Stereotypes and Luck
When strangers on the internet read about a 20-something aiming to reach financial independence by age 30, it’s easy to jump to the conclusion that this person must be extraordinarily smart or extremely lucky. Relative to most of the 7+ billion residents of earth, I most certainly am lucky to have been born into a loving, middle class family in the most prosperous country in history. At the same time, if you are reading this blog, you are most likely among the millions who share in this great fortune. And while I’ve been lucky over the years with some of my more alternative investments, I’ve also made mistakes trying to time the market, missing out on massive stock market gains over the last few years. The reality is, I am just a guy of decent luck and average skill who made saving money a priority early in life and lived below his means.
The Formative Years
I grew up as the oldest child in a very middle class family in the midwest. While we didn’t grow up on food stamps, money was definitely a source of stress for my parents for years on end. During the global financial crisis (GFC) around 2008 – 2009, my parents found themselves stuck owning two houses for more than a year, unable to sell our old house after purchasing another house closer to our school. Add on the massive devaluation of real estate at the time, and its easy to see how the stress that this situation brought on my family left a lasting impression on me. I still credit the GFC with much of my frugal tendencies to this day. As a high schooler, the financial impact of the great recession lingered on my family’s finances and I knew that I would need to take funding my college education into my own hands.
With this in mind, a central goal of my teenage years was graduating college without any student loans. The pursuit of this goal is what cemented my frugal habits and really put me on the path to financial independence, before I knew anything about the movement. I was eager to work and earn money and I started my first formal summer job as soon as I could, bagging groceries at the age of 14. As a teenager I also mowed lawns, fixed computers, built websites, worked at a marina, washed boats, and even taught sailing lessons.
Thanks to my savvy parents, I opened a Roth IRA after starting my first job where I contributed most of my paycheck. Looking back, I’m fortunate that I was introduced to Vanguard probably a decade before most of my peers. As you can see, my parents deserve a lot of credit for giving me a smart financial foundation and instilling into me a strong work ethic.
High School and College
I was a strong student in high school and was fortunate to get deeply involved in the FIRST Robotics Competition, which steered me down the path of mechanical engineering. Mechanical engineering appealed to me as a career path not only because I enjoyed it and it matched my aptitudes but also because I could earn a high income with just an undergrad degree. As college drew closer, I prioritized the ROI of my education, and chose a school that offered full-tuition, merit-based scholarships. The value of this scholarship as a result of my high GPA and test scores rang up in the six digit dollar value over 4 years and looking back, really overshadowed my earnings from summer jobs. My grades and extracurriculars helped me to win several additional scholarships of $1000+ each which would help with living expenses in college. As a senior in high school, I probably ended up earning over $100/hr from the marginal work of completing those scholarship applications.
As I entered college at this out-of-state southern school 900+ miles from home, my frugal and career-focused habits followed me. With the scholarship covering my cost of tuition and a bit more, I could focus on getting relevant experience to kick start my career. My freshman year, my scholarships, savings, and a few thousand dollars from my parents helped to cover my living expenses and textbooks. My sophomore year, I landed a coveted position as a Resident Advisor which covered my housing and a bit of food costs. On the career front, I was able to leverage my robotics experience from high school and college to land internships each summer. I lived frugally each summer as an intern and was able to use my modest savings from the internships to cover my living expenses the rest of the year while having a bit left to contribute to my Roth IRA.
The result of these decisions was that I came out of college with over $40,000 in the bank, an engineering degree, over a year of professional experience, and zero debt. The choices in the right direction really added up over time.
Entering the Workforce and Discovering FI
Around my junior year of college, I came across the Financial Independence / Retire Early community (FI / RE) on Reddit which was eye-opening for me. Discovering financial independence put the smart money principles I was already following into a broader framework and made me grasp their lifelong effects. I realized that I was incredibly fortunate to be exposed to this freedom-focused life strategy so early in my life and career.
As I entered my senior year of college, I accepted a full-time position at a startup in the SF Bay Area where I had interned the previous two summers. I was in awe at the prospect of making $90k per year as a 21 year old. With a deep appreciation for money from many summers spent making near minimum wage, I didn’t squander my earnings at my first full-time engineering job. I maxed out my 401k, Roth IRA and HSA and kept up a savings rate of over 50%. As I was promoted and increased my salary by starting at new employers, I have continued to live well below my means while saving and investing the difference. Despite increasing my salary, I still live well on below $30,000 per year in one of the most expensive areas of the country. By avoiding lifestyle inflation, banking my raises, and riding the wave of the greatest bull market in history, over the last four years my net worth has grown to a point where I am on track to reach financial independence by age 30.
The Boring Middle
The Boring Middle is the period in the FI journey that stretches between when you first learn about and implement the principles of FI to when you actually hit your “FI number” and can live entirely off the conservative returns on your investments.
As I write this, I currently reside in this so called Boring Middle, although 2020 has been quite the opposite of boring, for better or for worse. While many claim that everything to know about FI has already been written, I disagree. A big reason I made WalletBurst is to help make the Boring Middle less boring and to help people on the journey to FI to realize the lifestyle options that being money smart can open up well before reaching their “FI number.”
I generally try to avoid rigid identities, but ever since I stumbled upon the concept of financial independence during college, I have been obsessed with unlocking personal freedom through smart finance habits. For me, saving started out as a way for me to buy that gadget that my parents made me buy with my own money. Over the years, this mindset progressed from saving up for college to saving in order to unlock decades of freedom in the future.