How We Improved Our Net Worth By $730,000 In Less Than Three Years

This month marks a big financial milestone for us as we (finally) have a positive net worth.

There hasn’t been any grand secret for us. We didn’t hit it big on leveraged positions on hot tech stocks. We worked hard in residency and obtained lucrative jobs and save more (a lot more) than we earn. We refinanced our student loans to very good rates.  In an average month, here is our breakdown of our spending:

  • student loan payments $12,500/mo
  • mortgage payment $3,000/mo
  • retirement contributions $7,500/mo average (401ks, Roth IRAs, HSA)
  • 529 contributions $400/mo

There is certainly an element of luck. We have benefitted from fairly good returns in the market the past few years (although we’d benefit a lot more from a deep bear market as discussed in one of my favorite finance books). We are certainly grateful for our family’s good health (although we are well-insured against illness and death).

We haven’t deprived ourselves greatly to get to this point. We partake in selective extravagance – hiring a housekeeper to come twice a month, going on a few nice vacations, attending local sporting events, buying a nice (nicer than we needed) family vehicle. Like PoF, I can’t cut the cord. We bought a very comfortable home with room to grow into that we hope to own until our children leave for college (and plan to pay off in less than eight years). We have had two kids during this period and taken two sets of maternity and paternity leave and employed a nanny throughout. We could have taken jobs that earned even more and that were located in states with no/low state income tax but we picked a part of the country we love and a city with great public schools.

One of the adorable reasons we will be working an extra year or two at the end of our careers.

At times we are also selectively frugal. We don’t shop at expensive grocery stores and I use my old cell phone rather than constantly buying new ones. We grow a lot of our own food in our garden (which we mainly do because we enjoy it and not for financial reasons). I’m lucky enough to wear scrubs so I don’t spend much on clothing.

But by and large we have reached the conclusion that our path to financial independence will not be based on cutting out the occasional latte or some of the other extreme frugality espoused online, but rather will be paved by working hard, having a stable combined income in the 99th percentile for the country, and devoting a large percentage of our income to debt repayment and retirement savings. We are confident we will reach our goals by age 50 by making a lot of money, setting our investments on autopilot and forgetting them, and avoiding some of the common physician pitfalls of divorce, huge real estate losses, timing the stock market/day trading, failed side business, etc.

What are your keys to financial success?


15 Replies to “How We Improved Our Net Worth By $730,000 In Less Than Three Years”

  1. Congrats!

    Some people might think it’s easy to make amazing progress like that with two physician salaries, but it’s also easy to find other, less productive ways to part with that earned income.

    You mentioned your monthly “spending” which was mostly debt repayment and investing / saving. Do you have a handle on what you’re actually spending on day-to-day stuff?


    p.s. I finally cut the cord this summer when my Dish rate was about to go back up. I was offered a ridiculous deal to stay with them, but I declined.

    1. Thanks for reading PoF. We follow our spending on Mint and have a reasonable idea of our spending habits. We definitely do not fall in the extreme frugality side of things. Our plan is to continue to maximally fund all of our pretax savings options (401(k)s, HSA, 529 to tax deduction limit) and to continue to put >50% of our take home income to debt repayment and/or our brokerage account. The key for us will be that as we pay off the car, student loan 1, etc that the money previously spent will in fact be snowballed into further debt payment rather than used to expand our lifestyle. I am hopeful because I think this blog will keep us accountable and frankly, our lifestyle is already very comfortable at this point.

  2. I think you have the keys in place. Avoiding early hedonic lifestyle inflation, regular saving, and debt reduction. I also like that you are tracking your expenses. I only work 3 days per week now but I still have a housekeeper. Some things are worth the money.

    1. Thanks for reading! It’s a marathon and not a sprint for sure. If we were more frugal I’m sure we could shave a year or so off the back end of our career but like you said, there are certain luxuries that are worth spending money on.

  3. Uhh, no. I don’t see any numbers here to support reducing your net worth by 730k in 3 years. I am assuming you are counting your student loan, car loan an mortgage amounts in full to come to this conclusion?
    Adding up your mortgage and student loan payments does not entitle you to say that dollar amount came off your debt. Most of those payments are interest, not reduction in principle. If you are going to blog on finance, please use accurate facts and not exaggerations to get more clicks on your article. The facts as presented here are intellectual dishonesty, not education.

    1. Thanks for reading. Calculating my net worth accurately is not very challenging, seeing as I made it through four years of college, medical school, and residency (as did my wife).

      It is not that hard to reduce one’s net worth significantly when making in excess of $750,000/year gross (even with high taxes). We are not doing anything extraordinary here. The point of my blog is that for the high income earning couple it is the big picture items (high savings rate, aggressive debt repayment) and not extreme frugality (cutting out the occasional latte, etc) that will set you up for financial independence.

  4. Congratulations on hitting such an huge milestone so quickly! I hit a net worth of zero last year, after years of being in the red through medical school/residency/early attending life, and it was a great feeling. And it’s even more exciting to watch the positive net worth grow!

    I’m looking forward to reading more of your blog.

  5. I think it is okay for physicians not to be frugal and even our friend PoF would not be considered frugal by most Americans. As physicians we are fortunate to be able to pay down a lot of debt while still living an above average lifestyle. It is quite nice.

    Good work guys. We ended up increasing our networth by about $350K over the last 3 years on a 1 physician salary, so I can imagine a 2 physician salary is like overdrive.

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