We had a commenter recently who wanted to know how we got started. I’ll focus on my own process, but James has done relatively the same process as well.
1) Pay down Debt. Perhaps the best motivation for getting ahead is the experience of getting behind. I didn’t have a dollar of credit card debt until I was 26. In a year racked up debt for the first time by being unemployed and spending above my means. I spent the next year throwing money at my debt and getting it paid off for good.
2) Save for Goals. The next motivator was saving for various goals. I continued to save as much as I had been while paying of my credit card debt, but instead put this towards saving for buying a place together and then getting married. Having been accustomed to saving so much, this was relatively easy.
3) Save for Retirement. While I had been plugging away smaller amounts towards my retirement, my next big accomplishment was maxing our my ROTH IRA and then my 401(k). I just kept putting a little more in at a time until I was all maxed out. This felt good.
4) Raises. Another big thing to my success has been focusing on my career and getting frequent raises and promotions over the last five years. Even without my additional allowances for being overseas, my base pay has doubled in five years. Including my allowances my salary is now over four times what my salary was at that time.
5) Live within Means. A big one as well is that my expenses haven’t really increased much, while my salary has. Living within your means as your means increases just means spending more money. A key to acquiring wealth is to keep your expenses low as your income increases.
6) Take Risks. Another key has been taking risks, since we have the benefit of relative youth. We have taken several large risks while as a couple and they have paid off well. The first was flipping a place during the height of the real estate boom in DC, as well as putting a large chunk of change into Hansen’s stock. Being willing to take risks contributes to possible gains.
Those are the basics for what I’ve done to get established financially. They might be simple steps, but there is no need to make it complicated.
Best,
Miel
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