How did our net worth grow from zero in early 2009 to more than $1,600,000 today? Part two of our “By 35” story is continued below:
Related Link: By 35: Part 1
2009 (27): We had a number of positive changes start happening for us in the latter half of 2009. Mrs. Shirts reached two years of experience as a practicing veterinarian and she was able to use that experience to transition into a private practice much closer to home, secure a $70,000/year salary, and score a better work schedule that didn’t require working Sundays. I received a promotion/raise in late 2009, which was mainly earned through higher sales in a period where bonuses were depressed to non-existent. My institution ended up being in a better than most of our competitors and I started finding more business.
We also got stronger with our savings and took our first run at travel hacking. There are occasional short-term manufactured spending opportunities and I fell into one of these: The US Mint’s Dollar Coin Direct Ship Program. This almost eliminated vacation expenses and let us invest more. The market ended up returning 26% for the year and we finished 2009 and our 7th year of working with a positive net worth! I wish I kept the exact number or date it turned positive, but either way this was an accomplishment for the year.
2010 (28): We kept plugging away at the same plan, the Dollar Coin game was in full force for travel hacking, This year delivered a decent sales bonus too. We were both maxing out all of our retirement accounts without any changes to our reasonable level of spending. The market again had a nice return, generating 15%+ and by the end of the year, we had at net worth of just over $200,000.
2011: (29): We did it, twice our salary saved. The timing worked out well and I finally climbed up into a role paying $90,000/year plus a small bonus while Mrs. Shirts was still at $70,000. We crossed $320,000 at year end for our net worth. The market wasn’t kind to us or anyone else in 2011, but it also avoided a 2008 style crash. After the experience of 2009, I’ll take the mediocre return of 2011. It was also a banner year in sales for my career, I finally had seven years of experience in the job with the same company and could efficiently navigate deals through the system.
2012: (30): The one nice bonus. I worked a lot in 2011, days, evenings, weekends, investment banking style hours, but was rewarded with the largest bonus of my career, almost $50,000 (before it got whacked by federal/state/FICA taxes). I had made my employer over $1,200,000 in revenue, much of which they earned in subsequent years and my reward for that was an additional one time bonus of $50,000 . In hindsight I probably should have side hustled rental property instead of the hours I put in at work. I would have made the same amount in net worth and annuitized my income (in lieu of doing it for someone else). This was by far our best income year, combined we earned just over $200,000. We spent some of it with an expensive European vacation, but saved quite a bit. The market was okay this year and we finished with a net worth $470,000. I also was learning some work/life balance towards the end of the year.
2013 (31): “Green Ninjas” – Our new term for the investment accounts. They quietly do their job making more money, but you never hear a thing! – We continued to plug away in 2013, investing the maximum amount allowed in our 401ks, paying down our mortgage, and saving outside of retirement accounts. We still lived in the same house, drove the same cars, and kept our expenses to the same $2,000 – $3,000/mo plus housing. Our $470,000 net worth was almost entirely in investment accounts (the student loans and mortgage totaled the value of the house). We were rewarded with the best year we’ve ever experienced in the market. The S&P 500 returned 32% and our account balances ballooned to $716,000.
Taking a pause after the first ten years: What were we thinking?
I had worked in finance for almost 10 years, including a few hard grinding years and had increased my salary/market value to just over $100,000/year. I liked some parts of the job, but others were not enjoyable. Sales pressures, lack of company direction, rotating upper management, and the outside regulatory environment was tough. Mrs. Shirts had achieved what her profession would allow, paying in the mid $70,000/year with some less than desirable options if we wanted to increase her pay (longer commute or practice ownership). We both made good professional salaries, but weren’t in love with our careers. We had been avid readers/followers of Clark Howard, but happened to stumble across the FIRE movement and Mr. Money Mustache. Holy crap! We didn’t have to wait until we were 40!
A quick thought about compounding: We finished 2013 with a $716,000 net worth and outside of one bonus payout that netted $35,000 after taxes, had modest professional salaries with a lot of student loan debt obtained to get those salaries. That $716,000 left untouched in an S&P 500 index fund would have grown to $1,125,000 by the end of 2017 with no additional contributions.
2014: (32). I took a fairly stressful promotion and Mrs. Shirts declared a break from work. I always wanted the “next level” at my job and she was worn out by her’s, so we decided to go for it. I got a small raise, but we gave up way more than I got in the raise by giving up Mrs. Shirts salary. We moved eighty miles away, which turned out to be just far enough way to be pretty disruptive. Challenging job, company consolidations, absorbing a big loss on our prior house, and new round life stress. If I had only knew how good the market would be to us over the next four years, I would have relaxed a bit more.
In the later part of that year, I got a phone call for a much bigger promotion that involved moving 1,000 miles away. Since we had done it once, we said “well, why not?”. The economics of this move were also significantly better. The market also performed well that year. Our savings rate wasn’t great with all the changes (and we lost money on another house, which we were becoming professionals at) but the market continued to produce. Year-end net worth, $894,000.
2015: (33). What in the world did we just sign up for? The job was a massive turnaround, some parts fun, some parts incredibly frustrating. The market was mediocre that year and we briefly tried being a renter (not for us, we like control), but managed to cross the $1,000,000 threshold this year. The market was really volatile from August of 2015 until February of 2016, so its tough to remember that exact date we became a millionaire. It felt like we became and lost millionaire status 10+ times during this period, but our year-end snapshot was $1,019,000. I can say confidently that I had worked professionally for twelve years, this happened in 2015, and we were 33 at the time we achieved millionaire status.
2016 (34). “Everyone has a plan until they get punched in the face” – Mike Tyson’s famous line comes to life. Work was turning out well, I had a boss I enjoyed and built a great team. We bought a nice house, and were really starting to enjoy the fruits of all our hard work. Traveling, eating well, long weekend runs, and lots of travelling. it was time to ride this out and enjoy what we have worked so hard for!
Unfortunately the year did not work out that way, we lost our beloved first pet we adopted, the boss got escalated into the highest offices in the company (well deserved) leaving me working for someone new, and Mrs. Shirts suffered an injury that would turn into a multi-year process. The market’s returns was okay that year and our savings rate was decent, with a final result of $1,209,000.
2017 (35): The Lost Year. When new boss showed up, we were quickly evaluating how quickly I could pull the plug and get out of there. Suddenly, none of that stuff mattered anymore. We lost almost all of 2017 to diagnosis, treatment, and recovery. Work was secondary, but I retained the job and did not end up taking any extended unpaid time off. All while this was going on, the “green ninjas” continued to quietly do their thing. The market returned its third best year in our investing career, leaving our year-end net worth at $1,519,000.
So where does that leave us today?
The power of compounding is real. In the spirit of full disclosure from someone who writes about financial independence, I did end up with a compensation package in excess of $150,000/year. However, I only obtained that income after achieving financial independence, Mrs. Shirts giving up her income, and taking a couple big geographic moves.
The majority of our net worth came from the savings accumulated in the first ten years, almost all of which came from working with salaries way under six figures. We will continue to post asset allocation updates, but stop sharing net worth past $1,600,000 since anything else we do is optional. This is not a competition, we’ve earned enough to live on comfortably and we will have to carefully manage liquidity and taxes since substantially all of this is inside retirement accounts.
Do you have any questions or parts of our background you want to hear more about? Please comment below and share your thoughts.