Becoming Hundred Thousandaires

Kyle and I officially have a net worth of over $100,000!  I’m so excited to reach this milestone, but how it happened precisely has taken the wind out of my sails a little bit.  But it probably shouldn’t have.  See below.  ;)

 

Slow and Steady

 

One afternoon last week, I had some time to kill waiting in a parking lot, so I became absorbed in our Mint account (naturally).  This was the net worth balance I saw (doesn’t include property):

 

net worth May2014

 

I have been keeping an eye on our steady approach of the $100,000 net worth mark for around six months now.  I estimated that we would overtake it during the summer sometime.  I thought it would be impressive to be able to say that we got our net worth to $100k while in grad school so it was kind of turning to a race between our net worth and Kyle’s defense/my defense.

 

When I was doing the math on May 24, we were in our between-paychecks period – Kyle had been paid for May but I hadn’t yet.  Here was my thought process:

  • My paycheck of a bit over $2,000 would bump us to about $100,600, but it usually doesn’t get deposited until around the 4th of the following month.
  • Our rent ($870) comes out on the last day of the month.  So it looked like we wouldn’t quite get to $100k at the end of May/beginning of June because of the timing of the transfers – only about $99,700 at most.

 

However, I did expect that our June paychecks (Kyle’s last one as a grad student!) would put us solidly into the $100k range for the whole month of June and following, barring some major fall in the stock market or outsized spending on our part.

 

I was very pleased to be able to project that we would become hundred thousandaires before Kyle officially exited grad school.  I think that’s quite an accomplishment!  But I also was keeping in mind that if we do all the planned spending we would like to (big vacation, camera, car repairs) in the fall and I am un/underemployed for a while, we might dip back below $100k for a bit.  So things would still be a bit shaky on whether we had truly passed that milestone for some time.

 

Thrust Over the Finish Line

 

Later that very same day, Kyle’s parents gave him a sizeable monetary gift that was a combination of inheritance from a relative’s estate and graduation gift.  That gift pushed our net worth well over $100k.

 

We have yet to figure out what exactly to do with the money, but it will likely become the start of a down payment for a house.  I checked with Kyle’s parents about what their expectations might be for the money, if any, and it really seems like there are no strings.  Per Ric Edelman’s advice, we will probably keep they money in savings until we know the timeline on the house purchase, and if it’s quite a ways off we’ll invest the money.

 

So… that’s how that happened!  I’m just ever so slightly disappointed we didn’t get ourselves over the $100k mark, but not enough to not be ecstatic about the gift.

 

How We Owe It All to Our Parents, Anyway

 

Really, though, I shouldn’t be disappointed in how this happened at all.  Much of our net worth at our young age (28) is due to our parents, anyway.  It’s a coincidence that the gift put us over that arbitrary $100k net worth line, but it helped draw my attention to all the ways our parents have transferred wealth to us after we turned 18.

 

1) Paying for college: As I’ve written about before, our parents paid for the bulk of our very expensive college costs; Kyle graduated from college without debt and I had only $16,000 in student loans.  That gave us a huge advantage in starting out our working lives, to have this wonderful lucrative education without having to pay for it after the fact.

 

2) Letting us boomerang: My parents let me live with them for about six months after I graduated from college, paying only $500 per month for “room and board,” which was a nice discount from what I paid after I moved out on my own.  Kyle’s parents also paid for his room and board during two summers prior to grad school so he could pocket his entire paycheck.

 

3) Wedding: Our parents paid for about two thirds of our total wedding costs.

 

4) Gifts: We have received monetary gifts from our parents from time to time. Kyle’s parents gave him a very nice gift upon his graduation from college to help him get set up at grad school.  My parents passed on to me part of an inheritance in my first year of grad school, which I put toward our wedding the following year.  Our parents have also given us gifts about once a year for our wedding anniversary/birthdays, generally on the order of a few hundred dollars.

 

So in all these ways, our parents have given us money or enabled us to not spend as much money.  The big one here is paying for (most of) college so we weren’t saddled with a ton of student loan debt coming out.  No matter how much saving we’ve done in the last seven years, it’s impossible for us to take full credit for our net worth because it’s too hard to separate all that our parents have given us from our own efforts.  Even beyond the monetary gifts, which we could probably track down and itemize, we can’t forget about the base fact that they raised us and shaped our characters.

 

But It’s Our Accomplishment, Too

 

Still, most of the money we have at Ally and Vanguard is due to our consistent savings rate from our grad school paychecks.  We have fully embraced “pay yourself first.”  I started out saving 10% of my pay a few months after I finished college, and slowly increased that rate over the years.  Kyle started saving in 2009 and maxed out his Roth IRA every year from that point.  We now save about 17% of our gross income into our Roth IRAs, and in the last two years we maxed both out.  Our net worth has been even further increased by the stock market run-up we’ve seen since 2009, compounding our retirement savings.  We also invested our student loan payoff money and that alone has added $3,500 to our net worth over the last three years.  So we’re doing well with what we’ve earned and what’s been given to us.  :)  In addition, we save every month into our targeted savings accounts and have accumulated a lot of money there because we overestimated our spending needs.

 

Yay, we’re hundred thousandaires!  And I’m grateful to know that due to this recent gift we won’t retreat back into the ten thousandaire realm come our high-spending/low-earning fall.  Thanks, parents!  I trust you approve of our use of the gifts you’ve given us.

 

What fraction of your net worth do you think is due to you and your bootstraps and what is due to your family or other sources?  What exactly happened to push you past your most recent net worth milestone or financial goal?

 

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28 Responses to "Becoming Hundred Thousandaires"

  1. What an interesting post! It sounds like you’re off to a good start, and it’s wonderful that you credited your parents for their help.

    Can I offer some unsolicited advice? Be careful where you buy your house. Go to a site like city-data.com and find out your prospective town’s average household income and average house price. If house prices are more than 3X income, the houses are probably overvalued and could plummet before long.

    One more thing: try to prepay a little on your mortgage each month. Doing so reaped huge benefits for us. We were debt free by age 42. Being debt-free has helped us survive seven years of chronic unemployment. Plus it’s an incredible feeling to be debt-free!

    Good luck to you, dear :)
    Claire Middleton recently posted..Why My Profile Photo Looks Like Carlotta Vance

    1. Emily says:

      It sounds like you’re not so much cautioning where to buy a house but when. There are only a couple markets in the US that are truly rental markets all the time for most people, right? I’m wary of trying to time the housing market like I am of trying to time the stock market, so I’m expecting that we will only buy where we’re planning to stay for a reasonable length of time.

      Congrats on becoming debt free! Too bad about the unemployment, but I’m glad you were able to weather it because of your previous positive steps.

      1. Well, no, I don’t advocate timing the market. We bought our first house at a time when no one else was buying (13 1/2 % interest!), parents thought we were taking a risk. Turned out to be a great investment–who knew? We just wanted a place of our own.

        I just think it’s risky to buy in an area where people tend to be overextended; it doesn’t bode well for the local economy, especially when unemployment goes up.

        Keep up the good work :)
        Claire Middleton recently posted..Why My Profile Photo Looks Like Carlotta Vance

  2. Mrs. PoP says:

    Congrats on another milestone (first Kyle’s defense, then $100K, and soon your defense, right?)!

    It’d be very tough to say what portion of our net worth is due to familial contributions, but I’m inclined to say not too much in terms of direct supplements – though Mr PoP was fully supported through college, while my family support ended after high school. Though I guess we did get modest cash gifts from our families when we eloped, and that money went into renovating the house we bought out of foreclosure. The biggest support was Mr PoP’s parents giving us a loan on fair terms to buy our duplex at a time when getting cash to close those kinds of purchases would have been very difficult (and expensive) from a traditional bank. We paid the loan back, with interest, so I don’t feel like they sacrificed much to give it to us… but there’s little doubt in my mind that we wouldn’t have bought that property without the loan.
    Mrs. PoP recently posted..PoP Income Statement – May 2014

    1. Emily says:

      Yes, it’s a big summer for us with both defense and a net worth milestone! I don’t have a date yet but it should be before the end of August if my committee cooperates.

      The loan from your parents is a bit like the college support – you can put a number on it ($0 if you like, for you), but the financial benefits of the opportunity are much larger. It makes the lines between families as far as finances go quite hazy.

  3. Lauren says:

    Congrats!

    I also wanted to thank you for prompting me to think about when we’ll reach $100,000 (estimating Sept or Oct this year). It’s a milestone that wasn’t on my radar at all, but will hopefully add a little motivation after a few months of some lack luster finances and lagging interest!

    1. Emily says:

      Hey, awesome! I’m glad you’ve gotten a jolt of motivation! I actually wouldn’t even have been looking at net worth if Mint didn’t track it or me, but I’m glad I caught this crossing.

  4. Leigh says:

    Congrats! Someone once told me that the first $100,000 is the hardest :)

    I received a pretty reasonable gift from my parents in the same month that I surpassed $100,000 in net worth on my own. I was quite worried that I wasn’t going to hit it on my own, but then I ended up surpassing $100,000 that month by more than the gift, which made me feel much better!

    In reality, based on the cost of my degree and the various gifts I’ve received over the years, about the first $100,000 of my net worth was from my parents and relatives anyways, so I felt much more of an achievement when I hit $200,000 in net worth and now it feels like it’s pretty much all my work and savings. I also try to remind myself that I wouldn’t have hit $100,000 in net worth as early as I did if I hadn’t had as good of a job or been as good at living below my means as I have been.

    Most of the pushes past my net worth milestones and other financial goals these days are from bonuses or savings.
    Leigh recently posted..May 2014 net worth update (+7.0%)

    1. Emily says:

      I don’t know if this will be the hardest $100k but I certainly hope it’s been the slowest!

      Thinking about how much debt we would have started out with if our parents hadn’t paid for college is really mind-boggling – $300k between the two of us easily. I’m so glad things didn’t go in that direction.

      I don’t know if we’ll be able to say the next $100k is fully our own like you did… I suppose it depends on whether we keep receiving gifts. We aren’t expecting any, but we also didn’t expect the ones we got. Good point about how your own actions got you there as well as the gifts – it doesn’t matter how much money someone gives you if you spend everything that comes in!

  5. Congratulations on your newfound hundredthousandaire status! I love that you acknowledge how much help your parents have given you, and also that you’re using the gifts responsibly!
    Retired By 40! recently posted..June Goals and Budget Update

    1. Emily says:

      Thanks! We are pretty structured with all money we receive, though gifts we treat gifts differently than normal income.

  6. Congrats on reaching six figures. Nicely done! That’s so awesome that you managed all that in grad school.

    My parents are pretty awesome as well and have helped out a lot along the way. It’s one of those things that I sometimes have to remind myself of, but I’m so grateful of all the things they’ve helped with – some obvious, some not so much.
    Alicia @ Financial Diffraction recently posted..Financial Update – May 2014.

    1. Emily says:

      I’m truly shocked that it happened, I guess because I don’t pay too much attention to net worth overall. I think I felt more accomplished last summer when we reached 1 year’s salary in Roth IRAs and this one is more surprising because I don’t have a good handle on what that means on the context of our money management. People talk so much about retirement funds and EF sizes but not net worth as much.

  7. Congrats! We came out of graduate school (me graduating, anyway– DH graduated after I had gotten a real job) with 50K in savings which we turned into down-payment for a house. It’s nice starting out in the black instead of in the red.

    My parents also helped by paying for my college and our (admittedly pretty cheap) wedding.
    nicoleandmaggie recently posted..June mortgage update and Big lumps vs. drips and drabs

    1. Emily says:

      That’s a serious amount of savings! Great job. We have a long way to go before our down payment fund is full, even if we end up converting some of our current cash-equivalent savings. I wish more grad students saw grad school as a time that they can succeed in financially as well as vocationally.

      1. According to my calculations, it’s worth $60,694.32 in today’s dollars, so not as good as you. But we did also pay off DH’s student loans, so it’s not a complete measure of how much we saved. Still, I think you guys did better than we did!
        nicoleandmaggie recently posted..June mortgage update and Big lumps vs. drips and drabs

  8. Congrats on becoming hundred thousandaires! It really is a awesome milestone…seriously. It seemed to take awhile for me to get there but once you’re there it seems to move much faster. I probably have to credit the stock market the last few years for helping me out. I like that you paid room and board to your parents. When I went back to law school part time in the evenings while working during the day, it made sense to live at home…but I still paid “room and board.” It was much cheaper than renting outside, but I still got into the habit of setting aside money for housing and it helped my parents out financially too.
    Andrew@LivingRichCheaply recently posted..What Are You Investing In?

  9. Elissa @ 20s Finances says:

    Your parents can really be your best friends in all of this. My parents are paying for the vast majority of my college funds as well – it’s a lifesaver and I will always be grateful for them. Congratulations, too!

  10. Congrats! I’m still a ways a way from becoming a hundred thousandaire. But like you, I feel like I have to credit everything I do have to my parents. They’re pretty incredible.
    Stefanie @ The Broke and Beautiful Life recently posted..Addicted to Travel: Maximizing Freedom From Obligations

    1. Emily says:

      The stable employment we’ve had since we graduated from college has really been clutch, even though it doesn’t pay much. Much easier to plan and invest.

  11. […] I wrote two articles on our personal finances – high spending to celebrate Kyle’s defense and our net worth topping $100,000 – in addition to last month’s blog stats post, our monthly spending review for May, and one […]

  12. […] @ Evolving Personal Finance writes Becoming Hundred Thousandaires – My husband’s and my net worth recently topped $100,000!!! But precisely how it […]

  13. […] @ Evolving Personal Finance writes Becoming Hundred Thousandaires – My husband’s and my net worth recently topped $100,000!!! But precisely how it […]

  14. […] our real numbers online or in real life (though Kyle thinks it’s getting too braggy now that we’ve gained some traction) and we don’t have jobs that demand our silence on our salaries, forcing us to share anonymously. […]

  15. Amanda says:

    I appreciate that you acknowledge the huge advantages you have been given by having parents willing to pay for your education and wedding expenses.

    1. Emily says:

      Definitely! Our parents helped us start out around zero instead of very in debt like so many other Millennials. :/

  16. […] happened last May, around the time Kyle defended. If you remember, at that time Kyle’s parents decided to pass on to us a portion of an inheritance they had recently received. After we received the gift, we debated whether or how much of it to give. We have a rule about […]

  17. […] If we annualized our income from the last few months, it would be around $45,000. Yet our net worth is over $100,000. […]

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