Don’t forget to take the poll at the end of the article. Currently, 79% of our readers are better off than 4 years ago. Can this be right?
It is election year and we’re bombarded with this question again – are you better off today than 4 years ago? From what I’ve seen online, it seems most people are doing better now than in 2008. Of course, we were in the depth of a recession in 2008 so it’s not that difficult to be doing better today. However, this question is a trick question. All of us who are of working age should be continuously improving our financial situations. Even setbacks like unemployment should be temporary and can be overcome. Unless you have a serious long term issue such as a chronic health condition, your financial situation should be improving.
Spend Less Than You Earn
The RB40 household motto is spend less than you earn. If you can do this consistently, then you will be better off financially in the long run. We have never spent more than we earned and this practice has enabled us to save and invest. When I first started working, I invested mostly in growth stocks. It’s been up and down, but in the long run I was able to build up my portfolio.
Power Through The Down Market
For our young readers, the first lesson you need to learn is this – keep investing through the stock market down turn. It’s hard to keep buying stocks and mutual funds when the total value of your portfolio keeps going down every month, but that’s the sure way to make money. We maxed out our 401(k) contribution and kept adding to our other investments as well. You can see from the chart that our net worth recovered nicely and doubled since the last election.
Now that I’m retired from my career, our overall income is reduced greatly. However, I have been slowly converting our growth stock portfolio into income streams over the past 4 years. The extra income streams can’t replace my former paycheck completely, but they enable us to maintain our modest lifestyle. This is one place where we are not doing as well as we were 4 years ago, but it’s a tradeoff. Now that I’m a stay at home dad, I’m much more relaxed and healthy (both physically and mentally.) We are still spending less than we earn and I’m sure we’ll continue to build our net worth.
One thing good about becoming an entrepreneur is starting out at the bottom. My online income is small right now and it can only go up from here as I continue to expand our online footprint. Once I start generating more income from self employment, then I would be able to accelerate our growth again. The plan to leave my engineering career was a long time in the making. It hurt to lose those regular paychecks and it slowed down our financial momentum, but at least it didn’t stop or reverse our progress.
Sometime you can get stuck in a negative spiral. If you have debt, spend too much money, and/or not earning enough, then it can be difficult to get out of that situation. You just have to work hard to turn things around. Once you’re on the right path, then you’ll be able to create a positive spiral instead and keep improving your personal finance.
Are you better off today than 4 years ago? If not, what’s preventing you from making progress?
P.S. It’s not all about finance. We are much a much happier family today because of baby RB40. Sure, he can be a little jerk sometime, but he brings a lot of joy into our lives.
Take the poll!