Black Wealth – We Reached +$750,000 in less than Five Years
While unbalanced, August 2022 was a solid wealth re-calibration month for the Neighborhood Finance Guy (TNFG) household.
While my wife stayed behind with the puppy, I started my epic travel season. At least one flight every month through the end of 2022. First a work trip to deal with the rental property and a change over in tenants.
Followed by a trip to California to meet one of my best friend’s 10-month old baby. Without any itinerary, I drove to Lake Tahoe for hiking, views and BBQ. On the investments side, there was a short growth spurt which peaked right before the new Student Loan Forgiveness. With nearly $10,000 in home repairs, we ended with around $20,000 worth of expenses.
Table of Contents
We hit a new wealth milestone!
For context, let’s go back in time. We hit zero net worth in May 2017. One of the best feelings in the world. It doesn’t mean that we don’t have liabilities aka debt. Think of it like a breakeven point when your Assets match your Liabilities.
At the start of the pandemic, our net worth plunged a clean $50,000 to $200,000 (March 2020). We stayed the course and luckily keep our job albeit remote. By April 2021, our wealth skyrocketed to $500,000 which lead to a feature on Business Insider. As of now, we hit over $750,000 with a strong wealth snowball in our sails.
“We are truly a far cry from where we started.”
A very long way from counting every dollar of the $1k per month I was making, and stretching it to cover bills and pay off debts (March 2012). Being Poor was a traumatic experience that fortunately didn’t kill my will power.
Just more proof that life can change drastically. If you are struggling right now, it doesn’t mean you will struggle forever. Either way, you have to do more today to help move you forward.
Massive Repairs, Travel and High Prices Couldn’t Stop Us
The pandemic randomly ended or I guess we are dealing with it on our own. The new wave is the Monkey Pox and the weather.
Besides the investment market drama, the world is going through severe droughts. The city of Jackson, Mississippi is completely cut off from water for the potential future. It’s that bad.
It’s getting hard so check up on your friends.
High prices outside, means more opportunity to focus on health and wellness inside. You don’t need more money to start building better habits. Check out TNFG’s Top 3 Best SMART+Er Goal books for inspiration.
Don’t let disaster strike again without a response. Cut back on unnecessary expenses and double down on getting an emergency savings plan. You deserve more than to struggle.
New to TNFG?
If you are new to my content, this blog post showcases the TNFG monthly Net Worth Breakdown for August 2022. There are always usable financial nuggets and aha moments that might help you along the way.
I’ve also been known to be the most transparent financial literacy person on social media, check out how our wealth has been growing since April 15, 2021:
A Million and one Limiting Beliefs in August
“The Man who says he can, and the man who says he can not.. Are both correct.” Confucius
He said this over 2,000 years ago. There is truly nothing new under the sun, the rest is merely acceptance. You don’t have to be the strongest, fastest or most creative. You merely have to be willing to put in the work. Most people obsess about other people. Overly concerned with what they don’t have while neglecting what they do have.
Life is unfair and unbalanced.
Even though the game is unfair, there are always rules. If there are rules, there is always a trick to the game. My wife and I learned that hard and challenging times, are par for the course. They will happen. To mitigate them, you have to start vigilant and work towards better outcomes today.
You will have to challenge yourself to Limiting Beliefs to change your trajectory. Check out the video (below) for tips on how and why:
Going Backwards into Non-Debt Free Territory for a HVAC
The HVAC aka Heating, ventilation, and air conditioning was repaired for almost $9,000 but it will be better for our utility bills in the long run. As well as improve our rental conversation next year. No complaints about the AC for the next 15 years.
On another note, I found out that since 2016; we spent over $32,000 on Amazon deliveries. Have you ever done an review of your purchases because that’s crazy. If a similar amount of around $500 per month was invested into Amazon $AMZN or $VOO for the same period, I would have?
Under the Amazon scenario, our wealth would have grown by +$75,581. While the Vanguard Total Stock Market ETF approach would be up +63,490. Either way that’s a wealth differential of +$100,000.
It really makes you think. And no, I don’t expect you to stop spending money on Amazon. I’m pointing out the little costs that add up. I’m sure that at least $10,000 was frivolous spending.
Investing in a Down Market, taste like Salty Tears
As you can see above, our household portfolio dropped with the start of the year. But at least, we are beating the general S&P. It’s been a drag but this is where winners buckle down..
To think, I started with $500 rollover into my 401k in 2014 when I got to DC. The portfolio is around $500k now, the net/max financial plan and our strategy is still the same (see breakdown below):
- Investing to match in the 401k,
- Paid down credit card debt aggressively,
- Increased my 401k contribution until max (ie limit $20.5k for 2022),
- Started to invest in a Traditional IRA (ie limit $6k for 2022) and Health Savings Account (ie limit $3.75k for 2022),
- Got more money back during tax season, and
- Reinvested some more.
Intentional Living – Investing while Paying Off Debt in 2022
| Tax Deferred or Tax Free | Matching Contribution | Total | ||
| 401ks | Tax Deferred | $41,000 | $9,815 | $50,815 |
| ROTH IRAs | Tax Free at Withdraw | $12,000 | $12,000 | |
| Health Savings Account HSAs | *Tax Free | $6,500 | **$800 | $7,300 |
| After Tax Brokerage M1 Finance | Taxable in the current Year | $12,500 | $12,500 | |
| Group Investments | Taxable in the current Year | $2,000 | $2,000 | |
| Total Investment Contributions | $84,615 |
*Triple Tax Advantage
**Health Insurance Plan Kick Back
Dwindling Wealth. Here’s the market screenshot so far (below)
More losers than winners so buy low and hold:
Investing Goal remaining from September to December 2022
Since we are investing while paying off debt, it’s a long way to Victory but it’s been rewarding. The goal by the end of this year is about +$80,000 investment contributions. We are investing a ton mainly because it reduces our tax liability for the year.
My wife and I aren’t skipping on fun and jumping back to our end of the year international trip.
Here’s the Monthly Wealth Summary:
There was a moment when I though we were going to close at $775,000. And then, it all started to fall apart. Higher freezes, inflation rates, higher credit balance and Will Smith tried to apologize. August was a whole mess.
Well at least we saw an increase in August of 1.00% or $7,460. Home valuation edged upward by +$1,100. People are still fighting over home ownership. There are more benefits to Own your home vs Renting. Especially with rent going up at least 30% from last year while the national average is up to $2,000.
Well at least the financial nerds say that the S&P will recapture losses and settle around 5% this year. No matter where the pendulum swings, you deserve a great financial plan that helps you build generational wealth.
Wait what is Putin doing lately? Oh yeah, causing an energy apocalypse for Europe.
What’s working toward wealth creation and what’s working against?
Yeah about those expenses
This got to be a new record for us in a bad way. Prices are going up just about everywhere. The Federal Reserves still have quite a few rate hikes but it doesn’t seem like inflation is slowing down.
We spend nearly $12,000 on housing costs and $5,000 on travel. While the food is now uncomfortably at around $750; there doesn’t seem an end in sight.
I’m hoping this trend doesn’t continue but I’ve been saying that since 2021.
We purchased a new HVAC system which was always on the table after fixing a plumbing leak and clearing the AC before winter.
All of that was anticipated but the cost still came in and we had to cover it.
Even more expenses working against building wealth
New tenants settled into the rental for the new school year. We also book them a professional cleaning crew as a pseudo care package.
Having tenants that you treat right, can lead to a great relationship over the long term. They are likely to stay for the next three years.
We do need to curtail travel and shopping for 2023. There an epic level budgeting disaster brewing. Happy that the net/max plan is keeping us provisioned thus far.
Income from my wife’s consultation wrapped up so we need to figure out how to bring in more passive income.
For the last 8 months, our YTD investments hit $61,356 while our total debt repayments were $80,084. Sounds crazy but we generally run all expenses on credit cards.
Takeaways for August and the wealth journey in 2022
Growing Up is hard, so let your destination match your mindset.
While it might sound mean, in truth, we will all have to grow up one day. Make today the day where you start to believe in yourself, your family and your trajectory. For good or for bad, you have to act because all the world is a stage.
Last year, China restricted video games for their kids for only three hours per week from Friday night to Sunday Night. They realized that sometimes you have to change your entertainment lifestyle to change the wealth and prosperity outcome. No matter if you like their approach or not, they figured it out.
No one is going to do it for you.
What are our next wealth building steps to close out the year?
Got to bring in more passive income and brush up on Portuguese in three months. We are headed back to Lisbon for our wedding anniversary.
“Travel is our drug of choice.“
Beyond that here’s our overarching goals for 2022:
- Keeping our expenses where they should be. All about, “Not equating happiness and social acceptance based on the money you spend.“
- Do a 401k Rollover and Invest nearly $70,000 in an IRA. Check out our strategy.
- Add $12,500 in M1 Finance focusing on Growth and Passive Income that generates at least $4,000 dividends in 2023. Check out the portfolio in real time. If you like the platform and want to start investing, I have the $10 for $10 referral if you need it. *Terms apply – https://m1.finance/SYdqDJ2SyADC.
- Shooting for a sustained investment rate with the push for $1 Million net worth in 2 Years (by YE 2024). To help monitor your savings, cash flow, net worth, investments, retirement and more FREE with Personal Capital! Sign up with my link & get $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz
- Plan 2023 travel season with a puppy since we can’t over-tap our friends for puppy sitting. We are headed to Mexico and likely do some winter or summer glamping.
- Head back to school in 2023 to eventually study for the Certified Financial Planner designation. I’m sure I know this stuff but this will add more credibility to my online news features.
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