We started with nothing when we got our first jobs – spouse and me each had a used car worth maybe $2-3k each. Spouse had $10k in credit card debt. So, basically nothing – maybe a little negative even.
Fast forward 10 years. We had negative 50k net worth because we had bought a house at the peak of the bubble with 5% down, and had negative equity which offset our meager savings.
2000 (Year 1): $-4k NW
2010 (Year 10): $-50k NW
At this point, I remember thinking that we are financially ruined – this ill-timed house purchase would sink us. But we needed to live somewhere, so continued to pay our interest-only mortgage.
Then something crazy happened. The economy roared back.
So, fast forward 15 more years from 2010 to 2025.
Our home equity is $2M.
Our savings portfolio has grown to $3.75M
2025 (Year 25): $5.75M NW
And the crazy thing is that the past 15 years have been marked by career stagnation for me. Same company, no promotions. Just lateral movement. I am a bit of a career failure-to-launch case. Salary only up by 60% since 2010. Neither of us are given stock options or RSUs by our employers. Imagine how much more the people fortunate enough to get those have stacked …
So, compounding works to build wealth. But you gotta persist and give it time…
For those struggling to get to FI, keep investing and it gets easier. Will take time, but compounding is real. I present my own case as an example.
byu/Ok_Rent_2937 infinancialindependence
Posted by Ok_Rent_2937
6 Comments
It goes from 0-100 very fast. The first 100k is the hardest is definitely true.
Can you explain how you got to $3.75M savings in 15 years?
Getting a hold of some assets and then waiting for the Fed to inflate those assets by devaluing the currency has been the winning strategy for close to 60 years now.
Unfortunately the longer that stays true, the harder it is for people to do the first part because the cost of living gets disproportionately higher. But it’s hard to envision what the next chapter looks like
If you work on these three things to happen, you’ll see the compounding:
* Push to get your wages to go up
* Push to have a higher savings rate
* Don’t use the market to gamble
We focused on emergency savings, then getting a home, then investing. It took us 6 years to save our first $250k in the market. It took 5 years to get from 250k to $1 million, so 12 years for the first million invested. We are on track to get the next $1 million in about 2 years.
How did you go from interest only mortgage on an underwater house to 2 million in home equity? Bought a house in prime California that tripled or quadruped in value?
Whats your household income?