Small Expenses That Seem to Hurt

I’m a completely irrational human being.  I often find myself fretting/obsessing or just plain paying waaaay too much attention to small expenses and then freely throwing around a few hundred dollars on *want* items without a second thought.

A great example of this is my reaction when I opened a toll summary statement to see that my wife had driven in the express carpool lanes three times last month.  These are the lanes on the road that you have to pay a variable toll to drive in depending on how bad traffic is.  We’ve always done well staying out of those lanes but my wife had been driving a carload of kids back from a camp and just couldn’t stand the thought of sitting in traffic any longer than she had to.  Unfortunately the price of admission on that particular day was $10.00!!  Basically a frugal guy’s version of a dagger to the heart.  It KILLS me to spend money on things like that.  To add a tiny bit of a shove to the dagger, she apparently enjoyed that trip so much, she decided to use the lanes twice more last month, luckily at a cost of $.50 a trip.  I guess I have such a strong emotional reaction to a small charge like this because a) it’s not worth it to me and b) I see it as an unnecessary tax that we can easily avoid.  Yes, I know we could spend lots of time discussing what our time is worth (and believe me, my rate is much higher than the $10 toll), but regardless, it’s still something I hate paying.

Compare that to the ease at which I willingly hand over a couple hundred dollars for things like a new Stihl weedeater or a new electronic gadget and it does make me look like an idiot.  The phrase “penny wise and pound foolish” has entered my head a zillion times.  What I’ve had to try to do is step back and look at the big picture.  We’ve never really budgeted for “misc” type stuff each month, but in a sense, we are spending a few hundred dollars a month on just plain miscellaneous stuff.  As a percentage of our budget, it’s really not much and should probably be expected.  I think the most important aspect of this is that we are using cash, not accruing any debt and are meeting all of our other financial goals.  Regardless, it’s really tough sitting here with the dagger poking at my side.

Real Life Personal Finance Dork Like Me!

I finally stumbled on to someone at work that is looking at retiring early like I am.  I was shocked when her date was two years sooner than mine (we are the same age).  It helps that her husband is older than she is and already qualifies for a pension and has a large 401K.  She will also qualify for a pension at 55 but she’s looking to retire before age 50!

We only had a short conversation about retirement but I look forward to talking more with her about it.  She mentioned that they’d been to a financial adviser and I was thrilled to hear that she used a “fee only” adviser to avoid all the conflicts of interest with the other types.  While we haven’t gone to an adviser yet, I’ve been considering it in the next couple years.

I was able to share a few things with her that she wasn’t aware of including that our 401K plan now lets you invest after tax dollars (up to a max of $53,000 a year including pretax) and then lets you do annual ROTH conversions.  For us it would allow us to drastically increase our ROTH contributions, although I haven’t even taken full advantage of ROTH’s because we never set one up for my wife.  That’s currently the number one thing nagging me in the back of my brain.  It’s been foolish for me not to have started a ROTH for her.  I found myself justifying by saying that I wanted to get more money put in post tax accounts to help us live during the years before we turn 59.5 even though I KNOW I can access all the ROTH contributions before 59.5.  You know how sometimes you just make stupid decisions and can’t explain it?  Yeah, this is one for me.  My goal for this year is to correct that.


Updated Net Worth

Time flies when you’re having fun and apparently money piles up too.  We have seen some very good gains in our net worth over the last 10 months.  Overall it was an increase of over $150,000.  That’s more than $15,000 a month, which is more than we make by far.  We are starting to see the rewards of compound interest for sure.  I’ve also been keeping an eye on dividend income.  I don’t know why I never spent more time paying attention to dividends but now that our balances are larger, it’s awesome to see that money paid in to our accounts every quarter.  I’ve been aggressively transferring excess income in to our brokerage account by using automated transfers.  It’s much easier to pay yourself first consistently when the transfers happen automagically!

I’m starting to think more and more about an early retirement.  While I won’t be setting any records in that territory, it’s starting to look more and more like I’ll be able to check out of the rat race at around 51 years old.  I’ve chosen that as my target because my daughter will be heading off to college (using funds from a 529 account we’ve been building for years).  I expect my wife will work a few years longer than me since she’s a bit younger and that will help us continue to compound our investments that much longer.  I’d like to get our net worth as close to $2M as we can before I retire but I’m not going to make that a mandatory requirement.

I’m also spending a lot more time on our after tax investment accounts.  Looking back, this was the single biggest mistake I made during all of our years of saving and investing.  I had always been somewhat scared of the tax requirements on after tax accounts but it’s not nearly as tough as I thought (especially now that brokerages have to track my cost basis).

Anyway, that’s the quick update on our net worth.  I’m hoping to get to $1.25M by the end of the year.  We’ll see how it goes.

What Percentage of Our Income Are We Saving?

Just doing some quick analysis of our saving progress.  In my handy dandy net worth spreadsheet, it shows we are saving 31% of our gross income in our 401k accounts and additional payments to our mortgage.  We put an extra $200 towards our mortgage balance each year just to help speed up the payoff a bit.  While many will argue we should be directing those funds towards our investment account, I can assure you we are also contributing a decent amount to the “after tax” investment account as well.  The goal is diversification and moderation with all of our money.

Overall we have about $237K left on our mortgage with an estimated home value of $380K.  That’s our only debt and has an interest rate of 3.75% so we aren’t too worried about it.  When we decide to quit working, we’ll sell our primary home and move to our other house that is paid for.  The good part of that plan is we’ll be able to invest the equity from the house sale and have zero tax liability on it.  That combined with our other “after tax” accounts will help us manage our pretax withdrawals to maximize tax efficiency.

Another statistic that I keep an eye on, although it’s not nearly as important, is what I call our “net worth savings rate”.  This includes all dollars that we put towards all of our accounts.  That savings rate is 47% and includes things like my daughter’s 529 account, all the 401k contributions and additional mortgage payments and also includes what we are putting in our after tax accounts.  I’d like to get this up to over 50% but we’re pretty happy with the current overall progress.

At this point, we are really on autopilot.  If we were to stop contributing to all of our accounts today, we would just have to wait longer to retire comfortably.  We are continuing to aggressively save because, a) we don’t need all the money we make to live day to day and b) we’d like to have the option to retire earlier than the traditional age.

Why Are We Tracking Our Net Worth?

I’m assuming if you are viewing this site, you probably have a pretty good idea about why we are tracking our net worth.  For us, it’s all about being on a path to financial independence.  I’m very interested in getting to the day that I wake up in the morning and have full control over what I do all day long.  At this point, we both have to wake up and go to work Monday through Friday.  While we don’t hate our jobs and really like the income they provide, it would be amazing to just sit on the couch all day watching Oprah reruns.  Either that, or we’d go out and pursue other interests or volunteer in ways that are meaningful to us.

I remember when we were first married.  We were both making decent money for being right out of college ($60K total) but we didn’t have any money saved up.  Zero retirement, zero savings and we were spending it as fast as we earned it. (We’ve been married about 17 years)  We both had car loans and had our first mortgage.  At the time, I thought we were pretty savvy because we had paid off our student loans and credit card balances that had built up during college (back then the balances, on average, weren’t nearly as high as they are today).  Little did I know how much smarter we could have been back then.  If we’d done a better job of spending less than we made and investing the difference we would have hit the million dollar milestone long before now.  All in all, I’d have to say we don’t have any regrets.  We’ve had a lot of fun over the years and have done much better over the last decade, striking a balance between living for today and saving for tomorrow.

When we initially started saving it felt like more of a dreaded task than it does today.  Early on, the balances were very low and didn’t seem to get larger very quickly.  Back then we weren’t even bothering to track the balances to see how they changed over time.  Every time I checked the my retirement account, I’d see a tiny increase in the balance.  We weren’t saving nearly as much back then which made it even harder to see the account balance climb.  As the years went on, it got more and more exciting.  The first big milestone that I still remember was when our net worth hit $50,000.  That was more money than I’d ever had in my life and it almost didn’t seem real.  When we hit the $100,000 milestone it really started to sink in that it was possible to amass real wealth.  At that point, it also started to become much more obvious how the decisions we were making could drastically impact our overall net worth.  Should we buy a new car?  Not if we wanted to keep seeing the number go up.  The depreciation hit you take on a new car would instantly show up in our tracking spreadsheet.  When we’d buy a new TV, our savings account number went down in real time.  We have never tracked consumer assets like TV’s, computers etc in our net worth so it sometimes felt like just throwing money away when we’d make those purchases because we’d see our account balances decrease.  While it didn’t cause us to just stop buying things altogether, it did make us pause to decide if it was something we really needed or wanted.

So, for us, tracking our net worth has always been about helping drive us to make better financial decisions.  Someone once told me that only things that are measured can be improved.  If you don’t know how much money you have, or how much debt you have, you certainly won’t know whether you are on a path to financial independence.

What Is Our Net Worth?

We might as well kick things off with the NUMBER!  As of today, our net worth is:


I didn’t write down the date that we finally passed the $1M threshold but I believe it was about March of this year.  Needless to say, we were very excited to hit this milestone.  I told my wife that we’d go out to dinner to celebrate.  We finally did that last weekend, although it was a combined celebration of date night/$1M threshold.

I realize that the number, without some background is really kind of boring.  So, here are some basics that we’ll go in to in more depth in other posts:


43 year old male

42 year old female

One 12 year old child

Both have college degrees

Both employed with combined income of $174,000

We have been saving since about 2001, although not aggressively back then

As of a couple years ago, we both save the maximum allowed in our 401k’s

We contribute to 1 ROTH IRA (Yes, we should be doing two before we earn over the limit)

We save $400 a month in a 529 plan for our child (Currently $46K)

We finally have a std brokerage account for after tax funds

We have 2 homes (1 paid off, 1 with a $226K mortgage)

Our only debt is the one mortgage.  We have zero consumer debt, no car loans etc

So that’s a bit of background to go with the number.  I’ll post more details about the various aspects of our assets in the future.  I will also post monthly updates about our net worth in the future.  If you have any questions about what we are doing, make sure and leave a comment.

Welcome to Naked Net Worth!

Welcome to Naked Net worth.  You won’t find any nudity here but you will see all the naked numbers around our net worth and hopefully you’ll participate in the discussions about money and how to keep yourself pointed in the right direction on your path to financial independence.

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