Creative Ways to use the Net Worth Calculator Beyond Creating a Millionaire Math Map

Millionaire1

As I mentioned in the last post, you can download my free Net Worth Calculator spreadsheet as my thank you for subscribing to my RSS feed. Simply click on the orange or blue feed button and follow the prompts. Once inside my feed, click on the download link for the Net Worth Calculator at the bottom of each entry.

Once you’ve had a chance to play around with the spreadsheet, I thought I’d explore some unconventional ways to put it to work.

Scenario #1
You got out of the military in January 1996 and began a civilian career. At the time, you had saved $18,500. After more than a decade at two different companies and steady pay raises, you’ve accumulated a nest egg of $135,000. At what percentage has your net worth grown?

Enter the following data.

CIR: 15% to start -you will be bracketing to find the answer
SY: 1996
SNW: $18,500
ITR: 0% because you are seeking a historical answer to growth that has already been taxed.
ASC: $0 because you are seeking a historical answer to growth that has already been saved.

Since 15% only generates $98,980 by the start of 2008, you will have to bracket the interest rate, entering a logical progression of numbers until the value at the start of 2008 reaches approximately $135,000. The answer, within the limits of the spreadsheet,  is 18.014%

Scenario #2
You like your current job, despite its nonexistent salary growth. Given your situation, it’s unrealistic to save any further. You are comfortable with learning how to invest better but is it really worth the effort?

You’ve got $16,000 tucked away in a Roth IRA earning 6%. You could either:

  1. Look for a job that pays $1,000 more per year. However in your field, those jobs are more demanding time wise and less enjoyable. It would mean that after taxes in the 15 % tax bracket, you could faithfully add $850 yearly to your retirement funds.
  2. Stay put with less work stress and direct that energy to improving your investment returns by 4% points per year. Considering how much of your Roth is currently in a money market account, becoming more comfortable with stock mutual funds might do the trick. In 5 years, what is the money difference?

Enter the following data for keeping the old job.

CIR: 10%
SY: 2008
SNW: $16,000
ITR: 0% since funds are tax protected in a Roth IRA
ASC: $0 since staying put means no added savings

Final results at 12% in 5 years = $28,197

Enter the following data for taking the new job.

CIR: 6%
SY: 2008
SNW: $16,000
ITR: 0% since funds are tax protected in a Roth IRA
ASC: $850 – I’m assuming the individual is in the 15% tax bracket and if he has $1,000 extra gross income, he will have an extra $850 after taxes available to deposit in the Roth IRA

Final results at the start of 2013:

Stay put in old job: $25,768
Take the new job: $26,203

Better, but maybe not enough to justify losing the more satisfying job.

Of course there are no guarantees. The point is to play around with the options and and see how the math works. Our happy employee might even do better than 10% as investing skills improve. You never know.

Scenario #3
You are planning to get married in 2010. By combining households, the two of you will easily cover your remaining debt load with some money to spare. You can actually start thinking about starting a nest egg. After doing some basic math, you should have $2,000 to start the marriage and after taxes you’re pretty sure you can save $4,000 a year given what you expect your combined salaries and expenses to be.

Since you are young and love to dream big, you’re shooting for a 15% return. If you succeed, what will your nest egg be worth in a decade? You are in the 28% tax bracket, but figure only a quarter of any year’s growth will be vulnerable to the IRS.

Enter the following data.

CIR: 15%
SY: 2010
SNW: $2,000
ITR: 7% since that is a quarter of 28%
ASC: $4,000

Final Results: at the start of 2021, you will have $100,337. Congratulations!

Scenario #4
When you graduate in June, your favorite uncle is gifting you $5,000 in stock and has promised to pay any tax obligation in the year of the transfer if you promise not to sell a single share for 20 years. He wants you to have a solid start in life. The stock has done well in the past and seems like a standard bearer for any new stock portfolio.

For now, you don’t want to think about your looming mountain of student loan debt. You want to …

2 To Do Today – Fill Out Rebates

Ever since Black Friday, I’ve written Fill Out Rebates at the top of my to do list.

Depending on the morning, I’ve penned it in blue ink, purple ink, green gel, and black ball point. I’ve scrawled the words on the back of an envelope, on linen paper, salvaged sheets from the recycle bin, and a torn page from a spiral notebook.

I’ve moved the purchases from the right side of my desk to the left, and then back right again. I’ve even piled the crap by my keyboard, figuring the obnoxiousness of it all would spur me into action.

They’re still there, waiting to be done.Rebate

I’m usually very good at this, having those puppies scanned, filled out, UPC’s clipped and at the Post Office within three business days, tops.

This year I’m dragging butt.

It’s only two items – a $13 rebate on a memory card for my camera from Circuit City and a $10 retractable mouse from Office Depot. I’m beginning to understand why the redemption rate is so pathetically low. My inertia has the best of me.

The forms say I have until Christmas Eve and the end of December to get my act together.

I’ll run out of to-do-list ink before then.…

How To Use Your Inner Mildar To Improve Your Net Worth Game

The next time you see people whose appearance doesn’t match their circumstances, instead of crinkling up one side of your nose and going, “Huh?”, sharpen your eyes and say, “Hmm”.

Instead of thinking:

  • What a loser
  • Get some decent clothes
  • Go buy a car that actually has power locks

Ask yourself:

  • Why is this person not working full time?
  • How is he really spending his money? It’s obviously not on clothes
  • How is she choosing her investments? It’s certainly not a fancy house

Mildar helps you identify individuals with significant net worth in spite of their middle class surroundings and to see some aspect of their success as possible for yourself. Simply having more money doesn’t make another’s choices more admirable. It does make it worth your time to check it out.

Mildar focuses your attention on what you value and what you don’t. The point is to get you thinking differently about how you spend your resources and what message it’s sending to others. If you care more about what others think, it will be very hard to be financially free on a five figure salary. Driving a beat up car an extra year or two won’t score any self esteem points, but it may allow you to make some extra debt payments.

Real life Mildar sightings are always more meaningful than examples from books or web sites. When you start to see others making choices you admire that improve their bottom line, you’ll begin to believe some of those decisions are doable for your own situation.

I challenge you to find something positive in even the most McScroogeist affluent person. Regardless if his overall behavior repulses you, I’m confident he is doing something right that you can add to your millionaire psyche. And you never know, there are some nice millionaires out there too.

No matter what you observe, please share your Mildar sightings so all can benefit. I’m especially interested in stories that don’t involve couples, because all of my experience has been with married millionaires.…