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Net Worth Gains through the Years
I love, love, love Quicken and have been using it for years -- almost two decades now. One thing I like so much about it is that it allows me to track my net worth and see my progress over time.
I thought I'd share my net worth gains by year (from Quicken) to demonstrated how the path to growing your net worth is not one straight climb. Sometimes it's up a bit and sometimes it's up big. And sometimes it's even down. Here are my results.
Over the past 17 years, my net worth has had a compound annual growth rate (CAGR) of 12.5%. But the gains versus the prior year have never been 12.5% exactly. Instead, they are as follows:
Buy Term and Invest the Difference
I've written a couple times about buying term life insurance and investing the difference. For those of you unfamiliar with the phrase "buy term and invest the difference," it simply suggests that you do not buy permanent life insurance and instead by the cheaper term life insurance and invest the money you saved doing so. If you do this, you'll end up having more money in the long run as well as life insurance during the time you need it.
Turns out that Money magazine's "Mole" agrees that buying term and investing the difference is the best option for most people:
An Example of How to Save a Bundle on a New Car
I've previously detailed my process for saving a fortune on a new car (and for those of you wondering, here's why I buy new cars). I've used this system to purchase three cars (four now) in the past 10 years, but had never shared the specifics on FMF. Well, a recent new car purchase opportunity came up and I thought I'd detail the process for you.
Background
When we moved to Oklahoma last fall, our intention was to give my wife's car (2005 Toyota Corolla with 68,000 miles) to our son and buy my wife a new car. But we got down here and a few things happened:
Almost Infinite Investment Return
I was browsing through my Amazon affiliate sales the other day and noticed that I had sold copies of two great books: The Millionaire Next Door and The Richest Man in Babylon. I got to thinking about these books, what they contain, and the people who bought them. I also started to think about my own life and how it's been impacted by a few good books. This is when I became VERY happy.
I Just Cashed in $1,600 in Credit Card Rewards
I haven't written much about credit card rewards lately, but that doesn't mean I haven't been using cards that pay rewards. I have been using them -- and as much as possible.
I've discussed previously that I prefer to use cards that offer cash back as I can then use the money on whatever I like -- not just on what the rewards programs offer. Plus many of those points programs seem a bit shaky, designed to give you much less back than you think you're getting.
I use two main cards these days as follows:
- Fidelity American Express -- Pays 2% cash back on every charge made. The rewards are deposited automatically in my Fidelity account. This is my most used card.
- Chase Freedom -- Pays 5% in rotating categories which change quarterly. It's used mostly when either groceries or gas are offering 5% cash back.
I have one supporting card that I use for one purpose as follows:
The Power of Working Your Career
On a recent post, one reader left the following comment:
A Simple Way to Calculate Your Retirement Number
In How Much Money Do I Need to Retire? (60 Minute Financial Solutions)the author provides a simple way to calculate your retirement number as follows:
(Retirement Income Needs - Social Security and Pension Income) / Investment Return after Inflation = Simple Retirement Number
Let's use the following assumptions to calculate a retirement number:
Eight Opening Lines to Network Like a Pro
We've talked about the fact that your career is your most important financial asset. If you really want to grow it (and your income), and you should, networking is a key skill you'll need to develop. But mixing it up with others can be awkward, especially for those of us who aren't great at small talk.
Luckily, I stumbled upon some help. Fox Business lists eight opening lines to network like a pro. Here they are with my comments on each:
“I just tried a slider from the buffet table, and I think I’m going to grab another. Care to join me?”
I hate that this one is first because it sounds cheesy to me. I don't like/use it personally.
Do You Tip Carhops?
Here's an interesting question that's bound to get people in an uproar. :)
Dave Ramsey asks whether or not you should tip your carhop.
Until the end of last year, my answer would have been, "I don't go to any places that have carhops." We didn't have any restaurants in Michigan (at least convenient to us) that used them.
Then we moved to Oklahoma and there's a Sonic every three blocks. If you don't know what a Sonic is, some of you may remember the old A&W stands where you ordered from your car and someone comes out with your order.
So, do you tip that person?
Here's what Dave's site has to say on the issue:
What Does It Mean to be Self Made?
On my post about what we've learned from millionaires there was a bit of discussion about what it means to be "self made". One commenter suggested the following:
If you started off middle-class or inherited anything from your parents, you're not "self-made." Which is fine. There's no shame in your parents' having been able to give you advantages. But it's not the same experience as having come up out of a housing project.
Another responded:
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