The Beginning of My Road to $1 Million

February 2020 Net Worth Update

What is financial independence?

In simple terms, it’s when a person can afford to live a basic lifestyle without having to work a job to afford it. To do that, that person would need a pretty substantial investment portfolio.

But how does one get to that point?

There are many different factors at play in the journey to financial independence, but the most important factors for successfully reaching financial independence are time and consistency.

My Goal for to Reach Financial Independence

Currently, I’m 23 years old. I’ll turn 24 in April.

My goal is to achieve financial independence by 2025, when I am 28 years old. Personally, I will consider myself to be financially independent when my wife and I reach $30,000 annually in passive income.

While this is not a massive number in the grand scheme of things, it should be enough to cover all of our expenses. It will give my wife and I a lot more freedom in our life and career choices.

I have also set the goal of reaching $1 million net worth by 2027, which is when I turn 30 years old. This number is less important than the passive income number, but should be helpful for keeping my options wide open in the future.

So, to recap, I want to reach:

  • $1,000,000 in net worth by 2027 (when I’m 30 years old)
  • $30,000 per year in annual passive income by 2025 (when I’m 28 years old)

And I’ll be documenting it all.

My Monthly Net Worth Check-Ins

I am setting off with the intention of reaching $1 million net worth and becoming financially independent in under seven years.

My obvious hope is to reach this goal quickly, but regardless, I will be completing monthly check-ins that log the ups and downs of my experience.

I hope to provide insight and inspire others to take the path towards building their financial futures. At the end of every month, I will review my current status and cover the following:

  • How much my assets increased or decreased
  • How much my liabilities increased or decreased
  • Whether my net worth increased or decreased compared to the previous month
  • Any relevant financial updates (career, job, investments, etc.)
  • My plans moving forward

I’m aiming to provide as much relevant context as possible while moving along through this journey.

That said, my financial goals are unique to me and my lifestyle. Before going over my goals, it’s important to note that my finances are tied to my wife, EmilyAnn’s, so most of the finances I will be going over throughout this process are joint finances.

With that said, here’s where I’m starting from:

My Initial Assets & Liabilities: February 2020

Throughout this process, I will update a net worth tracker to compare my progress to my goal of having a $1 million net worth by 2027. This spreadsheet is updated on a monthly basis, and it will show my specific holdings and debts.

I’ll also post everything on YouTube for those of you who’d prefer a more visual experience.

Let’s start with my assets.

Assets – February 2020

Assets - February 2020

Our cash balance is a bit high relative to our assets. That’s mostly because we’re gearing up for a real estate purchase in the near future.

We’re actually under contract right now, and that’s what that earnest money line item is for.

Otherwise, a massive portion of our assets are tied up in our primary residence, which is a condo in Chicago that we house hack by renting out an extra bedroom and bathroom.

That bedroom brings in $800 per month, which offsets our mortgage.

Our stock portfolio is mostly index funds. That goes for both my IRA and our taxable Vanguard stock accounts (I’m not including my wife’s IRA in this).

In total, that leaves us with $269,673.16 in assets.

And now for those pesky liabilities:

Liabilities – February 2020

Liabilities - February 2020

Our biggest debt at the moment is a promissory note to a family member. That’s due in full in August 2023.

We also have a HELOC against the house. It’s only at 2.25% interest with a credit limit of around $120,000. As of now, we’ve only drawn a bit over $19,000 from that available balance. We would expect to use that in the future to potentially finance another investment.

From time to time, you might notice a credit card balance on our liabilities sheet. I always pay off my credit cards in full each month. So, rest assured, those balances will get paid down before interest accrues.

Finally, we have some student loans (just a tad over $37,000) from my wife’s audiology doctorate program, which she is still attending. That balance will definitely grow from here.

In total, we have $187,076.04 in liabilities.

My Net Worth – February 2020

So, our starting net worth as I begin documenting my path to financial independence is $82,597.12.

This means that our debt ratio (liabilities divided by assets) is 69.37%.

It also means that we need to increase our net worth by about $11,000 per month on average in order to reach our goal of $1 million net worth by 2027.

It will be a challenge, no doubt.

What’s Next?

My path to building my wealth will very likely not be entirely uphill from this point.

For example, we still have a few semester’s worth of payments to make for EmilyAnn’s audiology program through Northwestern University, and we expect to take out at least another $40,000 in student loans to cover the costs of this program.

Though it might be much, much more.

And I still have to finish law school, which will limit my earning potential in the short term. Though I was able to land a full ride to law school, so at least I won’t be accruing debt for that in the meantime.

Throughout this process, I will be documenting the highs and lows of my journey to financial independence. Ideally, I can inspire others to begin their respective journeys, as well as provide honest insight into what the grind might look like.

I’ll offer candid anecdotes about my experience in different investment strategies as I begin to figure out what works for me, and what doesn’t.

And, when it’s all said and done, I’ll have a well documented history of exactly how I got there.

Things to Keep an Eye On

Starting out this journey, I know I will need to diversify my income through different investment strategies.

I anticipate a majority of my investment income will be through real estate investing.

As a matter of fact, I am under contract on my first out-of-state investment deal. More on that to come.

As we expand our real estate portfolio, I will likely be accumulating a fair amount of debt to fund those investments. I expect both my assets and liabilities totals to rise significantly.

At the same time, I plan to make significant stock market investments. This will probably be a little simpler, as I will be putting money into the market and letting it do its thing. It will mostly be invested in index funds and a portfolio I plan to create in M1 Finance.

My Financial Goals

There isn’t just one path towards achieving financial independence. That said, all strategic plans share some specific characteristics:

  • Setting clear financial goals
  • Focusing on particular financial assets
  • Maintaining consistent, positive financial habits
  • Staying disciplined through it all

In order to start on your own path, you need to determine your long-term objectives. Are you striving for complete financial independence – the ability to do whatever you want without having to work? Or are you content with a mostly self-sufficient lifestyle with the occasional need to supplement your passive income?

This phase of my financial journey is about achieving a basic level of financial independence: I want my investments to cover a basic cost of living.

After that, I can look to get to a higher level, financially.

But I can only get there one step at a time.

The series will document those steps.

Why I’m Documenting My Path to Financial Independence

A majority of the content creators that occupy the finance space began sharing their experiences after they had already achieved financial independence. While these creators do offer valuable advice and perspective, they lack the insight of somebody beginning their path to financial independence today.

For me, what distinguishes the best finance content creators from the rest is their level of transparency.

I’m beginning to document my path with a specific goal in mind: providing real-time insight to those looking to begin their journey, as well.

It will also keep me very honest about my goals and can serve as a useful accountability tool.

And maybe you’ll find it marginally entertaining or interesting.

In any event, it will probably be a multi-year journey. So there will be a lot to potentially cover.

Without massive, largely unpredictable luck, there are no shortcuts to achieving financial freedom. It’s a long process with ebbs and flows that depend on a variety of personal and external factors. So, without patience and consistency, the likelihood of achieving financial independence is nonexistent.

So begins the grind.

This website, and any communication stemming from it, while ideally informative, should not be taken as financial or legal advice. Assume all links are affiliate links. I am an Amazon affiliate.

Jack Duffley

Jack Duffley is a real estate investor and attorney based in Houston, TX.

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