What better way to get this blog started than to talk a little about myself/ourselves. We have an About Us page that can help run you through the basics, but in the interest of creating a chronological record of progress (and hopefully not one of failure), here’s the situation about how we started down the road to financial freedom.
We are both in our early-to-mid 30’s.
When I turned 13 I came into my first lump sum of money: about $2,000. I did what most 13 year olds would have done, and spent it on a $2,000 computer. A lesson learned in spending large lump sums is that the smartphone in my pocket right now has exponentially more computing power than that computer did. So my first financial windfall came and went with a puff of smoke.
I graduated high school, and because I come from a hispanic background, I was able to put that on a lot of my college and loan applications. I was lucky enough to have about a $30,000 inheritance in an accessible account should I need it. More on luck in another post (and more on privilege in another). Lo and behold, I didn’t need that inheritance.
Because I was attending an accelerated high school — I worked hard to be smart, but I didn’t realize the implications it would have for me at the time — I received extra attention when I got good grades as a “minority.” When I graduated, I was the whitest Mexican kid you’ve ever seen walking across the stage to receive my Minority Achievement Award from the principal. With this award in hand, I received a full-ride scholarship to the University of Arizona.
My next major financial freedom lesson occurred 3 years later. To retain my full-ride scholarship, I needed to maintain a certain GPA. I learned firsthand that most things received for free have intrinsically less value. Because I had no skin in the game, I didn’t understand how important this money really was. I stopped going to classes in favor of partying, sleeping in late, playing games, and doing the usual “college stuff.” As a result, in my junior year I lost my scholarship.
I paid for the remaining 2.5 semesters out of pocket, with a little help from my parents. Luckily it wasn’t a lot at that point. I learned some basic programming skills in my spare time, and was minoring in Computer Science. So I took on a part time job programming Flash games for a local nonprofit as a means of generating some base income.
I graduated college with a more or less useless Bachelor of Arts degree. I took about 6 months off, living at home, before looking for work. To my amazement, my degree held almost no value toward the types of jobs I was searching for. Almost all of them were experience based or proof-of-concept type positions. I got a lot further based on my tinkering with programming than I did based on my education background.
And so I landed my first full-time job. I was making about $23/hour doing work that I marginally enjoyed, for a small startup that actually felt pretty rewarding. Having no student loans, a loaner car (hand-me-down from my brother), and no other real expenses, and, other than living at my parents’ house, I was pretty damn happy.
Eventually I got the itch that so many of us get (no, not that itch) and I started to feel stuck. I didn’t appreciate the position I had, even though by all accounts it was quite enviable. The company I worked for was showing real signs of growth. When I started with them, it was just me and 2 other people; they had quickly doubled staff and clients and were poised to make much bigger moves. I felt like I could go places with them, but I wasn’t sure if those were the places I wanted to go.
I finally started feeling like I had just gotten lucky up to this point. That I hadn’t worked for anything I had. And that work wasn’t supposed to be this easy.
In 2008, at 24 years old, I enlisted in the military. Against every ounce of sense I had in my body, and against what every financial guru told me, I decided this was the best way for me to develop a sense of self and contribution to a country that had already given me so much opportunity. I wanted to get out from behind my desk and do something that felt unequivocal.
This may have been the birth moment of my current attitude about life.
I had options to enlist or become a commissioned officer. The officer route promised much more responsibility and pay, but I wanted to be in the trenches. Since I still had no financial burdens (lucky me), I also had no real financial aspirations (stupid me).
I graduated from Marine Corps boot camp and started my next adventure. My first 2 years saw me doing a lot of training and having a lot of fun. I felt that spark again which I had felt when I had started my first job, and hoped it wouldn’t fade as quickly. I was living large for a junior enlisted Marine. Pay checks came frequently, and were spent just as quickly. I deployed and pocketed a tidy sum.
Lesson 3 in financial mismanagement. I bought a 2009 Toyota Tacoma (it was used for about 6 months, so I felt like this was a financially smart purchase) for $26,000 cash and a $6,000 loan. All of my deployment money, enlistment bonus, and cash savings up to that point vanished into that wonderful truck.
A year later I got married and suddenly the world of money became very real. My wife’s $65,000 in student loans put things into perspective very quickly.
My wife worked a job in the hotel industry at the time, making a decent wage, and adding some nice supplemental income to our equation. I deployed again in 2011 and this time I made my first wise financial decision. We put all of my deployment money into her student loans.
When I returned, I traded my gas guzzling truck for a 2009 Prius (after all, I was married now, and had no one left to impress!). My car payments vanished and so did my gas bill. We used a portion of deployment money to pay off my wife’s car as well. The rest went into paying off our student loan debt.
We bought a house. We bought at the cusp of the housing recovery in California. The market had started to rebound, but was still near bottom. We bought at 3.25% using a zero-down VA loan. We ensured our monthly payments were at least a couple hundred lower than the housing allowance I received through the military. Things started to look up.
Through careful budgeting and minimizing discretionary spending, we started making even more of a dent in student loan debt.
I deployed a third time. Seven long months later, I came back to two paid off cars and zero student loan debt. In 3 years my wife and I tackled what seemed impossible. We had destroyed roughly $75,000 in debt, and had also begun a considerable investment portfolio.
It sounds super simple writing it now. Why did it even take us that long? I can assure you discretionary spending is the hardest thing. Coming to terms with your own spending habits is just as hard. During my time in the Marine Corps, I attended several finance classes; I was mostly trying to learn for myself, but I also had a desire to teach fellow Marines some of the lessons I had learned.
I thought… If we can pay off $75,000 in debt, and build a $100,000 investment portfolio in less than 5 years, starting from zero, then imagine what an entry level enlisted Marine with zero debt could do with the right guidance. My desire to teach finance really started to blossom here. I realized that the first step to financial freedom is understanding why you are imprisoned to begin with.
For my wife and I, and for many, many Marines who I counseled, the biggest road block is ourselves. For any given Marine, if I sat them down and asked them how much they spent every month at the corner store, I almost unequivocally got “About $50” as a response. Going line by line down their spending records, though, revealed a different story. Time and time again, these numbers were actually well over $200, and in some cases over $400, in addition to the $350 that was automatically deducted from their pay checks each month for the messing facilities!
My wife and I could say the same about our own spending. How much were we spending eating out each month? “Oh, about $100.” In truth we were spending almost $500, sometimes $600 eating out. Other discretionary spending took even larger tolls on our savings and investments.
Once we learned to budget and control our spending, we watched our debt melt away.
Today, through many lessons learned, through a lot of good fortune and luck, through intensely controlled spending, and through a lot of hard work and an employer that pays a living wage, my wife and I are debt free with the exception of two mortgages.
That’s right.
We own two cars outright. We have investment portfolios of about $150,000; retirement account(s) of about $260,000, about $20,000 in cash, and two homes, mortgaged at 3.25% with about $150,000 in equity. Our credit scores are both over 840, we both have full time jobs with benefits, and a combined net worth of just over $550,000.
We started our road to financial freedom at 24 years old. I am now 33 and after having wandered aimlessly through the financial forest, I finally see the path ahead.
I’ve started this blog for several reasons.
- There’s no better way to track my own progress than to write about it. I’ve always wanted to be a better writer.
- Like when I counseled Marines, I feel like my story has some value to those who want to follow a similar path.
- I love to brag.
- Feeling humbled by other peoples’ successes and experiences helps me grow.
- I would feel accomplished knowing that I was able to help YOU get to financial freedom.
Thanks for reading my story and joining us on the path to financial freedom!