Are You Better Off than a Decade Ago?

MSN Money asks if you were better off at the end of 2009 than you were at the end of 1999. They try to make some arguments as to why this isn't such an outlandish question including:

• Wages haven't risen that much
• Spending has increased (everyone now HAS to have a cell phone, web access, multiple cars, etc.)
• Debt has increased thanks to credit cards
• Housing prices are flat in 2009 versus 1999
• People are saving much less

These things lead them to the following:

Regardless of whether you want to blame falling incomes or our increasingly profligate habits, the end result is the same. Net worth -- assets (real estate, stocks, cars) minus debts (mortgages, credit cards) -- rose just 5% after inflation in the past 10 years, to $53.1 trillion, according to data from the Federal Reserve. 

So I thought I would address this question myself and let you do so as well. Here's where I stand in 2009 versus 1999:

• My income has increased 61% in those 10 years (BTW, 2009 was not my highest-earning year. If I take the highest, my income was up 125%. For those curious, my work salary has consistently gone up, but I had a side business and investments that did very well a few years ago.)

• My spending has remained roughly flat as a percentage of my income.

• My debt has remained the same (debt free in 1999 and still so today)

• My house is worth a bit more than the house I had in 1999, but the value of the house has fallen in the past three years

• We're still saving a good portion of our income (roughly 40%).

• And the bottom line: my net worth is up 207%.

Yeah, I'd say I'm better off financially than I was in 1999. :-)

Of course, if your income is flat, your spending is up, you're not saving much, and you're accumulating more debt, then I can see how 10 years can be a financial drain. But if you're doing what we talk about here all the time -- growing your income, controlling your expenses, paying off debt, and saving -- then a decade will find you much, much better off at the end of it than at the beginning.

How about you? Are you better off now than you were 10 years ago?

Comments

[texashaze]

My family is MUCH better off than 10 years ago. The issue here relates to FMF's comments - if you kept expenses low and didn't take on too much debt while focusing on increasing income, you should be okay. During the 'alts' a lot of people spent more than they earned and borrowed more than they should have. Those folks will probably agree with ths MSN article. Those of us who were responsible should have had better results.

[Kyle]

Wow, I just did the math and my income has increases 670% over the last ten years. That doesn't include my wife's income either. Of course ten years ago I was a part time waiter in a crappy Mexican restaurant. I guess the answer to the question is yes I am easily better off now than I was ten years ago.

[MC]

I am WAY better off than I was 10 years ago!

In 2000 I had just gotten my first "real" job after years of grad school and low-pay postdoctoral training, I was married and we had just had twins, I had just bought a house with my husband with no money down & 2 mortgages, and also we had just purchased a new car with a loan. (and I didn't know it then, but my now ex-husband also had a large amount of credit card debt)

My income has increased almost 30% since then and my net worth is now way positive. I've paid off all the debts except $60K left on a 4.5% mortgage, I have a large emergency fund, a fully-funded 403b/401K, and additional investments. I'm on track to be able to send my kids to college in a few years, and retirement is even feasible if I'm careful. The divorce was expensive, but worth every penny! I can't believe the huge savings in everyday emotional and financial costs, just from cutting loose that toxic man.

[Lakita (PFJourney)]

I am better off but it doesn't all have to do with finances. 10 years ago I was starting my first co-op job earning decent entry level pay for that time period. May income has more than doubled since then.

The real reason I am better off now than then are the life lessons I learned in my 20s....some financial, some social, many spiritual.

My outlook on life has changed. In my 20s, I lived in the moment. Now, a decade later I put more thought into being financially secure and THAT, along with my increased income :) makes me better off than I was a decade ago.

[Eugene Krabs]

You know, this was, quite literally, one of the questions a friend and I asked ourselves once.
"Can you believe we ten years older now? I wonder if we are any better? We're not, are we?"

That was one of those things that finally got me to take my finances seriously.

[Jen]

Sure! I'm much better off. We went from being students with a negative net worth to being professionals grossing $240K this year. It's been a bumpy ride but it wasn't a lost decade. At least not for our household.

[Marc]

I am much better off, more than doubled my salary and my net worth is much much much higher (mainly due to growing up). Like many of your posts I attribute this pursuing the right education. I graduated with my bachelors in 1993 and have been taken courses (about 1 a semester) since then (working on second masters). I am in the pharma/biotech computer field, so it is important to stay up to date and ahead of the competition. I look at many of the people that have not advanced and they have been on autopilot since 2000. The competition, both here AND abroad, aren't sitting still - you had better not either.

[Matt Ranlett]

I don't have to bother with math to tell you that the 10 year gap between 1999 and 2009 is gigantic. 1999 was the first full year I worked after graduating in 1998. I came out of college in 1998 with a huge amount of credit card debt (poster child for why college kids shouldn't be able to sign up for multiple credit cards in the quad) and I immediately got married to a girl who took out loans for her entire undergraduate education. 1999 saw me working for the mid 40s, struggling to keep up with credit cards and rent while putting my wife through school again (she wanted a new degree).

Flash forward 10 years. In the intervening years I've been divorced and re-married, had a child, and witnessed an explosion of net worth. My net worth was negative in 1999 and my salary has gone up over 250% while being supplemented by an additional 15% from side business income. All debts aside from mortgage have been paid off and my wife and I are in a position to comfortably afford our lifestyle on a single income while she stays home with our son.

This 10 year gap is really fun to look back on as it was the time-frame in which I really got started and established myself both professionally and personally. The NEXT ten years will really be a telling time for me. Upcoming changes may include additional children, new career directions, graduate school, resumption of a dual income family (once the kid(s) are in school full time) and more. Great times ahead!

[Josh Stein]

My net worth is about the same today than it was 10 years ago.

But I have a reason!

In 1999, I was a high school senior with a few hundred bucks in the bank.

Today, with the sum of mortgage + student loans + value of house, we're about breakeven.

[guinness416]

I was just out of college (albeit with a few grand in the bank) and had moved from Ireland to NYC 10 years ago so yeah, my income, networth, etc etc have skyrocketed since. I owned almost nothing back then though; I'm pretty minimalist but even so the amount of stuff I've since accumulated is amazing. As with Matt above, the next 10 years will be quite interesting.

My waistline, however .....

[wanzman]

Looking back 10 years is crazy for me...

10 years ago I was a high school freshman (15 years old). I maybe had $200 in cash to my name, and a bit of money in a savings account in the bank.

Since that time, I graduated valedictorian of my high school, graduated summa cum laude from a Big 12 state university, landed an awesome job in a commercial banking training program, bought my first house, got married (in Jamaica), took a new job with a new bank (promotion), bought my first rental property (a condo), and as of yesterday, got my first rental property leased out.

My wife and I now control about $300K in assets, and have a net worth of about $130K. Our annual income is now about $85k combined.

I feel very blessed for us to be where we are at the ages of 25 (me) and 24 (my wife).

[A Girl and A Boy who love each other.]

10 Years ago we were in college making next to nothing. We had a networth of around 1,000-2,000 bucks until 2002. Since then we have accomplished alot. Our income has grown and our net worth is around 170k.

[Crystal]

10 years ago I was 17 and still living in Argentina with my parents and sisters while my dad finished up the project he was sent there to build.

5 years ago I graduated Magna Cum Laude and took the job I have now.

In 5 years, my salary has increased about 32% and our net worth went from around 0 to about $120,000 (including our home equity). We are less than 8 years away from paying off our house. We've developed friendships in our area and I am more content with life than I have ever been before.

[Susan]

Since 1999 we wised up and started paying down our debt. We also refinanced our mortgage to a 10 year at 4% and in a couple of years, we'll have our house paid off. We also don't have day care expenses that we had in 1999 (now we have a bigger food budget though). :) So yeah, we're better off.

[mylegs]

Like many here, 2010 is much more financially secure than 2000. Our income has increased from $30,000 to over $300k annually. But, that's after being fresh out of college and now practicing law for a few years. Net worth from negative numbers to over $350k now. Going to grow this number significantly now that we have no debt.

[Mike Hunt]

At the end of 1999 I was 26, earning $67K per year with a net worth of about $100k. 10 years later I'm earning nearly 4 times this and the net worth has gone up 1700%. If I can only repeat this in the next 10 years I'll be doing pretty well!

Unfortunately I'm quite certain it ain't gonna happen.

I have been very, very lucky to catch the run up over the last 10 years and am very grateful for having this opportunity.

-Mike

[Anthony]

LOL... 10 years ago, I was 14. My net worth was approx. $0. Today, my net worth is a lot more in the red... :) I'm trying to get out. Ask me in 10 years if I'm better off. Hopefully, my answer is a glorious "YES!"

[Old Limey]

Yes, it has been a great decade - 10 priceless, wonderful, happy, healthy, years of retirement.

I keep a daily log of our investment portfolio so that's an easy one - Net gain $3,834,523.
Our home has probably increased by $200K-$300K but I don't have accurate numbers on its value on 12/31/99 but we bought it in 1977 for $107K, today it's valued at $1.1M.
Our condo has probably increased at least $150K, partly because our son did a beautiful $130K remodel on it when we allowed him, his wife and 9 year old daughter to live there rent free about 6 years ago. He gets it in our will anyway.

Apart from our 1991 and 1998 Mercedes that's all we own.

Reading the posts above it's very obvious that FMF readers are by no means a cross section of America. They are predominantly hard working, well educated and successful, individuals that understand the benefits of living within their means, maintaining good control over their debts and spending, managing their finances well, and saving hard and consistently. Keep it up everybody!

[D]

I got my first "real" job in 2001 and since then my salary has increased 1,900%. Wow, I've never done the math on that before. I'd def. say I am in a much better spot than I was 10 years ago. A little less hair, bigger stomach, but a safer future!

[Claire]

Well, my net worth is certainly higher now...but Tee Hee...I was probably better off then. I was a senior in high school with no bills and no responsibilities. I babysat and had a job, but all the money I earned was mine to spend or save as I please. I had no "Needs" I had to pay for, so I paid for my "Wants" and saved the rest. I didn't have a car and my parents rarely even made me pay for gas - so no expenses at all.

Now the only debt I have is a mortgage, and I have more in savings that I did then...but I have all these bills and responsibilities to pay for. Maybe not better off, but I didn't have to worry about what I spent or if I'd have enough to pay the bills :)

[LiveCheap]

I think the question is far too simplistic. A decade is a very long time and for people graduating from college at that time or within the previous 5 years, their salaries should be up 50% just to keep up with inflation. In my case, salary went up over 300%, net worth went up 2,000%, got house, etc. Am I satisfied with my progress? not remotely, but it was a pretty good decade with a lot of good memories.
But it needs to be compared with what would have happened in a normal decade and needs to be adjusted for inflation and stage of career.

Think about. If you graduated from a good college with an engineering degree and you made $40K in 1999 when you graduated and you are making $70K today, you aren't doing as well as the 75% increase in income would indicate. Inflation ate up half the salary gains and your career path should have progressed further. When I was in my early 20s, I used to think that it was crazy that I was making as much as my dad ever did in a 25 year technology career. But my dad was buying houses when they were $60,000 and I was looking at $300,000 models.

FMF readers show what hard work, living below your means, and likely some talent can do even in a rotten decade.

[Pop]

"And the bottom line: my net worth is up 207%."

Without some context, that number is almost meaningless. Someone's net worth went up 5,000% in the past year, from $10 to $500.

[Noadi]

10 years ago I was at a residential Math & Science highschool stressing over Chemistry and Precalculus. I think I'm probably a bit better off now. I didn't finish college which is a regret I have to deal with but I now own my own business doing something I love and it's growing steadily despite the economy. I had a net worth of approximately $0 in highschool and I now have a positive net worth and started saving for retirement (or at least my older years, artists don't really retire). I'm hunting for my very first solo apartment which is a big step, no more living with family or roommates, just me and my dog.

[cg]

Like some others above, 10 years ago I was 15, the only job I had was irregular babysitting of younger cousins or kids from the neighborhood. I have no idea what my net worth was at the time, since I don't even have the same checking account anymore (but I *did* have a checking account, at a local bank). Since then, I've graduated high school, graduated college, had several part-time jobs during both of those times, and got my first real job after graduating college four years ago. Now I have a net worth that will hopefully hit 6 figures in the next few months (if my 401k doesn't go down again).

Ask me again in another 10 years. : )

[Terry]

I'm definitely not better off today than a decade ago.

[BillV]

I know I'm better off. 2 years of being a "Man of Leisure".... I prefer this to being retired.
If I have one regret, if is that I did not know 'Old Limey' 10 years ago or more.

[Kathy]

Not better off.
Husband lost job.
Had to sell house - at least not underwater.
Was fortunate to keep my job in massive layoffs in my department.
Son in college, one in high school. In our 50's - now what?

[Tyler]

I am struggling with the math on something: Those of you who have less than 5 years of work experience and make less than 100k per year right now, how in the world do you have 100k+ of net worth?

If you make 100k every year, with at 25% tax rate, your post tax income is 75k per year or 375k over the 5 years. If you saved 1/3 of your post tax income every year, had zero debt, you would have saved 125k. Most investments over the last 5 years are under water. So it’s hard to believe you had huge compounding ROI.

The only thing I can figure is that you naively believe your home is worth a lot more than you paid for it. (It’s a lot of fun to value an illiquid asset for whatever you think its worth. Banks and traders try to do it all the time!)

These first few years of living are some of the most expensive, where the list of needs and wants is very long. (need to buy a hose, shovel, lawnmower, table for the house, want to buy a night out on the town, etc) Many have debt from education expenses or poor choices.

The first few years of work and saving are of massive importance. I think it would be valuable to look at things people can do during these years to increase their net worth. If you truly have this net worth, I am very impressed and would love to learn a bit more.

I was and I am a big saver, but I have also been fortunate enough to be a 2-3 standard deviation earner for most of my career.Outside of high earners, I don’t know anyone who was able to build that kind of net worth over that period of their life.

[BD]

I'm a lot worse off. 10 years ago, I had a decent job, an apartment, a husband, and a car. Now, I have no job, no husband, no apartment and no car at all. However, in terms of sheer cash, my overall savings has risen a bit. But in light of all the losses, and the fact it's only a bit more savings, I'd say overall, I'm worse off.

[Crystal]

@Tyler
We calculate our net worth pretty much the same way Networth IQ does it (we include the house and cars, but we don't include possessions we could sell)...here's our breakdown for January 31st:

Assets
1. Cash - $21,000
2. Stocks - $11,730
3. Retirement - $31,468
4. Home - $130,000
5. Cars - $17,000

Liabilities
1. Home - $74,405
2. Car - $11,900

Total = $124,893

I base the value of our home on a couple of things. First, two houses in our small neighborhood just sold for $155,000 and $149,000 within the last 4 months. These houses were built the same year by the same builder as our home. Second, they each sold within two months. Based on the their square footage and their sales prices, our house would have sold for $136,000. The bank appraises our house at $140,000. I decided to play it safe and value our home at $130,000.

I base the value of our cars on Kelley Blue Book's Private Party Value of our vehicles in "Good" condition rounded down to the nearest $1000...my car is valued at $4600 ($4000) and my husband's is $13,850 ($13,000). That's how I get the total of $17,000. Since I have sold two used cars via Craigslist using the same figures from KBB, I feel confident I could get those prices or better within 2 weeks. Plus, our cars are in "Excellent" condition, but again, I round down to be on the safe side.

We bought a fantastic foreclosure that was in great condition and was only 3 years old...instant equity. We also have $6000 more in cash, but I don't count it since it's spread over a few accounts as padding and $3000 of it will be used in a couple of weeks to pay off our current credit cards charges and bills.

Like I said in another post, I don't really care about our net worth - I try to concentrate on our cash flow and specific investments. I want to fully fund another Roth IRA this year and work on building up our cash reserves in order to purchase a rental property in a couple of years.

[Crystal]

Oh, and we graduated college and got married in May 2005 with $2000 combined in our savings accounts and a $12,000 car loan. Here's our income breakdown for the past 5 years:

Husband
2005 - $10,000
2006 - $28,000
2007 - $42,500
2008 - $42,750
2009 - $43,000

Me
2005 - $21,050
2006 - $29,500
2007 - $33,000
2008 - $35,000
2009 - $35,000

A 100K+ net worth is totally possible if you make less than 100K a year for 5 years. It's all about spending less than you earn and investing the rest. Where have I heard that before? :-)

[JG]

Way, way better off. Despite getting married and then divorced and having to it all over again, I am with a far better husband! Weddings were all paid for by spouse & I. The house I bought in 1999 is paid off. Wouldn't have even considered paying it off early til I read personal finance blogs and realized I had no other debt, so why not?

I've been steadily investing the max into my 401k as well as into company stock when there was a big discount til now where I invest primarily in general stocks.

The 401k has been the most disappointing. I was so focused on investing/personal finance out of college, and loved the thought that if you start investing when you're young, people starting much later, but putting in more per year still won't ever catch up with you. Well, with investments being pretty flat over the decade, it seems that scenario may not always apply! However, I do believe that even if my investments are negative over a decade, I am much better off than a similar person who just spent that money over the decade. I still have most of the money I invested. I am used to living off of less. And, at least I've been investing it and slowly growing my net worth rather than spending all my money, or worse, money I don't even have.

I would say that over 10 years, I have grown a lot less satisfied with my career and job. I have discovered that since I've paid off all my debts, and have a house that costs very little to me now in insurance, property tax, utilities and maintenance, I'm a lot less motivated at work. Instead, I find what motivates me is not job status, salary, etc, but doing something that's interesting to me and fulfilling. Unfortunately, my job has been neither over the last 3 years, so I really should work harder to make a change. It is hard to leave behind health benefits, a solid salary and four paid weeks of vacation plus the extra holidays, though. For now, I get satisfaction outside of work.

[JoeTaxpayer]

Much better off than 10 years ago.
Income is only up 22%, not staying ahead of inflation, but - our interest burden is 1/3 of what it was, 5.24% vs 7.625 on a balance that is half what it was. In 1999 we had a nanny for a newborn, and there went half my takehome pay.
I look at savings as total worth minus the house value and then divide by annual pay. In '99 it was just over 6X, now over 10X, i.e. in ten years of a flat market, we still increased our net worth by 4 years gross pay. When I look at the charts and the S&P (1469 then, 1115 end of '09) I can't help but wonder where we'd be had the decade been "normal," say just 6-7%/yr growth. (at 6%, we'd have S&P = 2631)

[Georgia]

Counting from 1999-2009, my income has gone up by about $7-8k. I finally paid off our massive cc debt (@2002) - up to $34k at one time. In that time my husband was on SS & with a small retirement. I still get his small retirement.

Between my SS & both retirements, I gross about $29.5k a year. In 1999, my income alone was about $22k. I know this has not kept up with inflation, but I have no debt, own my own home (a 44 y/o double wide trailer that we have upgraded a lot), I average close to $4.5k a year in savings, and my expenses are much lower (all utilities average $230 a month-this includes phone, cable, & high speed internet.)

Most of my expenses are to visit family, who all live far away:Chicago, NH, FL, AL, OK, TX, AZ, CA, NV, & WA. As I get older my expenses may go down quite a bit more.

I also have good insurance at a fairly reasonable rate ($210 a month), $15k life insurance for my burial, and a very moderate ($76k) retirement savings. My health insurance is that low because I am a state retiree and they underwrite some of the cost. I also know it is a good match with Medicare. I don't need Part D. My husband had cancer for 8 years and the only out of pocket in that time, other than a few co-pays, was approximately $187. We were blessed.

[Georgia]

Oops!!!! I didn't pay attention to the dates. I am trying to catch up on some back info that I had not gotten to yet. Gracious!! Almost a 3 month backlog. Sorry. God bless you and keep your column coming.