WEALTH FOR TOMORROW

Hello and welcome to my 2015 financial review! It has definitely been a positive and eventful year for us, highlighted by my wife finishing grad school and getting a new job and us moving to a new state to be closer to family. To top it off, last month we also booked our first international vacation for this coming spring.

About four years ago, while transitioning from being a student to working full time, I really began to think about money and the effect it has on life (amazing, I know). I resolved to pay off my school debt as soon as possible and achieve financial independence where I would no longer be a slave to my job and could do what I wanted with my time.

Since then, I have been tracking our spending, automated all the bills I could, regularly contribute to our retirement accounts (also automated), and focused on paying down debt. I have also delved into my passion of investing and finance and been teaching myself in my free time how to invest wisely. It has been great seeing our savings grow over time and our loans slowly decrease. It goes the slowest at first, but this is a game of patience and making a lot of small good decisions over a long period of time.

I have been doing quarterly check-ins to update our assets and liabilities. Our retirement accounts include a Vanguard account for my wife with her old rollover IRA, her Roth IRA that we contribute to each month, and now also a Simple IRA with her new work that also contributes a small match, my Roth IRA, and my 401k. I also opened a brokerage account at the end of 2014 where I contribute when I can. We are not focusing on having a large amount of cash on hand (emergency fund) as we still have some high interest student loans we are paying down (>7% yikes!). We always have at least a month or two in our savings, but any more than that we are putting into our loans. Worst case scenario, I can sell the individual securities we own in my brokerage account. Our debt is student loans and whatever we have on our credit card month to month. This quarter, the credit card balance spiked because we charged about $2,000 in travel expenses for this spring. We are still paying 0% interest until this summer so we will definitely pay it off before then. We decided to go ahead and take this trip because we both believe that it is worth the experience to go while we are young and do not have many responsibilities (notably kids J).

These are our assets to date. We rent an apartment and we own both our cars outright.

ASSETS

	Retirement savings accounts	Brokerage account	Liquid cash
Q4 2015	$20,715.93	$5,228.28	$6,198.14
Q3 2015	$17,439.58	$4,374.41	$9,694.45
% Change	+18.8%	+19.5	-36%

 

= $31,942.35

As I mentioned before, our only debt is student loans. We started using a credit card to take advantage of the rewards. The credit card we use has no annual fee and 2% cash back on all purchases. We charged a couple plane tickets last month which is why it is so high right now.

We are using the avalanche method of attacking our loans, putting all extra payments towards the highest interest loan until that is paid off, then moving on to the next highest.

Liabilities

	Student loans	Credit card
Q4 2015	$147,304.82	$2,843.49
Q3 2015	$150,047.25	$404.65
%Change	-1.8%	+602.7%

 

= –$150,148.31

Net worth:  31,942.35-150,148.31= -$118,205.96

This is how our assets and liabilities compare to each other from the end of 2014 to the end of 2015. I am pleased with our savings rate this year despite the many changes and expenses we had. I would like our assets to reach 50K by the end of 2016. Liabilities are obviously tough but I know it moves the slowest the first few years as the majority of our payments are currently going towards interest.

	Assets	Liabilities
End of 2015	31,942.35	150,148.31
End 0f 2014	16,575.62	166,486.91
% Change	+92.7%	-9.8%

This last one is a stat that serves as additional encouragement to our loan situation. 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
$147,304.82	$57,583.30

 

 

I decided make financial independence one of the top goals for me and my family. We started off in a deep debt hole from the beginning of college, but I am confident that we are headed in the right direction and will have freedom one day. I have also made it my mission to put our story and progress out there for everyone to see. I hope it is an encouragement and example that with hard work, planning, and patience, you can turn your financial situation around and achieve your goals.

I named this blog Wealth for Tomorrow because I see people obsessed with the belief that you have to “win the lottery” to get rich or that there is no hope for “average” people. But that is a lazy view because it implies that it is all about luck and we have no control over the future. I want to show those people that anyone can get out of debt and build wealth if you are willing to put in the work. If you continually work hard and smart today, you will build wealth for tomorrow.