Zero To Millionaire in Ten Years

family-in-the-creek

Financial voyeurs of the world, rejoice!  I dug out all our old tax returns, pay stubs, and my net worth spreadsheet to pull together the story of our ten year journey from nearly zero net worth to millionaire status (and early retirement).

This post answers a lot of questions like: How much did we earn?  Did we have six figure incomes all of our careers?  Did we work for a start up and make a million when our employer went IPO?  Did we get lucky picking stocks?

 

Year 1

Our story starts in 2004, a period in ancient times before the launch of Youtube.  This is the year I graduated from law school and started what would be my job for the next seven years (in engineering, not law).  My starting salary at a small engineering consulting firm was $48,000.  The salary negotiation was bizarre.  The president of the company asked me what I would like to make.  I asked for $42,000 (since I had a job already lined up elsewhere for $36,000).  He countered with “does $48,000 work for you?”.  I spent about two seconds trying to figure what the trick was before suppressing a smile and responding with “yes, that will be acceptable”.  The vice-president’s dumbfounded sideways glance at the president sticks with me even today.

Mrs. RoG was still in law school at the time.  Like me, she never worked as an attorney.  In 2004, we owned a rental condo that was previously our primary residence in a nearby city where I attended law school.  We had just purchased our new primary residence – a house in Raleigh.

We had some investments slowly accumulated during college and graduate school plus a fledgling 401k from a couple years of Mrs. RoG’s employment between undergrad and grad school (at a salary of $24,000 to $34,000).  I guess we were the weird ones that graduated college with a positive net worth (in spite of six figure college loans).  By the end of 2004, we maxed out our IRAs, I contributed what my company allowed to a 401k, and we added to our taxable accounts.  In total we added about $15,000 to our investment portfolio in 2004, bringing the portfolio balance to $64,000.  We didn’t start Year 1 with zero dollars, but it makes sense to start when I graduated college since that is when our earnings picked up dramatically.

If you’re really interested in my career before my first post-college job, check out “From Paper Boy to Engineering Manager to Early Retiree“.

Root of Good's Earnings and Wealth

 My SalaryMrs. RoG SalaryAdditions to PortfolioPortfolio Total
200448,000015,00064,000
200549,0005,000101,000183,000
200655,00040,00075,000295,000
200756,50049,00066,000371,000
200864,00045,00073,000304,000
200960,00046,00071,000478,000
201064,00056,00068,000662,000
201168,00063,00085,000697,000
201269,00062,000102,000940,000
201369,00069,00080,0001,244,000
201412,00074,00051,0001,351,000
Slow and steady wins the race. Go Team Tortoise!

 

Year 2

2005 was a year of big changes for us.  Our first child was born in the spring right before Mrs. RoG finished law school.  After graduating and spending most of the year caring for our daughter, Mrs. RoG decided to get a job.  Her starting salary of $38,000 per year was pretty average for her field, and she was eligible to receive overtime pay.  The company offered really good benefits like nearly free family health insurance that would save us a lot of money over the next decade.

Mrs. RoG only worked six weeks in 2005 and pulled in $5,000. I received a small raise to $49,000.

During the year, we sold our rental condo and put the proceeds into our investment portfolio.  We also completed a cash out refinance on our primary residence that generated a lot of cash because we purchased the house from the City at a discount of $30,000 from fair market value.  These real estate moves helped us add $101,000 to our investment portfolio during the year even though we only earned $54,000 from working.

Our portfolio ended the year at $183,000 with $18,000 in gains for the year.  At some point during this year I realized we would be able to save a significant part of our incomes every year and it was a mathematical fact that we would have enough to retire comfortably one day.  I thought our “magic number” needed to retire was well over $2 million and it would take at least 20 years to hit that number.

I also discovered the Early-Retirement.org forums this year, which helped crystallize in my mind the concept of early retirement as a thing that people aim for in an intentional manner, instead of something that randomly happens as a result of saving massive piles of money.

 

Year 3

In 2006, we had another kid.  Mrs. RoG’s swanky job offered three months of paid maternity leave plus the option to take two more months of unpaid leave.  Since we weren’t even spending my whole paycheck at the time, Mrs. RoG was able to take off five months.  In spite of not getting paid for two months, she still made $40,000 during the year due to overtime and bonus.

I rode the boom time wave at my job, snagging two raises to bring my salary to $55,000.

We kept maxing out our 401ks and IRAs throughout the year and picked up company matches in the process.  Including the 401k matches, we contributed $75,000 to our investments during Year 3.

The portfolio ended the year at $295,000 which includes $37,000 in investment gains during the year.

 

Year 4

In 2007, we both received small raises, with my salary increasing to $56,500.  Mrs. RoG earned $49,000 for the year including overtime and a small bonus.  Our combined household income jumped into six figure territory for the first time.  We continued saving very aggressively by putting $66,000 into our investment portfolio during the year.

We crossed another $100,000 milestone in our investment portfolio and closed out the year with $371,000, including a $10,000 stock market gain during the year.  2007 also marks the start of the Great Recession of 2007-2009.

 

Year 5

2008 was a big year in my career.  I earned my Professional Engineer’s license and along with the license came a $7,500 raise to bring my salary up to $64,000.  That’s the good news.  The bad news is that I would never make much more than that in inflation adjusted terms during the rest of my career.  Along with the raise came more autonomy and responsibility at work, however I kept my work efforts steady at forty hours per week.

Mrs. RoG took a small step back in compensation at work but a huge step forward in terms of work-life balance.  She moved to a new position within her company that involved a promotion and a switch from paid overtime to exempt status and a base salary increase.  Without overtime pay, her overall compensation dropped $4,000 to $45,000 for the year.  The upside was a much more flexible work schedule that would prove a huge help once our kids started elementary school (at the worst school in the district).  Mrs. RoG is still in the same job that she started back in 2008.

We kept shoveling cash into our investment accounts totaling $73,000 during the year.  In spite of the new cash influx, our portfolio dropped to $304,000 by year end due to a $140,000 loss throughout the year.  2008 wasn’t a pretty year in the stock market.  In fact, it was ugly!  But it marked the start of one of the best buying opportunities many of us will ever know.

My first paycheck. $29.62 for a month of delivering the weekly newspaper when I was 13.

My first paycheck. $29.62 for a month of delivering the weekly newspaper when I was 13.

 

Year 6

In 2009, the company I worked for and the entire industry I worked in was getting crushed by the economic forces at play during the Great Recession.  Half my firm got laid off or quit for better opportunities elsewhere.  I survived the multiple rounds of layoffs, but not completely intact.  Salaries at my level in the company got cut by 6% across the board, bringing my pay down to $60,000 for the year.  I wasn’t sure if my company or industry would survive, so I decided to study for the bar exam and get my law license just in case.  I passed the bar exam.

The stock market hit bottom in March 2009 and the economy rebounded shortly thereafter.  I never needed to switch industries, but I did get the bug to switch jobs so I could make more money and do something different.

Mrs. RoG received a small raise to $46,000 per year.  Throughout the Great Recession we continued to save and invest as much as we could, dropping another $71,000 into our brokerage and retirement accounts.  Starting in March, the markets took off and left us with $103,000 in stock market gains for the year.  This didn’t quite erase the losses suffered in 2008, but it did leave us with $478,000 by year end – perilously close to the half million mark.

 

Year 7

2010 saw my salary reinstated to the previous $64,000 per year but left me unhappy.  I was still making the same thing I was two years earlier (less in real terms after factoring in inflation).  I continued my job search and found a sweet new gig that I would start in 2011.

Mrs. RoG got promoted without changing jobs.  The company handed her a fat 20% raise, bringing her salary plus bonus up to $56,000 for the year.

We took a big international trip to Argentina and Uruguay this year, leaving the kids at home on the other side of the world.  We didn’t spend much since the flights were free using credit card sign up bonus offers to get American Airlines miles.

We kept saving and investing and put another $68,000 into our investment accounts during 2010.  The market continued it’s upward path and after making $116,000 in investment returns for the year, we had $662,000 in our portfolio by year end.  At this point, the reality of early retirement set in.  We were getting closer and closer each year.  We couldn’t have retired in North Carolina, but we could have somewhere in the world if we were willing to relocate overseas to accelerate early retirement.

 

Year 8

A few days into 2011, I started my new job with the State of North Carolina and picked up a $4,000 raise, bringing my salary to $68,000.  I lost the profit sharing contributions and the off and on 401k match with my switch to government work, but I picked up a (worthless to me) pension plan and the ability to contribute the full amount to a 457 and another full annual contribution to a 401k (= normal 401k contribution limit x2).  The extra tax-deferred savings plans were a magic ticket that let us into the kingdom of paying almost zero tax on a growing six figure household income.

Mrs. RoG received another outsized raise and a good bonus, bringing her 2011 compensation up $7,000 to $63,000.

With our growing salaries and decreased tax burden, we contributed $85,000 to our investment accounts during 2011.  The market didn’t do well, resulting in a $50,000 loss.  However our $85,000 in new contributions offset those losses and led to a small increase in total investment account value to $697,000.

 

Year 9

2012 was a mostly flat year in terms of our salaries.  I snagged a tiny less-than-inflation 1% raise to almost $69,000 and Mrs. RoG actually brought in $1,000 less than 2011 with a smaller than normal bonus.

This didn’t prevent us from saving $102,000 in our investment accounts during the year.  Between our six figure investment contributions plus very strong stock market returns of $141,000, we were just shy of a quarter million dollar increase in our investment account value.  By year end, we had $940,000 in our accounts.  So close to a million and over three times what we had just four years earlier!

Even more exciting than approaching millionaire territory was the birth of kid #3.  This meant (in financial terms) our tax burden dropped once again.  Mrs. RoG also enjoyed another three month paid vacation maternity leave (gotta love a company with great benefits!).

 

Year 10

In 2013, I didn’t get any raises.  The State decided they weren’t necessary to keep the mediocre employees on board; most of the good ones had already left.  Mrs. RoG, however, managed a very respectable $7,000 increase in 2013, bringing her total pay to $69,000 for the year.  I finally knew what it felt like to have a wife that makes more than me.  It felt pretty good because a higher salary for one of us meant more savings for our joint financial future.  We saved $80,000 this year.

We would have saved a little more, except the state abruptly terminated my employment contract.  Departmental times were a changin’.  At first I thought I was unemployed then quickly realized I was retired!  I also started this blog not long after losing my job.

We were right at our financial early retirement goals with $1,244,000 in the investment accounts by year end (with $224,000 of that being investment gains during 2013).

 

Year 11

In 2014, I did very little in the way of productive work.  I kept Root of Good going which produced a respectable but small side income, and I was asked to do some freelance writing by a few different folks.  In total, I made about $12,000 in 2014 after expenses.  I never counted on making anything during early retirement, instead planning on living solely on portfolio income and capital gains.  My blogging and freelancing income was a pleasant surprise to our early retirement finances.

Mrs. RoG continued her path of excellence at her job in spite of taking an extra five weeks of paid time off and requesting a three month paid sabbatical.  She picked up another $5,000 raise, bringing the 2014 compensation to $74,000.

We continued our investment contributions throughout 2014, adding a net of $51,000 to our investment accounts (it was more than $51,000 but I withdrew all the dividends from our brokerage account).  We were earning way more than we were spending each month and the continued retirement contributions were a great way to keep our income tax below zero for the year (-$1,268 to be exact).

The $51,000 of investment contributions plus modest market returns of $56,000 brought our investment balance to $1,351,000 by the end of 2014.

We thought 2015 would be the year Mrs. RoG finally quits work, and she even resigned this past September.  It didn’t stick but she did negotiate a shift to working four days per week at full time pay and she now works from home 90-95% of the time.

 

Notes

The portfolio values in this article don’t include home equity, just investments and cash.  During these 11 years, we were also making extra payments on our mortgage and paid it off completely at the beginning of 2015.  Those extra principal payments aren’t counted as “investment contributions” but ditching the mortgage certainly enhanced our financial position in early retirement.

401k matches and profit sharing contributions are not included in salary but are included in the “additions to portfolio” column in the chart.  That’s just how I kept track of them over the years.  Add in $5,000 to $8,000 if you want to “gross up” our salaries to include the 401k matches and profit sharing contributions.

My reported salary doesn’t include the occasional $500 to $2000 annual bonus I received most of the first seven years of working.  I simply don’t have good records of those bonuses.  Mrs. RoG’s salary does include all bonuses and overtime pay.

 

The ten year path to early retirement

So there you have it – our path to financial independence.  Abnormally normal salaries that generally (but not consistently) increased as we gained skills and experience.  Add to that heavy duty savings while keeping expenses low.  We had three kids and paid off a mortgage.  Overall, a pretty boring but surprisingly effective path to financial independence.

This chart shows net worth including the value of our house

This chart shows net worth including the value of our house.  The ’07-09 Great Recession was a tiny blip in hindsight

Neither of us ever reached a six figure salary, with my salary topping out at $69,000 and Mrs. RoG’s at $74,000.  These salaries probably seem huge for someone earning minimum wage or for readers from developing countries, but they are fairly normal (or low!) for college educated professionals in the engineering and finance fields.  Our highest combined salaries were $138,000.

We never received stock options or worked for a company that went public.  No winning lottery tickets or inheritances, either.  Just steady saving and investing in our low cost index fund portfolio year after year.  We didn’t upgrade our starter home or our cars.  Three kids can ride in the back of an Accord, and we even took a 2,500 mile road trip to Canada in that car.

Every year we saved more than half of our income.  In other words, we saved all of my paycheck every year and then saved part of Mrs. RoG’s paycheck, too.  This meant we were immune to financial catastrophe if one of us lost a job.  As a result, we never worried about keeping a large emergency fund and instead preferred to invest as much as possible to maximize our long term returns.  It worked.

By 2014, we had lifetime earnings of a little less than $1.2 million while our investment portfolio had grown to over $1.3 million.  Because of the investment earnings, it’s almost like we never spent a dime of our salaries over the years!

My advice to those just starting out or part of the way to financial independence?

  • Start saving and investing early, even if you don’t have a concrete savings goal.
  • Skip a money manager and invest in low cost passive index funds instead.
  • Track your spending and investments with a spreadsheet or a free tool like Personal Capital.
  • Keep saving and investing even especially in really horrible markets.
  • Don’t succumb to peer pressure to upgrade your lifestyle as your salary goes up.  Your peers might spend all their raises but you don’t have to.
  • Stick with the saving.  Even if you don’t have a million bucks in ten years, you’ll still have a lot more than zero.

 

 

Are you following an ordinary, boring path to early retirement like me?  Or have you figured out a way to turbocharge your path to financial independence?

 

 

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182 comments

  • The last two years Mrs C. and I have been able to start shoveling a decent amount of money into our retirement accounts, 8 years from now our graph should be similarly impressive. I actually wrote a piece fairly similar to this one (with vastly different details of course) but have been wrestling with whether or not I want to be so transparent on my blog. Congratulations to you for finding the courage to put all your details out there! This is a very interesting post.

  • Great detail and transparency ROG. You definitely draw a big counterpoint to my recent post about how moving to Manhattan has sped up my path to FI. I believe with a family, doing the whole FI/RE thing in a lower COL area is 100% the way to go. Just curious (sorry if you discussed in previous post) but how did you and the Mrs. handle child care? Out of pocket or did family/friends help out?

    • I just read that moving to NYC post. Good job keeping the expenses low. And you’re right, we would have a very hard time adjusting to the much higher COL in NYC. You were able to have roommates to split rent 3 ways and still saw an almost doubling of your housing expenses. I figure we would end up with an 8-10x increase versus our current housing costs in our paid off 4 BR house here in Raleigh. And in terms of quality of life, we have way more space, 2 cars, and still have that NYC-like access and convenience of a lot of stuff nearby (many destinations are actually walkable). I’ve seen a lot of friends move to high COL places like Silicon Valley or NYC, make serious dough, then relocate back to North Carolina when it came time to buy a house and settle down. All have said it was a smart move, not too much of a pay cut, and standard of living is much higher outside the high COL areas.

      But if I was single or kidless, I’d definitely consider a high COL area to boost my income and the potential for even more income in the future. In Mrs. RoG’s career in finance for example, she would have enjoyed many more opportunities in Manhattan than here in Raleigh. But the horror stories of the 2 hour 1 way commute from the ‘burbs doesn’t sound like much of a life.

      As for child care, we paid Mrs. RoG’s mom each month. We funneled the payments through a Dependent Care FSA, so we saved another 35% or so on taxes. The amount was less than half what day care would have been, and our kids got to stay with family. Another reason we didn’t feel motivated to leave Raleigh.

      • It’s hard for those of us who just can’t stand car culture. I don’t want to be in the car, ever, unless it’s a road trip. I don’t want to drive to the grocery store. Or Costco. I don’t want a yard. There are only a few places in the US for hard core walkers, and they are all pricey.

        I live far, far away from my homeland of NYC. I save 70% of my after-tax income, which is all that is really possible with no kids in my high income bracket. I have reached nearly your savings in 6 years. I am burnt out and I pine for home, friends, family. I don’t want to stay where I am. I can walk many places, but what I want is to ditch the car entirely. I want my homeland!

        I can FIRE right now if I stay in exile, and I can never retire if I follow my heart and soul home. I have tried life elsewhere for a decade. And I miss home.

        Yeah, the first world problems. I know. But what’s the point of FIRE if you can’t be where you need to be?

        • Ha ha, yeah, first world problems indeed. 🙂

          It’s a tough call – I get it about friends, family, and familiar places, so not sure what to say about moving back to NYC. It’s obviously doable, but it will take much longer to be able to afford it versus a low COL part of the country.

          I feel you on the car issues. I don’t enjoy driving but it gets the job done when I need to get somewhere over a mile or two, or carry heavy stuff, or the weather is horrible.

  • Now this is what I call inspiring! I’ve just read through all the details and have saved it to re-read later on today when I have a little more time. There are just so many useful nuggets in here – I’ve already emailed it to a few friends I think so many people would benefit from it 🙂

  • Great breakdown Mr. RoG, and congrats to the family on your FI/RE accomplishments! As a financial data tracker myself, enjoyed the annual summaries you recap along the journey. Not sure if you would have this, but may be really interesting to see how the household spending remained steady over the 10 years or increased with each child. But even without it, the message is clear. Thanks again for presenting a very comprehensive and personal story for all to learn & motivate.

    • Unfortunately I didn’t really keep good detailed records of expenses until about 2010 or 2011. I couldn’t easily tell any trends from those last five years of data, although at that point we already had 2 kids and added one more in 2012. I think the kid costs for us have been pretty muted. We already owned cars that worked for our 3 kids (though that might change if we upgrade to a minivan for long road trips and family vacations). Our house that we got for a screaming good deal came with 4 bedrooms, and the smallest house in the neighborhood comes with 3 bedrooms, so we didn’t really spend any extra on housing for kids although I suppose we could have rented a 1 BR or studio apartment (Mrs. RoG might not be living there with me though… 🙂 ).

      I’m sure our food expenses went up as we added kids. And I know our water usage is higher now versus before (maybe double today versus pre-kids).

  • Very bold of you!

    I’m quite impressed by the aggressive savings rate during the accumulation phase. I could have done more (?) but didn’t. Doesn’t matter, I still got to the end goal.

    I’m thinking of starting a transparency series of posts with the start of the year. Unlike you, my blog earns exactly zero dollars and I have no rental real estate so it would be a living off the stockpile pureplay for the readers. Still waffling on whether quarterly or monthly updates make more sense.

  • Hi Justin,

    I love the article. I got from zero to $15,000 in annual dividend income in 8 years. I expect to reach my dividend crossover point sometime around 2018. ( the point at which my annual dividend income exceeds my expenses)

    I never made 6 figures, but my secret tool has been saving a lot, never having any debt, and investing aggressively in mostly quality dividend growth stocks that compound earnings and dividends, that were bought at attractive valuations. When your companies grow dividends on their own, and your are reinvesting those dividends into more dividend paying companies, you are turbocharging your dividend income.

    Since early 2013 I have also been maxing out any tax-deferred account I could get my hands on/am eligible for. If I had done that at the beginning of my journey, I would have been at my dividend crossover point today – minimizing tax waste is one of the biggest obstacles to accumulating a nest egg for early retirement.

    Best Regards,

    Dividend Growth Investor

    • I haven’t added up all the tax savings from maxing out our various tax deferred savings options but a quick guess says $100k+. And probably more like $150k+ if I add in growth on those tax savings. The downside of course is we may eventually owe tax on some withdrawals. But guess what? I have $150k+ of assets to pay that annual tax bill, and the flexibility to craft my income so I can still limit my tax burden each year.

      Good job on racking up the dividends. I never focused strictly on dividends, but that’s a good way to look at growth of your nest egg.

  • From zero to hero in one blog post! Nicely done and it’s great to see what one can achieve in 10 years with average salaries for professionals. Despite the transparency, if this was posted on some mainstream finance site you’d have thousands of whiners lining up to tell you why this is not possible.

    • Absolutely true. And I’d be called a liar!

      The strange thing to me is that more people don’t do exactly as we did and accumulate a large stockpile of cash by their 30’s. I mean, it’s not rocket science. Neither one of us made huge ridiculous salaries.

      • I tell you why. In my case I was chasing a dream and figure that looking for a higher paying job was more important than saving when I was younger. I understood compounding but always felt hopeless when the amount needed to make significant progreSs would be a good part of our income. We were not spending that much nevertheless I didn’t see the light at the end of the tunnel. It is easier to find information now. Also, I wish I had read your money or your life when I was younger.

  • So impressive! There is so much information out there about investing early, but this narrative illustrates that in a way that’s more “real life” for the average reader. I loved it.

    Keep up the good work!

  • This could’ve been titled “Sticking to the plan.” Amazing how you never wavered from your goal or got spooked through the recession or while having multiple new mouths to feed. Me? I managed to retire early but made many mistakes along the way, like ditching Chipotle and other retail stocks in 2008 out of fear and “cleverness.” I put “cleverness” in quotes because I thought I just knew the retail sector was going to collapse for years. Consumers would never waste money on frivolous purchases ever again! I also stopped contributing substantially to my 401K. That Chipotle stock? I missed out on a 14-bagger by veering from my buy and hold philosophy. Fortunately, I was in a high-paying industry and got back on track. Your methodical approach and robot-like quality to stick to a solid plan is a great example for any of the young folks reading your blog. Did you ever ALMOST do something stupid? And once you got the early retirement bug was it difficult to keep going into the office or did your goal inspire you?

    • We had a few missteps in life. We both went to law school for 3 years yet never practiced law for a living. I did, however, do some pro bono work including some litigation work in the courtroom, which was cool in a Matlock kind of way.

      So there’s 3 years of not earning a lot of money and paying tuition. Though we still made the most of it. I started a small company and profited $35k or so during my law school career. I also picked up some decent summer internships that generally paid okay. And the legal background probably helped me in my career in hard to quantify ways.

      I also thought about “going for broke” back in 2008-2009 by getting a ton of credit cards, borrowing all I could from them and buying really risky options with the hopes that I could double or triple my money and repay everything. Worst case I would have filed bankruptcy. In hindsight, I think it would have worked out pretty well, since the market did in fact recovery strongly in March of 2009. I just didn’t want to lose the few hundred thousand we had already saved and have to deal with a nightmare of creditors if things didn’t turn out as planned.

      As for going into the office, it was always a challenge. It’s always been more fun to not go to work. 🙂 But you get up, go in, make another buck, and come home. I knew there was a light at the end of the tunnel, and I guess that’s what kept me motivated. Definitely glad we stuck with it now that we’ve arrived at FI!

  • I think avoiding lifestyle inflation and living in a low cost area really helped your results, which are incredible and something I would like to emulate! Your ability to enjoy activities without breaking the bank was also a big factor (would be like going to a park vs Disneyworld).

    Just like your tax article, I think this is a great template for people to read and realize a commitment to saving is more important than making huge amounts in salary. I will definitely be sending people to read it!

    • Thanks!

      Yes, keeping lifestyle inflation in check coupled with living in a low COL helped us spend just a fraction of what we were earning. As the incomes rose, our savings ramped up as well.

  • I love seeing the progress you guys have made over the last 10 years. It’s one thing striking out on your own in unknown territory when it comes to early retirement and building a portfolio, and another seeing examples of people doing it.

    It must be tough at first getting used to living through huge downturns in the stock market. We’re starting where you guys were 10 years ago and I see a lot of turmoil in the markets, but I know as long as we’re steadfast and keep our eye on the goal, we’ll get there.

    Thanks for the inspiration!

    • Living through the downturn wasn’t too bad. We were only spending less than one paycheck, so a loss of a job became a lower savings rate, not a real financial catastrophe. In fact, during the 99 weeks of unemployment days, I was hoping for a layoff and a sweet sweet $50k or so for not working for 2 years. I got the unemployment eventually, but not before it turned into 20 weeks and only $7k total.

      Watching the portfolio crater wasn’t rough because I knew it was going to bounce back eventually. And I loved seeing everything on sale by half or more.

  • Nice! We’re inching towards $1mm in net worth (between the market performance this year and some major CapEx spending on our house with the remodel and our solar system it really does feel like inching compared to previous years!), but our path is similar to yours, just delayed a few years since we didn’t really get started with serious saving or investing until we got married in mid-2009.

  • thank you for this! I paid off all my student loan debt and opened my first retirement account this year (age 27). I’m hoping so desperately for FIRE in 13 years but I make $32,000 a year and sometimes it seems impossible. I’ll max out my IRA this year though which I think is a good first step! I keep telling myself it’s a slow and steady kind of thing 🙂

  • This post proves that a large number of people are capable of early retirement. Clearly you don’t need to pull in $200k a year to make it. The proof is in the numbers. Start saving early and don’t stop. Your graph would be significantly different if you got scared and ran for cover in ’08 and ’09. I count 2015 as our year zero even though we’ve been out of college for 5 years. 2015 was the year we officially decided early retirement was for us. We’re hoping to fuel our dream in 7 years.

  • That is an excellent recap of your financial independence journey and results. I can only imagine how much work it took to put together all the history for this article. Way to stay calm when your portfolio loses $100k in a year! Very informative and thanks for sharing.

    We have a similar path as you over the last 11 years with saving and paying off our home. Our numbers were a bit different with our income and expenses – mainly due to living in Northern California. Either way, you have shown people that it is possible to build serious net worth in a decade. It is a matter of starting early, protecting your principle, and saving as much as possible.

    • It did take a while – longer than I thought it would. I tried to make it as accurate as possible so pulled out old tax returns and W-2s to cross check other data sources. Luckily I kept a good spreadsheet with net worth and investment data so that was pretty easy to pull together.

  • This is a fabulous breakdown of how you actually did it! I’m a big fan of large windfalls… and that real estate addition to your portfolio of double your income from that year would have been enough to kick me into motion as well! Well done you guys! Success on paper: proven! My time for our breakdown of how we did it will come… in a few more years… 🙂

    • A couple of lucky (smart?) real estate moves early on certainly helped. The fact that we didn’t upsize the house as we increased our salary helped a lot too (and continues to help as our expenses are still low today!).

  • That is a really encouraging post – clearly shows early retirement is viable if you prioritize it over immediate purchase gratification or keeping up with the Joneses. In our life, we spent a solid 3 years getting on top of expenses and slashing debt (college, masters, cars, bad decisions, etc :)). This took a little longer, because we were investing along the way as well. Now that the debt is nearly gone (other than mortgage), we’re supercharging the effort with real-estate investments. Like you mentioned on your personal residence, we’ve found some of the biggest gains in our net worth simply came from buying the right house. So we figured we’d amplify that with more real estate. If all goes well, we should be free in 2-3 years or so!

    • Real estate is certainly a good way to get to FI quickly. It helped us a little when we were just starting out, but mostly by accident. We just needed an inexpensive place to live during college and it ended up being pretty profitable (and cheaper than renting). Then we lucked out by buying our current house at a big discount.

  • Great blog post. It’s the kind of nuts and bolts financial map that people like me love to read, follow and pick up tips and tricks.

    The one thing I would add to your advice about saving and investing is that it really doesn’t matter when you start – age wise – as long as you focus on your goals like a laser. I was a rock musician from 17 until I was 32 and lived a far from frugal or financially responsible life. I saw the light around 33 and within approx 10 years of hardcore saving and investing I was financially secure.

    Saying “anyone can do it” is misleading because most people don’t have the stamina or desire to sacrifice at the level it takes, but the rewards are well worth it in my book.

    thanks for passing your motivation and road map on to the next generation

    • Was Frugal Bazooka your band name? That would totally rock.

      You highlight a great point – we could have screwed around and accumulated nothing our very first 10 years and then started saving aggressively the next 10 years and still made it. In fact, our incomes would be higher in this alternate reality because we would have skipped the first 10 years of gaining experience and getting those first promotions.

      • That’s a great point. By the time I started taking money seriously, I was making a lot more of it than I was when I was 20…and I understood it much better. That helped tremendously in giving myself permission to sacrifice a lot of material nonsense in favor of future wealth. I honestly don’t think I could have seen the light at the end of the tunnel when I was making subsistence wages, so for me waiting until I was 30 was a Godsend.

        As far as the band name, lmao…we still sell band product on the internet so for the sake of anonymity I will decline to mention it…but needless to say we were not A listers. We may have been one of the worst bands to ever sell a record…and yes, we sold them when they were still made on wax.

  • How did you acquire the rental? Did you have a mortgage on it when you sold it? Your school loans were just paid over time?

    • We bought the rental when Mrs. RoG had a full time job in between undergrad and law school. I guess it was easy to qualify for a loan back then. I remember being surprised they would give $64k to a bunch of sketchy 20-somethings. I don’t recall if there was any mortgage left, but from what I’ve pieced together, we had paid down the condo mortgage from our cash out refinance on our new(er) house and so when we sold the condo, we got a big check at closing. We bought at $71k, put in $7-8k between improvements and HOA assessments, and sold for $95k, plus made a couple thousand per year cash flow for a couple years while we rented it out. We’ve been paying on the school loans since graduating and still owe some on them. They are on the income based repayment plan so payments aren’t very large at all right now (or really ever).

  • Thanks for this very inspirational and informative post Justin! Your salaries (considering Mrs. RoG works in Finance) were lower than I thought 🙂

    I’m on about the same path, but a single earner right now (and I have no idea if/when that may change). My goal is $1.2MM by 30. I figure even if I miss it and “only” get to $1MM, I’ll still be sitting pretty. I enjoy being productive so I’m not sure I will “retire” at that point, but maybe take a sabbatical, travel some more, and then either start consulting with companies, do some financial coaching (since I have my Series 7/63), sell some houses, volunteer and be on some boards, and live “large” 🙂

    It’s crazy how simple it is. Not easy, but simple. My roommate just got a job and within 3 weeks she had a new Prius. I’m not allowing myself any big spending like that until I am much, much closer to my goal.

    • Yes, people think we make tons of cash when I mention we worked in the engineering and finance fields. We certainly did okay, but it’s never been the six figure salaries that a lot of other engineers and finance folks make. But it’s not what you make, rather what you save.

      Your roommate bought a brand new prius? I can’t even afford one of those. 🙂

  • Justin, great recap of your journey to a million (and beyond)! It’s always fascinating to see how other’s carve their own path. I really admire what you were able to accomplish in such a short time especially since neither you nor your wife had a six figure income during that time… IMPRESSIVE!! 🙂

    My own turbo charge to FIRE came from a combination of healthy savings, real estate investments, and cashing out equity from my tech support biz.

  • Very impressive! I’ve had a significantly higher salary than you and your wife together my whole working career (5 years so far) and the only reason I have more saved up than you did at the same point is it coincides with the 2008 crash. I’m definitely envious of the low COL and multiple 401k-like options you had.

    • Great job taking advantage of the low market valuations back in 2008! I loved buying stuff at half off.

      • I guess I wasn’t clear – I’m 5 years into my career now; I didn’t graduate college until 2010. My net worth is higher than yours was at year 5, but only because your year 5 was 2008 and had that 6-figure loss-on-paper. I’m barely ahead of where you were at year 4.

        I would love to have a repeat of 2008 valuations in the next few years, though!

      • What do you do or… where do you put your money while you wait for the next half off? Should you have it liquid?

        • I remained fully invested instead of waiting for the next crash. There’s no way to know when it is coming ahead of time, or just how low it will go.

  • Once again confirmation that it’s mostly about the savings rate and less about the salary. Although you should keep in mind that you have been way over the US median household income (which is somewhere between $50’000 and $60’000 if I remember correctly) for all of your working years.

  • Thanks for sharing. Your financial journey is quite similar to mine, except mine is stretched out a bit more due to my wife not working much since having kids and me cutting back on my working hours. Having such flexibility is certainly one of the benefits of investing a large part of your income early in your life.

    • The fact that we kept 2 incomes while having kids certainly helped put us where we are today. And now we both get to spend more time with the kids (though we missed that during the younger years for our 2 oldest kids).

  • As others have already said, Justin, great job and congratulations. I think it is important that you and others like you (I’ll include myself) need to continue to preach the gospel of living within ones means, rather than the conspicuous consumption pushed by the government and companies that could give a rat’s butt about any of us and our finances. Perhaps if enough of us do so it will finally begin to sink in with more than it currently appears to.

    Again, great job and continued success with the FIRE lifestyle. Ain’t it grand!

  • My husband and I are expecting baby #3, and both work full-time. He’s active duty military and I’m a government contractor. Our combined “taxable” income is about 80K (some of the military pay is non-taxable). We are scheduled to move next year, and I’ll probably be staying home for a year with the new baby, lowering our income by about 40K, but we won’t be paying 24K in childcare. I would LOVE to save more (we are at about 25% right now), but can’t figure out how to make that happen. Any tips? We’d like to add another kid to the mix someday, and I’d love to figure out how to get them all through college and retire at a decent age! We’re fortunate that my husband will have a military pension, and I don’t think he’ll ever be able to truly retire early without losing his mind, but I do want him to be able to take a job with flexible hours post-military retirement.

    • Specific recommendations are hard without knowing exactly how much you spend in different areas. In general, a 25% savings rate is pretty good. Keep that up long term (once you’re back in the workforce) and the savings plus the military pension should put you in a great position in your late 30’s or early 40’s when your husband qualifies for retirement. You might not have 100% of all future needs covered, but you’ll have lots of flexibility to take only jobs that are interesting and fit your lifestyle.

  • Very cool and thanks for summarizing your story. I guess I should be pretty happy that my salary didn’t reduce during great recession, the salary just froze. I assume you didn’t leverage with your portfolio? I guess the bull run the last few years really helped with the portfolio value gain.

    • I never leveraged the overall portfolio. I did dabble in one of the triple leveraged financials ETFs for a short period of time (that happened to be 2 days after the market bottomed out). I made 100% returns, sold half, then made some more before getting out. I was really trying to arbitrage against some dumb choices my employer made in our profit sharing plan that held stocks. I sat on the management committee so knew they were dumping the investments at the bottom of the market (I actually clicked the button to sell by order of the President 🙁 ).

  • Very inspiring, thanks Justin! I’ll be hitting roughly $85k networth by the end of my second full year. I recently decided to switch directions, so instead of maxing out my 401(k) out entirely, I’m taking a portion of that for a downpayment on a duplex. While I’ll take a bit of a hit this year, I anticipate having the rental income will help me make up for that in the future. Less RE, more FI right now 🙂

  • this was a super-awesome post. I really really enjoyed reading the full story. And yes, I’d consider those salaries low for the industries.

    Slow and steady…slow and steady…

    • Yeah, we never made a ton of money in the fields we were in, but we made the most of what we had. Part of the reason we didn’t make crazy salaries is the fact that we wanted a close to 40 hour per week job. We could have busted our butts and worked more, got better raises and saved even more money. But it wasn’t worth it since we wouldn’t really reach FI that much sooner.

  • Awesome post Justin! Thanks for your transparency and your extremely detailed post about your journey to FI. It is a true inspiration for many of us on the same journey.

  • I always like to see the journey to financial independence. And yes I am a financial voyeur. I think another commenter mentioned it already and I know you didn’t really keep track of expenses early on but that would be a great post to see how you guys were able to save so much. Well at least the big expenses like housing costs, childcare costs, student loan, and groceries.

    • I have a post on our expenses from 2010, 2011, and 2012. I used those expenses as a basis for developing my full retirement budget.

      We basically spent around $2,000 on core expenses plus another $2,000 on mortgage, childcare, and student loans. The latter $2,000 are expenses that go away in early retirement.

      I just didn’t keep track of the spending before 2010, so those first six years of “adult” life are kind of a financial mystery other than the fact that I know what we made and what we saved, which means we didn’t spend much more back then in the early years than we did in the last 5 years.

  • I really enjoyed this post. I really appreciate when early retirement blogs like yours break down the income and savings during the working years. I’m 35 and pretty much just started saving large amounts over the past year. This post just gives me the motivation to “keep on keeping on”.
    With my boyfriend on the same page (though not putting as much into investments) I think we’ll be on track to be able to retire within 10-15 years.

    • Someone else commented here that it doesn’t matter when you start investing. He was in his 30’s when he started saving and investing heavily and basically replicated what I did over the next 10 years. So if you stick with it, you’ll definitely have a huge pot of money in 10 years. Come back to visit if it works out! 🙂

  • I’m following an ordinary and boring path. Right now I contribute 25% before tax into my 401k – which I’m not maxing out because my company only allows you to contribute up to 25% of your salary, and I make less than 72k (so annoying). Still, I have an ok amount invested to the tune of 60k in 2.5 years post-college despite that nuisance.

    I can’t help but notice how much it helps to have another person going at it with you. You both get there so much quicker.

    • Hey you’re doing good! Mrs. RoG had that same 25% limitation on her 401k contributions and this is the first year she’s able to actually max it to the federal max limits (but the last few years she’s been pretty close).

  • Nice journey! The great thing about hanging out w/ millionaires such as yourself is that the chances of getting free drinks goes up! B/c after all, you’re a millionaire! 🙂

  • Hey man I really liked your story. I’m currently in college and was wondering what steps were taken to get a condo and 40k right out the door? I’m really interested in retiring before 40. So any help would be beneficial .

    • At the time one of us was working in between undergrad and grad school, so it was pretty easy to qualify for the mortgage (and the condo was only $71k, not crazy expensive). Most of our financial success came from saving a lot of money consistently every year.

  • Thanks for sharing this! What a fun post to read.

  • I just don’t understand how the math works in your table. Example, 2012 you made $69,000 and $62,000. You say you added $102,000 to investment accounts. Well $69k+$62k = $131,000 – $102,000 = $29,000. I guess you paid almost zero tax but then you made extra payments on the mortgage… So did you live on like $15k a year?

    • That’s not far off from what our actual expenses. Looking at the year before and after 2012, we probably had a little extra cash or a tax refund or something that hit in 2012 that gave us extra cash to invest. We would also loan small amounts to family so maybe we were repaid in 2012 and that’s where some extra cash came from.

      • Thanks. Very impressive! So with three kids you are spending significantly less than MMM with one.

        We’ve got a long way to go. Minus mortgage and daycare ($10k/year) we still spend $40,000/year. Higher CoL area but still. Only thing saving us is higher incomes but inspiring to hear about how much efficient others are.

  • Thank you so much for your post! As a regular lurker in the Bogleheads and r/financialindependence forums, I have rarely seen these kind of success stories where the OP has a family with kids and a “modest” income. Really brings the possibility of early retirement to life for me. Thank you for your transparency and analysis!

    • Thanks for the kind words, Dan. Yes, it’s definitely possible to save a lot of money over time if you’re conscious of spending and put a lot into the markets each year. Glad to serve as an example of a normal person doing just that!

  • That’s pretty awesome. I love your graph. The steep upward climb is unbelievable. Your low cost of living is the secret sauce here.
    I didn’t keep meticulous record until about 2006. Our net worth is increasing, but our slope is much more modest.
    Thanks for sharing!

    • The last few years before I stopped working really were steep. It was almost unbelievable how fast the NW rose at that point, but it’s a natural consequence of putting the money in investments and waiting for the markets to go up.

  • Well done you guys! I wish I had the foresight to do as you did but I’m super inspired anyway and I’m going to share the hell out of this post!

  • Love the blog! Your breakdown of your 2014 taxes convinced me to go through the exercise of doing my taxes by hand, and I ended up catching a few things that my accountant missed, so thank you for that! One thing that jumped out in this post was your decision to do a cash-out refi in Year 2. Can you explain your thought process there, especially after seeing that you ended up paying off the house this past year? The reason I ask is that I am in a somewhat similar position (only with regards to the house, not to having more than $1M saved up unfortunately!). I bought my house as a foreclosure and put 20% down to avoid PMI. I also paid all the renovations in cash (or on credit cards paid off w/in 30 days to be more accurate). So my mortgage is–I’m sure–much smaller than any of my neighbors, but a lot of my net worth is locked up in the house, not enjoying the benefits of compound interest. I dont expect houses in the area I live in to appreciate much in the next 10 years. Should I consider pulling the money out in cash-out refinance in order to boost my retirement funding?

    • Doing a cash out refinance to invest is a little risky (or a lot risky!). We knew we could easily cover the higher mortgage payments with one income, so it wasn’t a big risk in our situation. So consider how much more the monthly debt service would be if you cash out refi.

      The other issue is valuation. I’m a crappy stock market timer because it’s really hard to get it right. But back in 2004-05 when we did the cash out, the SP 500 was sitting about 20%+ under the peak it reached five years earlier, so it seemed like a good enough time to buy. I was proved wrong in 2007-09 then proved right not long after. 🙂 Today, the market is still near all-time highs in most sectors and asset classes, so I’m not as confident that right now is a great time to cash out refi and stick it in the market unless you really don’t mind the risk of being in the negative for the next 5-10 years if the economy gets soft in the near future.

  • Pretty sweet post. Our first six years are looking quite identical (we had better returns than you, and we spent more, but not by a lot).

    We’re going to put a pause on wealth building in the next few months when I step out of the work force, but I still think that within the decade we could be millionaires (depending on when Rob graduates, how much we actually invest, etc.).

    • Awesome, Hannah! Having that much already from the past six years means you’ll still see a lot of growth even if your combined income drops once you’re out of the work force. Once you have that base, becoming a millionaire is just a matter of time.

  • It’s inspiring to see someone else take the same financial path as I have planned. I’m a few years into work and my wife and I have our own spreadsheet of yearly future net worth estimates that we keep chugging away at an increasing speed due to compounding. I am an engineer as well. There must be some correlation between being an engineer and working towards FI as it seems there’s a disproportionate amount of engineers. Must be our striving for efficiency and mathematical skills applied to finance as well.

    • I think you’re on to something. I was a spreadsheet jockey at work, so putting together my own spreadsheets to track net worth, investments, etc was simple. And we took a semester of engineering economics where we looked at net present value of future payments, time value of money, comparing different projects by applying discount rates and that sort of analysis. Definitely helps make the A vs B decisions in life including the timing of present and future payments and income.

  • That is seriously impressive that your portfolio outpaced your earnings! Thank you for sharing this breakdown and proving, once and for all, that it’s entirely possible to build a large portfolio and retire early even on a modest income. I still see so many comments online from people who think that you have to be a DINK household with six figures each to retire early (and, ok, this happens to be us), and it’s clearly not true. You guys rock. 🙂

    • I’ve seen those comments too, and it always baffled my mind since we were doing pretty well accumulating a nice nest egg on regular salaries (for college grads).

  • I love seeing your information, at the same time, it’s depressing because we have higher incomes and are still working on improving our savings. Hopefully, our graphs will start to sharply increase in the near future as well and we’ll be retiring by 50!

  • One of my favorite things about your blog has been your transparency . . . this is awesome! It truly shows that you don’t need to make six figures for 2 decades to reach millionaire status. Keep up the great work! Inspiring read!

    -DP

  • Nicely done, sir. I made up my mind last year to pursue early retirement. We’re about the same age and started working at the same time. Had I known that retiring in your 30s was a realistic option, I may have saved as carefully and aggressively as you did. But I’m not starting from scratch, so I should be able to get out of the rat race before I turn 40. You and your wife’s journey is certainly an inspiration; thanks for sharing and for providing much useful advice for those of us who want to follow in your footsteps!

  • Very impressed. Makes me want to increase my savings rate even more. Do you know what your annualized returns were over those ten years?

    • Investment returns:

      2005 – 11%
      06 – 16%
      07 – 9%
      08 – -37%
      09 – +37%
      10 – 19%
      11 – -7%
      12 – 20%
      13 – 24%
      14 – 4%

      This should match up pretty closely with the annual additions and year end values in the table, but might not be perfect. The % returns I’m showing are for the parts of my portfolio that were invested by me. But some part of it was in cash or in the ESOP controlled by my former employer.

      • EscapeVelocity2020

        I have a similar amount of data as to what went in to this post, so it’s fun to benchmark. What is interesting to me is that your 2005 and 2006 weren’t higher for you guys. We had NW gains of ~50%! 2008 was our only negative year, but it was less negative than yours. We were expats and my income was very helpful. Plowing all of that into things like GE and PFE in the low single digits really helped. I just liked the dividends, but that and the capital appreciation over the years has been quite nice.

        • Maybe you guys were adding more funds each year so that helped NW growth? We were ~100% stocks the whole time, with half of that in international stuff, so that might make a difference.

  • I can’t get my head around some of this math. In 2006 you had gross incomes of 95K, and managed to contribute 75K. How is this possible? Did the 20K remaining cover your income tax, accommodation, food, health care, transportation, etc.?

    • I was wondering the same thing most other years you lived on much more than that if you do the math. So that was a very frugal year indeed! I guess that was before some of the kids and maybe you did not make any extra mortgage payments that year?

      • Some years expenses were higher, others they were lower so we saved different amounts each year. Yes, it might be we didn’t make extra mortgage payments or we refinanced the mortgage and took a little cash out or didn’t have to pay the mortgage for a few months.

    • On top of $95k combined salary, we had another $5-6k of 401k matches and some years another $6-10k of profit sharing contributions (but I didn’t track those separately from “additions to investments”). So the $75k of additions to investments was probably something like $65k of our cash and $10k of 401k match and profit sharing (ESOP). In other words, we had $30k (maybe a little more) for taxes and living expenses. I didn’t track expenses back in 2006 so I can’t tell you exactly how much we spent.

      • This still does not add up. I could be wrong but I think the max 401K contribution in 2006 was around $15K so that would be $30K with you and your wife maxing out. Add in the ER match +$6K +profit sharing of $10K and you’re at around $46K. Where did the other $29K come from?

  • Great article! (As always, really enjoy the Blog)

    I also like the conversation in the comments that the 10 years can be anytime. I’m 35 now and just getting my NW to zero. Idea I could start late and still have a chance to escape at 45 is pretty enlightening/encouraging.

    Also my wife has a govt job with “nearly free” insurance also plus access to 403b and 457 like you. We are no where near taking full advantage of that space but nice to know its there when we’re ready!

    • Sounds like you are set to do some hard core savings over the next 10 years! Even if you don’t have enough to retire in 10 years, you’ll be way closer than you are today if you stick to your plan.

  • Hi Justin,

    So very impressive. I hope lots of people look at that and at least say, “if that family of 5 can hit a mil in under 10 years, I should at least be able to do that in under 20 years!” (because they CAN!)

    I’d like to do the same historical review as you did. The good news is that I’ve been tracking my annual account balances in a spreadsheet since 1997 and I can pull my income from tax returns or from SSA.gov. The bad news is I can’t figure out how to differentiate my savings versus the growth of my investments. How did you do it? Do you or anyone else have any advice? I can live with just being in the ballpark.

    • I kept track of all my portfolio inflows and outflows each year (starting in 2005; 2004 was educated guesswork). Those inflows include 401k contributions (including the match), IRA contributions, adding money to a brokerage account, etc. Outflows are if you take the dividends in cash and spend them or sell investments and take the cash outside the brokerage account.

      You could theoretically go through 10 years of account history online (if you haven’t switched brokerages or rolled over 401k/IRAs).

  • Thank you so much for sharing this! It’s one thing to read about ER in theory but much more helpful to see the actual numbers and hear about the experience behind the amounts for each year. Great motivation to stay the course by keeping expenses low and increasing the savings rate.

    • You are welcome!

      I agree – it’s a lot easier to understand how relatively simple (not necessarily easy) it is to hit a big savings goal after 10 years by seeing the year by year progress.

  • Thanks for the post- very insightful to see the numbers laid out like that. It’s easy to look at people that successfully saved large amounts of money and to think “they must have had some advantages that I do not.” While that may be the case at times, more likely it’s that “they just managed to save a much higher percentage of their income.”

    I’m curious- what percentage of your savings/portfolio ended up in retirement/tax deferred accounts vs taxable ones? You mention maxing out 401ks & IRAs every year, so I assume it is quite high. This is fine while Mrs RoG is still working, but if she were to retire, you would have to live off of only the taxable portion for the next 20 some years, right? I’m curious, as the vast majority of my savings are in tax deferred accounts, and while advantageous for growth…not so much for early retirement. Thanks.

    • Yeah, no inheritances or options vesting and the company going IPO here. I wish though! 🙂

      As for our retirement vs. taxable assets, it’s something like 70% traditional IRA/401k, 5% Roth, 25% taxable brokerage account. The taxable brokerage account has over $300,000 in it, so that’s roughly 9-10 years of living expenses without any growth.

      While we are living off the taxable brokerage account, we will be setting up a Roth IRA Conversion Ladder. Follow that link for the full explanation, but it’s basically a way to convert traditional IRA/401k assets to Roth and then withdraw them penalty free after a 5 year waiting period. So we shouldn’t have any problem accessing all these retirement accounts in the near term with a little planning.

  • Thanks for sharing! As a younger person, I’m always trying to figure out the older folks have accumulated so much money (no offense there). I think it’s super cool you have reached FI. Now I have an idea….just keep saving and investing.
    So how much cash do you keep on hand for your emergency fund(liquid savings)?

    • Right now we have just under $30,000 sitting in the money market drawing 1% interest. That’s about 1 year’s worth of living expenses, and we could probably stretch it to 18-24 months since we’ll be getting $10,000 per year in dividends from our taxable brokerage account too.

      At this point it’s not a emergency fund as much as a cash buffer so we can sleep at night. Virtually the entire rest of our portfolio is invested in equity mutual funds, so there’s a lot of volatility month to month. I’d hate to have to sell when the market is down.

      I also like this large cash buffer because I can make financial moves instantly without worrying about where cash is coming from or which securities to sell and what the tax impacts might be. We could literally walk to a car dealership and own a new (to us) car in 20 minutes if we needed to (for example).

      While working, we rarely had more than $3,000 in checking and money market. Just enough to pay 1 month’s worth of bills in case our paychecks got screwed up or one of us lost our job. That way we would have a full month to figure stuff out in terms of cash flow and repositioning assets. Might as well have almost all your wealth working for you while you’re in the accumulation stage of wealth building.

  • I wish our records were that good but I wasn’t too concerned about it. I could probably find our old tax returns if I really looked. Y’alls story is amazing. Seeing the progress broken down year by year is inspirational. Especially given y’alls life circumstances. Most people think there’s no way they can afford to retire, let alone retire early. Yet with 2 middle class incomes and 3 kids y’all were able to reach early retirement in a relatively short amount of time.

    • Old tax returns or social security statements are great places to look if you want to find your historical earnings. I was lucky to start tracking my net worth and investment balances since the very beginning of our post-college years, so I know exactly how we did. Pretty cool when you look at the historical results!

  • Great article, Justin. I really love your transparency on this blog. It’s kind of crazy to see all the numbers laid out. Something that really jumps off the page is how much market returns can affect your bottom line. It’s really a shame that some people lack the knowledge to feel comfortable investing in the market. Hopefully in another 8 years, I’ll be where you are today 🙂

    • I always tell young people to get aggressive in the market and let your money grow for you. If you don’t need the cash for 10+ years, don’t worry about daily or yearly fluctuations in value. Just let it grow!

  • What an utterly brilliant and inspiring post – thanks for going into detail on how you did it…with children too – wow!

  • This is an amazing, inspiring account, thanks for taking the time to document your path. We have followed essentially the same ‘boring’ route, but ours took longer than 10 years. My wife and I never earned outsized salaries; our financial success has been due mainly to a commitment to saving, which of course requires a commitment to controlled spending. I believe just about anyone can do the same as you and I, if they choose.

    • Good to hear from someone else that walked the same path!

      I think there are a lot of us out there (maybe not many doing it in 10 years though). Just sitting back, going to work each day, and piling money into investments quietly.

  • Really enjoyed as many others have, sent it to the wife, so you know I was impressed;) As I personally switch to a pay off debt vs invest change in 2016, it will be exciting to see all of the build up. Real estate is our catalyst, but making the switch to a heavy investment strategy will hopefully lead us to this zero to millionaire thing your selling;)

  • This article gives me great hope as I am still starting my journey. I am documenting this in my blog and my goal is retire by 50 🙂 Wish me luck!

    Cheers
    MrRicket

  • Thanks much for this road map of your plan!!! I’ve been working for 9 year but only my 6th year on the goal to save and retire early… I am on pace with your year 4 networth totals.. However, my biggest problem is I am so far doing this on a solo income since It’s just me at this point.. No Significant other to help achieve quicker success..

    I’ve increased my annual income to just over 6 figures now so I’m picking up some momentum.

    Thanks again for sharing this really helps put it in perspective.. I’ve been hoping to retire in about 2 years.. but thing I really have about 4-5 years to go before I call it quits.. Cheers!!

  • Wow! What a great story! Thank you for sharing your success. I am working on my own early retirement plan but in reality it has been much more slow going due to a divorce, a ton of consumer debt, cash flowing school for my lovely wife (second marriage) and our six children which as you all know can be expensive to raise. At the young age of 39 I made the decision to become debt free and together my wife and I have begun to build our wealth. What is said is true- building wealth is easy but making the commitment and carrying out the steps needed is what is difficult. Living below your means and not keeping up with the Jones-es truly does help to build wealth. I actually like the work I do so my fire date is set for December 2025 with the hope of hitting our goal $1 million in savings right before then.
    Again thank you for sharing your story it really has helped me to continue on the path towards financial independence.

    • Wow, six kids. That’s a handful ignoring the financial implications. We would definitely need a larger car and possibly a bigger house (or at least more bunk beds!) if that was us. 🙂 $1 million should still be easily doable if you consistently save though.

  • Great post with great detail! Way to go being such a super saver too! Very inspiring to show people that even on a “normal” salary becoming a millionaire is well within reach if people are willing to leave frugally and make the right investment choices. Congrats on reaching FIRE!

  • A stupendously inspiring article! I’m always upset that I only started putting money into the market a few years ago, and not in 2008. I was in bank account for many years, and property for a few more, but finally realised I was climbing the down escalator with that bunch. I should be good to go at around 40 though, so still very early in “normal” terms, so I know I shouldn’t dwell on the what-ifs. Easy to say, harder to do!

    • At least you realized you’re going the wrong way on the escalator so you change your direction. 🙂 Some people just keep sprinting the wrong way on the escalator and wonder why they’re exhausted yet still broke.

  • Wow, I’m so impressed that your investments exceed how much you’ve made in your lives! Unfortunately we spent a few too many years in our twenties being financial morons, but thank goodness we finally woke up. Now we are well on our way to being millionaires. Wish we hadn’t wasted so much of our twenties, but we learned some good lessons 🙂

  • Hey, ROG. Loved reading about your tortoise-like slog to financial independence. Very impressive, very insightful. Mrs. Groovy and I have charted a similar course and will pull the trigger on early retirement next year. Like you, saying no to lifestyle inflation has been key. We have a modest home, drive a 2004 Camry, and consider going to Dairy Queen for ice cream a big night out. And because we revel in being boring, we have been able to save 60 percent of our gross household income for the past seven or eight years. Another big factor in our quest for financial independence has been geoarbitrage. We moved from Long Island to Charlotte in 2006 and forever ditched the house payment. Had we remained in New York, early retirement would have been impossible. Kudos to your success. It warms the cockles of my heart when a fellow Tar Heelian makes good.

    • I have heard of tons of people making that one way trip down I-95 away from NYC area and to the NC area and buying a house for cash with the equity they received from selling their old house up north. I guess that explains why our population is exploding down here. Good to see the geographic arbitrage worked out for you!

  • I’ve been following this blog for a few months and I must say I am impressed. Thank you, Justin for your transparency and honesty.

    We are a family of 5 too, with 3 kids (3 yr old and 1 year twins) and we are slowly but surely getting there.

    Your journey is inspiring!

  • This post is just super awesome.

  • Great post! I spent the summer of 2003 in NC when I was in college selling books door to door… I should’ve started investing back then!

    Quick question, what percentage of your money is in qualified/retirement accounts, and how do you deal with early distributions if you are not 59 1/2 yet? What about some of us that might not want to retire but have a part time job or still have some type of earned income?

    • We have about 25% in taxable accounts and 75% in retirement accounts. We will be living off the taxable account for 10 years or so while we do a Roth IRA Conversion Ladder.

      If you want to keep earning income after leaving a full time job, but not fully retire, then plan on using your investments to supplement your earned income each year.

  • Great post, and it’s amazing that you also kept such good records. I like your bullet points at the end. Ultimately, I think that it really helped that you had a goal in mind early on even if the early retirement idea had not been finalized yet. Incredible savings rate, and good to have a spouse who is on board with the plan.

    • Definitely. We didn’t know when early retirement would happen but just kept saving. Wealth creation was the goal all along and the early retirement idea crystallized after we were on our wealth building path.

  • I absolutely Love this post! Thank you for the openness and transparency. Truly refreshing! You made no excuses while achieving your net worth goals and just did it. There are a million and one excuses that others come up with…the kids, the salaries, etc. You have helped many with sharing your numbers; proving that it’s not how much you make, it’s how you manage your money. I’m on my way to FIRE and it is truly motivating to see how well you have done.

  • Ok – Question here (otherwise known as the b.s. flag) – who paid for yours and spouse’s law school? It takes most people a really long time to pay off that debt – especially those with kids and other responsibilities. So how did you BOTH pay for law school?

    • It was a combination of working during summers, student loans, and dirt cheap tuition for in state schools. My school was around $10-12k per year and Mrs. RoG’s was closer to $3-4k per year.

  • Great post! It seems to me that the increasing difficulty in obtaining individual health insurance coverage that is widely accepted by physicians and other providers may pose a problem for early retirees. Most carriers in Texas have eliminated individual PPO plans for 2016 in favor of Obamacare HMOs with narrow networks. And some promise to reduce networks even more in the future while raising premiums.

    What is your family’s plan when Mrs. RoG retires and loses employer coverage?

    • Our plan is to get an Exchange policy with heavy ACA subsidies.

      Your concern about limited networks is an important one. So far the very affordable silver plans we’re looking at offer reasonable networks (though most are limited). Our primary care doc is in network on all of the plans I’ve researched so far. There is a decent selection of specialists and hospitals nearby (we have 3 major hospitals within about 10 minutes, and at least 1-2 are in network for all plans I’ve checked).

      The concern might be a little overblown though. Even on our really good ($10k+ per year paid by employer) corporate provided health insurance policy through UHC, we don’t have access to the closest major hospital with the top trauma center around. So it’s not strictly an Affordable Care Act issue, but rather one of trade offs and limited access given the current framework of health insurance.

      I haven’t figured out how we’ll cover health care for emergencies while traveling within the US but outside of our likely limited network. Most (all?) plans cover emergency care out of network but I think the insured is still responsible for any bills above the reasonable and customary charges. I don’t think paying thousands of dollars in additional premiums for nationwide coverage is the answer, so perhaps spending a few hundred dollars on travel insurance that covers health care is a better solution.

  • perhaps i missed something – if you graduated law school in year 1, 2004, that would have made you about 22 at the same. Assuming a 3 year track in law school is pretty typical, that would have made you 19 or somewhere around there when you graduated from undergrad, yes? you were able to put quiet a bit into savings prior to law school graduation too, about $50K at 22, plus the condo.

    sorry for all the questions – would you mind elaborating on your exact student loan debt – up top you reference six figure student loan debt, but then in the comments you mention paying something around $11k/yr for your law degree and $4k/yr for the mrs. Even on a 3 year track, that barely gets you to $50k. Would it be right to assume this additional debt comes from undergrad? your 2013 tax breakdown includes a $600 deduction for student loan interest – which even at a monthly min payment on a $100K loan (without knowing int rate/terms/type of loans/etc.) seems off to me – but then again student loan terms can vary greatly, so thought i would ask since i have some loan debt of my own. would be interested to know how you balance those payments with saving.

    Could you also provide some insight into your expenses, in your post about career path, you mention driving a car during undergrad is this the infamous Honda, whats the car payment and insurance cost? Also, is the mrs a couponer? average monthly food bill in a low CoL area for a family of 5 can run upwards of $600+ conservatively (and thank God you dont have boys!), trying to do a little planning to see what it takes to make this work. in a previous comment regarding your expenses for i think 2011/2012 maybe, a commenter estimated your expenses to be around $15k, and you agreed that it was somewhere in that ball park.

    A little insight into how you are able to achieve such low expenses with student loan payments, car payments, car insurance, food and non-food essentials, childcare (you describe your scenario as cost-effective as your in-laws are your primary childcare option), cable/internet, Christmas/birthday presents, activities, clothing would be so helpful! We’ve cut cable (smartest move I’ve ever made), driving the same car, use coupons (gotten pretty good at it too!) but it sometimes feel like it doesn’t make much of a difference – some additional detailed info would certainly be appreciated!

    Interesting post overall, just have a ton of follow up questions!

    • That’s quite a lot of questions! I’ll try to answer them all fully, but feel free to post any Q’s I missed or follow up Q’s.

      I graduated law school at 23, undergrad at 20 (only took 3 years).

      As far as the actual cost of college/law school tuition versus student loan balances, we were able to save a portion of the student loans at times. I think we got the max federal student loans each year (something like $3-5k/yr during undergrad and $18k/yr during law school). I also had some paid jobs during school that helped cover expenses, including a very nice summer clerkship during law school that paid the equivalent salary of $45k/yr (but only worked that job for 6 months).

      The student loan debt sits at a fixed 0.75% interest rate for 30 years, so we were in absolutely no hurry to pay it off early. We still owe a good chunk of it but don’t plan on making more than the minimum payments since the interest rate is below what I’m earning in a zero risk insured money market account. As for your student debt situation, a good general rule of thumb is to pay down any debt over 4%, and definitely don’t invest in a lot of bonds paying less than 4% if you have a bunch of 4%+ debt. But I would contribute to a 401k to at least get the match, and possibly max out other retirement accounts (for the tax benefits) before prepaying student loan debt depending on what the rate is.

      The car was a Honda Civic (Mrs. RoG drove a Honda Accord). Both were purchased brand new in college with a 4.9% loan (I think) with a 3 year term. Payments were $453 for mine and $511 for Mrs. RoG I recall. Insurance was expensive at first for me since I didn’t have 3 years driving experience at the time (I went car free for 2 years during college). Maybe $2000/yr?? After I became an experienced driver, our insurance dropped a lot. Eventually we dropped comp. and collision coverage and ended up paying around $500-600/yr for the later years (other than a 3 year period that was slightly higher due to a moving violation). More on our cheap auto costs. And thoughts on saving on insurance.

      For groceries, we never coupon. Here’s what a typical month of groceries looks like. Lots of store brand stuff, whole fruits and vegetables, beef, chicken, etc. Relatively little convenience foods or packaged single serving type stuff that comes with a huge per serving cost. Aldi is a big part of it – prices there are usually better than name brand stuff with coupons. I will sometimes shop the grocery store sales (maybe 2x month) for their loss leaders.

      I don’t think our actual expenses dropped to $15k in 2011/2012 but probably more like $20-24k for core expenses plus some more for mortgage payment and child care. I guess $24k is “close” to $15k when some can’t get their spending under $100k! 🙂

      As for how we spend so little, here’s a summary of all our expenses for a few years right before I retired. Here’s our October 2015 monthly spending report and that link includes a link to all other months of spending in 2015 if you’re curious just how we cut our expenses so low.

  • I just started reading your blog today and it’s safe to say I’m addicted to it! It’s amazing to see how much your investment accounts increased over 10 years. Most people who get laid off consider it a negative thing, you however turned it into a postive and considered it an early retirement!

  • I may have missed it above. What were you doing for living arrangements? Did you have a mortgage? Health insurance costs?

    • For these ten years, we had very affordable family health coverage through Mrs. Root of Good’s employer. Most years we used a high deductible ($3000 to $5000 deductible) plan that cost $400-900 per year during these 10 years.

      We had a mortgage until 2015 when we paid it off a couple years early.

  • Just saw an article on you and was encouraged about retiring early. I was wondering now that you are retired, how are you receiving passive income? Is it mostly through your stock investing? Thanks.

  • I’m curious as to if you invested the monies as they became available or accumulated until the end of the year? I’m assuming that it is dollar cost averaging in as it became available so as to maximize the time in the market. thx! (and yes…found you via USAtoday 🙂

  • I feel like a total dummy asking these questions after reading through your article. Something I am not sure I get it right and hoping you could help me understand.
    1. How do you save so much every year? For example on year 3, both of you making $95K but you saved $38K = $75K total input to portfolio – $37K gain of investment. How is that possible after tax, and mortgage payment and food and another necessary expenses? I just want to learn how to save like that.
    2. How do you have investment return that is $37K a year? Do you buy high risk stocks? Do you have someone to manage your investment? I do want to learn on this as well

  • I love your story, thank you for sharing it! I just wanted to know the reason why you didn’t invest (any) more in real estate. Do you find it harder to do, or do you think it doesn’t built wealth as fast, or any other reason? Thanks!

    • I think real estate is a great way to build wealth if you know what you’re doing. We have done well on both of the properties we have purchased in our life (sold the first one for a decent profit after profitably renting it for a couple years; our current house we bought at a steep discount to FMV as a bit of a fixer upper).

      But it can be a lot of work. It wasn’t something I wanted to take on while working full time and raising kids. Later in life when I have more free time I might get back into the rental game.

      • Thanks Justin for your answer. It’s interesting, because I guess we do what we know about/understand better. We are actually building our net worth through real estate, paying down as much as we can so we don’t keep huge mortgages and making sure that they are at least just neutral or a little bit positive, since we (my husband and I) haven’t learned much at all about stock/bonds/shares etc. So personally, the latter would be riskier for us, to invest in such a way. I think the risk lays where we are less educated, whatever that is.
        This said, I do have the impression that real estate might be quicker to increase net worth, although it depends again on how aggressive one is I guess. We don’t buy fixer-uppers as we have jobs that keep us very busy and we want to spend the rest of the time with our family; so we try to buy new but with some kind of discount in them to make sure we do have equity built-in, and we have agents managing them so we don’t have phone calls in the middle of the night (that’s factored in the neutral/positive calculations).
        Thanks again for your great blog 🙂

        • We did pretty well with the one rental we had for a couple of years, but with full time jobs and kids it wasn’t worth the effort (compared to the minutes I spend each year managing our $150k worth of REIT index funds). Other than clicking a button to buy them years ago and the occasional effort to rebalance the portfolio, I spend no real time.

  • Hey Justin. First timer here on your blog after listening to the podcast over at Mad Fientist. I really appreciate this top-level net worth breakdown, and have to say it’s the best one I’ve seen on any FI blog yet.

    One thing I can’t figure out though is how you and all the other 70-80% savings rate achievers are able to sock away that much money in a single year. Take your 2012 year for example. You’re showing a net salary of $131k between you and your wife, and somehow you’re able to add $102k to your portfolio. Let’s say 10% (which seems generous) of that is company match and the other $90k is somehow tax-free. That leaves roughly $40k (pre-tax) with which you were able to pay down a mortgage and live off of as a family of five for a full year? I can’t figure out how people are making those numbers work.

    Is it possible for you to detail any one of your portfolio years a little more closely? My wife and I make about the same, bought a great house at the bottom of the real estate bust in Phoenix, no car payments, virtually debt free, don’t buy what we don’t need, etc. and I just can’t figure out how people are hitting these savings rates. We’re early 30s with a modest portfolio at this point so I’d love to be able to exponentially ramp it up every year over the next decade.

  • Details! Thank you so much for sharing the details. I am new to being on the path to early FI. Seeing the numbers really is helpful and inspiring. I appreciate this post so much and will bookmark for future reference.

  • I know this is an older post but still my favorite. In fact it inspired me to try to do the same for our journey and share as much info as I can for others to see. Hopefully the more we share, the more others will too and the subject will stop being so taboo and we can start having more meaningful conversations around how to best approach this.

  • SustainableLiving

    One important thing to note is that on a “slightly-higher-than-normal to the rest of the US salary” this is MUCH more difficult, if not impossible, in a high Cost-of-Living area such as the Washington, DC, metro area, especially if you have to deal with unavoidable expenses that others simply do not have, e.g. multiple food allergies, special needs child(ren), etc.

    Moving to a reasonably safe place with
    * reasonable housing costs (where it doesn’t cost $300,000 for a 2BR/1BA 900sf CONDO for your family of 4 or similarly-sized 1950’s houses start at $600,000),
    * low total tax burden (some states levy hefty annual taxes, including tangible/personal property taxes on all vehicles, even 15-yr-old cars) and
    * reasonable day care (or low-enough overall CoL for one parent to stay at home)
    is essential.

    It’s easy for people brought up in these areas to think everywhere is just as, or nearly as, expensive as their home city, but there’s such an astonishing difference in housing, cost of living, commuting expenses and harder-to-assign-a-financial-expense-to LIFE-DRAINING COMMUTING TIMES, that it needs to be said again and again that unless a person truly LOVES their situation in an area like that (e.g. it’s hard to become a top-10 actor if you live in Sac City, Iowa vs. Los Angeles), they need to MOVE to another area of the country.

    In contrast, I have a friend who lives in VA, in the DC metro area (a place I left once I finally realized that happy FIRE would take forever there without extended family nearby or a huge income). They live in a 1400sf 1950s house, his parents provide free childcare, and her husband makes over $350,000/yr as a lawyer. She complains that she can’t make a decent income on her own (at least admits she doesn’t need it), but doesn’t mind that he’s gone 8AM-midnight 6 days a week, hardly ever seeing their kids. She wouldn’t consider moving because her Russian network is based there and because “the rest of the US is soooo boring!” They have no plans to retire early. It’s working out great for her (poor kids), but for others not in that (crazy) boat, I would consider finding a job or starting a business somewhere else. (Yes, I wrote “poor kids” based on how often I heard her kids complain/say sadly that they never saw their Dad.)

    There are wonderful places in the US outside of big cities. There are wonderful people in the US outside of big cities.

    You never ever get time back, not with your aging parents, elderly grandparents or your loving young children and babies.

    • All great points. Many times the larger salaries in high COL areas don’t offset the higher COL, especially after factoring in the cost to live within an easy commute of your job (what would my 10 minute commute cost me in NYC, for example??). There’s a reason why so many people leave high COL areas and move to places like Raleigh.

      You make a good point about other non-big city places being perfectly good places to live and work, full of very nice people. There seems to be a certain snobbery from some big city folks that can’t imagine moving to a mid-size city because they wouldn’t have the exact same set of restaurants/stores/people as they do in their own little enclave back home. To me, there’s little utility in having 1000 ethnic stores and restaurants when 100 is more than I’ll likely visit in a year (100 being the minimum number of ethnic stores and restaurants available in virtually every mid-size US city I bet!).

      In our neighborhood in Raleigh, there’s a middle eastern store (carries Russian, Iranian, Turkish stuff too), tons of Asian stores, an African store, a few Mexican/Latino groceries, and all kinds of restaurants. All within walking distance. It’s like a big city, but at a fraction of the cost. Maybe I’m spoiled though.

      • Ha, I was actually one of those people that moved from high COL to southern USA thinking that I would compromise on the fun, diversity’ and much lower salaries. To my shock, I not only found a much better salary (now THAT I was not expecting at all) but incredible diversity! Ethnic groceries, so many restaurants, and a lot of colleagues from diverse backgrounds that have allowed me and my kids to be friends with people we would perhaps otherwise not.

        Also this place is so great for families and everything is so ‘easy’. Parking is so cheap and plentiful, it is crazy. The cost of my home is the exact price of our tiny condo – that was a fun swap for us. And did I mention how much better the public school system is? And now I have time and money to go on vacation to the REALLY fun places where you can actually take advantage of them (whereas if you live somewhere and working it is hard to go experience those things on a regular basis).

        We saved a ton in the high COl area by not having a car, living in a small studio (loved under 600sqf living near metro), etc. all pre-kids, but I am shocked that by making this move South even though we need cars now and a longer commute, we are on our way to retiring early too AND having money to live ‘now’ and travel with our kids. No way I could have make that all happen in our previous city.

        I am most amazed by the amount of stuff and esp size of houses people need to be ‘happy’. The thought of anything over 2100 square feet makes me sick in terms of cleaning alone! (lol lazy mom move for financial win!). When kids are gone, we are looking to rent studios or 1 bed max again and living with one suitcase each and move a ton like we did in gradschool abroad – best year of our live, that feeling of freedom from stuff and you can just pick up and go. People these days pay for storage for things they cannot keep in their house! That gives me a headache (other than in between moves or whatever).

        I think you can make things work anywhere, just a matter of ‘what are you sacrificing’ but certainly there are places out there than make it MUCH easier. People are scared to change, but once you try it it is SO liberating as possibilities are endless.

        • And one can always live in a 600 sf studio in a low COL city and save even more! The studios and 1 BR condos down the street from me sell for $35-50k and rent for $400-500/mo. Walkable to transit and groceries, so if your job is walkable, bikeable, or near transit, it would be very easy to go carless here in Raleigh (with the occasional Uber or car rental).

          I’ve never understood the fascination with a big house or tons of stuff either. But one thing we noticed is having 2+ bathrooms for the five of us is really nice (after staying in some airbnb apartments and houses with just one bathroom). Cleaning that second or third bathroom isn’t as much fun though. 🙂

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