5-Year Progress Check

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

Just for fun, I decided to compare my budget today; to the budget I had in place 5-years ago.  This exercise isn’t something that I do on a regular basis.  It was prompted by a discussion I had with a coworker.  She is in the process of buying a house and that got me to thinking back on saving and buying my first house.  As I have said before, I have made decent progress over the past several years in managing my finances better.  How much better you might ask?  Let’s take a look.

Income

Five years ago, I had been with my current company for about 5 months.  My salary at the time was $79,000 a year.  Having a dependable income was precisely why I had left my previous job 5 months earlier.  The old job was commission based and I wasn’t a very good salesman.  Today, my annual salary is $95,000 a year and this year I received a bonus of $20,000.  So, I have managed to increase my income quite a bit over the last 5 years.  I wish I could say that this was deliberate on my part, but I can’t.  All I’ve done is simply work hard and changed positions internally when necessary.  I will say that I was surprised that my net take-home pay has not changed as dramatically in those 5 years.  Back in 2009 my monthly take-home was $4,776.  That is after taxes and benefits.  Today, my take-home is $5,267.  That is a difference of only $491 a month.  Where is the rest of it you might ask?  The rest of it is being saved.  Back in 2009 I was still trying to dig out of the hole that I had placed myself in, so I was not contributing much, if anything, to my 401k.  Today, I am contributing 7%; my employer is contributing 8%.  I am also maxing out my HSA account at $6,550.  That means I am saving over $12,000 a year.  That’s how you dig out of the hole.

Savings

No surprise, I had very little in the way of savings 5 years ago.  The best I could find for my bank savings and brokerage account were the year-end balances.  I had $3,300 in cash savings and $200 in the brokerage account.  Today, I have just over $26,000 in the bank and about $5,000 in the brokerage account.  The 401k balance is just as dramatic.  I was able to find the balance from April 2009, it was $407.  I had contributed for one month and then had stopped in order to eliminate my debt.  Today, my balance is just over $41,000.  I have become much more disciplined in my contributions and trying to increase my contribution whenever possible.

Net Worth

As I said, I was still digging out of a hole 5 years ago.  My net worth at the time was about -$18,000 or so.  I had credit card debt payments at the time of $400 a month and student loan payments of $140 a month, along with a car payment and mortgage.  Today, I just have the car payment and mortgage.  Both the car and mortgage have such low interest rates, that I have no desire to pay them early.  My net worth today is over $123,000.

Progress

I still can’t believe the progress that I have been able to make in just 5 years.  Certainly, the increased salary has made life a lot easier, but discipline was also needed and a change in mindset.  My wife and I had to change our thinking on wants versus needs.  We had spent too much on wants in the past.  We were tired of playing catch up.  By taking advantage of the increasing salary and saving more, we have built up a larger safety net.  The unexpected car repair or tax bill, no longer puts us back in the hole.  We plan for major purchases and save the money ahead of time.  This has allowed us to make the progress over the last 5 years.  I’m curious to see what kind of progress I can make in the next 5 years.

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9 Comments
  1. Sometimes what we all need is to sit down, look at all our expenses and right then and there decide which we should prioritise and which we can live without. I agree that salary is a big factor in your financial state and that lifestyle and discipline play crucial roles too.
    Mike Goodman recently posted..Are end of year financial sales worth spending your money on?My Profile

    • I agree Mike. Really deciding between needs and wants is what helped me out. I do spend money on my wants, but it’s a set amount and only after all the other priorities are addressed.

  2. I only started about a year ago, but I have made so much progress as well. I’m just going to keep at it and I’ll see where I stand in 5-years.
    Aldo R @ Million Dollar Ninja recently posted..Cool Gifts For DadMy Profile

    • Good for you Aldo. When I was first digging out, I wasn’t sure I was ever going to see daylight. Slow and steady has been winning the race for me. Now it’s more fun to think of what I can do with my finances, meaning, do I save in savings account or brokerage or both.

  3. Great exercise for your finances. The progress you made is very commendable. Does the HSA rollover into another account or is this lumped into the 401K? Just asking cause you didn’t state the balance on that account. I know some plans allow you to roll it over if unused for some time. Good Luck.

    • Thanks El. I knew it was bad before, but I had forgotten just how bad the numbers looked.

      With the HSA, that will be a separate account always. The funds that are in it don’t have to be used up by year-end, but they will have to stay in the same account. I have the ability to invest in just about anything within the account, so it’s not too bad. As far as the current balance, there isn’t much there since we’ve had a decent amount of medical expenses thus far this year, probably between $2,500 and $3,000. They should begin tapering off now that the deductible on the medical plan has been satisfied. I’m hoping by year-end to have about $2,000 or $3,000 left in the account. Fingers crossed.

  4. Checking to see where you are at and where you have been is a great exercise. I check my progress over 2-3 month spans, but it would probably be fun to see my net worth a year ago and especially 5 years ago.
    Even Steven recently posted..Why my Father is AmazingMy Profile

    • Over the 2-2 month span I do see small progress, loan amounts are smaller, savings accounts are a little higher. I was very surprised by the 5-year progress. I record my annual net worth, so that I can compare it to the previous year. It’s my financial report card. I’m striving for straight A’s.

  5. I only began about a season ago, but I have created so much improvement as well. I’m just going to keep at it and I’ll see where I take a position in 7-years.

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