WEALTH FOR TOMORROW

We are 3 quarters in to 2015! Finances in the last quarter (July through September) have remained steady as both my wife and I have had pay increases in the past few months (me with a small promotion and her with taking on more clients) which has offset slight increased spending including now having all our loans in repayment phase. We are staying steady on our retirement contributions and I added another $1,000 to my brokerage account, where I am learning about investing and trading equities.

Again, keeping track of finances is a key part of my journey to achieve financial freedom. After finishing both our bachelors and a master’s degree for my wife, we found ourselves beginning our adult lives deeply in debt. During college, I did not think twice before taking out more loans to cover the next year. It did not hit me until after I graduated exactly how much weight the loans would have on my life. I became fascinated with finances and the concept of financial independence and began to dream of the day I would be free from debt. I decided that I would do anything and everything I could to get there, and teach as many people I could along the way.

This blog is where I am recording my progress as well as journaling what I learn during the process. A few years ago, we had around $200,000 in debt and no retirement savings whatsoever. We are slowly chipping away and adding to our accounts. I want our story to be an inspiration to others out there who feel like they are in a financial situation that is out of control. I want to show others that even if you start off your adult life on the wrong foot, you can make a change and gain control of this aspect of life. Financial freedom means I could retire if I wanted to. It means I choose where I go, who I see, and what I do with my time.

This is a summary of our net worth. I calculate that by taking our assets and subtracting our liabilities. We are currently renting our apartment, so our assets include 3 retirement accounts (my 401K and 2 Roth IRAs), my brokerage account where I am building a stock portfolio, and our liquid cash which is in a traditional bank account. Our only liabilities include student loans and technically our credit card which we only use for the rewards and pay off each month. I am doing my best to balance paying off loans, saving for retirement, and having an emergency fund. At this point, I am slowly adding to our emergency fund until it reaches closer to 4 months worth of expenses, then I will shift that over to paying off loans. I am contributing enough to get the match on my 401k, and slowly increasing our Roth contributions every few months. All excess money is going toward paying off loans, highest interest rate first.

ASSETS

	Retirement savings accounts	Brokerage account	Liquid cash
Q3 2015	$17,439.58	$4,374.41	$9,694.45
Q2 2015	$16,289.80	$3,139.00	$8,535.26
% Change	+7%	+39%	+14%

 

= $31,508.44

 

Liabilities

	Student loans	Credit card
Q3 2015	$150,047.25	$404.65
Q2 2015	$150,953.80	$273.73
%Change	-.06%	+48%

 

= $150,451.90

Net worth:  31,508.44-150,451.90= -$118,943.46

*Despite the high monthly payments we make, only a small portion goes to the principle amount due to interest. This is why I am trying to pay more than the minimums, starting with the highest interest rate loan first.

This last one is a stat that helps keep me motivated paying off loans. It is difficult paying so much each month but hardly making a dent on the initial balance due to the incredible amount of interest. This is the remaining loan balance and the amount we have paid off including interest.

Loan Balance	Paid off
$150,047.25	$52,711.28

This was the update on our finances at the end of September 2015. I am taking a long term approach, understanding that patience is the key to building wealth and slow methodical moves to adjust as we go. I have a positive outlook on the future, knowing it is most difficult to build momentum at the beginning. I want to be an example to others 5, 10, and 20 years down the road of how anyone can achieve financial freedom no matter where you start out.