a coincidence that the gift put us over that arbitrary $100k net worth line, but it helped draw my attention to all the ways our parents have transferred wealth to us after we turned 18.
1) Paying for college: As I’ve written about before, our parents paid for the bulk of our very expensive college costs; Kyle graduated from college without debt and I had only $16,000 in student loans. That gave us a huge advantage in starting out our working lives, to have this wonderful lucrative education without having to pay for it after the fact.
2) Letting us boomerang: My parents let me live with them for about six months after I graduated from college, paying only $500 per month for “room and board,” which was a nice discount from what I paid after I moved out on my own. Kyle’s parents also paid for his room and board during two summers prior to grad school so he could pocket his entire paycheck.
3) Wedding: Our parents paid for about two thirds of our total wedding costs.
4) Gifts: We have received monetary gifts from our parents from time to time. Kyle’s parents gave him a very nice gift upon his graduation from college to help him get set up at grad school. My parents passed on to me part of an inheritance in my first year of grad school, which I put toward our wedding the following year. Our parents have also given us gifts about once a year for our wedding anniversary/birthdays, generally on the order of a few hundred dollars.
So in all these ways, our parents have given us money or enabled us to not spend as much money. The big one here is paying for (most of) college so we weren’t saddled with a ton of student loan debt coming out. No matter how much saving we’ve done in the last seven years, it’s impossible for us to take full credit for our net worth because it’s too hard to separate all that our parents have given us from our own efforts. Even beyond the monetary gifts, which we could probably track down and itemize, we can’t forget about the base fact that they raised us and shaped our characters.
But It’s Our Accomplishment, Too
Still, most of the money we have at Ally and Vanguard is due to our consistent savings rate from our grad school paychecks. We have fully embraced “pay yourself first.” I started out saving 10% of my pay a few months after I finished college, and slowly increased that rate over the years. Kyle started saving in 2009 and maxed out his Roth IRA every year from that point. We now save about 17% of our gross income into our Roth IRAs, and in the last two years we maxed both out. Our net worth has been even further increased by the stock market run-up we’ve seen since 2009, compounding our retirement savings. We also invested our student loan payoff money and that alone has added $3,500 to our net worth over the last three years. So we’re doing well with what we’ve earned and what’s been given to us. In addition, we save every month into our targeted savings accounts and have accumulated a lot of money there because we overestimated our spending needs.
Yay, we’re hundred thousandaires! And I’m grateful to know that due to this recent gift we won’t retreat back into the ten thousandaire realm come our high-spending/low-earning fall. Thanks, parents! I trust you approve of our use of the gifts you’ve given us.
What fraction of your net worth do you think is due to you and your bootstraps and what is due to your family or other sources? What exactly happened to push you past your most recent net worth milestone or financial goal?