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Treasure Map: The Path to our Net Worth

Pirates, scalawags, scurvy*, walking the plank…maybe not.  Mainly chaaarrrts o’ net worth.    Kind of a treasure map.  Get ready!

I’ve shared our net worth every quarter (or so) since starting this blog. But what about the days before my media/blogging empire had blossomed?  Before I had tens of avid readers, and hundreds of page views some days?

How/when did the asset growth happen? How did we get here?

Our Path

Remember, this was only our financial walk.  We had non-financial ups & downs.  Excitement, hurt, sunshine, and rain.  We enjoyed beginnings and endured endings.  And in between we’ve carved out our little life.  That’s the real meat of things.  These are just the numbers.

But hopefully “just the numbers” are helpful to someone who reads them.  As I started saving, I tried to understand the tips & tricks of those who’d come ahead of me.  I read financial blogs & articles voraciously.  What had others done to successfully put together a nest egg?

So I’ve laid our number-story out for you to see.   You can see the risk, luck, loss, and gains that led us to today.  And with this info, maybe have a better shot at creating your numbers to your liking.

In summarizing our path, I realized that even without purposeful direction the whole time, a consistent theme had emerged: creating assets, and letting them grow.  First with the excitement of max leverage.  Only later deleveraged into equity.

Secondly, by having stayed put at a job for a while, I profited directly with our company’s success in the real estate upswing coming out of the financial crisis.  This has come primarily as illiquid/paper net worth, so we didn’t naturally adjust our lifestyle.

Really, only in the last few years have we become focused on financial independence.  Because of this, our recent lifestyle has for the most part stayed in check (except as admitted), as substantial cash-outs from real estate have been funneled to build other investment assets toward our long term goals.

I have a good map of numbers starting in about 2010.  Before that, details are a bit sketchy.   But I have creatively reconstructed the 7 years before that using a few bank records and asset purchase/sales.  It shouldn’t be too far off from reality.


Thirteen Years of Personal Finances in One Chart:

Phases of Asset Building


The first year of being a grown-up (2003) is easy to pin down…close to, but on the wrong side of zero. So let’s start there – age 22, and in my first job. Just after college…cue the Boss’ Glory Days.

I left school in May 2003 without debt and with a medium-fancy 4 yr old truck – thanks to my parents.  Quite a leg up; I’m very appreciative to them.

I also received a signing bonus upon accepting my first job, score!  But my spending calculations were a large bit off.  So by the time I actually started, I had burned through that stash and was into the hole a few thousand dollars.  I don’t count cars towards net worth.  So begins my tally: Negative 2K.

End of 2003: ($2,000)

First Job through 2005: First Real Assets

I had a relatively well-paying job ($64k/yr), but wasn’t really focused on saving.  I put some money into my 401k/Roth and saved some for a rainy day, but didn’t do anything impressive for those first 2 years.  Enjoyed traveling, chasing girls,** & living in a big city!

I transitioned to an analyst role in commercial real estate in 2005.

Moved back to my hometown and bought a house ($200k).  I got half of the down-payment for that by raiding my IRA (I can’t remember but maybe even my ROTH, damnit).  Other half came from another starting bonus.

While finance theory would say this was a bad move, there was a silver lining.  It started me with a mindset of building assets.  Don’t underestimate mental/behavioral impacts on your finances.

End of 2005: $35,000

Second Job through 2007: Leveraged Assets

Early in your career is a tough time to save.  Salary tends to be low, and your retirement-type numbers are so far away that they tend to not even be goals.  Too exhausting to think about how far off you are.

So rather than basic saving, I thought more about using debt & effort to build some value for myself.  Not all the way off, but my method was heavily debt-reliant.  The markets cooperated, for a while at least.

Importantly, my eyes were opened to asset creation & growth. I learned that levered assets (could) grow in value – leaving more equity – and then beget other/larger assets.

And leverage was easy to get; you didn’t need much in the way of initial equity. Perfect for me: I had hardly any!

My equity in the house (using lots of sweat equity + a rising home market + high leverage) shot up during the next 2-3 years from $20k to $50k-60k.

I did start saving some in my 401k/ROTH accounts.  Not quite maxing out, but respectable.

End of 2007: $110,000 (3.1x Assets vs 2005)

Marriage & Recession (…not that they are linked) through 2009

The next couple of years saw a lot of action on every front for me.

I bought two more houses – so owned 2 rentals & a primary residence now (5 total mortgages).  Buying more houses mainly took debt (as mentioned above), paired with only the slightest bit of savings. Only a recession would be able to teach me the perils of high leverage.  I hoped we wouldn’t hit one of those for a while.

I became an equity partner in some highly leveraged commercial real estate deals (good timing, you should be thinking sarcastically).

I got married.  All the joy & fun, but also requiring a financial merger.  I brought the baggage apparently: 5 mortgages on 3 houses.

And of course, the economy proceeded to fall apart – led by real estate.  I received a new vantage point on the uglier attributes of debt.  The economy brought a pretty stressful time both at work and with the personal houses.  But in both cases, we were able to see it through.  No foreclosures, no evictions, no job loss or pay cut.

My tenants proved to be pretty solid.  I saved/invested the additional cash required to hold onto the houses & take advantage of lower interest rates.  Looking back, this was a forced savings mechanism for me – pushing me to invest heavily in assets at the trough of the financial crisis.  Would have been tricky though if I’d lost my job.

My individual wealth lowered from 2008 to 2009, but my wife had some savings when we got married.  So net worth technically grows even those years.  I swear finances had nothing to do with getting married though. 🙂  Hey wait, really, I promise.  I didn’t even track net worth then.

End of 2009: $175,000 (1.6x Assets vs 2007)

Post Recession through 2011: Deleveraging, Supercharged Saving as DINKs

The biggest change was that I became less enamored with leverage.  At least at home.  I decided if we were going to use debt at work, then I didn’t need to double down on the homefront.

Both my wife and I also started making more at work, so had more free cash.  Instead of spending more, though, we had several big piles of debt (even if paired with assets) to target.

We directed savings to principal on the house debt for the next few yrs.  The stock market also bounced back, along with real estate values.  The forced saving during the recession paid off.  So by the end of the next two years, we had almost tripled our net worth.  Over $200k of that was embedded in our three houses.

End of 2011: $450,000 (2.6x Assets vs 2009)

Upswing at work through 2014: Benefitting from Staying Put

By 2014, I’d been an employee at one firm for almost a decade.  It wasn’t all roses for me.  Several times I became unsettled or felt undervalued.  (It’s hard for a company to value me as much as I value myself!…familiar feeling anyone?) Several times, I had other offers or thought about leaving.

But I stuck it out.  Sometimes inertia.  Sometimes good management by my boss.  And sometimes, I actually appreciated what I had in a growing company with solid values/culture.

I did very well financially by sticking it out.

The three years 2012-2014  were marked by the meat of an upswing in real estate, and specifically the niche we had carved out for our company.  In staying put, my deferred comp (equity ownership) had a chance to grow in the background.  Since I got a slice of each pie we baked, I received several large equity accounts in projects.

I’ve always looked at these paper accounts somewhat skeptically.  I first earned “equity” in 2008.  With the the amount of leverage and scale of the projects, I didn’t feel confident that I’d ever see a dime.  So I didn’t count anything to my net worth until 2012.

During 2012-2014, we refinanced/stabilized those older projects.  Some that had barely hung on through the downturn now had strong fundamentals and favorable debt terms.

I began counting my equity accounts at the “book value” of the initial capital accounts.  My assumption has been that in a reasonable but downside case we can probably sell for a breakeven on total “going-in” costs.  I only revalue the equity upon a sale/refinance (because that de-risks and creates a more stable value and cash flow going forward).
We also got several projects started with medium leverage. Felt more stable, even if still illiquid.

The impact to our net worth was huge – it quadrupled in 3 years.  Half of the total being in these commercial real estate deals.

We had also continued to pay down our home mortgage – with loan-to-value (LTV) below 40% by 2014.  Rentals were at 66% LTV.

End of 2014: $1,944,000 (4.3x Assets vs 2011)

Continued Strength through 2016: The Song Remains the Same

I have assumed the real estate cycle was ending several times in the past 5 years, but it just keeps on keeping on.

My commercial real estate portfolio value has almost doubled in value in the past two years, still conservatively valued (I hope).  Mostly this is due to our company creating a new construction deals, and a couple projects recapitalized/stabilized.

At home, we began redirecting most excess cash to stocks/bonds – more than doubling our public market investments in 2 years.  This is mostly located in passive vanguard mutual funds along the lines of my investment allocation strategy.

This has shifted us somewhat towards diversification.  For the foreseeable future, we’ll be way heavy in real estate.  But we hope to create some stability with a sizable chunk of our net worth in public equity/debt.  Along these lines, we sold a rental when the opportunity presented itself.

In addition, we’ve doubled the money invested in our primary residence in two ways.  First, we finished paying off the mortgage in 2015.  Second we traded up our house a bit.  Basically 10-20% more expensive.  We ended in a newer (60 yrs vs 110 yrs) house with a yard and better school district.  Happy with things, but more cash tied up.

End of 2016: $3,526,000 (1.8x Assets vs 2014)

Pretty crazy growth rates looking back – this post is the first time I’ve calculated it.  Our net worth about doubled every two years.  That’s wild.

I can’t believe where we are sitting today.  I started tracking numbers & blogging in early 2013, when we had a net worth 20% of today’s.  I had no expectation of this type of growth.  Here’s to setting yourself up with the opportunity for things to go right.  I appreciate all the other bloggers and books that helped me with this.

Actually our numbers have increased to heights that at times I’ve been embarrassed to post them.  But I ultimately decided that since I’m anonymous that maybe it’s less bad-form to share.  And like I said at the beginning – hopefully this sharing will help someone else.

I’m close to hitting the personal bounds of utility for net worth.  I could buy vacation houses, boats, planes – sure.  Would that make me happier?  Not really.  Ok, maybe the boat would.

Our goal is $4M in investment assets (meaning: excluding our primary residence, currently non-existent vacation homes, and cars).  Could get sidetracked by a recession.  But if not, we should be there in the next year or two.

Then a new chapter.  I’ve been giving this a good bit of thought recently.  I don’t have it figured out – of course not, bc it’s the future.  At least though: more meat of life and less numbers.


*I’m not pirate-obsessed (just have little kids), but scurvy is by far my favorite seafaring/pirate term.  Always has been.  Love how it sounds.

**limited success, I have to admit

10 thoughts on “Treasure Map: The Path to our Net Worth

  1. Bubba,

    First, well done!

    That net worth trend is very impressive and is representative of an exponential curve. It would be interesting to see what % of the ending NW in 2016 @ $3.5M was from contributions and the other from gains/compounding.

    I can really relate with your progressive story and have thus far experienced a very similar path. However, based on your time it sounds like we are about 5-6 years apart in age.

    I graduated college in December of 2008. I was pretty allured to the power of leverage as well. It started in 2007, while still in college, when I had $11,000 in a brokerage account (I had started it with $8,000 in student loan money). In 2007, it was pretty easy to feel brilliant, and after turning my $8,000 into $11,000 in less than 6-months, I thought it would be a great idea to magnify my brilliance with margin. So, I levered up and invested my $11,000 and another $11,000 of borrowed money.

    During that same time, real estate was hot, and I somehow went in on a deal to buy a house with 100% financing with an older friend of my bothers. I will probably go down as the worst market timer of all-time, but did it feel cool to tell my classmates how awesome it was to be able to make these types of investments while still in college.

    You probably can guess what happened next. My ignorance and naivety got the best of me, and taught me a very valuable lesson…leverage needs to be used prudently and it cuts both ways.

    My genius was able to turn $22,000 into $4,000. And the house I bought for $440,000 was the top of the market. We were able to get renters in the place for about $2,500/month, the only problem is that the mortgage with taxes and HOA was running about $3,500/month, so the numbers didn’t work. I eventually let the house go to foreclosure in November of 2009, where it later sold for $285,000.

    Oh, and around the same time, my wife and I (girlfriend at the time) assumed the mortgage on a condo they bought for $258,000, which at the time (May 2009) was only worth about $90,000. So I estimate that my net worth at the end of 2009 was about negative $300,000. Needless to say I learned a lot in a short period of time.

    I didn’t officially start keeping detailed tabs on net worth until about 2012. But it looks like this so far:

    2009 – ($300,000)
    2012 – $42,000
    2013 – $103,012
    2014 – $181,364
    2015 – $317,727
    2016 – $527,668

    Anyways, thanks for sharing your journey, it is an inspiring one that I hope to follow closely in my own journey.



    1. Dom, that’s quite a run you had. Crazy how aggressive you were in college – stocks on margin and levered real estate. I love it! It can be painful while you think you’re invincible. Definitely been there…and still go there from time to time. Less so each year, I guess. Getting a little older and more experienced.

      Thanks very much for sharing. You’ve certainly turned things around in the past 5 years or so. What a tremendous trajectory.

      Keep up the savings, and the blog – it’s very helpful to many. And don’t wear yourself out!

    1. I wouldn’t recommend max leverage, but some (responsible) leverage does tend to help things along. Debt creates stress, and can really go the wrong way quickly. So be careful. Thanks for reading!

  2. I had to double back at the numbers – woah! Nice job! My keyboard is a bit wet from drool. I don’t usually like the word leverage because my partner and I are both so risk averse but this is doing it r-i-g-h-t!

    1. Thanks for your nice comment. Like you, I’m actually very debt averse now. I barely made it through using as much debt as I had in 2009 – have been ridding myself of it since! (I do like a little risk though)

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