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Massively Improve Your Net Worth With This Plan

Have you been trying to improve your net worth lately? If you have, congratulations! You’re already miles ahead of the typical American. For the most part, the majority of the population is so worried about what people think about them that they never even measure their own net worth. I mean think about it. The average person has a car loan, a pretty beefy mortgage, and some credit card debt. It they keep this lifestyle up throughout their life, their net worth will never get above $20,000! Believe me, I’ve seen it.

I first started thinking about my net worth in 2010 and made some great decisions to pay off my student loans early and to start investing in my future. Take a look at the graph below. This shows you my entire life after graduating from college in 2008.

When I got out of school, I had those pesky student loans and the only thing I owned at the time was my cheap VW Passat. Overall, my net worth was in the negative (which definitely isn’t unusual for new college grads). In 2009, I got married, which suddenly added another $6,000 to my debt (due to her student loans). In early 2010, we decided that we were going to work hard to get rid of our student loans, and we were quite successful. By 2011, we were debt free and finally had our very first positive net worth (and boy it felt good)!

improve your net worth

This is when things started to take off. We had zero payments each month, and in late 2011 we saved up enough dollars to buy a foreclosed house. We fixed it up and began paying down the mortgage, so by the end of the year our net worth was taking off to the moon! But, then the blip in the chart happened. This is where my wife decided to walk away and take half of the net worth with her. Naturally, 2013 was a tough year for me (both emotionally and financially). However, things are back on track now and if I hit my goal with the house payoff this year I will have quite a large net worth and will look to grow it even more in the years to come.

How to Improve Your Net Worth

So how did I increase my net worth by so much between 2013 and 2014? And how do I plan to double my net worth by 2015? Well, because I really want you to increase your net worth, I’m going to tell you the secret. Do it slowly.

Seriously. Back in 2009, I was investing in single stocks, had no emergency fund, and I really thought I was something. Well, I was something alright – really stupid. At that time, I got my hands on Dave Ramsey’s book and realized that I wasn’t quite as smart as I thought. Almost immediately, I changed my ways and began to follow Dave’s 7 Baby step plan to wealth.

7 step plan

If you have already started these steps, you know that this plan seems to take FOREVER! Fortunately for me, I didn’t have any big car payments or house payments, so I was able to get through step 1 pretty quickly. Then, by reducing my monthly costs, I was able to pay off my consumer debts in 14 months. Saving up my beefy emergency fund (step 3) took another seven months, and then things really started to roll. With a decent cash flow, I was able to just set up my investments to complete step 4. I have no children, so step 5 didn’t apply. So now, I’m working on paying off that house, and I feel like I am getting so close to step 7!

If you feel like the process is going slow, don’t feel bad. It’s supposed to. Plus, sometimes life happens along the way (like my divorce). I started clawing my way out of debt in 2010 – it’s now four years later and I am still not on step 7! However, I am now beginning to see the benefit of this plan. Once I pay off my house, my monthly expenses will dive down to about $1,500 a month. This reduction in costs is going to allow me to build some crazy wealth! And, it can do the same for you.

I would strongly encourage you to get started on this plan if you want to have a high net worth and a wealthy future. By paying off your debts, you are slowly increasing your cash flow, which, when put into assets and investments, increase your overall net worth! And, what do you think happens when you build up a high net worth? You can stop working at that job you hate! Give this plan a try (for at least a full year) and you will be amazed at how much more wealthy you will feel.

Are you working to improve your net worth? How are you doing?

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6 comments to Massively Improve Your Net Worth With This Plan

  • Nice work. Life definitely throws curve balls at us, but look at how well you’ve been able to bounce back. Nice work. I bet things will really take off when you get your next promotion/job. BTW, I bet those lines on the chart equal $1 each, right? haha. JK
    Corey recently posted..4 Job Search Rules to Break

  • jim

    Derek,
    Nicely done! Seriously. You should be very proud of yourself. You’re doing great – especially considering the blow the divorce must have made. Continued good luck. Get that mortgage paid off and there is no stopping you!

    • Thanks Jim. Things finally feel like they are going smoothly again and that my financial status is about ready to take off! I often can’t hold myself back from telling people about this plan to become wealthy. After just a little discipline, anyone can become wealthy!

  • Great post! So many want to take one step and be a millionaire. For 99.99% of people it never works this way. It takes time and effort. By breaking down the steps into smaller ones, it makes the journey that much more exciting. You get to check off things as you go and can see the progress and hard work you have done,
    Jon @ Penny Thots recently posted..Do You Have An Opportunity Fund?

    • It is a great experience along the way as well. If I would have won the lottery 4 years ago, I would have made some really stupid decisions and might have even gone broke. By building my net worth slowly over time, I really have the understanding of what I need and don’t need, and what is truly worth me spending my money on.

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