Has anyone ever told you that you are lucky? I don’t share my financial situation with many people. I do on this blog, but I do so anonymously. There have been a few times in my life when I broke my code of secrecy. I share about my financial situation when someone asks me for financial advice.
I am not a financial advisor, so I cannot give advice on a professional level. I can, however, share my experience with others. People seem to get more out of a story than from a list of steps to follow. This is where I started, this is what I did, this is where I am.
When I have shared my relative level of success, it was never to sound braggadocios. It was always in the spirit of trying to help that person improve their financial situation. Most of these conversations where started by them asking if I think they should take out a car loan or if they should start buying stocks.
I never share closed-ended answers. I just share about how I navigated similar situations. My approach is to let my results be their guide.
Most of these conversations were enlightening discussions for them. The other person walked away surprised by what was financially possible if they applied some discipline in their life. They thanked me for sharing my experience with them. Some said that I was lucky to be in the financial shape that I was in.
That comment made me think. Was I lucky? I never thought of myself as unlucky, but I never thought about if luck contributed to my financial situation.
On some levels, I was lucky. I was born into a stable and loving family who always supported me and would correct me when I needed it. There have never been any major health issues in my life. I also have been blessed with the most selfless person who I have ever met for a wife. Yes, I do count my lucky stars every day for those blessings.
Debt causes me fear. At a young age, I took out a small car loan. The car ended up being a junk and I had a few grand in debt and nothing to show for it. I swore off debt from then on. Fortunately, debt spooked me at a young age.
Being afraid to go into debt forced me to work my way through college. That allowed me to pay cash for my first two years of community college. The only debt that I had to take was to pay for my second two years. I came out owing only $18,000 and my student loans were only $156 per month. Many of my coworkers had student loan payments of over $700 per month. They lived in dorms, partied, took out the meal plan, and did not hold a job during college.
The same fear carried over when it was time to buy a house. My wife had bought our house before we were married. She was able to make payments on her salary alone. Instead of moving to a bigger house in a new development, we just decided to stay in that house and pay it down quicker.
Saving money just came naturally for me. I did not have debt, so I had money in my pocket. The work that I performed for my first few years of full-time employment was hard manual labor. It just felt like the right thing to do was to save the money. It would have depressed me to blow it on what I felt was stupid crap.
My saving rate was always at least 30%. Saving money was fun. It was like a game. How could I find ways to save more?
That mindset became ingrained in me. As I earned more, I saved more. Saving money gave me pleasure, so I kept doing it.
Saving is like exercise. It is hard but addicting. A hard workout is painful, but also provides pleasure. There is a sacrifice with saving money, but the sense of accomplishment is more pleasurable to me than the feeling I get when money is wasted.
I did not want the money that I was working hard to save just sit in an FDIC checking account. It would not grow fast enough there. I wanted my money to grow and work for me.
After reading about compound interest, I decided to invest in mutual funds. They felt like the right fit for me. Individual stocks seemed to take up too much time with having to research companies. With mutual funds, an investor can buy a basket of stocks in a single fund.
My approach to investing was based on life-cycle investing. When I started investing, I did not have much money, so I wanted to maximize returns. In my 20’s, I was invested 100% in stocks for about ten years.
After I had a nice little nest egg, I took some risk off the table. I added some bonds to my asset allocation. They helped reduce the volatility when the economy tanked in 2007-2009.
Ten years later, I reached financial independence and decided to add even more bonds to reduce risk. The game is not over, but I have a big lead. It is now time to run the ball and play stingy defense. For the next ten years, I just need to earn about 6% based on my savings rate to reach my goal of early retirement.
I was lucky to be born with an able mind and body. Yes, I have caught a few lucky breaks in my life. However, I feel that I had taken the required actions and developed the right habits to put myself into the position to be successful.
Lottery winners are lucky. I worked my butt off for everything I have. I did not go into debt because I did not want to be backed into a corner by creditors. Saving money seemed logical to me because I did not want to waste all that energy to just blow it. As an investor, I took a risk and accepted market returns during booms as well as recessions.
Even though I do not believe that luck has had much to do with what I have achieved, I count my blessing every day. Life has taught me that it is much better to be practice humility and to always help others. As the result of all of that, I truly have a thankful and grateful heart.
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