During the Financial Crisis of 2008-09, one important lesson I learned was taking inventory of accomplishments at work. Though I ended up being fine, we were put on notice that our employment status was questionable. That’s scary stuff when you are the single income earner for a family of 4.
After being on the job 10 years and doing a great job, I updated my resume. As I jotted down my accomplishments, it truly amazed me how much I had done since I joined the company. Until that time, I hadn’t taken the time to inventory my successes. The process helped me in several ways.
First, it energized me. I had proof that I had added tremendous value to the company. Second, it made me feel better that if I were let go that I had a great list of accomplishments that other companies would desire.
Third, it gave me ammunition to talk with my boss. If they let me go then they don’t see anymore of these great value-add benefits I brought to the table. I was reselling myself with my list of accomplishments.
Finally, it helped me at home too because I felt better and my wife/kids could feel the difference. I always try not to bring my work stress home but you can’t hide everything. Plus, my wife was my confidant and she needed to know what was happening at work. We were a team!
As you look through your career, you find that there are several milestone moments that you consider Top 5 or Top 10. I know I can name those moments. And other than my memories of the people I worked with, those milestone moments is what I’ll remember.
Your personal finances can be inventoried too. Identifying your past financial milestones can help you forecast future milestones. Let’s take a look at my past 5 years and future 5 years.
Financial Milestones
My personal financial history is riddled with horror stories and, like a bad movie, I don’t want to relive them. However, I do remember those moments and they helped create the financial person I am today.
If I were creating my past 35 years of financial milestones, I’d probably include my first $100,000 and growing savings rates markers (20%, 30%, etc…). I might also include when I bought my first house. That 1,347 square foot house was bought in 1993 for $74,000.
Let’s take a look at some of my past and forecasted milestones.
Income Milestones
Though I didn’t list it, the first time I made $100,000 of annual work income was 2007. I was 44 years old that year. It took me about 20 years of working to finally hit that number. Thankfully, it only took 10 more years to earn $200,000 in 2016 (age 53). This year, and only 5 years away from earning $200,000, I’ll be close to making $300,000 (age 58).
These are important milestones that truly impact your personal and financial life. These are my peak earning years and I’m doing my best to use these funds to create a healthy retirement.
If I didn’t have a pension that has been accruing these last 22 years, I’d probably have move jobs more frequently. This would have enabled me to generate a higher income at an earlier age. But that wasn’t my path since I made a commitment to my wife/kids that we’d remain stable. And the stability payoff for me will be a $70,000+ pension when I retire at age 62.
Savings Rate
My savings rate is my number one focus right now. With only 4 years remaining until retirement, I’m using every ounce of money I can to save. Of course, that’s if my free cash flow isn’t going to pay down debt.
Once my debt is finally paid off (this year), my savings rate will finally soar. My last few years will be tremendous. They’ll be so tremendous that it’s going to be hard to walk away. Earning $300,000 and having a savings rate of 60% or higher will be good times.
When you have family obligations (i.e. kids), these are the years you dream of. Kids out of college, earning their own living, off your payroll, you’re debt free, and you get to save all of your money. That is my dream and it will be tough to walk away from when I turn 62.
Net Worth
I’ll be the first to admit that I’m a net worth addict. With Personal Capital, it’s so easy to see your net worth. Since I also use the tool to track my expenses, I’m seeing it every single day. In December 2017, I hit $500,000 and that was an amazing feeling. And $1,000,000 seemed so far away.
But here I am with a prediction (actually it’s factual) that I’ll hit that $1,000,000 mark on the day I get one of my bonuses (March 17). That bonus will be about $58,000 so that will easily take me over $1,000,000. And if that doesn’t work (though it will), I will hit it the next week because my next bonus is about $57,000.
Though COVID will make it difficult, we’ll have to celebrate this important financial milestone.
Debt Free
Something that seems totally foreign to me is being debt free. In December 2016, I signed-up for Personal Capital and saw that we had nearly $250,000 in debt – mortgage, home equity loan, and credit cards. Eventually we had 2 cars added to the list too.
It took 5 years, but by the end of this year we’ll be completely debt free. I’m not sure if I’ve ever been debt free so it will be a feeling like no other. When we paid off our $86,000 home equity loan in 2018, it felt like a huge weight lifted off our shoulders. It was a grand accomplishment in our household.
When we finally take out the last mortgage payment later this year, I’m not sure how I’ll feel. It’s likely that I’ll just focus on how much I can now save knowing we don’t have to make any debt payments. All of our earned income can go directly into savings. Thus, the 60%+ savings rate. I see an article coming when that deed is done.
Investment Portfolio
Sure, I’ll hit a $1,000,000 net worth in March but that include the value of my home equity (home value – mortgage). The reason I’m focused on my savings rate is that I’m trying to increase the value of my investment portfolio.
Achieving a $500,000 portfolio value in September 2019 was a huge boost in confidence. But the real target is a value of $1,000,000 and we plan to achieve that in March 2024 (when I’m 60 years old). I’ll be only one year away from retirement at that point.
It sure would be nice to hit $1,500,000 but it would take either a miracle or me not retiring in 2025. And that just doesn’t seem likely. Again, thank goodness for the pension.
Summary
So are financial milestones important? Of course they are. They are your history of success and targets in the form of forecasted goals. Forecasted milestones force me to develop and execute a plan and they drive me to stay the course. In a human life with so many possible distractions, they can be a beacon of hope.
My forecasted milestones help me know what my future might look like. They provide goals to be achieved. They create a picture that tells me I’m on the right path (or not). Honestly, and this may sound dramatic, I’m not sure where I’d be without them.
Without them, it’s possible that I would not know when I was retiring. It’s possible that my confidence wouldn’t be boosted by celebrating and acknowledging past milestones. They are great markers of achievement that must be documented. Trust me, it’s a fun and worthwhile exercise.
Thanks for reading!
Mr. TLR