State of the Bear Cave – 2016 Year in Review
So we’ve been doing this blogging thing for a little over four months, and trying to execute our plan to leave our jobs for only a little bit longer than that. Now that the new year has rolled around it’s time to get a complete look at the year that just passed. There were some big milestones in our lives and we made significant progress towards our goal. Just how much surprised even us.
Bottom Line – Net Worth Increase
Our net worth reached $1M this year. I guess we’re officially millionaires now. Feels a lot less special than I thought it would. This is almost double what we had at the beginning of the year, an increase of over $500k.
This increase came from a few different sources. The gain was split about halfway between investment returns (increase in the value of our house and the returns in the market) and good old fashioned savings (contributions to investment accounts and paying down debt).
The Grizzlies make a lot of money right now, that fact is staring us in the face. Between the two of us, we took home around $378k after tax (a little under $550 before tax). We were able to divert 71% of this to paying down debt and contributing to investment accounts, for a total savings of $269k. The bulk of this went into our investment accounts, but there is one very significant milestone for us in 2016.
We completely paid off our student loans. We started off a few years ago with over $250k in student debt – all from graduate school. This year saw the final end of that albatross around our neck. It’s nice to be free. We go into a lot more detail in the post above, but getting rid of this debt was huge for us.
Reduction in Cash
Another element worth calling out is that change in our cash position. Before this year we were carrying almost $40k in a no-interest checking account at any given time. This was dumb. Don’t do this. I knew this at the time but was too lazy to do anything about it. We’ve now deployed that cash to more useful purposes, like helping us make that nice $60k gain in the market.
On the other side of that 71% savings rate are the expenses we racked up for the year. Our expenses totaled around $109k for the year. But I like to think about it as a tale of two years – The first five months and the last seven months. During the first five, we were still spending extravagantly. In the last seven, we cut back.
Our average monthly expenses after you take out daycare and the interest on our mortgage dropped from around $6k to a little under $3k – 50% decrease. We went from spending at an annual rate of $70k per year to spending at an annual rate of only $36k.
Overall, not a bad year. Hitting a million dollars in net worth, completely paying off our student loans, and cutting our annual run rate of discretionary spending is half are all pretty significant. But by far the most significant piece of all is simply finding this path in the first place, realizing that there was a way out that didn’t involve spending the next 40 years in our jobs. I go back and re-read our first post every so often to remind myself how lucky we are. For our jobs, our health, our family, but most of all for finding a better way through life. Happy new year everyone!