Financially, I'm Below Average
Posted on January 05, 2007 by Her and tagged net_worth
The median net worth for my age is $2,125. We're $70,000 short. My credit score of 725 gets a letter grade of C, and is higher than only 31% of households in the US. We seem to be parading through all our friend's houses at innumerable housewarming parties. Meanwhile, we're worried that our rent might go up next year.
I know it's not good to be comparing myself to the Jones', but sometimes it's hard not to notice that the double-whammy of student loan debt and financial ignorance is leaving us in the dust. I hope we can make up for lost time by making good decisions in the future.
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Sarah | Jan 5, 2007
It will happen in due time. Just remember that you have realized where your mistakes NOW and are fixing them, and not when you're 50 and thinking about retirement.
The whole house thing can be overblown, it is nice to have something to call my own, yes, the tax savings are nice, but if you wasn't financially ready then don't do it. Owning is much more expensive than renting.
Watching you guys pay off your debt and build up savings has been encouraging and motivating for me. Keep it up!
I wouldn't fret too much. Like Dave Ramsey says, keeping up with the Jones' is pointless because the Jones' are broke. Your debt may feel like a burden, but mentally, you are far better than most others. Buying a house sure would be nice, but have a sound debt plan, retirement plan, and savings plan sure feels good too, and will feel many times better 30-40 years down the road.
The new Vantage Score system is not comparable to FICO scores from two years ago. The old FICO scores topped out around 800, while the new Vantage Scores range from 501-990. Each score is assigned a letter grade (just like in school) and mine gets a C.
Don't those statistics seem a little contradictory to you? Your anecdotal mention of house-warming parties would seem to imply that a positive net-worth for people our age is improbable.
My husband and I are 28 and 26, respectively. I am an attorney, he is a corporate executive. We own our own home. He has no loans from school, but I do have some federal student loan debt which I'm not in any rush to pay off since it has a 2% interest rate.
Needless to say, with a newly purchased house, we're certainly not in the positive net-worth category. On the other hand, we both have Roth IRAs, 401ks and savings accounts. And both of us have credit scores over 800. We'll make an extra principal payment towards our mortgage every year -- maybe more -- to pay off the mortgage early.
pinkshoes | Jan 8, 2007
Ariella - are you considering that the equity value in the home counts toward positive net worth?
My husband and I purchased our first home when we were married at age 22. We have always had a positive net worth. Our net worth was over $100k by the time I was 25 and is now over $400k at age 35. (I'm including our retirement accounts, stocks, bonds, home equity, cash, etc.)
I think home ownership correlates highly with positive net worth. Unless, that is, a person has chosen alternative financing options that leave them with virtually no equity in the home....
Jess | Jan 5, 2007
I think you're being a bit too hard on yourself, actually. Was the 725 31% higher than households in your age group, or does that include people who've been established homeowners for years? 725 is a little better than my FICO when I bought a house 2 years ago, and I got a great rate. Focus on saving for your down payment (after the wedding, of course) and paying off your credit cards and you'll be fine. :)
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