Our Seven Figure Journey (Effort, Luck, Privilege)

Our net worth is now over seven figures! I am a millionaire. It’s still a bit stunning for me, a poor kid raised by a single mom, to type that. I don’t generally talk about my net worth in specific numbers, but this milestone seems worth naming. 

Not a bad way to relaunch the site, either. 

In truth, I’ve got a lot of conflicted thoughts about it. It’s a mix of

• Pride – Poor kid is making it.
• Embarrassment – Educators aren’t supposed to have money…
• Regret – It could have happened much sooner.
• Excitement – What comes next?
• Fear – What will happen to derail our progress? How might we lose it? 
• Gratitude – Wow, how lucky are we?
• Calm – I think for the first time in my life I might feel financially okay.
• Indifference – Our lives don’t really change, and it’s just a step on the path. It’s not actually a big deal.

Today, I’ll share with you how we got here, how it could/should have happened earlier, and where we go next. I’ll do it all while doing my best to be aware and honest about the considerable amount of luck we had along the way.

Quick Overview

This post ended up being over 3000 words. It’s a lot of ground to cover. If you aren’t interested specifically in our journey or just don’t have time to read, let me be clear about what I hope readers take away:

• Spending less than you earn is the whole game. Do that and you’ll be okay. The rest is just adjustments.
• Time matters. Start as early as you can. 
• Income growth helps. Growing income covers up a lot of mistakes – even starting late. Without mistakes, it speeds your progress.
• Limit lifestyle inflation.  Growing income only helps if you don’t just spend it all!
• Wealth accelerates. Progress is slow at first, then speeds up.  
• Progress is a matter of effort, luck, and privilege. It doesn’t hurt anyone to acknowledge that.

Doing exactly what we did won’t (and shouldn’t) work for you. But, maybe you can make a connection or build a plan that will. I think most people can do it better.

Net Worth Arc (The Numbers)

Tracking net worth is a critical step for those looking to reach financial independence. We only started doing it a few years ago. 

Before that, we didn’t pay much attention to our finances. As is so often the case, starting to measure something led us to greater understanding and action.

I can estimate, with reasonable confidence, our earlier net worth at two points. Both are times we were buying a house and paid close attention to our money. 

In 2003 our net worth was -130,000. We were freshly married and new in our education careers. We bought our first house on a zero down loan with a first-time buyers program for new teachers. We had no other savings, some consumer debt, and over $100,000 in student loans. Living the American dream!

In 2012, our net worth was all the way to $0.00. We bought a new (larger) home. Again, we really had no business doing so. While we’d eliminated our student loan and consumer debt, we had very little in retirement savings, no financial plan, and were slightly underwater on our existing home thanks to the housing crash.

Fast forward to now. Through market appreciation, more focus on our finances, and increasing income our net worth grew. We technically touched the seven-figure mark in the Personal Capital net worth calculation late last year (just before the market decline.) However, in my spreadsheet calculation I discount the value of real estate to account for transaction costs, conservative valuations, and illiquidity. 

Even on my own spreadsheet, we hit the seven figure mark at the end of the first quarter this year. Yet, so much of it was in the value of our primary residence that we didn’t feel it was really a milestone. 

Then, we decided to downsize. 

Now, our net worth is over $1,000,000 excluding the value of a primary residence. It’s all in cash, paper assets, and real estate.

Here is what all that looks like in visual form. 

Note that the line between 2003 (-$130,000) and 2012 ($0) is just a connection, not an actual graph. The same is true from 2012 to 2015. In 2015, I started actually tracking but refined and adjusted the calculation over the years. It’s one reason I’m not showing values – it would give a false sense of specificity. 

I believe net worth is a great big picture indicator but market fluctuations make it volatile for short term comparisons.

No matter what – our net worth is over a million now. 

Stunning. 

Our Net Worth Journey + Transparency

I’ve written before about the concept of privilege. I’m baffled by people who insist that everything is dependent on individual action. It is so clearly not the case.

Yet, I also believe that individual efforts matter a great deal to your outcomes. In my view of the world, it’s clearly both. It takes effort, but privilege and luck matter too. How could they not?

I’ve been inspired by transparency posts and appreciate how they deal with acknowledging the advantages they’ve had. (Tread Lightly Retire Early and Our Next Life have two great examples.)

To that end, I’m going to describe some of the major factors in going from a negative net worth to millionaire status and speak to the degree to which I consider effort, luck, or privilege part of our success. It’s my form of transparency at a major milestone.

It’s a Joint Journey

When I reference personal finances I almost always use “we.” That’s because it’s truly a joint journey with me and my partner (referred to as TFI for Teacher FI.) I consider finding a long-term partner with similar values and complementary strengths the greatest fortune in my life, both personally and financially.

Childhood

My childhood wasn’t always easy. My parents split and there were periods of deep poverty while my amazing single mom was lifting us up. I used to think this was a major disadvantage that I miraculously overcame. While working in schools, I’ve come to realize that our circumstances weren’t actually that unusual or hard. And we had some advantages.

We were poor. I missed out on opportunities because of that. Yet, my grandparents were all professionals who modeled career success. They were also a backstop that would have kept us from homelessness or truly dangerous deprivation. Any type of safety net is a privilege. 

TFI was raised in a lower-middle class household. Her father was an immigrant and her mother stayed at home. She experienced racism and classism, and what many Americans would consider deprivation. Yet, she never wanted for anything important. Her dad modeled the traditional American dream of working from nothing to home ownership and a secure retirement.

Education was a huge value in both our families and we were both very successful in school.

While our childhoods weren’t rich or always easy, we were more privileged than many.

We met at a 4-year university. I was there on almost full academic scholarship (supplemented by loans) and she was there on scholarship, loans, and support from her father. 

From this point on, it’s all a “we.” It’s luck that we met the right partner early in our lives. We left with some student loan burden but not a crushing amount.

Early Career

In our early years, we worked a number of jobs. I won’t go into these, but we were hustling to make money and spending it as fast (and sometimes faster) than we made it on entertainment, possessions, and travel. 

Eventually, both of us went back to get Master’s degrees in teaching. Both were at private universities and funded with student loans. Not a wise financial decision in retrospect. It led to the careers we love though.

It was at this point we bought our first house. We had the privilege of using an educator specific loan that required zero down with no private mortgage insurance. We bought a house for the full amount at which we were approved. 

Fortunately, the program had relatively reasonable approval caps, which kept us from buying more than we could afford. Luck rather than good decision-making on our part. 

There we were with a new house, new jobs, consumer debt, and over $100,000 in student loans. 

2003: -$130,000 Net Worth

The Lost Decade

The next ten years were a mix of effort and luck. We were mostly treading water, financially.

We did one thing right, and we worked hard at it: We grew our income. 

Starting out as two new teachers, our debt was 2x our annual income. Over the next decade, we tripled our income. TFI doubled hers through education, experience, and taking on extra duties. I did the same, and then transitioned into administration – in some roles I’ve made 4x my starting teaching salary.

The speed with which I made that transition is due to privilege. I worked my ass off, I’m good at my job, and have proven my worth. But, I got that chance earlier than most others would have because I work in a profession that elevates men, particularly white men, into leadership at a high rate despite the fact that the majority of teachers (particularly at the elementary level) are women. Effort and privilege – both can be true. (See – I acknowledged the privilege without feeling my effort and accomplishment was diminished or devalued…)

Income matters, and we earn substantially more than the average American household. That simple fact has enabled us to overcome a lot of mistakes and a late start to investing.

Unfortunately, while we increased our income, our spending increased at the same rate. Our saving grace is that aside from early-20s recklessness, we were both debt adverse.

While we often spent more than we should, we never spent more than we could. 

After the first two years of teaching, we never carried consumer debt. If we borrowed for cars, we paid them off quickly and drove them for a long time.

Our lifestyle inflated, but we still made slow progress due to income and debt aversion. 

We paid off our student loans by constant payments, partial forgiveness (we both taught in low-income areas) and a small inheritance that we applied to debt. (effort, choice, and privilege!)

A few things happened that set the stage for future growth. Those were almost entirely due to luck.

Luck Strikes

403b

I took a principal job with a new school district. One of the offered benefits was a small contribution to a 403b. 

I’d read somewhere that a Vanguard index fund was the smart investment. I wish I could remember where or when I’d read that.

Anyway, I started my first retirement contribution after 8 years of teaching. (Oh, the lost opportunity!) Our 403b had a Vanguard option, which I chose. Through pure luck, I was saving for retirement in VTSAX. 

I happened to start in late 2009. This meant I began putting money in the market at the bottom. I continued to do so throughout the market rise – but we didn’t start using TFI’s 403b until much later. Sigh.

Real Estate Marketing Timing

Pure blind luck. That’s what it is when you make a stupid financial decision and it doesn’t end up hurting you.

We bought a big house. Like two bathrooms for each of us big. Like turn a whole bedroom into a walk-in closet big. Like three floors for two people big. And it cost 2.5 times as much as the reasonably priced house we were living in. In a HCOL area. We chose to more than double our housing costs.

Here is where the luck comes in – the new house is in an area that held value well. We were buying at what turned out to be the very bottom of the local market. 

It wasn’t a wise financial move, but it turned out to help us. It helped us accumulate wealth unintentionally.

Owning a Rental

Even more blind luck? We bought that giant house at a time when our existing house wasn’t worth much. We’d been paying on our original mortgage for almost ten years, but due to the housing market crash (it was hard in our area) we were about breakeven.

We decided, with virtually zero research and knowledge, to turn it into a single-family rental. A friend recommended a property management company.  

Turns out – the numbers actually work pretty well. It cash flowed almost immediately. And we’ve had less than two weeks total vacancy. 

Of course, generational privilege is part of owning this real estate. We were at the right ages to buy our first house at a very reasonable price, and at a point in our careers where we could buy at the bottom of a horrific real estate market. Boomers never get this (and my generation (X) only vaguely realizes it) when they consider how housing affects wealth for younger generations.

Either way, through blind luck we ended up with a primary home that would appreciate and a rental. We still had some student loans remaining, but a small amount of equity in our new home since we put money down.

After ten years of working hard, we were now worth exactly nothing. Better than being negative!

Net worth: 0

The Intentional Years

After buying the new house, we continued our clueless ways for another two years or so. Never spending more than we could afford, but our lifestyle continued to inflate. 

Expensive travel became our new vice. We worked hard . 100 hour weeks were not unusual for me. To “balance” this, we vacationed hard. 

Since we had solid income and never spent more than we earned, we were still making slow progress. In short, we were on track for the standard American retirement.

Then things started to change. Interestingly, our travel obsession started it. We decided that we might want to own vacation homes in a few different locations. This was not a wise financial move, but it led us to start thinking about spending differently.

We cut back on our discretionary spending in order to save for the purchase. For the first time we were intentionally putting away a decent amount of what we earned. We saved up a down payment quickly. It was easy.

We bought a vacation place in partnership with another couple. This was a dream purchase that led to a nightmare realization – I was trapped in a horrible earn/acquire cycle. (I plan to write in more detail about this soon.)

So, in 2016 I went down the FI rabbit hole. Since then, we’ve unwound our lifestyle inflation. We’ve increased our savings rate. We max out our pre-retirement accounts and carve out extra.

In the past few months, we’ve downsized our home. We cut monthly housing costs in half and converted primary home equity into an actual asset.  If you want to read in detail about our past few intentional years, check out the Our Journey section.

Our intentional actions have mattered quite a bit, but we’ve also seen the accelerating benefits of wealth accumulation. The graph demonstrates clearly how wealth starts to accelerate with a combination of high savings rate and compounding.

One final thing to note – we’ve been lucky to enjoy relatively healthy lives. There have been surgeries to correct for injuries, and minor medial issues, but nothing catastrophic or long-term. Unfortunately, in the United States those things still have massive effects on the ability to build wealth.

Here we are, living a life we enjoy and a seven figure net worth. 

How lucky are we?

How We Could Have Done It Faster

Of course, I’m obsessive about continuous improvement. While I’m thrilled with where we are at, I can’t help but look at how we could have done it differently. If we’d known what we know now, we would have passed this point years ago. Or, we could have made different working choices (better work/life balance) and still reached this point now.

Sharing this learning is one reason I write. There are so many things we didn’t know.

So, here is how we could have done it better.

Intentionality 

I’m not being humble when I say that we’ve mostly stumbled to this point. 

We worked hard on our income and kept our debt low. Those things are good. Everything else – not so much.

By ignoring our finances for 15 years we missed a lot of opportunity. It’s not that we were awful, we just weren’t intentional. Our choices weren’t informed or guided by our priorities.

Pay attention to your money, track your numbers. Then make the choices that work for you. 

Early career investing. 

We didn’t invest in my pre-tax retirement accounts for the first 8 years. We didn’t use TFIs for more than 12. Huge missed opportunity.

If you can get money in the market early, it will pay off.  I wish we’d even just started small investments right out of the gate. 

If you’re an educator you likely have access to 403b and 457. This means that if your investment options are good (check those fees!) you can invest twice the limit. 

Start early, even with just a small amount.

Limit Lifestyle Growth.

We’ve (mostly) reversed our lifestyle creep now. In some ways, living in a giant house and choosing to downsize has been a benefit. We’re clear on what we need and want, and aren’t pulled by the American dream of a big beautiful house. (We still like the beautiful part…)

I wouldn’t chose to live like we did in those early years of being broke teachers. But, I would have taken half (or more) of every income increase and used it to save instead of spend frivolously.

Housing Choices

We were lucky that upsizing our house didn’t hurt us financially. We got out without a loss and with significant equity built up. We even got a cash-flowing rental out of it!

But, I look back now and see how we could have stayed in our original home and purchased two or three rentals for what we spent on the bigger house. 

We’re in good shape AND we’d be in even better shape if we’d done all those things. 

Had we limited our lifestyle inflation, invested early, and kept our housing costs down we’d have had more money in the market and real estate during the run up of the last several years. The wealth acceleration would have been even more significant.

We didn’t, and we’re fine because we never spent more than we earned and we’ve had time on our side.

But – I hope you can use our experience to do better!

Related Post: The 15 Money Things I’d Tell a New Teacher

Where We Go From Here

Converting the primary home equity into actual cash and downsizing our monthly housing costs was a game-changer. A million dollars, while a great milestone, is not what it used to be. A seven-figure net worth is a good step, but we’re not done.

Financial Independence

We’re now two types of financially independent. (Yes, there are lots of types but I won’t go into that here.)

Lean FI – We have enough assets and have our life set-up in a way that if something happened and we both lost our jobs tomorrow we would not have to get new ones. It would require us to cut back on all but the essentials, but we could do it. Not the type of FI we want to be – but a great first step.

Coast FI – We also have accumulated enough that we could stop putting money in now and be financially healthy whenever we decided to retire. That is, we could coast into a comfortable normal and likely even early retirement.

Financial Independence: Not Yet – Actual financial independence is still a bit off. We don’t want to retire lean, and we expect to have some family support costs later in life. So, while a million is nice (no complaints here!) we’ll continue building assets. We expect to hit our actual FI number in about 5 years. Assuming strong market performance (which I don’t) we could get there earlier.

Either way, we’re very likely to hit FI before 50. Not bad for slow starters. 

Retire Early?

We are not driving towards FIRE (financial independence retire early.) We may choose to retire early, but for a variety of reasons are not setting a FIRE date.

Instead, we’ve embraced financial independence optional retirement. (FIOR) 

I’m writing about this more on Thursday, but essentially there are a number of reasons we don’t set a FIRE date. Instead, we want to make sure we have the option to retire on our own terms, when the time is right.

A Target?

Two Broke Teachers. Two Decades. Two Million.

I’ve always enjoyed reaching for stretch goals. Our first million net worth was really almost accidental in many ways. Through a combination of effort, privilege, and luck we’re there. It feels good.

But, what if we could double that. We started with 2003 at a negative net worth, could we get to two million in two decades? That gives us until the end of 2023 – about 4.5 more years. It would take extra effort and solid market returns. But, we’re saving more than 60% now and have a great start.

It might not happen. But it’s worth a try! (Full transparency: TFI rolled her eyes and swore when she read this part…)

Summary

That’s our journey from a net worth of -$130,000 to a seven figure net.

We started out broke and all of our income has come through our work in public education and education-related side hustles. We put in a lot of hard work and made some intentional choices – particularly in the last few years. Yet, the major factors in our progress have been time and some luck. Both covered up our early years of inattention and excess.

There is no prescription for financial independence beyond spend less than you earn over time. I don’t pretend that my path will work for everyone. Yet, I’m hopeful that by sharing our journey and things I know about the education career that others, especially educators, might see a way that might work for them.

I feel incredibly fortunate to be where I am today. I hope you can meet all your financial goals. I’d love to help.

It’s good to be back writing.