Let’s Talk Money…Part 1: Our Net Worth and Savings Rate

What is your net worth? The answer to this question can help determine how close to financial independence one is. Knowing your net worth is also great for tracking your progress. Many bloggers, including one of my favorites, J Money at http://budgetsaresexy.com, will track their net worth as often as monthly. It’s a great tool to use to see results in your savings growth, but it can be misleading. Let’s talk about CRNA on fire’s net worth. I determined our net worth using the simplest formula I could find on the internet:

Assets – Debts = Net Worth

Assets are the positives. These are the things you have going in your favor such as retirement accounts, vehicles you paid off, investments, property values etc. Debts are the negatives. These are your student loans, credit cards, car loans, mortgages, and the money you borrowed from your brother that one time in college. Follow the formula above and you’ve calculated your net worth. Pretty basic right? Let’s look at our numbers…


Retirement: Mr. CRNA and I have a combined total of $345,000 in our 401k accounts. This is nothing to scoff at but its ridiculously lower than it should be for two professionals who have been out of college for over ten years. While Mr. CRNA didn’t have any student loans I did and it seemed foolish, to me, to contribute to a 401k when that money could go towards my loan payoff, especially since my interest rate on my student loans where upwards of 6%. Dave Ramsey and his 7 steps to wealth or Baby Steps as he calls them, would have supported this decision as Baby Step 2 involves paying off all debt except your mortgage and 401k contributions start at Baby Step 4.

My employer, at the time, made a contribution to my 401k account regardless of whether or not I contributed so there was some money being invested for me. In my case this benefit was much better than a “match” to the amount I contributed but it has since been eliminated. In hind-sight had I been contributing money into my 401k I would’ve hit the start of the Bull market and been reaping the benefits of compound interest that would’ve far exceeded the 6% I was being charged on my student loans.

Currently, I am making a maximum contribution to my 401k account of $18,500, with a small employer match, in an effort to make up lost time in investing. My husband contributes around $5,000 to his account and gets a more considerable amount matched than I do. Let us not forget that he will also get a pension at retirement age.

Housing: Our home value is $435,000 at present. We have lived in our home for less than two years and as the market in our city has stabilized I would not expect the value to be any higher than it was at purchase or to rise anytime in the near future. We chose to upgrade our home for a better school district. While this made our home more expensive in total cost and monthly payment than our previous home, it is saving us years of private school tuition. Additionally, the home we once owned was very old and our new home is in fact almost brand new. We determined that the purchase of this home would reap future resell benefit where our previous home would not.

Land: We own a piece of land in the city we live in that’s worth $85,000. When we purchased this land our intention was to build a home on it but after many meetings with multiple contractors we agreed that building our dream home was going to be too expensive. We have been trying to sell this land for some time now but land takes longer to sell than already built homes.

Vehicles: We currently own both our vehicles so we no longer have any car payments. Both of our vehicles are less than two years old and they total a value of around $70,000 combined per Kelley blue book.

Savings and Checking accounts: at present we have about $21,000 in these accounts.


We have paid off all our student loans and our vehicles. We also pay off our credit card at the end of every month. So our only debt is our mortgage which has a remaining balance of $405,000.

$956,000 – $405,000 = Net worth of $551,000

This number sure looks good on paper and many people following the FIRE lifestyle would be able to retire on this amount. We can’t unfortunately as there isn’t enough available money. The only way to access $551k would be to roll our 401K accounts into taxable IRA accounts, sell our home and both our vehicles along with selling our property that we own…essentially liquidating everything. This is not my ideal retirement situation by any means. I love my home and have no intention of moving and as discussed above, this location benefits our family due to a better school district.

As a two income family we currently need both of our vehicles so selling one car is not an option. Could we sell both cars and then buy much cheaper vehicles? Yes, but the loss we would take on them, as they are relatively new, is not worth it. Also, Mr. CRNA is fully against this as he LOVES his ride. I’m willing to make drastic changes to our spending but I’m not uprooting our lives, not that I could, Mr. CRNA would never agree to this. Since we aren’t selling our home or our vehicles I’m removing them from our assets column in our net worth totals. Many people would disagree with this decision, but if you aren’t willing or able to liquidate those items so you can use that money to live on or achieve a passive income, is it really an asset? Jason Hull wrote is his article “Should You Include Your Home in Your Net Worth?”

“I often hear people describing their net worth in a conversation like this: ‘I have a $200,000 house, and $800,000 in investments, so I have a net worth of a million dollars.’ The problem with this description is that your house cannot independently generate income except in a reverse mortgage, which has its own twists. Basically, owning a home free and clear eliminates the need for you to have a housing expense—save, of course, for property taxes, insurance, and home maintenance costs. If you were to sell your house, then you’d need to use the money that you generated to create a stream of income to pay for your subsequent living arrangements, whether that’s buying another house, renting one, or moving into assisted living.”


Removing our home and vehicles gives us a more accurate view of where we stand financially, in my opinion. You can absolutely include your homes equity in your net worth. Just don’t make a mistake and quit your job based on a net worth that includes money you aren’t willing to access. Our new numbers after removing our home and vehicles:

Adjusted Assets of $451,000 – $405,000 = Adjusted net worth of $46,000

The upside to this number is that we are in the positive. Having a negative net worth would mean you owe more debt than you have assets. Considering my length of time at my earning level this number should be considerably higher. If we look at our savings rate over the past year you can see just how out of control our spending has become. This is how I’ve determined our savings rate:

Amount saved in all accounts
Net Pay

I’m sad to say that our savings rate this past year is an embarrasingly low 21%. It is common for many people just starting on their FIRE journey, once seeing how out of control their spending is, to change their habits overnight. We are no exception. It seems our spending is ridiculous AF! Apparantly as soon as Mr. CRNA and I get a large lump sum of money saved up we decide we need to spend it on, well, just about anything that we’ve been desiring. Things like new cars, upgrades to our home, luxury vacations, expensive dinners and booze. Financial independence is not possible for us at our current savings rate. There are many changes that must be made and many numbers to crunch. I’ve set a seven year goal to reaching FIRE and I’m wondering if this is even possible now. Maybe I’ve been unrealistic in what we can achieve. Can we make these changes without completely disrupting our lives? How long is a realistic timeline?

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