The "Magic Chart" and its role in making us millionaires;-).

Dramatic title, I know. Put it down to flipping through so many gossip magazines in the checkout line seeking ever more information on the child count and relationship status of Brad and Angelina.

But the chart has had an almost magical effect on my husband and me as we've continued this journey to financial independence, which started with a negative net worth as the wedding bells rang that September day in Chicago.

The concept was first presented in Your Money or Your Life, by Joe Dominguez and Vicki Robin. I was fascinated the first time I read about it and went to an office supply store for a pad of graph paper.

We kept those charts right there at eye level on the wall, staring at us day in and day out. Each month, we would chart our month's after-tax income, our month's expenses, and the gap (usually positive).

Knowing my pen would be recording those dots each month was a powerful motivator to put off or rethink various purchases. The months with a big positive gap were celebrated. A small or negative gap became fodder for late night pen and paper strategies for reducing everything from electric to food costs.

A second graph charted our net worth each month. And we were beyond thrilled when it first hit $100,000. Eventually our net worth grew considerably beyond that.


We still have not achieved financial independence, the number at which your income from investments pays enough to fund all your expenses should you live to be one hundred. And this is not an easy task to accomplish, especially as our expenses have grown quite a lot in the past five years with kids and looser purse strings.

To put this in context, for every $100 a month in expenses, dinners out, electric bill, or annualized heating costs, we need to have $24,000 in the bank spinning off interest at a rate of five percent. And many think five percent may be optimistic. At three percent, we need $40,000 in the bank.

We haven't done the chart in almost two years, not surprisingly coinciding with the birth of our beloved, energetic, rambunctious, started up Grandpa's combine when no one was looking, two year old son Kai.

But as I write this, I'm excited to dig out some more graph paper and restart the process.

One mistake I made early on was to think, "when we finally reach XYZ, THEN we're going to be SO happy." Looking back, the first milestone brought us every bit as much satisfaction, if not more than the many that came after.

And I've come to realize my daily happy moments don't tend to involve our net worth. Watching my Pug greet her canine buddies at the park, my petite, slightly sadistic step-aerobic commandant announcing cool down time, my kids occasional camp out nights on our bedroom floor, my husband's eyes lighting up on date night because I took the time to read the Economist and the conversation turns from potty training to "The Vote That Changed Japan".... It really IS the journey.

Whether you're starting at a negative number, zero, or three million, good wishes to you as you plot and graph your way to wealth, taking time to realize you're probably already pretty rich;-).