Got another financial history report to share today!
This time from fellow reader-turned-blogger, The Money Wizard, who tells us how he’s amassed $300,000+ before he’s even turned 30. Or put another way, about 4.4x my own net worth of $68,061.80 at his age! Haha… So he def. knows what he’s talking about over there :) Hope it inspires you in some small way today!
I can safely say that if it weren’t for J. Money, my life would look pretty different.
That’s because I’ve been a regular Budgets are Sexy lurker since around when he started the site, all the way back in 2008. At the time, his net worth updates were unlike anything I’d ever seen. After several years of following along, I was inspired enough to start my own blog, where I now publish my own net worth updates every month.
So, how does regular reading of Budgets are Sexy since you were a teenager impact your finances?
Well, in my case, it means a $100,000 net worth by the time you’re 25. And then $300,000 while you’re still in your 20s.
(As of this writing, I’m 29 years old with a net worth of $300,329.24. But who’s counting?)
When I saw J’s request for readers to divulge the nitty and gritty of their financial history, I thought it’d be great to tip my cap to a role model in the best way I know how – getting nerdy with money!
The Money Wizard’s Balance Sheet:
Here’s the breakdown of my net worth, as of last month’s update:
- Brokerage Account: $143,597
- 401k: $119,602
- Roth IRA: $35,601
- Cash: $5,338
- Liabilities: $3,809 between monthly rent and credit cards that I always pay in full.
Which, in the spirit of this series, doesn’t tell us a whole lot. We want to know *HOW* I got there. Time to spill the juicy details!
#1. I started investing as a teenager
Between the ages of 0-23, I probably invested $15-20,000 from teenage jobs and college side hustles. Nothing glamorous here. Mostly summer construction jobs, although at one point I did run a small baseball/softball bat flipping hustle. This gave my savings a nice head start and plenty of time to get the compound interest snowball started.
#2. I gave up on stock trading (and instead went with index investing)
I wasn’t perfect in my teenage investing though. Like most teenagers/early 20s, I was young and naïve and thought I could show the world who’s boss.
Luckily, I managed to contain those teenage dreams to a few bone-headed stock investments. (I thought for sure my Buffett-like value pick of Uranium stocks after the Fukushima nuclear disaster would make me a millionaire. It didn’t. I lost thousands.)
Thankfully, I learned this lesson early. Since then, I decided to move to a pretty simple 3 fund portfolio of index funds. It’s a decision that’s helped me earn over 7% in the stock market for the past several years, and more importantly, free up my time to do stuff a whole lot more fun than combing through financial statements.
#3. I avoided student loan debt
This was a mixture of a couple thousand dollars’ worth of GPA-related scholarships, part-time jobs, generous help from parents, and choosing a (relatively) affordable in-state public school.
#4. I took a well-paying job out of college
I was also fortunate to score a lucrative career out of college, although this wasn’t totally by accident.
I double majored in Finance and Economics, specifically because I knew they were some of the highest paying degrees. I’d have loved to major in something like English, but instead I decided to put that passion on the back-burner until I’d saved enough cash to retire early and do whatever I wanted. If I followed the money, I figured that date would come sooner rather than later.
The result? Coming out of school, I scored a $50,000 a year job in finance. And over the past few years, I’ve played the office politics game and worked like a dog, which scored two more meaningful promotions. I landed the first promotion after about 3 years, and it bumped my salary to around $70,000 a year. The second occurred more recently, as I approach my 6-year anniversary, and has me sitting around $90,000 in annual income moving forward.
#5. I took advantage of my above-average 401k match
Not quite an INSANE match, like J’s ridiculous free $16,500. But, solidly above average – my employer matches 7% of my salary at 100%. In other words, at my current pay, the first $6,300 I contribute is matched with an identical $6,300 contribution from my employer.
This wasn’t by accident either! During my second round of interviews, The Money Wizard, as a fresh-faced, not-yet college graduate, grilled the interviewers about the company’s 401k plan. They looked at me like I was a 60-year-old trapped in a 23-year-old’s body, and then relayed the news that ended up being a big factor in my job choice.
#6. I kept living like a college student for years
And I sort of still do…
For the first few years at my career, I spent no more than about $22-24,000 a year.
In part, that’s because I scrutinized every single expense I took on. If it was a monthly or annual subscription, it probably got cancelled, slashed, or at least negotiated. I also rented a modest 1-bedroom apartment away from downtown Denver. The way I saw it, all the Ubers in the world couldn’t match the increased cost of a trendy downtown place.
A few years ago, I moved in with my long-term girlfriend, and we now live in Minneapolis. The house is in her name, although I pay half of the mortgage, utilities, and maintenance every month. Another key fact, and this is definitely key, is that the house cost a whopping $180,000… a full 1/3 the price that Mint.com said we could afford.
That said, I do tend to splurge on dining out, entertainment, and travel. (What a typical millennial…)
In 2019, my goal is to spend less than $2,250 a month. If I manage that, I should save over $40,000 between my 401k, employer matching, IRA contributions, and Vanguard or Fidelity index funds.
One last thing I’d like to say, before J. Money realizes he accidentally let me on stage. ;)
I recognize my money situation is kind of weird. My inbox is filled with emails from readers at a different stage in this money journey, wondering how on earth a snot-nosed 20-something with $300,000 relates at all to their situation.
But consider this – with my current rate of savings, I’m on pace to reach complete financial freedom by the time I’m 35. Most likely, my corporate career won’t last a day longer than 12 short years, total. That’s a blip in the timeline of a normal working career, even if you’re starting entirely from zero.
So if you’re older, younger, or even still in debt, I hope my story shows the awesome possibilities for anyone who kicks debt to the curb, lives modestly, and invests heavily.
Thanks for having me J. Money!
Want to share your own financial journey with us? Hit me up!
For the past two in this mini-series:
PS: If you’re just getting started in your journey, here are a few good resources to help track your money. Doesn’t matter which route you go, just that it ends up sticking!
- The "Budget/Net Worth" spreadsheet - the colorful Excel template I personally use.
- The "Money Snapshot" spreadsheet - a simple Excel template I created for my former $$$ clients
If you're not a spreadsheet guy like me and prefer something more automated (which is fine, whatever gets you to take action!), you can try your hand with a free Personal Capital account instead.
Personal Capital is a cool tool that connects with your bank & investment accounts to give you an automated way to track your net worth. You'll get a crystal clear picture of how your spending and investments affect your financial goals (early retirement?), and it's super easy to use.
It only takes a couple minutes to set up and you can grab your free account here. They also do a lot of other cool stuff as well which my early retired friend Justin covers in our full review of Personal Capital - check it out here: Why I Use Personal Capital Almost Every Single Day.
(There's also Mint.com too btw which is also free and automated, but its more focused on day-to-day budgeting rather than long-term net worth building)
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!