Wednesday, May 23, 2018

A Look At The Last Four Years

It’s been just over 4 years since I started this blog and I thought it would be a good time to take a little look back at just how far I have come (and how far I have to go).

My first savings update was in May 2014 and I had saved about $4,880. I think at the time, I was saving about $100 a month of my paycheck income towards the car and funneling any extra money I received from gifts, side hustles, or work bonuses towards it. Four years later, both my income and my wife’s have greatly increased and I’m now able to save $600 a month of my paycheck. I could probably do more, but we have other goals and items we are saving for, so we are splitting our extra cash among various other projects.

Major milestones on my quest can be seen here. I reached $10,000 saved in December 2014 and 1 year later, I hit $20,000. Twelve months to save $10,000 isn’t too shabby, although that’s probably being a little over generous to my efforts. I am investing my savings in the stock market, so the total gain in value came from a combination of savings and stock price appreciation.

The next $10,000 took me 1 year and three months. What the stock market gives, the stock market takes away. Declining stock prices were a drag on my growth.

The next $10,000, which took me to $40,000 total, took only 10 months. I got there last January.

I made the below graph of the monthly change in value of my account. I had hoped to see a more or less increasing line because I have been steadily increasing my contributions as time goes on.

Quite a surprise! Despite consistently increasing my contributions over time, the monthly change has not increased in a linear fashion. I knew I had some down months, but I hadn't thought my monthly change was this volatile. This chart shows just how much stock market volatility can affect account value in the short term. As I get closer to my goal, I’ll have to start selling my stock to protect against a market downturn reducing my funds. But right now, my goal is, probably, a couple years away, so I plan to stay invested for the time being.

This project has pushed me to start various side hustles. Few have provided large returns, but the one that was definitely worth it was creating my own educational video courses to sell. Last November, I reached over $10,000 in earnings from that side hustle. This is even more amazing when you consider my sole monetary investment in creating the courses was a $149 microphone. Of course, I’ve spent my whole career learning about what I was teaching, but my employers paid me for that!

My courses are still earning money. In fact, the same courses are now for sale on a different platform and those are starting to generate some decent income as well.

That’s the power of passive income. Work once, get paid for years.

My goal has always been to save enough money and invest so that passive income will pay for my Tesla. It’s going to take a long time to save the more than $100,000 a Model S costs. I don’t want to plunk that money down and kiss it goodbye. Yes, I’d get a car in return, but that car will lose value over time. I’ve worked hard to amass this savings and I want to keep as much of it as I can.

I’m hoping that the snowball effect will start kicking in soon in a noticeable fashion. As my savings grow, I should start collecting more interest (or stock dividends, as the case may be) each month.

Two years to save $40,000. I wonder if I can save another $40,000 in one year?


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