Seven months down and five months to go! My life has been consumed with my nine-month-old and my six-month-old. They are both my babies! My nine-month-old son is growing and developing so fast. Every day is a new adventure and a new mission to discover something new. As you get older, it’s easy to lose that natural curiosity that is innate as a child. Having a kid has certainly taught me to pause and enjoy the wonder that fills this world. I continue to look forward to re-discovering the world with my son.
Then there is my six-month-old business and it too is growing so fast. The last six months have flown by and I can’t believe how fast the business has been ramping up. The business was officially born on February 25, 2019, when I filed for my DBA. So much has happened since then. Revenue has grown from $0 in February to $55,000 in July (Total revenue to date is $155,000). In July we grew from a team of two to a team of three and should be a team of six by September. I just secured a $420,000 line of credit just in case I end up with a timing issue between when I’m paid from my clients and when I have to actually pay my bills. To date the business has been able to self-fund. I recently met with a CPA and Lawyer in order to put in the right legal structure to limit both liability and taxes (much more to come in future posts).
On top of this, I’m still working my day job, which I won’t fully exit until the end of the 2019. From my current vantage point, I have two more months that will be very challenging, before I can take my foot off the gas a bit. My plan is to slow things down in Q4 as I wind down my day job and check off the remaining items on my checklist for the business. We have a pre-paid and pre-planned trip to Hawaii in October, which is the perfect motivation and reward to look forward to.
With that, let’s dive into the nuts and bolts.
If you’re a regular reader and only want to read the new content, feel free to just skip the intro below, and head to Net Worth. If you are new or haven’t read many of these reports, I encourage you to take two minutes to read the intro below, which does change periodically.
Why I Share These Monthly Reports
Mission Statement: To Humanize Finance, Build Wealth, and Reach Financial Freedom.
For those of you new around this corner of the internet, these monthly reports are about full transparency. And, they are just as much for me as they are for you. It was a hard decision to make all of my financial details public, but it has proved to be a very motivating one. The process I go through every month to produce these reports has been enlightening and life-changing. I published my first “income and net worth report” for January of 2015 when our net worth was only $195,141, and our gross income was on pace to hit $178,000 that year.
Four and a half years later, our net worth currently clocks in at $1,297,960 with a gross income over the trailing twelve months of $534,101 (new all-time-high).
- That’s a 6.7X increase in net worth due to a compound annual growth rate of roughly 51% for the past four years.
- At the same time, income has increased 2.6X, which translates to a compound annual growth rate of roughly 23%.
Honestly, I don’t think the GYFG household would have experienced these kinds of results without the existence of this blog and the accountability it brings. Knowing that I will share our results with you readers every month keeps me very focused and intentional with all things related to our financial well being. For that, I THANK YOU for taking the time to read and interact with me on this blog.
Above and beyond this benefit to my own household, my sincere hope is that my policy of full transparency will inspire you to take the helm of your own financial ship and be intentional with its direction. I truly believe that anyone can reach financial freedom if he or she is willing to do things differently than the pack. If you’re after average results, then you’ve landed on the wrong site. There’s nothing wrong with average, but the kind of results I preach are EXTRAORDINARY. Sure, the “get rich slow” method is proven, but there is an alternative, which is to “get rich fast.” Look, I have no interest in living like a starving college student until I am old and brittle to only then have the means to check off bucket-list items when my body might no longer be physically capable of doing them. And I don’t want that for you either!
Here at GYFG, we approach the pursuit of FINANCIAL FREEDOM with an abundance mindset, so you won’t hear me telling you to cut out those $5 lattes. Choose to spend on what is meaningful to you. I spend a lot, but I also strategically earn a lot, save a lot and invest a lot.
I hope these reports inspire and move you to action. Don’t take a passive role in your finances and hope for the best. Keep this famous Jim Rohn quote in mind:
“If you don’t plan your future, somebody else will. And you know what they have planned for you? NOT MUCH!”
You must be intentional with your finances if you ever want a fighting chance to make it to financial freedom. But it does not have to take 40-50 years of slaving away for “The Man” before you have the option to retire. I think 10-20 years is all you need, with the most aggressive folks probably able to reach financial freedom in 10 years or less. A high income paired with a high savings rate are two of the vital components of a good recipe for the 10-year track.
I know I don’t have to publish my juicy details every month, but it’s important to me that you know that I put my money where my mouth is (not so many people giving financial advice actually do this). I publish all of my financial details not to brag, but instead to show you what is working as well as what’s not working. Sometimes finance can get pretty dense, and I think real life examples and numbers can help slice through the complexities (and the BS). Personally, I have always enjoyed the financial reports put out by other bloggers around the blogosphere, so I always intended to share my own.
You can find all my previous reports on the Financial Stats page.
Financial Stats Dashboard
At the end of every month, I download a .csv file from my Personal Capital account and drop it into my custom built excel workbook in order to update the dashboard you see below. I’m blown away every month by the progress we have made in a relatively short period of time. Now that the mortgage is paid off and that section is no longer included in these monthly updates, this will become a new monthly staple. The only number below that is not an actual number and instead is a forecast is the current year projected income of $571,027 in the gross income chart below.
Now that we have seen the overall, let’s take a closer look at a few of the items below.
We officially blew past our 2019 net worth target of $1,250,000 this month. The business has added some jet fuel to our monthly income and savings, which has in turn accelerated our net worth growth. Our net worth was up $77,591 or 6.4% in July alone. For the year, net worth is up $285,095. To put this in perspective, we ended 2012 with a net worth of $42,424 and it took 36 months to achieve a net worth of $317,727 (a gain of $275,303). It’s crazy to see a similar size gain in seven months that previously took 36 months.
July Net Worth $1,297,960 (up $285,095 or +28.1% for 2019)
- Previous month: $1,220,368
- Difference: +$77,591
Net Worth Break Down (MoM):
The Real Estate ($638,829) category decreased from 52% down to 49%. This category includes the equity in our primary residence ($463,896), our investment in the Rich Uncles commercial REIT ($73,825), and our hard money loans through the PeerStreet ($101,109) platform. I have been taking capital as it’s freed up from our after-tax PeerStreet account and using it to fund Rich Uncles as we work the RU account value up to $100,000 (which is why the PeerStreet value hasn’t been changing much MoM).
Net Cash ($171,273) increased from 8% to 13%. We actually have $175,927 in cash but net cash is only $171,273 after you adjust for our current credit card balance of $4,654, which we pay in full every month based on the statement due date.
The Business ($234,962) category decreased from 19% to 18%. This represents the ownership I have in the private company that I work for. This is an illiquid investment that only gets an update to its value one time per year. I net the company stock asset value of $446,962 against the company stock loan of -$212,000 to arrive at the $234,962.
Life Settlements ($90,902) decreased from 8% to 7%. We currently have investments in seven policies at $10,000 each. They are accreting in value by about $1,000 per month. For anyone familiar with options, I liken the fixed return of life settlements to the theta of a short option. In this case, the accreted value is like the theta decay of an option you’ve sold. In more simple terms, with this fixed return you are amortizing (realizing) that value with the passing of time.
The Stocks ($155,699) category remained flat at 13% and represents the cumulative value of our brokerage accounts (retirement accounts) that are invested in stocks. However, this is not all of our retirement money, as the majority of our PeerStreet investments are made through a self-directed IRA (worth about $82,000 and counted in the Real Estate category of the pie chart).
Total Capital Deployed in 2019:
I anticipate deploying about $182,000 in new capital this year (of which 66.7% has already been deployed). Although a healthy sum, this is down significantly from the $414,692 that we were able to deploy in 2018. Going forward I expect there to be a lot more month-to-month variability in the capital deployed. About 65% of the 2019 total deployed will have gone towards putting the mortgage to bed (which officially happened in May).
The only monthly deployments we are making are the $1,000/month to Rich Uncles and contributions to Mrs. GYFG’s 401K. We are currently just letting cash build up but I do plan to deploy an additional $26,000 to Rich Uncles in order to get the account up to $100K before the end of the year. That is all I currently have on my radar for future deployments. I am paying back the 401K loan at about $450 per month but it’s not reflected in the above table as I plan to just update it at the end of the year (I currently owe $47,369 of the original $50,000 loan). We have plenty of cash sitting around to put the loan to bed at any time, but I’m not interested in doing so at all-time-highs in the market. The Fed did just lower interest rates for the first time in a decade and that usually is followed by a recession at some point, so I don’t feel a sense of urgency to pay off the loan any time soon. The other item not captured in the table above is the $45,000 that I sent to my high yield savings account at CIT bank currently yielding 2.3%.
Income for the month of July was $70,107 vs. $50,855 in June. On a cumulative basis, we have earned $352,681 through July of 2019. Not only did I get my mid-year bonus of $21,000 but I also took about $18,000 in income from the business. The business is currently only distributing income to me based on my own personal billable time to clients. I’m leaving all profits beyond this in the business to fund the continued growth. My goal is to have the business completely self-fund and to never have to touch the line of credit – if possible.
In the second chart above, I also track our income on a trailing twelve months, and as expected the TTM rose to a new all-time high to over $534K. We are currently tracking to earn almost $600,000 in 2019 (right on schedule with the goal I set in September of 2016).
Below is how we actually did vs. our goal of saving 50% of our after-tax income. In the chart below, the green bars represent our actual savings rate for the month, the orange bars are what we anticipate based on our 2019 budget, and the blue bar is the projected savings rate for all of 2019.
Our savings rate came in at 74%. My personal expenses are currently comingled with my business expenses for the new business, which is distorting/diluting the savings rate these past few months. The reason is that I’ve been spending a lot more on business travel, which is completely reimbursed by the client, but on my personal P&L it shows up in the revenue line for the reimbursement and the expense line for the actual expenses (a 0% savings rate, bringing the actual number down). Although I recently got a corporate credit card, the limit is too low to move all business expenses to it, so I’m working with the bank to get the line increased (with a personal guarantee, this is a more time-consuming process from what I’d been told).
Do you want to calculate your own savings rate? I’ve made it super easy for you with the savings rate calculator included in the free GYFG FI Toolkit that you can download instantly by clicking the link below. Here’s a peek below. Did I mention it’s free? You have nothing to lose and everything to gain, Freedom Fighter!
Speaking of savings rate, go check out my post where I mathematically prove the importance of your savings rate as a higher priority in achieving financial independence than your compound return. If you’re trying to build wealth quickly, then you have to read this post.
I’m cautiously optimistic about the economy. The Fed did lower rates for the first time in a decade and we know from history that this is typically followed by a recession within 12 months. Sam at Financial Samurai wrote a good article on this and shared the chart below:
I share this to remind everyone to proceed with caution. Like Sam, I believe it’s very prudent to be saving as much cash as possible over the next 12 months in anticipation of a slow-down in the economy. It’s probably not a good time to be taking on additional debt, but it is probably a good time to refinance your mortgage to reduce your fixed monthly expenses. Even better in my opinion is paying off the mortgage completely and getting a HELOC in place if you can manage it.
Recessions are known for bringing some of the best investing opportunities you will ever see but that only matters if you have not over-leveraged yourself, and you have the dry powder to avail yourself of those opportunities. Many of the most well-known businesses today were created during recessions, which keeps me motivated and optimistic for a very bright future.
I hope you had a Jolly July!
– Gen Y Finance Guy
p.s. Personal Capital now offers a 2.05% high yield savings account that is FDIC insured.
Dom – nice to see that your business is doing so well!
That is some nice income for July (and TTM).
Keep it up!
I’m currently getting the benefit of income from both my day job and the business – so, in a sense I’m double dipping. But I’m working hard to grow the business income to a point where I not only maintain but grow our monthly top line to $100K/Month by end of year (without the day job).
It’s not easy but the opportunity is there.
I can’t believe you started a new business, are working a full-time job, and have a baby to care for. I am exhausted every day taking care of my boy full-time. He’s finally going to preschool this fall, so maybe I will get a break if he cooperates and actually goes.
What’s the DBA business again?
Congrats on your progress!
I’m a glutton for punishment I guess. There is no way I could manage all this if I didn’t have a full time nanny for our son and my wife’s support.
It has certainly been challenging and a bit of a roller coaster from day to day but by January I’ll look back and realize that it’s so easy now as the day job is no longer competing for my time.
I do shut it off at 6PM on weekdays in order to have family dinner and do bath time with my son. I also try to keep weekend work to 4-6 hours. We started a tradition of going out to breakfast every weekend as a family.
The business is consulting – we implement specialty finance and accounting software. We are also resellers, which is the real play in this business due to the large commissions and residuals. For example, I’ve closed $150,000 in software sales that now generate about $50,000 in residual commissions. Besides my time, this is pure margin and passive. The initial contracts are 3 years with an average retention of 10 years due to high switching costs.
I’d have to put a lot of capital to work to generate that kind of passive income in the financial markets.
Amazing. Like Sam, I can’t believe you started a new business, work full-time and are taking care of the baby. Is Mrs. GYFG working too? We have our hands full with the six-month old and the full time Biglaw job. As much as I would like to expand my economic operations, bandwidth feels so limited. What’s your secret!!?
I’m nuts and don’t recommend following my path as a new parent. But luckily I only signed up for insanity through the end of 2019.
My wife is still working full time but we do have a full time nanny to help with our little one.
I wish I had a secret. It’s been a grind. That said, I have been smarter about hiring a lot of things out instead of the DIY method. I’ve also invested a lot of time up front putting in systems to keep the admin side of the business low effort (more to come in a future blog post).
I should add though that I have taken a significant step down in my day to day at the day job. I will eventually share the details, but I’m not ready to just yet on the blog. People will be surprised at what I’ve negotiated.
Dude you are absolutely killing it! It’s been a while since I stopped by and you’re no longer slight edging it, but making quantum leaps!!
Good to see you stop by MDP!
You stick with the slight edge long enough and eventually, the real power of compounding rears its pretty little head when things start to go exponential…dare I say parabolic.
Onward & Upward!