Ok so I’ve been spending too much time playing Xbox with my husband recently, because this is what came to mind when I hit my goal of a $25,000 net worth before age 25:
I made it happen! I turned 25 on Saturday and my net worth is currently sitting at $25,773. I can’t tell you how happy I am to finally breach the $25,000 mark, I feel like I’ve been hovering at this level for far too long. I might not be able to maintain this high net worth since I plan on spending a ton of cash on travelling over the next few months, but for right now, I’m going to do my happy dance:
How I Reached $25,000 in Net Worth Before Age 25
Getting to where I am today was not an easy road to travel. I’ve worked hard, I’ve deprived myself of many things that I’ve wanted over the years, and I’ve scrimped, saved and penny pinched. Here are a few things that got me to where I am today:
I Paid Off $38,000 in Debt
I graduated from school with $26,000 in student loans and a $12,000 car loan. Having that much debt was a huge downer for me, so I set out paying it off as quickly as possible. It took almost exactly two years and a lot of sacrifice, but I finally paid it all off and was able to call myself debt free. That debt would’ve been a huge suck on my resources if I hadn’t paid it off, and once it was gone, I was free to focus on building my net worth.
I Built Up a $10,000 Emergency Fund
After my debt was paid off, I barely skipped a beat before I started saving for my emergency fund. I’d maintained a small emergency fund of $2,500 throughout my debt repayment journey, but once my debt was gone, I wanted to accumulate a solid six months of living expenses in an emergency fund. It took about five months before I could declare my emergency fund full and I used all forms of found money including my tax return to accomplish this.
I Save 14% Of Our After Tax Income in my RRSP
My husband and I have combined finances, so we set aside 14% of our joint income for RRSP contributions. It was really important to me to get an early start on our retirement accounts, and now they sit at around $5,600. I’m really happy with this and it’s added a nice little chunk to my net worth, so I consider it money well saved.
I Save 40% Of Our Joint Income Overall
My husband and I both have the same views on saving, so it’s easy to aggressively save 40% of our joint income. While 14% of that goes to our RRSP, the rest goes towards goals we have for eventual planned spending like travel. While this money will eventually be spent, right now it’s sitting tight in a savings account, boosting my net worth. I imagine we’ll always have several thousand in savings that’s earmarked for things like travel, moving, extra school or what have you. The extra cash we pile into these accounts on a weekly basis helps our net worth continue to rise, even if we’re spending a little from those accounts at the same time.
What’s Next?
I’ve paid off my debt, maxed out my emergency fund, gotten a decent start on my retirement fund, and reached a net worth of $25,000 before age 25, what’s next?
As much as I’d like to set another aggressive savings goal, like $50,000 for a house down payment or something like that, I’ve got a few immediate, smaller savings goals that need to be met. If you haven’t been reading regularly, I’m moving to Halifax in January, and I’m planning on saving $3,200 for that move. Right now that account is at $1,254 so I’ve got a ways to go.
Right now, I’m just going to be happy that I’ve reached all of my goals for 2014, and I’ll worry about setting new goals in the new year.
I’m Going to Reward Myself
I’ve made a lot of progress on my finances in the last three years, and now I feel that it’s time to reward myself. One way I’m doing that is going to Paris in December, which I’m really excited for. I also got some birthday cash from family and friends, and instead of throwing that at a savings goal or debt like I have in years past, I decided to spend some of it (the rest will be going towards lowering my credit card debt).
What am I spending it on? Well you’ll just have to wait and see, but it’s something I’ve been wanting for years, so I’m really, really excited about it.
What was the last major milestone that you accomplished? I want to know!