You couldn’t really tell with my net worth update for April, but I got a huge raise this year on my base salary. As in a raise bigger than I got with the promotion last year. I definitely feel like my compensation is more in line with the market rates now, which is awesome. Plus, I have quite a bit more net income to save each month with the raise. I’m pretty excited for that.
I never really had a definition for feeling rich, but apparently having about $1,000-2,000 in disposable savings (i.e. amount available to save after maxing out my 401(k) evenly and taxes) per month with six months of cash reserves in the bank and investing 20% for retirement does it for me. I definitely feel like I can buy whatever I want. In my life thus far, I’ve built up a good frugal mentality, which has changed to a conscious spending mentality over the last year or so. I know that I have definitely experienced some lifestyle inflation, but I’m happy with how I’ve been spending my money.
Since I now have my raise for the year, barring a promotion at the other review cycle (which I really don’t see happening for at least another year or two, let alone later this year), the only variable in my total compensation for this year is my company’s stock price and whether or not I stay at my company (which is my current plan for the next few years). I won’t reveal the range (until the end of the year), but suffice it to say, I’m still shocked that I could even be seeing that number at this point in my life.
My projection for next year (2013) – Oh. My God. I don’t even want to think about that number because it still seems so insane. I’ll believe it when I actually see it.
I will most likely hit the social security tax maximum in October/November this year. It could be in August/September next year. That is a pretty nice amount of extra monthly cash flow.
Maybe being financially independent by the end of 2020 isn’t such a crazy goal.
Don’t get me wrong – I’m not going to go out and buy a $50,000 luxury car. That’s just not me. But I definitely feel like I don’t really need to worry about money and that is an amazing feeling. (Not that I have ever really worried about money…)
I now see why your career is one of your most valuable assets. So far, I’ve been grossing $15-20k more each year. I keep doubting that kind of growth is sustainable long-term, but then the subsequent year’s numbers get completely pushed up from my initial projections. Because of my salary growth, both my salary and savings are starting to compound now, which is amazing to watch. A 5% raise now means far more than it did on my starting salary a few years ago and that’s only going to continue.
I am so excited and enthralled to watch this journey.
How do you define being rich or wealthy? Do you meet your definition? If not, when do you think you will?