285 | Getting to the First $100k

It took us 3.5 years to go from negative $342k to positive $100k in net worth.

They say the first $100k is the hardest, but we made it through a combination of paying down debt, investing, and a little luck.

In this episode, let’s talk about our journey from negative $342k to positive $100k, including our actual numbers year by year.

• • what net worth is and how to calculate it
  • feeling surprised that your net worth isn’t what you expect
  • calculating our net worth for the first time
  • our net worth from negative $342k to positive $100k

• Need help with your finances? Schedule a consultation here

You’re listening to Personal Finance for Lawyers. I’m Rho Thomas, and as a busy wife, mom, and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back.

Today, we are talking about my husband’s and my first $100k in net worth.

So we first started looking at our finances and all that good stuff back in 2016 after having our first child because I wanted to go part-time at my firm. And so we were looking at our finances to figure out if we could make that happen.

And so we calculated our net worth as part of that. That was our first time doing it, and our net worth was negative multiple 6 figures. And so we’re going to get into exactly what it was.

But then we crossed the $100k mark in June of 2020. And so I’m going to take you through that journey. But before I do, I wanted to talk through what net worth actually is and encourage you to calculate yours if you haven’t done so.

You may be surprised to find out what it is. You might be surprised kind of in a negative sense, like I was, where I thought that our net worth was much higher because we were making good money, and I’m a lawyer, and he’s a doctor and all of that kind of stuff.

So I just knew that we were going to have a great net worth, didn’t expect it to be negative. But I’ve had clients who are on the flip side, where they’re so focused on having more debt than they wanted to or not having a good handle on their finances and what’s coming in and what’s going out and all of that, they expect to have a negative net worth, and it turns out that it’s higher than they thought it would be.

So a lot of people have that experience. If you don’t know what your net worth is, I encourage you to calculate it. The way that you do that is you take the value of all of your assets, so that is your bank account balances, your savings accounts, investment accounts, retirement accounts, the value of your house, the value of other things that you might have and then you subtract your liabilities, which tends to be debts. So credit cards, student loans, mortgages, all of that kind of stuff.

And the difference between the assets and the liabilities is your net worth. If you have more liabilities than you have assets, then your net worth is going to be negative, which is what happened with my husband and me.

And if you have more assets than liabilities, then your net worth will be positive.

So, getting into my particular situation, we calculated our net worth for the first time in December of 2016. I was about to head back to work after maternity leave after having our first child, and I wanted to come back on a part-time basis. I wanted to do like 75, 80% of the hours requirement for 75 to 80% of my salary.

And so that’s what prompted us to look at our finances, see what was going on, all that good stuff.

And as part of that we calculated our net worth, and it was negative $342,569.

I know that exactly because we keep a spreadsheet where we calculate our net worth each month. So for example, this is 2025. We have been calculating our net worth each month, but then at the end of this year, we will delete out January through November and we just keep December. So our spreadsheet right now has December 2016 and December 2017, December 2018 and so on, but then it has all of the months of of the current year.

And so I have snapshots of where we were at the end of each of those years, but I was also able to dig through and find exactly where we crossed that $100k mark. And that was in June of 2020.

So we are just going to walk through how our finances unfolded to get from negative 342,000 to positive 100,000.

So starting back in December of 2016, we had student loans, we had a car loan, and we had our mortgage. And then we had some accounts, like we had our checking and savings, we had a little bit of an investment account, and then we also had our retirement accounts. And then we include the value of our house and the value of our cars.

People think differently about that, but that’s what we do.

And so with our assets, we had $335,485 in assets. And the bulk of that was our house. Our house was valued at $226,000.

With our liabilities, we had $678,054. And so again, you take your assets minus your liabilities, and that is your net worth. So our net worth was negative $342,569.

So that is December of 2016. A year later, we had increased it. So we were still negative, but we had increased it quite a bit. So in December of 2017, we were at negative $257,952.11.

And we increased it mostly by paying down debt, but we also did increase the value of our liabilities some. So our debt had come down. We paid off the car loan, which was $11,292, and then we also paid off a good chunk of my student loans. So my student loans started at about $104,000, and a year later, they were at $77,973.

And then my husband’s student loans were increasing because he was on an income-based plan. And because he was in residency, he wasn’t required to pay anything or he was required to pay, like I think once he got a little further in residency, he was required to pay like $20 or something like that.

So his student loan was increasing over the course of this time. But thankfully, we were making progress with the other things that we were doing, so it was increasing our net worth, despite the fact that his interest kept causing his student loan to increase.

All right, the following year, in December of 2018, we had paid off all of my student loans by that point, and we had started working on my husband’s loan. In December of 2017, his loan was at $358,539, and then in December of 2018, he was at $357,475.

So we had paid off about $1,000 of his student loan. And mind you, back in 2016 when we started, he was at $353,000.

So he went from $353,000 to $358,000 in 2017 to $357,000 in 2018. So we started to pay off that interest that had accrued over those few years. But we were completely done with my student loans.

If I remember correctly, we paid off my student loans in September of 2018, and we were then able to start working on his.

So at that point, our net worth was negative $164,513.82.

And our net worth was increasing both because we were paying down debt, but then also because our assets were growing. So as I mentioned, we had some investment accounts, we had some retirement accounts, all of that. Those things were growing because that money was invested. And when you have your money invested, compound interest works on your behalf.

So our retirement accounts had gone from, in 2016, they were each at about $29,000. And in 2018, they were up to each about $50,000.

That was a combination of us contributing to them, but then also the interest growing because we had dropped our contributions to where we were contributing about 3% each into the retirement account. So a big portion of that was just compound interest.

Alright, in 2019, this was when we first crossed into positive territory with our net worth. So at this point, we had paid my husband’s student loan down about $100,000 from the year before. In 2018, he was at $357,475. And in 2019, we were down to $249,009.

So that was a big part of us getting from that negative into positive territory. And then again, our assets were continuing to grow.

So from 2018 to 2019, our assets grew. I have mentioned our retirement accounts before. At the end of 2018, they were at about $50,000. At the end of 2019, they were at about $70,000.

So again, that was a combination of our contributions and then the compound interest working on our behalf. We also had some other accounts, like we have a brokerage account that wasn’t that big. We have 529s for our boys that also weren’t that big. At that point, the brokerage account was $10,000. and then the 529s for our oldest son was almost $9,000, for our youngest son was $2,300, $2,400.

So we definitely had those assets, but it wasn’t like some huge pot of money or something like that. The big thing that was moving our asset side was our retirement accounts.

So moving into 2020, this is where we start crossing into the six-figure mark. It was about halfway through in June of 2020 when we hit six figures in our net worth. But before that, in that interim, is when COVID happened. There were a lot of ups and downs. Like as I’m looking back through this, I can see where our net worth went up in January and February. And then in March, it dropped back down to below where it was in January. Oh, I’m sorry, to about where it was in January.

So that was interesting to see. And that goes to what I tell you all the time about your savings. Like you don’t want your savings account to be a brokerage or an investment account because investments are volatile. And so when things happen, the market responds. And so your account might be going up and then all of a sudden it’s down.

And you don’t want for an emergency to happen and then your account is 1/3 of where you thought it was. And so the situation with COVID was a big example of that because it was interesting to see okay, from, December to January to February, it’s going up and then it dropped right back down. But it rebounded pretty quickly.

And I think the COVID run with the market was a big part of how we got to six figures.

At this point, the government had paused the interest on student loans. And we had been keeping about a month’s worth of expenses in our savings account. That is just what has worked for our family or what had worked for our family at that time.

We are a two-income household. We lived pretty far below our means where we were using a large portion of our income to go towards these goals that we had. And so we felt comfortable having a month’s worth of expenses and savings because we could just decrease how much we were putting towards our debt payments if we had unexpected expenses come up.

But when COVID happened and there were furloughs and people being laid off and all of that, it didn’t feel as secure. And so when they paused student loan payments and interest and all of that, we actually paused our payments as well. And for that next couple of months, we didn’t pay anything on my husband’s student loan and we put the money that we would have paid on his student loan into savings.

And so we built up to about six months of savings so that we were able to weather any storm that could come if I ended up being furloughed or laid off because there was some of that happening within the legal industry. So that was that.

But in that time, the stock market also rebounded, and our accounts kind of took off. And I think that’s a big part of what propelled us to that $100k because from, it looks like March 2020 was the last time that we made a payment on my husband’s student loans. And then April, May, and June, we were just putting the money that we would have put on student loans into savings.

And so the growth that was happening, it wasn’t from us paying down the loans or anything like that. Yes, we were putting that money into savings, but then also our assets were growing. And so that helped us to get to the $100k.

We actually were at $106,249.14 in June of 2020. And to give you a snapshot of where we were in terms of our loans and our assets, with the loans, we had our mortgage and my husband’s student loan, and the total there was $382,533.56.

And then with our assets, the total was $488,782.70. And again, a big chunk of that was our retirement accounts and our house. So that is the journey from December 2016 with a negative $342,000 net worth to June 2020 with a positive $100,000 net worth.

So hopefully it’s helpful for you to see how quickly things can change and how these decisions that you’re making about your savings, about your debt, about your investments can have a big change on your net worth and what you’re able to do with your finances.

If you would like help with your finances, getting things in order, and building your net worth, schedule a consultation at rhothomas.com/call, and I would be happy to help.

Alright, that is it for this week’s episode. Please take a second, subscribe to the show, leave a review. Both of those things help the show to grow, help more people to get this information, and as always, I appreciate your support.

As we close out, friend, I pray that you take the information you learn here, apply it in your life, and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to take back control of your time, build wealth, and live the life of freedom and choice you deserve.

Talk to you later.