How I Got To Where I Am Today: $0 – $78K (CoffeeForTheBuzz)

How I Got To Where I Am Today: $0 – $78K

To some people, the fact that I am 24 years and 9 months old with $78K in net worth is probably extremely impressive. To others, that piece of information doesn’t lend itself to the raise of an eyebrow. To me, it feels like I’m right about where I should be. I’ll credit myself for having made a few wise decisions in my very short professional career, but I realistically know that there are several jobs I could have gone after that would have made me more money than the one I have now. There are trips I could have passed on to save a little more money if I wanted to. All in all though, I’m happy with the amount of money I’ve been able to accumulate over the past 2 years. As you prepare to follow and join me on this journey to accumulate $1M in net worth by my 30th birthday, I wanted to catch you up to speed on how I compiled $78K from (nearly) the beginning.

Key Takeaways

  • This post isn’t meant to be used as a comparison for where you’re at today: plenty of you will have way more saved up than myself and plenty of you are probably in debt – that’s okay
  • There are a few key financial decisions that I’m proud of for getting me to the point I’m at today:
    • Saving a set amount of money each time I got paid, as soon as I got paid – and increasing that amount by 1% each paycheck until it hurt
    • Contributing the maximum to my traditional IRA and then Roth IRA (once I surpassed the traditional income limits)
    • Contributing the max to my 401k that my company will allow – but not a penny more
    • Living at home for a significant portion of time – you may take heat for this, but it’s a great strategy to get off on the right foot if your parents allow it

August 1992 – May 2015: Approximately $5K

In my first 22 years of life, I was relatively lazy and uneducated when it came to the value of money. I was a pretty smart kid, but never held a stable job save for one summer internship where I was able to stow away a few grand in the stock market and some excess cash I had accumulated one summer from caddying 10 to 15 times. Other than that, all of my time and energy was focused on playing sports, getting by in school, and (primarily) partying with my college buddies and trying to hang out with good looking girls. Accumulating wealth was something that began to crawl into my mind as I developed a habit of reading business books throughout college – namely The Millionaire Next Door, Think and Grow Rich, and The Power of Positive Thinking. I had never acted on what I learned about wealth, however, until after graduating from college in May of 2015. My parents let me ride their coattails through the first 22 years of my life and I can’t say I complained about it too much.

August 2015 (Age 23): $3,000

After taking a postgraduate trip to Asia with my best friend, I was finally prepared to make decisions that would allow me to begin significantly building my wealth. The first thing I did at my new employer was set up my 401k in one of the most aggressive funds the managing company offered. I’m not a huge proponent of 401ks, but I liked the fact that my company essentially gave me free money for the first 6% I contributed to the 401k. I highly recommend this approach to new graduates because it forces savings, effectively increases your pay, and it comes from pre-tax dollars effectively lowering your taxable wages. I don’t contribute anymore than what my company will match because I don’t want very much money tied up somewhere that I can’t access it until retirement without significant penalties. But I do enjoy tax breaks.

December 2015: $9,500

In my first year out of school, I believe I made 3 solid financial decisions that put me in a position to begin succeeding financially: 1) Found an apartment that was much cheaper than the apartments most of my friends lived in with similar salaries. Sure it wasn’t fancy, but I was with great friends and had plenty of great times there. 2) I contributed the maximum tax deductible amount of $5,500 to an IRA when my annual salary was still low enough to do so. 3) I began an aggressive saving habit that has stuck with me since the day I moved out of my parents house. I calculated my budgeted monthly expenses and then determined the amount that I felt was possible to save out of each paycheck. Each time I get paid, the first thing I do is transfer money to my savings account. And each paycheck I got, I would raise this savings figure by 1% until I got to a point that was borderline uncomfortable. Sometimes I was effectively living paycheck to paycheck and it wasn’t terribly fun, but I knew this was the discipline I needed to develop to set myself up well financially. I highly recommend this approach because it keeps you on your game when it comes to savings and should help you avoid lifestyle inflation – spending more rather than saving more as your income grows. My first bonus was only a couple grand, but it felt nice to begin padding the bank account.

May 2016: $27,521

With a raise in salary for the new year, I was able to begin saving more aggressively and received my first profit sharing payout in early May. That additional couple of thousand dollars went directly to my savings account along with the other savings I was piling up every two weeks. In addition, I really became serious about “side hustles” at this point in time with limited, though some, success. I bought lots of sporting and concert tickets that I sometimes turned a pretty profit on (though I have stopped doing that more out of personal beliefs as of late). Around this time, I began to learn how to build websites. I still had yet to charge any money on a website, but the knowledge was making me more powerful than ever before. I started realize that to really make it, I would need to figure out how to start making money outside of work. And that became my mission.

August 2016: $39,373

This was a big turning point in my financially “independent” life. My lease had just expired at the end of July and I became determined to make an investment in a multi-family real estate property as soon as possible. In order to do so in Chicago, however, I knew I would need to save a ton more cash than I currently had on hand. My wonderful parents agreed to let me move home to save as much money as I could until I was ready to complete my goal of investment property ownership. With no rent and limited living expenses due to work travel, I was able to more than double my savings each month. My only new cost was time – the commute to Chicago from my suburban home cost me 3 hours per day whenever I wasn’t traveling for work.

At the same time, I sold my first website to a paying customer. It was only for $100, but I learned that I had the power to make money outside of the 9 to 5 and that was a very powerful and motivating feeling. All the while I kept my eye on multi-family properties in the city so I could accomplish my real goal.

January 1, 2017: $57,764

After another bonus from work, rapidly increasing savings from home, and well performing investments in my retirement accounts (traditional and now Roth IRA as well as 401k), I began to feel pretty happy with my overall net worth. My cash on hand was getting to a point where I seriously started to consider trying to purchase my own multi-family property. I realized that to live in an area I liked, however, I would need wayyy more money than I had to buy a mult-family property. So my big idea began to form – buy a property with two friends who shared the same ambition for making their money grow and getting into the real estate investment game. They were quickly on board and we started planning and searching relentlessly.

April 2017: $68,000

I continued saving and saving. We didn’t have a ton of luck finding properties right out of the gate, so I decided it was time to move back to the city – I would sublease an apartment for a few months while we continued looking for a multi-family property to purchase together. It was a great experience living at home, but I was ready to be living near all of my friends again so I moved into a small studio apartment in a great location. Eventually, we found a property that we wanted to buy, but the deal fell through – we couldn’t come to terms with the seller of that property. Shortly thereafter, we found another property, made an offer, and it was accepted. There was some tense negotiation back and forth, but we came to a deal and that just about brings us to today.

My biggest leap in net worth was due to a $10,000 loan from my dad to support the purchase of our multi-family property. I have counted it into my net worth because I constantly pay him back a decent portion of each paycheck I receive and will continue to do so until that debt is gone. And that just about brings us to today.

End of May 2017: $78,000

I continued saving like hell, sold a bit of website work, and had my second profit sharing payment from work to get me to where I am at this present moment. In the near future, I will have some significant cash outflows into my portion of the real estate investment (the deal is set to close on June 23rd), but will finally have something real to show for it. My motivation is only getting stronger as I begin to witness the reality of one of my biggest dreams up until this point coming true. I’m excited to share this journey with you, inspire you to become as successful as you can (not just financially), as well as be inspired by you to become as successful as I can.

So What?

You’re probably wondering what this means for you – and the answer is – nothing, really. I am proud of where I am today, but have my sights set way higher for the future and regardless of your current situation, I think that should be the goal for you as well – always keep pushing for more financially, healthwise, and in your relationships. I hope that setting the tone for how I got where I am at this present moment will provide more context for you as I continue to realize successes and failures over the coming days, months, and years.

What are your thoughts about how I’ve lived the past few years of my life? Have you made some of the same decisions? Better ones? Worse ones? I’ve chosen to highlight the decisions that I’m happy I made the past few years, but there are plenty of bad ones that occurred as well so I’m curious to see what your experiences have been if you are a young professional/recent college grad.

Posted by CoffeeForTheBuzz