Editor’s Note: This is the first in our Net Worth Diaries series, where we examine the financial lives of others.
“D-Rock” is a 34-year-old lobbyist in DC. He and his wife plan on retiring in 6 years at 40.
Net Worth Trajectory
- 2008: Graduated from college
- 2009: First job; $35k salary
- 2010: Bought first house in foreclosure in the midwest | Net worth: $45,000
- 2011: Moved to D.C.; Pay bump to $70k | Net worth: $31,000
- 2012: Bought primary residence, a condo in DC | Net worth: $43,000
- 2014: Started law school part-time (while still working full-time) | Networth: $194,000
- 2014: Second fixer-upper rental property in Maryland | Net worth: $170,000
- 2017: Negotiated raise at the same employer: $140k | Net worth: $526,000
- 2018: Graduated law school | Net worth: $660,000
- 2019: Promotion to Director: $170,000 | Net worth $750,000
What did you do after college?
I worked at an association based in the midwest for a few years. I also bought a house in foreclosure and fixed it up. We lived there for two years but then we had opportunities out in D.C.
My work has a small Washington office and so I moved out there in 2011. When I moved I was on the lower rung, working as a junior lobbyist. Over the last eight years, I’ve gotten a lot more opportunities to grow.
Why did you decide to go to law school?
I knew that to advance in my career, I needed to go back to school, either to law school or to get a master’s in my area of expertise, which is health care.
I wouldn’t recommend law school for everyone, but being able to attend at night made it financially feasible. It took four years. For a while, it was four nights a week, plus studying 20 hours every weekend. But the degree was something I valued and wanted to do, and it made sense financially. I had the opportunity to work at a big firm and the money would have been incredible.
D-Rock spent a summer working at a law firm, but decided to go back to his former employer, a lobbying firm in DC. He successfully negotiated a raise from $87,000 to $140,000.
How did you go about negotiating for a raise with your old employer?
I started with a soft approach. I talked to my former employer for months prior to making a direct request, so he wasn’t shocked when I proposed coming back at a higher salary.
When I did come to him officially with it, I said he’d have to make me an offer before I made any decisions. They definitely wanted to rehire me, but it was unclear what that would look like monetarily.
And so we kind of agreed on: I’ll share with them a bottom line figure I’d consider and the top line figure that I would absolutely accept.
I really did think about it. I thought to myself, what would make it worthwhile.
In the end, I provided honest numbers that I thought were reasonable and could be realistically accommodated. And then right before I clicked send, I actually upward adjusted those numbers by about $5000.
I figured people never value themselves enough, myself included.
They came back with an offer $3800 above my low number, so it worked out great.
And then before my promotion, it was again one of those critical junctures where if this opportunity for a director position hadn’t opened up, I would’ve probably had to do something else just from a growth standpoint. So it was fortunate that it worked out.
I’m one of those people that is all about being steady and consistent. Some people would hate to be in a job for 10 years, even if it’s in many different roles. But for me, it works.
It seems you’ve consistently grown your income in your career, without switching jobs. How were you able to do this so effectively?
I think the biggest thing is first, create value and second, and documenting the value that you’ve created.
A lot of people do a good job, but I think people struggle with self-promotion.
Coming from the midwest, where people are very modest and humble, that’s something I’ve dealt with. But unless people know what you’re doing, you can be doing the best job in the world, it doesn’t matter.
Try to find opportunities both for growth to prove that you can take on bigger, better tasks, but also things that you are likely to succeed at, and then again documenting that.
Every year, as you’re going into your reviews, you want to be able to show the things that you’ve done beyond one’s core competencies and the bare requirement of the job.
A good employer will value that. And if you continue to flag it when your justifying request for increases or promotions, then it’s a lot harder for your employer to say no.
Whereas if you’re going in and just saying, I’m a good employee you’ve got to help me out, that’s not an argument a manager can take to their manager. It’s just too soft.
Do you have a target salary you are still trying to hit?
I’m pretty good with where I’m at now right after these big pay bumps. I was probably underpaid in the beginning and now I think I’m compensated in a way that makes me very comfortable. So no, I have what I think is sufficient.
Fortunately my work does regular minor increases, 3% a year. So those increases are already built in. And when you’re making a higher income, 3% actually does produce a raise beyond just inflation, which is nice.
The idea of being done you know, financially, in 8 or 10 years means I don’t really have to be thinking about, OK what’s going to position me for 20 years from now.
When you say you are 10 years away from financial independence, what numbers are you basing that off of?
We’re at about $750k net worth right now. We’ve been able to grow our net worth about $100k to $120k every year over the past few years.
So, conservatively, that puts us at about $2 million in ten years. And so I think that would be probably a fine number, especially considering neither of us has plans to completely stop working or at least generating income.
I would imagine we’d have some kind of income, plus we’re trying to purchase a couple more rental properties at some point, once the market turns.
Tell me about your first rental property: how did you find it?
We found the property on the MLS, but it was actually posted incorrectly. So it was posted at $140k. But we saw it on a different site listed for $123k.
It turned out that whoever uploaded it on the MLS put the wrong price. The foreclosure database had the correct price which was like $18,000 less than the listed price. We realized that the error wouldn’t last forever, so we put in an offer the next day. My motto is if you find something that works, do it right away, otherwise, someone else will. And so we put an offer for $10k less than asking, and they countered with $5k less, and we accepted.
In terms of fixing it up, we knew we could do a lot of it ourselves. And we did most of it ourselves: whether that was re-refinishing the floor or laying new tile in the kitchen. One of the things that my first house (the midwesthouse) taught me is, where some people see ugly, you seeing value, so long as the bones are good.
All in all we only put $8,000 into it, of which $5,000 were material cost plus $3,000 holding costs, and then we got it reappraised.
When we bought it, we didn’t have enough reserves to do 20% down, so our interest rate was not great. I think we had PMI or something. I can’t remember, but it wasn’t ideal. So when we fixed it up after six months we got a renter in there and then we refinanced it into a conventional 4.7% interest mortgage with no PMI.
It’s been a consistent income stream since then.
What advice do you have for other people who are interested in investing in rental properties?
Don’t listen to the people who haven’t done it personally because I think there is a lot of false information out there. Everyone’s heard the horror story from a friend of a friend, or an uncle.
The only things that you hear about are either the crazy good deals or the really terrible tenants.
Most properties are generally positive with some negative downsides.
The other piece of advice is, remember that a rental is not where you’re going to live. It is where somebody is going to live and it’s got to be suitable, and you need to provide a benefit to your tenant. At the same time, you have to look at the cold, hard numbers and say, Is this going to work financially?
Are you really being honest with yourself about what repairs it needs and what the holding costs are and the type of area, etc.
If you’re a little overly optimistic in a couple of different areas, it can really make a deal difficult. Being kind of cold with the numbers and analytical is critical to setting yourself up for success.
Is it more efficient to focus on cutting down your spending or to grow your income?
We’re auspicious to be duel income no kids, right? And this that provides us a strategic advantage with respect to living costs. But yeah, I think growing income is really the primary way of driving wealth. The key is, I think you have to proceed in a very strategic manner.
Working hard is not going to get you where you want to go. Generally speaking, it’s going to be looking at other opportunities, looking at what else is out there, or either training or work in a deliberate and productive manner.
They always ask in interviews, where do you want to be in 10 years. And most people make something up.
I’ve always known where I want to be in five years, and in ten years. I think anyone that doesn’t have an answer to that question is doing a disservice to their professional growth and development.
Because you don’t know where you’re going, you’re just kind of treading water. It’s one of the things where growing your income goes hand-in-hand with knowing where you’re headed and how you’re gonna get there.
D-Rock and his wife plan on reaching financial independence in 10 years by focusing on increasing income, saving heavily in tax-deferred, low-fee passive investments, buying rental properties, leveraging tax latter conversions, and maintaining his family’s DINK status (dual income no kids). He writes about his finances at Dinking Around Finance.