January 2017 Net Worth

We’re already a month into this journey we’re calling Debt Ascent, and it’s time for our second installment of updating our monthly net worth. In a welcome surprise, we were fortunately able to improve our NW by a shade over $16k in January, bringing up our total from just over -$147.5k last month to -$131.5k. While we only paid down our debt principle by $2.2k in January, market gains and contributions to both our investment accounts and savings resulted in the rest of the gains throughout the month.

Part of the reason for the large gains in our investment accounts is that in spite of being in debt, my wife and I prioritize fully funding our tax deferred retirement accounts above debt reduction. We discuss the reasons for that here, but one of them is that it  our primary goal is to become financially independent. And while this site is called Debt Ascent, our focus will be on taking the steps we think are best to improve our net worth, even if that means prioritizing things above debt reduction.

For the next few months, we plan to continue funding our pre-tax retirement accounts in addition to building up our savings accounts. At about the midpoint of the year we expect to get back to focusing on debt reduction using the strategy we previously discussed.

As we talked about in our December update, our goal for 2017 is to end the year with a positive net worth. To achieve this, we needed to make improvements by approximately $12.3k each month. This is going to be a tall order, but we’re off to as good of a start to the year as we could have hoped for.

 

 

6 thoughts on “January 2017 Net Worth

  1. Dear Debt Ascenters,

    I look forward to following your journey toward financial independence. I’m a dentist and my wife works for my office. Our goal is to achieve financial stability (as I define it) this year and then become financially independent by the time I’m 50. We work really hard and spend significantly less than our net income. I will enjoy reading about what sacrifices you will choose to make to reach financial independence by age 40. Will your wife choose to purchase her own practice? What (relative) luxuries will you allow yourselves? Will you feel pressure to inflate your standard of living? Keep up the good work!

  2. Hi Jon. Thanks for stopping by and taking the time to write us a note. Congratulations to you and your wife for taking the necessary steps to be able to earn financially independence by 50!

    Thanks also for the kind words. We’re glad to hear that there are some folks out there that are interested in our developing story. We will dive deeper at some point into things we prioritize over others that could be considered as sacrifices though all things considered we feel pretty fortunate for all that we have.

    We still haven’t decided if/when is the right time to buy a practice. We decided against it right away, but are considering the possibility more and more as our financial situation improves and she gains more experience in the clinical and business side of the industry. As far as lifestyle creep goes, we’re doing our best to avoid it as the temptation is always there!

    What about you? If you don’t mind me asking, I’m curious how you define financial stability vs. financial independence? We’d love to hear how you and your wife are making it happen.

  3. DAs,

    I define financial independence as the point in our lives when we no longer have a need to work. At this point, we would no longer have a need to actively make money. FI wouldn’t necessarily directly correspond with retirement. We could choose to continue to work and/or volunteer either in the dental field or in another field, but we wouldn’t feel the pressure to need to earn another dollar.

    I have a (probably) unique definition of financial stability. Debt of any kind has always bothered me. However, like many, I chose to take on considerable debt (all “good debt”) to help me to achieve my financial goals. Although the debt always felt like an enormous weight, if I had it to do over again I would have done it the same way. It’s important to remember that I am still in the middle of my FI journey (and like you will make mistakes) versus Dr. Doug Carlsen (who commented on your first two posts). If you are unfamiliar with his story, he retired from dentistry at age 53. He now advises others on how to achieve FI.

    My wife and I no longer have debt of any kind. We plan to never have debt again. We paid off our practice loan in June 2014. We also purchased the building where I practice. We paid off that mortgage in April 2015. However, we are still currently renting a house. Home ownership is important to us, but we chose not to take on more debt. So, at that point we began saving to buy a house. We should be able to buy our first house this year. We also still drive the same cars that we drove when we met over ten years ago. There are several legitimate criticisms of our decision. First, mortgage interest rates are low. Second, interest is tax deductible. Third, we have chosen to delay aggressive saving/investing for retirement. Up until this point, we are only maxing backdoor Roth IRAs and maxing our HSA account (and using this as a stealth IRA). We have been missing out on not only tax-deferred retirement investing but also in all of the potential compound interest (the “eighth wonder or the world”) during the current eight year bull market. We plan to begin to aggressively save for retirement (401(k) with cash balance plan and taxable investing?) in 2018.

    So, for us financial stability is the point where we no longer have any big purchases to make. We will be debt free and saving for retirement aggressively. Also, our personal overhead (annual spending) should be as low as we can comfortably make it. I welcome any constructive criticism.

    Have a great day,

    Jon

    1. Great stuff, Jon. Thank you! Our definition of FI matches yours in that it doesn’t necessarily equate to retirement, but rather as the point where we were confident we no longer needed to earn income again to sustain of level of spending indefinitely.

      I like what you’re defining as financial stability. The point where all the one-time spending that is needed to reach your financial goals are paid off and out of the way and your annual spending is closest to what you’ll expect once retired. While we never defined it that way, we have tried to project our future expenditures based on a similar idea. Due to our loan payments and other expenses related to having careers, our spending is much higher now than what we expect to have in retirement.

      We too have seen Doug Carlsen as a great example of what can be achieved at a relatively young age coming from the dental profession. We’ve read his articles over the past few years, and I’m sure he’s happy that he’s positively influenced others.

      Congratulations on your achievements of being debt free and owning both a practice and the building it sits in. And to be able to pay cash for a home such a short time later is a wonderful accomplishment. We’re still renters ourselves, and the decision to buy a home and/or a practice is the reason for the influx to our savings.

      Your plan for financial independence (and financial stability) is obviously well thought out and more importantly, well executed. We plan to post shortly on our debt vs. investment strategy and quantifying the reasons why we’re choosing the path we are, and you’ve touched on some of them here. While our strategies appear to differ a bit, it seems we are in full agreement though on fully funding our HSA to use as the ultimate retirement account as The Mad Fientist has described it.

      Thanks again for taking the time to discuss your path to FI with us. It’s quite inspiring.

      -DA

  4. Wow, $16k is a big jump in NW. Way to go.

    Looking forward to following your journey. And good luck!

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