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Are you better off than 4 years ago?

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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? 

are you better off than 4 years ago? 2012

I’m aging like fine wine. ;)

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.

are you better off today than 4 years ago net worth finance 2012

The RB40 line includes new saving and investment. The SP500 line also has reinvestment baked in from what I understand.

Course Correction

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.

Starting Over

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.

Positive Spiral

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.

Poll is closed.

are better off than 4 years ago?

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{ 65 comments… add one }

  • The College Investor September 26, 2012, 12:44 am

    I’m much better off than I was 4 years ago. I have my primary job, which I make much more than 4 years ago (probably 50% more over 4 years), and my online business is having its best year yet. Investments are up, bought a house, started a family – everything seems to be running on all cylinders.

    I feel like there is so much opportunity, much more than when Obama took over. I wish I could clone myself multiple times to take advantage of all the opportunities.

    • retirebyforty September 26, 2012, 12:27 pm

      Wow! That’s great. So much optimism. Congratulation on doing such a great job over the last 4 years. I’m sure you’ll keep it running on all cylinders for years to come. I wish I could clone myself too. :)

  • jefferson @SeeDebtRun September 26, 2012, 5:30 am

    i think that we are better off in general.. i am at a better position in my career, we certainly have a better handle our budget.. and more than ever- we have a clear path going forward.

    as long as you can stick to your “motto” Joe.. you guys will no doubt continue on the right track.

    • retirebyforty September 26, 2012, 12:27 pm

      You guys are paying off a ton of debt so you should keep improving. Great job!

  • W at Off-Road Finance September 26, 2012, 6:17 am

    I’m definitely better off than 4 years ago, but not really related to the markets. My market activities are almost all market neutral (ie. they don’t care about up vs down markets) so I rarely see much difference. The high volatility of 2008 & early 2009 was nice though.

  • Leigh September 26, 2012, 6:22 am

    I’m definitely better off than I was 4 years ago – I was still in college then and in a terrible relationship! Now, I own a condo, I have a great relationship, a great, well-paying job, plenty of money, and don’t plan on moving anywhere any time soon. Ah, college. That is starting to feel like ages ago 😀

    I’m curious – how did you get the S&P data to compare to yours?

    • retirebyforty September 26, 2012, 1:33 pm

      That’s great to hear. College was fun, but life is so much nicer when you make some money. :)
      I got the SP500 historical data from Yahoo, then I used Excel to chart it. Let me know if you have further questions.

  • Lance@MoneyLife&More September 26, 2012, 6:40 am

    That is a tough question for me to answer because I was in college 4 years ago! I do have a good job and have done well since I have graduated despite the down times.

    On your RB40 vs S&P500 did you just use the value of your initial investments in 2008 at today’s prices or did you include the additional investments you have added since then?

    • retirebyforty September 26, 2012, 1:34 pm

      I included additional investments. SP500 also include reinvestment, right?

  • Christa September 26, 2012, 6:48 am

    I love your positive outlook on how and why you’re better off than four years ago. I’m in the same boat with a lower family income but much more joy in my new family structure — it’s amazing what the addition of a tiny human can do in the way of bringing more joy to an already happy family!

    • retirebyforty September 26, 2012, 1:35 pm

      It’s so much better to have a kid when you’re older. We weren’t ready for a kid when we were in our 20s. :)

  • Emily @ evolvingPF September 26, 2012, 7:03 am

    I have the exact same job with the same (inflation-adjusted) pay that I did four years ago, but I’m much better off now because I’ve had four years of savings! I also got INTO the stock market in January 2009 so… yeah. That’s going really well.

    Also in the last four years I’ve gotten married – a major improvement over dating!

    • retirebyforty September 27, 2012, 4:26 pm

      Congratulation on getting married! :) I agree that’s a huge improvement over dating.
      Your saving is exactly what I’m talking about in this post. If we spend less than we make, then in 4 years we should all be better off.

  • MoneyMouse September 26, 2012, 7:04 am

    Just looking at your photo, i was having a hard time telling which is the BEFORE and AFTER. Yes honestly, you look the same like no changes at all physically. May i ask how are you doing financially? Oh i’m sorry its probably too much. hehe.

    • retirebyforty September 28, 2012, 12:38 pm

      really? Thanks! I thought I got a little softer around the jaws, but that’s OK. :)

  • SavvyFinancialLatina September 26, 2012, 7:14 am

    I am way better off than I was four yrs ago at age 18.

    I love my husband, slowly improving relationship with my family, financially more stable, two degrees + a job, car…the list is endless!

    • retirebyforty September 27, 2012, 4:27 pm

      That is so great to hear. It’s a big transition for you over the past 4 years and you did a great job.

  • Kurt @ Money Counselor September 26, 2012, 8:17 am

    My wife and I are much better off. Since 2008 we made a Big Move, contemplated for years, to a beautiful part of the world, and we’re really happy we did. Our finances have improved, though that has little or nothing to do with the fortunes of the equity markets. We remain debt-free, and continue to live below our means.

    • retirebyforty September 27, 2012, 4:30 pm

      That was a big move. I’m really happy it works out for you.

  • Miss T @ Prairie Eco-Thrifter September 26, 2012, 8:36 am

    I am much better too than I was 4 years ago. I have made a lot changes to how I live my life and manage it in various aspects. When it comes to finances, I actually manage my money now which I never did before. I have been able to save and stay out of debt which is huge.

    • retirebyforty September 27, 2012, 4:31 pm

      The early 20s can be turbulence and I’m very happy to hear you are doing much better. Staying out of debt is great!

  • RichUncle EL September 26, 2012, 10:20 am

    I am much better off than I was 4 years ago with the happiness family factor, but for some reason I have more expenses now than in 2008-2009. So since this a financial website I am a bit down when it comes to looking at my bills then and now. Income raises are not keeping up with inflation and back in ’09 I didn’t have student loans as they were in deferment. Have to increase my blog income to help with loan repayments and then with a house down payment.

    • retirebyforty September 27, 2012, 4:33 pm

      So you still had student loan in ’09, but just didn’t have to pay yet right?
      I’m sure you will get rolling and be better off in 2016. 😉

  • Marie at Family Money Values September 26, 2012, 11:25 am

    Get ready to invest during a down market, we will probably have one after the Nov. election!

    • retirebyforty September 27, 2012, 4:32 pm

      Why do you say that?

  • Kathleen @ Frugal Portland September 26, 2012, 11:26 am

    Yes indeed I am better off but you’re right — that’s a trick question! I moved back to Portland four years ago, which is the real reason I’m better off!

    • retirebyforty September 27, 2012, 4:32 pm

      Good move for you then. :) Portland is great, isn’t it?

  • Sustainable Living Blog (Jeff) September 26, 2012, 1:53 pm

    Man joe, you look great! What an awesome coat!
    I answered with the “im better off” but that’s a loaded question – I was a student in 2008, and living off of 1k a month, driving a total heap car (that literally caught on fire once while I was in it) and had very little savings and investments to speak of. I lived in a small apartment with a roommate too.
    I’ve been doing a lot of stuff to make myself better off over these 4 years though – it’s nothing that I feel like I can directly connect with who is leading the country.

    • retirebyforty September 28, 2012, 12:37 pm

      Thanks! I got that coat for $40. :)
      You are doing a great job with your finance.

  • krantcents September 26, 2012, 4:45 pm

    I am definitely better off in certain areas. Others not so much. As a teacher, I am worse off because of budget cuts. I still have a job, but my classes are huge and opportunities for extra money is almost nonexistent. My portfolio has increased and my home value is increasing. Along with a lot of people, I feel optimistic.

    • retirebyforty September 27, 2012, 4:34 pm

      Really? I thought you are doing very well. It sounds like your net worth is up so that’s good right? I’m really optimistic too.

  • William @ Drop Dead Money September 27, 2012, 3:21 am

    Much better off! We we blessed to be able to retire. Not by 40, but better late than never! :)

  • Mike September 27, 2012, 5:24 am

    Congrats! You definitely look a lot better! On the money front, I am slowly starting to see a fair amount of improvements coming with the time that I have been spending on some of the activities!

  • Roshawn @ Watson Inc September 27, 2012, 5:28 am

    Wow, you got great results and good participation. Our answer is yes and for the same reasons you outlined. Of course, I wonder about bias in your population, which may be skewing the results to be more favorably. For example, we know that comments do not reflect a blogs true audience, which is obviously much larger. Additionally, give the niche (personal finance) and the sub-niche (early retirement) that you are in, I would expect for this population of people to be doing better anyway. None of that in any way diminishes the value of this… I guess it just shapes the takeaway points. Fun stuff!!!! LOVE IT. Please do more!

    • retirebyforty September 27, 2012, 4:36 pm

      I think you are right about the bias.
      This mean the readers who took the poll have a much higher chance at improving their lives than the average voter. :)

  • Little House September 27, 2012, 6:46 am

    Four years ago, I decided to go back to school and complete my credential thinking the educational system would be better off today. Not true at all, unfortunately. I’m now credentialed, but the district I work for is worse off and there’s no job in sight for a few more years at least. Now, I’m have to look into other districts, probably move (which I’m okay with). So, things are about the same for me just now I have student loan debt and am really wondering if it was worth it. Very frustrating!

    • retirebyforty September 27, 2012, 4:37 pm

      That’s kind of sad to hear about the education system. Hopefully when the economy improve, there will be more money to hire teachers. :(

  • Sandy September 27, 2012, 6:46 am

    I’m much better than before. I’ve bought two houses, changed careers, have a blog that I can be proud of, my family is alive and I have a solid plan for my future. A lot can happen in four years. I never dreamed that I would be this far along.

    • retirebyforty September 27, 2012, 4:37 pm

      You are doing so great! Keep it up.

  • Flexo September 27, 2012, 3:55 pm

    Much, much, much, much, much, much better off. Much. :-) I wouldn’t say that has anything to do with government policies, but … well, I guess there is a tenuous relationship… something to explore for a new article, perhaps.

    • retirebyforty September 28, 2012, 7:30 am

      Haha, nice! Your hard work finally paid off. :)

  • Travis @Debtchronicles September 27, 2012, 4:01 pm

    I’m better off than I was 4 years ago….but I can say with utmost confidence that it has nothing to do with anything our government has done. Nothing, nada, ZERO. Through increased financial responsibility and and reducing spending I have improved my finances – something our government wouldn’t know anything about.

    • retirebyforty September 28, 2012, 7:31 am

      Great job Travis. It’s always better to depend on yourself than the government to do something, right?

  • Jacob @ iHeartBudgets September 27, 2012, 4:13 pm

    Yup! But as some have said, nothing to do with the government, and more to do with taking personal responsibility. That, and now I’m a husband and father, definitely wasn’t 4 years ago. My pay has increased about 50%, I started a 2nd and possibly 3rd job, bought a house, and have paid down some debt.

    Definitely in a better place, but again, nothing to do with who sits in the Oval Office.

    • retirebyforty September 28, 2012, 7:32 am

      3 jobs and kid? That’s crazy!

  • Aloysa @My Broken Coin September 27, 2012, 6:30 pm

    I am definitely better off: 15K in debt gone, didn’t lose a job, Beaker is employed, we have less bills to pay, build up 401K a little bit more, travelled some more. We are better.

    • retirebyforty September 28, 2012, 7:32 am

      That’s great to hear from a shopaholic. :) Great job!

  • FI Fighter September 27, 2012, 7:51 pm

    YES! Much better off. 4 years ago, I was still a green, newbie engineer just starting off. I had basically no savings, and worked 12 hour days (yes work was just so much fun ;))

    In the past 4 years, I’ve been able to: max out 401k + roth ira every year, build up a taxable dividend account for early retirement, and purchase my first investment home.

    I’m very encouraged by the amount of progress one can make in a short period of time, especially if they save aggressively and invest wisely. I can’t wait to see how much more progress I can make in the next 4 years.

    Best wishes!

    • retirebyforty September 28, 2012, 7:35 am

      Hahaha, I hear you about work. Green newbie engineers are so gullible.
      I’m so happy to hear how much progress you made. Young people are not doing as bad as the media said after all.

  • Kelly September 28, 2012, 7:41 am

    Four years ago we were debt free (minus our mortgage), maxing out our 401K, had great college funds going for the kids, and had a years worth of savings. We’re still there. So things are still the same, but they weren’t that bad 4 years ago.

    • retirebyforty September 28, 2012, 7:51 am

      Your net worth must have grown since then, right?

  • Dominique Brown September 28, 2012, 4:41 pm

    I’m better off today than I was 4 years ago. My networth has increased by 300k. I really can’t complain at all about how great life is. Let’s toast to progress lol

  • Elizabeth @ Broke Professionals September 29, 2012, 6:21 pm

    Wow, that’s a loaded question! I answered that I AM doing better. If you’re talking merely about income, than we’re about the same, but the difference is that in the past four years (which coincide with me becoming a parent; my daughter was born in September 2008) I’ve learned to take control of my career, my finances, in ways I hadn’t before. I’m in charge now, and even if that means I make a few grand less a year, it is MORE than worth it for my independence!

  • anon September 30, 2012, 9:20 am

    Got married, had 2 kids, paid off student loan, got master’s degree, changed jobs twice, moved, increased income by 60%, and net worth by ~100k. It’s been a great 4 yrs!

    • retirebyforty October 1, 2012, 11:25 am

      Great job doing all that with 2 kids! :)

  • First Gen American October 1, 2012, 12:11 am

    I’m definitely better off financially, but I was not impacted by a layoff during this downturn. I’m not sure I’d have the same answer if I had to relocate and job hunt…but I’m 4 years older, so I have 4 years more of savings, am debt free, earn more, and have fewer expenses than I did 4 years ago.

    That’s all about to change though. Just bought a house…going back into debt for a while.

  • jim October 2, 2012, 2:39 pm

    I’m better off. Our net worth is up and my pay is up. We have a lot of real estate assets and those are down in value but we made up for it via savings and gains in retirement and paying down mortgages.

  • David@SkepticFinance October 4, 2012, 7:19 am

    4 years ago I had just graduated from college a year prior, had been working my job (same job as now) for about 6 months, net worth right around 0.

    Now I’m at the same job, my individual income has almost doubled, got married to the best woman ever and our combined income is close to 4x my individual income from 4 years ago, net worth is now around 150k. When the market took its down turn instead of selling to get out I put in as much as I could afford to.

    It’s unfortunate that the “are you better off” question is used for politics, although I’m much better off now than 4 years ago, I don’t think it’s due to who has been in office. If McCain had won the 2008 election, I would likely be in the same position I am now. I may or may not have changed jobs, my net worth would probably be about the same. Why? Because I believe my circumstances are 90% a result of my own actions, not which political party supposedly is in control of the country.

    Great post, it was my goal to retire by 40 before I found your site and I’m enjoying what you’re writing.

    • retirebyforty October 5, 2012, 8:44 am

      You made awesome progress in 4 years. You’re 100x better off than 4 years ago!
      Good luck with early retirement. I’m sure you can do it because you are starting off so young and are doing so well already.

  • 101 Centavos October 26, 2012, 1:17 pm

    You don’t look any older. Certainly better dressed and more dashing. Must be the semi-retirement.

  • Joe Cassandra October 31, 2012, 8:54 am

    I’m better off than 4 years ago, but it doesn’t have to do with any politics.

    I graduated college and got a job, then took the initiative to start my own site. Income could be better (but it always could right!)

  • Staz @ EssentialFinances December 8, 2012, 9:31 am

    Way better! 4 years ago all the jobs were taken in my area and it was nearly impossible to get a job competing with everyone so I ended up racking up about $14,000 in credit card debt and debt owed to family. Now I have a steady job, owe about $1500 on my credit card (no more family debt), about $500 in an emergency fund and about $22,500 in various investments.

    On my way to retire by 40!

    • retirebyforty December 9, 2012, 12:30 pm

      Great job! I’m sure you’ll be debt free in 2013. You made such huge progress over the last 4 years.

  • Diane C December 10, 2012, 1:29 pm

    Oh, yes I am better off! I just got married for the first time at the ripe old age of 54!!! Retired last week. My new husband is not quite as frugal as I am, but he is much better at balancing wants vs. needs. He can also fix anything, so our skills balance out. When we realized that our balance sheets were almost an exact match, I chucked my [insert bad word here] job and am setting out to discover married *and* retired life. Husband loves his job and can retire with a full pension in ten years. In fact, he likes his job so much, he says he feels like he’s already retired. Yay for him. He made his own luck by switching to an [initially] lower-paying job that includes pension benefits, and continuing to save outside of that.

    One of my favorite planning things to do is to check all of my statements once a month on the same date. A good month is when the combined balance grows by more than that month’s income. It’s been a good yardstick and very motivating. I will continue to do so once we get out finances blended. It’s going to be easier, since my income will be effectively reduced to zero! I didn’t make it by forty, but I sure am happy to call myself retired now.

    • retirebyforty December 10, 2012, 2:48 pm

      Congratulation on your retirement and marriage! I like your yard stick, it sounds very motivating.
      Great news about your husband too. A full pension is awesome.

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