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I graduated college with $25,000 in savings, bought a tiny rental property with the money, and set off to travel the world, with what little remained on my bank account and the monthly rents. Living the dream, right?
So let me rephrase: I spent the first couple of years of college living on a meager $400 scholarship. My 90 sqft dorm room was $130 so I had $270 left to eat, buy books, clothes, and everything else I needed.
That’s $9 a day.
It meant no lattes, no beers, no clubs, no cool gadgets, no fancy winter coats. My cousin handed me down my first cell phone, the size of a walkie talkie, when everyone had tiny Motorolas. I walked because the bus was $2. I carried 50lb bags of laundry back to my parents’.
I took waitressing jobs until 2am and was barely awake in class at 8am. I missed one exam because I was so out of everything I thought it was the next day, and was frantically studying for it when I found out.
I flipped burgers for minimum wage. I tutored younger kids, supervised school lunches and taught primary school when the teacher was sick. I spent Christmases working retail jobs and dealing with the shopping craziness, before and during the sales.
I always found a way to make extra money on the side, but I barely had a social life. I took all kinds of hardship, from customers who wanted to yell at the waitress to friends calling me cheap and weird.
Then I went to business school, found a company to sponsor my tuition in exchange for a full time work/study arrangement. I still hustled on weekends, taking the train two hours each way to Disneyland to be part of the magic. And spent the last year submitting travel grant applications to finance the missing bit of my dream.
Hard work pays off
After all these sacrifices, I did graduate with savings and traveled the world. It is not as glamorous when you put it like that, is it? But it was all worth it. And then, when I came back, I saved and saved again, until I was able to leave the corporate world at 29 to live life on my own terms.
Again, it was done at a cost. I didn’t buy a car until I was 29. I walked, cycled, took the bus, and slept at the airport before taking a red eye. My social life was mostly potlucks with friends rather than gourmet restaurants. And after I was done with my day job at 6pm, three or four nights a week, I would venture out in the cold (sometimes heavy rain) on my bicycle to go teach French to a few clients.
Then, I would come back and complete my freelance travel writing assignments. The last few years, I hated my day job, to the point of being really stressed about going to work the next day, but I held strong, thinking about my end goal. The temporary discomfort was nothing in comparison to my reward.
Today, I have no regrets. Today, at 35, I live in the tropical paradise of Guatemala, my days comprise of heavenly swims in a beautiful lake, runs, and long walks with my dog. I travel internationally two or three times a year. My nest egg provides more than enough for me to keep living a perfect life of travel and leisure for the rest of my days. The cost? A dozen years of hard work.
Most people take it easy, generally for lack of questioning the path everyone follows. You have to buy a car, top up your credit cards, get a mortgage, make minimum payments on your student loans until you’re 45. Then start paying for your kids’ college, and worry about retirement every single day.
You have to treat yourself often because YOLO and you deserve it. Of course you do. You are great and unique. And you also deserve to retire when you can still enjoy life.
I still have haunting memories of old men well into their 70s bagging groceries or mopping the floor at a fast food. That alone kept me from overspending.
Everyone can do it
I am no more special than you are. I just had my priorities straight.
When you were paying that car $300 a month on credit, plus as much for insurance, gas, maintenance and repairs, I was saving $600 a month. From 18 to 29 when I got my first car, that’s $79,200. Invest $600 a month at 8% for 11 years and you will have $127,190 saved. Not too shabby for a 29 year old right?
But are you ready to go without a car, keep having roommate five years after graduation, or buy clothes once a year, for the sake of a higher goal? I know I was.
My round the world trip cost less than $12,000. I wanted to see the world, at any cost. It didn’t matter that I had to camp often, eat rice and beans, and hitch-hike. And sure, dropping $12,000 on travel is crazy for some people, but remember during that time I had no rent, and that includes meals, transportation and going out.
Isn’t your food and rent budget close to $1,000/month? Does a $12,000 trip seem any crazier than buying a $50,000 car?
Get at it early
The whole secret to my current financial independence is I got started early. Compound interest has been working for me since my teen years. Make your money work for you too.Compound interest has been working for me since my teen years. Make your money work for you too. Click To Tweet
If you are 25, saving $500 a month will allow you to retire at 59 with over $1 million in savings. Sure, that’s hard at first, but if you were used to living lean as a student, you should manage now that you make real money.
If you start at 35, you will need over $1,000 a month in savings to retire with seven figures. And at 45, it is over $2,500 you will have to fork out monthly. Pretty impossible on top of a mortgage and tuition for the kids. So start now.
The steps are simple
- Get rid of your high interest debt. It’s crippling you from the start. Get a 0% balance transfer on your cards and refinance your mortgage and loans.
- Take advantage of your employer match.
- Max out all your tax free and tax deferred savings account.
- Invest as much as you can. The markets historically yield higher returns than savings accounts.
- Only take on debt that will make you money. Such as a mortgage on a rental property.
- Be patient. With time on your side, it will snowball eventually.
And keep an allowance for fun money. I still traveled when I was working. That was the one thing I refused to skimp on. But by ruthlessly prioritizing my spending, I was able to find the money to do it on top of reaching my long term financial goals.
What are you willing to sacrifice to achieve your financial goals?
Photo Credit: frankieleon