Saving my first one hundred thousand dollars was the hardest. When I started on the road to financial independence (FI), I was only 20 years old. I wanted financial independence and reaching my first $100K was the first goal that I set. I was aware that it was a lofty financial goal, but I embraced the challenge. I wanted to reach this milestone by age 30. On my way to reaching this goal, here is what I did:
I had to land a job and start earning money. When I looked for a job, my options were limited. I did not have a college degree yet. The economy where I lived was not great. My options were a factory job, construction, or working in the food industry. I selected working on an assembly line in a mattress factory. There was nothing glamorous about the job. It paid a decent hourly wage for unskilled labor. It was a means to an end, so I was grateful to have it.
Learning to Save
To reach my goal of building a net worth of $100K by the age of 30, I had to save. Saving came easily to me. I was working hard for the paycheck and did not want to waste the money. Every month, I would put at least $500 away towards my long-term goal. I also put additional money away for vacations, car expenses, and costs associated with college.
I had to learn how to invest the money that I was saving. It was the year 1997. It seemed as if growth and technology stocks were soaring to new market highs daily. There were often commercials on television advertising new day-trading platforms. I was fortunate to have read a few books that taught me to stay away from such speculative approaches. I learned to invest in mutual funds that tracked indexes such as the S&P 500.
I needed to earn 8% on my investments based on my savings and time horizon. Historically, the stock market earned 10%. I was confident in the information that I read. I dollar cost averaged money into my investment account every month. I ignored the market volatility and just kept moving forward.
Getting a good college education was important to me. I knew going to college would help me to learn skills that would put me in a better position to earn a larger salary. College was, however, a financial challenge to manage on my path to reaching $100K by age 30. I did not want to incur a large student loan balance. To avoid that, I took 60 credits at the local community college. I paid cash for those credits. That allowed me to incur only $18K in student loans for the additional 60 credits I needed to complete my BS degree.
Yes, I did reach the first goal on my journey to financial independence. By age 30, I saved almost $120K. The only debt I had was my student loan of $18K, so that left me with a net worth of over $100K.
Looking back, I did put a great deal of pressure on myself to reach this goal because my salary never exceeded $30K per year during this period. It was, however, worth it. It set me up with a solid foundation to build upon towards my next goal of a $1M net worth.
Yes, my 20s were productive, but I also had a great time. I went on nice vacations, went out with my friends, and dated the girl who later became my wife. I would not go back and change it if I could.
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